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Doing Business 2016
Measuring Regulatory Quality and Efficiency
13th edition
ISBN 978-1-4648-0667-4
sku 210667
Doing Business 2016 is the 13th in a series of annual reports investigating the
regulations that enhance business activity and those that constrain it. The
report provides quantitative indicators covering 11 areas of the business
environment in 189 economies. The goal of the Doing Business series is to
provide objective data for use by governments in designing sound business
regulatory policies and to encourage research on the important dimensions
of the regulatory environment for firms.
www.doingbusiness.org
AWorld Bank Group Flagship Report
Comparing Business Regulation for domestic firms in 189 Economies
DoingBusiness2016

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ISBN (paper): 978-1-4648-0667-4
ISBN (electronic): 978-1-4648-0668-1
DOI: 10.1596/978-1-4648-0667-4
ISSN: 1729-2638
Cover design: Corporate Visions, Inc.

Comparing Business Regulation for domestic firms in 189 Economies
AWorld Bank Group Flagship Report
Doing Business 2016
Measuring Regulatory Quality and Efficiency
13th edition

Doing Business 2016
Resources on the
DoingBusiness website
Current features
News on the Doing Business project
http://www.doingbusiness.org
Rankings
How economies rank—from 1 to 189
http://www.doingbusiness.org/rankings
Data
All the data for 189 economies—topic
rankings, indicator values, lists of
regulatory procedures and details
underlying indicators
http://www.doingbusiness.org/data
Reports
Access to Doing Business reports as
well as subnational and regional reports,
case studies and customized economy
and regional profiles
http://www.doingbusiness.org/reports
Methodology
The methodologies and research
papers underlying Doing Business
http://www.doingbusiness.org/methodology
Research
Abstracts of papers on Doing Business
topics and related policy issues
http://www.doingbusiness.org/research
Doing Business reforms
Short summaries of DB2016 business
regulation reforms and lists of reforms
since DB2008
http://www.doingbusiness.org/reforms
Historical data
Customized data sets since DB2004
http://www.doingbusiness.org/custom-query
Law library
Online collection of business laws and
regulations relating to business
http://www.doingbusiness.org/law-library
Contributors
More than 11,400 specialists in
189 economies who participate
in Doing Business
http://www.doingbusiness.org
/contributors/doing-business
Entrepreneurship data
Data on new business density (number
of newly registered companies per 1,000
working-age people) for 136 economies
/exploretopics/entrepreneurship
Distance to frontier
Data benchmarking 189 economies to
the frontier in regulatory practice and a
distance to frontier calculator
/distance-to-frontier
Information on good
practices
Showing where the many good
practices identified by Doing Business
have been adopted
/good-practice

Doing Business 2016
iv Foreword
1 Overview
19 About Doing Business
27 What is changing in Doing Business?
34 Reforming the business environment in 2014/15
Case studies
54 Starting a business
Third-party involvement in company formation
62 Dealing with construction permits
Assessing quality control and safety mechanisms
70 Getting electricity
Measuring reliability, prices and transparency
78 Registering property
The paths of digitization
83 Trading across borders
A new approach to measuring trade processes
91 Enforcing contracts
Measuring good practices in the judiciary
99 Resolving insolvency
New funding and business survival
105 Legal research findings on business regulation and the law
113 References
119 Data notes
163 Distance to frontier and ease of doing business ranking
169 Summaries of Doing Business reforms in 2014/15
183 Country tables
247 Labor market regulation data
268 Acknowledgments
Contents
Doing Business 2016 is the 13th in a series of
annual reports investigating the regulations
that enhance business activity and those
that constrain it. Doing Business presents
quantitative indicators on business regulation
and the protection of property rights that can
be compared across 189 economies—from
Afghanistan to Zimbabwe—and over time.
Doing Business measures aspects of regulation
affecting 11 areas of the life of a business.
Ten of these areas are included in this year’s
ranking on the ease of doing business: starting
a business, dealing with construction permits,
getting electricity, registering property, getting
credit, protecting minority investors, paying
taxes, trading across borders, enforcing
contracts and resolving insolvency. Doing
Business also measures features of labor
market regulation, which is not included in this
year’s ranking.
Data in Doing Business 2016 are current as
of June 1, 2015. The indicators are used to
analyze economic outcomes and identify what
reforms of business regulation have worked,
where and why.

Doing Business 2016
Foreword
O
ver the 13 years since its incep-
tion the Doing Business report
has become one of the world’s
most influential policy publications. It is
an annual report on the state of health of
economies based on detailed diagnostics
not of the relatively more visible features
(such as growth) and various macroeco-
nomic parameters (such as the public
debt) but of underlying and embedded
characteristics—such as the regulatory
system, the efficacy of the bureaucracy
and the nature of business governance.
An economy’s scores on Doing Business
indicators are somewhat akin to a mea-
sure of concentrations of various proteins
and minerals in the human blood. They
may not seem important to the lay
observer, but they have huge long-run
implications for an economy’s health,
performance and growth.
Since 2003 Doing Business has been
publishing annual quantitative data on
the main regulatory constraints affecting
domestic small and medium-size enter-
prises throughout their life cycle. This
year’s report presents data for 189 econ-
omies and aggregates information from
10 areas of business regulation—starting
a business, dealing with construction
permits, getting electricity, register-
ing property, getting credit, protecting
minority investors, paying taxes, trading
across borders, enforcing contracts and
resolving insolvency—to develop an
overall ease of doing business ranking.
Data are also collected on the regulation
of labor markets but these are not part of
the overall ranking.
EVOLUTION OF THE
METHODOLOGY
Given the importance of Doing Business
and the responsibility that comes with it,
and also in the light of the 2013 report of
the Independent Panel on Doing Business,
chaired by Trevor Manuel, it was decided
that we would use two years to revise and
improve the measurement of the ease of
doing business in different economies.
This is the second and last year of this
major revision exercise and that gives this
year’s report a special significance.
The research on which regulatory con-
straints are most important for firms and
how to best measure them continues
to evolve. Since the first Doing Business
report was published in 2003, the team
has implemented a number of method-
ological improvements, expanding the
coverage of regulatory areas measured
and enhancing the relevance and the
depth of the indicators. While initially the
report was focused largely on measuring
efficiency and the costs of compliance
with business regulations, over the past
two years there has been a systematic
effort to capture different dimensions of
quality in most indicator sets. This year’s
report introduces new measures of
regulatory quality in the indicator sets
on dealing with construction permits,
getting electricity, registering property
and enforcing contracts. It also presents
a significantly expanded data set for the
labor market regulation indicators to
cover certain dimensions of job quality,

vForeword
such as the availability of paid sick leave,
on-the-job training and unemployment
insurance for workers. In addition, the
methodology for the trading across
borders indicators has been revamped to
increase their relevance.
Studies show that creating a regula-
tory milieu that enables private enterprises,
especially small firms, to function and be
creative has a large positive impact on
job creation and is therefore good for the
economy. Yet the growth and efficiency of
small firms have been constrained by many
factors, including access to finance, lack of
managerial and technological capacities
and, importantly for this report, the quality
of the regulatory environment.
Demographic projections of the ris-
ing number of working-age people in
low-income and some middle-income
economies have given rise to both hope
and concern. The latter takes the form of
alarming accounts of how, because of this
“demographic dividend,” we will have to
create new jobs for all the new working-
age youngsters. What is often forgotten
is that there is no reason to presume that
they will all be supplying their labor. If we
can provide a good regulatory environ-
ment and some entrepreneurial training,
many of them will be on the other side
of the market, demanding instead of
supplying labor. In other words, the same
new working-age population can create
new jobs and supply new labor. Hence,
at this juncture the World Bank Group’s
Doing Business report can be viewed as a
small but serious intellectual contribution
to this challenge.
A WORD OF CAUTION
When using this report, it is important to
understand its strengths and limitations.
A major advantage of Doing Business
is the comparability of data across the
world’s economies thanks to the use of
standardized case scenarios with well-
specified assumptions. The report not
only highlights the extent of regulatory
obstacles to firms through the compilation
of quantitative data for more than 40 sub-
indicators but also identifies the source of
business environment constraints. This
helps governments identify well-defined
areas of action and design reform agendas.
In addition, the majority of Doing Business
indicators are based on a reading of the
law, which makes the indicators “action-
able”—as the law is well within the sphere
of influence of policy makers and is thus
amenable to change.
While this method has the advantage of
transparency, it has one inevitable short-
coming. It is not feasible to design a case
study that will be an equally good fit for all
the world’s economies. Because the report
aims to have a global coverage, the choice
of indicators is partly constrained by the
data that can realistically be collected in
some of the least developed economies of
the world.
Furthermore, Doing Business covers a
limited number of regulatory constraints.
And it does not measure many aspects of
the business environment that matter to
firms, investors and the overall economy.
For example, the report does not attempt
to capture a number of dimensions of
macroeconomic stability, the prevalence
of corruption, antitrust policies or the skills
of the workforce, important as all these
factors are for establishing a foundation for
sustainable economic development. Even
within the relatively small set of indica-
tors included in Doing Business the focus
is deliberately narrow. The trading across
borders indicators, for example, capture the
time and cost for document preparation
and compliance with border procedures to
export and import goods; they do not mea-
sure the costs associated with international
transport or tariff and nontariff barriers.
Therefore, policy makers wishing to imple-
ment regulatory reforms can use Doing
Business as a starting point for identifying
necessary reforms but should by no means
stop at what is measured by the report.
There is indeed a risk in this, which is
important to acknowledge. When we
measure certain dimensions of the perfor-
mance of an agent, such as a government,
that has to perform multiple tasks, there is a
risk of diverting a disproportionate amount
of effort to the tasks that are measured
while ignoring others that may be equally
important. There is an important literature
in economics that, while not dealing
directly with this, formalizes and draws
our attention to this problem.1
We can see
this problem arise in other domains, such
as when teachers’ salaries are indexed by
student evaluation scores; there is a risk
that this will dampen the incentive for cre-
ativity, which is harder to measure. Ranking
universities often leads them to try to game
the system and move resources and effort
away from some important but unmeasur-
able dimensions to the narrower tasks that
are tracked and measured.
This is a risk that we have to contend with
wheneverwemakeanefforttorankagents
who perform multiple tasks, or more tasks
than can be measured. The hope is that
governments, like individual agents, are
inspired by more than narrowly focused
optimization.2
They can then treat these
scores not as targets that ought to be
maximized to the exclusion of all else, but
as indicative of how they are performing
on an important dimension of economic
life—to wit, business governance—and
use them to do better in ways that may or
may not be possible to measure but that
lead to better lives for their citizens.
WHAT DO THE DOING
BUSINESS DATA SHOW?
A quick look at the list of economies at the
top of the ease of doing business ranking
reveals that the best 30 performers are
1. See Holmstrom and Milgrom (1991); and Laffont and Martimort (2009, ch. 5).
2. This is discussed in the context of economic governance in Bowles (2004, ch. 14).

Doing Business 2016vi
not those with little regulation but those
with good rules that allow efficient and
transparent functioning of businesses and
markets while protecting the public inter-
est. Data in this year’s report also show
that economies that have efficient regu-
latory processes as measured by Doing
Business have high regulatory quality. In
addition, the economies that rank high on
Doing Business indicators tend to perform
well in other international data sets, such
as the Global Competitiveness Index and
Transparency International’s Corruption
Perceptions Index.
OECD high-income economies have the
best scores on average, yet there are
good practices in business regulation in
every region. In 2014/15, 122 economies
implemented at least one reform in the
areas measured by Doing Business—for a
total of 231 reforms. Europe and Central
Asia has the largest share of economies
that implemented at least one reform and
accounts for 3 of the 10 top improvers.
Analysis of the Doing Business data for the
past 12 years shows encouraging signs
of convergence toward best practices, as
lower-income economies have improved
more in the areas measured by the report
than high-income economies that started
with a fairly strong regulatory framework
when Doing Business was first launched in
2003. Among the areas measured by the
report, starting a business has seen the
most improvements. In 2003 it took an
average of 51 days worldwide to start a
business; by 2015 this number had been
more than halved, to 20 days.
Since its launch in 2003 the Doing
Business report has inspired hundreds
of regulatory reforms worldwide. In the
past 12 years more than 2,600 reforms
have been recorded globally in the
areas measured by the report. Doing
Business has been praised by some and
criticized by others. Indeed, there is no
unique way to measure one of the most
complex dimensions of the economy:
the regulatory burden for firms. To
ensure transparency, Doing Business
publishes the methodology used for the
development of each indicator and the
disaggregated data online. This allows
users to apply their own judgment on
how to best analyze the data, including
by constructing alternative rankings
using a different set of weights for the
individual indicators.
As we continue our work on improving
the report’s methodology, we welcome
your ideas on how to strengthen the
diagnostics of business environment
constraints and make Doing Business a
more effective tool to promote better
regulatory practices.
Kaushik Basu
Senior Vice President and
Chief Economist
The World Bank
Washington, DC

Doing Business 2016
S
ocieties need regulation—and
businesses, as part of society,
are no exception. Without the
rules that underpin their establishment,
operation and dissolution, modern busi-
nesses cannot exist. And where markets
left to themselves would produce poor
outcomes, well-designed regulation can
ensure outcomes that are socially optimal
and likely to leave everyone better off.
Regulation can lead to fairer outcomes
by correcting for imbalances in power
between different players. For example,
an unregulated labor market is unlikely
to produce socially optimal outcomes
for both employers and employees; bal-
anced regulation can allow flexibility for
employers while providing protections
for workers. Regulation can also address
asymmetries in information—such as
those in the credit market, where borrow-
ers are likely to have more information
about their ability to repay a loan than
lenders do.
In addition, regulation can enable the
provision of public goods that markets
cannot provide and without which
markets cannot operate. For example,
a well-designed land administration
system, by providing reliable information
on the ownership of property, makes it
possible for the property market to exist
and to operate. It is no surprise that land
markets barely function in countries with
no property registry, such as Libya and
Timor-Leste.
And regulation can induce market players
to consider the impact of their actions on
others. Take the example of a business
that becomes insolvent. Without regula-
tion, creditors each have an incentive to
grabasmuchoftheinsolventfirm’sassets
as they can, even if it is in their collective
interest to see the firm restructured.
Doing Business focuses on regulations
and regulatory processes involved in
setting up and operating a business. It
analyzes those that address asymmetries
in information (such as credit market
regulations), those that balance asym-
metries in bargaining power (such as
labor market regulations) and those that
enable the provision of public goods or
services (such as business or property
registration).
Countless transactions are required to
set up and operate a business. When
starting a new business, entrepreneurs
need to establish a legal entity separate
from themselves to limit their liability
and to allow the business to live beyond
the life of its owners—a process requir-
ing commercial registration. To operate
their business, entrepreneurs may need
a simple way to export and import; they
may need to obtain a building permit or
acquire property to expand their business;
they may need to resolve a commercial
dispute through the courts; and they are
very likely to need an inflow of funds
through credit or new equity. Regulation
is at the heart of all these transactions.
If well designed, regulation can facilitate
these transactions and allow businesses
to operate effectively; if badly designed, it
can make completing these transactions
difficult.
ƒƒ This year’s Doing Business report
continues a two-year process of
introducing improvements in 8 of
10 Doing Business indicator sets—to
complement the emphasis on the
efficiency of regulation with a greater
focus on its quality.
ƒƒ New data show that efficiency and
quality go hand in hand. Economies
that have a faster and less costly
process for connecting to the electrical
grid also tend to have a more reliable
electricity supply. Property transfers
are faster and less costly in economies
with a good land administration
system. Commercial disputes are
resolved more efficiently by courts
using internationally recognized good
practices. And economies where the
formalities to build a warehouse can
be completed more simply, quickly
and inexpensively have on average
better-quality building regulation.
ƒƒ Information technology is part of
good business regulation. In the past
year alone Doing Business recorded
50 reforms establishing or improving
online tools for regulatory processes.
ƒƒ Overall in the past year, 122 economies
implemented at least one regulatory
reform in the areas measured by Doing
Business—231 reforms in total.
ƒƒ Economies in all regions and income
groups have improved the quality
and efficiency of business regulation.
But lower-income economies
have improved more in the areas
measured by Doing Business than
high-income economies have—there is
convergence.
Overview

Doing Business 20162
Indeed, regulation can overburden busi-
nesses, making it virtually impossible for
them to operate. Consider business reg-
istration. If the process is too complex—
as in Equatorial Guinea, where complet-
ing the formalities to start a business
takes 18 procedures and 135 days—it
can deter entrepreneurs from even
starting a new business. And if resolv-
ing a commercial dispute takes too
much time—such as the 1,402 days in
Guatemala—it can reduce the number of
potential clients and suppliers for a com-
pany. Where courts are inefficient, firms
are more likely to do business only with
people they know. How regulations and
regulatory processes are designed makes
all the difference.
Byexpandingthescopeoftheindicators—
a process started in last year’s report
and continued in this year’s—Doing
Business provides further clarity on the
differences between well-designed and
badly designed regulation. New data on
the quality of regulation make it easier
to identify where regulation is enabling
businesses to thrive and where it is
enabling rent seeking.
WHAT DOES DOING
BUSINESS MEASURE—AND
HOW IS IT CHANGING?
Measuring the quality of regulation is not
new for Doing Business; some indicator
sets have always addressed aspects
of regulatory quality, such as those on
getting credit and protecting minority
investors. But the improvements being
introduced in Doing Business indicators
are increasing the emphasis on the
quality of regulation as a complement
to the initial emphasis on its efficiency.
Last year’s report expanded the indicator
sets for three topics to capture aspects
of quality; this year’s report introduces
changes in the indicator sets for five
others, in most cases also by expanding
them to measure quality as well as effi-
ciency (figure 1.1).
There are different ways to assess the
quality of regulation. One way is to evalu-
ate the process leading to the creation
of new regulations, by looking at such
aspects as whether consultations take
place with stakeholders or whether
regulatory impact assessments are
carried out. Another is to analyze the
perceptions of citizens or experts about a
government’s ability to formulate sound
policies and regulations and implement
them in a predictable fashion.
Doing Business uses a different approach
to measuring the quality of regulation.
It focuses on whether an economy has
in place the rules and processes that
can lead to good outcomes, linked in
each case to Doing Business measures
of efficiency. In the area of dealing with
construction permits, for example, Doing
Business now measures the quality of
building regulations and the qualification
requirements for the people reviewing
building plans as well as the efficiency
(as measured by time and cost) of the
process for completing all the formali-
ties to build a warehouse. Doing Business
does not assess the process for designing
building regulations; instead, it gauges
whether an economy has the kind of
building regulations and quality controls
that enable well-constructed buildings.
Doing Business continues to focus on
regulation that affects domestic small
and medium-size enterprises, operat-
ing in the largest business city of an
economy, across 11 areas.1
Ten of these
areas—starting a business, dealing with
construction permits, getting electric-
ity, registering property, getting credit,
protecting minority investors, paying
contracts and resolving insolvency—are
included in the distance to frontier score
and ease of doing business ranking. The
distance to frontier score captures the
gap between an economy’s performance
and a measure of best practice across the
entire sample of 36 indicators, where 100
is the frontier and 0 is the furthest from
the frontier. Doing Business also analyzes
labor market regulation, which is not
or ease of doing business ranking.2
FIGURE 1.1 What Doing Business continues to cover and what it is adding and
changing
• Procedures, time, cost and paid-in minimum capital to start a business
• Procedures, time and cost to complete all formalities to build a warehouse
• Procedures, time and cost to get connected to the electrical grid
• Procedures, time and cost to transfer a property
• Movable collateral laws and credit information systems
• Minority shareholders’ rights in related-party transactions and in corporate
governance
• Payments, time and total tax rate for a firm to comply with all tax
regulations
• Time and cost to resolve a commercial dispute
• Time, cost, outcome and recovery rate for a commercial insolvency and
strength of the legal framework for insolvency
Additions
• Quality of building regulation and its implementation
• Reliability of electricity supply, transparency of tariffs and price of
electricity
• Quality of the land administration system
• Quality of judicial processes
Changes
• Time and cost to export the product of comparative advantage and import
auto parts
What this
year’s report
adds and
changes
What Doing
Business
continues
to cover

