DB konferencija Iva Hamel

8/9/2019 DB konferencija Iva Hamel

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Iva Hamel,

Senior Private Sector Development SpecialistTrade and Competitiveness Global Practice, World Bank Group ,

Zagreb, Croatia

February 3, 2015

Global Indicators Group

DEVELOPMENT ECONOMICS

DOING BUSINESS 2015GOING BEYOND EFFICIENCY


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1

What does Doing Business measure?

Doing Bus iness indicators:

Focus on regulations relevant to the life cycle of asmall to medium-sized domestic business.

Are built on standardized case scenarios.

Are measured for the most populous city in eachcountry, and the second largest business city incountries with more than 100 million inhabitants.

Are focused on the formal sector.

DO NOT measure all aspects of the business environment such as s ecurity,macroeconomic stability, prevalence of bribery and corruption, level of trainingand skills of the labor force, proximity to markets, regulations specific to foreigninvestment or the state of the financial system.


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3

What Doing Business continues to cover and what it is adding


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Methodology changes in Doing Business 2015

The Doing Business 2015 report incorporates important changes, in order to expand the focus in indicator setsto also cover aspects of the quality of services and recent good practices in the areas covered.

1) Three indicators had major revisions of their methodology:

Resolving insolvency This years report introduces a new measure: the strength of insolvency framework index ,

evaluating the adequacy and integrity of the legal framework applicable to liquidation and

reorganization proceedings. Protecting minority investors The scope of the indicator set was expanded to also measure shareholders rights in corporate

governance beyond related-party transactions1. Shareholders rights and role in major corporate decisions (extent of shareholder rights index) 2. Governance structure (strength of governance structure index)3. Transparency (extent of corporate transparency index)4. Ease of shareholder suits index expanded to take into account the allocation of legal expenses

Getting credit The methodology has been revised for both the strength of legal rights index and the depth of credit

information index to cover more good practices1. Strength of legal rights index additionally covers: Integrated legal rights framework & more features of the

collateral registry2. Depth of credit information index additionally covers: Existence of an online platform to exchange credit

information & availability of credit scores4


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2) Minor changes have been made to the Paying Taxes, Enforcing Contracts, and Dealing withConstruction Permits indicators:

Dealing with construction permits The cost of construction is now set at 50 times income per capita (before, the cost was

assessed by the Doing Business respondents); The indicator set no longer includes the procedures for obtaining a landline telephone

connection.

Enforcing contracts The value of the claim is now set at twice the income per capita or $5,000, whichever is

higher.

Paying taxes

Change in DTF ranking calculation: total tax rate component now enters the score in anonlinear fashion (> approach different from that used for all other indicators).

5

Methodology changes in Doing Business 2015


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Registering Property The indicator set will be expanded to cover the reliability , transparency and geographic

coverage of land management systems as well as dispute resolution for land issues .

Dealing with Construction Permits The indicator set will be expanded to measure good practices in construction regulation:

Does the building code follow good practices? Is it easily accessible?Who approves the designs? How are inspections carried out before, during and afterconstruction?What qualifications are required for the professionals reviewing plans or conductinginspections? What are the rules on liability and insurance?

Getting Electricity A new indicator will assess the reliability of electricity supply by measuring both the duration

and the frequency of power outages .

Paying Taxes The indicator set will be expanded to include measures of the postfiling process , such as tax

audits, tax refunds and tax appeals.

Enforcing Contracts The indicator set will be expanded to cover aspects of judicial quality as well as aspects of

court infrastructure that promote efficiency.

Changes planned for Doing Business 2016

6


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Second city added to the data set for 11 economies

City added in DB15 City already covered by Doing

Business

7

For economies with more than 100 million inhabitants, an extra city was added to the DoingBus ines s measures.These economies are: Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan,the Russian Federation, and the United States.


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New computation of ranking - from percentile ranking toDTF ranking

The distance to frontier measure benchmarkseconomies with respect to a measure of regulatorybest practice showing the gap between eacheconomies performance and the best performanceon each indicator.

Although the ranking generated from the distanceto frontier scores and the percentile rank are highlycorrelated, the distance to frontier measurecaptures more information than the percentile rankbecause it includes not only the ordering ofeconomies but also how far apart they are.

Economies with higher variance across topics aremore likely to have a less favorable classification inthe distance to frontier rank than in the percentilerank.

8

The difference of the two ranking calculations(based on DB2014 data)

The correlation between the distance to frontierranking and the percentile ranking is 99%.

Source: Doing Business database.Note: The correlation between the distance to frontier ranking and the percentile ranking is 0.99.


