ContentsDoing Business 2011 is the eighth in a series of annual reports investigating the Preface vregulations that enhance business activity and those that constrain it. Doing Business Executive summary 1presents quantitative indicators on business regulations and the protection of property About Doing Business:rights that can be compared across 183 economies—from Afghanistan to Zimbabwe— measuring for impact 12and over time. Starting a business 18Regulations affecting 11 areas of the life of a business are covered: starting a business, Dealing with construction permits 26dealing with construction permits, registering property, getting credit, protecting Registering property 32investors, paying taxes, trading across borders, enforcing contracts, closing a busi- Getting credit 39ness, getting electricity and employing workers. The getting electricity and employingworkers data are not included in the ranking on the ease of doing business in Doing Protecting investors 47Business 2011. Paying taxes 54 Trading across borders 63Data in Doing Business 2011 are current as of June 1, 2010. The indicators are used toanalyze economic outcomes and identify what reforms have worked, where and why. Enforcing contracts 70 Closing a business 77The methodology for the employing workers indicators changed for Doing Business2011. See Data notes for details. Annex: pilot indicators on getting electricity 84THE DOING BUSINESS WEBSITE Download reports Annex: employing workers 93 Access to Doing Business reports as well asCurrent features subnational and regional reports, reform caseNews on the Doing Business projecthttp://www.doingbusiness.org studies and customized country and regional References 105 profilesRankings http://www.doingbusiness.org/Reports Data notes 110How economies rank—from 1 to 183 Subnational and regional projects Summaries of Doing Businesshttp://www.doingbusiness.org/Rankings Differences in business regulations at the reforms in 2009/10 134Doing Business reforms subnational and regional level Country tables 144Short summaries of DB2011 reforms, lists of http://www.doingbusiness.org/reformers since DB2004 Subnational-Reportshttp://www.doingbusiness.org/Reforms Law library Acknowledgments 206Historical data Online collection of laws and regulationsCustomized data sets since DB2004 relating to business and gender issueshttp://www.doingbusiness.org/Custom-Query http://www.doingbusiness.org/Law-library http://wbl.worldbank.orgMethodology and researchThe methodology and research papers Local partnersunderlying Doing Business More than 8,200 specialists in 183 economieshttp://www.doingbusiness.org/Methodology who participate in Doing Businesshttp://www.doingbusiness.org/Research http://www.doingbusiness.org/Local-Partners/ Doing-Business Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet
vPreface A vibrant private sector—with firms making investments, creating jobs and improving productivity—promotes growth and expands opportunities for the poor. In the words of an 18-year-old Ecuadoran in Voices of the Poor, a World Bank survey capturing the perspectives of poor people around the world, “First, I would like to have work of any kind.” Enabling private sector growth—and ensuring that poor people can participate in its benefits—requires a regulatory environment where new entrants with drive and good ideas, regardless of their gender or ethnic origin, can get started in business and where firms can invest and grow, generating more jobs. Doing Business 2011 is the eighth in a series of annual reports benchmarking the regulations that enhance business activity and those that constrain it. The report presents quantitative indicators on business regulation and the protection of property rights for 183 economies—from Afghanistan to Zimbabwe. The data are cur- rent as of June 2010. A fundamental premise of Doing Business is that economic activity requires good rules—rules that establish and clarify property rights and reduce the cost of resolving disputes; rules that increase the predictability of economic interac- tions and provide contractual partners with certainty and protection against abuse. The objective is regulations designed to be efficient, accessible to all and simple in their implementation. Doing Business gives higher scores in some areas for stronger property rights and investor protections, such as stricter disclosure requirements in related-party transactions. Doing Business takes the perspective of domestic, primarily smaller companies and measures the regulations applying to them through their life cycle. Economies are ranked on the basis of 9 areas of regulation—for starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. In addition, data are presented for regulations on employing workers and for a set of pilot indica- tors on getting electricity. Doing Business is limited in scope. It does not consider the costs and benefits of regula- tion from the perspective of society as a whole. Nor does it measure all aspects of the business environment that matter to firms and investors or affect the competitiveness of an economy. Its aim is simply to supply business leaders and policy makers with a fact base for informing policy making and to provide open data for research on how business regulations and institutions affect such economic outcomes as productivity, investment, informality, corruption, unemployment and poverty. Through its indicators, Doing Business has tracked changes to business regulation around the world, recording more than 1,500 important improvements since 2004. Against the backdrop of the global financial and economic crisis, policy makers around the world continue to reform business regulation at the level of the firm, in some areas at an even faster pace than before. These continued efforts prompt questions: What has been the impact? How has busi- ness regulation changed around the world—and how have the changes affected firms and economies? Doing Business 2011 presents new data and findings toward answer- ing these questions. Drawing on a now longer time series, the report introduces a new measure to illustrate how the regulatory environment for business has changed in absolute terms in each economy over the 5 years since Doing Business 2006 was pub- lished. This measure complements the aggregate ranking on the ease of doing business, which benchmarks each economy’s current performance on the indicators against that of all other economies in the Doing Business sample. Research is also taking advantage
