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"Doing Business 2011" and Timor-Leste

9 November 2010.  Updated 28 January 2011

For those without the time to read the World Bank's 267-page "Doing Business 2011" report, La'o Hamutuk has excerpted what it says about Timor-Leste (in addition to the improvements in the courts highlighted in the Bank's press release below). It's not a pretty picture.

Table 1.2: Rankings on the ease of doing business:
DB2011  Timor-Leste ranks 174 out of 183  (9 African countries are worse)
DB2010  Timor-Leste ranked the same 174 out of 183 in last year's report.
Reforms: 1  (scores range from 0 to 4)

Table 3.4: Paid-in minimum capital to start a business
In Timor-Leste, you need USD$5,000 = 921% of annual GNI per capita. This is the highest in the world. (Niger is second at 613%.)

Table 5.1: Where is registering property easy—and where not? (average of procedures, time and cost)
Timor-Leste ranks among the most difficult -- 180 out of 183 (Micronesia, Marshall Islands and Brunei are worse)

Table 6.1: Where is getting credit easy—and where not? (sum of the strength of legal rights index and the depth of credit information index)
Timor-Leste is the second most difficult -- 182 out of 183  (Palau is worse)
Page 50: "In East Asia and the Pacific half the economies have no credit bureau or registry, scoring 0 on the depth of credit information index. But things are improving. Timor-Leste is working to make its new public credit registry fully operational. ..."

Table 6.4: Who has the most credit information and the most legal rights for borrowers and lenders—and who the least?
Timor-Leste is in a 4-way tie for third-worst (only Palau and West Bank/Gaza are worse)

Table 8.3: Who makes paying taxes easy and who does not—and where is the total tax rate highest and lowest?
Timor-Leste is 8th best in number of payments per year, at  6.
Timor-Leste has the lowest total tax rate, at 0.2% of profit. (Vanuatu is next at 8.4%)
[La'o Hamutuk's comment on these figures.]

Table 10.1: Where is enforcing contracts easy —and where not? (procedures, time and cost to resolve a commercial dispute through the courts.)
Timor-Leste is the worst in the world.

Table 10.4: Who makes enforcing contracts easy—and who does not?
Timor-Leste is the fifth worst in the world in number of procedures (51, better than Brunei, Syria, Sudan and Kosovo).
Timor-Leste is the 10th slowest in the world, at 1,285 days.
Timor-Leste is the most expensive in the world, with cost at 163.2% of claim.

Table 12.1: Who makes getting electricity easy—and who does not?
Timor-Leste is in a 9-way tie for best, with only three procedures.
[Apparently the authors don't know that it is impossible to get electricity in most of the country, and that service is intermittent even in the capital.]
The cost of getting an electric connection (7,389% of annual per capita income) in Timor-Leste is the 12th highest in the world.

Country Table for Timor-Leste (East Asia & Pacific)
Gross National Income (GNI) per capita (US$) 543
Ease of doing business (rank) 174
Lower middle income
Population (m) 1.1

Starting a business (rank) 167
Procedures (number) 10
Time (days) 83
Cost (% of income per capita) 18.4
Minimum capital (% of GNI per capita) 921.3

Dealing with construction permits (rank) 128
Procedures (number) 22
Time (days) 208
Cost (% of GNI per capita) 138.2

Registering property (rank) 183
Procedures (number) NO PRACTICE
Time (days) NO PRACTICE
Cost (% of property value) NO PRACTICE

Getting credit (rank) 182
Strength of legal rights index (0-10) 1
Depth of credit information index (0-6) 0
Public registry coverage (% of adults) 0.0
Private bureau coverage (% of adults) 0.0

Protecting investors (rank) 132
Extent of disclosure index (0-10) 3
Extent of director liability index (0-10) 4
Ease of shareholder suits index (0-10) 5
Strength of investor protection index (0-10) 4.0

Paying taxes (rank) 20
Payments (number per year) 6
Time (hours per year) 276
Total tax rate (% of profit) 0.2

Trading across borders (rank) 91
Documents to export (number) 6
Time to export (days) 25
Cost to export (US$ per container) 1,010
Documents to import (number) 7
Time to import (days) 26
Cost to import (US$ per container) 1,015

Enforcing contracts (rank) 183
Procedures (number) 51
Time (days) 1,285
Cost (% of claim) 163.2

Closing a business (rank) 183
Time (years) NO PRACTICE
Cost (% of estate) NO PRACTICE
Recovery rate (cents on the dollar) 0.0

The World Bank's table of Timor-Leste data contains some additional information, such as that between 2010 and 2011, Timor-Leste dropped 45 places in the ranking on Dealing with Construction Permits.

Media release from the World Bank Group

Timor-Leste Increases Court Efficiency

Washington, D.C., November 4, 2010­Timor-Leste has increased court efficiency by training and appointing new judges and passing a new civil procedure code, according to the Doing Business report launched today. However its regulatory environment in which local firms do business still lags behind other East Asian economies.

Doing Business 2011: Making a Difference for Entrepreneurs is the eighth in a series of annual reports published by IFC and the World Bank. For the first time in eight years, the economies of East Asia and the Pacific were among the most active in improving the regulatory climate in which local firms do business. Timor-Leste ranked 174 out of 183 economies.

“IFC is keen to assist the government to realise business climate reforms underway such as streamlining of business start-up processes and improving access to credit, which will enable small and medium-size businesses to flourish and create jobs,” said Milissa Day, IFC’s Timor-Leste Country Manager.

World-wide it is easiest for local firms to do business in Singapore, Hong Kong SAR China, and New Zealand. Vanuatu, at rank 60, is the top performing country in the Pacific region.

The Marshall Islands improved business regulations most among Pacific nations in the last year, moving up 15 places to 108, by strengthening its legal framework to facilitate access to finance with a new secured transactions law. The law establishes a collateral registry and broadens the range of assets that can be used as collateral. Solomon Islands also passed a new secured transactions law and established a collateral registry, improving its ranking by 10 places to 96. In Papua New Guinea, a new private credit bureau that makes it easier for lenders to provide entrepreneurs with finance helped to improve the country’s ranking by five places to 103.

Samoa used new information technologies to become the most improved economy globally in the area of property registration. Samoa reduced the time required to register property by four months by shifting from a deed system to a title system and fully computerizing its land registry.

About the Doing Business report series

Doing Business analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and closing a business. Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, skill level, or the strength of financial systems. Its findings have stimulated policy debates in more than 80 economies and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies.
For more information about the Doing Business report series, please visit: www.doingbusiness.org

About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit www.worldbank.org , www.miga.org, and www.ifc.org.

Adjustments to 2010 Rankings:
Doing Business 2010 rankings were retroactively adjusted to reflect the removal of the Employing Workers Indicator from the aggregated calculation of rankings. The Employing workers indicator (EWI) methodology is currently being reviewed by internal and external consultative groups, with the aim of getting a good balance between worker protection and efficient employment regulation that favors job creation. Since the consultative process is not complete, the employing workers indicator will be in an Annex of the Doing Business 2011 report and it will not be factored into the rankings. The new indicator Getting Electricity will also not be included in the rankings.

Contacts for region-specific queries on Doing Business 2011:

East Asia and the Pacific
Hannfried von Hindenburg +852-2509-8115Carl Hanlon +1 (202) 473-8087,E-mail: hvonhindenburg@ifc.org E-mail:
chanlon@worldbank.org

In Sydney, Australia:
Sara King, Phone: +61 (2) 9235-6524,E-mail: Sking@ifc.org

 

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
Rua dos Martires da Patria, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-77234330
email: 
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