1. Doing Business DB10: International Enterprise Promotion Convention
Sylvia Solf
Program Manager Doing Business
Project not written by one or a few authors but work of many.
DB team
Over 8,000 local partners
Input by country offices and departments, over 60 gvt responses during reform update review
Harrogate, United Kingdom
November 16, 2009

2. The Doing Business Project
Initiated 8 years ago
10 Indicator sets on regulations throughout life cycle of a small to medium-sized local business.
Based on laws and regulations, collaboration with over 8,000 experts (lawyers, accountants, freight forwarders, public officials).
Goal: to provide an objective basis for understanding and improving the regulatory environment for business.
DOES NOT measure all aspects of the business environment.
The Doing Business project, launched 8 years ago, goes one step further. It looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business and the standard cost model initially developed and applied in the Netherlands are, for the present, the only standard tools used across a broad range of jurisdictions to measure the impact of government rule-making on business activity.
The first Doing Business report, published in 2003, covered 5 indicator sets in 133 economies. This year’s report covers 10 indicator sets in 183 economies. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business.
What Doing Business covers
Doing Business provides a quantitative measure of regulations for starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across bor­ders, enforcing contracts and closing a business—as they apply to domestic small and medium-size enterprises.
A fundamental premise of Doing Business is that economic activity requires good rules.
These include rules that establish and clarify property rights and reduce the costs of resolving disputes, rules that increase the predictability of economic interactions and rules that provide contractual partners with core protections against abuse. The objective: regulations designed to be efficient, to be accessible to all who need to use them and to be simple in their implementation. Accordingly, some Doing Business indicators give a higher score for more regulation, such as stricter disclosure requirements in related-party transactions. Some give a higher score for a simplified way of implementing existing regulation, such as completing business start-up formalities in a one-stop shop.
The Doing Business project encompasses 2 types of data. The first come from readings of laws and regulations. The second are time and motion indicators that measure the efficiency in achieving a regulatory goal (such as granting the legal identity of a business). Within the time and motion indicators, cost estimates are recorded from official fee schedules where applicable. Here, Doing Business builds on Hernando de Soto’s pioneering work in applying the time and motion approach first used by Frederick Taylor to revolutionize the production of the Model T Ford. De Soto used the approach in the 1980s to show the obstacles to setting up a garment factory on the outskirts of Lima.
The standard cost model is a quantitative methodology for determining the administrative burdens that regulation imposes on businesses. The method can be used to measure the effect of a single law or of selected areas of legislation or to perform a baseline measurement of all legislation in a country.
This included a review by the World Bank Independent Evaluation Group (2008).
De Soto (2000).

3. Doing Business indicators – 10 areas of business regulation
Start-up
Expansion
Operations
Closing
Starting a business
Minimum capital requirement,
procedures, time and cost
Registering property
Proc, time and cost
Getting credit
Credit information systems
Movable collateral laws
Protecting investors
Disclosure and liability in related party transactions
Enforcing contracts
Proc, time and cost to resolve a commercial dispute
Dealing with construction permits
Employing workers
Flexibility in hiring, work schedule, redundancy procedures
Paying taxes
Payments, time and Total Tax Rate
Trading across borders
Documents, time and cost
Closing a business
Time, cost and recovery rate
Start-up: barriers to entry
Expansion: expansion required financing and access to credit. Some of the main funding sources are: bank debt, equity, trade credit. DB indicators looks at areas of regulation that indirectly influence access to finance:
Registering property – security of title and ownership so property can be used as collateral
Getting credit: credit information history and laws facilitating use of movable collateral can ease access to credit
Strong disclosure and minority shareholder rights protection can install trust in potential investors (equity)
Efficient court processes for resolving commercial disputes: more likely to expand to other trading partners (otherwise, tendency to do business with known parties- trust).
Operations: red tape associated with dealing with construction permits, paying taxes and trading across borders. Employment regulations that can affect hiring decisions.
Closing a business: process of insolvency (also related to access to credit as also looks at protection of secured creditor – recovery rate)
Entry
Property rights
Investor protection
Access to credit
Administrative burden
Flexibility in hiring
Recovery rate
Reallocation of assets

