Doing Business Blog - The World Bank Group

Bhutan's Job Creation Plan

How do you go about persuading young people to take up jobs in the private sector when they all aspire to civil service positions? And how do you go about raising skill levels to fill private sector jobs?

This is the not uncommon dilemma the government of Bhutan has been struggling with for the past few years. Young people want only civil service jobs because of the better working conditions, higher starting salaries and perceived prestige of working in the civil service. Yet the civil service has been increasingly unable to absorb all of those who want a job.

Employers, for their part, prefer to hire foreign workers with more relevant skills. The number of unemployed youth in the cities was getting to the point where Bhutan's most important policy objective of Gross National Happiness was being endangered.

In cooperation with the Asian Development Bank, the government resolved to act, adopting the Labor and Employment Act of Bhutan in January of last year.

Bloomberg Markets: India Needs a Bureaucracy Buster

Interesting excerpts from a commentary written by Andy Mukherjee from the May 2008 issue of Bloomberg Markets magazine:

"From earth sciences and public grievances to social justice, urban poverty and the diaspora, the Indian government has a ministry for everything and everyone.  Forming a new agency is its way of legitimizing an activity or an interest group by saying, "We care about you."

...Of course the number of ministries--there are 48 of them, plus "independent departments" of atomic energy and space--also reflects the compulsion of running a coalition government. 

...Including junior ministries, 79 politicians currently hold high office in the federal government.  State governments replicate many of the federal ministries and have some additional ones besides.  Uttar Pradesh, the most populous state, has a minister for gardens.

Amid this plenitude, the office that's badly needed and remains missing in India is the Ministry for Doing Business...  India needs a minister for doing business to reduce the clutter and confusion businesses face when dealing with a very large, and growing executive branch.  Not only that.  The further one moves down the chain of command--from federal to state governments and then to civic management--the denser the web of control becomes, even as the responsiveness of the officialdom turns less predictable.

A Picture Worth A Thousand Words

As part of the on-going Doing Business research on transparency, I have come across very interesting anti-corruption material and web-pages. After surfing many public institutions' sites, I noticed that governments tend to take an arid approach when presenting anti-corruption content. Complicated words, not very dynamic web pages, and weak educational content for their citizen are quite common. This seems to make complete sense considering the seriousness and sensitivity of the topic. But, they always left me wondering if there could be a way of dealing with anti-corruption issues in a more user-friendly manner.

My wondering found a pleasant response while surfing the Anti-Corruption Commission web-page of the Royal Government of Bhutan. More specifically, while browsing through the pages of their last annual bulletin. With an Anti-Corruption Act that was recently approved in 2006, this country seems to be making an important push to ensure the law’s full implementation and overall compliance. What you see here is the poster that accompanied the reminder of the deadline to submit the required asset declaration for public officials.

Stealing Electricity - Risky Business in India

In India, as in many other countries, there is a nexus between power company employees and those (often commercial establishments) who would steal electricity (either through tapping of overhead transmission lines, meter tampering or under-billing). In the past, most of these culprits, with or without political and financial clout, used to get away with it. Not so anymore. Stealing power has now become a punishable offense in India, and power utilities are now pulling out all the stops to prosecute the culprits.

Electricity theft has long been rampant in most parts of India (the annual losses due to electricity theft is estimated to be US$ 4.5 billion, about 1.5% of GDP) and the capital city of India, Delhi is not far behind.

Until 2002, Delhi's power supply came from Delhi Vidyut Board (DVB), a state-owned power enterprise, which was known for its less than robust customer service and inefficient staff. This was in addition to transmission and distribution losses of 50% thanks to a large number of un-metered and illegal customers, under-billing and poor collections.

The View Beyond One’s Nose

The devil is in the details. Reforms are no different. With the rising popularity of business climate reforms, countries are eagerly computerizing, digitizing or, even better, creating virtual one stop shops for anything from company start-up to licensing systems to customs. And in many cases it works. But sometimes, small grains of sand get in the way.

On a recent trip to Malaysia, the Company Registrar there described in detail the new computerized registration system. “In the near future, everything will be electronic”. But even with a brand new system, Malaysia will not compare to Denmark or New Zealand.

Why? Because company documents have to be stamped prior to registration. But, according to the Company Registrar, this is not a requirement of his agency. True. But this makes no difference to the entrepreneur who still has to make a trip to the stamp office and scan the document before enjoying the new online system. Entrepreneurs are literally on the edge between old and new. Not the most efficient system.

Dismantling the License Raj

Reducing the number of business licenses in India in 1985 resulted in a 32% increase in manufacturing productivity in the next decade. So finds a study by Amalavoyal Chari, a graduate student at Yale.

The reforms took place when Rajiv Gandhi unexpectedly came to power following his mother's assassination in 1984. He was an unknown quantity - an airline pilot with no political experience. But Gandhi turned out to be a fast reformer: twenty-five industries were entirely exempted from business licensing in March 1985. In late 1985 and 1986, further reforms made licensing easier in a number of other industries.

It didn't work everywhere.

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.