vi DOING BUSINESS 2011of the longer time series, and studies on business regulation reforms in Latin Americaand Eastern Europe and Central Asia show some promising results. But this is onlythe beginning. The coming years will be exciting as this growing time series and otheremerging data sets allow researchers and policy makers to find out more about whatworks in business regulation—and how and why.Since its launch in 2003, Doing Business has stimulated debate about policy through itsdata and benchmarks, both by exposing potential challenges and by identifying wherepolicy makers might look for lessons and good practices. Governments have reportedmore than 270 business regulation reforms inspired or informed by Doing Businesssince 2003. Most were nested in broader programs of investment climate reform aimedat enhancing economic competitiveness, as in Colombia, Kenya and Liberia. In struc-turing their reform programs for the business environment, governments use multipledata sources and indicators. And reformers respond to many stakeholders and interestgroups, all of whom bring important issues and concerns to the debate. World BankGroup dialogue with governments on the investment climate is designed to encouragecritical use of the data, sharpening judgment, avoiding a narrow focus on improv-ing Doing Business rankings and encouraging broad-based reforms that enhance theinvestment climate.Doing Business would not be possible without the expertise and generous input of anetwork of more than 8,200 local experts, including lawyers, business consultants, ac-countants, freight forwarders, government officials and other professionals routinelyadministering or advising on the relevant legal and regulatory requirements in the183 economies covered. In particular, the Doing Business team would like to thankits global contributors: Allen & Overy LLP; Baker & McKenzie; Cleary Gottlieb Steen& Hamilton LLP; Ius Laboris, Alliance of Labor, Employment, Benefits and PensionsLaw Firms; KPMG; the Law Society of England and Wales; Lex Mundi, Association ofIndependent Law Firms; Noronha Advogados; Panalpina; PricewaterhouseCoopers;PricewaterhouseCoopers Legal Services; Russell Bedford International; SDV Interna-tional Logistics; and Toboc Inc.The project also benefited throughout the past year from advice and input from gov-ernments and policy makers around the world. In particular, the team would like tothank the governments of Burkina Faso, Colombia, the Arab Republic of Egypt, theRepublic of Korea, the former Yugoslav Republic of Macedonia, Mexico, Portugal andRwanda for providing statistical information on the impact of business regulation re-forms as well as the more than 60 governments that contributed detailed informationon business regulation reforms in 2009/10.This volume is a product of the staff of the World Bank Group. The team would like tothank all World Bank Group colleagues from the regional departments and networksfor their contributions to this effort. Janamitra Devan Vice President and Head of Network Financial & Private Sector Development The World Bank–International Finance Corporation
1Executive FIGURE 1.1 Easing start-up, payment of taxes and trade most popular in 2009/10 Share of economies with at least 1 Doing Business reform making it easier to do business, by topic (%)summary Starting a business 0 20 40 60 80 Paying taxes Trading across borders Registering property Dealing with construction permits Doing Business reform Getting by report year credit Closing DB2011 only a business DB2005–DB2011 Enforcing contracts Protecting investorsAgainst the backdrop of the global finan- Note: Not all indicators are covered for the full period. Paying taxes, trading across borders, dealing with construction permits and protecting investors were introduced in Doing Business 2006.cial and economic crisis, policy makers Source: Doing Business database.around the world took steps in the pastyear to make it easier for local firms start-up to closing (box 1.1). The results factors relevant for business. For exam-to start up and operate. This is impor- have stimulated policy debates in more ple, it does not evaluate macroeconomictant. Throughout 2009/10 firms around than 80 economies and enabled a grow- conditions, infrastructure, workforcethe world felt the repercussions of what ing body of research on how firm-level skills or security. Nor does it assess mar-began as a financial crisis in mostly high- regulation relates to economic outcomes ket regulation or the strength of financialincome economies and then spread as across economies.1 A fundamental prem- systems, both key factors in understand-an economic crisis to many more. While ise of Doing Business is that economic ing some of the underlying causes of thesome economies have been hit harder activity requires good rules that are trans- financial crisis. But where business regu-than others, how easy or difficult it is to parent and accessible to all. lation is transparent and efficient, oppor-start and run a business, and how effi- Doing Business does not cover all tunities are less likely to be based on per-cient courts and insolvency proceedingsare, can influence how firms cope with BOX 1.1 Measuring regulation throughout the life cycle of a local businesscrises and how quickly they can seizenew opportunities. This year’s aggregate ranking on the ease of doing business is based on indicator sets that Between June 2009 and May 2010 measure and benchmark regulations affecting 9 areas in the life cycle of a business: startinggovernments in 117 economies imple- a business, dealing with construction permits, registering property, getting credit, protectingmented 216 business regulation reforms investors, paying taxes, trading across borders, enforcing contracts and closing a business. Doing Business also looks at regulations on employing workers and, as a new initiative, get-making it easier to start and operate ting electricity (neither of which is included in this year’s aggregate ranking).1a business, strengthening transparencyand property rights and improving the Doing Business encompasses 2 types of data and indicators. “Legal scoring indicators,” suchefficiency of commercial dispute resolu- as those on investor protections and legal rights for borrowers and lenders, provide a mea-tion and bankruptcy procedures. More sure of legal provisions in the laws and regulations on the books. Doing Business gives higherthan half those policy changes eased scores in some areas for stronger property rights and investor protections, such as stricterstart-up, trade and the payment of taxes disclosure requirements in related-party transactions. “Time and motion indicators,” such(figure 1.1). as those on starting a business, registering property and dealing with construction permits, Through indicators benchmarking measure the efficiency and complexity in