3Overview
While Doing Business has always mea-
sured some aspects of regulatory quality,
its original indicators have focused mainly
on measuring regulatory efficiency, such
as by recording the procedures, time and
cost to start a business or to register a
property transfer. These are important
aspects to measure. Different research
papers have shown the importance of
these measures for economic outcomes.3
According to one study, for example,
a reform that simplified business
registration in Mexican municipalities
increased registration by 5% and wage
employment by 2.2%—and, as a result
of increased competition, reduced the
income of incumbent businesses by 3%.4
Other studies have analyzed the impor-
tance of trade logistics costs. Research
using World Bank Enterprise Survey data
shows that reductions over time in the
cost of importing lead to an increase in
the share of firms’ material inputs that
are of foreign origin.5
Other research papers show the impor-
tance of well-designed credit market
regulations and well-functioning court
systems for debt recovery. For example,
mandatory credit reporting systems
improve financial intermediation and
access, particularly when used in con-
junction with credit information systems.6
In India the establishment of debt recov-
ery tribunals reduced nonperforming
loans by 28% and lowered interest rates
on larger loans, suggesting that faster
processing of debt recovery cases cut
the cost of credit.7
Research also shows
that a badly designed tax system can
be a big deterrent for businesses. After
a tax reform in Brazil, business licensing
among retail firms rose by 13%.8
But measuring quality in the same areas
where Doing Business previously mea-
sured only efficiency is also important.
To see why, we can compare data for the
registering property indicators for two
countries: Saudi Arabia, where the prop-
erty transfer process is fast but opaque,
and France, where the process is slow but
the land administration system is of high
quality.
In Saudi Arabia transferring a commercial
property from one company to another
takes less than a week and costs noth-
ing in fees. But new data collected by
Doing Business this year on the quality of
land administration systems show that
the Saudi system lacks transparency
and the mechanisms for resolving land
disputes are complex. Information either
is not accessible to everyone or can be
obtained only in person. And resolving a
land dispute over tenure rights between
two local businesses in Riyadh takes
more than three years.
France has the opposite situation. Doing
Business data show that the property
transfer process is long and costly: trans-
ferring a commercial property takes 49
days on average and costs 6.1% of the
property value. But the new data col-
lected by Doing Business show that the
land administration system has strong
standards of transparency and effec-
tive mechanisms for dispute resolution.
Thanks to fully digital records at the
mapping agency (cadastre), anyone can
consult maps and verify boundaries.
Information about documents and fees
for property transfers can be found online
and on public boards. And resolving a
land dispute over tenure rights between
two local businesses in Paris takes
between one and two years.
Besides expanding the scope of indicator
sets to measure aspects of regulatory
quality, this year Doing Business is chang-
ingthemethodologyforthetradingacross
borders indicators to increase their policy
relevance. The case study now reflects
different assumptions about the traded
product. For the export process Doing
Business now focuses on the product of
comparative advantage for each econo-
my and its natural trading partner for that
product. This allows consideration of a
large range of products while before only
six were possible. It also ensures that
the indicators measuring the time and
cost to export focus on the product that
is most relevant for each economy. For
the import process Doing Business now
analyzes the import of auto parts by each
economy from its largest trading partner
for that product—a change based in part
on the premise that while economies
export only products in which they have
comparative advantage, every economy
imports a little bit of everything. Auto
parts were chosen for the import process
because they are a commonly traded
product that normally requires no special
inspections or licenses—and therefore
are typical of manufactured products.
Another important change is that the
mode of transport is no longer restricted
to sea transport. Instead, the most com-
mon mode of transport for the product
and partner is used.
The expectation is that the new Doing
Business indicators will provide useful
information for researchers and policy
makers, just as the older indicators have
done. According to one observer, “the
main achievement of the Doing Business
project has been to shed light and create
a more informed debate on a range of
differences in laws and regulations across
countries in areas where little was known
on a systematic basis before the project
began.”9
While the changes being introduced
this year are substantive, there is a
strong correlation at the aggregate level
between this year’s data under the old
methodology and the same data under
the new one (figure 1.2). This is not sur-
prising, since the changes are additions
or modifications within existing indicator
sets and there is a positive correlation
between the old and new measures in
Doing Business. But even with a high cor-
relation there can still be relatively large
shifts in ranking in some cases. This is
particularly likely for economies in the
middle of the distribution, in part because
they are more closely bunched and small
shifts in their distance to frontier scores

will therefore tend to have a greater
impact on their positions relative to other
economies.
The Doing Business website presents
comparable data for this year and last,
making it possible to assess the extent
to which there has been an improvement
in business regulation in any economy.
Moreover, because most of the changes
in methodology involve adding new mea-
sures of quality within existing indicator
sets rather than revising existing mea-
sures of efficiency, data for two-thirds of
the current indicators (24 of 36) remain
comparable over time. The full series are
available on the website.
WHERE IS REGULATION
MORE BUSINESS-FRIENDLY?
Singapore continues to be the economy
with the most business-friendly regula-
tion (table 1.1). And while there was
some reordering of economies within
the top 20 in the ease of doing business
ranking, the list remains very similar to
last year’s: 18 economies stayed on the
list, while 2 entered this year (Lithuania
and the former Yugoslav Republic of
Macedonia) and 2 were nudged out
(Georgia and Switzerland). Economies
in the top 20 continued to improve their
business regulatory environment in the
past year. For example, Hong Kong SAR,
China, made four regulatory reforms in
the areas measured by Doing Business.
One was implemented at the Companies
Registry, which also serves as the main
collateral registry for movable property.
The registry launched a full-scale elec-
tronic filing service on March 3, 2015, and
now security interests can be registered,
amended, renewed and canceled online.
New Zealand provides another example:
Vector, the electricity distribution util-
ity, cut six days from the time needed
to provide external connection works to
customers.
The 20 economies at the top of the ease
of doing business ranking perform well
not only on the Doing Business indicators
but also in international data sets captur-
ing other dimensions of competitiveness.
The economies performing best in the
Doing Business rankings therefore are
not those with no regulation but those
whose governments have managed to
create rules that facilitate interactions
in the marketplace without needlessly
hindering the development of the private
sector. Moreover, even outside the top
20 economies there is a strong associa-
tion between performance in the ease of
doing business ranking and performance
on measures of competitiveness and of
quality of government and governance.
Economies that rank well on the ease of
doing business also score well on such
measures as the Global Competitiveness
Index and Transparency International’s
Corruption Perceptions Index.10
The distance to frontier scores underly-
ing the ease of doing business rankings
reveal some regional patterns. OECD
high-income economies have the highest
distance to frontier scores on average,
indicating that this regional group has the
most business-friendly regulation overall
(figure 1.3). But good practices in busi-
ness regulation can be found in almost
all regions. In six of the seven regions the
highest distance to frontier score is above
70. The difference between the best and
worst scores in a region can be substan-
tial, however, especially in Sub-Saharan
Africa, the Middle East and North Africa
and East Asia and the Pacific.
WHAT IS THE
RELATIONSHIP BETWEEN
EFFICIENCY AND QUALITY?
While measuring aspects of the quality of
regulation is not new for Doing Business,
the two-year process of introducing
improvements that was launched in last
year’s report represents a systematic
effort to include measures of quality in
most of the indicator sets. This year’s
report introduces new measures of
regulatory quality in four indicator sets:
dealing with construction permits, get-
ting electricity, registering property and
enforcing contracts. Last year’s report
added a measure of regulatory quality to
the indicator set for resolving insolvency
FIGURE 1.2 Distance to frontier scores remain similar under the new methodology
30 40 50 60 70 80 90 100
30
40
50
60
70
80
90
100
Distance to frontier score under new methodology (0–100)
Distance to frontier score under
old methodology (0–100)
Source: Doing Business database.
Note: The figure compares distance to frontier scores based on this year’s data computed using the old (Doing
Business 2015) methodology with scores based on the same data computed using the new methodology. The
differences between the two series are in dealing with construction permits, getting electricity, registering property,
protecting minority investors, trading across borders and enforcing contracts. The 45-degree line shows where the
scores under the old and new methodologies are equal. The correlation between the two scores is 0.97.

5Overview
TABLE 1.1 Ease of doing business ranking
Rank Economy DTF score Rank Economy DTF score Rank Economy DTF score
1 Singapore 87.34 64 Jamaica 67.27 é 127 Cambodia 55.22 é
2 New Zealand 86.79 é 65 Bahrain 66.81 é 128 Maldives 55.04
3 Denmark 84.40 é 66 Kosovo 66.22 é 129 West Bank and Gaza 54.83 é
4 Korea, Rep. 83.88 67 Kyrgyz Republic 66.01 é 130 India 54.68 é
5 Hong Kong SAR, China 83.67 é 68 Qatar 65.97 é 131 Egypt,Arab Rep. 54.43 é
6 United Kingdom 82.46 é 69 Panama 65.74 132 Tajikistan 54.19 é
7 United States 82.15 70 Oman 65.40 é 133 Mozambique 53.98 é
8 Sweden 81.72 é 71 Bhutan 65.21 é 134 Lao PDR 53.77 é
9 Norway 81.61 é 72 Botswana 64.98 é 135 Grenada 53.46 é
10 Finland 81.05 é 73 South Africa 64.89 136 Palau 53.43
11 Taiwan, China 80.55 é 74 Tunisia 64.88 é 137 Guyana 51.83
12 Macedonia, FYR 80.18 é 75 Morocco 64.51 é 138 Pakistan 51.69 é
13 Australia 80.08 76 San Marino 64.21 é 139 Tanzania 51.62 é
14 Canada 80.07 é 77 St. Lucia 64.20 é 140 Marshall Islands 51.58
15 Germany 79.87 é 78 Tonga 64.13 141 Malawi 51.03 é
16 Estonia 79.49 é 79 Bosnia and Herzegovina 63.71 é 142 Côte d’Ivoire 50.93 é
17 Ireland 79.15 é 80 Malta 63.70 é 143 Burkina Faso 50.81 é
18 Malaysia 79.13 é 81 Guatemala 63.49 é 143 Mali 50.81 é
19 Iceland 78.93 é 82 Saudi Arabia 63.17 é 145 Papua New Guinea 50.74 é
20 Lithuania 78.88 é 83 Ukraine 63.04 é 146 Ethiopia 49.73 é
21 Austria 78.38 é 84 Brunei Darussalam 62.93 é 147 Sierra Leone 49.69 é
22 Latvia 78.06 é 84 China 62.93 é 148 Micronesia, Fed. Sts. 49.67
23 Portugal 77.57 é 86 El Salvador 62.76 é 149 Kiribati 49.50
24 Georgia 77.45 é 87 Uzbekistan 62.60 é 150 Togo 49.03 é
25 Poland 76.45 é 88 Fiji 62.58 é 151 Gambia,The 48.99 é
26 Switzerland 76.04 é 88 Trinidad and Tobago 62.58 152 Burundi 48.82 é
27 France 75.96 é 90 Vietnam 62.10 é 153 Senegal 48.57 é
28 Netherlands 75.94 91 Dominica 61.44 é 154 Comoros 48.22 é
29 Slovak Republic 75.62 é 92 Uruguay 61.21 é 155 Zimbabwe 48.17 é
29 Slovenia 75.62 é 93 Dominican Republic 61.16 é 156 Suriname 47.69 é
31 United Arab Emirates 75.10 é 94 Vanuatu 61.08 é 157 Bolivia 47.47 é
32 Mauritius 75.05 é 95 Seychelles 61.05 é 158 Benin 47.15 é
33 Spain 74.86 é 96 Samoa 60.70 é 159 Sudan 46.97 é
34 Japan 74.72 97 Albania 60.50 160 Niger 46.37 é
35 Armenia 74.22 é 97 Zambia 60.50 161 Iraq 46.06
36 Czech Republic 73.95 é 99 Nepal 60.41 é 162 Gabon 45.99
37 Romania 73.78 é 100 Paraguay 60.19 163 Algeria 45.72 é
38 Bulgaria 73.72 é 101 Kuwait 60.17 é 164 Madagascar 45.68 é
38 Mexico 73.72 é 101 Namibia 60.17 é 165 Guinea 45.54 é
40 Croatia 72.71 é 103 Philippines 60.07 é 166 São Tomé and Príncipe 45.50 é
41 Kazakhstan 72.68 é 104 Antigua and Barbuda 59.70 167 Myanmar 45.27 é
42 Hungary 72.57 é 105 Swaziland 59.10 é 168 Mauritania 44.74 é
43 Belgium 72.50 é 106 Bahamas,The 59.00 é 169 Nigeria 44.69 é
44 Belarus 72.33 é 107 Sri Lanka 58.96 é 170 Yemen, Rep. 44.54 é
45 Italy 72.07 é 108 Kenya 58.24 é 171 Djibouti 44.25 é
46 Montenegro 71.85 é 109 Indonesia 58.12 é 172 Cameroon 44.11 é
47 Cyprus 71.78 é 110 Honduras 58.06 é 173 Timor-Leste 44.02
48 Chile 71.49 é 111 St.Vincent and the Grenadines 57.91 é 174 Bangladesh 43.10 é
49 Thailand 71.42 é 112 Solomon Islands 57.86 é 175 Syrian Arab Republic 42.56
50 Peru 71.33 113 Jordan 57.84 é 176 Congo, Rep. 41.88 é
51 Russian Federation 70.99 é 114 Ghana 57.69 é 177 Afghanistan 40.58
52 Moldova 70.97 é 114 Lesotho 57.69 é 178 Guinea-Bissau 40.56 é
53 Israel 70.56 116 Brazil 57.67 é 179 Liberia 40.19 é
54 Colombia 70.43 é 117 Ecuador 57.47 é 180 Equatorial Guinea 40.03
55 Turkey 69.16 118 Iran, Islamic Rep. 57.44 é 181 Angola 39.64 é
56 Mongolia 68.83 é 119 Barbados 56.85 182 Haiti 39.56 é
57 Puerto Rico (U.S.) 68.73 120 Belize 56.83 é 183 Chad 38.22 é
58 Costa Rica 68.55 é 121 Argentina 56.78 184 Congo, Dem. Rep. 38.14 é
59 Serbia 68.41 é 122 Uganda 56.64 é 185 Central African Republic 36.26 é
60 Greece 68.38 é 123 Lebanon 56.39 186 Venezuela, RB 35.51
61 Luxembourg 68.31 124 St. Kitts and Nevis 55.83 é 187 South Sudan 34.78
62 Rwanda 68.12 125 Nicaragua 55.78 é 188 Libya 31.77
63 Azerbaijan 67.80 é 126 Cabo Verde 55.54 é 189 Eritrea 27.61 é
Note: The rankings are benchmarked to June 2015 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s
aggregate ranking. For the economies for which the data cover two cities, scores are a population-weighted average for the two cities. An arrow indicates an improvement in
the score between 2014 and 2015 (and therefore an improvement in the overall business environment as measured by Doing Business), while the absence of one indicates
either no improvement or a deterioration in the score. The score for both years is based on the new methodology.

and expanded those in the indicator sets
for getting credit and protecting minority
investors.
Doing Business measures the quality of
regulation by analyzing whether the
regulatory infrastructure needed for
a transaction to be successfully com-
pleted is in place. Doing Business does
not measure the quality of the outcome
related to that regulation. For example,
Doing Business measures the quality of
building regulations and controls by
assessing whether building plans are
approved by staff with the right quali-
fications and whether the necessary
inspections take place. It does not
assess whether the warehouse that
gets constructed in the end is of good
quality. The following discussion looks
at the relationship between efficiency
and quality through the lens of Doing
Business data. Doing Business focuses
on specific case studies and measures
particular aspects of business regula-
tion. The results should be interpreted
with that framework in mind.
Efficiency and quality linked at
the aggregate level
Analysis shows that efficiency and
quality go hand in hand: economies that
have efficient regulatory processes as
measured by Doing Business also tend to
have good regulatory quality (figure 1.4).
Economies can be broadly divided into
four groups:
ƒƒ Economies able to achieve both
efficiency and quality in business
regulation.
ƒƒ Economies where both efficiency and
quality are far from ideal—with regula-
tory transactions that are complex and
expensive and that in the end do not
accomplish their objectives. In these
economies regulation is seen as a rent-
seeking activity rather than as some-
thing that provides a useful service to
citizens and the business community.
ƒƒ Economies where regulatory pro-
cesses are fast and inexpensive but
lack quality. These are likely to be
economies that started out in the sec-
ond group and then improved regula-
tory efficiency but have yet to improve
regulatory quality. Most economies
are in this group and the first one.
ƒƒ Economies where the quality of
regulation is high but the processes
for implementing it remain complex.
Very few economies are currently in
this group; those with low regulatory
efficiency tend to also have low regu-
latory quality.
An example from Denmark illustrates
how regulatory efficiency and quality go
together and in fact reinforce each other
in a virtuous cycle. The country’s state-
of-the-art land registry provides both
efficient registration of property transfers
and valuable property titles, thanks to its
transparent, accurate information and
complete geographic coverage. Because
the registration is so efficient (requiring
only three procedures and four days),
people are more likely to register property
transfers—helping to maintain the accu-
racy of the registry’s data and the quality
of land administration. And because the
registry is therefore so reliable, the pro-
cess of registering a property transfer can
be kept simple, fast and inexpensive.
By contrast, Greece exhibits a vicious
cycle in its land administration system.
To transfer property, a local buyer has
to complete 10 different procedures—a
process that takes 20 days and costs
4.9% of the property value. Beyond the
efficiency issues, there are also quality
issues. For example, there are no official
cadastral maps for the municipality of
Athens, and very little of the privately
owned land across the country is mapped
in the cadastre. Transparency is poor,
with no separate mechanism for filing a
complaint at the property registry and no
up-to-date statistics about the number
of land transactions in Athens. And there
is no specific compensation mechanism
to cover for losses incurred by someone
who engaged in good faith in a property
transaction based on erroneous informa-
tion from the registry.
So the advantages of using the registry
are low and the costs (in both time and
money) are high—a big deterrent to
formally registering property transfers.
And lack of formal registration reinforces
the poor quality of the information main-
tained at the registry, making it difficult
to complete property transfers simply,
quickly and inexpensively. But there are
prospects for breaking the vicious cycle:
cadastral maps are being developed
by the National Cadastre and Mapping
Agency and should cover Athens
by 2020. These may strengthen the
Figure 1.3 Big gaps between the highest and lowest distance to frontier scores in
some regions
0
20
40
60
80
100
Sub-Saharan
Africa
South AsiaMiddle East
North Africa
Latin America
Caribbean
East Asia
Pacific
Europe
Central Asia
OECD high
income
Distance to frontier score
Average number of
reforms per economy
Worst score Best score Average score

7Overview
certainty of property rights, benefiting
investors and citizens alike.
Registering property is not the only area
where Greece lags; enforcing contracts is
another. Resolving a commercial dispute
through the courts takes longer in Greece
than in any other European country—
about 1,580 days, or more than four years,
through the Athens First-Instance Single-
Member Court. Worldwide, only three
economies have a longer process: Guinea-
Bissau, Suriname and Afghanistan. In
Greece litigants spend much of that time
simply waiting for the first hearing. In
fact, a case filed before the competent
court in October 2015 would not be
heard by a judge until 2018. Yet there has
been an effort to improve the quality of
judicial processes (such as by introducing
electronic filing, as reported in last year’s
report). Indeed, new data show that case
management techniques are widely used
in Greece; the country receives 4.5 of 6
possible points on the case management
index, one of the components of the new
quality of judicial processes index. But
adjournments remain common, leading
to considerable delays. The improvement
in quality has yet to show results in mea-
sures of efficiency.
Greece faces similar challenges in resolv-
ing insolvency, where the efficiency of
regulation has yet to catch up with the
quality. Greece receives 12 of 16 pos-
sible points on the strength of insolvency
framework index, indicating that its
insolvency law complies with most inter-
nationally recognized good practices.
Nevertheless, creditors can expect to
recover only 34.9% of the estate value of
an insolvent firm, and the process takes
three and half years.
On average, economies perform bet-
ter on measures of efficiency than on
measures of quality. Less than 10% of
the economies covered have a lower
distance to frontier score for efficiency
than for quality. Most of these economies
are in Europe and Central Asia, which
has the smallest average gap between
efficiency and quality. The largest gaps
are in the Middle East and North Africa,
where the average gap is more than 20
points and the difference between the
two measures is as large as 39 points for
Iraq and 30 for the Republic of Yemen
(figure 1.5). This evidence that regulatory
quality lags behind regulatory efficiency
is important—because both a higher level
of regulatory efficiency and a higher level
of regulatory quality are associated sepa-
rately with a lower level of corruption.11
Patterns across indicator sets
While the efficiency and quality of regu-
lation go hand in hand at the aggregate
level, analyzing the data for individual
Doing Business topics reveals clearer pat-
terns. Three case studies in this year’s
report (on dealing with construction
permits, getting electricity and enforcing
contracts) and two in last year’s report
(on registering property and resolving
insolvency) discuss in detail the link
between efficiency and quality in mixed
indicator sets—those including both effi-
ciency measures and quality measures.
In getting electricity the main pattern is
clear: economies with a simpler, faster
and less costly process for connecting to
the electrical grid also tend to have a more
reliable electricity supply. The Republic of
Korea, for example, has the simplest and
fastest process worldwide for getting a
new electricity connection, and it is one
of the few economies with the highest
possible score on the new reliability of
supply and transparency of tariffs index.
Businesses in Seoul typically have less
than an hour of power outages a year, and
they can receive compensation if power
isn’t restored within a certain amount of
time. The utility uses automated systems
for monitoring outages and restoring
service. And an independent regulator
oversees the sector and makes sure that
changes in electricity tariffs are commu-
nicated ahead of time.
At the opposite end of the spectrum is
Liberia, which has the longest process for
getting a new connection. Once connect-
ed, customers in Liberia typically experi-
ence more than an hour of power outages
each week. In addition, the utility still uses
FIGURE 1.4 Regulatory efficiency and regulatory quality go hand in hand
High quality,
low efficiency
High quality,
high efficiency
Low quality,
high efficiency
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
for regulatory quality
Low quality,
low efficiency
Distance to frontier score for regulatory efficiency
Note: The distance to frontier score for regulatory efficiency is the aggregate score for the procedures (where
applicable), time and cost indicators from the following indicator sets: starting a business (also including the
minimum capital requirement indicator), dealing with construction permits, getting electricity, registering property,
paying taxes, trading across borders, enforcing contracts and resolving insolvency. The distance to frontier score
for regulatory quality is the aggregate score for getting credit and protecting minority investors as well as
the regulatory quality indices from the indicator sets on dealing with construction permits, getting electricity,
registering property, enforcing contracts and resolving insolvency. The correlation between the two scores is 0.82.

manual systems to monitor outages and
restore service, there is no independent
regulatory body, electricity tariffs are not
published online, and there is no financial
incentive for the utility to minimize power
cuts. As a result, Liberia receives 0 of 8
possible points on the reliability of supply
and transparency of tariffs index.
Another aspect is revealed by data on the
price of electricity for commercial users—
new data collected by Doing Business this
year but not included in the distance to
frontier score or the ease of doing busi-
ness ranking. Electricity tariffs for com-
mercial customers typically range from 10
to 30 cents per kilowatt-hour, but prices
in some economies are much higher.
Tariffs need to strike a balance—remain-
ing affordable to customers while still
enabling the utility to recover costs and
make a profit. The data show that Korea
has a relatively low electricity price, at 10
cents per kilowatt-hour (or 10% of annual
income per capita as the monthly bill for
the case study warehouse).12
In Liberia,
by contrast, electricity supply is not only
unreliable; it is also very expensive—
at 56 cents per kilowatt-hour (37 times
annual income per capita as the monthly
bill for the case study warehouse).
Indeed, Liberia’s electricity price is the
highest in Sub-Saharan Africa and among
the highest in the world.
For the registering property topic, the
data show that economies with simpler,
faster and less costly processes for
property transfers also have on average
the highest-quality land administration
systems. Along with Denmark, Lithuania
is among those that combine high
efficiency and high quality. A property
transfer from one local entrepreneur to
another can be completed in less than
three days at a cost of 0.8% of the prop-
erty value. Supporting this efficiency is a
high-quality land administration system.
Property records are fully digital and pro-
vide complete coverage of private land
in Lithuania. Entrepreneurs interested in
buying a property can use the electronic
database to check for encumbrances and
the geographic information system to
verify the boundaries. They can also get
information online about land ownership,
fees for property transactions and statis-
tics about land transactions. In addition,
the legal framework reflects good prac-
tices for preventing and resolving land
disputes. For example, the law requires
verification of the identity of the parties
to a property transaction, and there is a
national database that can be used for
this purpose. The law also requires a
review of the documents for a property
transaction to verify that they are legally
valid.
At the other extreme are land adminis-
tration systems in which low efficiency
is coupled with low quality. In Haiti, for
example, completing a property transfer
from one local entrepreneur to another
takes more than 10 months and costs
7.1% of the property value. While proj-
ects are under way to modernize the land
administration system, the country still
lacks a geographic information system
and a database to check for encum-
brances. Databases on land ownership
and maps are not linked, and there are
no unique identifying numbers used for
land plots. Most of the information at
the land registry—such as on service
standards and the fees and documents
required in property transactions—is not
publicly available or must be requested
in person. Haiti lacks a national database
to verify the identity of the parties to a
land transaction. It also lacks a specific
compensation mechanism to cover any
losses incurred in a property transaction
because of errors by the property registry.
For the enforcing contracts topic, data
show that court systems that are efficient
are also likely to have high-quality judicial
processes. For example, resolving a com-
mercial dispute through the Singapore
District Court takes just 150 days, the
shortest time recorded worldwide, and
costs 25.8% of the value of the claim.
Efficient dispute resolution is paired with
good institutions (such as specialized
courts), effective case management and
sophisticated court automation tools.
And litigants can submit their claim
online, pay court fees online and serve the
initial summons electronically. Singapore
receives the highest score worldwide
Figure 1.5 The biggest gaps between regulatory efficiency and regulatory quality are
in the Middle East and North Africa
0
20
40
60
80
100
Sub-Saharan
Africa
South AsiaLatin America
Caribbean
Middle East
North Africa
East Asia
Pacific
Europe
Central Asia
OECD high
income
Average distance to frontier score
Regulatory efficiency Regulatory quality
Note: The distance to frontier score for regulatory efficiency is the aggregate score for the procedures (where
applicable), time and cost indicators from the following indicator sets: starting a business (also including the
minimum capital requirement indicator), dealing with construction permits, getting electricity, registering property,
paying taxes, trading across borders, enforcing contracts and resolving insolvency. The distance to frontier score
for regulatory quality is the aggregate score for getting credit and protecting minority investors as well as
the regulatory quality indices from the indicator sets on dealing with construction permits, getting electricity,
registering property, enforcing contracts and resolving insolvency.

