1 1 Business Registration Reforms (W Bank) 2
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- 1. WORLD BANK GROUPSUPPORT TO BUSINESS REGISTRATION REFORMS Andrei Mikhnev and Dobromir Christow World Bank Group CRF Annual Conference Cape Town, South AfricaAPRIL 20, 2010
- 2. Presentation outline Business Registration Reforms as tracked by Doing Business Single Point Registration Outsourcing of Business Registration Services Impact of Business Registration Reforms on Entrepreneurship Growth 2
- 4. For the fourth year running Singapore leads the overall rankings
- 5. New Zealand is number 1 in Starting a Business
- 6. Rwanda was top reformer moving from 143 to 67 position
- 7. Starting a Business: the most popular reforms3
- 8. CRF economies top DB10 indicators 4
- 9. CRF member countries among 20 top in the ease of Starting a Business 5
- 10. 2010 top reformers in the ease of Starting a Business 6
- 11. The ranking for CRF members 7
- 12. Starting a business indicator All procedures for an entrepreneur to start up and formally operate an industrial or commercial company 8
- 13. Starting a business – the process 9
- 19. Simple publication requirements (or none)
- 20. 3 procedures, 5 days, fees 1.5% GNI per capita (on average) New Zealand Canada Australia Singapore Georgia Macedonia, FYR Belarus United States Ireland Mauritius 10
- 21. Who reformed business registration (DB 2005-2010)? 11
- 22. Simplification of regulatory requirements is the most popular reform 12
- 23. Enabling on-line services is the second most popular reform 13
- 24. Decrease in minimum capital requirements over the last 5 years CRF member countries reduced/abolished their minimum capital requirements 14
- 25. Many countries impose high entry barriers *All countries are listed in order from least to greatest in terms of cost, time and number of procedures. Source: Doing Business 2010
- 27. 3 reforms, including starting a business
- 28. 3 procedures and 3 days16
- 30. Two procedures removed resulting in 9 procedures
- 31. Cost reduced by almost 45.61% of GNI per capita2008 16 days less Time (in days) 2009 Eliminated 2 procedures Procedures 17
- 32. For more information visit: www.doingbusiness.org 18
- 33. 19 Business Entry Advisory Projects
- 34. 1 New Wave of Reforms I: Single Point Registration, Notions, Nuances One-Stop Shop – office, paper, semi e-registration One roof or one door One window or one table – authorization Mostly used for paper-based systems, practice shows good results in Prince George’s Island, Canada and in Rwanda Single Point Registration – everywhere, e-documents Single window, or single access point for all Web-based interface via Internet, or public screens in the registry Virtual Location – UK, Norway, Sweden where Company Office is remote
- 36. Representatives of different institutions
- 38. Several databases – transfer of docs to the HQ
- 41. Low risk of harassment and corruption
- 42. Reduces time and cost for business? Only if synergy
- 43. Remote location of staff representatives
- 44. How to retrieve archives and database?
- 46. One joint-form, one number, one fee, one database
- 49. Institutions to transfer discretion
- 50. Coordination between institutions
- 51. Modified procedures - business process reengineering (BPR)
- 53. 24 Although not always a single point registration, the registries with OSS function outperform stand-alone registries
- 54. 25 New Wave of Reforms II: Outsourcing Generic Reasons for Outsourcing in Biz Registration Relevant expertise not available in-house Lack of funds for development plans (India and Gibraltar) Combination of both Cost savings is rarely the reason, but expected on a long run Many countries have outsourced some aspect of business registration, particularly development and operation of computer systems, but there are some that have gone further. Gibraltar has outsourced its whole registration system, including core functions.
- 55. 26 World Bank Group Survey: Outsourced Functions by Biz Registries 53 registries provided information 50% of the countries outsource functions to the private sector 75% with outsourcing to other parts of government
- 56. 27 Functions outsourced by the registries in the 53 countries, ICT functions outsourced Of the 53 biz registries: 40 outsource some function 29 outsource functions to the private sector 22 outsource functions to other parts of government 11 outsource functions to both public and private sectors Mostly ICT- related functions: systems development, computer operations, web site management: 36 outsource systems development 25 outsource computer operations 26 outsource web site management
- 57. 28 Non-ICT functions outsourced by the registries Other outsourced functions: 14 registries outsource receipt and examination of documents – 5 registries outsource to the private sector and 9 to government 17 registries outsource issue of certificates and provision of company information – 8 registries to the private sector and 9 to government 17 registries outsource handling of enquiries (in person, by telephone or in writing) – 6 registries to the private sector and 13 to government, including some that use both.
