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WORLD BANK GROUPSUPPORT TO BUSINESS REGISTRATION REFORMS
Andrei Mikhnev and Dobromir ChristowWorld Bank Group
CRF ANNUAL CONFERENCECAPE TOWN, SOUTH AFRICA
APRIL 20, 2010
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
Key Findings
CRF member countries are at the top of Doing Business 2010 rankings
For the fourth year running Singapore leads the overall rankings
New Zealand is number 1 in Starting a Business
Rwanda was top reformer moving from 143 to 67 position
Starting a Business: the most popular reforms
3
Topic World’s top ranked CRF top ranked
Starting a business New ZealandNew Zealand (1)
Australia (3)
Dealing with construction permits
Hong Kong, ChinaHong Kong, China (1)
Singapore (2)
Employing workers SingaporeAustralia
Singapore (1)Australia (1)
Registering propertySaudi Arabia
New Zealand (3)
Getting creditMalaysia
Malaysia (1)Australia (4)
Protecting investorsNew Zealand
New Zealand (1)Singapore (2)
Paying taxesMaldives
Hong Kong, China (3)Singapore (5)
Trading across bordersSingapore
Singapore (1)Hong Kong, China (2)
Enforcing contractsLuxembourg
Hong Kong, China (3)
Closing a businessJapan
Singapore (2)
CRF economies top DB10 indicators
4
1. New Zealand 11. Rwanda
2. Canada 12. Madagascar
3. Australia 13. Saudi Arabia
4. Singapore 14. Kyrgyz Republic
5. Georgia 15. Puerto Rico
6. Macedonia, FYR 16. United Kingdom
7. Belarus 17. Azerbaijan
8. United States 18. Hong Kong, China
9. Ireland 19. Jamaica
10. Mauritius 20. Samoa
CRF member countries among 20 top in the ease of Starting a Business
5
2010 top reformers in the ease of Starting a Business
6
Country DB 2010 DB 2009
1 Samoa 20 131
2 Belarus 7 98
3 Taiwan, China 29 119
4 Korea, Rep. 53 133
5 United Arab Emirates 44 118
6 Rwanda 11 64
7 Madagascar 12 60
8 Mozambique 96 143
9 Armenia 21 65
10 Serbia 73 108
The ranking for CRF members
7
New Z
ealan
d
Austra
lia
Mac
edon
ia
Rwanda
Hong
Kong
Sri La
nka
Tunisi
a
South
Afri
ca
Colom
bia
Botsw
ana
Zambia
Vanua
tu
Indo
nesia
0
20
40
60
80
100
120
140
160
180
Starting a business indicator
All procedures for an entrepreneur to start up and formally operate an industrial or commercial company
8
Starting a business – the process
Pre-registration• M
inimum capital requirement
• Company name search
• Document preparation & notarization
Publication Company sealTax and social security registration Mandatory insurance registration
9
Starting a business – top 10 and best practices
1. New Zealand
2. Canada
3. Australia
4. Singapore
5. Georgia
6. Macedonia, FYR
7. Belarus
8. United States
9. Ireland
10. Mauritius
• Nominal or zero minimum capital• Standardized forms• No court involvement • Online registration • Fixed registration fee• Simple publication requirements (or none)• 3 procedures, 5 days, fees 1.5% GNI per
capita (on average)
10
Country Reforms Country Reforms
IndonesiaDB07, DB08,DB09,DB10 Mongolia DB05
Malaysia DB08, DB09, DB10 Australia DB08
Singapore DB06, DB09, DB10 Netherlands DB07Australia DB08 Nigeria DB06,DB08
Botswana DB09, DB10 Hong Kong, China DB10Colombia DB05,DB09,DB10 Pakistan DB10
India DB07 Rwanda DB07, DB10
JordanDB07, DB08,DB09,DB10 New Zealand DB09
Macedonia DB07,DB08,DB09,DB10Samoa DB10Malaysia DB08,DB09,DB10 Canada DB09Mauritius DB08,DB09 Singapore DB06,DB09,DB10
South Africa DB09 Sri Lanka DB05, DB08
Tunisia DB06, DB09 UAE DB10
Zambia DB09 UK &Vanuatu 0
Who reformed business registration (DB 2005-2010)?
