DOING BUSINESS 2009 - JOHN J. HADDAD, Ph.D.

STARTING A BUSINESS 13Creating a one-stop shopThirty-nine economies have created orimproved a one-stop shop in the past 5years: 16 in Eastern Europe and CentralAsia, 7 in Africa, 6 in the OECD highincomegroup, 5 in Latin America and5 in the Middle East and North Africa.One-stop shops can be a quick way tobuild momentum for reform. Azerbaijan,El Salvador, Guatemala and Moroccocreated theirs in less than 6 months.And introducing a one-stop shop hashad promising results. In Oman businessregistrations increased from an average733 a month in 2006 to 1,306 a monthin 2007. In Azerbaijan registrations grewby 40% between January 1 and May2008. Croatia saw company formation inZagreb and Split increase by more than300% over 3 years.But creating a one-stop shop is nomagic bullet. Often entrepreneurs muststill deal with formalities elsewhere aswell (figure 2.6). In Guatemala, for example,the one-stop shop can organizecommercial, tax and social security registrationin 2–3 days. But before the registrarcan finalize the registration, a noticemust be published for 8 days duringwhich third parties can raise objections.Despite the one-stop shop, 11 proceduresand 26 days are still required. Reformersalso run the risk of creating “one-morestopshops” or “mailboxes” that merelyreceive applications and forward them toministries for approval. Delays continue.Abolishing the minimum capitalrequirementSixty-nine economies allow entrepreneursto start a company without puttingup a fixed amount of capital beforeregistration. They allow entrepreneursto determine what is appropriate for thebusiness based on its type and capitalstructure. Twenty-two economies havereduced or abolished their minimumcapital requirement in the past 5 years,including Egypt, Finland, France, Georgia,Hungary, Japan, Jordan, Uruguayand Yemen. This group has seen some ofthe biggest spikes in new company registrations.After Madagascar reduced itsFIGURE 2.6One-stop shops—same name, different resultsTime and procedures to start a businessParaguayBelarusBurkina FasoMoroccoTurkeyFIGURE 2.4One-stop shopRequiredadditionalprocedures0 10 20 30Time to start a business (days)Source: Doing Business database.minimum capital requirement by more rate managers have to get a fiscal codeEastern Europe & Central Asia leads reforms, Africa runner-upthan 80% in 2006, the rate of new registrationsjumped from 13% to 26%. by Doing Business obtaining report year a tax identification number.before using the online tax system andNumber of reforms easing business start-upAfter Tunisia reduced DB2005 its requirement,DB2006 DB2007 Countries also DB2008 have to make DB2009 sure thatEastern new registrations Europe increased by 30% between2002 and 2006. 7 52the legislation needed to allow electronic& Central Asia(28 economies)That encouraged transactions is in place.the Sub-Saharan country to abolish it altogether in But much can be gained already—2007/08.Africain time and cost and also 42 in safety—by(46 economies)computerizing files at the registry orOECD Using technologyhigh incomeoffering some online services such as29(24 Making economies) registration electronic is among name checking. And everyone has toLatin the most America effective ways to speed companyCaribbean formation. Seven of the economies that 25 one of the company registries in thestart somewhere. It was only 13 years ago&(32 economies)with the fastest business start-up offer United States stored all files in a warehouseso big that employees were usingMiddle East &North electronic Africa registration—Australia, Canada,economies) Denmark, Estonia, New Zealand, roller skates to get to the documents. Ob-23(19East Portugal Asia and Singapore. More than 20 taining documents took about a month.& Pacific16economies have introduced electronic Thankfully there was no fire.(24 economies)registration in the past 5 years. Customerseconomies) are not the only ones 6 saving on time NotesSouth Asia(8and cost. When Belgium implementedits Note: paperless A reform is counted registration as 1 reform per and reforming filing economy sys-petem, it reduced annual administrativeyear. 1. This example is from the World Bank’sSource: Doing Business database.Doing Business: Women in Africa (2008a),a collection of case studies of African entrepreneurs.costs FIGURE by 2.1€1.7 billion.Top 10 Electronic reformers registration in starting a business is possible 2. Kaplan, Piedra and Seira (2008) on Mexico,Chari (2008) on India, Monteiro andin Average more improvement than 80% of rich economies butonly 2007 about 30% of developing ones. That Assunção (2008) on Brazil and Yakovlevis not surprising, of course, given the differencesin internet access and costs. 82.and Zhuravskaya (2008) on the Russian46% 65% 54% 28% 1. YemenFederation.Slovenia3. 3. Barseghyan Senegal (2008).And electronic registration is more4. 4. Bruhn Albania (2008).complicated than it looks. In Sweden20085. 5. Ciccone Liberia and Papaioannou (2007).applications for company, tax and labor 6. Azerbaijan6. Freund and Bolaky (forthcoming), Chang,registrations can be completed online. 7. Kaltani Syriaand Loayza (forthcoming), CunatBut most forms still must be printed 8. and Hungary Melitz (2007), Helpman and Itskhokiout and signed by hand. The Philippines 9. (2007) Oman and Helpman, Melitz and RubinsteinSierra (2008). Leoneallows entrepreneurs to reserve the companyname and register online, but still 7. Klapper and others (2008).10.Procedures Time Cost Paid-inrequires payment in person. Belgium minimumal-lows electronic filing—but only through Database,8. World Bank Group EntrepreneurshipcapitalSource: Doing Business2008.database.a notary or lawyer. In Argentina corpo-FIGURRankare bPreregregistpostreProcedcompfinal dis receNote: SFIGURETop 5in staReformCreateSimpliAbolishminimIntroduCut orNote: ASource: DFIGUREStartigets fTime an2004Time (d1220Cost(% of in14.4(c) The International Bank for Reconstruction and Development / The World Bank