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Doing Business 2009 Tajikistan Launch Wendy Werner International Finance Corporation DB can help Tajikistan measure progress Where are we? Where do we want to be? Why DB is important for Tajikistan What do the indicators measure? How to take action Doing Business in Tajikistan: 2009-2008

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Doing Business 2009Tajikistan LaunchWendy WernerInternational Finance Corporation

db can help tajikistan measure progress
DB can help Tajikistan measure progress
  • Where are we? Where do we want to be?
  • Why DB is important for Tajikistan
  • What do the indicators measure?
  • How to take action
doing business in tajikistan 2009 2008
Doing Business in Tajikistan: 2009-2008

Overall ranking on ease of doing business is 159 out of 181

  • Decrease in rankings of separate indicators is caused by:
  • Addition of 3 countries in DB 2009;
  • Other countries improved their regulations, while Tajikistan did not introduce as many improvements;
  • Some indicators reflect worsening of the situation (e.g. increase total tax rate, cost of business registration, etc. )

Source: Web-based database of Doing Business on www.doingbusiness.org

tajikistan can improve its db ranking with action now
Tajikistan can improve its DB ranking with action now
  • Focus on 3-4 reforms that can be in place by May 2009
    • Recommendations developed/ work ongoing
    • Low ranking
    • Part of current PSD Strategy/ Action Plan

Starting a Business

Protecting Investors

Construction Permits

& Licenses

Getting Credit

timing is critical
Timing is critical
  • DB 2010 data is collected Jan-May 2009
  • Much can be accomplished in 8 months
  • New Laws or amendments passed
  • Processes must be in place
how much can tajikistan improve
How much can Tajikistan improve?

Current

Proposed Reform

Potential Improvement

All 3 actions would yield an

overall Doing Busines rating

of 130

Jump of 29 places!

Starting a Business

49 days 13 steps

Min Capital 216% of GNI

= 995 Somoni

Registration in 5 days

2 steps

Min Capital 5% of GNI

= 80 Somoni

Jump 129

places from

#168 to #39

Getting Credit

Credit Information

Index = 0 / 10

Pass and apply draft

Credit Bureau Law.

Credit Info Index = 4 / 10

Jump 49

places from

#172 to #123

Protecting Investors

Investor Protection

Index = 3.3 of 10

Amend Joint Stock

Companies Act.

Increasing disclosure

& shareholders’ rights

Index = 4.7

Jump 46

places from

#150 to #104

www.doingbusiness.org

Simulated improvement assuming all other countries stay constant.

db can help tajikistan measure progress7
DB can help Tajikistan measure progress
  • Where are we? Where do we want to be?
  • Why DB is important for Tajikistan
  • What do the indicators measure?
  • How to take action
db is an business environment report card
DB is an Business Environment Report Card
  • Consistent methodology
  • Critical activities for all businesses

Policy and legislative action can

change DB Rankings

kyrgyzstan improved rank from 99 to 68
Kyrgyzstan: Improved rank from 99 to 68
  • Starting a Business
  • OSS streamlined business registration processes
  • Eliminated requirements such as proof of residence
  • Obtaining company seal became optional
  • Cut 4 steps. Time reduced from 21 to 15 days.

#50 to #31

+19 in rank

  • Protecting Investors
  • Minority shareholders can take legal actions
  • Assess related-party transaction before approval
  • Directors liable for negligence if they harm shareholders
  • If found liable, Directors pay damages, disgorge profits

Now #11

was #33

+22 ranking

  • Dealing with Construction Permits
  • Occupany permit at a single place
  • Cut 9 steps, reduced time by almost 6 months
  • Lowered cost from 759% of income per capital to 406%

Moved up

112 spots!!

#170 to #58

db can help tajikistan measure progress11
DB can help Tajikistan measure progress
  • Where are we? Where do we want to be?
  • Why DB is important for Tajikistan
  • What do the indicators measure?
  • How to take action
protecting investors
Protecting Investors

Extent of disclosure,

Extent of Director liability, and

Ease of Shareholder suits

Tajikistan

jumped

29 places

in 2009!

