Starting a business in Madagascar

IndonesiaSylvia SolfJustin Yap7 November 2007

Doing Business Indicators

2007 2008 2009• Starting a business

• Dealing with licenses

• Employing workers

• Registering property

• Getting credit

• Protecting investors

• Paying taxes

• Trading across borders

• Enforcing contracts

• Closing a business

• Update of 2007

• Add 3 countries

• Reformer’s Club:

• 11 case studies

• Add Not paying bribes

• Add Using

infrastructure

• Research program on

regulation and

business opportunities

for women

178 Countries

Doing Business basic methodology: Time and motion study

1. Obtain the standard form of the company deed

2. Notarize deeds

3. Certificate of domicile

4. Obtain NWPW number (taxes)

5. Deposit capital in a bank

6. Pay registration fee at Treasury

7. Register at Ministry of Justice

8. Register with the Company Register

9. Apply for publication

10. Apply for trade license

11. Registration of manpower

12. Social security

Cost

(right axis)

Time

(left axis)

Co

st (

% o

f G

NI

pe

r ca

pit

a)

Tim

e (n

um

be

r o

f d

ays

)

0

20

40

60

80

100

120

0%

10%

20%

30%

40%

50%

1 2 3 4 5 6 7 8 9 10 11 12

60%

70%

80%

90%

List of procedures

Starting a business in Indonesia

Tracking reform: Easier property transfer in Ghana

Time reduced from 169 to 34 days

0

20

40

60

80

100

120

140

160

180

Procedures

2007

2006

Preparation of the transfer document

Assessment and payment of stamp duty

Submit application for Title Certificate

Publication of transaction

Issuance of Title Certificate

Tim

e (d

ays

)

Procedure eliminated:Registration of deed and land commission

Top 30 on the Ease of Doing Business — 2007

1. Singapore 16. Switzerland

2. New Zealand 17. Estonia

3. United States 18. Georgia

4. Hong Kong, China 19. Belgium

5. Denmark 20. Germany

6. United Kingdom 21. Netherlands

7. Canada 22. Latvia

8. Ireland 23. Saudi Arabia

9. Australia 24. Malaysia

10. Iceland 25. Austria

11. Norway 26. Lithuania

12. Japan 27. Mauritius

13. Finland 28. Puerto Rico

14. Sweden 29. Israel

15. Thailand 30. Korea

Top Reformers in 2006-07

1.Egypt

2.Croatia

3.Ghana

4.Macedoni

a FYR

5.Georgia

6.Colombia

7.Saudi Arabia

8.Kenya

9.China

10.Bulgaria

Starting a

business Dealing with

licenses Employing

workers

Registering

property Getting credit

Protecting

investors Paying taxes

Trading

across

borders

Enforcing

contracts Closing a

business

Eastern European and OECD countries reform steadily

Countries with at least one positive reform in 2006-7 (%)

E. Europe + Central

Asia

78.6%

62.5%

South Asia

OECD

62.5%

Middle East + N. Africa

Sub-Saharan Africa

East Asia+ Pacific

Latin America+ Caribbean

35.5%

58.8%

52.2%

45.8%

Eastern Europe surpasses East Asia on the ease of doing business

Average rank, ease of doing business

22

76 77

87

96

107

136

High income: OECD Europe & Central Asia East Asia & Pacific Latin America & Caribbean Middle East & North Africa South Asia Sub-Saharan Africa

High income OECD

Latin America &

Caribbean

East Asia & Pacific

MiddleEast &

North Africa

Eastern Europe

& Central Asia

South Asia Sub Saharan Africa

Indonesia in the region

Singapore 1Hong Kong, China 4Japan 12Thailand 15Malaysia 24Korea 30Brunei 78China 83Vietnam 91Indonesia 123Philippines 133Cambodia 145Lao PDR 164Timor-Leste 168