achieving a regulatory goal by recording the pro-183 economies, Doing Business sheds light cedures, time and cost to complete a transaction in accordance with all relevant regulationson how easy or difficult it is for a local from the point of view of the entrepreneur. Any interaction of the company with externalentrepreneur to open and run a small to parties such as government agencies counts as one procedure. Cost estimates are recordedmedium-size business when complying from official fee schedules where these apply. For a detailed explanation of the Doing Businesswith relevant regulations. It measures methodology, see Data notes.and tracks changes in the regulations 1. The methodology underlying the employing workers indicators is being refined in consultation with relevant experts and stakehold- ers. The getting electricity indicators are a pilot data set. (For more detail, see the annexes on these indicator sets.) Aggregate rankingsapplying to domestic, primarily smaller published in Doing Business 2010 were based on 10 indicator sets and are therefore not comparable. Comparable rankings based on 9 topics for last year along with this year are presented in table 1.2 and on the Doing Business website (http://www.doingbusiness.org).companies through their life cycle, from
2 DOING BUSINESS 2011FIGURE 1.2 Asia and the OECD high-income group,Seventy-five percent of economies in East Asia and the Pacific reformed reformed their insolvency regimes, in-business regulation in 2009/10 cluding Belgium, the Czech Republic,Share of economies with at least 1 Doing Business reform making it easier to do business (%) Hungary, Japan, the Republic of Korea,Eastern Europe & Central Asia 84 Romania, Spain, the United Kingdom East Asia 75 and the Baltic states (table 1.1).6 Particu- & Pacific larly in times of economic distress, ef- OECD high income 67 ficient court and bankruptcy procedures South 63 are needed to ensure that assets can be Asia Middle East reallocated quickly and do not get stuck 61& North Africa in court. Most of the reforms in this area Sub-Saharan focused on improving or introducing Africa 59 Latin America reorganization procedures to ensure that & Caribbean 47 viable firms can continue operating. Be-Source: Doing Business database. fore, it was common for insolvent firms in many economies of Eastern Europe and Central Asia to be liquidated evensonal connections or special privileges, land.4 It makes sense for policy makers if they were still viable. Not surprisingly,and more economic activity is likely to to help such businesses grow. Improving the average recovery rate in the region astake place in the formal economy, where their regulatory environment is one way calculated by Doing Business is 33 centsit can be subject to beneficial regulations of supporting them. on the dollar. In OECD high-incomeand taxation. Since 2003, when the Doing Consider the story of Bedi Limited, economies the average is 69 cents.Business project started, policy makers in a garment producer in Nakuru, Kenya.5 Swift action has been the name ofmore than 75% of the world’s economies After spending 18 months pursuing a the game in Eastern Europe and Centralhave made it easier to start a business in trial order for school items from Tesco, Asia. The region’s policy makers havethe formal sector. A recent study using one of the largest retail chains in the been the most active in implementingdata collected from company registries United Kingdom, Bedi lost out on the business regulation reforms as measuredin 100 economies over 8 years found chance to become part of its global supply by Doing Business since 2004. This pastthat economies with efficient business chain. Bedi had everything well planned year was no different, with 21 of 25registration systems have a higher firm to meet a delivery date set for July. But economies (84%) reforming businessentry rate and greater business density the goods were delayed at the port. When regulation. Besides improving insolvencyon average.2 they arrived in the United Kingdom in procedures, making it easier for firms Ultimately this is about people. The August, it was too late. The back-to- to start up and to pay taxes were popu-economic crisis has made it more im- school promotion was over. Changes to lar measures—more than a third of theportant than ever to create new jobs and regulations and procedures can help im- region’s economies introduced changespreserve existing ones. As the number of prove the overall trade logistics environ- in each of these areas. Less happened inunemployed people reached 212 million ment, enabling companies like Bedi to some of the other areas, such as creditin 2009, 34 million more than at the onset capture such growth opportunities. information systems. But thanks to 36of the crisis in 2007,3 job creation became reforms in this area since 2004, sucha top priority for policy makers around WHAT WERE THE TRENDS TABLE 1.1the world. With public budgets tighter IN 2009/10? Economies improving the most in eachas a result of stimulus packages and con- Doing Business topic in 2009/10tracting fiscal revenues, governments For policy makers seeking to improve Starting a business Perumust now do more with less. Unleashing the regulatory environment for business, Dealing with constructionthe job creation potential of small private priorities varied across regions this past Congo, Dem. Rep. permitsenterprises is therefore vital. year. Registering property Samoa Small and medium-size businesses Getting credit Ghanaindeed have great potential to create QUICK RESPONSE TO CRISIS Protecting investors Swazilandjobs. They account for an estimated 95% The global crisis triggered major legal Paying taxes Tunisiaof firms and 60–70% of employment in and institutional reforms in 2009/10. Trading across borders PeruOECD high-income economies and 60– Facing rising numbers of insolven- Enforcing contracts Malawi80% of employment in such economies cies and debt disputes, 16 economies, Closing a business Czech Republicas Chile, China, South Africa and Thai- mostly in Eastern Europe and Central Source: Doing Business database.
