09 November 2010

Doing Business 2011 in Timor-Leste

Lao Hamutuk Dili 20/11/2010 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%)
[See the box on http://www.laohamutuk.org/misc/AMPGovt/tax/NewTaxLaw08.htm for 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 Bank doesn'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 complete report is available at  http://www.doingbusiness.org/Reports/Doing-Business/Doing-Business-2011 .

A table of Timor-Leste data is at http://www.doingbusiness.org/data/exploreeconomies/timor_leste, which contains some additional information, such as that between 2010 and 2011, Timor-Leste dropped 45 places in the ranking on Dealing with Construction Permits.

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