How Indonesia ranks in each indicator

Topic Indonesia’s Rank World’s highest ranked

Starting a business 168 Australia

Dealing with licenses 99St. Vincent & the

Grenadines

Employing workers 153 United States

Registering property 121 New Zealand

Getting credit 68 United Kingdom

Protecting investors 51 New Zealand

Paying taxes 110 Maldives

Trading across borders 41 Singapore

Enforcing contracts 141 Hong Kong, China

Closing a business 136 Japan

Ease of trading across borders in Indonesia compared to region

1

3

21

29

36

41

42

50

57

63

75

78

82

111

139

158

168

Singapore

Hong Kong, China

Malaysia

Taiwan, China

Brunei

Indonesia

China

Thailand

Philippines

Vietnam

East Asia&Pacific (avg)

Timor-Leste

Papua New Guinea

Fiji

Cambodia

Lao PDR

Mongolia

Indonesia’s reforms improved ease of doingbusiness in 3 areas

1.China

2.Fiji

3.Indonesia

4.Lao PDR

5.Malaysia

6.Micronesi

a

7.Mongolia

8.Thailand

9.Timor Leste

10.Tonga

11.Vanuatu

12.Vietnam

Starting a

business x Dealing with

licenses Employing

workers

Registering

property x

Getting credit Protecting

investors Paying taxes

Trading across

borders Enforcing

contracts Closing a

business

Shorter licensing times

Time to obtain building Permit

New regulation specifically revoked provisions on time period to complete building permits and special permits/building statement

28 Days

After reform: 21 days

Before reform: 49 days

Time to obtain a building permit cut by more than half

Easier access to credit

Countries that expanded scope

of information covered by credit

registries or bureaus

China

France

Georgia

Honduras

India

Indonesia

Kenya

Kuwait

Pakistan

Saudi Arabia

Trinidad and Tobago

Tunisia

West Bank and Gaza

Minimum loan amount lowered in the public credit registry lowered from 50 million rupiah to ZEROZERO

Stronger investor protections

Indonesia deepened corporate disclosure requirements

Indonesia

Hong Kong

9

5

3

10

89

5.67

8.67

Disclosure Index

Director Liability Index

Shareholder Suits IndexTotal Investor Protection Index

105.0

46.8

14.9

Days to open a business

Indonesia Regional average OECD average

Time and cost to start a business

Time in days Cost as % of GNI per capita

80.0

34.7

5.1

Cost to open a business

Opportunities for reform: simplifying business start-up

0.1

1.2

2.42.8

3.64.2 4.2 4.4

4.9 5

6.2 6.3

10.511

12

New

Zea

land

Vietn

am

Malay

sia

Sin

gapo

re

Chi

na

Lao

PDR

Phi

lippi

nes

Cam

bodi

a

East

Asia

&Pacifi

c (a

vg)

Hon

g Kon

g, C

hina

Taiwan

, Chi

na

Tha

iland

Indo

nesia

Van

uatu

F

iji

Reducing cost to transfer property

Cost to register property (% of value)

How to jump 41 places by reforming in 3 areas

Starting a business (rank: 168)• Eliminate minimum capital requirement• Make notary involvment optional • Consolidate government approvals at one-stop shopNew global rank: 61

Registering property (rank: 121)• Introduce low flat registration feeNew global rank: 52

Getting credit (rank: 68)• Grant borrowers access to their credit information• Collect and distribute information from retailers, trade creditors & utilitiesNew global rank: 42

Indonesia’s New Overall Rank: 82

Why does it matter? Business Friendly Regulation Leads toMore Registered Businesses and Start-ups

Countries ranked by ease of doing business, quintiles

Business Density (registered firms per capita)

Business Entry (new firms in % of registered firms)

Source: Doing Business database

Easiest Most difficult Most difficultEasiest

…Which Means more Formal Employment

Source: Doing Business database, WDI

Informal Sector (% of GDP)

Unemployment (% of labor force)

Easiest Most difficult Most difficultEasiest

Countries ranked by ease of doing business, quintiles

More Reforms, Higher Equity Returns

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

-6 -4 -2 0 2 4 6 8 10 12

3-year Shareholder Returns

Venezuela

Egypt

Colombia

Sri Lanka

India

Brazil

Poland

Number of reforms, 2003-06

Thank you

For more information, please visit www.doingbusiness.org