Doing Business 2007-2008
Presentation of main results
Dushanbe, December 4, 2007
Content
• Doing Business: global picture and Tajikistan ranking
• Focus on specific indicators
• Doing Business in Central Asia: next steps
2
Doing Business: global tool to assess
private sector development
Major highlights of Doing Business
The Doing
Business project
provides objective
measures of
business
regulations and
their enforcement
across 178
countries using
experts opinions.
•Annual report to measure business environment
worldwide
•Started in 2003 with coverage of 5 indicators and
more than 130 countries
•In 2007 Doing Business covers 10 indicators and 178
countries worldwide
•Since 2003 the report informed and inspired over 120
reforms of business regulations
•The bestselling report of WBG
•Publicly available comprehensive web-based
database – most visited website in the WBG
3
Business friendly regulation leads to more
registered businesses and start-ups
Business density
(registered firms per capita)
Easiest
Most difficult
Business entry
(new firms in % of registered firms)
Easiest
Most difficult
Countries ranked by ease of doing business, quintiles
4
Source: Doing Business database
..which means more formal employment
Unemployment
(% of labor force)
Informal Sector
(% of GDP)
Easiest
Most difficult
Easiest
Most difficult
Countries ranked by ease of doing business, quintiles
Source: Doing Business database, WDI
5
Top/last 30 on the ease of doing
business, 2008
Top 30
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Singapore
New Zealand
United States
Hong Kong, China
Denmark
United Kingdom
Canada
Ireland
Australia
Iceland
Norway
Japan
Finland
Sweden
Thailand
Switzerland
Estonia
Georgia
Belgium
Germany
Netherlands
Latvia
Saudi Arabia
Malaysia
Austria
Lithuania
Mauritius
Puerto Rico
Israel
Korea
Last 30
149.
150.
151.
152.
153.
154.
155.
156.
157.
158.
159.
160.
161.
162.
163.
164.
165.
166.
167.
168.
169.
170.
171.
172.
173.
174.
175.
176.
177.
178.
Haiti
Rwanda
Benin
Zimbabwe
Tajikistan
Cameroon
Côte d'Ivoire
Togo
Mali
Mauritania
Afghanistan
Sierra Leone
Burkina Faso
Senegal
Guinea
São Tomé and Principe
Lao PDR
Equatorial Guinea
Angola
Timor-Leste
Niger
Liberia
Eritrea
Venezuela
Chad
Burundi
Guinea-Bissau
Congo, Rep.
Central African Republic
Congo, Dem. Rep.
6
Eastern Europe and Central Asia countries
reform the fastest
78,6%
Countries with at least one positive reform, in %
62,5%
62,5%
58,8%
52,2%
45,8%
35,5%
E. Europe &
Central Asia
South Asia
OECD
Middle East & Sub-Saharan
N. Africa
Africa
East Asia &
Pacific
Latin America
& Caribbean
7
Eastern Europe and Central Asia surpass
East Asia ease of doing business
Average Rank, Ease of Doing Business
136
107
76
77
87
96
22
High Europe & East Asia Latin
Middle
income: Central & Pacific America & East &
OECD
Asia
Caribbean North
Africa
South
Asia
SubSaharan
Africa
8
Europe and Central Asia – Ranking on ease
of Doing Business
Georgia
Armenia
Turkey
Kazakhstan
18
39
57
71
Kyrgyz Republic
94
Azerbaijan
96
Russia
Belarus
106
110
Uzbekistan
138
Ukraine
139
Tajikistan
153
9
Number of reforms improving a set of
Doing Business indicators in Europe and
Central Asia
# of reforms in 2007 in covered indicators
6
Georgia
Uzbekistan
4
3
Armenia
Azerbaijan
2
Belarus
2
Turkey
2
Kazakhstan
1
Tajikistan
1
Russia
1
Tajikistan
reformed
its
licensing
legislation
10
Content
• Doing Business: global picture and Tajikistan ranking
• Focus on specific indicators
• Doing Business in Central Asia: next steps
11
Doing Business indicators
BEE areas
Access to finance
Juridical system
Starting a
business
Getting
credit
Protecting
investors
Dealing with
Licenses
Registering
property
Enforcing
contracts
Trading
accross
borders
Employing
workers
Paying taxes
Closing a
business
Doing Business indicators have relevant link to the Private Sector Development
12
Doing Business in Tajikistan: 2006-2007
Ease of...