9Overview
on the new quality of judicial processes
index, 15.5 of 18 possible points.
There are also examples of slow and
costly dispute resolution paired with low-
quality judicial processes. Myanmar is
one such example. A local business trying
to enforce a contract through the courts in
Myanmar would spend more than three
years doing so, and pay fees amounting
to more than half the value in dispute.
Moreover, the country’s court system
has no case management, no court auto-
mation and no specialized commercial
courts or small claims courts—all aspects
reflected in Myanmar’s low score on the
quality of judicial processes index (3).
But alternative dispute resolution is being
developed: arbitration and mediation
are both recognized ways of resolving a
commercial dispute, and arbitration in
Myanmar is regulated through a dedi-
cated law.
In resolving insolvency, quality and
efficiency are again linked: where there
is a good legal framework for insolvency,
creditors recover a larger share of their
credit at the end of the insolvency
process. Finland is a good illustration.
Resolving insolvency there takes 11
months on average and costs 4% of
the debtor’s estate, and the most likely
outcome is that the company will be sold
as a going concern. The average recovery
rate for creditors is 90.1 cents on the dol-
lar. This high recovery rate is paired with
a high score on the strength of insolvency
framework index. The Finnish insolvency
law includes a range of good practices.
For example, it allows debtors to avoid
preferential and undervalued transac-
tions; it permits post-commencement
finance and grants such finance priority
only over ordinary unsecured creditors;
and it allows all creditors to vote in judi-
cial reorganization proceedings.
In São Tomé and Príncipe, however,
insolvent companies and their creditors
confront both poor efficiency and low
quality. The insolvency process takes
6.2 years on average, costs 22% of the
debtor’s estate and is most likely to end
with the company being sold piecemeal.
The insolvency law lacks important good
practices: there are no judicial reorgani-
zation proceedings, the legal framework
does not establish the availability or
priority of post-commencement finance,
and creditors cannot participate in the
appointment of the insolvency represen-
tative or the approval of asset sales.
For dealing with construction permits,
data show the same pattern as for
the other topics. Economies with a
more efficient construction permitting
system also have better quality control
and safety mechanisms. Conversely, in
some economies poor regulatory quality
accompanies poor regulatory efficiency.
One example is Gabon, which receives
only 5 of 15 possible points on the new
building quality control index. Its building
regulations are not easily accessible, and
they stipulate only the list of documents
required for a building permit, not the
fees or preapprovals needed. The country
has adequate mechanisms for quality
control before construction but not for
quality control during and after construc-
tion. While building permit applications
are reviewed by a qualified architect
or engineer, no inspections are legally
required during construction—and final
inspections, while required, do not occur
in practice. Moreover, none of the parties
involved in a construction project are held
legally liable for structural problems that
come to light once the building is occu-
pied, nor is anyone required to obtain
insurance to cover potential problems.
Data also show that Gabon has an inef-
ficient construction permitting process:
completing all the formalities to build a
warehouse takes 329 days.
Some economies manage to achieve
the best of both worlds, designing and
implementing a construction permitting
system that is both efficient and good
quality. One of them is FYR Macedonia.
Its administrative procedures for dealing
with construction permits are very effi-
cient: completing the formalities to build
a warehouse takes only 74 days. The
country also has robust quality control
and safety mechanisms, earning it 14 of
15 possible points on the building quality
control index. All documents required in
construction permitting are specified and
accessible online—along with the list of
agencies to visit, the fees to pay and the
preapprovals to obtain. A certified archi-
tect reviews and approves building permit
applications, and mandatory inspections
are carried out both during and after
construction. And clearly defined liability
regimes and insurance requirements are
in place.
BUSINESS REGULATION
AND THE INTERNET
The proliferation of information and com-
munication technologies has transformed
how businesses operate and how they
are regulated in every region of the world.
The internet provides a new platform
for delivering government information
and services—and new opportunities for
enhancing the efficiency and transpar-
ency of public administration. Indeed, the
internet is a tool that governments can
use to support businesses at every stage
in their life cycle, whether applying for
a business permit, registering property,
paying taxes or trading internationally.
The potential of online
regulatory solutions
By simplifying regulatory processes such
as business incorporation, web-based
resources can promote private sec-
tor development. Cross-country data
analysis shows a strong positive asso-
ciation between new firm density and
the availability of electronic platforms for
incorporation.13
Beyond starting a business, the internet
offers many opportunities for efficiency
gains in other areas of business regula-
tion measured by Doing Business. Among
the 189 economies covered by Doing
Business, more than 80% (152 in total)
use web-based applications to process

export and import documents. Banks
in more than 75% of economies with a
credit registry or bureau use online plat-
forms to access credit information. And
in more than 40% of economies the tax
authorities allow businesses to file taxes
online—and the majority of businesses
actually do it.
These uses of the internet make a differ-
ence for businesses. Where electronic
platforms are widely used in regulatory
processes, entrepreneurs spend less time
on compliance. For example, there is a
strong negative correlation between the
time it takes to transfer property and the
availability of online access to land infor-
mation.14
With the changes in methodol-
ogy introduced this year, the internet has
become a more integral part of the good
practices measured by Doing Business.
But use of the internet to streamline
business regulation remains largely
confined to more developed economies.
Data for nine Doing Business topics show
that OECD high-income economies and
Europe and Central Asia make the great-
est use of online systems in regulatory
processes (figure 1.6). In Sub-Saharan
Africa, by contrast, very few economies
use electronic platforms in business
regulation. Of the nine possible regula-
tory transactions included in the analysis,
Australia, Denmark and Estonia enable
entrepreneurs to complete eight or more
online. The Central African Republic, the
Republic of Congo and Equatorial Guinea
are among the few economies where
none of these transactions can be com-
pleted online.
Continued growth in electronic
services
Given the potential economic opportuni-
ties from the use of electronic services, it
is no surprise that many of the reforms
captured by Doing Business in 2014/15
focused on introducing or enhancing
electronic platforms and services. In the
past year 18 economies established or
improved online tax payment systems,
13 introduced or enhanced web-based
systems to streamline cross-border
trade, and another 11 encouraged elec-
tronic business registration. In addition,
6 economies established or improved
online tools for registering property, and
2 did the same for enforcing contracts.
Many governments use the internet for
tax collection and payment—with the
aim of reducing the scope for bureau-
cratic discretion and even corruption
and increasing the tax system’s transpar-
ency, efficiency and cost-effectiveness.
Electronic tax collection also helps
simplify tax compliance.15
After Rwanda
made the use of its electronic filing and
payment system compulsory in 2014/15,
the time required for a business to pre-
pare, file and pay taxes fell by 10 hours,
from 119 hours a year to 109. Among
other economies introducing or enhanc-
ing electronic systems in 2014/15,
Costa Rica facilitated online payment of
corporate income tax and Malaysia made
electronic filing compulsory for contribu-
tions to the Employees Provident Fund by
employers with 50 or more employees.
Since 2006 the use of electronic tax fil-
ing and payment systems has increased
substantially in several regions of the
world, with the most remarkable progress
in Europe and Central Asia. Sub-Saharan
Africa remains the region with the small-
est share of economies using electronic
filing or payment (figure 1.7). Worldwide,
less than 15 economies introduced or
enhanced electronic systems for filing
or paying taxes between 2008 and 2011.
But an average of 15 economies a year
have introduced such changes since
2012—with 19 doing so in 2013.
Introducing or enhancing web-based sys-
tems was a common feature of reforms
making it easier to start a business in
2014/15. Uganda introduced an online
system for obtaining a trading license.
Belarus improved online services and
expanded the geographic coverage of
online registration.
Several economies digitized procedures for
tradingacrossbordersin2014/15.Suriname
implemented an automated customs data
management system—fully operational
by July 2015—that allows the electronic
submission of customs declarations and
supporting documents for exports and
imports. Other economies also introduced
or improved systems allowing electronic
submission and processing of trade-related
documents (for exports, imports or both),
including The Bahamas, Benin, Brazil, Côte
Figure 1.6 OECD high-income economies and Europe and Central Asia make the
greatest use of online systems in regulatory processes
0
1
2
3
4
5
6
Sub-Saharan
Africa
South AsiaMiddle East
North Africa
Latin America
Caribbean
East Asia
Pacific
Europe
Central Asia
OECD high
income
Average score for use of online
systems (0–9)
Note: The score shows the average number of areas in which online systems are in use, out of a possible total of
nine areas: online business registration, online submission of construction plans, online submission of applications
for an electricity connection, online information on land, online access to credit information for banks, electronic
movable collateral registries, online tax payment, electronic submission of trade documents and electronic filing of
court cases.

11Overview
d’Ivoire, Ghana, Guatemala, Madagascar,
Mauritania, Suriname, Tajikistan, Tanzania
and Togo.
Some economies explored the use of
web-based resources to make registering
property easier in 2014/15. Bhutan intro-
duced a computerized land information
system connecting each municipality
to the cadastre. Georgia and Italy used
online technology to improve contract
enforcement. Both economies introduced
an electronic filing system for commercial
cases, making it possible for attorneys to
submit the initial summons online.
A broader role in governance
Beyond the applications in regula-
tory processes, the internet serves as
an important tool for more participa-
tory democratic practices and inclusive
development. The internet has made
it easier for the general public to moni-
tor government budgets, projects and
activities as well as to access different
kinds of regulatory information. It can be
used to promote more direct interactions
between governments and citizens as
well as to empower citizens to influence
local governance in their community. And
as a new platform for public disclosure
of regulatory reforms (and for soliciting
feedback on these reforms), the internet
has also transformed the process of craft-
ing business regulations (box 1.1).16
Yet while the internet has the potential
to promote inclusiveness, reduce corrup-
tion and improve regulatory efficiency,
its impact on the quality of domestic
governance is subject to political, infra-
structural, social and economic factors.
For example, the success of online solu-
tions depends on an enabling political
environment that supports and protects
free speech. Most importantly, the vast
majority of the world’s population still
lacks access to the internet and is thus
cut off from these tools and innovations.
WHERE DID BUSINESS
REGULATION IMPROVE THE
MOST IN 2014/15?
In 2014/15, 122 economies implemented
at least one regulatory reform in the
areas measured by Doing Business—231
reforms in total (figure 1.8). Europe and
Central Asia again had the largest share
of economies implementing at least
one reform—and it accounts for 3 of
the 10 top improvers. The region with
the second largest share of economies
with at least one reform has typically
been Sub-Saharan Africa. But in the past
year, for the first time, it was South Asia.
Nevertheless, Sub-Saharan Africa is
still home to 5 of the 10 top improvers.
These 10—the economies showing the
most notable improvement in perfor-
mance on the Doing Business indicators
in 2014/15—are Costa Rica, Uganda,
Kenya, Cyprus, Mauritania, Uzbekistan,
Kazakhstan, Jamaica, Senegal and Benin.
The new data on the quality of regula-
tion make it possible to analyze whether
the regulatory reforms implemented in
the past year are more likely to improve
regulatory efficiency, regulatory qual-
ity or both (table 1.2). Analysis shows
that in the areas where Doing Business
indicators have traditionally measured
the complexity and cost of regulatory
processes, reforms implemented in the
past year continued to focus on increas-
ing efficiency. Doing Business registered
no reform improving regulatory quality
in the area of dealing with construction
permits. Only 2 of 22 economies with a
reform in the area of registering property
improved regulatory quality: Switzerland
introduced a national electronic land
information system, while Vanuatu
introduced a specific and separate com-
plaint mechanism for customers of the
Land Registry and Surveyor’s Office by
appointing a land ombudsman. And only
2 of 22 economies with a reform in the
area of getting electricity had an improve-
ment in quality: the utility in Oman
started fully recording the duration and
frequency of outages, while Cambodia
increased power generation capacity.
In the areas where Doing Business indica-
tors have traditionally measured the
strength of legal institutions, reforms
were more likely to be aimed at improv-
ing regulatory quality. This was the case
for the majority of reforms making it
easier to enforce contracts or resolve
Figure 1.7 Economies in Europe and Central Asia show the most progress in
adopting electronic tax filing and payment
0
10
20
30
40
50
60
70
80
90
100
2006 2007 2008 2009 2010 2011 2012 2013 2014
OECD high income
Europe Central Asia
Latin America Caribbean
East Asia Pacific
Middle East North Africa
South Asia
Sub-Saharan Africa
Share of economies using online tax
filing or payment systems (%)

insolvency. In Côte d’Ivoire, for example,
a new law that entered into force on
June 20, 2014, introduced substantial
changes in alternative dispute resolution.
Before the new law, the only form of
alternative dispute resolution available
was mandatory conciliation, regulated by
a law dating to 1993. The new law made
BOX 1.1 Business regulation and transparency in rulemaking
The quality and efficiency of business regulation are linked to the level of consultation around new regulations and the extent to
which their possible impacts—economic, social and environmental—are considered before their adoption. A new global data-
base, Citizen Engagement in Rulemaking, tracks the extent to which governments publicize proposed regulations and invite input
on their scope and language from a wide range of stakeholders. The database also tracks how governments analyze possible
impacts of new regulations and whether they consider alternatives to regulation. Analysis of the data shows that greater trans-
parency during the rulemaking process and stronger consultation practices are highly and significantly associated with greater
regulatory quality and efficiency as measured by Doing Business (see figure).
Good regulatory practices go hand in hand with regulatory quality and efficiency
20
40
60
80
100
0 2 4 6
20
40
60
80
100
0 2 4 6
for regulatory efficiency (0–100)
for regulatory quality (0–100)
Citizen engagement in rulemaking score Citizen engagement in rulemaking score
Sources: Doing Business database; Citizen Engagement in Rulemaking database (http://rulemaking.worldbank.org), World Bank Group.
Note: The citizen engagement in rulemaking score is based on the following components: whether governments publish the text of proposed regulations publicly before
their enactment; whether policy makers allow the general public to provide comments on proposed regulation; whether policy makers report publicly on the results of
this consultation; whether governments conduct an impact assessment of proposed regulations; whether a specialized body is tasked with reviewing regulatory impact
assessments conducted by other agencies; and whether regulatory impact assessments are made public. The correlation between the citizen engagement in rulemaking
score and the distance to frontier score for regulatory quality is 0.60. The correlation between the citizen engagement in rulemaking score and the distance to frontier
score for regulatory efficiency is 0.70. Relationships are significant at the 1% level after controlling for income per capita.
The transparency of rulemaking varies across regions and income levels. In 96% of OECD high-income economies the govern-
ment publishes proposed regulations, conducts thorough consultations on the draft text and provides assessments of potential
impacts before the regulations are adopted. In Poland, for example, all proposed regulations are published on the same website
and consultations are held on the draft text. After the consultation process, rulemaking bodies provide a public report with
responses to the comments received. Regulatory agencies and ministries assess the potential impacts of proposed regulations—
including the economic, social and environmental impacts. The assessment is distributed with the proposed text of regulations
and forms part of the consultation process.
By contrast, only a third of low-income economies conduct public consultations on proposed regulations, and they typically use
less technologically advanced methods to do so. In Mozambique, for example, government officials publish proposed regula-
tions in a federal journal and distribute drafts directly to specific stakeholders. In Afghanistan, Ethiopia and Niger policy makers
hold public meetings to discuss proposed regulatory changes. Very few low- or lower-middle-income economies have a dedi-
cated website for public engagement on proposed regulations, and those that do have newly implemented systems, such as in
Kenya, Myanmar and Vietnam.
Among regions, the Middle East and North Africa has the lowest average level of transparency and engagement around rule-
making, with Morocco being a notable exception. In Latin America and the Caribbean there is a clear divide between two groups:
while Caribbean and Central American economies tend to consult only targeted stakeholders, larger economies such as Brazil,
Colombia and Mexico have more open and systematic consultation processes.
Source: Citizen Engagement in Rulemaking database (http://rulemaking.worldbank.org), World Bank Group.

13Overview
voluntary mediation available in both
commercial and civil cases.
In Chile a new insolvency act that came
into force on October 9, 2014, estab-
lished specialized courts with exclusive
jurisdiction over insolvency cases. The
new act also clarified and streamlined all
provisions related to reorganization and
liquidation. In addition, it emphasized
the reorganization of viable businesses
as a preferred alternative to liquidation.
Beyond these changes, Chile created a
public office responsible for the general
administration of insolvency proceed-
ings. The Superintendence of Insolvency
supervises all activities by insolvency
representatives and auctioneers during
insolvency proceedings and informs the
creditors and the court of any irregulari-
ties observed during the proceedings.
For a full discussion of the reform pat-
terns and top improvers this year, see
Figure 1.8 Again in the past year, Europe and Central Asia had the largest share of economies making it easier to do business
IBRD 41901
SEPTEMBER 2015
Reforms making it easier
to do business, 2014/15
0
1
2
3
4 or more*
Not in the Doing Business sample
* Only 12 economies implemented 4 or more reforms: Kazakhstan (7); Rwanda (6); Cyprus (5); the Russian Federation (5); Vietnam (5); Hong Kong SAR, China (4); Jamaica (4);
Kenya (4); Madagascar (4); Morocco (4); Senegal (4); and the United Arab Emirates (4).
TABLE 1.2 More reforms recorded by Doing Business in 2014/15 were aimed at
improving regulatory efficiency than regulatory quality
Topic
Reforms improving
regulatory efficiency
Reforms improving
regulatory quality
Dealing with construction permits 17 0
Getting electricity 20 2
Registering property 20 2
Enforcing contracts 2 9
Resolving insolvency 2 7
Total 61 20
Note: The analysis covers only the Doing Business topics for which there are indicators of both regulatory quality
and regulatory efficiency.

the chapter on reforming the business
environment.
HOW HAS BUSINESS
REGULATION CHANGED
OVER THE PAST 12 YEARS?
Among the trends revealed by Doing
Business data, one of the more encour-
aging ones is the steady improvement
in the areas tracked by the indicators.
Economies in all income groups and in
all regions have improved the quality
and efficiency of business regulation. But
lower-income economies have improved
more in the areas measured by Doing
Business than high-income economies
have—there is convergence (figure 1.9).
There is a similar story of convergence
among regions. OECD high-income
economies had the smallest average
improvement in the distance to frontier
score over the past 12 years because their
scores were already quite high in 2004.
Europe and Central Asia had the biggest
improvement, followed by Sub-Saharan
Africa (figure 1.10). The Middle East
and North Africa had the third biggest
improvement. Most of the improvement
in that region took place before 2010,
however, while in recent years the pace
has been fairly slow.
Some areas of business regulation
measured by Doing Business saw more
improvement than others. Starting a
business clearly stands out as the area
with the biggest improvement (figure
1.11). In the past 12 years more economies
implemented regulatory reforms in this
area than in any other measured by Doing
Business. The second biggest improve-
ment was in getting credit. Reforms in
this area are not common, but when
they do occur they are likely to introduce
overarching changes, such as establish-
ing a new credit registry or bureau or
developing a new secured transactions
system. The smallest improvement
was in the area of enforcing contracts,
where reforms are relatively uncommon
because reforming a judicial system can
be a long and complicated task.
Who improved the most overall?
Globally, Georgia improved the most in
the areas measured by Doing Business
over the past 12 years, followed closely
by Rwanda. During this period output
per capita in Georgia increased by
66% and business density more than
tripled.17
Many factors contributed to this
improvement in economic outcomes,
and the effort to make it easier for local
entrepreneurs to do business may
have been one of them. Georgia made
improvements in all 10 areas included in
the aggregate distance to frontier score,
through 39 regulatory reforms.
During this 12-year period Georgia
eliminated the paid-in minimum capital
requirement for starting a business,
established a one-stop shop for con-
struction permitting, reduced the fees
for getting a new electricity connection,
eliminated notarization requirements for
registering property, improved its credit
information system by implementing a
new law on personal data protection,
introduced electronic systems for paying
taxes, modernized its dispute resolu-
tion system for enforcing contracts and
adopted an insolvency law introducing
both reorganization and liquidation
proceedings—to name just a few of the
important changes.
Among the most notable reforms are
those strengthening minority inves-
tor protections. In June 2007 Georgia
amended its securities law to enhance
approval and disclosure requirements
for related-party transactions. In 2009
it introduced provisions allowing share-
holders greater access to corporate
information during a trial. Finally, in 2011
Georgia introduced new requirements
relating to the approval of related-party
transactions. Georgia still has room to
improve, however, as it performs less well
on the new components of the protecting
minority investors indicators (introduced
in last year’s report) than on the older
ones.
Who improved the most in each
region?
Just as Georgia stands out in Europe
and Central Asia for having made
big strides toward better and more
efficient business regulation, at least
one economy stands out in every other
region for its improvement in the areas
measured by Doing Business: Rwanda in
Sub-Saharan Africa; Colombia in Latin
America and the Caribbean; the Arab
Republic of Egypt in the Middle East and
North Africa; China in East Asia and the
Pacific; India in South Asia; and Poland
in the OECD high-income group (figure
1.12). Still, while reforming in the areas
measured by Doing Business is important,
doing so is not enough to guarantee
sound economic policies or to ensure
economic growth or development. While
Figure 1.9 Lower-income economies
have made bigger improvements over
time in the quality and efficiency of
business regulation
0
3
6
9
12
15
High
income
Upper
middle
income
Lower
middle
income
Low
income
Average year-on-year
improvement in distance
to frontier score
DB2005
DB2006
DB2007
DB2008
DB2009
DB2010
DB2011
DB2012
DB2013
DB2014
DB2015
DB2016
Note: The red line shows the average global
improvement in the distance to frontier score
since 2004. The measure is normalized to range
from 0 to 100, with 100 representing the frontier.
Because of changes over the years in methodology
and in the economies and indicators included, the
improvements are measured year on year using pairs
of consecutive years with comparable data.