- 58. 29 Main activities outsourced for biz registration either to the private sector or to another governmental agency
- 60. A private organization managing the registry needs legal authority.
- 62. Partnership arrangements with other organizations to provide services in remote areas
- 63. Decentralization requires training of staff in partner organizations
- 65. 34 Risks, problems, lessons learned:Belgium – private sector one-stop shops
- 66. 35 Problems with IT Rights and Contracts:Lessons from Nigeria and Latvia Rights to the software, Nigeria: In 2005 Nigeria replaced the paper based system with electronic, but the contractor retained the IP rights over the software Amendments were needed later to integrate with tax registration Solution was found more than three years later Rights to the data, Latvia The Registry needed to enhance computer systems, lack of funds, arrangement with a company to provide IT services for exclusive rights to sell Registry data for 10 year s Funding resolved, but the website information lacked the official status Ministries had to pay a private-sector company at the market rate Contract contrary to newer EU law
- 68. To study the impact of regulatory, political, and macroeconomic institutional changes
- 72. Entry of new firms dropped 38
- 73. Entry Density 2009 &Starting a Business Rank 39 Entry Density
- 74. Impact of simplifying registration Evidence from recent research: “Quasi-experimental” evaluations of registration simplification in Mexico, Colombia, India Provide effects of reforms to registration procedures Cross-country studies Provide average effects of a certain level of regulation Easier and cheaper registration encourages new firms to register
- 75. Impact of reforms 41 Creation of new firms Employment
- 76. Impact of Reform in Egypt 42 FDI Increase – OSS in Egypt After the launch of the OSS in Egypt – increase in number of registered companies: from 2,500 in 2003 to 7,000 in 2009 OSS for biz registration reform contributed to the FDI increase in Egypt. In 2003 FDI was around $1billion, while after the introduction of OSS for biz registration in 2008 the FDI have increased up to $13 billion
- 77. THANK YOU CRF 2010 Andrei Mikhnev amikhnev@worldbank.org Dobromir Christow dchristow@ifc.orgAPRIL 2010, MAURITIUS
Notas do Editor
- Finding #1:The Middle East and North Africa increased its regional rate of reform quicker than any other region. Doing Business 2010: Reforming through Difficult Times finds that in 2008/09, 17 of 19 Middle East and North African countries passed regulatory reforms to create opportunities for local entrepreneurs.Finding #2: Egypt, a consistent reformer and a global top reformer for the fourth time, moved up to position 106 from 116 out of 183 global economies measured in the ease of doing business rankings. Egypt made business start up less costly and expedited the process to obtain construction permits. The reforms did not stop there- Egypt expanded the available credit information in the private credit bureau database and created commercial courts to expedite contract dispute settlement. Finding #3:The United Arab Emirates, moving from 47 to 33 in the global ease of doing business rankings, entered the global top 10 reformers list for the first time by eliminating the minimum capital requirement for business start-ups and simplifying registration documents. The United Arab Emirates also sped up building permit approval by improving its online system, and streamlined trade procedures and increased capacity at the ports.Finding #4:Saudi Arabia further shot up the global ranks to number 13 out of 183 on the ease of doing business - the highest ranked in the region, by establishing a one stop center for business registration and an expedited process for dealing with construction permits.
