Open Meeting with DB2015 Contributors Wednesday January 7, 2015 - - PowerPoint PPT Presentation

Open Meeting with DB2015 Contributors Wednesday January 7, 2015

Permanent Committee for Streamlining Business Environment in Kuwait (PCK)

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• Motivating reforms through

country benchmarking.

• Informing the design of

reforms.

• Enriching international

initiatives on development effectiveness.

• Informing theory.

• Simplify and deregulate in competitive markets.
• Focus on enhancing rights.
• Expand the use of technology.
• Reduce court involvement in business matters.
• Make reform a continuous process.

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In the regulation of business activity, two principles Apply:

• First, regulate only when private ordering or

litigation are not sufficient to induce good conduct.

• Second, regulate only if there is capacity to enforce.

• A reflection (proxy) of important institutional features

that matter for economic growth & poverty reduction.

• A new method to characterize details of rules and

mechanisms underlying competitive markets.

• A mechanism to strengthen service delivery and

measurement of actual practices.

• A promoter of economic inclusion with input from local

experts who deal with practical situations.

• A helpful benchmarking tool.
• A model of transparency about data and its limitations.
• An enabler for progress in research and policy debate.

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DB is not an “investor attraction” index but aims at measuring key features of rules governing businesses.

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• DB ranking is a comprehensive measure of

business environment .

• Narrow focus on increasing DB ranking results in

improvement of the overall business environment .

• DB indicators promote deregulation .
• DB indicators focus only on laws and do not take

into account practice.

• DB methodology and historical data have not

been revised over the years.

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• DB2004
• DB2015

economies topics economies topics 133 5 189 10+

Between June 2013 and June 2014:

• 123 economies out of 189

recorded real improvements in local regulatory framework (65%).

• 230 business reforms were

documented.

– 145 reforms aimed at reducing the complexity and cost of complying with business regulation (63%). – 85 reforms aimed at strengthening legal institutions (37%). Most improved economies

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DB 2015: Done

• Revision of the calculation
• f the Ease of Doing

Business ranking.

• Adding a second city in 11

large economies.

• Broadening the scope of

indicator sets for :

1. Getting credit. 2. Protecting minority investors(renamed). 3. Resolving insolvency.

DB2016: Planned

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• Broadening the scope of

indicator sets to expand the regulatory quality:

• 1. Dealing with

construction permits.

• 2. Getting electricity.
• 3. Registering property.
• 4. Paying taxes.
• 5. Enforcing contracts.

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For indices, the frontier is set at the best theoretical score even if no economy attains it. Example: the strength of legal rights index (which ranges from 0 to 12) is set in this case at 12.

• The distance to frontier score

captures the gap between an economy’s performance and a measure of best practice across the entire 10 DB topics.

• A higher score indicates a

more efficient business environment and stronger legal institutions.

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What was added to Resolving insolvency

Indicator set

• New: the strength of

insolvency framework index Changes

• A new indicator measures good

practices in accordance with the WBG’s Principles for Effective Insolvency and creditor/Debtor Regimes and the United Nations Commission on International Trade Law’s (UNCITRAL) Legislative Guide on Insolvency Law.

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Who ? Why?

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How?

• There are more than 10,000

contributors.

• The contributors are from law

firms, notaries, consulting firms, freight-forwarders, & others, that are familiar with the whole process covered by regulations for DB in the country.

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Kuwait Contributors in DB2015: 39

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• Global Supporters
• Regional Supporters

Others:

• Kauffman Foundation
• USAID

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23 DB website: http://www.doingbusiness.org/data/exploreeconomies/kuwait#starting-a-business

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Total: 5+2 = 7

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Total number of attached official documents to the report: 10

• II. KDIPA Explanation/Response to Comments:

Staring a Business:

Comment from government DB Team response KDIPA Explanation The passage of Law No.111 for 2013 for commercial licensing permits has entailed to reduce processing time for permits and facilitate business by allowing to issue within 3 days the impact is currently shorter number of procedures for starting a limited liability company (according to case scenario in DB methodology) down from 12 procedures recorded in DB2014 to only 7 procedures and shorter duration from 32 days to 21 days. According to input from incorporation lawyers, the majority of companies do not yet obtain their business license online using the new e-

• services. Furthermore, in line

with the estimates provided, please note that the time recorded to obtain a commercial license is 2 days for the case-study company under consideration. This positive reform is available since October 20, 2013 but till to date official sources at MoCI indicated that there was no request applications received for issuing a temporary license which if received will take only 3 days.

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• II. KDIPA Explanation/Response to Comments:

Staring a Business:

Comment from government DB Team response KDIPA Explanation

The number of civil ID is granted immediately for the company at MoCI through an e-link with the Public Authority for Civil Information (PACI) as

• f November 10, 2013.