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Ease of doing business ranking Top 50 economies

9


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48 9

1113 14 17

2123 24

2527

31 3233

36 3738

4244

4851

54 5659

6164 65

94

0

10

20

30

40

50

60

70

80

90

100

Denmark and the United Kingdom lead the EU in the ease of doingbusiness ranking in 2013/2014

Rank (1 189)

10


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11

Big gaps between the highest and lowest distance to frontier scoresin some regions

Source: Doing Business database.

Tajikistan

Georgia


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Pace of reforms remains strong in 2013/14: share of economies withat least one reform making it easier to do business

12

OECD highIncome

Europe andCentral Asia

Middle East andNorth Africa

South Asia

East Asia andPacific

Sub-SaharanAfrica

LatinAmerica &

theCaribbean

Worldwide, 123 economies implemented 230 reforms in 2013/2014, with 145 reforms aimed at reducingthe complexity and cost of complying with business regulation, and 85 reforms aimed at strengtheninglegal institutions.

74%

55%

50%

60%

65%

50%

85%


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The 10 economies improving the most across 3 or more areas measuredby Doing Business in 2013/14

13


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Europe & Central Asia is the region that has improved its business environment themost over the years from 2005 to 2013 as well as from 2013 to 2014

15

Note: The distance to frontier measure shows how far on average an economy is at a point in time from the best performance achieved by any economy on each DoingBusiness indicator since 2005 or the first year in which data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representingthe frontier. The data refer to the 183 economies included in Doing Business 2010 (2009) and to the regional classifications for 2013. Six economies were added insubsequent years. Source: Doing Business database.

72.976,8

56.1

62.7

53.9

58.9

51.7

65.0

50.4

57.7

48.7

55.0

42.1

51.3

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013

OECD high income East Asia & PacificLatin America & Caribbean Europe & Central AsiaMiddle East & North Africa South AsiaSub-Saharan Africa

Gap between OECD high-incomeeconomies and rest of the world

Regulatory frontier

Regions DTFDB2014DTFDB2015

Changein DTF

OECD high income 76.08 76.47 0.39

Europe & Central Asia 65.11 66.67 1.56

East Asia & Pacific 62.42 63.19 0.77

Latin America &Caribbean 59.92 60.66 0.74

Middle East & North Africa 58.92 59.23 0.31

South Asia 54.05 54.56 0.51

Sub-Saharan Africa 50.76 51.87 1.11


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It was possible to start a business inless than 20 days in only 41economies* , mostly in North Americaand Northern and Central Europe

Now, the time to start a business isless than 20 days for entrepreneursin 127 economies*

2005

2014*

*Based on samples of 174 economies in 2005 and 189economies in 2014

Development impact: Countries that regulate entry more heavily have greater corruption and

larger unofficial economies, but not better quality of public or private goods. (Quarterly Journalof Economics, February 2002, Djankov, La Porta, Lopez de Silanes, Shleifer.)

Reforms making it easier to start a business were once again mostcommon in 2013/14 and show results over time in reduced delays

16

*EU in 2005: 10 economies

*EU in 2014: 25 economies


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Developing economies around the world have reduced delays forexporting and importing through seaport

17

33

31

24

19

20

17

12

10

36

39

34

26

25

22

15

12

0 10 20 30 40 50

South Asia

Sub-Saharan Africa

Europe & Central Asia

Middle East & North Africa

East Asia & Pacific

Latin America & Caribbean

European Union

OECD high income

Time to export (days)

DB 2006 DB 2015

Global Average

22

Development impact:Empirical evidence shows that

each additional day that a productis delayed prior to being shippedreduces trade by more than 1%.(Review of Economies and Statistics ,February 2010, Djankov, Freund and Pham)


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All regions have reduced the time it takes to transfer propertybetween local firms

18

100

78

63

57

31

23

24

26

137

101

85

104

51

111

57

32

0 50 100 150

South Asia

East Asia & Pacific

Latin America & Caribbean

Sub-Saharan Africa

Middle East & North Africa

Europe & Central Asia

OECD high income

European Union

Average time to register property (days)

DB 2006 DB 2015

Global Average

50


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Strong convergence across economies since 2005 Averages by group

19

Note: Economies are ranked in quartiles by performance in 2005 on the indicator shown. The data refer to the 174 economiesincluded in Doing Business 2006 (2005). Fifteen economies were added in subsequent years.Source: Doing Business database.