15Overview
Doing Business reforms have many poten-
tial positive effects, these effects can be
undermined by such factors as political
instability, macroeconomic instability
and civil conflict. Being recognized as a
regional top improver does not mean that
these economies have exemplary busi-
ness regulation; instead, it shows that
thanks to serious efforts in regulatory
reform over several years, they made the
biggest advances toward the frontier in
regulatory practice.
Rwanda made reforms in all areas
measured by Doing Business. Two areas
stand out: registering property and get-
ting credit. Rwanda made registering a
property transfer easier through three
important steps. In January 2008 it
reduced both the cost and the time for
the process—by replacing the 6% reg-
istration fee with a flat rate, regardless
of the property value, and by creating a
centralized service in the tax authority to
speed up the issuance of the certificate of
good standing. In August 2008 Rwanda
made further improvements in the reg-
istration process that again reduced the
time required to transfer property. Finally,
in June 2012 Rwanda eliminated the
requirement for a tax clearance certificate
and implemented the web-based Land
Administration Information System for
processing land transactions—an effort
that also improved the quality of land
administration.
Rwanda made getting credit easier by
improving both its credit information sys-
tem and its legal framework for secured
transactions. The country started reform-
ing its credit information system as early
as 2004. That year it made a big invest-
ment in information technology systems
to enable banks to transmit credit data
electronically—essential so that the
credit information system could actu-
ally exist. In addition, the credit registry
started to include microfinance institu-
tions as a source of information. In 2010
Rwanda granted borrowers the right to
inspect their own credit report and began
requiring loans of all sizes to be reported
to the credit bureau and the central bank’s
credit registry. In 2011 the credit bureau
started to collect and distribute informa-
tion from utility companies, and both
the credit bureau and the credit registry
also started to distribute more than two
Figure 1.10 Europe and Central Asia has made a substantially bigger improvement
in business regulation over time than any other region
0
5
10
15
20
25
OECD
high income
Caribbean
East Asia
Pacific
Middle East
North Africa
Sub-Saharan
Africa
Europe
Central Asia
to frontier score
DB2005
DB2006
DB2007
DB2008
DB2009
DB2010
DB2011
DB2012
DB2013
DB2014
DB2015
DB2016
DB2005
DB2006
DB2007
DB2008
DB2009
DB2010
DB2011
DB2012
DB2013
DB2014
DB2015
DB2016
Note: The red line shows the average global improvement in the distance to frontier score since 2004. The
measure is normalized to range from 0 to 100, with 100 representing the frontier. Because of changes over the
years in methodology and in the economies and indicators included, the improvements are measured year on year
using pairs of consecutive years with comparable data.
Figure 1.11 Worldwide, economies have improved regulatory processes the most in
the area of starting a business
0
5
10
15
20
25
Enforcing
contracts
Getting
electricity
Protecting
minority
investors
Resolving
insolvency
Dealing
with
construction
permits
Paying
taxes
Registering
property
Trading
across
borders
Getting
credit
Starting a
business
to frontier score
DB2005
DB2006
DB2007
DB2008
DB2009
DB2010
DB2011
DB2012
DB2013
DB2014
DB2015
DB2016
Note: The red line shows the average global improvement in the distance to frontier score since 2004. The
measure is normalized to range from 0 to 100, with 100 representing the frontier. Because of changes over the
years in methodology and in the economies and indicators included, the improvements are measured year on year
using pairs of consecutive years with comparable data.

years of historical information. And in the
past year the credit bureau introduced a
credit scoring service, further improving
Rwanda’s credit information system.
Rwanda began strengthening its secured
transactions system in 2009, when it
introduced provisions allowing a wider
range of assets to be used as collateral,
permitting a general description of debts
and obligations in a security agreement,
allowing out-of-court enforcement of
collateral and granting secured creditors
absolute priority within bankruptcy. It
also created a new collateral registry.
More recently, in 2013 Rwanda provided
greater flexibility on the types of debts
and obligations that can be secured
through a collateral agreement.
Colombia made the biggest improvement
in the distance to frontier score in Latin
America and the Caribbean over the past
12 years. It has reformed in all areas mea-
sured by Doing Business, most notably
in the areas of paying taxes and getting
credit. The milestone reforms making it
easier to pay taxes centered on making
electronic filing available and more useful
to firms. In 2010, for example, Colombia
established mandatory electronic filing
and payment for some of the major taxes.
Colombia improved access to credit last
year by adopting a new secured trans-
actions law that takes a functional
approach to secured transactions and by
establishing a centralized, notice-based
collateral registry. The law broadens
the range of assets that can be used as
collateral, allows a general description of
assets granted as collateral, establishes
clear priority rules inside bankruptcy for
secured creditors, sets out grounds for
relief from a stay of enforcement actions
by secured creditors during reorganiza-
tion procedures and allows out-of-court
enforcement of collateral. Thanks to
these changes, Colombia is now one
of only three economies with a perfect
score on the strength of legal rights index.
In the Middle East and North Africa, Egypt
had the biggest increase in the distance
to frontier score over the past 12 years,
though most of the gains occurred in the
first half of that period, before 2009. The
most dramatic improvements were made
in the area of starting a business. In 2004
Egypt introduced computerized company
contract models for use in business incor-
poration and created a single access point
for business registration with approval in
24 hours. In 2007 Egypt lowered regis-
tration fees, improved the process at the
one-stop shop and reduced the minimum
capital requirement. In 2009 Egypt
Figure 1.12 Economies in every region have made big strides in business regulation
2004
37*
832*
China
Colombia
Egypt,Arab Rep.
Georgia
India
Poland
Rwanda
10
70*
456*
38
3
4.3*
127
1,000
370
2
2015
Payments to pay taxes
Hours to pay taxes
Days to start a business
Points on getting credit indices
Days to transfer property
Points on extent of conflict of interest
regulation index
Days to start a business
Days to enforce a contract
Payments to pay taxes
Hours to pay taxes
9
261
19
11
239
8
10
7.7
29
685
32
19
Note: The getting credit indices are the strength of legal rights and depth of credit information indices. The scores for 2004 on these indices are of a possible 16 points; those
for 2015 are of a possible 20 points.
* Data are for 2005.

17Overview
further reduced the minimum capital
requirement in February, then abolished
it in April. Finally, in 2010 it reduced the
cost to start a business. Another area of
big improvement is getting credit. The
credit bureau I-score was established
in 2007 and later improved. Borrowers’
right to inspect their own data in the
credit bureau was guaranteed in 2008,
and the credit bureau added retailers to
its database in 2009.
In East Asia and the Pacific, China stands
out with the biggest improvement in the
distance to frontier score over the past 12
years. Business tax reform contributed a
great deal to that accomplishment. In 2008
China made paying taxes easier and less
costly for companies by unifying the criteria
and accounting methods for tax deductions
and by reducing the corporate income tax
rate. And in 2009 a new corporate income
tax law unified the tax regimes for domestic
and foreign enterprises and clarified the
calculation of taxable income for corporate
income tax purposes.
India is the South Asian economy record-
ing the biggest increase in the distance
to frontier score since 2004. One of the
areas of greatest improvement has been
starting a business. In 2004 India cut time
from the process for obtaining a perma-
nent account number (an identification
number for firms), and in 2006 it speeded
up the process for obtaining a tax registra-
tion number. In 2010 India established an
online system for value added tax regis-
tration and replaced the physical stamp
previously required with an online version.
And in the past year India eliminated the
paid-in minimum capital requirement
and streamlined the process for starting
a business. More reforms are ongoing—in
starting a business and other areas mea-
sured by Doing Business—though the full
effects have yet to be felt (box 1.2).
Among OECD high-income economies,
Poland stands out as having made
substantial improvements over the past
12 years in areas measured by Doing
Business. The most notable ones relate
to the functioning of courts as reflected
in the enforcing contracts and resolving
insolvency indicators. In 2007 Poland
improved its insolvency process by
tightening professional requirements for
administrators and introducing lower
limits on trustees’ pay. In 2009 an amend-
ment to its bankruptcy law introduced the
option of a prebankruptcy reorganization
procedure for financially distressed com-
panies. And in 2011 an amendment to its
bankruptcy and reorganization law simpli-
fied court procedures and extended more
rights to secured creditors. Poland started
reforms making it easier to enforce con-
tracts as early as 2005, by amending its
civil procedure code. In 2007 it introduced
stricter rules of procedure to increase the
speed and efficiency of court proceedings.
Finally, in 2012 Poland further amended its
civil procedure code and appointed more
judges to commercial courts.
BOX 1.2 Doing business in India—the path toward regulatory reform
In 2014 the government of India launched an ambitious program of regulatory reform aimed at making it easier to do business.
Spanning a range of areas measured by Doing Business, the program represents a great deal of effort to create a more business-
friendly environment, particularly in Delhi and Mumbai.
One important focus is to make starting a business easier. In May 2015 the government adopted amendments to the Companies
Act that eliminated the minimum capital requirement. Now Indian entrepreneurs no longer need to deposit 100,000 Indian
rupees ($1,629)—equivalent to 111% of income per capita—in order to start a local limited liability company. The amendments
also ended the requirement to obtain a certificate to commence business operations, saving business founders an unnecessary
step and five days. Several other initiatives to simplify the start-up process were still ongoing on June 1, 2015, the cutoff date for
this year’s data collection. These include developing a single application form for new firms and introducing online registration
for tax identification numbers.
Another focus is to make the process for getting a new electricity connection simpler and faster. Toward that end the utility in Delhi
eliminated an internal wiring inspection by the Electrical Inspectorate—and now instead of two inspections for the same purpose,
there is only one. The utility also combined the external connection works and the final switching on of electricity in one procedure.
The utility in Mumbai reduced the procedures and time for connecting to electricity by improving internal work processes and coor-
dination. It combined several steps into one procedure—the inspection and installation of the meter, the external connection works
and the final connection. Now companies can get connected to the grid, and get on with their business, 14 days sooner than before.
Improvements have also been initiated in other areas measured by Doing Business. To make dealing with construction permits
easier, for example, a single-window system for processing building permit applications is being started in Mumbai—with the
promise of greatly reducing the associated bureaucratic burden once fully implemented. And online systems for filing and paying
taxes are being further improved to simplify tax compliance.
Fostering an environment more supportive of private sector activity will take time. But if the efforts are sustained over the next several
years,theycouldleadtosubstantialbenefitsforIndianentrepreneurs—alongwithpotentialgainsineconomicgrowthandjobcreation.

WHAT IS IN THIS YEAR’S
REPORT?
This year’s report presents seven case
studies. Five focus on legal and regulatory
features covered by new or expanded indi-
cators being introduced this year—in the
areas of dealing with construction permits,
getting electricity, registering property,
trading across borders and enforcing con-
tracts. The other two analyze other areas
of interest in the historical data set.
The case study on dealing with construc-
tion permits analyzes the new data for the
building quality control index. The results
show that high-income economies have
on average better quality control and
safety mechanisms. The case study also
finds that economies with greater effi-
ciency and quality in their construction
permitting system tend to have a lower
incidence of corruption.
The case study on getting electric-
ity focuses on both the new reliability
of electricity supply and transparency of
tariffs index and the price of electricity
consumption. It finds that economies that
have a more reliable electricity supply
also tend to have a more efficient process
for getting a new electricity connection.
The registering property case study ana-
lyzes one of the features covered by the
new quality of land administration index:
the digital capabilities of the land registry
and cadastre. The case study shows that
property transfers have become more
efficient in economies that introduced
digital systems in their land registry, their
cadastre or both.
The case study on trading across borders
presents the new methodology for this
indicator set. It analyzes the trade pat-
terns captured in the indicators and dis-
cusses the main patterns in the data on
the time and cost to export and import.
The case study finds that economies
in customs unions tend to have more
streamlined trade processes. Finally, the
enforcing contracts case study presents
the new data on the quality of judicial
processes and discusses regional pat-
terns and recent reforms in this area.
Beyond these five case studies covering
new features, a case study on starting
a business analyzes the involvement of
third parties such as lawyers and nota-
ries in company formation. It finds that
where third parties are involved the cost
is higher. A case study on resolving insol-
vency focuses on post-commencement
finance—new funds obtained by a com-
pany after it enters an insolvency process,
when an inflow of funds can be crucial
in preserving the company’s viability.
Comparing legal provisions on post-com-
mencement finance around the world, the
case study finds that businesses are more
likely to survive an insolvency process in
economies where post-commencement
finance is well regulated.
Finally, this year’s report presents a sum-
mary of some of the research recently pub-
lished in academic law journals that relates
to the four sets of Doing Business indicators
whose focus is essentially on the law—
getting credit (legal rights of borrowers
and lenders), protecting minority investors,
enforcing contracts and resolving insol-
vency. There are close links between these
indicators and the literature. For example,
theliteratureemphasizestheimportanceof
having effective mechanisms of alternative
dispute resolution as a way to minimize the
case backlog in courts—and this inspired
the expansion of the enforcing contracts
indicators to also cover arbitration and vol-
untary mediation this year. Doing Business
will continue to monitor the literature in
both law and economics to identify good
practices and inform policy makers under-
taking legal and regulatory reform efforts.
Notes
1. For 11 economies the data are also collected
for the second largest business city (see table
13A.1 at the end of the data notes).
2. This year’s report also introduces an expanded
methodology for the labor market regulation
indicators, as discussed in the data notes.
3. The papers cited here are just a few examples
of research done in the areas measured by
Doing Business. Since 2003, when the Doing
Business report was first published, 2,182
research articles discussing how regulation
in the areas measured by Doing Business
influences economic outcomes have been
published in peer-reviewed academic journals.
Another 6,296 working papers have been
posted online.
4. Bruhn 2011.
5. Amin and Islam 2014.
6. Giannetti and Jentzsch 2013.
7. Visaria 2009.
8. Monteiro and Assunção 2012.
9. Besley 2015, p. 106.
10. Relationships are significant at the 1%
level after controlling for income per
capita. The correlation between the ease
of doing business ranking and the Global
Competitiveness Index is 0.84. The correlation
between the ease of doing business ranking
and the Corruption Perceptions Index is 0.75.
11. Relationships are significant at the 1% level
after controlling for income per capita. The
correlation between the distance to frontier
score for regulatory efficiency and the
Corruption Perceptions Index is 0.77. The
correlation between the distance to frontier
score for regulatory quality and the Corruption
Perceptions Index is 0.66.
12. This corresponds to a monthly consumption
of 26,880 kilowatt-hours.
13. The relationship is significant at the 1% level
after controlling for income per capita. New
firm density is the number of newly registered
limited liability companies per 1,000 working-
age people (ages 15–64).
14. The relationship is significant at the 1% level
after controlling for income per capita.
15. UNPAN 2012.
16. UNPAN 2012.
17. According to the World Bank’s World
Development Indicators database, output
per capita in Georgia increased from $4,346
in 2004 to $7,233 in 2014 (in constant 2011
international dollars) (http://data.worldbank
.org/indicator). And according to the World
Bank Group’s Entrepreneurship Database,
business density rose from 1.35 firms per
1,000 adults in 2005 to 4.86 in 2012
(http://www.doingbusiness.org/data
/exploretopics/entrepreneurship).

Doing Business 2016
E
conomic activity requires sensible
rules that encourage firm start-up
and growth and avoid creating
distortions in the marketplace. Doing
Business focuses on the rules and regula-
tions that can help the private sector
thrive—because without a dynamic
private sector, no economy can provide
a good, and sustainable, standard of liv-
ing for people. Doing Business measures
the presence of rules that establish and
clarify property rights, minimize the cost
of resolving disputes, increase the pre-
dictability of economic interactions and
provide contractual partners with core
protections against abuse.
The Doing Business data highlight the
important role of the government and
government policies in the day-to-day
life of domestic small and medium-size
firms. The objective is to encourage
regulations that are designed to be effi-
cient, accessible to all who use them and
simple in their implementation. Where
regulation is burdensome, it diverts the
energies of entrepreneurs away from
developing their businesses. But where
regulation is efficient, transparent and
implemented in a simple way, it becomes
easier for businesses to innovate and
expand—and easier for aspiring entre-
preneurs to compete on an equal footing.
Indeed, Doing Business values good rules
as a key to social inclusion. Enabling
growth—and ensuring that all people,
regardless of income level, can participate
in its benefits—requires an environment
where new entrants with drive and good
ideas can get started in business and
where good firms can invest and grow.
Doing Business was designed with two
maintypesofusersinmind:policymakers
and researchers.1
It is a tool that govern-
ments can use to design sound business
regulatory policies. Nevertheless, the
Doing Business data are limited in scope
and should be complemented with other
sources of information. Doing Business
focuses on a few specific rules relevant to
the specific case studies analyzed. These
rules and case studies are chosen to be
illustrative of the business regulatory
environment, but they are not a compre-
hensive description of that environment.
Doing Business is also an important source
of information for researchers. It provides
a unique data set that enables analysis
aimed at better understanding the role
of business regulation in economic
development.
WHAT DOES DOING
BUSINESS MEASURE?
Doing Business captures several impor-
tant dimensions of the regulatory
environment as it applies to local firms.
It provides quantitative indicators on
regulation for starting a business, deal-
ing with construction permits, getting
electricity, registering property, getting
credit, protecting minority investors, pay-
ing taxes, trading across borders, enforc-
ing contracts and resolving insolvency
(table 2.1). Doing Business also measures
features of labor market regulation. This
year’s report does not present rankings
of economies on the labor market regula-
tion indicators or include the topic in the
aggregate distance to frontier score or
ƒƒ Doing Business measures aspects of
business regulation affecting domestic
small and medium-size firms in 11
areas across 189 economies. Ten of
these areas—starting a business,
dealing with construction permits,
getting electricity, registering property,
getting credit, protecting minority
investors, paying taxes, trading across
borders, enforcing contracts and
resolving insolvency—are included
in the distance to frontier score and
ease of doing business ranking. Doing
Business also measures features of
labor market regulation, which is not
included in these two measures.
ƒƒ Doing Business does not capture other
aspects of the business environment,
such as security, market size,
macroeconomic stability and the
prevalence of bribery and corruption.
ƒƒ The Doing Business methodology is
based on standardized case scenarios
in the largest business city of each
economy. In addition, for 11 economies
a second city is covered.
ƒƒ The subnational Doing Business studies
complement the global report by going
beyond the largest business city in
selected economies.
ƒƒ Doing Business relies on four main
sources of information: the relevant
laws and regulations, Doing Business
respondents, the governments of the
economies covered and the World
Bank Group regional staff.
About DoingBusiness

ranking on the ease of doing business. It
does present the data for these indicators.
Four sets of indicators—dealing with
construction permits, getting electric-
ity, registering property and enforcing
contracts—have been expanded for this
year’s report to measure aspects of regu-
latory quality. One indicator set—trading
across borders—has been redesigned
to increase the relevance of what is
measured. (For details on what is new in
these indicator sets, see the chapter on
what is changing in Doing Business.)
How the indicators are selected
The choice of the 11 sets of Doing Business
indicators has been guided by economic
research and firm-level data, particu-
larly data from the World Bank Enterprise
Surveys.2
These surveys provide data
highlighting the main obstacles to
business activity as reported by entre-
preneurs in more than 135 economies.
For example, among the factors that the
surveys have identified as important to
businesses have been access to finance
and access to electricity—inspiring the
design of the Doing Business indicators on
getting credit and getting electricity.
The design of the Doing Business indica-
tors has also been informed by theoretical
insights gleaned from extensive research
and the literature on the role of institu-
tions in enabling economic development.
In addition, the background papers devel-
oping the methodology for each of the
Doing Business indicator sets have estab-
lished the importance of the rules and
regulations that Doing Business focuses
on for such economic outcomes as trade
volumes, foreign direct investment, mar-
ket capitalization in stock exchanges and
private credit as a percentage of GDP.3
Two aggregate measures
Doing Business presents data both for
individual indicators and for two aggre-
gate measures—the distance to frontier
score and the ease of doing business
ranking—to provide different perspec-
tives on the data. The distance to frontier
score aids in assessing the absolute
level of regulatory performance and
how it improves over time. This measure
shows the distance of each economy to
the “frontier,” which represents the best
performance observed on each of the
indicators across all economies in the
Doing Business sample since 2005 or the
third year in which data were collected
for the indicator. (For indicators calcu-
lated as scores, such as the strength of
legal rights index or the quality of land
administration index, the frontier is set at
the highest possible value.) This allows
users both to see the gap between a
particular economy’s performance and
the best performance at any point in time
and to assess the absolute change in the
economy’s regulatory environment over
time as measured by Doing Business. The
distance to frontier is first computed for
each topic and then averaged across all
topics to compute the aggregate distance
to frontier score. The ranking on the ease
of doing business complements the dis-
tance to frontier score by providing infor-
mation about an economy’s performance
in business regulation relative to the
performance of other economies as mea-
sured by Doing Business.
For each topic covered and for all topics,
Doing Business uses a simple averaging
approach for weighting component
indicators, calculating rankings and
determining the distance to frontier
score.4
Each topic covered by Doing
Business relates to a different aspect of
the business regulatory environment.
The distance to frontier scores and
rankings of each economy vary, often
substantially, across topics, indicating
that strong performance by an economy
in one area of regulation can coexist with
weak performance in another (figure 2.1).
A quick way to assess the variability of
an economy’s regulatory performance is
to look at its distance to frontier scores
across topics (see the country tables).
The Kyrgyz Republic, for example, has an
overall distance to frontier score of 66.01,
meaning that it is two-thirds of the way
from the worst to the best performance.
Its distance to frontier score is 92.94 for
TABLE 2.1 What Doing Business measures—11 areas of business regulation
Indicator set What is measured
Starting a business Procedures, time, cost and paid-in minimum capital to start a
limited liability company
Dealing with construction permits Procedures, time and cost to complete all formalities to build a
warehouse and the quality control and safety mechanisms in the
construction permitting system
Getting electricity Procedures, time and cost to get connected to the electrical grid,
the reliability of the electricity supply and the cost of electricity
consumption
Registering property Procedures, time and cost to transfer a property and the quality of
the land administration system
Getting credit Movable collateral laws and credit information systems
Protecting minority investors Minority shareholders’ rights in related-party transactions and in
corporate governance
Paying taxes Payments, time and total tax rate for a firm to comply with all tax
regulations
Trading across borders Time and cost to export the product of comparative advantage and
import auto parts
Enforcing contracts Time and cost to resolve a commercial dispute and the quality of
judicial processes
Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency
and the strength of the legal framework for insolvency
Labor market regulation Flexibility in employment regulation and aspects of job quality

