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

14 Overview FIGURE 3.1Doing Business 2009Starting Top 10 reformersa businessAverage improvementDealing with2007construction2008permitsin dealing with construction permits15% 21% 21%Employing workersRegistering propertyGetting creditProtecting investorsPaying taxesTrading across bordersEnforcing Procedures contracts Time CostClosing a businessFIGURE 3.1Top 10 reformersin dealing with construction permitsAverage 1. Kyrgyz improvement Republic20072. Burkina Faso3. Hong 15% Kong, China21% 21%4.20085.6.7.8.9.10.RwandaArmeniaBelarusJamaicaCroatiaBosnia and HerzegovinaAngolaSource: Doing Business database.Procedures Time CostFIGURE 3.5Private and risk-based inspections—greater efficiencyAverage delay for inspections (days)1.2.3.4.5.6.7.8.Kyrgyz RepublicBurkina FasoHong Kong, ChinaRwanda218254214 ArmeniaBelarusJamaicaCroatia9. Bosnia and Herzegovina10. Private Angola Risk-based Randominspections inspections inspectionsby building by buildingauthorities authoritiesSource:Source:DoingDoingBusinessBusinessdatabase.database.FIGURE 3.5Private and rigreater efficieAverage delay fo214PrivateinspectionsIn 2007 the municipality of Niamey,Niger, issued only 300 building permits.But you wouldn’t know it by lookingaroundFIGURE 3.3the city, where buildings aresprouting Reforms in fast. Sub-Saharan “Building Africa permit? picking Who upneeds that? Just hire a contractor, tell himwhat you want, and out of the ground itcomes,” Eastern Europe says a local developer.& Central This Asia approach to building has resultedin a city at odds with the original(28 economies)zoning Sub-Saharan plans: water pipes zigzag in everyAfricadirection, (46 economies) and houses extend beyondtheir assigned land parcels. The reason:OECDobtaining high incomeall building-related approvals(24 economies)and connecting to utilities can take entrepreneursEast Asia almost 9 months, at a cost of& Pacific82,694% (24 economies) of income per capita.Latin The America situation may soon change.Niger & Caribbean adopted a new building law 6 in(32 economies)March 2008, following the collapse of 2Middle East &North Africa4TABLE 3.1(19 economies)Where is dealing with constructionpermits South Asia easy—and where not?0(8 economies)Easiest Rank Most difficult Rankbuildings in the center of Niamey.In Almaty, Kazakhstan, builderssuffer the burden of overregulation. Undertakingthe construction of a simplewarehouse requires navigating a labyrinthof 38 procedures and 18 agencies—FIGURE 3.3Reforms and spending Sub-Saharan 231 days in Africa the process. picking upStriking the right balance is a challengewhen it comes to construction 20Eastern regulations. EuropeGood regulations ensure the& safety Central standards Asia that protect the public(28 economies) 13while making the permitting processSub-Saharanefficient, transparent and affordable forAfrica9(46 both economies) building authorities and the privateprofessionals who use it. If proceduresOECDhigh are overly incomecomplicated or costly, builders(24 economies)build without a permit.East Asia In an effort to achieve this balanceeconomies) between safety and cost, Bavaria& Pacific8(24Latin introduced America a differentiated permitting& approach Caribbeanin 1994. Low-risk projects 6 requirethat the designing architects show(32 economies)Middle proof of East their & qualifications and assumeNorth Africa4(19 liability economies) for the construction. Mediumriskones require that an independentSouth Asia 0(8 certified economies) appraiser approve the plans.Only high-risk, complex projects areSource: fully Doing reviewed Business database. by building authorities. 1By 2002 builders had saved an estimated€154 million in building permit fees,and building authorities had 270 feweremployees on their payroll. The approachhas spread to the rest of Germany.Economies that score well on theease of dealing with construction permitstend to have rigorous yet expeditious andtransparent permitting processes (tableSt. Note: Vincent A reform and is counted as 1 1 reform Tanzania per reforming economy 172per year.the Source: GrenadinesDoing Business database.Singapore 2 Burundi 173New Zealand 3 Zimbabwe 174Note: A reform is counted as 1 reform per reforming economy per year.Belize 4 Kazakhstan 175Marshall Islands 5 China 176St. Kitts and Nevis 6 Liberia 177Denmark 7 Tajikistan 178Maldives 8 Ukraine 179Kenya 9 Russian Federation 180Georgia 10 Eritrea 181Note: Rankings are the average of the economy rankings on theprocedures, time and cost to comply with formalities to build awarehouse. See Data notes for details.Source: Doing Business database.3.1). Speed matters. A recent study inthe United States shows that acceleratingpermit 3.4 approvals by 3 months in aFIGURETop22-month5 reformprojectfeaturescyclein dealingcould increasewithconstruction permitsReforms property including tax revenue feature by since 16.15% DB2006 and (%) constructionspending for local governmentsby 5.7%. 2 33%Yet in 80 of the 181 economiesStreamlined project clearancesstudied in Doing Business, compliancewith construction formalities takes 28% longerthan the statutory standardized time limits 30-week con-Introducedstruction project itself.20Singapore’s 13% Building and ConstructionAuthority inspection provides regime easy access toChanged13the information needed for obtaining aconstruction 13% permit. Its website lists all9Introduced the forms new that building must code be filled out, providesdownloadable copies and enables8%users to submit all paperwork electronically.Developers in Austria, Denmark,Computerized permitting processNote: A reform may include several reform features.Source:Iceland,Doing BusinessMalaysiadatabase.and the United Statesalso complete their applications online.Number of reforms making it easier to deal with construction permitsby Doing Business report yearDB2006 DB2007 DB2008 DB2009Number of reforms making it easier to deal with construction permitsby Doing Business report yearDB2006 DB2007 DB2008 DB2009FIGURE 3.2Rankings on dealing with constructionpermits are based on 3 subindicatorsDays to builda warehousein main cityAs % of income per capita,no bribes includedProcedure is completed when final documentis received; construction permits, inspectionsand utility connections includedNote: See Data notes for details.33.3% 33.3%Time Cost33.3%ProceduresSource: Doing BusineFIGURE 3.4Top 5 reformconstructionReforms includiStreamlined proIntroduced stat1Changed inspec1Introduced new8%Computerized pNote: A reform maySource: Doing BusineFIGURE 3.2Rankings onpermits areDays to builda warehousein main cityProcedure is cois received; conand utility connNote: See Data no(c) The International Bank for Reconstruction and Development / The World Bank