New French govt befriends business

A severe political crisis rocked the French state last week, from which emerged a new government, still under the leadership of Mr Manuel Valls, who had resigned as Prime Minister a few days earlier following left wing opposition within governement to his economic policy. The new agenda, much closer to what is termed "liberal" views in France (pro-business), also labelled "social democrat" policy, was illustrated by a visit on 27 August to the summer meeting of the Employers' federation during which the Prime Minister , during which Mr Valls promised to accelerate administrative simplification to bring about a new "era of trust".
A new omnibus law will enact a batch of simplifications, starting with a charter of tax controls and the appointment of a mediator for business. A set of some 50 urgent measures to streamline red tape on construction is already being implemented.
For more, see public sector newsletter Acteurs Publics.

 

 

 

Tanzania announces regulatory reforms

At the official launching of the OECD's investment policy review of Tanzania, the Prime Minister announced his intention to grapple with "the most problematic areas in the performance of business sector in the country (which) include access to credit, corruption, complex procedures in securing construction permits, cross-border trade licenses, payment of taxes, land and property registration... The government would now make delibefrate efforts to review the legal framework and regulations that have been deterring smooth operation of investment projects." A booming economy with enviable growth rates, Tanzania still suffers from a poor Doing Business ranking (145th out of 189 in the 2014 report.) For more, see IP Media and read the summary of the review on the OECD site.

Doing Business in Colombia 2013 just published

"Doing Business in Colombia 2013, the third subnational report of the Doing Business series in Colombia, compares business regulations across 23 cities. The report focuses on local and national regulations that affect 5 stages in the life of a small to medium-size domestic firm: starting a business, dealing with construction permits, registering property, paying taxes and trading across borders. It identifies differences in local regulations and the enforcement of national regulations at the local level that can enhance or constrain local business activity. The report finds that Colombian cities continue to implement regulatory business reforms converging towards best regulatory practices." For main findings, go to World Bank site. The report is interesting i.a. for the multi-level regulatory governance aspect.

Independent review of Doing Business index

E. Schizas points us to a very interesting document, the report of the Independent Panel Review of the Doing Businessranking. This review comes at a time when this publication is facing renewed criticism, already reported here (30 May)To try to give an idea that this is well worth checking, here are some of the "concerns" highlighted by the Panel (extracts):
"The Doing Business report has the potential to be misinterpreted"
"The report relies on a narrow information source. "
"The report only measures regulations applicable to categories of business that can be captured through its methodology."
"The report’s data-collection methodology can be improved."
"The report does not provide a tool to enable countries to respond appropriately to low overall ranking."

Threat to our beloved "Doing Business"

According to All Africa, "an independent review panel is expected to soon release its findings regarding the World Bank's "Doing Business" report. Speculation abounds that the panel might recommend outsourcing "Doing Business", removing the "ease of doing business" rankings, or even eliminating the report altogether.
This challenge is not a new one, as powerful World Bank shareholders have been trying to sink the project since its inception in 2002. Now China, the world's second largest economy and an ever more influential force within the Bank, is seeking to water down the report by eliminating, among other things, its country rankings. For more, go to All Africa, the article explains why it would be a great loss if this index of regulatory reform progress was suppressed. (From Emmanouil Schizas, London)
PS: just after posting this, I noticed the leader in The Economist (25 May) under the title: "Stand Up for 'Doing Business'" which gives more detail about the on-going enquiry into the ranking, and strongly supports keeping this indicator. "The president of the World Bank should support one of its most useful products."

Doing Business in EAC 2013

Released 2 May, "Doing Business in the East African Community 2013" takes stock of the impact of regulatory reforms in this area which has registrered significant positive economic development. Rwanda remains the best pupil in the class of 5 economies, but Burundi jumped 10 places in the world ranking thanks to several key reforms. New data show the importance of access to regulatory information. The rise in e-government initiatives in the region (as in other parts of the world) provides an opportunity to increase access to information and transparency. The report finds that "The EAC has achieved greater convergence in the complexity and cost of regulatory processes than in the strength of legal institutions relevant to business regulation."

