doing business in the middle east and north africa – with particular reference to iraq

Doing Business in the Middle East and North Africa – with particular

reference to Iraq

Baghdad

12 November 20111

Presentation to Iraq Private Sector Development Center

What does Doing Business measure?

Doing Business indicators:

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

Are built on standardized case scenarios.

Are measured for the most populous city in each country.

Are focused on the formal sector.

DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets.

2 22

3

Doing Business indicators – 11 areas of business regulation (9 included in the DB2011 ranking; 10 in DB2012)

Start-up Expansion Operations Insolvency Starting a

business

Minimum capital requirement,

procedures, time and cost

Registering property

Procedures, time and cost

Getting credit

Credit information systems

Movable collateral laws

Protecting investors

Disclosure and liability in related party transactions

Enforcing contracts

Procedures, time and cost to resolve a commercial dispute

Dealing with construction permits


Paying taxes

Payments, time and Total Tax Rate

Trading across borders

Documents, time and cost

Getting electricity


Employing workers (annex)

Resolving insolvency (formerly Closing a business)

Time, cost and recovery rate

Property rightsInvestor protectionAccess to credit

Entry Administrative burden Flexibility in hiring

Recovery rateReallocation of assets

33

1. Singapore 16. Georgia2. Hong Kong SAR, China 17. Thailand3. New Zealand 18. Malaysia

4. United States 19. Germany

5. Denmark 20. Japan6. Norway 21. Latvia7. United Kingdom 22. Macedonia, FYR8. Korea, Rep. 23. Mauritius9. Iceland 24. Estonia10. Ireland 25. Taiwan, China11. Finland 26. Switzerland 12. Saudi Arabia 27. Lithuania13. Canada 28. Belgium14. Sweden 29. France15. Australia 30. Portugal

Top 30 economies for the ease of Doing Business in 2010/11

44

Economies in the Middle East & North Africa on average have relatively efficient regulatory processes but weaker legal institutions

55

Middle East & North Africa ranking in Doing Business 2012 (Iraq 164)

170 164

148 144

134 131

110 104

99 96

94 93

67 49

46 38

36 33

12

DjiboutiIraq

AlgeriaIran, Islamic Rep.

Syrian Arab RepublicWest Bank and Gaza

Egypt, Arab Rep.Lebanon

Yemen, Rep.Jordan

MoroccoMENA

KuwaitOman

TunisiaBahrain

QatarUnited Arab Emirates

Saudi Arabia

Easier to do business

66

Middle East & North Africa economies score high in many areas of business regulation

Indicator World’s top ranked Middle East and North Africa’s top ranked

Starting a business New Zealand Saudi Arabia (10)Egypt, Arab Rep. (21)

Dealing with construction permits Hong Kong SAR, China Saudi Arabia (4)Bahrain (7)

Registering property Saudi Arabia Saudi Arabia (1)United Arab Emirates (6)

Getting credit Malaysia Saudi Arabia (48)Egypt and U.A.E. (78)

Protecting investors New Zealand Saudi Arabia (17)Kuwait (29)

Paying taxes Maldives Qatar (2)United Arab Emirates (7)

Trading across borders Singapore United Arab Emirates (5)Saudi Arabia (18)

Enforcing contracts Luxembourg Yemen, Rep. (38)Iran, Islamic Rep. (50)

Resolving Insolvency Japan Bahrain (25)Qatar (37)

Getting Electricity Iceland United Arab Emirates (10)Qatar (18)

77

Saudi Arabia

United Arab Emira

tes

BahrainQatar

TunisiaOman

Kuwait

Yemen, Rep.

Jordan

Morocco

Lebanon

Egypt, Arab Rep.

West

Bank and Gaza

Syrian Arab Republic

Iran, Is

lamic Rep.

Iraq

Algeria

Djibouti

0

20

40

60

80

100

120

140

160

180

Average rank across DB indicators

Average of lowest 3 topic rankings Average of all topic rankingsAverage of highest 3 topic ranking

UAE ranks 5 in Trading Across Borders, 6 in Register-ing Property, 7in Paying Taxes

Economy performance across different areas of business regulations can vary considerably

UAE ranks 151 in Resolving Insolvency, 134 in Enforcing Contracts, 122 in Protecting Investors

Globally, the pace of reforms making doing business easier is faster than ever before

11 of the 18 MENA economies improved their business regulations in 2010/11.

99

18 regulatory reforms in 11 economies improved the business environment in the region

Jordan, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, United Arab Emirates

Algeria, United Arab Emirates, Oman, Qatar

Morocco, Oman, Yemen

Djibouti, Jordan

MoroccoLebanon

1010

Several economies from the region stand out for improving their performance over time since 2005 – no improvement for Iraq since 2001*

Oman

Saudi Arabia

United Arab Emira

tesKuwait

Tunisia

LebanonJordan

Morocco

Iran, Is

lamic Rep.

West Bank and Gaza

Algeria

Yemen, Rep.

Iraq

Egypt, Arab Rep.

Syrian Arab Republic

Djibouti

0.20

0.25

0.30

0.35

0.40

0.45

0.50

0.55

0.60

0.65

*Bahrain and Qatar not included due to later inclusion in the DB dataset

Nar

row

ing

the

Dis

tanc

e to

the

Fron

tier f

rom

200

5 to

201

1 (p

erce

ntag

e po

ints

)

1111

Specific results for Iraq

1212

Ease of Doing Business- Iraq ranked 164 in 2012- Iraq ranked 159 in 2011

Doing Business indicators for Iraq in 2012: Starting a business - 176 Dealing with Construction Permits – 120 Getting Electricity – 46 Registering property – 98 Getting credit – 174 Protecting investors – 122 Paying taxes – 49 Trading across borders – 180 Enforcing contracts – 140 Resolving insolvency - 183


1313

Indicators where Iraq doing relatively well

Getting Electricity – 46This is a new indicator used for the first time in the Doing Business 2012 reportRelatively easy and quick to connect to the electricity grid – 5 procedures, taking 47 days costing 360% of GNI(But there is a chronic shortage of electricity in Iraq – this is a key issue in Iraq)

Paying taxes – 49Iraq less reliant on business taxation than most other countries because if it reliance on oil revenues. Iraq’s business taxation system is relatively simple, 13 payments per year, taking 312 hours with tax rate of 28.4% of profit


1414

Indicators where Iraq doing relatively less well

Starting a business – 17611 procedures, taking 77 days to register, costing 115% of per capita income, with minimum capital of 35 per cent of par capita incomeAn important indicator and a major constraint for informal businesses entering the “formal economy”

Trading across borders - 180Requiring 10 documents, 80 days to get approval, cost $3550 per containerAn important indicator illustrating major impediments to Iraq integrating with the World economy

Resolving insolvency (formerly closing a business) – 183Businesses in Iraq cannot be closed


1515

Support for Doing Business reforms in Iraq

USAID-Tijara (with support from other partners) leading in supporting DB reforms for:Starting a business, Registering property, Getting credit, Protecting investors, Resolving insolvency

World Bank Group (with support from other partners) leading in supporting DB reforms for:

Dealing with construction permits (IFC), Trading across borders and Enforcing contracts (WB)

Support for Doing Business reforms in Iraq relatively recent. Progress to date has been very slow, in part, because two or more ministries are typically involved in regulating each indicator and because of institutional resistance to reforms

Thank you.

1616

For more information:www.doingbusiness.org