21ABOUT DOING BUSINESS
starting a business, 90.59 for register-
ing property and 79.98 for dealing with
construction permits. At the same time,
it has a distance to frontier score of
34.66 for resolving insolvency, 43.95 for
getting electricity and 49.49 for enforcing
contracts.
WHAT DOES DOING
BUSINESS NOT MEASURE?
Doing Business does not cover many
important policy areas, and even within
the areas it covers its scope is narrow
(table 2.2). Doing Business does not
measure the full range of factors, policies
and institutions that affect the quality of
an economy’s business environment or
its national competitiveness. It does not,
for example, capture aspects of security,
market size, macroeconomic stability, the
state of the financial system, the preva-
lence of bribery and corruption or the level
of training and skills of the labor force.
Even within the relatively small set of
indicators included in Doing Business,
the focus is deliberately narrow. The
trading across borders indicators, for
example, capture the time and cost
required for the logistical process of
exporting and importing goods, but
they do not measure the cost of tariffs
or of the international transport. Thus
through these indicators Doing Business
provides a narrow perspective on the
infrastructure challenges that firms
face, particularly in the developing
world. It does not address the extent
to which inadequate roads, rail, ports
and communications may add to firms’
costs and undermine competitiveness
(except to the extent that the trading
across borders indicators indirectly
measure the quality of ports). Similar
to the indicators on trading across
borders, those on starting a business
or protecting minority investors do not
cover all aspects of commercial legisla-
tion. And while Doing Business mea-
sures only a few aspects within each
area that it covers, business regulation
reforms should not focus just on these
aspects, because those that it does not
measure are still important.
Doing Business does not attempt to mea-
sure all costs and benefits of a particular
law or regulation to society as a whole.
For example, the paying taxes indica-
tors measure the total tax rate, which,
in isolation, is a cost to businesses. The
indicators do not measure, nor are they
intended to measure, the benefits of the
social and economic programs funded
through tax revenues. Measuring qual-
ity and efficiency in business regulation
provides one input into the debate on
the regulatory burden associated with
achieving regulatory objectives. These
TABLE 2.2 What Doing Business does
not cover
Examples of areas not covered
Macroeconomic stability
State of the financial system
Level of training and skills of the labor force
Prevalence of bribery and corruption
Market size
Security
Examples of aspects not included within the
areas covered
In paying taxes, personal income tax rates
In getting credit, the monetary policy stance
and the associated ease or tightness of credit
conditions for firms
In trading across borders, export or import tariffs
and subsidies
Figure 2.1 An economy’s regulatory environment may be more business-friendly in some areas than in others
Denmark
UnitedStates
Singapore
HongKongSAR,China
Norway
Taiwan,China
Australia
Germany
Ireland
Iceland
Austria
Portugal
Poland
France
SlovakRepublic
UnitedArabEmirates
Spain
Armenia
Romania
Mexico
Kazakhstan
Belgium
Italy
Cyprus
Thailand
RussianFederation
Israel
Turkey
PuertoRico(U.S.)
Serbia
Luxembourg
Azerbaijan
Bahrain
KyrgyzRepublic
Panama
Bhutan
SouthAfrica
Morocco
St.Lucia
BosniaandHerzegovina
Guatemala
Ukraine
China
Fiji
Vietnam
DominicanRepublic
Seychelles
Albania
Nepal
Kuwait
Philippines
Swaziland
SriLanka
Indonesia
St.VincentandtheGrenadines
Jordan
Lesotho
Ecuador
Barbados
Argentina
Lebanon
Nicaragua
Cambodia
WestBankandGaza
Egypt,ArabRep.
Mozambique
Grenada
Guyana
Tanzania
Malawi
BurkinaFaso
PapuaNewGuinea
SierraLeone
Kiribati
Gambia,The
Senegal
Zimbabwe
Bolivia
Sudan
Iraq
Algeria
Guinea
Myanmar
Nigeria
Djibouti
Timor-Leste
SyrianArabRepublic
Afghanistan
Liberia
Angola
Chad
CentralAfricanRepublic
SouthSudan
Eritrea
Distance to
frontier score
0
20
10
50
70
100
90
80
60
40
30
Average of highest three topic scores
Average of all topic scores
Average of lowest three topic scores
Note: The distance to frontier scores reflected are those for the 10 Doing Business topics included in this year’s aggregate distance to frontier score. The figure is illustrative only;
it does not include all 189 economies covered by this year’s report. See the country tables for the distance to frontier scores for each Doing Business topic for all economies.

objectives can differ across economies.
Doing Business provides a starting point
for this discussion and should be used in
conjunction with other data sources.
WHAT ARE THE STRENGTHS
AND LIMITATIONS OF THE
METHODOLOGY?
The Doing Business methodology was
designed to be an easily replicable way
to benchmark certain aspects of business
regulation. It has advantages and limita-
tions that should be understood when
using the data (table 2.3).
A key consideration for the Doing Business
indicators is that they should ensure com-
parability of the data across a global set of
economies. The indicators are therefore
developed around standardized case
scenarios with specific assumptions.
One such assumption is the location of
a notional business—the subject of the
Doing Business case study—in the largest
business city of the economy. The real-
ity is that business regulations and their
enforcement may differ within a country,
particularly in federal states and large
economies. But gathering data for every
relevant jurisdiction in each of the 189
economies covered by Doing Business
would be infeasible. Nevertheless, where
policy makers are interested in generating
data at the local level, beyond the largest
business city, Doing Business has comple-
mented its global indicators with subna-
tional studies (box 2.1). And starting in last
year’s report, Doing Business has extended
its coverage to the second largest business
city in economies with a population of
more than 100 million as of 2013.
Doing Business recognizes the limitations
of the standardized case scenarios and
assumptions. But while such assump-
tions come at the expense of generality,
they also help ensure the comparability
of data. For this reason it is common to
see limiting assumptions of this kind in
economic indicators.
Some Doing Business topics are complex,
and so it is important that the standard-
ized cases are carefully defined. For
example, the standardized case scenario
usually involves a limited liability com-
pany or its legal equivalent. There are
two reasons for this assumption. First,
private, limited liability companies are
the most prevalent business form for
firms with more than one owner in many
economies around the world. Second,
this choice reflects the focus of Doing
Business on expanding opportunities for
entrepreneurship: investors are encour-
aged to venture into business when
potential losses are limited to their
capital participation.
Another assumption underlying
the Doing Business indicators is that
entrepreneurs have knowledge of and
comply with applicable regulations.
In practice, entrepreneurs may not
know what needs to be done or how
to comply and may lose considerable
time trying to find out. Alternatively,
they may deliberately avoid compli-
ance altogether—by not registering
for social security, for example. Where
regulation is particularly onerous, firms
may opt for bribery and other informal
arrangements intended to bypass the
rules—an aspect that helps explain
differences between the de jure data
provided by Doing Business and the de
facto insights offered by World Bank
Enterprise Surveys.5
In economies with
particularly burdensome regulation,
levels of informality tend to be higher.
Compared with their formal sector
counterparts, firms in the informal
sector typically grow more slowly, have
poorer access to credit and employ few-
er workers—and these workers remain
outside the protections of labor law.6
Firms in the informal sector are also
less likely to pay taxes. Doing Business
measures one set of factors that help
explain the occurrence of informality
and give policy makers insights into
potential areas of regulatory reform.
Rules and regulations fall under the
direct control of policy makers—and
they are often where policy makers
start when intending to change the set
of incentives under which businesses
operate. Doing Business not only shows
where problems exist in the regulatory
framework; it also points to specific
regulations or regulatory procedures
that may lend themselves to reform.
And its quantitative measures enable
research on how specific regulations
TABLE 2.3 Advantages and limitations of the Doing Business methodology
Feature Advantages Limitations
Use of standardized
case scenarios
Makes the data comparable across
economies and the methodology
transparent
Reduces the scope of the data and
means that only regulatory reforms
in the areas measured can be
systematically tracked
Focus on largest
business citya
Makes the data collection manageable
(cost-effective) and the data
comparable
Reduces the representativeness of
the data for an economy if there are
significant differences across locations
Focus on domestic and
formal sector
Keeps the attention on where
regulations are relevant and firms are
most productive—the formal sector
Fails to reflect reality for the informal
sector—important where that is
large—or for foreign firms where they
face a different set of constraints
Reliance on expert
respondents
Ensures that the data reflect the
knowledge of those with the most
experience in conducting the types of
transactions measured
Results in indicators that do not
measure the variation in experiences
among entrepreneurs
Focus on the law Makes the indicators “actionable”—
because the law is what policy makers
can change
Fails to reflect the reality that where
systematic compliance with the law
is lacking, regulatory changes will not
achieve the full results desired
a. In economies with a population of more than 100 million as of 2013, Doing Business covers business regulation
in both the largest business city and the second largest one.

BOX 2.1 Comparing regulation at the local level: subnational Doing Business studies
The subnational Doing Business studies expand the Doing Business analysis beyond the largest business city of an economy. They
measure variation in regulations or in the implementation of national laws across locations within an economy (as in South
Africa) or a region (as in Central America). Projects are undertaken at the request of governments.
Data collected by subnational studies over the past two years show that there can be substantial variation within an economy
(see figure). In Mexico in 2013, for example, registering a property transfer took as few as 2 days in Colima and as many as 74 in
Mexico City. Indeed, within the same economy one can find locations that perform as well as economies ranking in the top 20
on the ease of registering property and locations that perform as poorly as economies ranking in the bottom 40 on that indicator.
Different locations, different regulatory processes, same economy
0
10
20
30
40
50
60
South AfricaPolandNigeriaMexicoEgypt,Arab Rep.
0
50
100
150
200
250
South AfricaPolandNigeriaMexicoEgypt,Arab Rep.
Least time Most time Average time
Time to start a business (days)
Least time Most time Average time
Time to register property (days)
Source: Subnational Doing Business database.
Note: The average time shown for each economy is based on all locations covered by the data: 15 locations and governorates in the Arab Republic of Egypt in 2013,
31 states and Mexico City in Mexico in 2013, 36 cities in Nigeria in 2014, 18 cities in Poland in 2014 and 9 cities in South Africa in 2015.
The subnational Doing Business studies create disaggregated data on business regulation. But they go beyond a data collection
exercise. They have proved to be strong motivators for regulatory reform at the local level:
•• The data produced are comparable across locations within the economy and internationally, enabling locations to bench-
mark their results both locally and globally. Comparisons of locations that are within the same economy and therefore share
the same legal and regulatory framework can be revealing: local officials find it hard to explain why doing business is more
difficult in their jurisdiction than in a neighboring one.
(continued)

affect firm behavior and economic
outcomes.
Many of the Doing Business indicators can
be considered “actionable,” measuring
aspects over which governments have
direct control. For example, governments
can reduce (or even eliminate) the mini-
mum capital requirement for new firms.
They can invest in company and prop-
erty registries to increase the efficiency of
these public agencies. They can improve
the efficiency of tax administration by
adopting the latest technologies to facili-
tate the preparation, filing and payment
of taxes by businesses. And they can
undertake court reforms to shorten delays
in the enforcement of contracts. On the
other hand, some Doing Business indica-
tors capture costs that involve private sec-
tor participants, such as lawyers, notaries,
architects, electricians or freight forward-
ers—costs over which governments may
have little influence in the short run.
While many Doing Business indicators are
actionable, this does not necessarily mean
that they are always “action-worthy” in
a particular context.7
And Doing Business
data do not indicate which indicators
are more “action-worthy” than others.
Business regulation reforms are one
element of a strategy aimed at improv-
ing competitiveness and establishing a
solid foundation for sustainable economic
growth. There are many other impor-
tant goals to pursue—such as effective
management of public finances, adequate
attention to education and training, adop-
tion of the latest technologies to boost
economic productivity and the quality of
public services, and appropriate regard for
air and water quality to safeguard people’s
health. Governments have to decide what
set of priorities best fits the needs they
face. To say that governments should work
toward a sensible set of rules for private
sector activity does not suggest that they
should be doing so at the expense of other
worthy economic and social goals.
HOW ARE THE DATA
COLLECTED?
The Doing Business data are based on
a detailed reading of domestic laws
and regulations as well as administra-
tive requirements. The data cover 189
economies—including small economies
and some of the poorest economies, for
which little or no data are available in
other data sets. The data are collected
through several rounds of interaction with
expert respondents (both private sector
practitioners and government officials)—
through responses to questionnaires,
BOX 2.1 Comparing regulation at the local level: subnational Doing Business studies (continued)
•• Pointing out good practices that exist in some locations but not others within an economy helps policy makers recognize
the potential for replicating these good practices. This can prompt discussions of regulatory reform across different levels
of government, providing opportunities for local governments and agencies to learn from one another and resulting in local
ownership and capacity building.
Since 2005 subnational reports have covered 437 locations in 65 economies, including Colombia, the Arab Republic of Egypt,
Italy, the Philippines and Serbia. Fifteen economies—including Indonesia, Mexico, Nigeria and the Russian Federation—have
undertaken two or more rounds of subnational data collection to measure progress over time. This year subnational studies were
completed in the Dominican Republic, Poland, South Africa, Spain and six countries in Central America. Ongoing studies include
those in Afghanistan (5 cities), Kenya (10 cities), Mexico (31 states and Mexico City) and the United Arab Emirates (3 emirates).
Subnational reports are available on the Doing Business website at http://www.doingbusiness.org/subnational.
Figure 2.2 How Doing Business collects and verifies the data
Data sources:
• The relevant laws and regulations
• Responses to questionnaires by
private sector practitioners and
government officials
• Governments
• World Bank Group regional staff
Steps included in the
data verification process:
• Conference calls and
videoconferences with private
sector practitioners and
government officials
• Travel to selected economies
The Doing Business team develops
questionnaires for each topic and
sends them to private sector
practitioners and government
officials.
The Doing Business team analyzes the
relevant laws and regulations along with
the information in the questionnaires.
Governments and World Bank Group
regional teams submit information on
regulatory changes that could potentially
be included in the global count of
regulatory reforms.
The Doing Business team shares
preliminary information on reforms with
governments (through the World Bank
Group’s Board of Executive Directors) and
World Bank Group regional teams for
their feedback.
The Doing Business team analyzes the
data and writes the report. Comments
on the report and the data are received
from across the World Bank Group
through an internal review process.
The report is published
and disseminated.

conference calls, written correspondence
and visits by the team. Doing Business
relies on four main sources of information:
the relevant laws and regulations, Doing
Business respondents, the governments
of the economies covered and the World
Bank Group regional staff (figure 2.2).
For a detailed explanation of the Doing
Business methodology, see the data notes.
Relevant laws and regulations
Most of the Doing Business indicators
are based on laws and regulations.
Indeed, around two-thirds of the data
embedded in the Doing Business indica-
tors are based on a reading of the law.
Besides filling out written question-
naires, Doing Business respondents
provide references to the relevant laws,
regulations and fee schedules. The
Doing Business team collects the texts
of the relevant laws and regulations
and checks questionnaire responses
for accuracy. For example, the team
will examine the commercial code to
confirm the paid-in minimum capital
requirement, look at the legislation to
see whether borrowers have the right
to access their data at the credit bureau
and read the tax code to find applicable
tax rates. (Doing Business makes these
and other types of laws available on the
Doing Business law library website.)8
Because of the extensive data checking,
which involves an annual update of an
established database, having very large
samples of respondents is not neces-
sary for these types of questions. In
principle, the role of the contributors
is largely advisory—helping the Doing
Business team in finding and under-
standing the laws and regulations—and
there are quickly diminishing returns to
an expanded number of contributors.
For the rest of the data the team con-
ducts extensive consultations with
multiple contributors to minimize
measurement error. For some indica-
tors—for example, those on dealing
with construction permits, enforcing
contracts and resolving insolvency—
the time component and part of the
cost component (where fee schedules
are lacking) are based on actual prac-
tice rather than the law on the books.
This introduces a degree of judgment
by respondents on what actual practice
looks like. When respondents disagree,
the time indicators reported by Doing
Business represent the median values
of several responses given under the
assumptions of the standardized case.
Doing Business respondents
Over the past 13 years more than 33,000
professionals in 189 economies have
assisted in providing the data that inform
the Doing Business indicators.9
This year’s
report draws on the inputs of more than
11,400 professionals.10
Table 13.2 in the
data notes lists the number of respon-
dents for each indicator set. The Doing
Business website shows the number of
respondents for each economy and each
indicator set.
Respondents are professionals who
routinely administer or advise on the
legal and regulatory requirements in the
specific areas covered by Doing Business,
selected on the basis of their expertise
in these areas. Because of the focus on
legal and regulatory arrangements, most
of the respondents are legal profession-
als such as lawyers, judges or notaries.
In addition, officials of the credit bureau
or registry complete the credit informa-
tion questionnaire. Freight forwarders,
accountants, architects, engineers
and other professionals answer the
questionnaires related to trading across
borders, paying taxes and dealing with
construction permits. Certain public
officials (such as registrars from the
company or property registry) also
provide information that is incorporated
into the indicators.
The Doing Business approach has been
to work with legal practitioners or other
professionals who regularly undertake
the transactions involved. Following
the standard methodological approach
for time-and-motion studies, Doing
Business breaks down each process or
transaction, such as starting a business
or registering a building, into separate
steps to ensure a better estimate of
time. The time estimate for each step
is given by practitioners with sig-
nificant and routine experience in the
transaction.
Doing Business does not survey firms for
two main reasons. The first relates to
the frequency with which firms engage
in the transactions captured by the
indicators, which is generally low. For
example, a firm goes through the start-
up process once in its existence, while
an incorporation lawyer may carry out
10 such transactions each month. The
incorporation lawyers and other experts
providing information to Doing Business
are therefore better able to assess the
process of starting a business than are
individual firms. They also have access
to the latest regulations and practices,
while a firm may have faced a different
set of rules when incorporating years
before. The second reason is that the
Doing Business questionnaires mostly
gather legal information, which firms
are unlikely to be fully familiar with. For
example, few firms will know about all
the many legal procedures involved in
resolving a commercial dispute through
the courts, even if they have gone
through the process themselves. But a
litigation lawyer should have little dif-
ficulty in providing the requested infor-
mation on all the procedures.
Governments and World Bank
Group regional staff
After receiving the completed ques-
tionnaires from the Doing Business
respondents, verifying the information
against the law and conducting follow-up
inquiries to ensure that all relevant infor-
mation is captured, the Doing Business
team shares the preliminary descriptions
of regulatory reforms with governments
(through the World Bank Group’s Board
of Executive Directors) and with regional
staff of the World Bank Group. Through
this process government authorities
and World Bank Group staff working on

most of the economies covered can alert
the team about, for example, regulatory
reforms not picked up by the respondents
or additional achievements of regulatory
reforms already captured in the database.
In response to such feedback, the Doing
Business team turns to the local private
sector experts for further consultation
and, as needed, corroboration. In addi-
tion, the team responds formally to the
comments of governments or regional
staff and provides explanations of the
scoring decisions.
Data adjustments
Information on data corrections is pro-
vided in the data notes and on the Doing
Business website. A transparent complaint
procedure allows anyone to challenge the
data. From November 2014 to October
2015 the team received and responded
to more than 170 queries on the data. If
changes in data are confirmed, they are
immediately reflected on the website.
notes
1. The focus of the Doing Business indicators
remains the regulatory regime faced by
domestic firms engaging in economic activity
in the largest business city of an economy.
Doing Business was not initially designed to
inform decisions by foreign investors, though
investors may in practice find the data useful
as a proxy for the quality of the national
investment climate. Analysis done in the
World Bank Group’s Global Indicators Group
has shown that countries that have sensible
rules for domestic economic activity also tend
to have good rules for the activities of foreign
subsidiaries engaged in the local economy.
2. For more on the World Bank Enterprise
Surveys, see the website at http://www
.enterprisesurveys.org.
3. These papers are available on the Doing
Business website at http://www.doingbusiness
.org/methodology.
4. For getting credit, indicators are weighted
proportionally, according to their contribution
to the total score, with a weight of 60%
assigned to the strength of legal rights index
and 40% to the depth of credit information
index. In this way each point included in these
indices has the same value independent of
the component it belongs to. Indicators for all
other topics are assigned equal weights. For
more details, see the chapter on the distance
to frontier and ease of doing business ranking.
5. Hallward-Driemeier and Pritchett 2015.
6. Schneider 2005; La Porta and Shleifer 2008.
7. One study using Doing Business indicators
illustrates the difficulties in using highly
disaggregated indicators to identify reform
priorities (Kraay and Tawara 2013).
8. For the law library website, see http://www
.doingbusiness.org/law-library.
9. The annual data collection exercise is an
update of the database. The Doing Business
team and the contributors examine the
extent to which the regulatory framework
has changed in ways relevant for the features
captured by the indicators. The data collection
process should therefore be seen as adding
each year to an existing stock of knowledge
reflected in the previous year’s report, not as
creating an entirely new data set.
10. While more than 11,400 contributors provided
data for this year’s report, many of them
completed a questionnaire for more than
one Doing Business indicator set. Indeed, the
total number of contributions received for
this year’s report is more than 14,100 which
represents a true measure of the inputs
received. The average number of contributions
per indicator set and economy is just under
seven. For more details, see http://www
.doingbusiness.org/contributors/doing
-business.