New permit policy in Jakarta

The Jakarta Post dated 15 May reports on a commitment by the governor of Jakarta to establish a special body to handle all investment permit-related processes under one roof, following complaints about the red-tape surrounding the setting up of a business. The Doing Business ranking of Indonesia is poor (128th) and particularly weak on "Starting a Business" (166th), a fact that the article does not mention, though it quotes other DB figures. Though welcome, this one-stop-shop only concerns one of the cities likely to attract foreign investment, but it will contribute to regulatory reform measures suggested by the October 2012 OECD review.

2013 Index of Economic Freedom

Not yet mentioned on this blog, another convenient international comparison of how regulations can impact economic achievement: the Index of Economic Freedom, calculated and published since 1995 by The Wall Street Journal and The Heritage Foundation, an American think tank. The 10 benchmarks used to gauge the economic success of 185 countries around the world are well supported in economic and political economy theory (primarily by A. Smith), and are illustrated by country case studies. The definition of economic freedom itself is not without interest: the 10 economic freedoms are grouped into four broad categories or pillars of economic freedom:

• Rule of Law (property rights, freedom from corruption);
• Limited Government (fiscal freedom, government spending);
• Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and
• Open Markets (trade freedom, investment freedom, financial freedom).

Each of these four pillars provide useful indications as they are, like the indicators used in the World Bank Doing Business ranking, dedicated to measuring the economic impact of a prudent use of regulation.

Bangladesh Gvt reluctant to adopt regulatory reform

Bangladesh does not rank well in the Doing Business index: 129th out of 185 economies, falling. Experts agree on the causes of this poor performnance: "lack of regulatory reforms, bureaucratic bottlenecks, infrastructure deficit, pervasive corruption and confrontational politics" according to an editorial in the B. Financial Express. A recent parliamentary initiative to create a "business caucus" to support reform, following the publication of a book suggesting to 'build partnership between parliamentarians and the private sector to modernise and update regulatory mechanism in Bangladesh' is not well received. 'The commerce minister does not agree'. For a long-winded explanation of this double-bind, which is at the root of the problem (no clear picture in the minds of the people in charge), try the Financial Express article dated 4 March.

"Less paperwork, more security" (Italian simplification)

With change underway in Italy following the parliamentary elections, it may be useful to take a look at the well designed and stocked site of the unit for simplification of the ministry of public administration and simplification. Though it is mainly in Italian, there are a few resources in English, for instance a presentation of the local version of a one-stop-shop for company registration ("impresa en un giorno"). An October 2012 ppt sums up recent original trends in legal simplification, implementing the 6 February 2012 decree "Simplify Italy". The document stresses that the programme works under the principle "less paperwork, more security" and does not jeopardize any regulatory guarantees (such as safety at work), but only reduces reporting obligations. The policy also seeks to help companies comply with legislation, by improving their information. The site insists on the protection of regulatory benefits: "simplified official forms and procedures can only adopted with the agreeement of the Standing Advisory Committee on Health and Safety at Work, which brings together ministries, regions, employers' organizations, trade unions and the Regions-State Conference. These measures are expected to generate savings of about €3.7bn." The presentation ends with practical examples of simplifications under way, which concern both business and citizens.

Doing Business: become a contributor !

The World Bank Group is seeking specialists to participate in its pro bono global research project. The Doing Business Report is a publication of the World Bank and the International Finance Corporation that benchmarks business regulation in 185 countries worldwide. To volunteer for research work, visit "become a contributor" page.

