Doing Business Blog - The World Bank Group

A Question for the President?

If you have a question for World Bank President Robert Zoellick, who will be attending the G20 meetings in London next week, March 31 is your chance to ask. Reuters is collecting questions online, and Zoellick will be responding in a speech while in London next Tuesday. Just follow this link and add your questions to the comments section. (You can also use the #askwb tag on Twitter.)

Better Practice Comes to New York City Building Codes

On July 1, 2008, Mayor Michael R. Bloomberg announced the launch of the new City of New York Construction Codes, the first modernization of the Building Code since 1968. The Building Code in New York City had not been updated for almost 40 years. Not anymore. The new Codes require the Building Department to revise the Codes every 3 years to incorporate new standards, technologies and materials.  As of July 1, 2009, everyone is required to follow the new rules.

Regulatory Reform – Lessons from the British BRE

The past few years have shown incredible convergence in how many governments implement regulatory reforms. Just between June 2007 and June 2008, 113 economies introduced 239 reforms as recorded by Doing Business, the most recorded in a single year since the project started.

On February 24, I attended a regulatory reform session of the Financial and Private Sector Development Forum 2009, in which Jitinder Kohli, Chief Executive of Better Regulation Executive (BRE), shared with us his experience as BRE leads the regulatory reform agenda across the British government.

Why Entrepreneurship Matters

Whoever is interested in entrepreneurship should check out this week’s Economist to find an interesting report on the matter. The author demystifies some common misconceptions (e.g.everyone is young, it depends on Venture Capital, it has to change the world, among others) and assesses how the enthusiasm for entrepreneurship is holding up in times of crisis.  Not so bad, apparently.

Some resources such as talent and office space are easier to find. That together with less competition in the long run allows newcomers to get their foot in the door. 85% of entrepreneurs in eight emerging markets surveyed for Endeavor indicated that they have been hit by the crisis; 88% thought that it would still get worse.  But, they also foresaw that, on average, their businesses would grow by 31%, and the number of employees by 12%. 

Doing Business - How Useful Are These Indicators Anyway?

This was the big question during a sometimes heated panel discussion I recently attended in Miami. With a lawyer, an investor, and a government official present, one can imagine that the views varied. Juan Pablo Capello from Greenberg Traurig, who has advised many international investors, saw the indicators as quite limited as they focus mostly on local, small and medium size enterprises. In his view, sovereign ratings and legal certainly matter much more for foreign investors. Luis Manuel Kolster from GM countered that actually investors do look at tax rates and regulatory burden, but the decision to invest is also foremost driven by market size and cost. What I found most interesting was the government perspective, or should I say reformer perspective, by Liliana Rojas from the Colombian Ministry of Commerce. At the end of the day, it is governments that create and shape the regulatory environment for businesses. So, are they doing this in the sole hope of attracting sudden large foreign investment? She saw the indicators and rankings as a rather useful tool for benchmarking, informing reform agendas and tracking progress. The goal of these reforms? Promote and support local businesses and, in this way, aid job creation and growth. In the end, all participants agreed that, particularly nowadays, this is an important objective to have.

Reforming Outdated Commercial Laws

Three weeks ago I visited El Salvador and Honduras to discuss different aspects of their reform program inspired by the Doing Business (DB) indicators. In San Salvador, representatives from Central American governments met in a two-day workshop to share successful experiences of regulatory reform and learn from each other.

Panama and the Dominican Republic sent participants as did Honduras, Guatemala and Nicaragua. Some of the participating countries – such as the host nation, Guatemala and Honduras – have been reforming for a while and are planning their next steps. The Dominican Republic was a top-10 reformer last year. Others – such as Nicaragua and Panama – are relative newcomers to the reform field. We will see how much they can and will get done.

China: Tax Reform and the Financial Crisis

The financial crisis has brought unprecedented challenges to the global economy, and with it a rising demand for regulatory efficiencies.

As a response to current challenges to China’s domestic economy, the Chinese State Administration of Taxation (SAT) issued a notice announcing that the Value Added Tax (VAT) refund rate for export of textiles and garments would be increased from 14% to 15%, to take effect from 1 February.

The obvious result? As estimated by Jingming Bai, Deputy Director of the Chinese Research Institute for Fiscal Science, increasing the VAT refund rate by 1 percentage point would result in US$731 million for Chinese companies.

What’s more, it would save thousands of jobs in the Chinese textiles industry, where the majority of workers are women.