- 9
- Sixty-one economies made it easier to start a business in 2008/09 (table 2.2). Sub-Saharan Africa and Eastern Europe and Central Asia had the most reforms. For the first time a small island state led the way. Samoa’s new company act allows entrepreneurs to choose the amount of capital for their company. A flat fee replaced varying stamp duties. And thanks to standard forms, entrepreneurs can now opt not to use professional legal services. The new act also eliminated the antiquated requirement for a company seal. Belarus and Taiwan (China) were the runner-up reformers. Belarus simplified its registration formalities by merging 4 procedures, abolished the minimum capital requirement, made the use of a notary optional and removed the need for company seal approval. Start-up time was shortened by nearly 4 weeks. Taiwan (China), having cut the minimum capital requirement in half in 2008, this time abolished it altogether. It also did away with the business license, streamlined company and tax registrations and introduced time limits for incorporation and filings with labor authorities. Start-up time was shortened by about 3 weeks. Serbia implemented a one-stop shop combining company and tax registration. Korea eliminated its minimum capital requirement and dropped requirements for notarization. The United Arab Emirates eliminated the minimum capital requirement. Hong Kong (China) streamlined registration procedures and introduced a new incorporation form, merging 3 procedures into 1. Indonesia introduced standard registration forms, cut the requirement to obtain a certificate of company domicile and made business and tax registration faster. Start-up time was cut by 16 days. Malaysia set up a one-stop shop hosting the company registry, the Inland Revenue Board, customs, financial institutions and the pension and social security agencies. Singapore combined tax and company registration in a single online form. Macedonia starting a business now takes 4 days, because the central registry forwards relevant company information to other institutions. Several documents no longer have to be notarized.Colombia established a new public-private health provider where employers and employees can be registered within a week. It also introduced online pre-enrollment with the social insurance system. In Pakistan, thanks to an e-services project and the introduction of digital signatures, new companies can register and file tax returns online. Botswana simplified business licensing and tax registration as part of an ongoing computerization effort.
- New Zealand: 1 Procedure, 1 day, 0.4% of income per capita, 0 minimum capital requirementMinimum capital requirement - 80 countries do not require a min cap requirementAn amount written in the law (company law)Proof of capital deposited in the bank required at registrationPaid in : what is the amount paid upfront? as an amount or percentage Can be deposited by lawyer or notaryCheck the name of the companyMay be done on line in the registrar’s website or at the registryHow long to wait before obtaining the final nameIt can be a numberOne-stop shop: What exactly do they do (complete registration, forward document to other agencies – if so, how? By mail, electronic system, pouch, central database?). What other services do they offer? Is anyone using those? Is there one contact person to go to or several offices? What percentage of companies actually uses the one-stop shop? Is it mostly foreign or also domestic?PublicationOn-line- (EU Requirement)In the official gazette (for civil law countries)Can be done at the registry itself Company sealOften and outdated practice-still required by law although easily forged/doesn’t really bring much purpose.Which agency required documents with a sealTax registrationDifferent steps registration to different taxes : VAT, Income taxOne ID number (unique), one database, online registrationTemporary number Possible inspection
- Mauritius / South Africa / Cape Verde
- Egypt, Madagascar, Morocco, Madagascar (DB10), Mozambique (DB10)
- 43, 23, 38
- 1. Starting a businessSingapore continued its business start-up reforms and further streamlined the process by merging the tax registration procedure with the procedures of business registration. Now the two procedures can be executed simultaneously and seamlessly using the same online form. The portion of the online form pertaining to GST registration is electronically transmitted to IRAS for registration and upon successful registration, IRAS notifies the applicant about the outcome of the application. Implication: 1 procedure, 1 day and SGD 70 are abolishedSummary of Reform: Singapore further simplified business start up by making it possible to incorporate the company and register for taxes simultaneously and seamlessly using the same online form2. Construction permitsIn Singapore, prior to November 2008, the Workplace Safety & Health (Registration of Factories) Regulations required all factories to be registered before they could commence operations. Registration was valid for up to two years. A SGD 540 annual fee was payable upon registration and renewal. The system did not differentiate lower risk factories in the process.The new scheme will apply all factories except construction worksites, shipyards, metalworking companies, wafer fabrication, petrochemical, chemical and pharmaceutical plants. Qualifying factories are factories with lower risks of fatalities and accidents. They will no longer be required to pay an annual registration fee nor are they required to renew their registration. To strengthen risk management (RM) requirements, these factories will now be required to make a declaration that they have implemented RM at their workplaces before work can commence.Starting 1 November 2008, qualifying factories will only be required to make an online declaration that they have implemented risk management in their factories and notify the Commissioner for Workplace Safety and Health of their operations via the On-line Business Licensing System (OBLS) at https://licences.business.gov.sg.Implication: Time was reduced by 13 days and cost was reduced by 1% of GNIpc.Summary of Reform: Singapore has further eased the process of dealing with construction permits with a new Workplace Safety & Health Regulations that allow low risk industries to submit documents on-line4. Registering PropertySingapore has continued improving its Computerized Systems of Government Agencies (Integrated Legal Requisition System "Intereq") by upgrading of the systems and streamlining the administrative procedures of the various government agencies providing the Intereq Service. As an example, the Land Transport Authority has enhanced their systems to provide instant replies.With "Intereq", lawyers can now send legal requisitions to relevant government agencies via the internet, and receive replies to legal requisitions applications via the Internet. And to further improve the system, several government agencies are currently working closely with CrimsonLogic to refine the work processes to provide more timely replies.As a result, it is now faster to obtain responses while conducting due diligence.Implication: As a result of this improvement, the time needed to conduct all due diligence has been reduced by 4 days.Summary of Reform: Singapore eased property registration by improving its computerized system
- It moved by 12 spots from 173 to 161.