Abu Dhabi slashes red tape

According to a leading newspaper in the Emirate, "red tape and delays in starting a business are to be slashed and the cost cut almost in half in a raft of reforms to boost the private sector. Awarding at least 10 per cent of government contracts to private companies, cutting the time required to obtain a construction permit and overhauling laws on the private sector were among 29 initiatives announced yesterday by the Abu Dhabi Department of Economic Development.
The moves come as the Government seeks to accelerate the role of private enterprise in driving diversification and raise the contribution of the non-oil sector from the 2005 level of 40 per cent of the Abu Dhabi economy to 64 per cent by 2030. The initiatives are part of the department's 2013-2016 strategy but it aims to meet the targets this year. They include a database of private-sector companies, a consumer protection and market surveillance centre, an export promotion agency and a federal level credit rating agency for small and medium-sized businesses.
The cost of starting a business will be cut from from 10 per cent of gross national income per capita to 6 per cent. UAE gross national income per capita was valued at Dh150,000 in 2011, indicating a cut of more than Dh5,500.
The department will also launch a commercial business centre to cut the paperwork and time taken to register a business. A specialised unit to support partnership between the public and private sectors and a draft public-private partnership law were also announced. " For more, read the official press release dated 20 Feb.

Russia to cut red tape to boost investment

Under the title "Medvedev Cuts Red Tape to Boost Investment in Regions", the Moscow Times dated 18 Feb. reports that Prime Minister Dmitry Medvedev has ordered the government to find ways by 14 March to "reduce bureaucratic obstacles to regional investment amid a drive to boost regional economies." A key measure requires the Economic Development Ministry to draft proposals to abolish the superfluous powers of the regional branches of federal agencies that create obstacles to investment. The key obstacles to investing in Russia are workers' poor knowledge of English, red tape and corruption, according to a survey of 195 foreign top managers by the Economist Intelligence Unit. The research was carried out in May on behalf of aluminum giant RusAl.

French state aids to entrepreneurship too complex

"Too numerous and too expensive," that is how the Audit Court (Cour des Comptes) assessed public subsidies to entrepreneurship in France in its annual report published 14 February. The Court pointed at the proliferation of support schemes funded by central and local governments, for an estimated cost of 2.7 billion euros in 2011, of which 80% comes from direct aids ($ 2.1 billion) mainly through the activation of unemployment spending. Indirect aid consists mainly of tax incentives for investment in venture capital (0.3 billion excluding tax exemptions). In this patchwork, the auditors point to "the lack of an overall strategy" and suggest to designate a responsible inter-ministerial coordinating agency. The PACE (Agency for entrepreneurship), which currently supports this mission should be restructured, otherwise "the question of maintenance of this body would be asked." The authors also recommend that reform involve regional prefects for a decentralized approach, as has been tested in the Nord-Pas-de-Calais, Picardy and Lorraine regions. For a summary, see the Court's own summary (30 pages) or Les Echos article online.

Doing Business 2013 just released

Today the World Bank and IFC release the 10th edition of their flagship report: "Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises" assesses regulations affecting domestic firms in 185 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders. This year’s report data cover regulations measured from June 2011 through May 2012. Over the past decade, these reports have recorded nearly 2,000 regulatory reforms implemented by 180 economies.

 

Key findings (from the official site):

• Poland was the global top improver in the past year. It enhanced the ease of doing business through four institutional or regulatory reforms, making it easier to register property, pay taxes, enforce contracts, and resolve insolvency.
• Besides Poland, nine other economies are recognized as having the most improved ease of doing business across several areas of regulation as measured by the report: Sri Lanka, Ukraine, Uzbekistan, Burundi, Costa Rica, Mongolia, Greece, Serbia, and Kazakhstan.
• Worldwide, 108 economies implemented 201 regulatory reforms in 2011/12 making it easier to do business as measured by Doing Business. Reform efforts globally have focused on making it easier to start a new business, increasing the efficiency of tax administration and facilitating trade across international borders. Of the 201 regulatory reforms recorded in the past year, 44% focused on these 3 policy areas alone. Read about reforms.
• Singapore topped the global ranking on the ease of doing business for the seventh consecutive year, followed by Hong Kong SAR, China,; New Zealand; the United States; and Denmark. Georgia was a new entrant to the top 10.

Coming soon: Doing Business 2013

Experts be warned: the next World Bank flagship report (for us at least) will be issued on October 23, 2012 at 00.01 GMT (7 pm in Washington). Watch this space !

