PSWG Policy Priorities for 2009- Annual Planning

Maputo, February 2009

Criteria for setting policy priorities

• Quick-win reforms to improve Mozambique Doing Business Ranking

• Broad-based business enabling environment reform

• Maximum of five policies per year

Proposed Quick-win Reforms

Starting a business

Eliminate minimum capital and bank deposit requirement

71 133

Dealing with licenses

Combine three procedures (request of DUAT, topographic plan and building permits) and impose statutory time limits

105 136

Trading across borders

Eliminate pre-shipment inspection and introduce the single window

131 137

Paying taxes Eliminate the stump duty 87 140

Employing workers

Approve of Labor Law

Closing business

Approve bankruptcy and recovery law

Getting Credit

123

Enforcing Contracts

Improve functioning of commercial court and use of arbitration centers

unknown unknown

Registering property

Convert SISA into service fee unknown unknown

Protecting Investors

Reduce time and cost 149

Mozambique best ranking 38

Broad Based Reform

Reduce time and cost 124

Create a new private credit bureau and improve securities law

Already approved. Impact in two years due to transitional provisions

Reduce time and cost required to resolvebankruptcies,

133 Already approved.

Reduce number of payment from 37 to 36 88

Reduce firing cost - bringing in line with SADCcountries

161

Reduce the number of procedures to getconstruction permits from 17 to 15; and time from381 days to 201 days

153

Reduce time to import from 32 to 23 days; andimport documents from 10 to 9

140

Indicator impact

Overall impact (from 141)

Minimum capital to start a business reduced from122.5% to 0% GDP per capita; procedures from 10to 9; and time from 26 to 25 days;

144

Topic Suggested reform Impact Current Rank

(DB 2009)

Proposed Broad Based Reforms

Area Suggested reform Observations

          Allow free transferability of rural land use concessions (DUATS)

          Establish a mechanism that allow the use of DUAT as collateral           Increase tax on land to encourage user to make productiveinvestment

Fiscal           Create single tax regime for SME’s Already approved

          The 2007 labor law’s quotas for expatriate workers should beautomatic with no unnecessary red tape.

          Reduce the cost of firing in line with the SADC countries

          Create a second-tier bond market to open new avenues forfinancing for larger domestic businesses, and create competition forthe banks in dealing with traditional clients.

          Introduce new banking regulations on commissions and fees thatenhance transparency in the banking system.

          Amend Aviso 5/2005 to broaden the set of borrowers who canqualify for loans in foreign exchange

          Create a new private bureau and improve securities law

          Expand air transport competition and decrease taxes and fees forairlines and passengers;

Government and private sectorpriority;

          Open sea freight competition for domestic shipping; Impact on enhancing Mozambiquecompetitiveness in SADC region

          Remove Barriers at Borders

Trade

Land

Less political will to embark on land reform.

Finance

Private sector priority due to lackand high cost of finance fordomestic investment;

Labor

Already approved

Selected ReformsTopic

Selection criteria

Desired Outcome 2009implementing

institutionOther Partners PSWG Projects

Analytical support

PSWG focal point

Starting a business

Quick-Win

Eliminate minimum capital

and bank deposit

requirement

Ministry of Justice

Ministry on Industry and Commerce and CTA

WB, USAID, Norwegian Embassy and GTZ,

USAID

Dealing with

Licenses

Quick-Win

Combine three procedures (request of DUAT, topographic plan and building) and impose statutory time limits

Municipality Authority

Ministry on Industry and Commerce, Ministry of Public Works and Housing and CTA

GTZ and USAID USAID

Trading across

borders

Quick-Win/ PAPs

Eliminate pre-shipment inspection and introduce single window in Mozambique

Tax Authority (Customs)

Ministry on Industry and Commerce, Ministry of Finance and CTA

USAID TIP, EC, and IF Mechanism

IF Mechanism

Create a second-tier bond market. Introduce new banking regulations on commissions and fees.Amend Aviso 5/2005.Create a new private credit bureau and improve Expand air transport

competition and decrease

taxes and fees for airlines

and passengersOpen sea freight competition for domestic shipping; Remove Barriers at Borders

USAID

TradeBroad Based

Ministry of Transport and

Communications; and Tax

Authority

Ministry on Industry and Commerce, Ministry of Tourism, Ministry of Finance and CTA

IF Mechanism Italian Coop

FinanceBroad Based

Central Bank

Ministry on Industry and Commerce, Bolsa de Valores de Moçambique, CTA and Financial Sector Working Group

Next stapes

• Produce the Technical Notes• Complete the Work plan for the selected

policies, including:– PSWG Focal point– Available PSWG Projects– Available Analytical Support

• Establish the Implementing and Monitoring Mechanism

• Thank You!