Incorporation experts reported that a visit to PACI is still necessary to complete this registration as the electronic service is not yet fully functional as of June 1, 2014. Official sources reiterated that there is no need to physically visit PACI . A screen shot at MoCI for issuing directly civil ID is attached that proves no need to physically visit PACI. Attached pdf document

• no. 5

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• II. KDIPA Explanation/Response to Comments:

Staring a Business:

Comment from government DB Team response KDIPA Explanation

The issue of rise in limited liability licensing fees from KD 30 to KD 150 comes after 27 years of the last increase (1986), it entailed longer duration (for example 4 years instead of 2), less fees for renewals,& is in line with other regional GCC rates, it intends to hinder manipulation of commercial licensing for establishing imaginary companies Private sector practitioners have confirmed the increase in the commercial license fee based on Resolution No. 411/2013, published in the Official Gazette on October 20,

• 2013. This change will be

reflected in the upcoming Doing Business 2015 report. (as Χ reform) Despite apparent rise of fees we maintain our stance that if the cost is considered as % of Kuwait GDP per capita and given the fact it is over 4 years validity instead of previous 2 years then it has no impact.

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• II. KDIPA Explanation/Response to Comments:

Staring a Business:

Comment from government DB Team response KDIPA Explanation According to MoJ, the limited liability companies, General Partnership companies, and Limited Partnership companies, will be able to process procedures within 2 hours from submission, without violating any articles in decree law No. 25/2012 as amended by Law

• No. 97/2013. While, the public

shareholding companies, the holding companies, and the closed shareholding will take a maximum of 2 days to complete the same procedures. According to input from incorporation lawyers, the time to obtain a commercial license has not changed as of June 1, 2014. MoJ documentation is already saving time by being done in

• ne day ( 2 hours) for limited

liability companies. Please refer to attached pdf official document no. 4

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• II. KDIPA Explanation/Response to Comments:

Dealing with Construction Permits:

DB Team Response:

The team consulted with construction experts who noted that obtaining the electricity approval still takes 7 days on average. This time includes the waiting time after the electricity inspection is conducted and before the Ministry of Electricity and Water begins the approval process. As for the cost, construction experts noted there is still a fee of KD 4,000 for this approval. The team would appreciate receiving an

• fficial fee schedule where it indicates that there is no charge for the electricity
• approval. (Attached document No. 1)

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• II. KDIPA Explanation/Response to Comments:

Dealing with Construction Permits:

DB Team Response:

The team consulted with construction experts who noted that obtaining the water approval still takes 5 days on average. This time includes the waiting time after the water inspection is conducted and before the Ministry of Electricity and Water begins the approval process. As for the cost, construction experts noted there is still a fee of KD 3,000 for this

• approval. The team would appreciate receiving an official fee schedule where it

indicates that there is no charge for the water approval.

(Attached document No. 1)

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• II. KDIPA Explanation/Response to Comments:

Dealing with Construction Permits:

DB Team Response:

The team consulted with construction experts who noted that obtaining the sewerage approval still takes 2 weeks on average. This time includes the waiting time after the sewerage inspection is conducted and before the Ministry of Public Works begins the approval process. As for the cost, construction experts noted there is still a fee of KD 2,000 for this

• approval. The team would appreciate receiving an official fee schedule where it

indicates that there is no charge for the sewerage approval. .

(Attached document No. 2)

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• II. KDIPA Explanation/Response to Comments:

Dealing with Construction Permits:

(Attached document No. 3)

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• II. KDIPA Explanation/Response to Comments:

Dealing with Construction Permits:

DB Team Response:

The team consulted with construction experts who noted that the fee to obtain a new water connection remains at KD 100 the water connection is now assumed to be 150 meters instead of 10 meters. (Attached document No. 8)

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• II. KDIPA Explanation/Response to Comments:

Getting Electricity:

DB Team Response: Regarding procedure 4, the electricity company and private experts contacted by the team have confirmed that this step still takes 16 days as in the past. As for the cost, they indicated that KD 150 is actually the lowest fee charged. As such, the time and cost for this procedure remain unchanged in the Doing Business 2015 report.

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• II. KDIPA Explanation/Response to Comments:

Getting Electricity:

DB Team Response: All procedures measured by the indicator are verified by respondents with expertise in the field including the electricity company and private contractors, all of whom confirmed that this procedure still takes the same time as last year. Therefore, the team records 21 days for the completion of this procedure for the Doing Business 2015 report.

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• II. KDIPA Explanation/Response to Comments:

Getting Electricity:

DB Team Response: The cost for this procedure remains unchanged in the Doing Business 2015 report. (Attached document No. 9)

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• II. KDIPA Explanation/Response to Comments:

Registering Property:

Comment from government DB Team response KDIPA Explanation

Description of the reform: procedures made easier by establishing a GIS database for all civil data for property and shops in coordination with MoCI . Developing an automated electronic system for standardizing forms and text used for property registration and an e-payment system (Tasdeed) has been launched on a dedicate portal run by MoJ. Impact of the reform: Procedure 1: Reforms speeding procedures by allowing for Issuing of commercial licenses at MoCI without going back to the Municipality. The team’s research showed that the impact of the reform was not yet noticed by the private sector

• respondents. According to private

sector respondents, the seller must request a Borders and Cadastral Sheet from the Municipality providing details of the property (including zoning). Based on above mentioned, Procedure 1 for the Registering Property indicator will remain unchanged in the Doing Business 2015 report. Will follow up for future developments.