EXECUTIVE SUMMARY 3systems are already better developed. Doing Business by 25% by 2015. Small mies introduced changes (7 in all), IndiaAverage coverage is up from 3% of the Pacific island states, which face special continued improvements to its electronicadult population to 30%. challenges, have also been active, getting registration system for new firms by key support from donors. allowing online payment of stamp fees.ECONOMIES IN EAST ASIA AND THE Across Eastern Europe the implemen-PACIFIC HIT THEIR STRIDE TRADE FACILITATION POPULAR IN tation of European Union regulationsFor the first time in the 8 years of Doing AFRICA AND THE MIDDLE EAST encouraging electronic systems triggeredBusiness reports, economies in East Asia About half of all trade facilitation re- such changes as the implementation ofand the Pacific were among the most forms in 2009/10 took place in Sub- electronic customs systems in Latvia andactive in making it easier for local firms Saharan Africa (with 9) and the Middle Lithuania.to do business. Eighteen of 24 econo- East and North Africa (6). Several weremies reformed business regulations and motivated by regional integration. Some WHERE IS IT EASIEST TO DOinstitutions—more than in any other of these efforts built on existing ini- BUSINESS?year. The pace of Doing Business reforms tiatives such as the Southern Africanhad been steadily picking up since 2006, Customs Union. In East Africa single Globally, doing business remains easi-when only a third of the region’s econo- border controls speeded up crossings est in OECD high-income economies.mies implemented such reforms. In the between Rwanda and Uganda. Different In Sub-Saharan Africa and South Asiapast year 75% did (figure 1.2). electronic data systems are still used by entrepreneurs have it hardest and prop- Emerging-market economies such customs authorities in Kenya, Tanzania erty protections are weakest across the 9as Indonesia, Malaysia and Vietnam and Uganda. But efforts are under way areas of business regulation included intook the lead, easing start-up, permit- to create a single interface between these this year’s ranking on the ease of doingting and property registration for small systems. Overall, 27 of 46 Sub-Saharan business (figure 1.3).and medium-size firms and improving African economies implemented Doing Singapore retains the top rankingcredit information sharing. Hong Kong Business reforms, 49 in all. on the ease of doing business this year,SAR (China), after seeing the number of In the Middle East and North Af- followed by Hong Kong SAR (China),bankruptcy petitions rise from 10,918 in rica 11 of 18 economies implemented New Zealand, the United Kingdom, the2007 to 15,784 in 2009, is working on a business regulation reforms, 22 in all. United States, Denmark, Canada, Nor-new reorganization procedure. Six modernized customs procedures and way, Ireland and Australia (table 1.2). The momentum in the region may port infrastructure to facilitate trade and Change continued at the top. Among thecontinue. Recently leaders of the Asia- align with international standards. These top 25 economies, 18 made it even easierPacific Economic Cooperation (APEC) include Bahrain, the Arab Republic of to do business this past year. Within theorganization launched an initiative Egypt and the United Arab Emirates. FIGURE 1.3aimed at making it easier for small and Which regions have the most business-medium-size companies to do business ELECTRONIC SYSTEMS ON THE RISE friendly environment in Doing Business?through systematic peer learning and AROUND THE GLOBE #1assistance across economies. The idea is In economies around the world, regard- economythat economies in the region that have less of location and income level, policy OECD high income 30benefited from making it easier to do makers adopted technology to make itbusiness can now share their experience easier to do business, lower transac-with others. The Korea Customs Service, tions costs and increase transparency. Infor example, estimates that predictable Latin America and the Caribbean, where Eastern Europe & Central Asia 72cargo processing times and rapid turn- 47% of economies implemented business East Asia & Pacific 87over by ports provide a benefit of some regulation reforms in the past year, 23 of Latin America & Caribbean 96 Middle East & North Africa$2 billion annually. Singapore’s online the 25 reforms simplified administrative South Asia 117registration system for new firms saves processes. Many did so by introducingbusinesses an estimated $42 million an- online procedures or synchronizing the Sub-Saharan Africa 137nually.7 Using firm surveys, planners operations of different agencies throughidentified 5 priority areas for the APEC electronic systems. In this way Brazil,initiative—starting a business, getting Chile, Ecuador and Mexico simplifiedcredit, trading across borders, enforcing start-up, Colombia eased construction 183 Average ranking oncontracts and dealing with permits. The permitting, and Nicaragua made it easier the ease of doing businessgoal is to improve regulatory perfor- to trade across borders. (1–183)mance in those areas as measured by In South Asia, where 5 of 8 econo- Source: Doing Business database.
4 DOING BUSINESS 2011TABLE 1.2Rankings on the ease of doing businessDB2011 DB2010 DB2011 DB2011 DB2010 DB2011 DB2011 DB2010 DB2011 RANK RANK ECONOMY REFORMS RANK RANK ECONOMY REFORMS RANK RANK ECONOMY REFORMS 1 1 Singapore 0 62 61 Fiji 1 123 116 Russian Federation 2 2 2 Hong Kong SAR, China 2 63 82 Czech Republic 2 124 122 Uruguay 1 3 3 New Zealand 1 64 56 Antigua and Barbuda 0 125 121 Costa Rica 0 4 4 United Kingdom 2 65 60 Turkey 0 126 130 Mozambique 1 5 5 United States 0 66 65 Montenegro 3 127 124 Brazil 1 6 6 Denmark 2 67 77 Ghana 2 128 125 Tanzania 0 7 9 Canada 2 68 64 Belarus 4 129 131 Iran, Islamic Rep. 3 8 7 Norway 0 69 68 Namibia 0 130 127 Ecuador 1 9 8 Ireland 0 70 73 Poland 1 131 128 Honduras 0 10 10 Australia 0 71 66 Tonga 1 132 142 Cape Verde 3 11 12 Saudi Arabia 4 72 62 Panama 2 133 132 Malawi 2 12 13 Georgia 4 73 63 Mongolia 0 134 135 India 2 13 11 Finland 0 74 69 Kuwait 0 135 133 West Bank and Gaza 1 14 18 Sweden 3 75 72 St. Vincent and the Grenadines 0 136 136 Algeria 0 15 14 Iceland 0 76 84 Zambia 3 137 134 Nigeria 0 16 15 Korea, Rep. 1 77 71 Bahamas, The 0 138 137 Lesotho 0 17 17 Estonia 3 78 88 Vietnam 3 139 149 Tajikistan 3 18 19 Japan 1 79 78 China 1 140 138 Madagascar 2 19 16 Thailand 1 80 76 Italy 1 141 139 Micronesia, Fed. Sts. 0 20 20 Mauritius 1 81 79 Jamaica 1 142 140 Bhutan 1 21 23 Malaysia 3 82 81 Albania 1 143 143 Sierra Leone 3 22 21 Germany 1 83 75 Pakistan 1 144 144 Syrian Arab Republic 3 23 26 Lithuania 5 84 89 Croatia 2 145 147 Ukraine 3 24 27 Latvia 2 85 96 Maldives 1 146 141 Gambia, The 0 25 22 Belgium 1 86 80 El Salvador 0 147 145 Cambodia 1 26 28 France 0 87 83 St. Kitts and Nevis 0 148 146 Philippines 2 27 24 Switzerland 0 88 85 Dominica 0 149 148 Bolivia 0 28 25 Bahrain 1 89 90 Serbia 1 150 150 Uzbekistan 0 29 30 Israel 1 90 87 Moldova 1 151 154 Burkina Faso 4 30 29 Netherlands 1 91 86 Dominican Republic 0 152 151 Senegal 0 31 33 Portugal 2 92 98 Grenada 3 153 155 Mali 3 32 31 Austria 1 93 91 Kiribati 0 154 153 Sudan 0 33 34 Taiwan, China 2 94 99 Egypt, Arab Rep. 2 155 152 Liberia 0 34 32 