- Indonesia, Timor-Leste, Cambodia, Montenegro, Liberia, Azerbaijan, Bangladesh, Bhutan, Rwanda, Madagascar, Sudan, Burkina Faso, Brazil, Georgia, Peru, Philippines, Egypt, Papua New Guinea, Yemen, Serbia, Armenia, Solomon Islands, Tonga, Mexico, Honduras, Caribbean, Ecuador, Nicaragua, Laos, Morocco, El Salvador, Sierra Leone,
- 100 countries in the database"Total": Is the number of total registered corporations at year-end."New": Is the number of newly registered corporations during the calendar year.“Total Business Density": Is the number of total registered corporations divided by total working age population. “New Business Density": Is the number of newly registered corporations divided by total working age population. “Business Entry Rate": Is the number of newly registered corporations divided by the number of total registered corporations.
- More interesting, perhaps, is the shift in the relationship between the regulatory environment and entrepreneurial activity. Between 2003 and 2007, the change in new business entry is significantly and positively associated with the strength of the regulatory environment (after controlling for GDP per capita). That is, countries in which it is time-consuming and costly to register a business experienced less growth in new business entry than those with a cheap and modernized registration process (Klapper, et al, 2009). During the crisis, however, the strength of the regulatory environment loses its predictive power on entrepreneurial activity. Essentially, these preliminary results suggest that a strong regulatory environment cannot safeguard an economy against a sharp contraction in new formal business entry during a financial crisis.
- Albania: In 2006, starting a business became easier with online publication, reduction of the registration cost, and the consolidation of tax, health insurance, and labor registration into a single application. The corporate income tax rate was reduced from 20 percent to 10 percent effective January 1, 2008. Between 2001 and 2006, Albania averaged 1,055 new corporation registrations per month. The average for 2007 and 2008 was 2,591.El Salvador: In 2007, implemented a new commercial code that simplified business start-up by reducing the minimum capital requirement, simplifying the legalization of accounting books, and publication requirements. New firm registration increased from 1,680 new firms in 2007 to 2,699 in 2008, and 4,400 in 2009.Belarus: In 2006, Belarus implemented a one-stop combining company registration, seal design approval, and registrations with tax, statistical and social security authorities. This, together with a new notary fee schedule, results in a reduction in the number of procedures from 16 to 10, time from 69 to 48 days, and cost from 26% to 9% of GNIpc. Prior to 2006, the corporation entry density in Belarus had been stagnant, with entry density averaging 0.94, less than half the ECA average for the same period. Between 2007 and 2009, this figure more than doubled to 2.69, surpassing the ECA average. Even in 2009, when most countries saw a sharp decrease in entry density, Belarus' entry density continued to rise, reaching a decade-high 3.21. Burkina Faso: In 2005, it took 40 days to complete the 12 formalities associated with starting a business. By 2008, the number of processes had been reduced to 5 and these could be completed in 16 days. Over the same period, new corporation registrations rose 25%. Rwanda: In 2008, business start-up was eased by eliminating a notarization requirement; introducing standardized memorandums of association; enabling online publication; consolidating name checking, registration fee payment, tax registration, and company registration procedures; and shortening the time required to process completed applications. Between 2004 and 2007, there was an average of 742 new corporations per year; in 2008, 3,028 new corporations were registered in Rwanda.