Julius Spatz

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Business and Investment Climate ReformsRelevance
and Conceptual Approach

• Julius Spatz
• Division for Economic Development and Employment
• Section for Economic and Private Sector
  Development
• Eschborn, Germany
• November 2006

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Structure

• Basic Framework
• Relevance of BIC Reforms
• Conceptual Approach
• Knowledge Management Activities

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Basic Framework
BIC (in the narrow sense)
Improving the legal, political and institutional
framework conditions
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Elements of BIC in a Narrower Sense
Elements Core Topics Possible Areas of Intervention
Governance issues Rent seeking mechanisms, corruption etc. Measures to increase transparency and accountability in public administration
Policy, legal and regulatory framework Property Rights, Resolution of Commercial Disputes, Employment, Business Registration, Taxation etc. Facilitate analysis, design, implementation and monitoring of policy, legal and regulatory reforms
Organisational framework Capacity of advocacy institutions, capacity of public administration, mechanisms for public-private dialogue Strengthening institutions, organisational development for public and private sector
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Elements of BIC in a Wider Sense
Elements Core Topics Possible Areas of Intervention
Macroeconomic strategies Key macroeconomic figures such as exchange rate, interest rates etc. Macroeconomic policy and strategy advice
Labour Force and Human Capital Access to qualified labour Skills Development
Finance Access to finance Financial System Development
Support services Access to Business Development Services BDS Market Development
Markets, social and productive infrastructure etc. access to markets, market information, quality of infrastructure etc. Improving market access, market research and information, export promotion, investments in infrastructure etc.
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Why to Reform - Relevance of BIC Reforms Key
Factors in Doing Business 2007

• Starting a business
• Dealing with licences
• Employing workers
• Registering property
• Getting credit
• Protecting investors
• Paying taxes
• Trading across borders
• Enforcing contracts
• Closing a business

