Doing Business in East Asia and the Pacific Neil Gregory Acting Director, Global Indicators and Analysis Karim Belayachi Co-author, Doing Business Project WASHINGTON, DC 1
What does Doing Business measure? Doing Business indicators: Focus on regulations relevant to the life cycle of a small to medium-sized domestic business. Are built on standardized case scenarios. Are measured for the most populous city in each country. Are focused on the formal sector. DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, of regulation specific to foreign investment or financial markets. 2
Doing Business indicators 11 areas of business regulation (9 included in ease of doing business ranking) Start-up Expansion Operations Closing Starting a business Minimum capital requirement, procedures, time and cost Registering property Procedures, time and cost Getting credit Credit information systems Movable collateral laws Protecting investors Disclosure and liability in related party transactions Enforcing contracts Procedures, time and cost to resolve a commercial dispute Dealing with construction permits Procedures, time and cost Employing workers Flexibility in hiring, work schedule, redundancy procedures Paying taxes Payments, time and Total Tax Rate Trading across borders Documents, time and cost Getting electricity (pilot) Closing a business Time, cost and recovery rate Procedures, time and cost Entry Property rights Investor protection Access to credit Administrative burden Flexibility in hiring Recovery rate Reallocation of assets 3
Top 30 economies on the ease of Doing Business 2009/10 1. Singapore 16. Korea, Rep. 2. Hong Kong SAR, China 17. Estonia 3. New Zealand 18. Japan 4. United Kingdom 19. Thailand 5. United States 20. Mauritius 6. Denmark 21. Malaysia 7. Canada 22. Germany 8. Norway 23. Lithuania 9. Ireland 24. Latvia 10. Australia 25. Belgium 11. Saudi Arabia 26. France 12. Georgia 27. Switzerland 13. Finland 28. Bahrain 14. Sweden 29. Israel 15. Iceland 30. Netherlands 4
East Asia and the Pacific rankings on the ease of Doing Business 2009/10 Singapore 1 Hong Kong, China 2 Thailand 19 Malaysia 21 Ti Taiwan, China 33 Vanuatu 60 Samoa 61 Fiji 62 Tonga 71 Mongolia 73 Vietnam 78 China 79 EAP average 87 Kiribati 93 Solomon Islands 96 Papua New Guinea 103 Marshall Islands 108 Brunei Darussalam 112 Palau 120 Indonesia 121 Micronesia, Fed. Sts. 141 Cambodia 147 Philippines 148 Lao PDR 171 Timor Leste 174 Easier to do business More difficult to do business 5
East Asia and the Pacific is the third best performing region in 2009/10 Share of economies with at least 1 Doing Business reforms making it easier to do business 6 6
Worldwide the pace of reforms making business easier remains strong: 216 in 117 economies Economies in East Asia and the Pacific were among the most active in making it easier for local firms to do business in 2009/10 OECD high Income 84% Eastern Europe and Central Asia 67% 61% 75% 47% Latin America and Caribbean 59% Middle East and North Africa 63% South Asia East Asia and Pacific Sub-Saharan Africa Percentage of countries with at least one positive reform in 2009/10 7
10 economies improving the most in the ease of doing business in 2009/10 Economy Starting Dealing with Registering a construction property business permits Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Closing a business Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam 8
18 of 24 economies in East Asia and the Pacific improved business regulations this year Among 28 reforms in 7 areas of business regulation, Paying taxes and Starting a business were the most popular 8 6 5 4 2 2 1 Paying taxes Starting a business Trading across borders Getting Registering Enforcing Dealing with credit property contracts construction permits 9 9
87% of economies in the EAP region improved their business regulatory environment 10
China leads the reform pace in the EAP region 5-year measure of cumulative change Since DB06, China has taken In DB08 and DB11, the lead of reforms in EAP Vietnam made a lot of with the biggest improvements progress (10) Total business easing reforms since DB06: From DB07 to DB10, Indonesia made steady improvements (10) 12 10 10 10 11 From DB09, Timor-Leste implemented reforms in taxes and contracts (10)
In DB11, the average improvement is the highest in East Asia and Pacific Average change per year and per region Average improvement on all DB indicators according to the 5 year measure of cumulative change New metric 2 12