4. How does it work? Doing Business methodology
Time and motion indicators
Starting a business
Dealing with construction permits
Registering property
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
Scoring (legal) indicators
Employing workers
Protecting investors
Getting credit

5. Top 30 on the Ease of Doing Business 2010
1. Singapore
16. Finland
2. New Zealand
17. Mauritius
3. Hong Kong, China
18. Sweden
4. United States
19. Korea, Rep.
5. United Kingdom
20. Bahrain
6. Denmark
21. Switzerland
7. Ireland
22. Belgium
8. Canada
23. Malaysia
9. Australia
24. Estonia
10. Norway
25. Germany
11. Georgia
26. Lithuania
12. Thailand
27. Latvia
13. Saudi Arabia
28. Austria
14. Iceland
29. Israel
15. Japan
30. Netherlands
DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, of regulation specific to foreign investment or financial markets.
Iceland: past year, difficult macroeconomic situation
Mauritius: distance from large markets
Hong Kong: size of market (domestic market)

6. Often some variance in different areas
Topic
United Kingdom
DB 2009
DB 2010
World’s top ranked 2008/09
Starting a business 9 16
New Zealand
Dealing with construction permits 61
Hong Kong, China
Employing workers 34 35
Singapore
Australia
Registering property 22 23
Saudi Arabia
Getting credit 2
Malaysia
Protecting investors 10
Paying taxes
Maldives
Trading across borders 25
Enforcing contracts
Luxembourg
Closing a business
Japan
Dealing with Construction Permits Reform DB10:
Implication: Eight procedures were removed as reformed. Time decreased by 49 days. Cost increased by 9% GNI PC due to Energy Performance Certificate.
Summary of Reform: The United Kingdom eased the process of dealing with construction permits with the wider use of Approved Inspectors, resulting in a reduction of time and number of steps.
Registering property Reform DB10:
Implication: The lodging of a Land transaction return is now processed automatically and electronically by the HM Revenue & Customs (Tax agency) in the UK. Lodging and paying the return can be made on-line, and the return obtained within a few hours. The time to complete this procedure has been reduced from 14 days to 1 day.
Summary of Reform: The lodging of a land transaction return is now processed automatically and electronically by the HM Revenue & Customs in the UK reducing time to register property

7. Doing Business 2010: Reforming through Difficult Times
Update of 10 topics
New in DB2010
Other products
Starting a business
Dealing with construction permits
Employing workers
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
Business regulation and reform in the context of the global crisis
EWI and social protection
Worker Protection: Researching ILO core labor standards
Piloting a new infrastructure indicator
Add Cyprus, Kosovo
Report, academic papers, country summaries, website database
Translated into Spanish, French, Arabic
Law Library
Special Reports on Paying Taxes + DB in the Arab World 2010
Subnational studies on China, Colombia, India, Kenya, Mexico, among others
Peer-learning events in Abu Dhabi, Mauritius
Outreach: 4,845 media citations as of 31 Oct ’09
10 new reform case studies
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, of regulation specific to foreign investment or financial markets.
183 economies

8. Percentage of countries with at least one positive reform in 2008/09
Against backdrop of global financial and economic crisis, record number of reforms recorded
Percentage of countries with at least one positive reform in 2008/09
96%
High Income OECD
63%
Eastern Europe and Central Asia
89%
75%
59%
Middle East and North Africa
71%
Finding/Message #4
Eastern Europe and Central Asia is the fastest reforming region for the sixth year in a row: Economies in Eastern Europe and Central Asia, the region among those most affected by the crisis, reformed the most. Twenty-six of the region’s 27 economies reformed business regulation in at least one area covered by Doing Business
Finding/Message 6
The Middle East and North Africa region sees the largest surge in reforms: Seventeen of 19 economies reformed in 2008/09. United Arab Emirates became a top global reform and the top regional reformer moving in the ranks from 47 to 33. Egypt is once again a top global reformer and the regional runner-up reformer, moved in the ranks from 116 to Jordan was also among the most active reformers. Eight of the region’s economies have cut or reduced their minimum capital requirement since Seven economies—Egypt, Jordan, Morocco, Saudi Arabia, Tunisia, the United Arab Emirates and the Republic of Yemen—operate one-stop shops for starting a business. Saudi Arabia reaches 13 in the global ease of doing business rankings.
South Asia
Latin America and Caribbean
63%
East Asia and Pacific
Sub-Saharan Africa
287 reforms in 131 countries made is easier to do business

