Doing Business 2012 Doing Business in a More Transparent World Augusto Lopez-Claros Director, Global Indicators and Analysis Geneva Press Club – Geneva, Switzerland November 23,

What does Doing Business measure? Doing Business indicators:  Focus on regulations relevant to the life cycle of a small to medium-sized domestic business.  Are built on standardized case scenarios.  Are measured for the most populous city in each country.  Are focused on the formal sector. DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets. 2

Start-upExpansionOperationsInsolvency  Starting a business Minimum capital requirement, procedures, time and cost  Registering property Procedures, time and cost  Getting credit Credit information systems Movable collateral laws  Protecting investors Disclosure and liability in related party transactions  Enforcing contracts Procedures, time and cost to resolve a commercial dispute  Dealing with construction permits Procedures, time and cost  Paying taxes Payments, time and Total Tax Rate  Trading across borders Documents, time and cost  Getting electricity Procedures, time and cost  Employing workers (annex)  Resolving insolvency (formerly Closing a business) Time, cost and recovery rate Doing Business indicators – 11 areas of business regulation (9 included in the DB2011 ranking; 10 in DB2012) Entry Property rights Investor protection Access to credit Property rights Investor protection Access to credit Administrative burden Flexibility in hiring Administrative burden Flexibility in hiring Recovery rate Reallocation of assets Recovery rate Reallocation of assets 3

What's new in Doing Business 2012? 4

1. Singapore16. Georgia 2. Hong Kong SAR, China17. Thailand 3. New Zealand18. Malaysia 4. United States19. Germany 5. Denmark20. Japan 6. Norway21. Latvia 7. United Kingdom22. Macedonia, FYR 8. Korea, Rep.23. Mauritius 9. Iceland24. Estonia 10. Ireland25. Taiwan, China 11. Finland26. Switzerland 12. Saudi Arabia27. Lithuania 13. Canada28. Belgium 14. Sweden29. France 15. Australia30. Portugal Top 30 economies for the ease of doing business in 2010/11 5

Progress in narrowing the distance to the frontier

New metric on ‘distance to the frontier’: tracking economies’ progress over time …captures the absolute improvement that countries have made over time, and …also provides information on how far countries have been away from the “frontier” – a measure based on the most efficient business regulatory practices observed by the Doing Business Project across countries and over time. Narrowing the Distance to the Frontier from 2005 to 2011 (percentage points) 7

New metric on dispersion: an economy’s performance across different areas of business regulation can vary significantly8

Globally, the pace of reforms making business easier remains strong in 2010/11: 245 in 125 economies While in 2005/2006 only 33% of the economies of Sub-Saharan Africa implemented business regulation reforms, in 2010/ % of the economies reformed 9

Stronger legal institutions and property right protections are associated with more efficient regulatory processes Economies in Sub-Saharan Africa and South Asia are the most likely to have both weaker legal institutions and more complex regulatory processes 10

Economies worldwide increasingly focused reform efforts on legal institutions and property rights protections Reform increasing efficiency of regulatory processes are those in the areas of starting a business, dealing with construction permits, getting electricity, registering property, paying taxes and trading across borders. Reform strengthening legal institutions are those in the areas of getting credit, protecting investors, enforcing contracts and resolving insolvency. 11

Reforms making it easier to start a business were once again most common in 2010/11 – and have shown results over time in reduced delays… 12

…and in lower costs 13

All regions have reduced the time it takes to transfer property between local firms  Registering property now takes on average nearly as many days in Eastern Europe & Central Asia (33) and Middle East & North Africa (34) as it does in OECD high income economies (33). 14

Developing economies around the world have reduced delays for exporting and importing through seaport  Middle East & North Africa has experienced the biggest cumulative drop in the time for trading across borders  Sub-Saharan African economies have reformed 52 times in trading across borders, also reducing time, but exporters in the region still face delays over 3 times longer than in OECD high income economies 15

Tajikistan Sweden The complexity and time it takes to get an electricity connection varies significantly among economies 16

Easier access to fee schedules and lower fees tend to go hand in hand The rise in e-government initiatives around the world provides an opportunity to increase access to information and transparency. 17

Paying taxes: High tax rates do not always lead to high tax revenue or good public services 18

Change in ranking DB11 to DB12 Starting a Business Dealing with construction permits Getting electricity Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Resolving insolvency Morocco 115  94 (-21) √ √√ Moldova 99  81 (-18) √ √ √√ Macedonia, FYR 34  22 (-12) √ √√ √ São Tomé and Principe 174  163 (-11)√√ √ √ Latvia 31  21 (-10) √ √√ √ Cape Verde 129  119 (-10) √√ √ Sierra Leone 150  141 (-9) √ √√√ Burundi 177  169 (-8) √ √√ √ Solomon islands 81  74 (-7) √ √ √ √ Korea, Rep. 15  8 (-7) √ √ √ Armenia 61  55 (-6) √√ √ √ √ Colombia 47  42 (-5) √ √ √ Economies improving the most in the ease of doing business in 2010/11 19

Among large emerging economies, China has made the greatest strides in closing the gap to the frontier DB reforms Narrowing the Distance to the Frontier from 2005 to 2011 (percentage points) 20

Efficient Product Market Regulation in OECD correlate with ease of Doing Business 21

World Economic Forum Competitiveness Index and Doing Business

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