Doing Business Blog - The World Bank Group

What Would You Do With $400 billion?

As with so many things related to China, the numbers are just staggering. The Chinese government intends to invest $400 billion in trade logistics infrastructure by 2010. A sizeable amount of this will be used to improve port infrastructure in cities such as Dalian, Tianjin and Qingdao.

These infrastructure investments are timely and sensible. With the ongoing growth in Chinese trade - exports increased by more than 21% for the first three months of 2008 - port capacity has to keep pace. The Chinese clearly understand that to pursue a strategy of export-led growth, trade logistics have to be in order. In an integrated global economy, supply chains have to be reliable and fast. It is therefore not surprising that all of the so-called Asian tiger economies - which succeeded through export-led growth - score in the top 30 on the Doing Business Trading Across Borders indicator.

Be Smart, Be On Top

The widely used phrase “getting to the top is hard, staying there is harder” is apparently what authorities in Hong Kong-China had in mind when they conceived the “Be a Smart Regulator Programme” in mid-2007.The program is a large scale improvement plan for granting business licenses across multiple business sectors.

Under this initiative, several procedures to obtain a construction license were either eliminated or expedited. This was achieved not by creating new agencies or structures, but instead by creating working groups with the agencies and bureaus involved in the construction area. These groups found redundant procedures, improved communication and coordination schemes, and identified regulatory “easy fix” changes that could be implemented in order to foster a more efficient construction process in Hong Kong-China.

Going Portable in Phnom Penh

Up until last year, entrepreneurs in Cambodia who sought to obtain loans to expand their businesses might have found themselves coming up against a brick wall. As the country had no secured transactions law, an entrepreneur—particularly a small or medium-sized one—would likely have found himself with little to offer potential lenders in the way of collateral.

Land was acceptable as collateral—that is, if the entrepreneur was fortunate enough to own any.

Tangible movable property (such as the sewing machines of a clothing maker) was also acceptable—if the entrepreneur handed the property over to the lender. Of course, this would effectively deprive her of her business and negate the whole reason for getting a loan in the first place.

All this changed with the enactment of the country’s new Law on Secured Transactions in 2007. While Doing Business is still evaluating the impact that the new law will have on Cambodia’s score in the Legal Rights index of the Getting Credit indicator, the law looks to be a giant step forward. It creates a Filing Office within the Ministry of Commerce in which lenders can register their security interests in movable property.

The Master of the High Court

The illustrious title does not refer to the most brilliant lawyer in town, nor to a towering court of appeals-judge. The true master of the High Court in Suva, Republic of Fiji Islands, is Jay Udit, a so-called judge in chambers. Yet, his name stirs up universal acclaim for bringing down court delays. Lawyers give kudos, and sometimes a sour face, to his powers in the court room. A Doing Business delegation to the Fijian capital was privileged to see his court in session.

Tuesday morning, 8h15, in a court room packed with attorneys: two court clerks calling the case, lawyers answering with name and “here for plaintiff”, or “here for defendant.” On the bench, Master Udit, speaking up: “This case has been going on since June last year, what is the reason, where is the problem? Clerk, reschedule in ten days, I order costs.” followed by a “But, sir..” – to no avail.

To the next, with displays of bewilderment, “You need more than a month just to get your documents in order?” Then inquiring “If you are pursuing settlement, why do you file in court?” Impatiently, he adds ”What is the question here? What is the nature of the question you cannot resolve?” Finally revealing, angrily, “Trials are scheduled 2 to 3 months in advance, there really is no excuse for missing time.”

Vietnam: A Property Market

Hoang is a successful manager of a foreign company who lives with his wife in a modest apartment in the capital of Vietnam, Hanoi. Five years ago, he bought a second apartment in an “expat” residential area for $100,000.

Loans from commercial banks were almost unavailable, so he used all his savings and borrowed from friends and relatives to pay the entire amount upfront in four installments. Hoang has been renting the apartment to a Japanese executive since then. At present, Hoang’s apartment is worth three times more. He is confident that he could easily sell it for more than $300,000 now, if he would.

Hundreds of construction sites are mushrooming in Hanoi. The real estate market is booming. Middle-class and new riches nationwide pour money in real estate, considering it the safest haven for their personal savings. New apartment complexes, hotels and storehouses are changing the city’s landscape. Last week, the Hanoi People’s Committee gave green light to three new five-star hotel projects. The construction delirium has brought hundreds of young people from the countryside to work on the scaffold. Their remittances are already a critical resource for their impoverished provinces of origin.

Singapore: Making It Easier Even for Lawyers

As we travel around the world, the Doing Business team visits government authorities and institutions. An inevitable visit is to the courts. I was amazed when I arrived to the so-called “UFO building” -- the new building of the Supreme Court of Singapore. It is called the UFO building because of its particular futuristic shape.

Upon my arrival, I realized that something was strange. There were no lines in order to present cases to a judge, and everything was calm and organized. I thought I was at the wrong place. But no, I was in a real court!

In Singapore, the number 1 ranked country in the ease of doing business for the second year running, when lawyers go to court, they do not need to stand in lines anymore. When they arrive, they go directly to a computer where they sign in and receive a ticket which clarifies the time and location where they should present their cases.

Country (and Ranking) Hopping in Southeast Asia, Part I

A couple of weeks ago Sylvia Solf and I returned from a whirlwind five-country "roadshow" in Southeast Asia, with an additional stop for me in Bangladesh. The East Asia-Pacific region has the greatest variation in economy rankings of any region in the Doing Business index, from top-ranked Singapore to #168 Timor-Leste. Now we would have the chance to see for ourselves the different business environments in the region. We started off the mission in Malaysia, then went on to Brunei, Indonesia, Vietnam and Thailand. A few highlights:

Malaysia

The Petronas Towers in Kuala Lumpur symbolize the huge economic strides that Malaysia has made since independence (when we arrived, decorations from the celebration of the 50th anniversary of the country's independence from Great Britain still festooned the streets, along with lights for Eid ul-Fitr — called Hari Raya Puasa in Malaysia). Impressively, Malaysia ranks 24th in the overall ease of Doing Business rankings, ahead of Austria, South Korea and France. And by all outward measures that we could see, business is booming in Malaysia — certainly if the traffic jams that often bogged down our progress across Kuala Lumpur (popularly known as "KL") are any indication.

We presented the Doing Business indicators and methodology to probably the largest audience either Sylvia or I has ever seen — 500 private- and public-sector registrants at a workshop hosted by MITI, the Malaysian Ministry of International Trade and Industry. The audience was engaged, even through the Methodology presentation.

Country (and Ranking) Hopping in Southeast Asia, Part II

Vietnam

Our next port of call was Hanoi, which is an inviting city that has so far avoided the relative hustle and bustle of KL, Jakarta and Bangkok (although once the scooters that throng Hanoi's streets are replaced with cars, all bets are off). Participants in the presentation and panel discussion in Hanoi were encouraged that Vietnam ranked ahead of some of its neighbors in the region but, noting that Thailand and Malaysia rank in the top 30 in the overall ease of doing business, also seemed determine to improve the business environment in Vietnam.