Doing Businessin the Arab World

Dahlia KhalifaSenior Strategy Adviser

Abu DhabiNovember 8, 2009

Doing Business – Overview Launched 8 years ago. Doing Business in

the Arab World for 2nd year

Goal: to provide an objective basis for understanding and improving the regulatory environment for business.

From 5 indicator sets in 133 economies to 10 in 183 economies.

The objective: efficient regulations, accessible to all, and simple in their implementation.

Focus on regulations relevant to the life cycle of a small to medium-sized domestic business based on standardized case

DO NOT measure all aspects of the business environment.

1. Singapore 16. Finland

2. New Zealand 17. Mauritius

3. Hong Kong, China 18. Sweden

4. United States 19. Korea, Rep.

5. United Kingdom 20. Bahrain

6. Denmark 21. Switzerland

7. Ireland 22. Belgium

8. Canada 23. Malaysia

9. Australia 24. Estonia

10. Norway 25. Germany

11. Georgia 26. Lithuania

12. Thailand 27. Latvia

13. Saudi Arabia 28. Austria

14. Iceland 29. Israel

15. Japan 30. Netherlands

Top 30 on the ease of Doing Business 2010

Arab World overall performance on Doing Business 2008/09

• Saudi Arabia leads the way in the ease of doing business, followed by Bahrain.

•Top 6 economies in Arab world from GCC

•UAE and Egypt greatest jump in rankings this year, top global reformers – Egypt for 4th time

Key findings in this year’s report

Against backdrop of global financial and economic crisis, record number of reforms recorded: 287 reforms in 131 countries; 20% more than in the year before.

Focus on SMEs for job creation. Regulatory ease of starting, operating and closing a business influences how well firms can cope and adjust.

Reforms more likely in developing economies: Two-thirds of reforms in low- and lower-middle-income economies.

Rwanda first Sub-Saharan African country to become top reformer: Reforms in 7 of the 10 areas; from143 to 67 in aggregate ranking.

2 regions stand out for reform pace in 2008/9: Eastern Europe and Central Asia (sixth year in a row) and Middle East and North Africa (and Arab World)

Arab World average ranking: 103

DB Top Reformers in 2008/09

Economy Starting a business

Dealing with construction

permits

Employing workers

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across borders

Enforcing contracts

Closing a business

Rwanda

Kyrgyz Republic

Macedonia FYR

Belarus

United Arab Emirates

Moldova

Colombia

Tajikistan

Egypt, Arab Rep.

Liberia              

Arab world recorded a total of 38 positive reforms in 9 areas in 2008/09, 16 of 20 economies in the Arab world reformed

Percentage of countries with at least one positive reform in 2008/09

96%High Income

OECD

Eastern Europe and Central Asia

Sub-Saharan Africa

Latin America and

Caribbean

South Asia

East Asia and Pacific

Arab world– one of the leaders in the number of reforming countries

Arab World

In what topics does Arab World do the best?

Average rankings per topic 2008/09

103 95 9272

123101

6887

121105

Highest – 1

Lowest – 183

Consistent reform programs: Egypt, global top reformer for the fourth time

Egypt, global top reformer for the fourth time: Egypt moved from being ranked 116 to 106 among 183 economies on the overall ease of doing business. Egypt made business start-up less costly, simplified construction permits, expanded credit information, and created commercial courts to expedite contract dispute settlements.

Arab world performance – Ranking on the ease of Doing Business by indicator

Topic World’s top ranked 2008/09 Arab World’s top ranked 2008/09

Starting a business New Zealand Saudi Arabia (13)Egypt, Arab Rep. (24)

Dealing with construction permits Hong Kong, China Bahrain (14)United Arab Emirates (27)

Employing workers Australia Bahrain (13)Oman (21)

Registering property Saudi Arabia Saudi Arabia (1)United Arab Emirates (7)

Getting credit Malaysia Saudi Arabia (61)Egypt and U.A.E. (71)

Protecting investors New Zealand Saudi Arabia (16)Kuwait (27)

Paying taxes Maldives Qatar (2)United Arab Emirates (4)

Trading across borders Singapore United Arab Emirates (5)Saudi Arabia (23)

Enforcing contracts Luxembourg Yemen, Rep. (35)Tunisia (77)

Closing a business Japan Bahrain (26)Qatar (33)

Starting a Business in Arab World: Saudi Arabia and Egypt lead the way and 8 economies reform

Arab World Reformers in Starting a Business

Egypt, Arab. Rep.