  • Improvement achieved through new Joint Stock Companies Law
  • Amendments to law could improve ranking further:
    • Disclosure on related party transactions to public and in periodic filings
    • Increase Director liability for damage to company
    • Allow further access to documents by shareholder plaintiffs in the court case
starting a business
Starting a Business

Procedures, time, cost and

paid-in minimum capital to open a new business

  • OSS project targets 5 day registration through implementation of IT system
  • EC funding for project with Tax Cmt
  • Draft Law ready for consideration

?Is timing right for DB 2010?

? Can Tajikistan further cut paid-in capital?

kyrgyz republic 2009 vs 2008
Kyrgyz Republic: 2009 vs. 2008

4 procedures

15 days

Fees are 7.4% of GNI

Min Capital = 0.4% of GNI

  • Remove MoJ review of documents
  • Cut capital requirement, remove requirement for 50% paid-in capital
  • Presidential decree makes seal optional, but included because most companies still do it

Tajikistan: 13 procedures, 49 days

Cost is 27.5% of GNI

Min Capital = 216.8% of GNI

dealing with construction permits
Dealing with Construction Permits

Procedures, time and cost of obtaining

construction permits,

inspections and utility connections

  • Only 5 countries require more procedures than Tajikistan
  • Silence-is-consent rules exist in 27 countries
  • Top reformers implemented one-stop shops to streamline approval process
  • Elaboration of subnormative acts offers opportunity for streamlining procedures
  • Amendments to 2006 Licensing Law needed
  • OSS and Risk-based approach
getting credit
Getting Credit

Strength of legal rights index,

depth of credit information index

  • Draft Credit Bureau Law under discussion with Parliamentary Work Group
    • Mandatory participation by Financial institutions
    • Positive and negative credit information
    • Previous 5 years information provided
    • No licensing body, will speed implementation
    • Range of information providers
  • Implementation of private Credit Bureau with EBRD technical assistance
    • Feasibility study envisions CB within 50 weeks of Law
poor performance medium term target
Poor Performance: Medium term target

Paying Taxes

Trading Across Borders

  • Number of tax payments: 54
  • Time to prepare and file tax returns and pay taxes: 224 hours
  • Total taxes as a share of profit: 85.5%

DB Rank = 159

DB Rank = 177

fair performance monitor
Fair Performance: Monitor
  • Employing Workers
    • Difficulty of hiring index, rigidity of hours index, difficulty and cost of economic redundancy dismissals
  • Enforcing Contracts
    • Procedures, time and cost to resolve a commercial dispute in court
  • Registering Property
    • Procedures, time and cost to register a transfer of commercial real estate
  • Closing a Business
    • Recovery rate in bankruptcy
db can help tajikistan measure progress20
DB can help Tajikistan measure progress
  • Where are we? Where do we want to be?
  • Why DB is important for Tajikistan
  • What do the indicators measure?
  • How to take action
acceleration of current efforts
Acceleration of current efforts
  • On the right track: speed, focus, implementation
  • State DB improvement is target
  • Integrate DB into reform plans
  • Monitor progress
bee working group action plan
BEE Working Group Action Plan
  • OSS
    • Identified coordination requirements in OSS: DFID, WB, EC, USAID
    • Leverage collective expertise
    • Topic for BEE Working Group on Friday
  • Permits Reform
    • Early October on process, sequence
    • Next Investment Council meeting
  • Protecting Investors
    • Planned for December in BEE WG Action Plan
    • Can be accelerated to develop draft amendments by January

Thematic group on Getting Credit can be formed

db knowledge and tracking
DB knowledge and tracking
  • Decide target indicators today
  • Detailed workshops on target indicators (October)
    • DB methodology and case study
    • Examples of reformers
    • Current activities
  • Bi-monthly meetings to keep track of progress (Nov/ Jan/ Mar)
  • Monitoring of Action Plan at highest levels
slide24
Thank You

Questions and Discussion

survey respondents are one part of the data collection
Survey respondents are one part of the data collection
  • Review of legal frameworks with validation and additional information from survey respondents
  • Respondents are business intermediaries, law firms, etc.