Doingbusiness in 2006 Creating Jobs

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Doingbusiness in 2006Creating Jobs
Michael Klein Vice President for Private Sector
Development, World Bank-International Finance
Corporation (IFC), Chief Economist, IFC October
24th, 2005 São Paulo, Brazil
2
Doingbusiness indicators
2005
2004
2006

• Business Licensing
• Taxation
• Trade Infrastructure
• Transport
• Customs
• Standards
• Updates of 04 and 05

• Corporate Governance
• Property registration
• Updates of 04 topics

• Regulation of Entry
• Labor Regulations
• Contract Enforcement
• Credit Markets
• Credit information
• Collateral
• Bankruptcy

Products Report, academic papers, country
summaries, website database www.doingbusiness.org
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What is new this year?

• Creating jobs
• entry of new businesses
• reducing informality
• New topics
• trading across borders
• paying taxes
• Post-conflict Afghanistan, East Timor, Eritrea,
  Iraq, Sudan, West Bank and Gaza

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ReformsFaster entry, smaller tax burden, fewer
bordersStubborn labor regulations
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Top reformers in 2004-2005
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Top 30 economies on the ease of doing business

• New Zealand
• Singapore
• United States
• Canada
• Norway
• Australia
• Hong Kong, China
• Denmark
• United Kingdom
• Japan
• Ireland
• Iceland
• Finland
• Sweden
• Lithuania

• Estonia
• Switzerland
• Belgium
• Germany
• Thailand
• Malaysia
• Puerto Rico
• Mauritius
• Netherlands
• Chile
• Latvia
• Korea
• South Africa
• Israel
• Spain

119. Brazil
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Bottom 30 economies on the ease of doing business
119. Brazil

• 155. Congo, Dem. Rep
• 154. Burkina Faso
• 153. Central African Republic
• 152. Chad
• 151. Sudan
• 150. Niger
• 149. Togo
• 148. Congo, Rep.
• 147. Lao PDR
• 146. Mali
• 145. Cote dIvoire
• 144. Guinea
• 143. Burundi
• 142. Timor-Leste
• 141. Egypt

140. Tanzania 139. Rwanda 138. Uzbekistan 137.
Eritrea 136. Sierra Leone 135. Angola 134.
Haiti 133. Cambodia 132. Senegal 131.
Madagascar 130. Cameroon 129. Benin 128.
Algeria 127. Mauritania 126. Zimbabwe
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Heavy regulations exclude the vulnerable
Greater Informal Sector to GDP
Lesser Womens Share of Private Employment
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How much more employment?
Total average unemployment 11.3
Reforms to reach the top quartile of countries
could cut 3.7 percentage points off unemployment
Implied rate after cut
Bottom quartile
Top quartile
Ease of Doing Business indicator
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How much less informality?
Total average informal sector 41.4
Reforms to reach the top quartile of countries
could cut 9 percentage points off the share of
informal sector as a of GDP
Implied rate after cut
Bottom quartile
Top quartile
Ease of Doing Business indicator
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• Part II
• Brazils Performance

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Trading across borders
Days to import
Brazil Hard infrastructure is only 14 of the
total time
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Importing in Brazil, Jan. 2005
Customs Inspection Clearance
Pre-arrival activity DOCUMENTATION
Time, days
Inland Transportation
Port Related Activity
Total 43 days
Procedures
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Strong incentives to evade tax means less revenue
Tax revenues relative to tax payable
Tax paid as a of gross profit
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Brazilian Reforms

• Bankruptcy reform
• Creditors have more say in the process
• Rehabilitation is an option not available in
  previous law
• Secured creditors -gt more priority, only after
  limited labor claims
• Estimated time halved from 10 years to 5 years.
• Estimated recovery rate jumped from 40 cents to a
  U100 invested to U 17 to a U 100 invested.
• Why only U17?
• High interest rates erode the returns (5 years)

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Brazilian Reforms Contd

• Debt Recovery
• New procedural rules for courts set time limit on
  appeals
• The new rule could shorten up to 100 days from
  the current 546 days
• Abuse of appeals process is used as tactic to
  stall enforcement
• In Brazil, 88 of commercial cases appealed
• Argentina 13
• Peru - 17
• Mexico 30
• Brazils Supreme Court handles more than 100,000
  cases a year vs. the approx. 200 cases in the US.

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Brazil days to start a business
Least days Global
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Brazil days to build warehouse
Least days Global
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Brazil cost to hire and fire
Hiring Cost ( of monthly salary)
Firing Cost (weeks of salary)
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Brazil Depth of credit information
Best perfomer Global
Depth of credit information index Scale 1 6
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Obrigado pela atenção
Michael Klein Vice President for Private Sector
Development, World Bank-International Finance
Corporation (IFC), Chief Economist, IFC October
24th, 2005 São Paulo, Brazil