11
Simplification of regulatory requirements is the most popular reform
38%
19%
16%
13%
9%
3%3%
registration simplification
online registration
decrease or cut fees/flat fees
Creation/ improvement of One-Stop Shop
Abolishment /reduction of minimum capital requirement
Introduction or shortening of statutory time limits
Computerization of the registry
12
Enabling on-line services is the second most popular reform
13
Decrease in minimum capital requirements over the last 5 years
CRF member countries reduced/abolished their minimum capital requirements
14
Many countries impose high entry barriers
Cost to start a business:More than 50% of GNI per capita*
Zimbabwe, Democratic Republic of Congo, Guinea-Bissau, Central African Republic, Haiti, the Gambia, Togo, Djibouti, Comoros, Chad, Benin, Burundi, Angola, Guinea, Cambodia, Federal States of Micronesia, Côte d'Ivoire, Cameroon, Sierra Leone, Niger, Suriname, Nicaragua, Malawi, Equatorial Guinea, Bolivia, Mali, Republic of Congo, Uganda, Republic of Yemen, São Tomé and Principe, Lebanon, Nigeria, Eritrea, Iraq, India, Senegal, Paraguay, West Bank and Gaza, Nepal, Liberia, Solomon Islands, Belize, Burkina Faso
Time to register a business:More than 2 months*
Suriname, Guinea-Bissau, Haiti, Democratic Republic of Congo, São Tomé and Principe, República Bolivariana de Venezuela, Equatorial Guinea, Brazil, Brunei Darussalam, Lao PDR, Zimbabwe, Cambodia, Eritrea, Timor-Leste, Iraq, Chad, Togo, Angola, Namibia, Uruguay, Ecuador, Botswana, Swaziland
Number of procedures to register:More than 10*
Equatorial Guinea, Chad, Brunei Darussalam, Uganda, Brazil, Guinea-Bissau, República Bolivariana de Venezuela, Argentina, Bolivia, Greece, Philippines, Algeria, China, Democratic Republic of Congo, Ecuador, Eritrea, Guinea, Haiti, Honduras, India, Kuwait, Suriname, Swaziland, Bosnia and Herzegovina, Cameroon, Costa Rica, Kenya, Tajikistan, Tanzania, Montenegro, Burundi, Comoros, Djibouti, Guatemala, Iraq Uruguay, Vietnam, West Bank and Gaza
*All countries are listed in order from least to greatest in terms of cost, time and number of procedures.Source: Doing Business 2010
Reform case: Singapore
No. 1 for the fourth year running 3 reforms, including starting a business 3 procedures and 3 days
1 2 3 40
1
2
3
4
Procedures
1 day less
Eliminated 1 procedure
DB09
DB10
Tim
e (
in d
ay
s)
16
1 2 3 4 5 6 7 8 9 10 110
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
Reform case: Indonesia
Procedures
Tim
e (i
n d
ays)
Time reduced by 16 days to 60 days Two procedures removed resulting in 9 procedures Cost reduced by almost 45.61% of GNI per capita
2008
2009
16 days less
Eliminated 2 procedures
17
For more information visit: www.doingbusiness.org
18
19
Business Entry Advisory Projects
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
21
Every Counter under the One Roof is a Mini-Stop or a Mini-Point of Access - Synergy only on the Surface
STRUCTURE UNDER ONE ROOF One location Representatives of different institutions Many counters/interfaces Several databases – transfer of docs to the HQ Services and fees at the same place - OSS in Angola and Rwanda
ADVANTAGES, RISKS AND CHALENGES No legal changes Independent Institutions Low risk of harassment and corruption Reduces time and cost for business? Only if synergy Remote location of staff representatives How to retrieve archives and database? Institutional capacity and career development challenges
22
The front office is a Single Point of Access – back-office synergy, one form, fee, database in one process
STRUCTURE WHEN HAVING A SINGLE POINT REGISTRATION Only one interface/front office One joint-form, one number, one fee, one database Back-office processing Key difference from the old OSS – authorization to process on behalf of
other institutions
ADVANTAGES, RISKS AND CHALENGES Legal amendments mandatory Institutions to transfer discretion Coordination between institutions Modified procedures - business process reengineering (BPR) Fully authorized and trained staff
23
Global review, problems experienced and lessons learned
In 2009 the WBG conducted a global review on OSS for business start up How Many Stops in a OSS?