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• II. KDIPA Explanation/Response to Comments:

Registering Property:

Comment from government DB Team response KDIPA Explanation

Procedure 5: Under procedure 5 where the person concerned will submit an application to the Department of Citizen Services the time is reduced to 1 day (down from 15 days) and sign it and ratify it by the stakeholders and then they will receive their

• wn copy of the document.

Private sector contributors did not confirm the change in time for finalizing the

• procedure. Therefore, time

for procedure 5 will remain unchanged in the Doing Business 2015 report. Refer to attached pdf

• fficial document no. 10

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• II. KDIPA Explanation/Response to Comments:

Registering Property:

Comment from government DB Team response KDIPA Explanation An e-link is established between Ministry of Justice (MoJ) and Kuwait Municipality for a user based dedicated e-link to speed review of documents needed that are available in a shared e-

• database. Also, mobile based

applications are used especially SMS messages to be in touch with public to complete any missing documents and save time. Date of entry into force: September 8, 2013 As of June 1, 2014, private respondents in Kuwait reported that they did not notice any impact on time of registering property from the introduction of the e-link between Ministry of Justice (MoJ) and Kuwait Municipality and the introduction of mobile applications for communication with the

• public. Therefore, the time of

procedure related to the registration of the property with the Real Estate Registration Office will remain unchanged in the upcoming Doing Business 2015 report. We obtained clarification on this issue from Kuwait Municipality which confirmed that this e-link with MoJ is meant to show a unified computer screen between both parties to ensure no fraud or duplication and it is already implemented.

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• DB has enabled many countries to learn from the

experiences of others.

• DB makes available the list of economies that

adopted good practices over the last few years based on information collected from local experts.

• Good Practices provide insights into how

governments have improved the regulatory environment in the past in the various components measured by DB.

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• Economies providing greater access

to regulatory information tend to have more efficient regulatory processes and lower regulatory compliance costs.

• The data on the accessibility of

regulatory information was collected between January and August 2012.

• It measures how easy it is to access

fee schedules for 4 regulatory processes.

• Fee schedules are considered

easily accessible if they can be

• btained on the website or

through public brochures or notice boards.

• They are considered not easily

accessible if they can be obtained

• nly by meeting with an official.

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Fees Relevant agency Incorporation company registry Building permit building department Electricity connection distribution utility or electricity regulator Property transfer property registry

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• 1. Registering a new company
• 2. Obtaining a building permit
• 3. Connecting a business to electricity
• 4. Transferring property

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• WBG Women, Business and the Law series

provide an overall picture of women’s legal ability to function independently in the business environment, and complements the WBG Doing Business dataset.

• Kuwait has data under the WBG Women,

Business and the Law series which started in 2012 and presents 7 indicators/topics based

• n laws and regulations affecting women’s

prospects as entrepreneurs and employees in 143 economies.

• It is hoped this resource will inform research

and policy discussions on how to improve women’s economic opportunities and

• utcomes.

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• Kuwait has no data under the WBG Entrepreneurship project which

covers period 2004-2012 for 130 economies.

• New business entry density is defined as the number of newly

registered corporations per 1,000 working-age people (15 - 64 years) for private, formal sector companies with limited liability.

• This is a valuable indicator which quantifies the impact of

regulatory, political, and macroeconomic institutional changes on new business registration, a vital component of a dynamic private sector.

• The data can help answer:

– What are the trends in new firm creation? – What is the relationship between entrepreneurship and the business environment and financial development? – How much did the financial crisis affect entrepreneurial activity in the formal sector?

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country New Business Density Number of new limited liability companies UAE 1.38 10,814 Oman 1.74 3,165 Qatar 1.74 3,053

• Kuwait has no data (as yet) under the WBG Enterprise

Survey, which cover 139 economies.

• Enterprise Surveys and Doing Business are

complementary, but use different diagnostic tools as they reconcile the divergence of rules from practice that confronts DB data with experience reported by firms under the WBG Enterprise Survey program.

• The Enterprise Survey program should be done in

parallel to DB to help shed light on these issues and improve policy analysis.

• Currently WBG is gathering data in 30 countries around

the world.

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Innovation Module Micro Survey Informal Survey

IN OUR VIEW IT REPRESENTS A CLEAR STEP FORWARD, BECAUSE IT IS INFORMATIVE ABOUT A

NUMBER OF IMPORTANT ASPECTS OF LAWS AND REGULATIONS, IT IS USEFUL AS A BENCHMARKING TOOL FOR POLICY-MAKERS AND BECAUSE IT EXEMPLIFIES A METHOD TO COVER A POTENTIALLY LARGE VARIETY OF RULES AND INSTITUTIONAL ARRANGEMENTS.

The fundamental question is whether the approach taken by Doing Business is a step forward, not whether it measures everything perfectly.

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A Review of Doing Business, May 12, 2013