Click to edit Master title style Doing Business 2009 Tajikistan Launch Wendy Werner International Finance Corporation

Click to edit Master title style 2  Where are we? Where do we want to be?  Why DB is important for Tajikistan  What do the indicators measure?  How to take action DB can help Tajikistan measure progress

Click to edit Master title style 3 Doing Business in Tajikistan: Ease of...DB 2009 rankDB 2008 rank Change in rank Protecting Investors Starting a Business Dealing with Construction Permits Getting Credit Paying Taxes Trading Across Borders Registering Property Enforcing Contracts 23 0 Employing Workers Closing a Business Decrease in rankings of separate indicators is caused by: Addition of 3 countries in DB 2009; Other countries improved their regulations, while Tajikistan did not introduce as many improvements; Some indicators reflect worsening of the situation (e.g. increase total tax rate, cost of business registration, etc. ) Overall ranking on ease of doing business is 159 out of 181 Source: Web-based database of Doing Business on

Click to edit Master title style 4 Tajikistan can improve its DB ranking with action now  Focus on 3-4 reforms that can be in place by May 2009  Recommendations developed/ work ongoing  Low ranking  Part of current PSD Strategy/ Action Plan Starting a Business Construction Permits & Licenses Protecting Investors Getting Credit

Click to edit Master title style 5 Timing is critical  DB 2010 data is collected Jan-May 2009  Much can be accomplished in 8 months New Laws or amendments passed Processes must be in place

Click to edit Master title style 6 How much can Tajikistan improve? Registration in 5 days 2 steps Min Capital 5% of GNI = 80 Somoni Jump 129 places from #168 to #39 Simulated improvement assuming all other countries stay constant. Starting a Business 49 days 13 steps Min Capital 216% of GNI = 995 Somoni CurrentPotential ImprovementProposed Reform Pass and apply draft Credit Bureau Law. Credit Info Index = 4 / 10 Jump 49 places from #172 to #123 Getting Credit Credit Information Index = 0 / 10 Amend Joint Stock Companies Act. Increasing disclosure & shareholders’ rights Index = 4.7 Jump 46 places from #150 to #104 Protecting Investors Investor Protection Index = 3.3 of 10 All 3 actions would yield an overall Doing Busines rating of 130 Jump of 29 places!

Click to edit Master title style 7  Where are we? Where do we want to be?  Why DB is important for Tajikistan  What do the indicators measure?  How to take action DB can help Tajikistan measure progress

Click to edit Master title style 8 DB is an Business Environment Report Card  Consistent methodology  Critical activities for all businesses Policy and legislative action can change DB Rankings

Click to edit Master title style 9 Country competitiveness

Click to edit Master title style 10 Kyrgyzstan: Improved rank from 99 to 68 Protecting Investors Minority shareholders can take legal actions Assess related-party transaction before approval Directors liable for negligence if they harm shareholders If found liable, Directors pay damages, disgorge profits Starting a Business OSS streamlined business registration processes Eliminated requirements such as proof of residence Obtaining company seal became optional Cut 4 steps. Time reduced from 21 to 15 days. Dealing with Construction Permits Occupany permit at a single place Cut 9 steps, reduced time by almost 6 months Lowered cost from 759% of income per capital to 406% #50 to # in rank Now #11 was # ranking Moved up 112 spots!! #170 to #58

Click to edit Master title style 11  Where are we? Where do we want to be?  Why DB is important for Tajikistan  What do the indicators measure?  How to take action DB can help Tajikistan measure progress

Click to edit Master title style 12 To Improve... Chose your target.... Time & MotionLegal Indicators  Starting a business  Dealing with construction permits  Paying taxes  Trading across borders  Enforcing contracts  Closing a business  Employing workers  Registering property  Protecting investors  Getting credit

Click to edit Master title style 13 Extent of disclosure, Extent of Director liability, and Ease of Shareholder suits Protecting Investors  Improvement achieved through new Joint Stock Companies Law  Amendments to law could improve ranking further: 1. Disclosure on related party transactions to public and in periodic filings 2. Increase Director liability for damage to company 3. Allow further access to documents by shareholder plaintiffs in the court case Tajikistan jumped 29 places in 2009!