Out of 183 countries 67 have single point registration or OSS (EU claims all 27 members have OSS)
Single Point Registration (SPR) vs.OSS: Not all OSS are SPR -multiple interfaces even in all-online systems
Commercial Registry with other bodies on the same site – no SPR
Commercial Registry liaises with other bodies – more likely effective SPR
Bigger OSS, including Registry liaises with other bodies – more likely SPR
Integrated Registration Function – paper or online – more likely SPR
Online Registration Facility – no SPR when disintegrated processes are put just online and replicate the old paper process
24
Although not always a single point registration, the registries with OSS function outperform stand-alone registries
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.
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
No outsourcing
Outsourcing to public sector
Outsourcing to both public and private sectors
Outsourcing to private sector
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
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.
29
Main activities outsourced for biz registration either to the private sector or to another governmental agency
Main activities outsourced by business registries
Systems development
Computer operations
Web site management
Registration action
Providing information
Handling enquiries
30
Risks, problems, lessons learned: UK - was privatization an option?
The problem: a political initiative for privatization of government services
The solution: Consultation and market-testing of new activities
The result: Outsourced call centre; use of private sector where relevant skills not available in-house; continuing re-evaluation
LESSON FROM UK
Market-testing can lead to retaining functions in-house
31
Risks, problems, lessons learned: Colombia – registration with Chambers of Commerce
The problem: No state funding The solution: The role of CoC in the law
The result: A national database; cooperation with other agencies; commercial and tax registration effected within 2 days; OSS extended to cover other agencies.
LESSONS FROM COLOMBIA
Private sector organization can finance
A private organization managing the registry needs legal authority.
A chamber of commerce can provide a range of services to support businesses as well as maintain the register
32
Risks, problems, lessons learned: South Africa – reaching out to remote areas
The problem: Providing services to businesses over a vast geographical area
The solution: Partnership agreements with development agencies and the Post Office
The result: Services now offered via an increasing number of offices (currently 128)
LESSONS FROM SOUTH AFRICA
Different customers require different service
Partnership arrangements with other organizations to provide services in remote areas
Decentralization requires training of staff in partner organizations
Documents and fees submitted at post offices
33
Risks, problems, lessons learned:India – involving the private sector
The problem: Inaccessibility of registration offices; complex procedures; slow service; lack of funding
The solution: PPP involving a private-sector company in development of systems and operation of existing and new offices
The result: Improved outreach; several awards for innovation and customer service
LESSONS FROM INDIA Within a national e-governance plan.
PPP - private sector partner provides both skills and finance
A pilot implementation for large-scale projects
Different approach to legacy vs. new registrations
Service-level agreement with any contractor and arrangements for monitoring
34
Risks, problems, lessons learned:Belgium – private sector one-stop shops
The problem: Rationalize collection and use of data throughout government
The solution: Introduction of a centralized database and private-sector one-stop shops
The result: One-stop process for registration with Register of Legal Entities, VAT and Social Security
LESSONS FROM BELGIUM
OSS can simplify administrative procedures
OSS can be operated by private sector companies with access to a government database
The number and location determined by the market – no need to limit
Registration can take place alongside commercial activities
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
Entrepreneurship Database
36
Objectives• To understand the universe of private enterprises around the
globe• To study the impact of regulatory, political, and macroeconomic
institutional changes• To understand what drives entrepreneurs to graduate from the
informal to the formal sector
Indicators• Business Entry Rate• New Business Density• Total Business Density
37
Entry of new firms dropped
38
2000 2001 2002 2003 2004 2005 2006 2007 2008 20090.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
High Income
Upper-Middle Income
Lower-Middle Income
Low Income
En
try
De
ns
ity
Entry Density 2009 &Starting a Business Rank
39
0 20 40 60 80 100 120 140 1600.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Ease of Starting a Business Rank
En
try
Den
sity
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
Impact of reforms
41
Country Author Reform New firms
Colombia Cardenas and Rozo (2007) Introduction of a one stop shop (CAE program)
+ 5.2%
India Aghion et al. (2008) Elimination of license Raj (reduction of procedures to start a business)
+ 6%
Mexico Bruhn (2008) Introduction of a one stop shop (SARE program)
+ 5%
Creation of new firms
Country Author Reform Impact (employment)
Mexico Bruhn (2008) Introduction of a one stop shop (SARE program)
+ 2.8%
Employment
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
THANK YOU CRF 2010
Andrei [email protected]
Dobromir Christow [email protected]
APRIL 2010, MAURITIUS