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Relevance of BIC Reforms Starting a Business
Best Performer Worst Performer
Procedures (number) Australia 2 Equatorial Guinea 20
Duration (days) Australia 2 Suriname 694
Cost ( GNI per capita) Denmark 0 Sierra Leone 1194,5
Minimum capital ( GNI per capita) Bangladesh, India, Brasil, Peru, Namibia, Thailand... 0 Syria 4223,5
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Relevance of BIC Reforms Dealing with Licenses
Best Performer Worst Performer
Procedures (number) Denmark 2 Sierra Leone 48
Duration (days) Korea 52 Iran 668
Cost ( GNI per capita) Palau 6.8 Burundi 8,808.2
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Relevance of BIC Reforms Employing Workers
Best Performer Worst Performer
Difficulty of Hiring Index Australia, Malaysia, Zambia.. 0 Morocco, Tanzania... 100
Difficulty of Firing Index Belize, Canada, Thailand... 0 Bolivia, Egypt, Venezuela 100
Rigidity of Hours Index Australia, Libanon... 0 Côte dIvoire, Mongolia... 80
Rigidity of Employment Index Hong Kong, Singapore... 0 Congo, Dem. Rep. 100
Hiring Costs ( salary) Afghanistan, Cambodia0 Belgium55.2
Firing Costs (weeks of wages) Marshall Islands, New Zealand... 0 Zimbabwe 446.3
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Relevance of BIC Reforms Registering Property
Best Performer Worst Performer
Procedures (number) Norway, Sweden 1 Nigeria 16
Duration (days) Norway 1 Haiti 683
Cost ( of property value) Bhutan, Saudi Arabia0 Syria 27.9
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Relevance of BIC Reforms Getting Credit
Best Performer Worst Performer
Legal Rights Index Hong Kong, UK 10 Afghanistan, Cambodia 0
Credit Information Index Argentina, Germany, Malaysia... 6 Afghanistan, Lao PDR, Zimbabwe... 0
Public registry coverage ( adults) Portugal 72 Afghanistan, Philippines... 0
Private bureau coverage ( adults) Argentina, Australia, USA...100 Afghanistan, Cambodia... 0
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Relevance of BIC Reforms Protecting Investors
Best Performer Worst Performer
Disclosure Index Bulgaria, Malaysia, UK 10 Afghanistan, Lao PDR 0
Director Liability Index Cambodia, Malaysia, USA 9 Afghanistan, Vietnam... 0
Shareholder Suits Index Kenya, New Zealand 10 Djibouti, Iran, Mauritania 0
Investor Protection Index New Zealand9.7 Mauritania 0
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Relevance of BIC Reforms Paying Taxes
Best Performer Worst Performer
Payments (number) Maldives 1 Uzbekistan 130
Duration (hours) Maldives 0 Brazil 2600
Total Tax Rate ( of profit) Maldives 9.3 Gambia 291.4
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Relevance of BIC Reforms Trading Across Borders
Best Performer Worst Performer
Documents for Export (number) Hong Kong 2 Zambia 16
Time for Export (days) Estonia 3 Iraq 105
Cost to Export (US per Container) Tonga 265 Tajikistan 4,300
Documents for Import (number) Hong Kong, Kiribati 2 Rwanda. 20
Time for Import (days) Singapore3 Uzbekistan139
Cost to Import (US per Container) Singapore333 Zimbabwe 4,565
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Relevance of BIC Reforms Enforcing Contracts
Best Performer Worst Performer
Procedures (number) Iceland, Norway 14 Timor-Leste 69
Duration (days) New Zealand 109 Afghanistan 1,642
Cost ( of debt) Korea5.5 Sierra Leone 227.3
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Relevance of BIC Reforms Closing a Business
Best Performer Worst Performer
Time (years) Ireland 0.4 India 10
Cost ( of estate) Colombia, Netherlands... 1.0 Central African Republic, Lao PDR 76.0
Recovery rate (Cents on the Dollar)) Japan92.7 Chad, Lao PDR 0.0
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GTZ Portfolio Status Quo
Bangladesh Cambodia Laos Mongolia Philippines S
ri Lanka Vietnam
Tunisia
Ecuador
Ghana Kenya Mozambique South Africa SADC
some elements planned
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GTZ Portfolio Current Trends

• Element of the Profile of German Development
  Cooperation in Sub-Sahara Africa
• Thematic proposal for the German G8-presidency
• Rising interest in Eastern Europe and Central Asia

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Conceptual Approach (1)
National Level
Other Regions
Pilot Regions
Firm-levelInvervention
BIC Reforms
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Conceptual Approach (2)
2. Designing Technical advice Public-Private
Dialogue
1. Assessing Use of diagnostic tools and
processes(RIA, BCS, TaMS)
3. Implementing reforms Capacity development,
training
Lifecycle of Reform
4. Monitoring and evaluating Measuring the
outcomes of reforms and their impact
5. Documentation Replication of the Lessons
Learnt
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Conceptual Approach (3)
Public Sector
Private Sector
National Level
NationalPublic-Private Dialogue
Interministerial Coordination
National Business Association
Ministry
Program Impproving the BIC
Provincial Level
Local provincial Government
Local provinc. Business Assoc.
Local Public-Private Dialogue
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MDG 1Poverty reduction
MDG 3Gender
MDG 2, 4, 5, 6Education, health, child mortality.
Increased Bargaining Power of Women
Improved Public Education and Health System
Higher Share of the Family Budget Devoted to
Education and Health
Increased Incomes esp. of Women
Expansion of Business and Participation in
Technical Progress
Improved Participation of Women in the Growth
Process
Formalisation, increasing public revenues
Improved Business and Investment Climate Reduced
costs of doing business and non-commercial
risks. New business opportunities.

Analysis and Design
Implementation
Public-Private Dialogue
Impact Monitoring
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Product 037 Business and Investment Climate
provides

• Standard impact chains
• Standard indicators
• Tools for analysis und design
• Good practices and lessons learnt from other BIC
  projects
• Training material

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Thank you very much for your attention!