East Asia and the Pacific Justin Yap Melissa Johns September 26, 2007

Doing Business indicators 2007 2008 2009 Starting a business Dealing with licenses Employing workers Registering property Enforcing contracts Getting credit Trading across borders Protecting investors Paying taxes Closing a business Update of 2007 Add 3 countries Reformer’s Club: 11 case studies Add Not paying bribes Add Using infrastructure Research program on regulations and business opportunities for women

Ease of Doing Business: The Top 30 Singapore New Zealand United States Hong Kong, China Denmark United Kingdom Canada Ireland Australia Iceland Norway Japan Finland Sweden Thailand Switzerland Estonia Georgia Belgium Germany Netherlands Latvia Saudi Arabia Malaysia Austria Lithuania Mauritius Puerto Rico Israel Korea 1) Singapore tops the list for 2nd year in a row 2) EAP has two countries among the top 10 performers (Singapore and Hong Kong, China) and 4 among the top 30 performers (Singapore; Hong Kong, China; Thailand and Malaysia)

Top Reformer in 2006/2007: Egypt Egypt reformed in 5 of 10 Doing Business indicators

Top Reformers in 2006/2007

Benchmarking: What gets measured gets done Simpler business entry in Brazil, Bulgaria, Burkina Faso, El Salvador, Ethiopia, Jordan, Lao PDR, Madagascar, Peru, Serbia, Syria, Timor-Leste, Yemen Faster court enforcement in Jordan, Serbia, Poland, Tonga Fewer licenses and approvals required in Poland, Niger, Netherlands Improved investor protections in Mexico Credit information improvements in Afghanistan, Chengdu (China). Georgia, Indonesia, Panama, Vietnam 413 reforms recorded, 200 in 2006-7 informed or inspired 113 reforms

ECA reformed the most—while EAP is second to last Countries with at least one positive reform in 2006/2007

Eastern Europe surpasses East Asia in ease of doing business Average rank on the ease of Doing Business (out of 178 economies) Singapore, for the second year running, tops the aggregate rankings of 178 economies on the ease of doing business. EAP has two countries among the top 10 performers and 4 among the top 25 performers. In 2008 Eastern Europe and the former Soviet Union (rank 76 on average) surpassed EAP (rank 77 on average) on the ease of doing business

Business entry reforms = more businesses Business density (registered firms per capita) Business entry (new firms in % of registered firms) Message #1: As reforms pick up more business start up. Georgia now has 15 registered business out of 100 (like Malaysia). Easiest Most difficult Easiest Most difficult Countries ranked by ease of doing business, quintiles Source: Doing Business database

More Reforms → Higher Equity Returns 3-year shareholder returns Egypt Colombia Brazil Poland India Sri Lanka Venezuela Number of reforms, 2003-2006

…and more women entrepreneurs Female Entrepreneurs (% of entrepreneurs) Message #7: Higher rankings associated with higher shares of female entrepreneurs and employees. Easiest Most difficult Countries ranked by ease of doing business, quintiles Source: Doing Business database, ILO

East Asia’s Ranking Singapore 1 Hong Kong, China 4 Japan 12 Thailand 15 Malaysia 24 Taiwan, China 50 Mongolia 52 Brunei 78 China 83 Vietnam 91 Indonesia 123 Philippines 133 Cambodia 145 Lao PDR 164 Wide range in the rankings: Singapore at 1 , Lao PDR at 164 5 countries in the top 25 4 in the bottom third of the rankings Some surprises in the middle: Taiwan 50 Mongolia 52 Brunei – included for the first time in this year’s report – 78 China – a top reformer – at 83 Vietnam – another country that has been reforming fast – at 91

Pacific Region Rankings Australia 9 Fiji 36 Tonga 47 Samoa 61 Vanuatu 62 Kiribati 73 Solomon Islands 79 Palau 82 Papua New Guinea 84 Marshall Islands 89 Micronesia 112 Timor-Leste 168 Pacific region rankings The Doing Business report groups Australia among the OECD high income countries for the analysis, but we note here their 9th place on the global rankings. Fiji and Tonga follow at 36 and 47, respectively. Within many of the Pacific island economies, there is more grouping in the rankings. Samoa and Vanuatu right together at 61 and 62 Kiribas at 73, Solomon Islands 79, Palau 82, Papua New Guinea 84 and Marshall Islands at 89. Then there is a small jump to Micronesia at 112 And a larger jump to Timor-Leste at 168.

Regional Reformers Several countries have reformed in the region China – top reformer New property law put private property rights on equal footing with state property rights. Also passed a new bankruptcy law that gives secured creditors priority to the proceeds from their collateral. Tonga was the top reformer worldwide in enforcing contracts – introducing case management and dropping the time to resolve a simple commercial dispute by a third. (510 days to 350) Indonesia reformed in four areas, streamlining licensing requirements, easing access to credit and strengthening corporate governance rules Thailand simplified trade by allowing importers and exporters to submit their forms online. Mongolia reformed its tax laws.

Cost to Start a Business (% income per capita) Looking quickly at some of the individual indicators There is real variation across the region in the cost to start a business In Singapore it costs entrepreneurs 0.8% per capita income to register and operate a company, in Cambodia it takes 190.3% We have found globally that poor countries regulate more – they require more steps to start and run a business, they impose higher fees for transactions with the government, and they typically take more time to accomplish standard bureucratic processes. I’ll also point out here that no country performs uniformly well or uniformly badly across the indicators. Even though Timor-Leste is at the bottom of the rankings for the region, it has a low cost requirement for starting a business. This is due to a reform this year: The Ministry of Land and Health approvals were cut. Approvals by Ministry of Land and Health had represented almost 75% of cost last year.

EAP: Best region for ease of hiring Ease of Hiring Workers (0 = most flexible) Employing Workers Top 10 1. United States 2. Singapore 3. Marshall Islands 4. Georgia 5. Brunei (new) 6. Tonga 7. Maldives 8. Australia 9. Palau 10. Denmark (new) Overall East Asia and the Pacific has the most flexible labor regulations 5 of the top 10 on ease of employing workers Includes Brunei, which was included this year for the first time in the measurements

East Asia and Pacific: Taxes are low Total Tax Rate by Region East Asia and the Pacific also has low overall tax rates.

Tax Rates of Individual EAP Countries

Recovery rates vary across East Asia and the Pacific