Costa Rica tackles red tape by egov

An interesting article posted today in Tico Times sumarizes the Costa Rican government's project to apply technology to help improve the business environment. The policy is implemented by CINDE, a nongovernmental organization in charge of investment promotion, which relies primarily on introducing egov solutions. But, notes the article, "there is a huge gap in Costa Rica between the well-paved regulatory highway that CINDE and the government have set up for deep-pocketed foreign companies, and the pothole-filled obstacle course that ordinary Costa Ricans who just want to start up a mechanic's shop or a restaurant are forced to navigate... Costa Rica is drowning in red tape." The Doing Business index remains very low: Costa Rica ranks 121st of 183 countries. In Latin America and the Caribbean, Costa Rica ranks 25th out of 32 countries, behind every other Central American country except Honduras. Called the Digital Government project, the project is operationally a division of ICE, the country's power and telecommunications utility, but answers to a government commission presided over by the Prime Minister. It seeks to leverage the information technology expertise of ICE to put as many government processes online as possible. The basic building block, the "digital signature," is already developed. Tico Times also develops the recently introduced silence procedure: law 8,220, the Law (n°8220) for Protection of Citizens against Excessive Requirements and Administrative Processes introduces the concept of Positive Silence: that once all paperwork is presented, the government authorization requested will be deemed granted if the government institution does not respond within three days. Unfortutaly, Tico Times notes, this reform "has been a dead letter because ordinary citizens cannot drag a notary around to certify presentation of every paper required in bureaucratic processes." But if presentation is online, digitally documented by means of a digital cédula, the government authorization game could change radically in favor of ordinary citizens."
See also a presentation of the better regulation policy on the ministry's website and a news item on the National Plan for Simplification and Cutting Red Tape.

           

USAID supports Iraq RR

A Bahrein news agency reported three days ago that Iraq has signed a Memorandum of Understanding (MOU) with the United States Agency for International Development (USAID), outlining American support for Iraqi efforts to reduce regulatory obstacles in Iraq's private sector.
The MOU is in line with the Strategic Framework Agreement signed between the two countries and contributed to the Iraq Solution for Regulatory and Administrative Reform (ISRAR) project. ISRAR will review and eliminate unnecessary regulations that hinder business and private investment. ISRAR working groups, drawn from both the Government of Iraq and the private sector, will produce reform recommendations to make it easier to start a new business, obtain construction permits, and facilitate trade with regional neighbors and the world, according to the statement. The statement added that these recommendations will help significantly improve the Iraqi private sector, and Iraq's ranking in the World Bank's Doing Business Report, which will assist efforts to expand investment in the economy. It went on saying that implementation of these reforms will send a clear message to the international business community that Iraq is rapidly creating a new economic foundation.
See also last week's post on RR in the Kurdish Region of Iraq.

Kenyan regions more competitive

At the end of June, the World Bank issued its second report on comparative ease of doing business at the infranational level in Kenya.
It shows, using the Doing Business method, that over the past two years, all 13 cities have improved business registration processes while 2 cities expedited the approval of construction permits. Joint reform efforts by the national and local governments have reduced the average time to start a business by 22 days and the average cost by 5%. Mombasa is the city that saw most improvements across 3 out of the 4 areas measured. Due to a broad based business reform program, starting a business is more than one month faster today than in 2009; while the opening of a specialized court in September 2011 paved the way for more efficient commercial dispute resolution. This report, which measures the impact of regulatory reforms, offers encouragement to Kenyan reformers.

"Doing Business in the Arab world 2012"

On May 29, the World Bank published Doing Business in the Arab World 2012, the fourth in a series of annual reports benchmarking the regulations that enhance business activity and those that constrain it in 20 economies in the Arab world. Governments in 13 of 20 Arab economies implemented some 20 regulatory reforms in the year ending May 2011, aimed at improving the business environment for local entrepreneurs. Morocco was the most active in encouraging entrepreneurship through regulatory reform.
Also interesting on the same site: "Business Reforms in Middle East & North Africa," a compendium of findings of recent DB reports.