Ease of doing business

Partha Tripathi

Ease of doing business is an average indicator based on 10 parameter such as

� Starting a Business� Dealing with construction permits� Getting electricity� Registering PropertyGetting credit� Getting credit

� Protecting investors� Paying Taxes� Trading across barriers� Enforcing contracts� Resolving InsolvencySource of These data are world bank report on doing business

� Doing Business parameters for the year 2012 of India is compared with 5 best in class countries in various parameters

� The Ranking data is compared using Data TableTable

� Major issues HighlightedNote: Caution in interpretation should be taken as Ranking High does not mean that the countries has high GDP growth. There are other factors such as market size, purchasing power etc which also influence GDP growth

CountryCountryCountryCountry StartingStartingStartingStarting a a a a BusinessBusinessBusinessBusiness

Ease of DoingEase of DoingEase of DoingEase of DoingBusinessBusinessBusinessBusiness

New Zealand 1 3

Australia 2 15

Canada 3 13Canada 3 13

Singapore 4 1

Hong Kong SAR,

China

5 2

India 166 132

ParameterParameterParameterParameter Best 5 Best 5 Best 5 Best 5 CountryCountryCountryCountry

IndiaIndiaIndiaIndia

No of Procedure to Start a Limited Liability Company

1-3 12

No of Days to complete the 1-5 29No of Days to complete the procedure

1-5 29

Cost for Incorporation( % on Per Capita Income)

0.4-1.9% 46.8%

Minimum Paid In capital(% on Per Capita Income)

0.0% 149.6%

� Higher number of Procedures

� Number of days Taken is high but can be taken care if the number of procedure is streamlined

� Higher Stamp duty

� Minimum Paid in Capital Norms

� Number procedure can be streamlined instead of getting various identity numbers such as ESIC, Employees Provident fund etc can be streamlined. Instead of multiple numbers reforms can be oriented toward few numbers

Major IssuesMajor IssuesMajor IssuesMajor Issues Areas of ImprovementAreas of ImprovementAreas of ImprovementAreas of Improvement

� Minimum Paid in Capital Norms oriented toward few numbers

� Since the number of procedure are high it takes more time. Further now registering a company has become but registration with ESIC,EPFO is still not online.

� Stamp duty on Company formation can be reduced.

� Minimum Paid in Capital can be done away with

CountryCountryCountryCountry Dealing with Dealing with Dealing with Dealing with construction construction construction construction

PermitPermitPermitPermit


Hong Kong SAR,

China 1 2China 1 2

New Zealand 2 3

Singapore 3 1

Georgia 4 16

Saudi Arabia 4 12

India 181 132



No of Procedure to Legally Build a Warehouse

6-11 34


26-75 227

Cost for getting all Permits( % on Per Capita Income)

17.8-34.4% 1631.4%

� Higher number of Procedures

� Major time taken in Approval of building plan, Obtaining NOC from Tree authority/ Environmental clearance & completion Certificate where it takes on average about 30

� Number procedure can be streamlined and made smarter.

� Procedure can be compared with countries Like New Zealand, Singapore, Hongkong

E Governance can be implemented


where it takes on average about 30 to 60 days for each procedure

� No Major Reforms undertaken in the last 5 years

� E Governance can be implemented across government Departments which are involved in NOC.

� Central Coordinator, with Electronic documentation storage and workflow for NOC can be Thought of.

CountryCountryCountryCountry Getting Getting Getting Getting ElectricityElectricityElectricityElectricity


Iceland 1 9

Germany 2 19

Taiwan, China 3 25Taiwan, China 3 25

Hong Kong SAR,

China

42

Singapore 5 1

India 98 132



No of Procedure to Obtain Electricity Connection

3-4 7


17-43 67

Cost for Completion of Procedure( % on Per Capita Income)

1.7-52.4% 216.2%

� Major time taken in Sanction and actual connection

� No competition in an area.

� Loss making Distribution utilities

� Reduction in time for sanctioning and giving connection.

� Increasing Competition

� Bring Efficiency in Distribution Utilities by linking productivity with remuneration.


with remuneration.

� Regulation in service level agreements

CountryCountryCountryCountry Registering Registering Registering Registering propertypropertypropertyproperty


Saudi Arabia 1 12

Georgia 1 16

New Zealand 3 3New Zealand 3 3

Belarus 4 69

Armenia 5 55

India 97 132



No of Procedure to legally transfer title on immovable property

1-3 5


2-10 44

Cost for Completion of procedure( % on Per Capita Income)

0.0-0.3% 7.3%

� Major time taken in Mutation of Property.

� No Major reforms in last 5 years

� Reduction in time for Mutation.