116

44

2915

0

2040

6080

100120140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Time to start a business (days)Worst quartile Best 3 quartiles

695

499

216

199

0100200300400500600700800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Time to pay taxes (hours per year)Worst quartile Best 3 quartiles

52

40

20

16

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Time to export (days)Worst quartile Best 3 quartiles

235

94

42

33

0

50

100

150200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Time to register property (days)Worst quartile Best 3 quartiles


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Getting electricity

Dealing withconstruction permits

Trading across

borders

Getting credit

Registering property

Enforcing contracts

Paying taxes

Starting a business

1

2

2

5

5

5

7

13

Cyprus, Hungary, Latvia, Portugal, Romania,Spain, United Kingdom

Czech Republic, Greece, Ireland,Lithuania, Portugal

Croatia ,Poland

Greece, Ireland, Poland, Spain,Sweden

Austria, Bulgaria, Croatia , Czech Republic, Denmark, France, Greece, Italy, Lithuania, Malta,Slovak Republic, Spain, United Kingdom

Cyprus, Czech Republic, Hungary,Ireland, Slovak Republic

Poland

Croatia ,Lithuania

With a total of 40 reforms, 22 economies in the European Unionimproved business regulations in 2013/2014


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Croatia was the economy that improved the most in Dealing withConstruction permits in 2013/14

21* Note: Because Jamaica implemented changes in the past year in both the strength of legal rights and depth of credit informationcomponents of getting credit, the table shows a total of 231 reforms for 2013/14, though only 230 are counted as separate reforms.a. Refers to the average for the past 4 years.Source: Doing Business database.

Total 231 21(230 counted as separate reforms)*


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23

Source: Doing Business database.

Croatia cut more than 6 months from the time required to deal withconstruction permits


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2013/2014 Croatia made starting a business easier by reducing notary fees.

Due to the electronic platform's implementation, the cost to notarize memorandum ofassociation and register company with the Commercial Court (electronically) has been reducedas of January 1, 2014.

Reduced GNIpc by 5.6 %.Introduced or

improved onlineprocedures

9,1

3,5

Cost (% of income per capita) tostart a business

DB14 DB15

- 5.6%


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020

40

60

80

100

120

140

160

180189

Variability across areas of business regulation in the EuropeanUnion

26

Croatia TOP 3 rankings: Paying taxes: 36 Enforcing contracts: 54 Resolving insolvency: 56

Croatia BOTTOM 3 rankings: Starting a business: 88 Registering property: 92 Dealing with construction permits: 178

Croatia ranks 65 on the global ease of doing business, but in fact performancevaries significantly across indicators.

Average of the 3 lowest rankings

Average of the 3 highest rankings


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27

Ease of doing business rank and the distance to frontier measureevaluated by Doing Business for Croatia in 2013/14

Topics DB2015 Rank DB2015 DTF (% points) Good practice economies

Starting a Business 88 85.43 New Zealand;Canada

Dealing with Construction Permits 178 44.97 Hong Kong SAR, China;Singapore

Getting Electricity 59 80.05 Korea, Rep.;Taiwan, China

Registering Property 92 66.44 Georgia;New Zealand

Getting Credit 61 55.00 New Zealand;Colombia

Protecting Minority Investors 62 57.50 New Zealand;Hong Kong SAR, China

Paying Taxes 36 82.92 United Arab Emirates;Qatar

Trading Across Borders 86 74.25 Singapore;Hong Kong SAR, China

Enforcing Contracts 54 64.81 Singapore;Luxembourg

Resolving Insolvency 56 53.92 Finland;Japan


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The Doing Business Report is a catalyst for regulatory reforms

Over 80 countries have requested technical assistance to improve theinvestment climate in the areas measured by Doing Business since 2007

IBRA supported 191 Doing Business reforms in66 countries from FY 08 -12

Current engagements (including through country WB or IFC projects):SSA: CiV, Togo, Comoros, Burundi, Botswana, KenyaECA: Kosovo, Ukraine, ArmeniaLAC: Haiti, GU, ES, DR, T&T, CR, MXMENA: Morocco, Afghanistan, OmanAsia: Bhutan, Mongolia, IndonesiaOECD: Greece


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The World Bank Group offers technical assistance to improve clientcountries performance on DB and beyond

Reform memoranda:Overview of the economys investment climateShort and medium term reform recommendations to improve aneconomys performance on the Doing Business indicators

Development and review of action plans and reform proposals

In-depth topic specific assistance: business entry, constructionpermitting, property registration, getting credit, investor protection,taxation, trade, contractual enforcement, and insolvencyLegislative reviews of draft lawsSetting up the institutional framework to organize for reform (e.g. bysetting up cross-ministerial reform committees) Process mappingCreate and support public-private dialogueCommunication with the public

Peer to peer learning events


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Key Aspects for Long Term Success

Political will andstrong designatedcommittees tooversee reforms

Using DBstrategically

to begin areformprogram

Mobilizingmultiple WBGexperts forbroad-basedengagement

Strong WB IFC presence onthe ground tomaintainconstant clientcontact

Activelyencouragereforms that gobeyond DoingBusiness


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THANK YOU!

Questions www.doingbusiness.org

Documents

DB konferencija Iva Hamel