Doing Business 2016
G
ood practices in business regula-
tion have evolved since the Doing
Business indicators were first
developed in 2003. Some changes have
come, for example, as new technologies
have transformed the ways governments
interact with citizens and the business
community. The new developments have
created a need to expand and update the
Doing Business methodology. In addition,
the original Doing Business indicators are
by nature limited in scope, and expanding
the methodology allows opportunities to
reduce the limitations. While the Doing
Business report has introduced changes
in methodology of varying degrees every
year, this year’s report and last year’s
have implemented more substantive
improvements. These changes reflect
consultations that have taken place over
the years with World Bank Group staff,
country governments and the private sec-
tor and are being implemented against the
background of the findings presented in
2013 by the Independent Panel on Doing
Business.1
As part of these changes, 8 of 10 sets
of Doing Business indicators are being
improved over a two-year period (table
3.1). The improvements are aimed at
addressing two main concerns. First, in
indicator sets that primarily measure
the efficiency of a transaction or service
provided by a government agency (such
as registering property), the focus is
being expanded to also cover aspects of
the quality of that service. And second,
in indicator sets that already measure
some aspects of the quality of regulation
(such as protecting minority investors),
the focus is being expanded to include
additional good practices in the areas
covered. In addition, some changes are
aimed at increasing the relevance of
indicators (such as the trading across
borders indicators).
INTRODUCING NEW
MEASURES OF QUALITY
Efficiency in regulatory transactions is
important. Many research papers have
highlighted the positive effect of effi-
ciency improvements in areas measured
by Doing Business on such economic
outcomes as firm or job creation.2
But
increasing efficiency may have little
impact if the service provided is of poor
quality. For example, the ability to com-
plete a property transfer quickly and
inexpensively is important, but if the land
ƒƒ This year’s report introduces
improvements in 5 of 10 Doing Business
indicator sets. Part of an effort begun
in last year’s report, the changes
have two main goals. The first is to
expand the focus of indicator sets
that primarily measure the efficiency
of a transaction or service to also
cover aspects of the quality of that
service. The second is to expand the
focus of indicator sets that already
measure some aspects of the quality
of regulation to include recent good
practices in the areas covered.
ƒƒ This year’s report adds indicators
of quality to four indicator sets:
registering property, dealing with
construction permits, getting
electricity and enforcing contracts.
ƒƒ In addition, the trading across
borders indicators have been revised
to increase their relevance. The
underlying case study now focuses
on the top export product for each
economy, on auto parts as its import
product and on its largest trading
partner for the export and import
products.
What is changing
in Doing Business?
TABLE 3.1 Timeline of the changes in
Doing Business
Doing Business 2015
Broadening the scope of indicator sets
ƒƒ Getting credit
ƒƒ Protecting minority investors
ƒƒ Resolving insolvency
Doing Business 2016
Broadening the scope of indicator sets
ƒƒ Registering property
ƒƒ Dealing with construction permits
ƒƒ Getting electricity
ƒƒ Enforcing contracts
Increasing the relevance of indicator sets
ƒƒ Trading across borders

records are unreliable or other features of
the property rights regime are flawed, the
property title will have little value.
Yet measures of the quality of business
regulation at the micro level are scarce. By
expanding its focus on regulatory quality,
Doing Business will thus open a new area
for research. The aim is to help develop
greater understanding of the importance
of the quality of business regulation and
its link to regulatory efficiency and eco-
nomic outcomes.
In this year’s report four indicator sets are
being expanded to also measure regula-
tory quality: registering property, dealing
with construction permits, getting elec-
tricity, and enforcing contracts. A similar
expansion for the paying taxes indicator
set is being considered for next year. The
new indicators being introduced empha-
size the importance of having the right
type of regulation. In general, economies
with less regulation or none at all will have
a lower score on the new indicators.
Registering property
The registering property indicator set
assesses the efficiency of land admin-
istration systems by measuring the
procedures, time and cost to transfer a
property from one company to another.
This year’s report adds a new indicator to
also encompass aspects of the quality of
these systems. The quality of land admin-
istration index measures the reliability,
transparency and geographic coverage
of land administration systems as well
as aspects of dispute resolution for land
issues (figure 3.1). This new indicator is
and therefore affects the ease of doing
business ranking.
Ensuring the reliability of information
on property titles is a crucial function of
land administration systems. To measure
how well these systems are performing
this function, data for the quality of land
administration index record the practices
used in collecting, recording, storing and
processing information on land parcels
and property titles. Higher scores are
given for practices that support data reli-
ability, such as unifying, standardizing and
synchronizing records across different
sources and putting in place the necessary
infrastructure to reduce the risk of errors.
The indicator also measures the transpar-
ency of information in land administra-
tion systems around the world. New data
record whether land-related information
is made publicly available, whether
procedures and property transactions
are transparent and whether informa-
tion on fees for public services is easily
accessible.
In addition, the indicator measures the
coverage levels attained by land regis-
tration and mapping systems. A land
administration system that does not cov-
er the country’s entire territory is unable
to guarantee the protection of property
rights in areas that lack institutionalized
information on land. The result is a dual
system, with both formal and informal
land markets. To be enforceable, all
transactions need to be publicly verified
and authenticated at the land registry.
Finally, the indicator allows comparative
analysis of land dispute resolution across
economies. It measures the accessibility
of conflict resolution mechanisms and
the extent of liability for the entities
or agents recording land transactions.
The quality of land administration index
accounts for a quarter of the distance
to frontier score for registering property,
and the distance to frontier scores under
the old and new methodologies are
significantly correlated (figure 3.2). For a
complete discussion of the methodology
for the registering property indicators,
see the data notes. For an analysis of the
data for the indicators, see the case study
on registering property.
Dealing with construction
permits
The indicator set on dealing with construc-
tion permits measures the procedures,
time and cost to comply with the for-
malities to build a warehouse—including
obtaining necessary licenses and permits,
completing required notifications and
inspections, and obtaining utility connec-
tions. A new indicator added to the set
in this year’s report—the building quality
control index—expands the coverage to
also encompass good practices in con-
struction regulation (figure 3.3). This new
indicator is part of the distance to frontier
score and therefore affects the ease of
doing business ranking.
The building quality control index looks
at important issues facing the building
community. One is the need for clarity
in the rules, to ensure that regulation of
construction can fulfill the vital function
of helping to protect the public from
faulty building practices. To assess this
FIGURE 3.1 What is being added to registering property
Link between land
ownership registry
and mapping
system
Availability
of electronic
database
Availability of fee
schedules and
complaint
mechanisms
Accessibility of
information on
land ownership
Mechanisms to
prevent and
resolve land
disputes
Legal framework
for property
registration
Geographic
coverage of
mapping agency
Geographic
coverage of
land registry
Transparency Coverage
Dispute
resolutionReliability

29What is changing in Doing Business?
characteristic, the indicator examines
how clearly the building code or building
regulations specify the requirements for
obtaining a building permit and how eas-
ily accessible the regulations are.
Beyond measuring the clarity and acces-
sibility of regulations, the building quality
control index assesses the effectiveness
of inspection systems. Good inspection
systems are critical to ensuring public
safety. They can ensure that buildings
comply with proper safety standards,
reducing the chances of structural faults.
And requirements that technical experts
review the proposed plans before con-
struction even begins can reduce the risk
of structural failures later on. The indica-
tor covers quality control at three stages:
before, during and after construction.
A measure of quality control before con-
struction looks at one point: whether a
licensed engineer or architect must verify
that the architectural plans and drawings
comply with the building regulations.
Measures of quality control during con-
struction examine two points: what types
of inspections (if any) are required by law
during construction; and whether inspec-
tions required by law are actually carried
out (or, if not required by law, commonly
occur in practice). Measures of quality
control after construction also examine
two points: whether a final inspection is
required by law to verify that the build-
ing was built in accordance with the
approved plans and the building regula-
tions; and whether the final inspection
required by law is actually carried out (or,
if not required by law, commonly occurs
in practice).
The professionals who conduct the
inspections play a vital part in ensuring
that buildings meet safety standards.
So it is important that these profession-
als be certified and that they have the
necessary technical qualifications. And
if safety violations or construction flaws
occur despite their efforts, it is important
to have a well-defined liability and insur-
ance structure to cover losses resulting
from any structural faults.
The building quality control index covers
several points relating to these issues:
what the qualification requirements are
for the professionals responsible for
reviewing and approving the architec-
tural plans and for those authorized to
supervise or inspect the construction;
which parties are held legally liable for
construction flaws or problems affecting
the structural safety of the building once
occupied; and which parties are required
by law to obtain an insurance policy to
cover possible flaws or problems affect-
ing the structural safety of the building
once occupied.
The new index accounts for a quarter of
the distance to frontier score for deal-
ing with construction permits, and the
distance to frontier scores under the old
and new methodologies are significantly
correlated (figure 3.4). For a complete
discussion of the methodology for the
indicators on dealing with construction
permits, see the data notes. For a fuller
discussion of the new indicator and an
analysis of the associated data, see the
case study on dealing with construction
permits.
FIGURE 3.3 What is being added to dealing with construction permits
• Clarity and accessibility of regulations
• Quality control before construction
• Quality control during construction
• Quality control after construction
• Liability and insurance regimes
• Professional certification requirements
FIGURE 3.2 Comparing the distance to frontier scores for registering property under
the old and new methodologies
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score for registering
property under new methodology
Distance to frontier score for registering
property under old methodology
Note: Both distance to frontier scores are based on data for 2014. The 45-degree line shows where the scores
under the old and new methodologies are equal. The correlation between the two scores is 0.96.

Getting electricity
The indicator set on getting electricity
measures the efficiency of the process
for obtaining an electricity connection for
a standardized warehouse—as reflected
in the procedures, time and cost required.
While the efficiency of the connection
process has proved to be a useful proxy
for the overall efficiency of the electric-
ity sector, these measures cover only a
small part of the sector’s performance.
Beyond the complexity and high cost of
getting an electricity connection, inad-
equate or unreliable power supply and
the price of electricity consumption are
also perceived as important constraints
on business activity, particularly in the
developing world. To offer a more com-
plete view of the electricity distribution
sector, this year’s report adds two new
indicators, the reliability of supply and
transparency of tariffs index and the price
of electricity (figure 3.5). While the first
indicator is included in the distance to
frontier score and ease of doing business
ranking, the second one is not.
To assess the reliability of the electric-
ity supply, Doing Business measures
both the duration and the frequency of
power outages. To do so, it uses the sys-
tem average interruption duration index
(SAIDI) and the system average inter-
ruption frequency index (SAIFI). SAIDI
measures the average total duration of
outages, and SAIFI the average number
of outages, experienced by a customer
over the course of a year. These two
measures are typically recorded by utility
companies, but collecting the data can
be challenging because their availability
and quality depend on the utilities’ ability
(and resources) to collect the underlying
information.
The SAIDI and SAIFI measures are
used to highlight extreme cases of
power outages (as measured against
a threshold defined by Doing Business).
For economies where power outages are
not extreme, the quality of monitoring
and the role of the monitoring agency
or regulator become the crucial factors
being measured. Data for the reliability of
supply and transparency of tariffs index
record the methods used by electricity
distribution companies to monitor power
outages and restore power supply and
the role of the regulator in monitoring
outages. Data also record the existence
of financial deterrents to limit outages.
Beyond a reliable electricity supply, trans-
parency around tariffs is also important
for customers, to enable them to forecast
the cost of their energy consumption and
deal effectively with future price increas-
es. Thus the new index also measures the
accessibility of tariffs to customers and
the level of transparency around changes
in tariff rates.
To measure the price of electricity con-
sumption, Doing Business records the total
monthly electricity bill for a standardized
warehouse that stores goods and oper-
ates in the largest business city of the
economy (in 11 economies it also collects
data for the second largest business city).
The price of electricity is presented in
cents per kilowatt-hour. (The data on the
price of electricity are available on the
FIGURE 3.4 Comparing the distance to frontier scores for dealing with construction
permits under the old and new methodologies
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score for dealing with
construction permits under new methodology
construction permits under old methodology
FIGURE 3.5 What is being added to getting electricity
• Duration and frequency of power outages
• Tools to monitor power outages
• Tools to restore power supply
• Regulatory monitoring of utilities’ performance
• Financial deterrents aimed at limiting outages
• Transparency and accessibility of tariffs
• Price of electricity consumption

Doing Business website, at http://www
.doingbusiness.org.)
The reliability of supply and transparency
of tariffs index accounts for a quarter of
the distance to frontier score for getting
electricity, and the distance to frontier
scores under the old and new meth-
odologies are significantly correlated
(figure 3.6). For a detailed discussion of
the methodology for the getting electric-
ity indicators, see the data notes. For a
comprehensive presentation of the new
indicators and an analysis of the data, see
the case study on getting electricity.
Enforcing contracts
The enforcing contracts indicators have
focused on the efficiency of the com-
mercial court system, measuring the
procedures, time and cost to resolve a
commercial dispute between two firms.
This year’s report expands the indicator
set to also cover aspects of the quality
of judicial processes, focusing on well-
established good practices that promote
quality and efficiency in the court system
(figure 3.7).
The aim is to capture new and more
actionable aspects of the judicial system
in each economy, providing a picture of
judicial efficiency that goes beyond the
time and cost associated with resolving
a dispute. Advances in technology and
in mechanisms for alternative dispute
resolution have changed the face of judi-
ciaries worldwide and led to the evolution
of new good practices. Expanding the
scope of the enforcing contracts indica-
tors to cover the use of such practices
ensures the continued relevance of these
indicators.
A new indicator, the quality of judicial
processes index, measures whether an
economy has adopted a series of good
practices across four main areas: court
structure and proceedings, case manage-
ment, court automation and alternative
dispute resolution. For court structure
and proceedings the indicator records
several aspects, including whether there
is a specialized commercial court or divi-
sion and whether a small claims court or
simplified procedure for small claims is
available. For case management the indi-
cator records, for example, whether there
are regulations setting time standards for
FIGURE 3.6 Comparing the distance to frontier scores for getting electricity under the
old and new methodologies
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score for getting
electricity under new methodology
Distance to frontier score for getting
electricity under old methodology
FIGURE 3.7 What is being added to enforcing contracts
Case
management
Court
automation
Alternative dispute
resolution
Court structure and
proceedings
Availability of
a specialized
commercial court
or division
Criteria used
to assign cases
to judges
Availability
of pretrial
attachment
Availability of a
small claims court
or simplified
procedure for
small claims
Regulations
setting time
standards for key
court events
Use of pretrial
conference
Availability of
performance
measurement
mechanisms
Regulations on
adjournments
and continuances
Ability to file
initial complaint
electronically
Publication of
judgments
Ability to pay
court fees
electronically
Ability to serve
process
electronically
Availability and
regulation of
arbitration
Availability and
regulation of
voluntary
mediation or
conciliation
Availability of an
electronic case
management
system

key court events and whether electronic
case management is available.
For court automation the indicator covers
such aspects as whether the initial com-
plaint can be filed electronically, whether
process can be served electronically
and whether the court fees can be paid
electronically. And for alternative dispute
resolution the indicator records the avail-
ability of arbitration and voluntary media-
tion or conciliation and aspects of the
regulation of these methods of dispute
resolution.
The quality of judicial processes index,
which replaces the indicator on the num-
ber of procedures to enforce a contract,
accounts for a third of the distance to
frontier score for enforcing contracts.
Analysis shows significant correlation
between the distance to frontier scores
under the old and new methodologies
(figure 3.8). The data notes provide a
detailed discussion of the methodology
for the enforcing contracts indicators,
while the case study on enforcing
contracts provides a more complete
discussion of the new indicator and an
analysis of the underlying data.
INCREASING THE
RELEVANCE OF INDICATORS
Using feedback from academics,
policy makers and other data users, Doing
Business continually improves its indica-
tors with the aim of maintaining their
relevance. This year’s report introduces
substantial changes to the trading across
borders indicators to increase their use-
fulness for policy and research.
The trading across borders indicators
measure the time and cost (excluding
tariffs) associated with exporting and
importing a shipment of goods to and
from the economy’s main trading partner.
In past years’ reports the standardized
case study assumed that the goods were
one of six preselected products. This
represented an important shortcom-
ing, especially for the export process:
while economies tend to import a bit of
everything, they export only products of
comparative advantage.
To increase the relevance of the trading
acrossbordersindicators,thisyear’sreport
changes the standardized case study to
assume different traded products for the
import and export process. In the new
case study each economy imports a ship-
ment of 15 metric tons of containerized
auto parts from its natural import part-
ner—the economy from which it imports
the largest value (price times quantity) of
auto parts. And each economy exports
the product of its comparative advantage
(defined by the largest export value) to its
natural export partner—the economy that
is the largest purchaser of this product. To
identify the trading partners and export
product for each economy, Doing Business
collected data on trade flows for the most
recent four-year period from international
databases such as the United Nations
Commodity Trade Statistics Database
(UN Comtrade).
The new case study also reflects new
assumptions about the mode of transport
used in trading across borders. In the
previous case study, trade was assumed
to be conducted by sea, with the implica-
tion that calculations of time and cost for
landlocked economies included those
associated with border processes in
transit economies. In the new case study,
natural trading partners may be neigh-
boring economies that can be accessed
by land. Thus trade is assumed to be con-
ducted by the most widely used mode of
transport (whether sea, land, air or some
combination of these), and any time and
cost attributed to an economy are those
incurred while the shipment is within that
economy’s geographic borders.
Because the new methodology also
allows for regional trade, it emphasizes
the importance of customs unions. One
economy receiving a better score under
the new methodology is Croatia, which
is part of the European Union (figure
3.9). In the new case study Croatia both
exports to a fellow EU member (Austria)
and imports from one (Germany), and
documentary and border compliance
therefore take very little time and cost
FIGURE 3.8 Comparing the distance to frontier scores for enforcing contracts under
the old and new methodologies
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score for enforcing
contracts under new methodology
Distance to frontier score for enforcing
contracts under old methodology

as measured by Doing Business. In the
old case study, by contrast, Croatia’s
export and import partners were outside
the European Union, resulting in much
greater measures of the time and cost for
documentary and border compliance.
This year’s report also introduces two
other changes for the trading across
borders indicators. First, it is no longer
assumed that payment is made through
a letter of credit. And second, while data
on the documents needed to export and
import are still collected, these data are
no longer included when calculating the
ranking on the ease of trading across bor-
ders—because for traders, what matters
in the end is the time and cost to trade.
The time and cost for documentary and
border compliance to export and import
are part of the distance to frontier score
and therefore affect the ease of doing
business ranking. The time and cost for
domestic transport to export and import
are not included in the distance to frontier
score, though the data for these indica-
tors are published in this year’s report. For
a fuller discussion of the methodology for
the trading across borders indicators, see
the data notes. For an analysis of the data
for the indicators, see the case study on
trading across borders.
CHANGES UNDER
CONSIDERATION
The paying taxes indicators measure the
taxes and mandatory contributions that
a medium-size company must pay in a
given year as well as the administrative
burden of paying taxes and contributions.
The indicators now measure only the
administrative burden associated with
preparing, filing and paying three major
types of taxes (profit taxes, consumption
taxes and labor taxes). But the postfiling
process—involving tax audits, tax refunds
and tax appeals—can also impose a
substantial administrative burden on
firms. An expansion of the paying taxes
indicator set to include measures of the
postfiling process is under consideration
for next year’s report.
A new indicator would capture the
process and time related to auditing tax
returns for correctness, which may involve
desk audits, field audits or inspections;
the process and time involved in claim-
ing refunds of value added taxes; and the
administrative process and time related to
the first level of the tax appeal process.
For a complete discussion of the method-
ology for the paying taxes indicators, see
the data notes.
NOTES
1. For more information on the Independent
Panel on Doing Business and its work, see its
website at http://www.dbrpanel.org.
2. For more details, see the chapter in Doing
Business 2014 on research on the effects of
business regulations.
FIGURE 3.9 Comparing the distance to frontier scores for trading across borders
under the old and new methodologies
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score for trading
across borders under new methodology
Croatia
Distance to frontier score for trading
across borders under old methodology

Doing Business 2016
E
very year a growing number of
researchers provide new insights
into the relationship between
changes in domestic business regula-
tion and important markers of economic
prosperity—such as the number of new
businesses in an economy, the average
size of companies, the productivity of
those companies and average incomes
nationwide.
While there are many determinants of
economic growth, there is mounting
evidence that improving the regula-
tory environment for domestic small
and medium-size businesses can make
a difference. Recent research shows
that moving from the lowest quartile of
improvement in business regulation to
the highest one is associated with an
increase of around 0.8 percentage points
in an economy’s annual GDP per capita
growth rate.1
New research evidence
also suggests that an important determi-
nant of firm entry is the ease of paying
taxes, regardless of the corporate tax
rate. A study of 118 economies over six
years found that a 10% reduction in the
administrative burden of tax compliance
—as measured by the number of tax pay-
ments per year and the time required to
pay taxes—led to a 3% increase in annual
business entry rates.2
Clear regulations and simple bureaucratic
processes are important in part because
they mitigate risks for entrepreneurs,
new and experienced alike. Research
evidence shows that reforms intended to
encourage new business entry also help
existing businesses grow. In the Russian
Federation, for example, research found
that streamlining licensing procedures
and reducing the number of state inspec-
tions required for small businesses helped
these businesses increase annual sales in
regions with strong government institu-
tions.3
Simplifying licensing requirements
in these regions is associated with a 4.5
percentage point increase in annual sales
growth, while reducing the number of
state inspections per business led to a 12
percentage point increase.
While there is clear evidence that stream-
lining regulatory procedures can encour-
age business entry, business growth and
rising incomes, it is just as important to
identify any obstacles that could prevent
regulatory reform from delivering these
benefits. Regulatory reform is only as
effective as its implementation. Without
a robust and efficient judicial system,
entrepreneurs cannot trust that the rights
and responsibilities articulated in new
laws and regulations will be respected
in practice. Not surprisingly, researchers
have found that stronger legal systems
are positively correlated with greater
creation, growth and productivity of
businesses.
One way that a strong legal system
supports the creation and growth of busi-
nesses is by improving contract enforce-
ment. According to recent research in
38 European countries, legal systems
that resolve incoming cases quickly are
strongly correlated with confidence in
contract enforcement.4
Where contract
enforcement is reliable, hiring new people
or purchasing new equipment is less
ƒƒ Doing Business has recorded more than
2,600 regulatory reforms making it
easier to do business since 2004.
ƒƒ In the year ending June 1, 2015,
122 economies implemented at least
one such reform in areas measured by
Doing Business—231 in total.
ƒƒ Among reforms to reduce the
complexity and cost of regulatory
processes, those in the area of starting
a business were the most common in
2014/15, just as in the previous year.
The next most common were reforms
in the areas of paying taxes, getting
electricity and registering property.
ƒƒ Among reforms to strengthen legal
institutions in 2014/15, the largest
number was recorded in the area of
getting credit and the smallest in the
area of resolving insolvency.
ƒƒ Members of the Organization for
the Harmonization of Business Law
in Africa were particularly active: 14
of the 17 economies implemented
business regulation reforms in the
past year—29 in total. Twenty-four of
these reforms reduced the complexity
and cost of regulatory processes,
while the other five strengthened legal
institutions.
ƒƒ Sub-Saharan Africa alone accounted
for about 30% of the regulatory
reforms making it easier to do business
in 2014/15, followed closely by Europe
and Central Asia.
Reforming the business
environment in 2014/15

