FIAS

1. regional training Land Policies as an Impediment to Investment: Evidence from FIAS Case Studies Land Policies & Legal Empowerment of the Poor November 2-3, 2006, Washington DC FIAS 1

2. Why do we study land? Many interest groups are looking at land through specialized lenses and work towards the implementation of particular land policies. BUT limited focus on land from PSD perspective (Especially, limited discussion based on developing countries experience) Urban/Rural Development Environment and Natural Resources Land Policy Land thematic Group Financial Sector Social Development

3. Securing property rights encourages private investment Investor surveys: access to land is a major constraint to operations Doingbusiness 2007: large economic benefits can be reached from protecting property rights McKinsey (1991-2004): land market issues are major barriers to investment and competition in more than half the economic sectors (e.g. retail, housing and tourism)

4. Land has been a major obstacle to investment in many countries Percentage of respondents claiming that procedures for accessing the land are an obstacle for their business operation and growth Percentages are calculated on the base of respondents giving an answer to this question. Respondents had an option not to answer, which usually means that they had no experience with land obtaining or no need for land. Overall the share of non responding businesses is 41.4%. Source: ARCS

5. Harder to register property in poor countries Days Percentage of property value Source: Doing Business database

6. Examples illustrating reform efforts to overcome land obstacles Issues: Concerns: • Land availability • State owned land • Tribal Communal land • Ownership/use restrictions • Zoning/planning • Property tax (rate & coverage) • Selected Case Studies • Shenzhen (China) • Red Sea (Egypt) • Hong Kong • Vietnam • Ngamiland (Botswana) • Makuleke (SA) • Mozambique • Peru • Thailand • Novgorod (Russia) • Cape Town (SA) 1. Is land available and at what price? • Land rights • Titling system • Registration process • Collaterals • Transfer of property rights • Dispute resolution mechanisms 2. What are my rights? Are my property rights secure? • Land development procedures • Location permits • Construction/building permits • EIA • Utility connections • Property tax (administration) 3. Time and cost of land related procedures?

7. Russia: Getting access to land can be extremely time consuming and costly Flowchart of the procedure for allocation of land plot for business use (Nizhny Novgorod) Approving authority Document Issuing Authority Application to the Department of Economy and Planning Committee for land resources and land use planning Construction Passport Department of Economy and Planning Preliminary technical specifications for preliminary approval of project design and connection to engineering infrastructure Department of Economy and Planning Preliminary lease contact Head of Municipal Administration Head Directorate for Architecture and City Planning Sketch of the location of the structure Project cost estimate Head Directorate for Architecture and City Planning Draft of the Approval of the Local Administration Head for the construction/reconstruction permit Sanitary-Epidemiological Inspection Head of Municipal Administration Lease agreement for the land plot for the period of construction/reconstruction State Fire Inspection Registration of the land lease contract in the Book of Land Registry Committee for land resources and land use planning Draft of the Approval of the Local Administration Head for the Leasing contract on the Lease of land plot State Judicial Committee Obtaining of the proof of lease and the lease contract (a.k.a. registration of the lease in the Book of Land Registry) Total time: 273 days Source: FIAS

8. Russia: Longer bureaucratic delays are associated with fewer privatizations No. Sales Time required to complete procedure (log scale)

9. Russia: Higher complexity and higher fees are associate with more frequent bribes

10. Vietnam land program • Background • Vietnam is in a protracted • period of economic transition • after 1986 ‘Doi Moi’ reforms • Relatively good investment • climate but land remains • problem • Following land issues impede • PSD: • Limited availability • High prices • Unclear security of tenure • No market-oriented, long • term leases • IFC study of informality showed • that 80% of firms surveyed • would expand if land were • available • Basic Land Issues • Land market a field of tension • between growing private • sector and state ownership • of all land

11. Vietnam land program • What are the obstacles? • Strict and complex land • administration system • Land difficult to obtain / • poor allocation by state • Formal process costly and • time consuming • Unclear that formal registered • possession confers security • benefits • What is being done? • Land Law, 2003 aims for • efficiency of a true land market • despite all land being state • owned – not fully acheived • Gov VN has asked FIAS to • assess the impact of Land Law • on PSD • FIAS implementing a multi-year • program to strengthen the Land • Law and the administration of • business access / rights to land

12. Three Southern African case studies Tribes/ Local Community • Employment • Income • Social development • Cultural preservation Strategic Investors The State • Strategic sector growth • Sustainable development • Environment protection • Social development • Long-term investment • Efficient process • “Good citizen” status

13. Shenzhen - China’s “incubator” for land market reforms

14. ToConclude: • Land related constraints present a major impediment to investors. • Land problems are complex and country specific; they need to be dealt with accordingly. • Fundamental land system reforms require sustainable efforts over time. In the meantime, countries should and could explore practical and interim solutions to help overcome the difficulties in providing land to investors in the transitional period. • There is a further need to fill the knowledge gap on reform experience in developing countries. • Final solution design requires collective efforts of all relevant departments within the WBG, and with our clients.