Click to edit Master title style 14 Starting a Business  OSS project targets 5 day registration through implementation of IT system  EC funding for project with Tax Cmt  Draft Law ready for consideration ? Is timing right for DB 2010? ? Can Tajikistan further cut paid-in capital? Procedures, time, cost and paid-in minimum capital to open a new business

Click to edit Master title style 15 Kyrgyz Republic: 2009 vs ProcedureTime X Notarize company foundation agreement1 day X X Register at the One stop shop (includes Social Fund, Tax, & Natl statistics)10 days Obtain permission & make company seal3 days X Open Bank Account1 day  Remove MoJ review of documents  Cut capital requirement, remove requirement for 50% paid-in capital  Presidential decree makes seal optional, but included because most companies still do it 2008 ProcedureTime Deposit 50% of charter capial1 day Notarize company foundation areement1 day Obtain proof of location1 day Register at MoJ10 days Register with State Tax Inpsectorate2 days Obtain permission & make company seal2 days Register with Social Fund2 days Open Bank Account1 day 4 procedures 15 days Fees are 7.4% of GNI Min Capital = 0.4% of GNI Tajikistan: 13 procedures, 49 days Cost is 27.5% of GNI Min Capital = 216.8% of GNI

Click to edit Master title style 16 Dealing with Construction Permits  Only 5 countries require more procedures than Tajikistan  Silence-is-consent rules exist in 27 countries  Top reformers implemented one-stop shops to streamline approval process Elaboration of subnormative acts offers opportunity for streamlining procedures Amendments to 2006 Licensing Law needed OSS and Risk-based approach Procedures, time and cost of obtaining construction permits, inspections and utility connections

Click to edit Master title style 17 Getting Credit  Draft Credit Bureau Law under discussion with Parliamentary Work Group  Mandatory participation by Financial institutions  Positive and negative credit information  Previous 5 years information provided  No licensing body, will speed implementation  Range of information providers  Implementation of private Credit Bureau with EBRD technical assistance  Feasibility study envisions CB within 50 weeks of Law Strength of legal rights index, depth of credit information index

Click to edit Master title style 18 Poor Performance: Medium term target  Number of tax payments: 54  Time to prepare and file tax returns and pay taxes: 224 hours  Total taxes as a share of profit: 85.5% DocsTime (days) Cost Import1082$3150 Export1083$4550 Paying TaxesTrading Across Borders DB Rank = 159DB Rank = 177

Click to edit Master title style 19 Fair Performance: Monitor  Employing Workers  Difficulty of hiring index, rigidity of hours index, difficulty and cost of economic redundancy dismissals  Enforcing Contracts  Procedures, time and cost to resolve a commercial dispute in court  Registering Property  Procedures, time and cost to register a transfer of commercial real estate  Closing a Business  Recovery rate in bankruptcy

Click to edit Master title style 20  Where are we? Where do we want to be?  Why DB is important for Tajikistan  What do the indicators measure?  How to take action DB can help Tajikistan measure progress

Click to edit Master title style 21 Acceleration of current efforts  On the right track: speed, focus, implementation  State DB improvement is target  Integrate DB into reform plans  Monitor progress

Click to edit Master title style 22 BEE Working Group Action Plan 1. OSS  Identified coordination requirements in OSS: DFID, WB, EC, USAID  Leverage collective expertise  Topic for BEE Working Group on Friday 2. Permits Reform  Early October on process, sequence  Next Investment Council meeting 3. Protecting Investors  Planned for December in BEE WG Action Plan  Can be accelerated to develop draft amendments by January Thematic group on Getting Credit can be formed

Click to edit Master title style 23 DB knowledge and tracking Decide target indicators today Detailed workshops on target indicators (October)  DB methodology and case study  Examples of reformers  Current activities Bi-monthly meetings to keep track of progress (Nov/ Jan/ Mar) Monitoring of Action Plan at highest levels

Click to edit Master title style 24 Thank You Questions and Discussion

Click to edit Master title style 25 Survey respondents are one part of the data collection  Review of legal frameworks with validation and additional information from survey respondents  Respondents are business intermediaries, law firms, etc.