35Reforming the business environment in 2014/15
risky.5
In turn, acquiring new employees
and capital eases business entry and
facilitates business growth.
The importance of a robust legal system to
a thriving business environment is particu-
larly evident at the subnational level, where
varied implementation of national policies
in different court jurisdictions can help
identify the effect of regulatory reforms.
For example, recent research in Spain found
that provinces with more efficient judicial
systems had larger firms as well as higher
rates of firm entry.6
In fact, if the least effi-
cient provincial court improved to the
level of the most efficient one, its province
would see a relative increase in firm size of
0.6–2.8% and a relative increase in busi-
ness entry rate of 8.8–9.5%.
These findings are supported by similar
research in other countries. One study
focused on Italy, where resolving a
commercial dispute through the courts
in 2013 took an average of 1,210 days
as measured by Doing Business—about
three times as long as for a similar case
in Germany or the United Kingdom.7
So it
is perhaps unsurprising that firms in Italy
are 40% smaller on average than those
in other European countries. Research
found that halving the length of civil
proceedings in Italian courts would lead
to an 8–12% increase in average firm size
in the municipalities affected. Conversely,
if the performance of the most efficient
municipal court declined to the level of
the least efficient one, this would be likely
to reduce the average firm size in that
municipality by 23%.
The relationship between judicial quality
and firm size has also been established in
Mexico, where strong judicial systems are
correlated with greater firm size in terms
of output, employment and fixed assets.8
Research shows that if the Mexican state
with the worst judicial quality improved
its performance to match that of the
state with the best judicial quality, the
average firm size in that state would
double. Perhaps unsurprisingly, Mexican
states with better courts also have more
productive businesses—and it is estimat-
ed that the productivity gains associated
with moving from worst to best practice
in judicial quality would increase state
GDP by as much as 8%.
Of course, the judicial system is not the
only public institution that can influ-
ence the implementation of regulatory
reform for small businesses. In Russia,
for example, evidence shows that regu-
latory reform to encourage business
entry was most successful in regions
with greater government transparency,
a more educated citizenry and greater
fiscal autonomy.9
In a region meeting
these criteria, the probability of fully
implementing reforms was expected to
be 8 percentage points higher, and the
probability of meeting business entry
targets 11 percentage points higher.
Moreover, the share of new firms using
illegitimate business licenses was
expected to be 52 percentage points
lower in a good-governance region.
Beyond high-quality government insti-
tutions, this body of research underlines
the importance of political will for the
success of reform efforts. In Tanzania,
for example, the government’s Property
and Business Formalization Program
was a landmark initiative aimed at
bringing street vendors into the formal
business sector.10
Because of conflict-
ing priorities, however, the program
was never implemented. Its future suc-
cess will depend on renewed political
commitment.
Research has revealed many potential
benefits of a business-friendly regulatory
environment, including greater business
entry and stronger business growth
and productivity. Studies have also
underlined the institutional and political
obstacles that prevent promising regula-
tory reforms from fully materializing.
As researchers continue to probe the
relationship between regulatory reform
and its outcomes, the Doing Business
indicators continue to contribute to this
area of analysis.
WHO IMPROVED THE MOST
IN 2014/15?
In the year from June 1, 2014, to June 1,
2015, Doing Business recorded 231 regula-
toryreformsmakingiteasiertodobusiness
—with 122 economies implementing at
least one. About 71% of these reforms
were aimed at reducing the complexity
and cost of regulatory processes, while
the rest were focused on strengthening
legal institutions (table 4.1). This pattern,
similar to that in previous years, reflects
the greater difficulty of implementing legal
reforms and the time required to change
the way that legal institutions function.
Sub-Saharan Africa alone accounted for
about 30% of the regulatory reforms mak-
ing it easier to do business in 2014/15,
followed closely by Europe and Central
Asia. Moreover, Europe and Central Asia
had both the largest share of economies
implementing at least one reform and
the largest average number of regulatory
reforms per economy, with 2.3 (figure 4.1).
Nine economies in the region imple-
mented at least three reforms; Kazakhstan
accounted for the largest number, with
seven. Latin America and the Caribbean
and East Asia and the Pacific had the
smallest shares of economies implement-
ing regulatory reforms, and the OECD
high-income group the smallest average
number of reforms per economy (only
0.7). The Middle East and North Africa
was also among the regions with a small
number of reforms per economy (1.1).
That said, Morocco and the United Arab
Emirates each implemented four.
The 10 economies showing the most
notable improvement in performance on
the Doing Business indicators in 2014/15
were Costa Rica, Uganda, Kenya, Cyprus,
Mauritania, Uzbekistan, Kazakhstan,
Jamaica, Senegal and Benin (table 4.2).
These countries together implemented 39
businessregulationreformsacross10ofthe
areas measured by Doing Business. Senegal
(with four reforms) and Benin (with three)
join the list of top improvers for the second

consecutive year. Senegal made starting a
business easier by reducing the minimum
capital requirement. The electricity utility
in Senegal made getting a new connection
less time-consuming by streamlining the
review of applications and the process for
the final connection as well as by reducing
the time needed to obtain an excavation
permit. The utility also lowered the secu-
rity deposit required. In addition, Senegal
made property transfers less costly by
lowering the property transfer tax. Senegal
also made enforcing contracts easier, by
introducing a law that regulates judicial and
conventional voluntary mediation. Among
other changes, Benin made dealing with
construction permits less time-consuming
by establishing a one-stop shop and reduc-
ing the number of signatories required on
building permits.
Among the 10 top improvers, Costa Rica
made the biggest advance toward the reg-
ulatory frontier, thanks to three business
regulation reforms. The electricity utility in
Costa Rica made getting a new connection
easier by reducing the time required for
preparing the design of the external con-
nection works and for installing the meter
and starting the flow of electricity. In addi-
tion, Costa Rica improved access to credit
by adopting a new secured transactions
law that establishes a functional secured
transactions system and a modern, cen-
tralized, notice-based collateral registry.
The law also broadens the range of assets
that can be used as collateral, allows a
general description of assets granted
as collateral and permits out-of-court
enforcement of collateral. Finally, Costa
Rica made it easier to pay taxes by pro-
moting the use of its electronic filing and
payment system for corporate income tax
and general sales tax.
Overall, the 10 top improvers imple-
mented the most regulatory reforms in
the area of starting a business, followed
by getting credit, getting electricity and
registering property. Among the five that
are Sub-Saharan African economies, all
implemented reforms aimed at improving
company registration processes. Kenya
reduced the time it takes to assess and
pay stamp duty. Mauritania eliminated
the minimum capital requirement, while
Senegal lowered it. Uganda introduced
an online system for obtaining trading
licenses. Benin and Uganda both reduced
business incorporation fees.
These five Sub-Saharan African economies
also introduced changes in other areas.
Kenya made property transfers faster by
improving electronic document manage-
ment at the land registry and introducing
a unified form for registration. Kenya also
improved access to credit information, by
passinglegislationthatallowsthesharingof
positive information and by expanding bor-
rower coverage. In Uganda the electricity
utility reduced delays for new connections
by deploying additional customer service
engineers and reducing the time needed
Figure 4.1 Europe and Central Asia had the largest share of economies making it
easier to do business in 2014/15
0
20
40
60
80
100
Latin America
Caribbean
East Asia
Pacific
Middle East
North Africa
OECD
high income
Sub-Saharan
Africa
South AsiaEurope
Central Asia
Share of economies with at least one reform Average number of reforms per economy
0
1
2
3
4
5
Share of economies with at
least one reform making it
easier to do business (%)
Average number of
reforms per economy
2.3
1.1
0.7 0.8
1.5
1.1 1.1
Table 4.1 Reforms making it easier to do business in 2014/15 and in the past
five years
Area of reform
Number of
reforms in
2014/15
Average annual
number of
reforms in past
five years
Economy
improving the
most in area in
2014/15
Complexity and cost of regulatory processes
Starting a business 45 46 Myanmar
Dealing with construction permits 17 18 Serbia
Getting electricity 22 14 Oman
Registering property 22 22 Saudi Arabia
Paying taxes 40 33 Serbia
Trading across borders 19 20 Armenia
Strength of legal institutions
Getting credit—legal rights 10 11 Costa Rica
Getting credit—credit information 22 21 Kenya and Uganda
Protecting minority investors 14 16 Honduras
Enforcing contracts 11 12 Italy
Resolving insolvency 9 16 Cyprus

for the inspection and meter installation.
By eliminating inefficiencies, the utilities in
Kenya and Senegal also reduced the time
required for getting new connections.
Besides Costa Rica, Jamaica is the only
other economy in Latin America and the
Caribbean that made it to the list of 10
top improvers. Jamaica made starting a
business easier by launching an electronic
interface between the Companies Office
and the Tax Administration. It made
dealing with construction permits easier
by implementing a new workflow for
processing building permit applications.
Jamaica made paying taxes both easier
and less costly by encouraging taxpayers
to pay their taxes online, introducing an
employment tax credit and increasing
the depreciation rate for industrial build-
ings. At the same time, however, Jamaica
also introduced a minimum business
tax, raised the contribution rate for the
national insurance scheme and increased
the rates for stamp duty, the property tax,
the property transfer tax and the educa-
tion tax. Finally, Jamaica made resolving
insolvency easier by introducing a formal
reorganization procedure; introducing
provisions to facilitate the continuation of
the debtor’s business during insolvency
proceedings and allow creditors greater
participation in important decisions dur-
ing the proceedings; and establishing a
public office responsible for the general
administration of insolvency proceedings.
Three of the 10 top improvers reformed
their contract enforcement system.
Both Cyprus and Kazakhstan introduced
fast-track simplified procedures for
small claims. In addition, Kazakhstan
streamlined the rules for enforcement
proceedings. Three of the top improvers
implemented reforms aimed at improving
their insolvency framework in 2014/15,
up from only one in the previous year.
Mauritania and Benin are the only top
improvers that reformed their internation-
al trade practices. Mauritania reduced the
time for documentary and border compli-
ance for importing, while Benin reduced
the time for border compliance for both
exporting and importing by further devel-
oping its electronic single-window system.
Being recognized as top improvers does
not mean that these 10 economies have
exemplary business regulation; instead,
it shows that thanks to serious efforts in
regulatory reform in the past year, they
made the biggest advances toward the
frontier in regulatory practice (figure 4.2).
By contrast, among the three economies
worldwide that are closest to the frontier,
Singapore implemented no reforms
in 2014/15 in the areas measured by
Doing Business while New Zealand and
Denmark implemented one reform each.
Conversely, three other economies that
made substantial advances toward the
frontier—Myanmar, Brunei Darussalam
and the Democratic Republic of Congo—
are not considered top improvers
because they implemented fewer than
three reforms making it easier to do busi-
ness, with two each.
HIGHLIGHTS OF REFORMS
REDUCING REGULATORY
COMPLEXITY AND COST
In 2014/15, 106 economies imple-
mented 165 reforms aimed at reducing
the complexity and cost of regulatory
processes. Almost 30% of the reforms
were in Sub-Saharan Africa. Among the
areas tracked by Doing Business indica-
tors, starting a business accounted for
Table 4.2 The 10 economies improving the most across three or more areas measured by Doing Business in 2014/15
Economy
Ease of
doing
business
rank
Reforms making it easier to do business
Starting a
business
Dealing with
construction
permits
Getting
electricity
Registering
property
Getting
credit
Protecting
minority
investors
Paying
taxes
Trading
across
borders
Enforcing
contracts
Resolving
insolvency
Costa Rica 58 ✔ ✔ ✔
Uganda 122 ✔ ✔ ✔
Kenya 108 ✔ ✔ ✔ ✔
Cyprus 47 ✔ ✔ ✔ ✔ ✔
Mauritania 168 ✔ ✔ ✔
Uzbekistan 87 ✔ ✔ ✔
Kazakhstan 41 ✔ ✔ ✔ ✔ ✔ ✔ ✔
Jamaica 64 ✔ ✔ ✔ ✔
Senegal 153 ✔ ✔ ✔ ✔
Benin 158 ✔ ✔ ✔
Note: Economies are selected on the basis of the number of their reforms and ranked on how much their distance to frontier score improved. First, Doing Business selects the economies
that implemented reforms making it easier to do business in 3 or more of the 10 areas included in this year’s aggregate distance to frontier score. Regulatory changes making it more
difficult to do business are subtracted from the number of those making it easier. Second, Doing Business ranks these economies on the increase in their distance to frontier score from the
previous year.The improvement in their score is calculated not by using the data published in 2014 but by using comparable data that capture data revisions and methodology changes.
The choice of the most improved economies is determined by the largest improvements in the distance to frontier score among those with at least three reforms.

the largest number of these reforms,
followed by paying taxes, getting elec-
tricity and registering property. The few-
est were in trading across borders and
dealing with construction permits. The
reforms in all these areas allow entre-
preneurs to save on the time and cost
of regulatory compliance—and these
time and cost savings translate directly
into greater profitability for private busi-
nesses and greater fiscal productivity for
governments.
Moreover, economies that implemented
reforms reducing the complexity and
cost of regulatory processes in one area
measured by Doing Business were also
likely to do so in at least one other. Indeed,
more than 40% of these economies had
reforms reducing regulatory complexity
and cost in at least two areas, and more
than 20% had such reforms in at least
three areas. Starting a business, as the
area with the largest number of reforms
recorded by Doing Business, is the most
likely to be paired with other areas. For
example, more than half the economies
with a reform in the area of dealing with
construction permits also had a reform in
the area of starting a business. So did more
than half the economies that had a reform
in the area of getting electricity. And more
than a third of economies that reformed
in the area of registering property also
reformed their company start-up process.
Streamlining business
incorporation
Economies across all regions continue to
streamline the formalities for registering a
business.In2014/15,45economiesmade
starting a business easier by reducing the
procedures, time or cost associated with
the process. Some reduced or eliminated
the minimum capital requirement—
including Gabon, Guinea, Kuwait,
Mauritania, Myanmar, Niger and Senegal.
Others stopped requiring a company seal
to do business—such as Azerbaijan;
Hong Kong SAR, China; and Kazakhstan.
And still others considerably reduced
the time required to register a company,
including the former Yugoslav Republic of
Macedonia, Mongolia and Sweden.
Myanmar made the biggest improve-
ment in the ease of starting a business
in 2014/15. Besides eliminating its mini-
mum capital requirement, it also lowered
incorporation fees and abolished the
requirement to have separate temporary
and permanent certificates of incorpora-
tion. FYR Macedonia, another economy
that notably improved the ease of start-
ing a business, established an electronic
one-stop shop for registering all new
firms. The registration is done entirely on
an electronic platform through a certified
government agent, who is authorized to
prepare an application, draft and review
company deeds, and convert paper docu-
ments into a digital format. Once all the
Figure 4.2 How far have economies moved toward the frontier in regulatory practice since 2014?
25
0
50
75
100 Regulatory frontier
Finland
Vanuatu
Singapore
Denmark
HongKongSAR,China
UnitedKingdom
UnitedStates
Sweden
Taiwan,China
Macedonia,FYR
Canada
NewZealand
Korea,Rep.
Iceland
Malaysia
Australia
Norway
Germany
Estonia
Ireland
Lithuania
Latvia
Georgia
Poland
France
Netherlands
Slovenia
SlovakRepublic
UnitedArabEmirates
Mauritius
Spain
Japan
Armenia
CzechRepublic
Romania
Bulgaria
Mexico
Croatia
Kazakhstan
Belarus
Montenegro
Cyprus
Chile
RussianFederation
Colombia
Turkey
Mongolia
PuertoRico(U.S.)
CostaRica
Serbia
Rwanda
Azerbaijan
Jamaica
Bahrain
Kosovo
KyrgyzRepublic
Oman
Botswana
Tunisia
Morocco
SanMarino
Tonga
BosniaandHerzegovina
Malta
Guatemala
SaudiArabia
Ukraine
Uzbekistan
Vietnam
ElSalvador
DominicanRepublic
BruneiDarussalam
Austria
Portugal
Switzerland
Hungary
Belgium
Italy
Thailand
Peru
Moldova
Israel
Greece
Luxembourg
Qatar
Panama
Bhutan
SouthAfrica
St.Lucia
China
Fiji
TrinidadandTobago
Dominica
Uruguay
2015
2014
Note: The distance to frontier score shows how far on average an economy is at a point in time from the best performance achieved by any economy on each Doing Business
indicator since 2005 or the third year in which data for the indicator were collected. The measure is normalized to range from 0 to 100, with 100 representing the frontier. The
vertical bars show the change in the distance to frontier score from 2014 to 2015; for more details, see the note to table 1.1 in the overview. The 25 economies improving the
most are highlighted in red.

information is prepared, the agent digital-
ly signs the forms and submits the entire
registration packet to the Central Register
on behalf of the company founders. The
new process eliminated the requirement
for notary services to register a business,
thereby reducing the number of proce-
dures, time and cost required for start-up.
FYR Macedonia now ranks number two
on the ease of starting a business, after
New Zealand.
In recent years substantial regulatory
reform efforts have been undertaken by
the 17 member states of the Organization
for the Harmonization of Business Law
in Africa, known by its French acronym
OHADA (box 4.1). Among other things,
the organization has encouraged mem-
ber states to reduce their minimum capi-
tal requirements. Four member states
passed national legislation to this effect
in 2013/14. Seven did so in 2014/15,
resulting in substantial reductions in
the capital required (figure 4.3). The
Democratic Republic of Congo reduced
its minimum capital requirement from
500% of income per capita in 2014
to 11%—and Burkina Faso reduced its
requirement from 308% of income per
capita to 29%.
OHADA also recommends that national
governments eliminate the requirement
for the use of notary services in company
registration. The majority of member
states have followed this recommenda-
tion, allowing companies to register at a
one-stop shop either online or in person
without resorting to the use of notary
services. But many entrepreneurs in
OHADA economies still prefer to solicit
notary services both out of habit and to
ensure that the registration process runs
smoothly. As experience in other econo-
mies shows, the practice of using notary
services can be deeply rooted in the
start-up process and business habits can
take time to change (for more on this, see
the case study on starting a business).
Consolidating procedures for
building permits
In 2014/15, 17 economies reformed
their construction permitting process.
Several of them streamlined internal
review processes for building permit
applications, making them faster and
more efficient. Benin created a one-stop
shop for building permits that began
operating in January 2015 and reduced
the number of signatories required on
building permits from five to two. Sri
Lanka created a working group of differ-
ent agencies involved in issuing building
permits so that applicants no longer need
to obtain approvals from them separately.
The United Arab Emirates combined civil
defense approvals with the building per-
mit application process.
Kuwait
Seychelles
Samoa
Zambia
Albania
Namibia
Philippines
AntiguaandBarbuda
Swaziland
Bahamas,The
SriLanka
Kenya
Indonesia
Honduras
St.VincentandtheGrenadines
SolomonIslands
Jordan
Ghana
Lesotho
Brazil
Ecuador
Barbados
Argentina
Uganda
Lebanon
Nicaragua
CaboVerde
Cambodia
WestBankandGaza
India
Tajikistan
LaoPDR
Grenada
Guyana
Tanzania
Malawi
Côted’Ivoire
BurkinaFaso
Mali
PapuaNewGuinea
Ethiopia
SierraLeone
Kiribati
Togo
Senegal
Comoros
Zimbabwe
Suriname
Bolivia
Benin
Sudan
Niger
Gabon
Algeria
Madagascar
Guinea
Myanmar
Mauritania
Nigeria
Yemen,Rep.
Djibouti
Cameroon
Timor-Leste
Bangladesh
SyrianArabRepublic
Congo,Rep.
Guinea-Bissau
Liberia
EquatorialGuinea
Angola
Haiti
Venezuela,RB
SouthSudan
Libya
Eritrea
Chad
Congo,Dem.Rep.
Iran,IslamicRep.
Nepal
Belize
Maldives
Mozambique
Iraq
Afghanistan
CentralAfricanRepublic
SãoToméandPríncipe
Burundi
Gambia,The
Micronesia,Fed.Sts.
MarshallIslands
Palau
Pakistan
Egypt,ArabRep.
St.KittsandNevis
Paraguay

BOX 4.1 OHADA members continue to systematically improve their business environment
OHADA is a supranational entity that governs certain aspects of doing business in 17 West and Central African countries.a
Member states voluntarily sacrifice some sovereign authority in order to establish a homogeneous cross-border regulatory
regime for business. The aim is to promote investment in West and Central Africa, particularly foreign investment.b
Efforts by OHADA member states to streamline and standardize regulatory processes have helped make it easier to do business.
In 2014/15 Doing Business recorded business regulation reforms in 14 of the 17 OHADA member states—29 in total. Twenty-four
of these reforms reduced the complexity and cost of regulatory processes, while the other five strengthened legal institutions.
Only Cameroon, the Central African Republic and Equatorial Guinea did not reform in any of the areas measured by Doing
Business in the past year.
Nearly a third of the business regulation reforms implemented by OHADA members in 2014/15 made it easier for entrepreneurs
to start a business. Seven OHADA members reduced their minimum capital requirement—Burkina Faso, the Comoros, the
Democratic Republic of Congo, Gabon, Guinea, Niger and Senegal. Benin made starting a business less costly by reducing the
fees to file company documents at its one-stop shop. Togo reduced the fees to register with the tax authority.
At the same time, six OHADA members implemented reforms making it less costly to register a property transfer. Chad, the
Republic of Congo, Côte d’Ivoire, Gabon and Senegal lowered their property transfer tax rates. Guinea-Bissau lowered its proper-
ty registration tax. Three other OHADA members implemented reforms making it easier to deal with construction permits. Benin
established a one-stop shop and reduced the number of signatories required for a building permit. The Democratic Republic of
Congo halved the cost of the permit itself. Niger reduced the time required to obtain a water connection for a business.
These ongoing efforts have paid off. Since 2006 OHADA members have reduced the time to start a business by more than 60%
on average, the time to register property by 25% and the time to deal with construction permits by 26% (see figure). The overall
time to start a business, register property and deal with construction permits has fallen by 31% on average, and the overall cost
by 68%.
OHADA members have made big improvements in the average efficiency of some regulatory processes since 2006
days
days
days
Reduced the time it takes to
start a business by
61%
67
26
register property by
25%
93
70
deal with construction permits by
26%
231
172
Other regulatory reforms implemented in OHADA members in 2014/15 made it easier to get electricity or trade across borders.
The utility in Senegal made getting an electricity connection easier by reducing the time needed to obtain an excavation permit.
The utility in Togo streamlined the process for getting a new connection through several initiatives—including by establishing
a single window where customers can pay all fees at once—and also reduced the size of the security deposit required. Côte
d’Ivoire made it easier to trade across borders by streamlining the documentation required for certain imports.
Among the reforms aimed at strengthening legal institutions in 2014/15, Mali and Niger improved access to credit information
by formalizing the licensing process and role for domestic credit bureaus. Côte d’Ivoire and Senegal made contract enforcement
more efficient by introducing laws regulating judicial and conventional voluntary mediation.
Reforming legal institutions is not an easy undertaking and commonly takes years to yield noticeable results. But improving the
quality, efficiency and reliability of courts and legal frameworks in the OHADA member states would boost investor confidence
and thus help to accelerate growth and development.
a. The 17 members of OHADA are Benin, Burkina Faso, Cameroon, the Central African Republic, Chad, the Comoros, the Democratic Republic of Congo, the Republic of
Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal and Togo.
b. Dickerson 2005.