South Africa 0 95 92 Seychelles 1 156 158 Gabon 0 35 41 Mexico 2 96 106 Solomon Islands 1 157 156 Zimbabwe 3 36 46 Peru 4 97 95 Trinidad and Tobago 0 158 157 Djibouti 0 37 35 Cyprus 0 98 94 Kenya 2 159 159 Comoros 0 38 36 Macedonia, FYR 2 99 93 Belize 0 160 162 Togo 0 39 38 Colombia 1 100 101 Guyana 3 161 160 Suriname 0 40 37 United Arab Emirates 2 101 100 Guatemala 0 162 163 Haiti 1 41 40 Slovak Republic 0 102 102 Sri Lanka 0 163 164 Angola 1 42 43 Slovenia 3 103 108 Papua New Guinea 1 164 161 Equatorial Guinea 0 43 53 Chile 2 104 103 Ethiopia 1 165 167 Mauritania 0 44 47 Kyrgyz Republic 1 105 104 Yemen, Rep. 0 166 166 Iraq 0 45 42 Luxembourg 1 106 105 Paraguay 1 167 165 Afghanistan 0 46 52 Hungary 4 107 111 Bangladesh 2 168 173 Cameroon 1 47 49 Puerto Rico 0 108 123 Marshall Islands 1 169 168 Côte d’Ivoire 1 48 44 Armenia 1 109 97 Greece 0 170 172 Benin 1 49 48 Spain 3 110 110 Bosnia and Herzegovina 2 171 169 Lao PDR 1 50 39 Qatar 0 111 107 Jordan 2 172 170 Venezuela, RB 1 51 51 Bulgaria 2 112 117 Brunei Darussalam 3 173 171 Niger 1 52 50 Botswana 0 113 109 Lebanon 1 174 174 Timor-Leste 1 53 45 St. Lucia 0 114 114 Morocco 1 175 179 Congo, Dem. Rep. 3 54 55 Azerbaijan 2 115 113 Argentina 0 176 175 Guinea-Bissau 1 55 58 Tunisia 2 116 112 Nepal 0 177 177 Congo, Rep. 1 56 54 Romania 2 117 119 Nicaragua 1 178 176 São Tomé and Principe 1 57 57 Oman 0 118 126 Swaziland 2 179 178 Guinea 0 58 70 Rwanda 3 119 118 Kosovo 0 180 180 Eritrea 0 59 74 Kazakhstan 4 120 120 Palau 0 181 181 Burundi 1 60 59 Vanuatu 0 121 115 Indonesia 3 182 182 Central African Republic 0 61 67 Samoa 1 122 129 Uganda 2 183 183 Chad 0Note: The rankings for all economies are benchmarked to June 2010 and reported in the country tables. This year’s rankings on the ease of doing business are the average of the economy’s rankings on 9 topics (see box 1.1).Last year’s rankings, shown in italics, are adjusted: they are based on the same 9 topics and reflect data corrections. The number of business regulation reforms includes all measures making it easier to do business.Source: Doing Business database.
EXECUTIVE SUMMARY 5group of top 25, Sweden improved the used performance measures in the judi- goods crossing the national border andmost in the ease of doing business, rising ciary since the late 1990s. Malaysia in- a modern inspection system (TC-SCAN)from 18 to 14 in the rankings. It reduced troduced a performance index for judges at the border crossing point shared withthe minimum capital requirement for in 2009. Case disposal rates are already China. As a result, the time to export fellbusiness start-up, streamlined property improving. by 8 days, the time to import by 9 daysregistration and strengthened investor and the number of documents requiredprotections by increasing requirements MORE WAYS OF TRACKING for trade by 1. Kazakhstan also increasedfor corporate disclosure and regulating CHANGE IN BUSINESS the legal requirements for disclosure inthe approval of transactions between in- REGULATION related-party transactions. Thanks to theterested parties. amendments to its company law, compa- Economies where it is easy for Every year Doing Business recognizes the nies must describe transactions involv-firms to do business often have advanced 10 economies that improved the most in ing conflicts of interest in their annuale-government initiatives. E-government the ease of doing business in the previous report.kicked off in the 1980s, and economies year and introduced policy changes in 3 The runner-up this year was Rwanda,with well-developed systems continue to or more areas. This past year Kazakhstan followed by Peru, Vietnam, Cape Verde,improve them. Hong Kong SAR (China) took the lead (table 1.3). Kazakhstan Tajikistan, Zambia, Hungary, Grenadaand Singapore turned their one-stop amended its company law and intro- and Brunei Darussalam.shops for building permits into online duced regulations to streamline business Yearly movements in rankings cansystems in 2008. Denmark just intro- start-up and reduce the minimum capi- provide some indication of changes induced a new computerized land reg- tal requirement to 100 tenge ($0.70). It an economy’s regulatory environmentistration system. The United Kingdom made dealing with construction permits for firms, but they are always relative.recently introduced online filing at com- less cumbersome by introducing several An economy’s ranking might change be-mercial courts. new building regulations in 2009, a new cause of developments in other econo- Top-ranking economies also often one-stop shop for construction-related mies. Moreover, year-to-year changes inuse risk-based systems to focus their formalities and a risk-based approach for rankings do not reflect how the businessresources where they matter most, such permit approvals. Traders benefit from regulatory environment in an economyas the supervision of complex building improvements to the automated customs has changed over time.projects. Germany and Singapore are information system and risk-based sys- To illustrate how the regulatory en-among the 85 economies that have fast- tems. Several trade-related documents, vironment as measured by Doing Busi-track permit application processes for such as the bill of lading, can now be ness has changed within economies oversmall commercial buildings. submitted online, and customs declara- time, this year’s report introduces a new Finally, these economies tend to tions can be sent in before the cargo measure. The DB change score provideshold public servants accountable through arrives. Modernization efforts, already a 5-year measure of how business regu-performance-based systems. Australia, under way for several years, also include lations have changed in 174 economies.8Singapore and the United States have a risk management system to control It reflects all changes in an economy’sTABLE 1.3The 10 economies improving the most in the ease of doing business in 2009/10 Dealing with Trading Starting a construction Registering Protecting Paying across Enforcing Closing aEconomy business permits property Getting credit investors taxes borders contracts businessKazakhstanRwandaPeruVietnamCape VerdeTajikistanZambiaHungaryGrenadaBrunei DarussalamNote: Economies are ranked on the number and impact of reforms. First, Doing Business selects the economies that implemented reforms making it easier to do business in 3 or more of the 9 topics included in thisyears aggregate ranking (see box 1.1). Second, it ranks these economies on the increase in their ranking on the ease of doing business from the previous year using comparable rankings. The larger the improve-ment, the higher the ranking as a reformer.Source: Doing Business database.
