Egypt may rank low on the World Bank's list of countries where doing business is easy, but it is working on it. Niveen Wahish reports Did you know that it takes 193 days to register property in Egypt? In Norway it takes one, in Saudi Arabia four and Syria 34. It takes 410 days and 55 procedures to enforce a contract. And 4.2 years to go through insolvency thus demonstrating a severe weakness in bankruptcy procedures. It takes 30 procedures and 263 days to obtain a licence to build a warehouse. These are some of the findings which led the World Bank in a recent report to rank Egypt among the bottom 30 countries in which it is easy to do business. The report placed Egypt at 141 among 155 countries. "Doing Business 2006: Creating Jobs", is the third in a series of annual reports which investigate government regulation and its effect on business, particularly small and medium- sized domestic firms. It focusses on regulation of entry, labour regulations, contract enforcement, credit markets, bankruptcy, corporate governance, property registration, business licensing, taxation and trade infrastructure. While stating where countries have gone wrong, the report also highlights efforts at reform. In its list of the top 12 reformers for 2004, Egypt was ranked number six. According to Michael Klein, vice president for private sector development at the World Bank-International Finance Corporation, who presented the report in Egypt during a seminar earlier this week, Egypt offers a dual picture. Though it ranks low in its ability to facilitate business, its government is making a serious effort towards remedying the problem. Egypt did well on four out of the 10 aspects taken into consideration, namely starting a business, registering property, getting credit and cross-boarder trading. According to the report, one of Egypt's boldest reforms was the streamlining of customs procedures and trade documents. "Egypt established a single window for trade documentation and merged 26 approvals into five. A time limit of two days for passing through customs now applies. Improvements in customs were part of a broader reform to cut the number of tariff bands from 27 to six and simplify inspection procedures at the border," the report said. However, the report failed to note the reforms Egypt achieved in entry regulation for companies or in taxes. This is attributed to the fact that although the report is entitled, "Doing business in 2006: Creating Jobs", it is based upon data collected between January 2004 to January 2005. Despite Egypt's low ranking, minister of foreign trade and industry, Rachid Mohamed Rachid, noted that, "the ease to do business is not everything." In his opinion, investments are not just lured by the ease to do business alone, but by opportunity. In fact, the report itself points out that, "ranking on the ease of doing business does not tell the whole story. The indicator is limited in scope. It does not account for a country's proximity to large markets, quality of infrastructure services, the security of property from theft and looting, macroeconomic conditions or the underlying strength of institutions." Nevertheless, reforming the 10 aspects taken into consideration by the report, could be a good place to start in attracting the foreign investment needed to achieve Egypt's desired six to seven per cent growth rate. The inflow of foreign investment would need to equal 27 per cent of GDP in order to achieve this rate of growth. Currently, investments stand at approximately 13 per cent. Rachid believes that the bench marking provided by the ranking is useful and provides a solid guide for the future. Yet, he noted that it is equally important "to meet expectations and keep the momentum going". Klein reiterated a similar view when he stated, "Egypt is moving speedily on reform, but what is more important is how people perceive these efforts." Rachid outlined a number of other areas that Egypt is intent on solving. These include human resource development, access to land, legislative reform, clarity of industrial and sectoral policies, bankruptcy procedures and clarity on energy policies. But it is not Egypt the only one that has to work on its ranking. Twenty-nine other countries, mostly African, are among the bottom 30 economies in terms of the ease of doing business. In fact, according to the report, Africa had the lowest reform intensity for 2004. "Entrepreneurs face more regulatory obstacles in Africa than in any other region." the report noted, adding that "in 2004, reform was slower than in other regions." The same applies for the Middle East, which is classified by the report along with Africa as having done the least to reform. Meanwhile, at the top of the reports list were, among others, New Zealand, Singapore, the US, Hong Kong, Japan, Thailand, Malaysia, Korea, the Baltic countries as well as all the Scandinavian countries. According to Klein, improvement in the ease of doing business makes more jobs available and diminishes the share of the informal sector. "When regulations are costly and burdensome, businesses often operate in the informal economy and remain small, creating few jobs," explained Klein. With that in mind the report points out that improving a country's "Doing Business" indicators to the level of the top 30 countries could cut nine per cent off the share of the informal sector as a percentage of GDP. "Female and young workers would benefit the most from these changes. Both groups account for a large share of the unemployed, and burdensome regulations significantly affect their job opportunities." the report said.