9. Ease of Doing Business – by Region

10. Reforms gained momentum in developing economies
Finding/Message #2
Developing economies lead in DB reforms: Developing economy governments across the world are taking action to make the local regulatory environment more conducive to doing business. Two-thirds of reforms recorded by Doing Business in 2008/09 took place in low- and lower-middle-income economies. Most reforms in developing economies still focus on cutting red tape and simplifying bureaucratic formalities. Over the past 6 years 80% of reforms in low- and low-middle-income economies focused on easing business start-up and trade.

11. Easing business start-up – the most popular reform

12. And results are showing : improvements in business start-up since 2004

13. Reform continues in Europe
Reform making it easier to do business
Reform making it more difficult to do business

14. Consistent reform programs more common in developing and transition economies
Following a longer-term agenda aimed at increasing the competitiveness of their firms.
Continually pushing forward and staying proactive.
Following a clear direction in their policy agenda while responding to new economic realities.

15. The case of Rwanda’s new Company Law
Reform of commercial regulation and institutions since 2001
Also in 2008/9: new secured transactions and insolvency laws enter into effect.
Administrative reforms at border-crossing to facilitate trade
Institutional reform saves several months in property registration

16. Benchmarking among states: Subnational Doing Business in Mexico 2006, 2007 & 2008
Great Initial Impact Political support for reform efforts has continued even after two rounds of local elections and one presidential election since the first benchmark
29 of 31 states made it easier to start a business in Mexico in
Number of states
94% 31
75% 12
9 reformers
29 reformers
Reformers
Non reformers

17. Learning from others
“What I like about Doing Business … is that it creates a forum for exchanging knowledge. It’s no exaggeration when I say I checked the top ten in every indicator and we just asked them “What did you do”? If there is any advantage to starting late in anything, it’s that you can learn from others.”
Dr Mahmoud Mohieldin, Egypt’s Minister of Investment, and Doing Business 2010 top reformer

18. Benchmarking business regulation: What has been the impact ?
Reform task forces in over 30 countries
At the Prime Minister’s or President’s level (e.g. Colombia, Burkina Faso, India)
At the ministerial level (e.g. Rwanda, Kenya, Liberia, Sierra Leone, Kazakhstan, Saudi Arabia)
Learning and cooperating with others
Peer-learning events in El Salvador (Central America), Mauritius (Small Island States), Abu Dhabi (Arab World).
Ease of Doing Business action plan for 21 members of Asia-Pacific Economic Cooperation (APEC).
127 completed reforms were inspired by Doing Business in 2008/09

19. Some findings of recent research:
Why does it matter? Growing body of research on business regulation and economic outcomes
405 articles published in peer-reviewed academic journals, about 1,140 working papers
Some findings of recent research:
Higher entry costs significantly reduce output per worker and skilled employment. (Barseghyan (2008), Freund and Bolacky (2008), Dulleck et al (2006))
Women are particularly affected by regulation and its impact on entrepreneurship. (Ardagne and Lusagi (2009))
Economy’s governance structure and natural resources influence motivation for reform (Amin and Djankov, 2009)
Evidence from business start-up reform in Mexico: increase in new business registrations by 5%, in employment in eligible industries by 2.8% (Bruhn, 2008)

20. Thank you. For more information: www.doingbusiness.org