6 DOING BUSINESS 2011 FIGURE 1.4 DB change score In the past 5 years about 85% of economies made it easier to do business 0.5 Five-year measure of cumulative change in Doing Business indicators between DB2006 and DB2011 0.4 0.3 Doing business became easier 0.2 0.1 GEORGIA RWANDA BELARUS BURKINA FASO ZAMBIA CAMEROON SAUDI ARABIA MALI KYRGYZ REPUBLIC GHANA CROATIA KAZAKHSTAN MACEDONIA, FYR MOZAMBIQUE EGYPT, ARAB REP. UKRAINE CHINA ALBANIA TAJIKISTAN NIGERIA CZECH REPUBLIC SYRIAN ARAB REPUBLIC SIERRA LEONE UZBEKISTAN COLOMBIA AZERBAIJAN SENEGAL MADAGASCAR ARMENIA PERU MAURITIUS MALAWI VIETNAM TIMOR-LESTEBOSNIA AND HERZEGOVINA FRANCE POLAND GUATEMALA MEXICO HAITI INDIA DOMINICAN REPUBLIC YEMEN, REP. RUSSIAN FEDERATION CONGO, DEM. REP. TOGO TUNISIA DENMARK CAMBODIA INDONESIA CÔTE DIVOIRE MAURITANIA IRAN, ISLAMIC REP. NIGER ANGOLA MOROCCO SLOVENIA THAILAND LAO PDR SLOVAK REPUBLIC ROMANIA TANZANIA UNITED ARAB EMIRATES PORTUGAL HONG KONG, CHINA UNITED KINGDOM SERBIA BENIN GUINEA-BISSAU GAMBIA, THE SWAZILAND SUDAN PARAGUAY BULGARIA BANGLADESH MALDIVES UGANDA SWEDEN ALGERIA BOTSWANA VANUATU ETHIOPIA TURKEY AUSTRALIA JORDAN BRAZIL PAPUA NEW GUINEANote: The DB change score illustrates the level of change in the regulatory environment for local entrepreneurs as measured by 9 Doing Business indicator sets over a period of 5 years.This year’s DB change score ranges from –0.1 to 0.54. More details on how the DB change score is constructed can be found in the Data notes.Source: Doing Business database.business regulation as measured by the not a one-time effort and that the changes It created its first credit bureau, computer-Doing Business indicators—such as a introduced were substantial. Since 2005 ized the company registry and overhauledreduction in the time to start a business Rwanda has implemented 22 business its property registration system, movingthanks to a one-stop shop or an increase regulation reforms in the areas measured from a deed to a title registration system.in the strength of investor protection by Doing Business. Results show on the The multiyear reform reduced the timeindex thanks to new stock exchange rules ground. In 2005 starting a business in to transfer property from 24 weeks to 5.that tighten disclosure requirements for Rwanda took 9 procedures and cost 223% The state now guarantees the title and itsrelated-party transactions. The findings of income per capita. Today entrepre- authenticity. Regulatory reforms in Maliare encouraging: in about 85% of the 174 neurs can register a new business in 3 picked up in recent years. Key achieve-economies, doing business is now easier days, paying official fees that amount to ments include customs reforms, a newfor local firms (figure 1.4). 8.9% of income per capita. More than one-stop shop for business start-up and The 10 economies that made the 3,000 entrepreneurs took advantage of amendments to the civil procedure codelargest strides in making their regulatory the efficient process in 2008, up from an in 2009 that strengthened protections forenvironment more favorable to business average of 700 annually in previous years. minority shareholders and improved theare Georgia, Rwanda, Belarus, Burkina Registering property in 2005 took more (still lengthy) court procedures to resolveFaso, Saudi Arabia, Mali, the Kyrgyz Re- than a year (371 days), and the transfer commercial disputes.public, Ghana, Croatia and Kazakhstan. fees amounted to 9.8% of the property Some large emerging-market econ-All implemented more than a dozen value. Today the process takes 2 months omies also made significant changes atDoing Business reforms over the 5 years. and costs 0.4% of the value. A new com- a steady pace. China is one. Over sev-Several—including Georgia, Rwanda, pany law adopted in 2009 strengthened eral years China introduced 14 policyBelarus, Burkina Faso, the Kyrgyz Re- investor protections by requiring greater changes making it easier to do business,public, Croatia and Kazakhstan—have corporate disclosure, increasing the li- affecting 9 areas covered by Doing Busi-also been recognized as top 10 Doing ability of directors and improving share- ness. In 2005 a new company law reducedBusiness reformers in previous years. holders’ access to information. what had been one of the world’s high- Rwanda, for example, was recog- Others, such as Ghana and Mali, est minimum capital requirements fromnized last year. The cumulative improve- took a steady approach, improving the 1,236% of income per capita to 118%.ment over the past 5 years as measured by business environment over several years. In 2006 a new credit registry startedthe DB change score shows that this was Ghana implemented measures in 6 areas. operating. Today 64% of adults have a
EXECUTIVE SUMMARY 7 DB change score 0.5 0.4 0.3 0.2 0.1 VENEZUELA, R.B. CONGO, REP. ARGENTINA SINGAPORE ZIMBABWE LITHUANIA SURINAME COMOROS PAKISTAN FINLAND NORWAY NAMIBIA ICELAND ESTONIA GUINEA GABON PALAU CHAD ITALY FIJI SOLOMON ISLANDS UNITED STATES KOREA, REP. COSTA RICA AFGHANISTAN BHUTAN HONDURAS WEST BANK AND GAZA CAPE VERDE MONGOLIA GUYANA MICRONESIA, FED. STS. LESOTHO TAIWAN, CHINA ISRAEL EL SALVADOR MOLDOVA IRELAND HUNGARY MARSHALL ISLANDS SAMOA MALAYSIA URUGUAY IRAQ BELGIUM BURUNDI OMAN NICARAGUA SPAIN DJIBOUTI TONGA PUERTO RICO LEBANON ECUADOR GREECE LATVIA KENYA PHILIPPINES KUWAIT SOUTH AFRICA ERITREA CANADA SWITZERLAND ST. VINCENT AND THE GRENADINES ANTIGUA AND BARBUDA GRENADA TRINIDAD AND TOBAGO SRI LANKA KIRIBATI BELIZE JAMAICA EQUATORIAL GUINEA AUSTRIA CENTRAL AFRICAN REPUBLIC DOMINICA SEYCHELLES BOLIVIA NEW ZEALAND PANAMA ST. KITTS AND NEVIS ST. LUCIA NEPAL SÃO TOMÉ AND PRINCIPE NETHERLANDS JAPAN CHILE GERMANY –0.1 Doing business became more difficultcredit history. In 2007, after 14 years of reform but also on the starting point. especially well researched. But corre-consultation, a new property rights law For example, Finland or Singapore, with lation does not mean causality. Othercame into effect, offering equal protec- efficient e-government systems in place country-specific factors or other changestion to public and private property and and strong property rights