Logistics Constraints and Investment Climate

Uma Subramanian

Senior Economist

Investment Climate Unit

Private Sector Department

June 10, 2003

• Identify features that matter most for growth and productivity

• Benchmark performance relative to peers around the world• Highlight action to improve business climate • Promote informed dialogue to forge consensus on reform

priorities• Track changes over time to gauge impact of reforms

Investment Climate Assessments: Objectives

Approaches

• Investment Climate Assessments• Doing Business database and Indicators• Diagnostics

ICA

• A standard core survey instrument linking constraints to firm-level productivity.

• Quantitative questions in terms of dollars and days

• Standardized sampling and implementation across countries.

• Additional special modules

Investment Climate Assessments: Country Reports

  

Bolivia BrazilEcuadorHondurasNicaraguaPeruVenezuela

Eritrea Ethiopia KenyaMozambique NigeriaTanzaniaUgandaZambia

Bangladesh Bhutan India Nepal Pakistan Sri Lanka

CambodiaChina IndonesiaMalaysiaPhilippinesThailand

Kyrgyz Rep.MoldovaPolandSerbia (FRY)TajikistanUzbekistan

AlgeriaMorocco Syria

Entry Regulations Indicators - measure the procedures, time, cost and minimum capital requirements to register a business

formally

CountryNumber of Procedures

Duration (days)

Cost (% of GNI per capita)

Min. Capital (% of GNI per

capita)

Albania 11 62 62.5% 63.80%

Algeria 18 29 35.7% 81.80%

Argentina 14 63 10.6% 41.00%

Armenia 11 79 11.8% 17.20%

Australia 2 6 1.8% 0.00%

Austria 9 30 17.5% 128.80%

Azerbaijan 15 104 20.8% 0.00%

Bangladesh 7 30 77.6% 0.00%

Economic liberalization

Global markets with extensive

outsourcing - rapidly changing spatial

distribution of production, supply and

demand

“Just in time” deliveries

Global Emerging Trends

49.18 46.95

26.14

67.14

22.04

52.71

77.8981.49

35.62

65.1

33.37

59.82

0

10

20

30

40

50

60

70

80

90

EAP ECA LAC MENA SA AFRICA

Trade (% of GDP)

% o

f GDP

1990 2000

• Ability of countries to participate in global trends are critically dependent on how they are able to deliver goods and services in time and at low cost

• Knowledge of technological advances, and adaptation of innovative approaches,

• Institutional capacity to implement change

Logistics work under IC

Assessing Costs, Time, Variability

• Logistics Module : Firm level survey• Diagnostics: “Plumbing” approach• Development of indicators

Share of Exports/Sale

0.7

38.8

25.9

50.5

15.07

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Algeria Bangladesh China India Pakistan

Firms evaluating constraint as "major" or "very severe" (%)

24.2

19.4

9.95

27.0325.0

41.9

21.124.46

49.11

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Algeria Bangladesh China Pakistan Mozambique

Transportation Customs and trade regulations

% of firms evaluating constraint as "moderate" or "major"

19.34

14.9217.92

2.99

12.00

19.19

24.69

51.00 50.00

21.23

27.74

40.24

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Turkey Poland Moldova Azerbaijan Russia Tajikistan

Perc

enta

ge

C.Transportation G. Customs and Trade Regulations

Exports

8.6 8.8

5.5 5.1

9.24

17.00

14.2 14.0

8.19.3

17.71

21.38

0.0

5.0

10.0

15.0

20.0

25.0

Algeria Bangladesh China India Pakistan Mozambique

Avg. days to clear customs Longest day to clear customs

Imports

23.2

11.77.5

10.4

17.88

11.94

50.2

23.2

12.2

21.6

31.92

18.41

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Algeria Bangladesh China India Pakistan Mozambique

Avg. days to clear customs Longest day to clear customs

Imports

3.673.08 3.18

2.56

6.87

10.07

5.56 5.91 5.77

4.15

13.55

16.44

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

Turkey Poland Moldova Azerbaijan Russia Tajikistan

Days

Avg. days to clear customs (days) Longest delay to clear customs (days)

Exports

1.94 2.42 1.96 1.96

8.49

9.91

3.04

5.18

2.783.33

16.63 16.26

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

Turkey Poland Moldova Azerbaijan Russia Tajikistan

Days

Avg. days to clear customs (days) Longest delay to clear customs (days)

Case : High Value Exports from Landlocked Country to Europe

CONSIGNMENT ATTRIBUTES

Commodity Type CarpetShipment Size 1 TEUOrigin Kathmandu, NepalDestination Munich, GermanyVia Bremen Port, GermanyShipment Value $90,000.00

TRANSPORT & HANDLING

Cost Hours Cost Hours

Inland Transport $480.00 117 $740.00 88

Cargo Handling $260.00 74 $462.67 155

Ocean freight $1,200.00 528 $750.00 336

CROSS BORDER PROCESSING

Cost Time Cost TimeCargo Transfer $261.00 164 $125.00 37

Customs Inspection $405.00 20 $202.33 7

TRADE RELATED LOGISTICS

Time Cost of Goods

Insurance or Pilferage & Damage

Documentation & Forwarding

Bank Processing for L/C

LOGISTICS COSTS $5,343 $4,629LOGISTICS TIME 903 623

Kathmandu-Bhairawa-Nautanwa-Moradabad-Mumbai (JNPT)-Bremen

Cost

$360.00

ROUTE 3-2 ATTRIBUTES

$864.09

$675.00

$450.00

Kathmandu-Birgunj/Raxaul-Calcutta Port-Bremen

Cost

$360.00

ROUTE 3-1 ATTRIBUTES

$1,252.45

$675.00

$450.00