It is all about streamlining procedures to enable the private sector take a lead role, Sherine Nasr reviews Doing Business report 2011 The private sector is the effective growth engine in any society. The creation of a healthy business environment to sustain the private sector's role is fundamental for prosperity. This environment needs to include good rules to clarify property rights, reduce the costs involved in the resolution of disputes, create predictability in economic interactions and protect contractual partners against abuse. "The objective is regulations designed to be efficient, accessible to all and simple in their implementation," according to the eighth World Bank (WB) Doing Business report 2011, titled Making a Difference for Entrepreneurs. The report was released last week. This year's report examines regulations affecting 11 areas of business. These include starting a business, dealing with construction permits, registering property, getting credit, protecting investors and paying taxes and trading across borders, among other factors. Putting these elements in perspective as the basic components for the ease or difficulty of doing business, Egypt moved up from last year's 99th place to the 94th in a list of 183 countries examined by the report. Notably, Saudi Arabia came in 11th place, as it moved up one position from last year, with Australia in 10th place. For two years in a row, Singapore topped the list as the easiest country in which to do business, followed by Hong Kong, New Zealand, the United Kingdom, the United States and Denmark, all holding the same ranking as last year. Unlike the past four years, Egypt was not featured in the list of the top 10 reformers, in which Kazakhstan took the lead, followed by Rwanda, Peru and Vietnam, among other countries. Nevertheless, Egypt has moved up in the starting a business ranking as it took 18th place. This impressive ranking came as a direct result of streamlining procedures (only six are needed to start a business), reducing the time needed to complete the paperwork to seven days in addition to reducing the cost and the minimum capital required to set up a new business. Similarly, Egypt ranked high in the cross- border trading indicator, winning 21st place. This ranking includes an evaluation of the number of documents needed to export and import -- six for each -- the time needed to export and import -- 12 days each -- and the cost needed to export and import each container, which is $613 and $698 respectively. According to the report, Egypt has reduced the costs of starting a business and made trading easier by introducing an electronic system for the submission of export and import documents. More flexibility still has been underlined in the areas of getting credit, protecting investors and registering property as Egypt ranked 72nd, 74th and 93rd respectively. Reducing the number of procedures to register a property to seven, the time needed to 72 days and the cost to 0.8 per cent of the value of the property has helped Egypt maintain a good ranking. However, dealing with construction permits remains one of the least favourable indicators as Egypt ranked 154th with the number of procedures required reaching 25, days to complete them 218, while the cost as a percentage of income per capita $293.7. With reference to paying taxes and enforcing contracts, Egypt ranked 136th and 143rd respectively. The report cites a number of obstacles that continue to block the development of a smooth business climate. For example, it is hard to overlook the fact that an exaggerated total tax rate of 42.6 percent of profit is a negative indicator. In the meantime, it takes an investor a total of 41 procedures, 1,010 days and no less than 26.2 per cent expenses of the total cost of a claim to enforce a contract. Further, Egypt did not rank high in the area of closing a business, as it came at 131st place. A four-year period required for the closure of businesses, in addition to costs mounting to 22 per cent of the estate are certainly not positive indicators. Although the Doing Business report does not consider the costs and benefits of regulation from the perspective of society as a whole, however, it is considered a good tool to inform business leaders and policy-makers of how business regulations affect economic outcomes such as productivity, investment, corruption, unemployment and poverty.
