Doing Business 2007-2008 Presentation of main results

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Doing Business 2007-2008Presentation of main
results

• Dushanbe, December 4, 2007

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Content

• Doing Business global picture and Tajikistan
  ranking
• Focus on specific indicators
• Doing Business in Central Asia next steps

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Doing Business global tool to assess private
sector development
Major highlights of Doing Business
The Doing Business project provides objective
measures of business regulations and their
enforcement across 178 countries using experts
opinions.

• Annual report to measure business environment
  worldwide
• Started in 2003 with coverage of 5 indicators and
  more than 130 countries
• In 2007 Doing Business covers 10 indicators and
  178 countries worldwide
• Since 2003 the report informed and inspired over
  120 reforms of business regulations
• The bestselling report of WBG
• Publicly available comprehensive web-based
  database most visited website in the WBG

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Business friendly regulation leads to more
registered businesses and start-ups
Business density (registered firms per capita)
Business entry (new firms in of registered
firms)
Easiest
Most difficult
Most difficult
Easiest
Countries ranked by ease of doing business,
quintiles
Source Doing Business database
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..which means more formal employment
Unemployment ( of labor force)
Informal Sector ( of GDP)
Most difficult
Easiest
Most difficult
Easiest
Countries ranked by ease of doing business,
quintiles
Source Doing Business database, WDI
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Top/last 30 on the ease of doing business, 2008

• Haiti
• Rwanda
• Benin
• Zimbabwe
• Tajikistan
• Cameroon
• Côte d'Ivoire
• Togo
• Mali
• Mauritania
• Afghanistan
• Sierra Leone
• Burkina Faso
• Senegal
• Guinea
• São Tomé and Principe
• Lao PDR
• Equatorial Guinea
• Angola

• Singapore
• New Zealand
• United States
• Hong Kong, China
• Denmark
• United Kingdom
• Canada
• Ireland
• Australia
• Iceland
• Norway
• Japan
• Finland
• Sweden
• Thailand
• Switzerland
• Estonia
• Georgia
• Belgium

Top 30
Last 30
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Eastern Europe and Central Asia countries reform
the fastest
Countries with at least one positive reform, in
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Eastern Europe and Central Asia surpass East Asia
ease of doing business
Average Rank, Ease of Doing Business
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Europe and Central Asia Ranking on ease of
Doing Business
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Number of reforms improving a set of Doing
Business indicators in Europe and Central Asia
Tajikistan reformed its licensing legislation
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Content

• Doing Business global picture and Tajikistan
  ranking
• Focus on specific indicators
• Doing Business in Central Asia next steps

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Doing Business indicators
BEE areas
Access to finance
Juridical system
Starting a business
Getting credit
Protecting investors
Dealing with Licenses
Enforcing contracts
Registering property
Trading accross borders
Employing workers
Closing a business
Paying taxes
Doing Business indicators have relevant link to
the Private Sector Development
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Doing Business in Tajikistan 2006-2007
Overall ranking of Tajikistan on ease of doing
business is 153 among 178 countries
BEE areas
Access to finance
Enforcing contracts represents the theoretical
background rather than real practice
Juridical system

• Decrease in rankings of separate indicators is
  caused by
• Addition of 3 countries in DB 2008
• Other countries improved there regulations, while
  Tajikistan did not introduce any improvement
• Some indicators reflect worsening of the
  situation (e.g. in Paying Taxes the tax rate
  increased by 0,1)

Source Web-based database of Doing Business on
www.doingbusiness.org
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Starting a business became easier
Procedures
Thanks to reforms in licensing, Starting a
business became easier in Tajikistan
Still Tajikistan has long way to go
Time (days)
Cost ( of income per capita)
0
3,1
0,5
1,3
51
311
30
Ease of starting business
DB methodology covers the overall startup process
from state registration to actual start of
activity
1
47
49
77
174
161
119
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but there is still room for improvement in
registration
Small and Medium Companies
Small and medium companies underwent up to 6
steps to complete state registration.
One-stop-shop could improve registration
Time
According to the findings of SME survey state
registration process for small and medium
companies did not change significantly and
requires substantial time and cost
Cost
Source IFC, SME Survey 2006
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Dealing with licenses (construction permits)
MAIN ISSUES OF CONSTRUCION LICENSING IN
TAJIKISTAN
Procedures

• Dealing with licenses indicator records all
  procedures required for a business in the
  construction industry to build a standardized
  warehouse
• Obtaining all necessary PERMITS and licenses
• Receiving all necessary INSPECTIONS
• Completing all required notifications
• Submitting all necessary documents