BEE areas
Access to
finance
Juridical
system
DB 2008
rank
DB 2007
rank
Change in
rank
Starting a Business
161
171
+10
Dealing with Licenses
166
163
-3
Trading Across Borders
176
175
-1
Paying Taxes
155
153
-2
Getting Credit
135
132
-3
Registering Property
43
40
-3
Protecting Investors
176
175
-1
Enforcing Contracts
23
23
0
Employing Workers
125
126
+1
Closing a Business
99
102
+3
Decrease in rankings of separate indicators is caused by:
• Addition of 3 countries in DB 2008;
• Other countries improved there regulations, while Tajikistan did not introduce any
improvement;
• Some indicators reflect worsening of the situation (e.g. in Paying Taxes the tax
rate increased by 0,1%)
Source: Web-based database of Doing Business on www.doingbusiness.org
Overall ranking
of Tajikistan on
ease of doing
business is 153
among 178
countries
Enforcing
contracts
represents the
theoretical
background
rather than real
practice
13
BEE areas
Starting a business became easier…
Access to
finance
Juridical
system
Number of procedures
13
Procedures
9
8
10
10
8
2
14
Thanks to
reforms in
licensing,
Starting a
business
became
easier in
Tajikistan
DB2007
13
DB2008
Time (days)
67
49
DB2007
Still
Tajikistan
has long
way to go
86
Time (days)
47
48
49
21
2
18
DB2008
DB methodology covers the
overall startup process from
state registration to actual start
of activity
1
47
49
1,3
311 51
77
119 161 174
6
Cambodia
DB2008
30
Tajikistan
DB2007
0,5
Belarus
Kyrgyz
Republic
Ease of
starting
business
40
3,1
Iran
0
Armenia
75
Cost (% of
income per
capita)
Australia
Cost (% of income per capita)
14
…but there is still room for improvement in
registration
Small and Medium Companies
business days
According to the
findings of SME survey
state registration
process for small and
medium companies did
not change
significantly and
requires substantial
time and cost
Time
25
2002
25
2005
somoni
Small and
medium
companies
underwent up to
6 steps to
complete state
registration.
“One-stop-shop”
could improve
registration
Cost
745
487
2002
2005
Source: IFC, SME Survey 2006
15
BEE areas
Dealing with licenses
(construction permits)
Access to
finance
Juridical
system
54
32
Procedures
7
17
19
29
19
704
670
Time (days)
429
350
2
3788
669
1992
• Necessity to apply for
different permits and
licenses by various state
bodies;
• Difficult access to the
information on procedures
and prices;
• Long consideration times of
applications;
• Non-compliance with new
Law on Inspections
Russia
73
Ukraine
94
Tajikistan
Iran 653
411
Armenia
6
Belarus
Ease of
dealing with
licenses
61
25
Cost (% of
income per
capita
191
116
65
New
Zealand
Dealing with licenses
indicator records all
procedures required
for a business in the
construction industry
to build a standardized
warehouse:
• Obtaining all
necessary PERMITS
and licenses;
• Receiving all
necessary
INSPECTIONS;
•Completing all
required notifications;
•Submitting all
necessary documents
MAIN ISSUES OF
CONSTRUCION LICENSING
IN TAJIKISTAN:
164 166 174 177
16
BEE areas
Licensing, Permits and Inspections: a
complementary reform is needed
Access to
finance
Juridical
system
Permit
a document that gives the applicant a
right to undertake a specific action
Licensing
Inspections
Licensing and
permits are two
alternative ways
to regulate
business
activities
Permit
requirements
represent the
basis for
inspections
The risk is that if not
addressed in a timely
manner permits reform
might undermine the
efforts in the related
areas
17
BEE areas
Trading across borders is complex…
Access to
finance
Juridical
system
EXPORT
13
Documents
7
4
7
4
One of the steps
includes
necessary
certification of
the products
80
Time (days)
2500
3000
2550
30
Armenia 1165
21
390
7
740
416
5
Cost, USD
82
64
42
Kyrgyz
Republic
10
Tajikistan
1
Uzbekistan
China
Ease of
trading
across
borders
Germany
6
Singapore
Tajikistan
made no
changes in
terms of
trading
accross
borders
between 2006
and 2007
which is
reflected in low
ranking
7
10
118 165 175 177
18
BEE areas
Access to
finance
…especially for SMEs
Juridical
system
79%
% of respondents
21%
Export
65%
14%
None of
respondents
considers export
procedures as
very easy!!!
