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Doing Business in the Middle East and North Africa – with particular reference to Iraq Presentation to Iraq Private Sector Development Center Baghdad 12 November 2011
What does Doing Business measure? • Doing Business indicators: • Focus on regulations relevant to the life cycle of a small to medium-sized domestic business. • Are built on standardized case scenarios. • Are measured for the most populous city in each country. • Are focused on the formal sector. • DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets. 2 2
Doing Business indicators – 11 areas of business regulation (9 included in the DB2011 ranking; 10 in DB2012) Entry Property rights Investor protection Access to credit Administrative burden Flexibility in hiring Recovery rate Reallocation of assets 3 3
Economies in the Middle East & North Africa on average have relatively efficient regulatory processes but weaker legal institutions 5
Middle East & North Africa ranking in Doing Business 2012 (Iraq 164) Easier to do business 6
Middle East & North Africa economies score high in many areas of business regulation 7
Economy performance across different areas of business regulations can vary considerably UAE ranks 151 in Resolving Insolvency, 134 in Enforcing Contracts, 122 in Protecting Investors
Globally, the pace of reforms making doing business easier is faster than ever before 11 of the 18 MENA economies improved their business regulations in 2010/11. 9
18 regulatory reforms in 11 economies improved the business environment in the region Jordan, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates Algeria, United Arab Emirates, Oman, Qatar Morocco, Oman, Yemen Djibouti, Jordan Morocco Lebanon 10
Several economies from the region stand out for improving their performance over time since 2005 – no improvement for Iraq since 2001* *Bahrain and Qatar not included due to later inclusion in the DB dataset Narrowing the Distance to the Frontier from 2005 to 2011 (percentage points) 11
Specific results for Iraq • Ease of Doing Business • - Iraq ranked 164 in 2012 • - Iraq ranked 159 in 2011 • Doing Business indicators for Iraq in 2012: • Starting a business - 176 • Dealing with Construction Permits – 120 • Getting Electricity – 46 • Registering property – 98 • Getting credit – 174 • Protecting investors – 122 • Paying taxes – 49 • Trading across borders – 180 • Enforcing contracts – 140 • Resolving insolvency - 183 12
Specific results for Iraq • Indicators where Iraq doing relatively well • Getting Electricity – 46 • This is a new indicator used for the first time in the Doing Business 2012 report • Relatively easy and quick to connect to the electricity grid – 5 procedures, taking 47 days costing 360% of GNI • (But there is a chronic shortage of electricity in Iraq – this is a key issue in Iraq) • Paying taxes – 49 • Iraq less reliant on business taxation than most other countries because if it reliance on oil revenues. • Iraq’s business taxation system is relatively simple, • 13 payments per year, taking 312 hours with tax rate of 28.4% of profit 13
Specific results for Iraq • Indicators where Iraq doing relatively less well • Starting a business – 176 • 11 procedures, taking 77 days to register, costing 115% of per capita income, with minimum capital of 35 per cent of par capita income • An important indicator and a major constraint for informal businesses entering the “formal economy” • Trading across borders - 180 • Requiring 10 documents, 80 days to get approval, cost $3550 per container • An important indicator illustrating major impediments to Iraq integrating with the World economy • Resolving insolvency (formerly closing a business) – 183 • Businesses in Iraq cannot be closed 14
Specific results for Iraq • Support for Doing Business reforms in Iraq • USAID-Tijara (with support from other partners) leading in supporting DB reforms for: • Starting a business, Registering property, Getting credit, Protecting investors, Resolving insolvency • World Bank Group (with support from other partners) leading in supporting DB reforms for: • Dealing with construction permits (IFC), Trading across borders and Enforcing contracts (WB) • Support for Doing Business reforms in Iraq relatively recent. Progress to date has been very slow, in part, because two or more ministries are typically involved in regulating each indicator and because of institutional resistance to reforms 15
Thank you. For more information: www.doingbusiness.org 16