INVESTMENT CLIMATEDEVELOPMENT IMPACT EVALUATION INITIATIVE BANGLADESH INVESTMENT CLIMATE FUND BANGLADESH Impact Evaluation Concept Note INNOVATIONS IN INVESTMENT CLIMATE REFORMS AN IMPACT EVALUATION WORKSHOP PARIS, NOVEMBER 15,

Process Mapping diagram Assistant Director Prepares file and checks Deputy Director checks Director checks and approves Deputy Director signs file Assistant Director prepares license Deputy Director checks license Director checks file and signs license Deputy Director signs file Assistant Director signs file and issues license to firm 2

Background  IFC worked with the government to  Map the existing licensing processes,  Analyze bottlenecks, and  Implement unified licensing processes that remove bottlenecks  The reform will affect 3 types of firms  Licensed firms renewing annually  Firms operating without a license that register  New firms that register 3

4 Pilot 1 launched in 3 municipalities in July  Cox’s Bazaar  Hobigonj  Gopalgonj

Processes Processing Time (Average Day) Number of Steps (Average) Applicant’s number of Contacts/Visits (Average) BeforeAfterBeforeAfterBeforeAfter Trade License Issuance (Cox’s Bazaar, Hobigonj and Gopalgonj) Trade License Renewal ( Cox’s Bazaar, Hobigonj, and Gopalgonj) Pilot 1 launched in 3 municipalities in July 5

 Identify constraints to firms for trade license application  Identify triggers for formalization  Impact of municipality trade license process reform on small firms Research Questions 6

Target GroupImmediate EffectsMain EffectsLong term Effects 1) Licensed firms renewing annually  Reduced time and cost of renewing  Reduced “Indirect” costs  Compliance cost savings  Job creation  Investment  Increased government revenue 2) Firms operating without a license that register  Time and cost of registering  Reduced “Indirect” costs  Compliance cost savings  Access to credit  Business Growth 3) New firms that register  Time and cost of registering  Compliance cost savings  Access to credit  Business Growth Government agency/ client/ municipality Reduced internal procedures Increased customer satisfaction Increased government revenue (from higher collection of license fees and taxes ) Expected effects & outcomes to evaluate 7

 Evaluation Method: Randomized control trial  Intervention, piloted in 3 municipalities, is to be rolled out in the remaining 312 municipalities Evaluation Design Cluster Size Pilot 2Pilot 3Pilot 4 TrtCntrlTrtCntrlTrtCntrl Plan A15 30 Plan B75 -- Plan C

 Individual firms within each municipality  Matched randomization at the municipality level  Data collection  Baseline Surveys  Follow-up surveys  Customer satisfaction surveys  End consumer/market polls Sampling and Data 9

Indicative Timeline Dec 2012: Use existing +collect municipality data March 2013: Propensity rank for each municipality April 2013: Form pairs at municipality level April 2013: Baseline for Pilot 2 July 2013: Randomly phase in Pilot 2 10

 How do we distinguish between new and formerly unlicensed firms which register?  Phasing in of the pilots considering the political economy?  Have we missed anything with respect to expected effects and outcomes (slide 6)?  Do any possible unintended consequences come to mind? Questions for further discussion 11