� Computerising Land records


CountryCountryCountryCountry Getting CreditGetting CreditGetting CreditGetting Credit Ease of DoingEase of DoingEase of DoingEase of DoingBusinessBusinessBusinessBusiness

Malaysia 1 18

United Kingdom 1 7

South Africa 1 35South Africa 1 35

New Zealand 4 3

United States 4 4

Latvia 4 21

Hong Kong SAR,

China 4 2

India 40 132



Strength of Legal Rights Index(0-10)

10-9 8

Depth of Credit Information 6-5 4Depth of Credit Information Index(0-6)

6-5 4

Public Credit registry Coverage(% of Adults)

59.7-0.0% 0.0%

Private Credit Bureau Coverage(% of Adults)

100.0-0.0% 15.1%

� No Major issues


CountryCountryCountryCountry Protecting Protecting Protecting Protecting InvestorInvestorInvestorInvestor


New Zealand 1 3

Singapore 2 1

Hong Kong SAR,

China 3 2

Hong Kong SAR,

China 3 2

Malaysia 4 18

United States 5 4

Canada 5 13

Ireland 5 10

Colombia 5 42

Israel 5 34

India 46 132



Extent of disclosure index(0-10)

10-7 7

Extent of Director Liability 9-5 4Extent of Director Liability Index(0-10)

9-5 4

Ease of shareholders suit Index(0-10)

10-6 7

Strength of Investor protection index(0-10)

9.7-6.0 6.0

� Lack of Directors Liability in areas such as Paying back profits and damages to shareholders in case of willful Fraud

� Improving in the areas of Directors Liability such as repaying profit earned and paying damages in case of fraud committed by Directors.


CountryCountryCountryCountry Paying TaxesPaying TaxesPaying TaxesPaying Taxes Ease of DoingEase of DoingEase of DoingEase of DoingBusinessBusinessBusinessBusiness

Maldives 1 79

Qatar 2 36

Hong Kong SAR, 3Hong Kong SAR,

China

32

Singapore 4 1

Ireland 5 10

India 147 132



Tax payments ( No per year) 3-8 33

Time required to comply with 0-84 254Time required to comply with 3 major taxes (hours/year)

0-84 254

Total tax rate(% on Profit before tax)

9.3-27.1% 61.8%

� More number of taxes

� Electronic filing is present in all type Statutory payments

� Streamlining no of taxes to be paid

� Electronic filing for taxes which are not yet done such as ESIC, EPFO


CountryCountryCountryCountry Trading Across Trading Across Trading Across Trading Across borderborderborderborder


Singapore 1 3

Hong Kong SAR,

China 2 1

Estonia 3 89Estonia 3 89

Korea, Rep. 4 26

United Arab Emirates 5 12

India 109 132

ParameterParameterParameterParameter Best 5 CountryBest 5 CountryBest 5 CountryBest 5 Country IndiaIndiaIndiaIndia

Documents required to Export (Numbers)

3-4 8

Time required to Export (Days) 5-7 16

Cost Required to 456-725 1095Cost Required to Export(USD/40’ Container)

456-725 1095

Documents required to Imports (Numbers)

3-5 9

Time required to Import(Days) 4-7 20

Cost Required to Import (USD/40’ Container)

439-725 1070

� More number of Documents

� Time taken for processing

� Cost of Processing

� Documents preparation times

� Streamlining no of Documents for Export as well as imports

� Benchmarking with Best in class to understand the issues

� Reduction in cost of processing


CountryCountryCountryCountry Enforcing Enforcing Enforcing Enforcing ContractContractContractContract


Japan 1 63

Singapore 2 3

Canada 3 25Canada 3 25

Norway 4 60

Finland 5 45

India 182 132



Time( Days) 150-570 1420

Cost(% of Claim) 9.9-32.2% 39.6%Cost(% of Claim) 9.9-32.2% 39.6%

Procedures( numbers) 21-36 46

� Time taken to complete Trials � Judicial procedures so that Trails are concluded quickly

� Filling up vacancies


CountryCountryCountryCountry Resolving Resolving Resolving Resolving InsolvencyInsolvencyInsolvencyInsolvency


New Zealand 1 3

Singapore 2 1

Hong Kong SAR,

China 3 2

Hong Kong SAR,

China 3 2

Malaysia 4 18

United States 5 4

India 128 132



Time in Years 0.8-1.5 7

Cost to recover Debt (% of 1-15 9Cost to recover Debt (% of Estate)

1-15 9

Recovery Rate for Creditors (Cents on the Dollar)

44.6-91.3% 20.1%

� Time taken are very High to resolve Insolvency

� Recovery rate for creditors are low

� Bench marking with Singapore, New Zealand, Hongkong

� Time bound disposal of cases