East Asia and the Pacific performance Ranking on ease of Doing Business Starting a business Topic World s top ranked 2009/10 East Asia and the Pacific s top ranked 2009/10 Dealing with construction permits Registering property Getting credit Protecting investors Paying taxes Trading across borders Enforcing contracts Closing a business New Zealand Hong Kong SAR, China Saudi Arabia Malaysia New Zealand Maldives Singapore Luxembourg Japan Singapore (4) Hong Kong SAR, China (6) Hong Kong SAR, China (1) Singapore (2) Singapore (15) Thailand (19) Malaysia (1) Hong Kong SAR, China (2) Singapore (2) Hong Kong SAR, China (3) Hong Kong SAR, China (3) Singapore (4) Singapore (1) Hong Kong SAR, China (2) Hong Kong SAR, China (2) Singapore (13) Singapore (2) Taiwan, China (10) 13
East Asia and the Pacific stand out for their collateral regulations 14
East Asia and the Pacific significantly reduced compliance time for paying taxes 15
In Doing Business 2011 China continued to make paying taxes easier In 2009/10, China eased the tax administration burden on businesses by unifying criteria for corporate income tax deduction and shifting from a production-oriented value added system to a consumption-oriented one. 398 hours 504 hours DB 2011 DB 2010 As a result, China s tax compliance time was reduced by 106 hours, from 504 hours in Doing Business 2010 0 to 398 hours in Doing Business 2011 16
Indonesia has consistently improved starting a business over the last two years 2010 2011 Indonesia eased incorporation and post incorporation processes for new business registration through use of on-line service, deletion of certain licenses, increasing efficiency at the registry and cutting the company deeds legalization, publication, registration and business license fees. Indonesia eased the process of business start-up by reducing the cost for name clearance and reservation from Rp. 385,000 to Rp. 200,000. 17
Vietnam made doing business easier in three different areas Starting a business Dealing with Getting credit - Public construction permits credit registry Vietnam created a one stop shop combining the process of obtaining a business license and tax license Vietnam eliminated the need for a seal for company licensing The costs to register newly completed buildings were reduced by 50% The authority to register buildings was transferred from local authorities to the Department of National Resources and Environment Vietnam improved its credit information system by allowing borrowers to examine their credit reports and rectify erroneous information. Vietnam improved its rank in Dealing with construction permits by 8 positions shifting from #70 in Doing Business 2010 to #62 in Doing Business 2011 18
Thailand continued the long-time improvement by making paying taxes easier DB 2011 DB 2010 DB 2009 Paying taxes: Thailand has temporarily eased tax burden of business by reducing its specific business tax for twelve months Starting a business: Thailand eased business start up process by merging the registration of memorandum and the application for registration of establishment of company Registering property Paying taxes Protecting investors Trading across borders 19
The Philippines made starting a business easier in 2009/10 The Philippines introduced a one-stop shop for the municipal license and cut the inspection by the mayor s office, reducing start-up time by 15 days 60 Time (days) 50 40 30 20 10 Time cut from 53 to 38 days 1 procedure cut 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Procedures
The Philippines made trading across borders easier in 2009/10 800 Cost to export 700 600 500 400 300 200 100 0 Assembling and preparing documents costs L/C Costs Customs clearance As a result, cost to export decreased from US$816 to US$675 per container and cost to import decreased from US$ 819 to US$730 per container Ports and Terminal handling Inland transportation and handling 800 costs Cost to import 700 600 500 400 300 200 100 0 The Philippines improved its electronic customs systems, adding such functions as electronic payments and online submission of declarations Assembling L/C Cost Customs Ports and Inland and preparing clearance Terminal transportation documents handling and handling cost costs
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