protections by taking place simultaneously—such asexpanding the range of assets that can be law, has less room for improvement. Oth- macroeconomic reforms—may also haveused as collateral. ers, such as Italy, implemented several played a part. India implemented 18 business reg- regulatory reforms in areas where results How do we know whether thingsulation reforms in 7 areas. Many focused might be seen only in the longer term, would have been any different withouton technology—implementing electronic such as judiciary or insolvency reforms. the regulatory reform? Some studiesbusiness registration, electronic filing for have been able to test this by investi-taxes, an electronic collateral registry and WHAT IS THE EFFECT ON FIRMS, gating variations within a country overonline submission of customs forms and JOBS AND GROWTH? time, as when Colombia implementedpayments. Changes also occurred at the a bankruptcy reform that streamlinedsubnational level. In India, as in other Rankings and the 5-year measure of cu- reorganization procedures. Following thelarge nations, business regulations can mulative change (DB change score) are reform, viable firms were more likelyvary among states and cities. While Doing still only indicative. Few would doubt the to be reorganized than liquidated, andBusiness focuses on the largest business benefit of reducing red tape for business, firms’ recoveries improved.11 Other stud-city in an economy, it complements its particularly for small and medium-size ies investigated policy changes that af-national indicators with subnational businesses. But how do business regula- fected only certain firms or groups. Usingstudies, recognizing the interest of gov- tion reforms affect the performance of the unaffected group as a control, theyernments in these variations. According firms and contribute to jobs and growth? found that reforms easing formal busi-to Doing Business in India, 14 of the 17 A growing body of empirical research ness entry in Colombia, India and MexicoIndian cities covered in the study imple- has established a link between the regu- led to an increase in new firm entry andmented changes to ease business start- latory environment for firms and such competition.12 Thanks to simplified mu-up, construction permitting and property outcomes as the level of informality, nicipal registration formalities for firmsregistration between 2006 and 2009.9 employment and growth across econo- in Mexico, the number of registered busi- The level of change depends not mies.10 The broader economic impact nesses increased by 5%, and employmentonly on the pace of business regulation of lowering barriers to entry has been by 2.8%, in affected industries.
8 DOING BUSINESS 2011FIGURE 1.5 DB2011Eastern Europe and Central Asia setting a strong pace DB2010Share of economies with at least 1 Doing Business reform making it easier to do business by Doing Business report year (%) DB2009100 100 DB2008 96 91 91 DB2007 89 83 84 83 DB200680 79 75 73 75 71 67 67 67 67 67 63 6360 59 61 62 62 61 63 59 57 58 56 56 53 52 48 50 50 46 4740 39 38 35 25200 East Asia Eastern Europe OECD Latin America Middle East South Sub-Saharan & Pacific & Central Asia high income & Caribbean & North Africa Asia AfricaNote: Several economies have been reclassified to the OECD high-income group and are treated as if part of that group for the full period: the Czech Republic, Hungary and the Slovak Republic from Eastern Europe andCentral Asia in 2008, and Poland and Slovenia in 2010; and Israel from the Middle East and North Africa in 2010. In addition, 15 additional economies were added to the sample between Doing Business 2006 andDoing Business 2011.Source: Doing Business database. Other promising results are emerg- WHERE ARE THE OPPORTUNITIES There they lack access to formal businessing. Using panel data from enterprise IN DEVELOPING ECONOMIES? credit and markets, and their employeessurveys, new research associates busi- receive fewer benefits and no protec-ness regulation reforms in Eastern Eu- More than 1,500 improvements to busi- tions. Globally, 1.8 billion people arerope and Central Asia with improved ness regulations have been recorded by estimated to be employed in the informalfirm performance.13 While such factors Doing Business in 183 economies since sector, more than the 1.2 billion in theas macroeconomic reforms, technologi- 2004. Increasingly, firms in developing formal sector.15cal improvements and firm characteris- economies are benefiting. In the past While overly complicated proce-tics may also influence productivity, the year about 66% of these economies made dures can hinder business activity, soresults are encouraging. it easier to do business, up from only 34% can the lack of institutions or regulations The region’s economies were the of this group 6 years before. Compelling that protect property rights, increasemost active in improving business regu- results are starting to show, as illustrated transparency and enable entrepreneurslation over the past 6 years, often in re- by Rwanda and Ghana, and these results to make effective use of their assets.sponse to new circumstances such as the have inspired others. When institutions such as courts, col-prospect of joining the European Union This is good news, because oppor- lateral registries and credit informationor, more recently, the financial crisis tunities for regulatory reform remain. bureaus are inefficient or missing, the(figure 1.5). Some 93% of its economies Entrepreneurs and investors in low- and talented poor and entrepreneurs whoeased business start-up, and 20 econo- lower-middle-income economies con- lack connections, collateral and creditmies established one-stop shops. Starting tinue to face more bureaucratic formali- histories are most at risk of losing out.16a business in the region is now almost as ties and weaker protections of prop- So are women, because institutions andeasy as it is in OECD high-income econo- erty rights than their counterparts in regulations such as credit bureaus andmies. Immediate benefits for firms are high-income economies. Exporting, for laws on movable collateral support theoften cost and time savings. In Georgia a example, requires 11 documents in the types of businesses that women typically2009 survey found that the new start-up Republic of Congo but only 2 in France. run—small firms in low-capital-inten-service center helped businesses save an Starting a business still costs 18 times as sive industries in both the formal and theaverage of 3.25% of profits—and this much in Sub-Saharan Africa as in OECD informal sector (box 1.2).17is just for registration services. For all high-income economies (relative to in- Today only 1.3% of adults in low-in-businesses served, the direct and indirect come per capita). Many businesses in come economies are covered by a creditsavings amounted to $7.2 million.14 developing economies might simply opt bureau. Many micro, small and medium- out and remain in the informal sector. size enterprises, which typically have