Jordan

Lebanon

Oman

Saudi Arabia

Syrian Arab Republic

United Arab Emirates

Yemen, Rep.

Big improvements in starting a business since 2004 including in the region where average time dropped by almost half

8 Arab economies have reduced or eliminated the minimum capital requirement since 2005. 5 of these used to have among the highest such requirements in the world—up to the equivalent of $120,000. The UAE was among the economies abolishing the minimum capital requirement in 2008/09, perhaps inspired by the example of Egypt, Saudi Arabia, Tunisia and the Republic of Yemen.

Saudi Arabia eased business start up with the introduction of a new one-stop Unified Office for business start-up

Number of Procedures

Time (days) Cost (% of income p.c.)

Saudi Arabia rose from 15 to 13 on the global ease of doing business—making it the highest-ranked economy in the region—by establishing a one-stop shop for business registration and a faster process for construction permits

Dealing with Construction Permits in Arab World: Bahrain and United Arab Emirates lead the way

One-stop shops and risk-based systems popular in construction permitting

United Arab Emirates, global top reformer list for the first time

The UAE eased the process of dealing with construction permits in 2008/09 and is now ranked 2nd in the region after Bahrain 2008

2009

The United Arab Emirates moved from 47 to 33 on global ease of doing business and became one of the world’s 10 most active reformers by eliminating the minimum capital requirement, simplifying registration for new businesses, in addition to easing construction permitting and trading across borders.

Egypt eliminates most pre-approvals for construction permits

Number of Procedures

Time (days) Cost (% of income p.c.)

Getting Credit in Arab World: Bahrain has the highest coverage and Sudan the highest score on legal rights

Example of a successful reform: Morocco introduced private credit bureaus

Morocco strengthened access to credit information by introducing a private credit bureau

distributes positive and negative information

keeps credit information for more than 2 years

includes small loans on borrowers

Protecting Investors in Arab World: Saudi Arabia and Kuwait lead the way

Colombia- the road to the top 10 in Protecting Investors

•Colombia has reformed investor protections for 3 years.

•Passed a new decree which makes it easier to sue directors involved in prejudicial party transactions.

•If directors found guilty they must pay damages and disgorge the profit from the transaction.

Protecting Investors reforms in Tunisia

Rank 2009 2010

Protecting Investors Rank 143 73

Extent of disclosure index (0-10) 0 5

Extent of director liability index (0-10) 5 5

Ease of shareholder suits index (0-10) 6 6

Strength of investor protection index (0-10) 3.7 5.3

•The new provisions require approval of related party transactions by both the board of directors and a shareholders meeting

•Interested parties are no longer allowed to participate in the approval process

•Requires review of the terms of such transactions by an independent auditor

Trading across Borders in Arab World: United Arab Emirates and Saudi Arabia lead the way

After reforms United Arab Emirates leads the Arab World in Trading across Borders at #5 globally

Time to export (days)

Time to import (days)

Documents for export

5

4

Documents for import

7

5

Cost to export (USD per container)

Cost to import (USD per container)

Enforcing contracts in the Arab world: an opportunity for reform

Enforcing contracts:Top 10 and global good practices

Streamline provisions on mandatory mediation.

Increase number of mediators and court masters.

Have specialized commercial courts/chambers

Expand range of functions of court masters.

Explore enhanced use of technology in court systems.

Keep statistics on judicial performance.

• Luxembourg• Iceland• Hong Kong, China• Norway• Korea, Rep.• France• Germany• Finland• United States• New Zealand

Peer-learning and benchmarking: completed reforms motivated or informed by DB

About 270 reforms since 2004

270

Note: Reforms informed by Doing Business refers to reforms that were either supported by technical assistance or where governments indicated that the reform dialogue and process were informed by DB.

127 reforms in 2008/9

For more information visit: www.doingbusiness.org

Thank you. For more information:www.doingbusiness.org