78%
Existing
procedures are
complex and nontransparent
Import
2%
20%
25%
56%
0%
Very easy
25%
Rather Easy
22%
50%
75%
Rather complicated
100%
Very complicated
Source: IFC, SME Survey 2006
19
BEE areas
Access to
finance
Getting credit: no credit bureaus
Indicators
Description
Strength of legal
rights index
degree to which collateral and bankruptcy
laws protect the rights of borrowers and
lenders
Depth of credit
information index
Juridical
system
Tajikistan
Eastern Europe
and Central Asia
4
5.6
rules affecting the scope, accessibility
and quality of credit information
5
3.4
Public credit registry
coverage
number of individuals and firms listed in
a public credit registry
0
2.4%
Private credit bureau
coverage
number of individuals and firms listed by
a private credit bureau
0
15.4%
Tajikistan has no
credit bureaus which
makes lending risky
Tajikistan is on 135th
place on ease of
getting credit
20
BEE areas
Getting a credit is indeed a difficult
business …
Access to
finance
Juridical
system
Small and medium companies
NO
NO
NO
27
54
63
73
46
YES
34
YES
YES, by a bank
YES, by a MFO
3
Did your company need
external funding
Did you apply for a loan by a
bank/microfinance
organization
One of the
critical key
elements for
obtaining a
credit is the selfselection
process of
applicants
Did you get a loan
Source: IFC, SME Survey 2006
21
BEE areas
Access to
finance
... with critical issues
Juridical
system
% of respondents obtaining loan
45
30
Duration
Provided loans are short-term,
preventing long-term investment
22
Up to 3
months
3 to 6
months
% per annum
36
Interest
rates
1
12 to 24
months
above 24
months
38
34
Interest rates still remain very high,
forcing entrepreneurs to address
their needs by internal funds or
other sources
Average
interest
rate on
deposits
20%
Individual
entrepreneurs
Collateral
6 to 12
months
2
Collateral requirements are very
high and difficult to fulfill (e.g.
dehkan farmers can not pledge
their land user rights)
22
Small and
medium
companies
Dehkan farmers
% of collateral of principal amount
158
144
Individual
entrepreneurs
123
Small and
medium
companies
Dehkan farmers
22
BEE areas
Access to
finance
Protecting Investors
Juridical
system
Ranking in protecting
investors...
Protecting
investors
measures 4
indicators:
• Extent of
disclosure
index
• Extent of
director liability
index
• Ease of
shareholder
suits index
• Strength of
investor
protection
index
(average of 3
prior indices)
Expected FDI per
capita in 2007
...reflects FDI picture
FDI inflows, 2003-2007*, mln.USD
Tajikistan
176
68USD
600
385
32
22
54
2000
1200
Georgia
33
500
380
2003
450
454USD
2004
2005
2006
2007*
* - Forecast
Source: NBT, Ministry of Finance of Georgia
23
BEE areas
Attraction of the direct investments
Access to
finance
Juridical
system
Major areas of
investment attraction
To improve the
protecting investor
indicator Tajikistan
will need to work
further in two
directions:
1.Improve its
Investment
Climate, and
2.Learn how to
promote the
country.
These areas include
Investor
Facilitation
Providing better and more extensive services to its clients is a very
effective in a period when the government is completing steps to
formulate its approach to FDI.
Investment
Promotion
To better promote investment following tools should be used:
•Targeting companies
•Investment seminars/road shows
•Brochures
•Mailings and e-marketing
•Intermediaries
Investor
Aftercare
• Provide regular feedback to government about foreign investors´
experience of doing business in Tajikistan and formulate an effective
policy advocacy program
• Improve retention of existing investors and to generate new
investment through expansion, reinvestment or diversification
• Encourage positive perception of Tajikistan abroad.
Policy
Advocacy
Responsible body has to build a stronger reputation as a government
agency with a „balanced view“ by advocating policy changes
streamlining and improving the investment climate, yet protecting
national interests.
24
Content
• Doing Business: global picture and Tajikistan ranking
• Focus on specific indicators
• Doing Business in Central Asia: next steps
25
Next steps: regional DB
Countries covered
Kazakhstan
Doing Business team
in collaboration with
IFC PEP launched
regional study in
Central Asia and
covers following
indicators:
• Starting a business
• Dealing with
licenses
• Registering property
• Trading across
borders
Kyrgyz
Republic
Cities covered
•Astana
•Almata
•Aktobe
•Ust-Kaminogorsk
•Bishkek
•Osh
Tajikistan
•Dushanbe
•Khudjent
Uzbekistan
•Tashkent
•Ferghana
Regional study
to be finalized
by the
beginning of
2008
26
Next steps: what we expect
Main results
Regional Doing
Business Study
in Central Asia
would allow to
draw a picture
on
administrative
barriers
•Identification of best practices in the region and
possibility to use them across regions
•Assessment of institutional context within region
(not geographical location)
27