EXECUTIVE SUMMARY 9 BOX 1.2 Encouraging women in business Women make up more than 50% of the world’s population but less than 30% of the labor force in some economies. This represents untapped potential. For policy makers seeking to increase women’s participation in the economy, a good place to start is to ensure that institutions and laws are accessible to the types of businesses and jobs women currently hold. Take credit bureaus. With the advent of microfinance institutions in the 1970s, poor women in some parts of the world were able to access credit for the first time. By 2006 more than 3,330 microfinance institutions had reached 133 million clients. Among these clients, 93 million had been in the poorest groups when they took their first loans, and 85% of the poorest were women. But only 42 of 128 credit bureaus in the world cover microfinance institutions, limiting the ability of their borrowers to build a credit history. A new World Bank Group project, Women, Business and the Law, looks into discrepancies such as these as well as regulations that explicitly differentiate on the basis of gender.1 A recent analysis of existing literature concludes that aspects of the business regulatory environment are estimated to disproportionately af- fect women in their decision to become an entrepreneur and their performance in running a formal business. Barriers to women’s access to finance might drive their concentration in low-capital-intensive industries, which require less funding but also have less potential for growth and development. One possible barrier is that women may have less physical and “reputational” collateral than men.2 Women can benefit from laws facilitating the use of movable assets such as equipment or accounts receivable as security for loans. While women often lack legal title to land or buildings that could serve as collateral, they are more likely to have movable assets. In Sri Lanka women commonly hold wealth in the form of gold jewelry. Thankfully, this is accepted by banks as security for loans.3 Women often resort to informal credit, which involves high transactions costs. A recent study in Ghana reports that women, to ensure access to credit, invest considerable time in maintaining complex networks of informal credit providers.4 Improving firms’ access to formal finance has been shown to pay off, by promoting entrepreneurship, innovation, better asset allocation and firm growth.5 Everyone should be able to benefit, regardless of gender. 1. http://wbl.worldbank.org/. 2. Klapper and Parker (2010). 3. Pal (1997). 4. Schindler (2010). 5. World Bank (2008).95% of their assets in movable property added 50 economies to the sample. In access levels that exist outside the Doingrather than real estate, cannot use those the past year Doing Business has been Business report as well as other data onassets to raise funds to expand their busi- working on 2 indicator sets—a new set the availability and reliability of electric-ness. But this is not so everywhere. While on getting electricity and a refined one ity supply and consumption prices. Theonly 35% of Sub-Saharan African econo- on employing workers.18 new data allow objective comparison ofmies have laws encouraging the use of the procedures, time and cost to obtainall types of assets as collateral, 71% of IDENTIFYING REGULATORY REFORM a new electricity connection across aEast Asian and Pacific and 68% of OECD POSSIBILITIES IN GETTING ELECTRICITY wide range of economies. Some, such ashigh-income economies do. Seventy low- According to World Bank surveys of Germany, Iceland and Thailand, performand lower-middle-income economies businesses, managers in 108 economies well: a business with moderate electricitylack centralized collateral registries that consider the availability and reliability of demand can get a connection in 40 daystell creditors whether assets are already electricity to be the second most impor- or less. But in the Czech Republic it cansubject to the security right of another tant constraint to their business activ- take 279 days, in Ukraine 309 and in thecreditor. All this presents an opportunity ity, after access to finance. Studies have Kyrgyz Republic 337.for changes that can promote the growth shown that poor electricity supply ad- Analysis of the data presented in theof firms and employment. versely affects the productivity of firms annex on getting electricity sheds some and the investments they make in their light on both bottlenecks and possibleWHAT’S NEXT? productive capacity.19 But electricity ser- starting points for dialogue on regulatory vices not only matter to businesses; they reform. In 100 of 176 economies con-Doing Business has been measuring busi- also are among the most regulated areas nection costs are insufficiently transpar-ness regulation from the perspective of of economic activity. Doing Business ent.20 Utilities present customers withlocal firms and tracking changes over measures how such regulations affect individual budgets rather than clearlytime since 2003. Since its initiation, the businesses when getting a new connec- regulated capital contribution formu-project has introduced 5 new topics and tion. The indicators complement data on las. This reduces the accountability of