• Necessity to apply for different permits and
  licenses by various state bodies
• Difficult access to the information on procedures
  and prices
• Long consideration times of applications
• Non-compliance with new Law on Inspections

Time (days)
Cost ( of income per capita
Ease of dealing with licenses
2
94
73
164
174
166
177
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Licensing, Permits and Inspections a
complementary reform is needed
Permit
a document that gives the applicant a right to
undertake a specific action
The risk is that if not addressed in a timely
manner permits reform might undermine the efforts
in the related areas
Licensing
Inspections
Licensing and permits are two alternative ways to
regulate business activities
Permit requirements represent the basis for
inspections
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Trading across borders is complex
EXPORT
Documents
One of the steps includes necessary certification
of the products
Tajikistan made no changes in terms of trading
accross borders between 2006 and 2007 which is
reflected in low ranking
Time (days)
Cost, USD
Ease of trading across borders
1
10
42
118
177
175
165
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especially for SMEs
None of respondents considers export procedures
as very easy!!!
79
21
65
14
78
Existing procedures are complex and
non-transparent
2
20
56
22
Very easy Rather Easy
Rather complicated
Very complicated


Source IFC, SME Survey 2006
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Getting credit no credit bureaus
Tajikistan
Eastern Europe and Central Asia
Indicators
Description
Strength of legal rights index
degree to which collateral and bankruptcy laws
protect the rights of borrowers and lenders
4
5.6
Depth of credit information index
rules affecting the scope, accessibility and
quality of credit information
5
3.4
Public credit registry coverage
number of individuals and firms listed in a
public credit registry
0
2.4
Private credit bureau coverage
number of individuals and firms listed by a
private credit bureau
0
15.4
Tajikistan has no credit bureaus which makes
lending risky
Tajikistan is on 135th place on ease of getting
credit
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Getting a credit is indeed a difficult business
Small and medium companies
One of the critical key elements for obtaining a
credit is the self-selection process of applicants
Source IFC, SME Survey 2006
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... with critical issues
Provided loans are short-term, preventing
long-term investment
Duration
Interest rates still remain very high, forcing
entrepreneurs to address their needs by internal
funds or other sources
Average interest rate on deposits 20
Interest rates
Collateral requirements are very high and
difficult to fulfill (e.g. dehkan farmers can not
pledge their land user rights)
Collateral
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Protecting Investors
Ranking in protecting investors...
...reflects FDI picture
Expected FDI per capita in 2007
Protecting investors measures 4 indicators
Tajikistan
68USD
176

• Extent of disclosure index
• Extent of director liability index
• Ease of shareholder suits index
• Strength of investor protection index (average
  of 3 prior indices)

Georgia
454USD
33
- Forecast
Source NBT, Ministry of Finance of Georgia
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Attraction of the direct investments
Major areas of investment attraction
These areas include

• To improve the protecting investor indicator
  Tajikistan will need to work further in two
  directions
• Improve its Investment Climate, and
• Learn how to promote the country.

Investor Facilitation
Providing better and more extensive services to
its clients is a very effective in a period when
the government is completing steps to formulate
its approach to FDI.
Investment Promotion

• To better promote investment following tools
  should be used
• Targeting companies
• Investment seminars/road shows
• Brochures
• Mailings and e-marketing
• Intermediaries

Investor Aftercare

• Provide regular feedback to government about
  foreign investors experience of doing business
  in Tajikistan and formulate an effective policy
  advocacy program
• Improve retention of existing investors and to
  generate new investment through expansion,
  reinvestment or diversification
• Encourage positive perception of Tajikistan
  abroad.

Policy Advocacy
Responsible body has to build a stronger
reputation as a government agency with a
balanced view by advocating policy changes
streamlining and improving the investment
climate, yet protecting national interests.
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Content

• Doing Business global picture and Tajikistan
  ranking
• Focus on specific indicators
• Doing Business in Central Asia next steps

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Next steps regional DB
Countries covered
Cities covered
Kazakhstan

• Astana
• Almata
• Aktobe
• Ust-Kaminogorsk

Doing Business team in collaboration with IFC PEP
launched regional study in Central Asia and
covers following indicators
Regional study to be finalized by the beginning
of 2008
Kyrgyz Republic

• Bishkek
• Osh

Tajikistan

• Dushanbe
• Khudjent

• Starting a business
• Dealing with licenses
• Registering property
• Trading across borders

Uzbekistan

• Tashkent
• Ferghana

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Next steps what we expect
Main results
Regional Doing Business Study in Central Asia
would allow to draw a picture on administrative
barriers

• Identification of best practices in the region
  and possibility to use them across regions

• Assessment of institutional context within region
  (not geographical location)