Azerbaijan was among those making the
biggest improvements in the ease of deal-
ing with construction permits. The country
initiated a series of changes in January
2013, when its new Urban Planning and
Construction Code came into effect. The
new construction code consolidated pre-
vious construction legislation, streamlined
procedures related to the issuance of
building permits and established official
time limits for certain procedures. A
decree adopted in November 2014 result-
ed in the creation of a one-stop shop for
building permits, housed at the Ministry of
Emergency Situations.
Before the creation of the one-stop
shop, applicants for a building permit
in Azerbaijan had to obtain technical
approval for designs from six separate
agencies.11
Now they can obtain all the
preapprovals required through a single
interaction at the Ministry of Emergency
Situations. Representatives of different
agencies are located at the ministry and
able to issue all the required clearances,
including ecology, sanitation and epide-
miology, and fire and seismic safety. In
addition, the newly streamlined process
eliminated the requirement to register
the approved project documentation
with the State Supervision Agency for
Construction Safety. As a result of the
one-stop shop, seven procedures were
consolidated into one (figure 4.4).
Technical experts at the one-stop shop
have 30 days to examine all the appli-
cation materials for a building permit.
An application is normally reviewed
within 20 days. If the review turns up any
shortcomings, the applicant is contacted
directly to make any necessary changes
within 10 days. Otherwise, the building
permit is issued within three months.
Making access to electricity
faster and more efficient
Doing Business recorded 22 reforms
making it easier to get electricity in
2014/15. Most of the reforms reduced
the number of days required to complete
a certain procedure, including those in
Botswana; Cyprus; Taiwan, China; Togo;
and Vietnam. Togo undertook a range
of initiatives to expedite new electricity
connections (figure 4.5). Among other
changes, its electricity utility, Compagnie
Energie Electrique du Togo (CEET),
established a single window to process
applications for commercial customers.
This new system fast-tracked document
processing, substantially reducing the
number of days required to get an elec-
tricity connection.
To further reduce the time needed to get
a new connection, Togo introduced legal
time requirements that CEET must meet
when processing new applications and
providing connection estimates. To meet
the time objectives, the utility company
hired more engineers in 2014/15. It also
improved communication with custom-
ers. For example, the utility began to pub-
lish information online and to distribute
pamphlets outlining all the requirements
for applying for a new connection. As a
result, the number of incomplete and
unprocessed applications has decreased.
Figure 4.3 Seven OHADA member states reduced their minimum capital requirement
in 2014/15
0
100
200
300
400
500
SenegalGabonComorosBurkina FasoGuineaNigerCongo,
Dem. Rep.
Minimum capital requirement
(% of income per capita)
2014 2015
Figure 4.4 Azerbaijan’s one-stop shop combined seven procedures into a single step
in 2014/15
{!
Baku City
Executive
Authority Ministry of
Emergency
Situations
one-stop shop
3. Permit
1. Preapproval
Architecture and city
building approval
Fire safety clearance
Sanitation and
epidemiology clearance
Water and sewerage
clearance
Ecology and natural
resources approval
Construction safety expert
opinion
Project registration with
construction safety agency
2. Submission
of request

In addition, regulatory changes have
reduced the number of interactions
required between CEET and its custom-
ers when they apply for an electric-
ity connection. Customers can now pay
connection fees, security deposits and
subscription contract fees all at once. In
addition, the external connection works
and meter installation can now be com-
pleted through a single interaction with
the utility.
Elsewhere, utilities in India and Russia
reduced the time required to obtain an
electricity connection by eliminating
redundant inspections, while utilities
in such countries as Senegal undertook
commitments to process new applica-
tions more quickly. The utility in Delhi
eliminated an inspection of internal
wiring by the Electrical Inspectorate,
cutting out the need for additional
customer interactions with other agen-
cies. Now the utility is the only agency
certifying the safety standards of the
internal works. In Russia utility com-
panies in Moscow and St. Petersburg
signed cooperation agreements with
electricity providers and became
the sole agencies checking metering
devices, thereby eliminating redundant
inspections. The utility in Senegal, by
hiring more personnel, reduced the
time needed to review applications and
issue technical studies.
Another common feature of electricity
reforms in the past year was improve-
ment in the efficiency of distribution
utilities’ internal processes. For example,
in December 2014 the utility in Botswana
began to enforce service delivery time-
lines for its customer services team,
leading to a reduction in the time required
to connect to electricity from 121 days to
77. The utility also started to maintain
a readily available stock of distribution
transformers. By eliminating the need
to wait for transformers imported from
overseas, this led to a further reduction in
the time required.
Other economies made getting an
electricity connection easier by eliminat-
ing redundant approval requirements.
Myanmar substantially reduced the time
for getting a new connection in Yangon
by eliminating the need for the Ministry
of Electric Power to issue national-level
approvals for each connection request.
In Cambodia and Oman changes were
made to improve the reliability of power
supply. In January 2015 the utility in Oman
began recording the duration and frequen-
cy of outages to compute the annual sys-
tem average interruption duration index
(SAIDI) and system average interruption
frequency index (SAIFI).12
This enabled
the utility to analyze outage data, identify
and eliminate inefficiencies and accurately
assess the impact of these initiatives on
the distribution network.
Integrating property
registration systems
Twenty-two economies made register-
ing a property transfer easier in 2014/15.
The most common improvements
included reducing property transfer
taxes, combining or eliminating registra-
tion procedures, integrating electronic
platforms, introducing expedited pro-
cedures and making general gains in
administrative efficiency.
Kazakhstan and Bhutan were among
the economies that made the biggest
improvements in the ease of registering
property in 2014/15. In December 2014
Kazakhstan eliminated the need to obtain
an updated technical passport for a prop-
erty transfer as well as the requirement to
get the seller’s and buyer’s incorporation
documents notarized. These measures
eliminated one procedure and reduced
the time required for a property transfer
by 6.5 days (figure 4.6).
Bhutan launched an online land trans-
action system, E-Saktor, in 2014. The
new system connects the databases
of the Thimphu Municipality and the
National Land Commission. This has
helped streamline internal procedures by
allowing users to check information on
property boundaries and ownership. In
addition, the system allows land transac-
tions to be submitted electronically to the
National Land Commission for approval.
Landowners can use the online platform
to see whether all transactions related
to their land are carried out in accor-
dance with legal requirements. Thanks
Figure 4.5 Togo reduced the time required to obtain an electricity connection by a
third
0
10
20
30
40
50
60
70
80
Receive meter
installation, final
connection and flow of
electricity (2014)
Receive external
connection works by CEET,
meter installation, final
connection and flow of
electricity (2015)
Receive external
inspection by CEET
Submit application,
await estimate and sign
contract with CEET
Time to get electricity (days)
Procedures
2014 2015
Procedure 4
eliminated and total
time cut from
74 days to 51

to improved communication between
the municipality and the National Land
Commission, the land registry was able
to enhance its services and reduce the
time required to transfer property by 15
days.
Among regions, Sub-Saharan Africa
accounted for the most reforms relating
to the transfer of property in 2014/15. For
example, Nigeria reduced the consent fee
and stamp duty paid during a property
transfer. Cabo Verde, Chad, the Republic
of Congo, Côte d’Ivoire, Gabon, Guinea-
Bissau, Madagascar and Senegal made
property transfers less costly by lowering
property transfer taxes.
Six economies in Europe and Central Asia
simplified property transfers by eliminat-
ing unnecessary procedures and reducing
the time required to complete separate
registration formalities. For example,
Belarus and Russia introduced effective
time limits for the state registration of a
property transfer. Latvia introduced a new
application form for the state registration,
eliminating the requirement to submit a
statement of the buyer’s shareholders
as a separate document. Uzbekistan
introduced a new form for property
records, which incorporated informa-
tion on all encumbrances, restrictions
and tax arrears. The adoption of the
new form eliminated the requirement to
obtain three separate nonencumbrance
certificates.
Introducing electronic filing for
tax compliance
Spain was among the economies
that made the greatest advances in
tax payment systems in 2014/15. It
implemented a comprehensive tax
reform program in 2014 aimed at sup-
porting entrepreneurs and encouraging
investment. The objective was both to
streamline and simplify tax compliance
and to reduce the effective tax burden
on businesses. In the same year Spain
launched Cl@ve, an integrated online
platform for the entire public adminis-
trative sector. The new system made
accessing electronic services provided
by public agencies substantially easier.
Among other things, the new system
introduced a new way of submitting tax
returns online and retrieving historical
data electronically. It also provides
individualized information on tax
procedures. In addition, in 2014 Spain
simplified compliance with value added
tax (VAT) obligations by introducing a
single electronic form within the Cl@ve
system. The new system also enables
taxpayers to retrieve previous years’
VAT forms electronically and use them
to automatically populate some of the
fields in the current year’s forms. In
addition, Spain extended and promoted
the use of electronic invoicing beginning
in January 2013,13
though the majority
of companies started using electronic
invoices only in fiscal 2014. Altogether,
these initiatives have made it easier to
comply with VAT obligations and file
VAT returns.
In line with its intention to reduce the tax
burden on domestic enterprises, Spain
reduced the corporate income tax rate
for new companies incorporated on or
after January 1, 2013.14
Subsequently,
it reduced the effective rate for capital
gains tax from 24% to 8%. Spain also
reduced the environmental tax rate in
2014. These changes to the corporate tax
regime reduced the total tax rate (figure
4.7). At the same time, however, other
measures limited the deductibility of
certain expenses to broaden the tax base
for corporate income tax.
The most common feature of reforms
in the area of paying taxes over the
past year was the implementation
or enhancement of electronic filing
and payment systems. Besides Spain,
17 other economies introduced or
enhanced systems for filing and paying
taxes online (see table 4A.1 at the end of
this chapter). Taxpayers in these econo-
mies now file tax returns electronically,
spending less time to prepare, file and
pay taxes. Beyond saving businesses
time, electronic filing also helps prevent
human errors in returns. And by increas-
ing transparency, electronic filing limits
opportunities for corruption and bribery.
Four economies—The Gambia; Hong
Kong SAR, China; Maldives; and
Vietnam—took other measures to sim-
plify compliance with tax obligations.
For example, The Gambia improved its
bookkeeping system for VAT accounts to
better track the input and output records
required for filing VAT returns.
Figure 4.6 Kazakhstan made registering a property transfer faster and easier
0
2
4
6
8
10
12
14
Register title at
the Registration
Service Committee
Get sale-purchase
agreement notarized
Obtain
nonencumbrance
certificate
Obtain technical
passport for the property
Time to register property (days)
Procedures
2014 2015
One procedure
eliminated, and
total time reduced
by 6.5 days

Other economies directed efforts at
reducing the financial burden of taxes on
businesses and keeping tax rates at a rea-
sonable level to encourage development
of the private sector and formalization of
businesses. This is particularly important
for small and medium-size enterprises,
which contribute to growth and job cre-
ation but do not add significantly to tax
revenue.15
Seventeen economies reduced
profit tax rates in fiscal 2014. Norway
reduced the corporate income tax rate
from 28% to 27%. Portugal made paying
taxes less costly by both lowering the
corporate income tax rate and increasing
the allowable amount of the loss carried
forward. Brunei Darussalam, Greece,
Jamaica, Mozambique, the Slovak
Republic and Vietnam also reduced the
effective financial burden of profit taxes
on companies by introducing changes to
tax depreciation rules or deductions.
The Bahamas, Greece, Malaysia, Russia
and Spain reduced taxes other than profit
and labor taxes. Malaysia reduced the
property tax rate from 12% to 10% of the
annual rental value for commercial prop-
erties for 2014. Greece made insurance
premiums fully tax deductible in addition
to reducing property tax rates. Finally,
some economies eliminated smaller taxes.
Mexico abolished the business flat tax, and
Kosovo abandoned the practice of levying
an annual business license fee.
In most economies where the authorities
have opted to reduce the tax burden on
the business community, they have also
attempted to broaden the tax base and
protect government revenue. In a few cases
in recent years, particularly in economies
where tax rates are very high, the motiva-
tion has been more closely linked to reduc-
ing distortions, such as high levels of tax
evasion or a sizable informal sector.
Unleashing international trade
In the area of trading across borders, the
reforms recorded by Doing Business in
2014/15 span a wide range—from build-
ing or improving hard or soft infrastruc-
ture for trade to joining customs unions,
digitizing documentation and introducing
risk-based inspection systems. These
varied endeavors highlight the complex-
ity of international trade. They also speak
to changes introduced this year in the
methodology used to measure the time
and cost for trading across borders.
Under the new methodology Doing
Business also considers trade over land
between neighboring economies, adding
a new feature of reform: regional trade
facilitation agreements.
Brazil is among the economies investing in
electronic systems to facilitate trade. An
online platform has minimized bureaucracy
and streamlined transactions, reducing
customs clearance time for exporters
in both São Paulo and Rio de Janeiro in
2014/15. The Bureau of Foreign Trade and
Secretariat of the Federal Revenue began
implementing the electronic system in
April 2014 to link customs, tax and admin-
istrative agencies involved in exporting. The
system now allows exporters to submit
declarations and other related documents
electronically rather than in hard copy.
Although hard copies are still accepted
during this first year of the program, most
exporters have completely converted to the
new electronic system.
Yet the full potential of digitization and
electronic data interchange systems is not
realized immediately. Implementing the
systems takes time and involves changes
in operational practices, in training and,
in some cases, in the work habits of
staff. Benin successfully implemented an
electronic single-window system in 2012.
In the past year, however, it consider-
ably expanded the digitization of trade
procedures for both exports and imports
through the single window. The customs
authority is now required to accept only
electronic supporting documents for
the single invoice and other documents
submitted before the customs declaration.
This resulted in a substantial reduction of
time for customs procedures—three years
after the launch of the online platform.
Tunisia also improved international trade
practices in the past year. The country facil-
itated trade through the port of Rades by
increasing the efficiency of its state-owned
port handling company and by invest-
ing in port infrastructure. One important
structural improvement at the port was the
extension of the dock to increase terminal
capacity. The improvements in hard and
soft infrastructure at the port reduced
border compliance time for both exporting
and importing, saving traders in Tunisia 48
hours per shipment (figure 4.8).
Guatemala and Tanzania are among econ-
omies that improved soft infrastructure for
trade by allowing electronic submission
and processing of documents as well as
by using online platforms for the exchange
Figure 4.7 Spain has made complying with tax obligations easier for companies
0
10
20
30
40
50
60
70
20142013201220112010200920082007200620052004
0
50
100
150
200
250
300
350
Payments Total tax rate Time
Payments (number per year)
Total tax rate (% of profit) Time (hours per year)

of information between agencies involved
in international trade. On February 2014
Guatemala launched the “Customs with-
out Paper” program to promote the elec-
tronic submission of customs documents
through a web portal and to eliminate the
submission of hard copies. Online submis-
sion of customs declarations for exports
and imports has been compulsory for
Guatemalan traders since January 2015.
The program was rolled out gradually:
it started at the Puerto Barrios customs
office in March 2014 and was fully imple-
mented in all customs offices by July 2015.
Tanzania implemented an online system
for processing trade-related documents
in July 2014. The Tanzania Customs
Integrated System (TANCIS) links several
agencies, eliminating the need for traders
to visit these agencies in person.
HIGHLIGHTS OF REFORMS
STRENGTHENING LEGAL
INSTITUTIONS
In 2014/15, 53 economies implemented
reforms aimed at strengthening legal insti-
tutions and streamlining legal frameworks,
amounting to 66 reforms in total. The larg-
est number of reforms was recorded in the
area of getting credit. Of the 32 reforms
in this area, 14 were implemented in Sub-
Saharan Africa. About 64% of the reforms
in the area of enforcing contracts were
implemented in Europe and Central Asia,
along with 4 of the 9 reforms in the area
of resolving insolvency. No insolvency
reforms were recorded in the Middle East
and North Africa or South Asia in 2014/15.
Finally, 14 reforms were implemented in
the area of protecting minority investors.
By contrast with the reforms reducing the
complexity and cost of regulatory process-
es, those strengthening legal institutions
reflect no clear pattern of pairing. Only 9
of the 53 economies that strengthened
legal institutions in one area measured by
Doing Business also did so in another.
Strengthening frameworks for
secured transactions
Ten economies reformed secured transac-
tions legislation or strengthened credi-
tors’ rights in bankruptcy procedures in
2014/15. Most of these reforms were
aimed at developing a geographically
unified, online collateral registry. This kind
of reform makes it easier for creditors to
provide loans to small and medium-size
enterprises that lack real estate and can
provide only movable assets as collateral.
As a result of recent reforms, pledges over
movable assets in Costa Rica, El Salvador
and Hong Kong SAR, China, can now be
registered online by the contracting par-
ties or their representatives. In Costa Rica
and El Salvador rights created under finan-
cial leases, factoring agreements and sales
with retention of title are also documented
in this registry.
In Madagascar a new law broadened
the range of assets that can be used as
collateral by including future assets. The
new law also allows a general descrip-
tion of assets granted as collateral as
well as a general description of debts
and obligations. Mexico and Russia also
introduced new legislation allowing a
general description of assets granted as
collateral.
Costa Rica improved the legal rights of
borrowers and lenders the most in the
past year. Public officials developed a
sound legal framework to support the
implementation of a modern secured
transactions system. Thanks to a new law
on movable property guarantees, all types
of movable assets, present and future,
may now be used as collateral to secure
a loan.16
The law also regulates functional
equivalents to more traditional securities,
such as assignments of receivables and
sales with retention of title. In addition, it
allows out-of-court enforcement of col-
lateral, through both public auction and
private sale (table 4.3). This means that if
a debtor should default, a secured creditor
can now recover the unpaid loan without
going to court. The creditor can do so
through any type of asset sale, rather than
being restricted to cumbersome public
auctions. Similar legislative changes were
adopted by El Salvador. By approving their
new laws, Costa Rica and El Salvador
joined Colombia, Honduras and Jamaica
as pioneers of the modern secured
Figure 4.8 Port improvements cut 48 hours from the time for importing auto parts
from Paris to Tunis
Handling and inspections
at the port of Rades
2014
Paris Tunis
Documentary compliance: 27 hours, $144
Border compliance: 128 hours, $596
Customs clearance
and inspections
Domestic transport: 2 hours, $104
at the port of Rades
2015
Paris Tunis
Customs clearance
and inspections

transactions system in the Southern
Hemisphere.
Costa Rica also launched a centralized,
web-based collateral registry in May
2015. The registry allows online access
to register movable collateral as well
as to modify, update or cancel existing
registrations. It also allows the general
public to conduct online searches, thus
promoting transparency in secured lend-
ing by alerting third parties to existing
rights in assets.
Advancing credit information
systems
Twenty-two economies implemented
reforms improving their credit informa-
tion system in 2014/15. Kenya and
Uganda made the largest improvement
in credit reporting by expanding borrower
coverage. The credit reference bureau in
Kenya started to collect positive credit
information in addition to negative credit
information in 2014 and expanded its
borrower coverage to 14.8% of the
adult population as of January 2015.
Similarly, the credit bureau or registry in
the Lao People’s Democratic Republic,
Mauritania, Rwanda, Uganda and
Vietnam expanded coverage to at least
5% of the adult population.
Afghanistan, the Comoros, Guyana,
Lesotho and the Seychelles all estab-
lished a new credit bureau or registry
in 2014/15. Afghanistan’s central bank
launched the country’s first credit reg-
istry, which banks can consult before
issuing new loans. The new registry in the
Comoros began distributing information
on bank loans and outstanding payments
in November 2014. The new credit
bureaus in Guyana and Lesotho—the first
for both countries—started full opera-
tions in May 2015. The new registry in
the Seychelles facilitates the exchange
of credit information by distributing both
positive and negative data on firms and
individuals and by providing online access
for banks and other financial institutions.
Five economies improved their regulatory
framework for credit reporting, three of
them by adopting regulations enabling
the creation of new credit bureaus. Latvia
adopted a credit bureau law with the aim
of promoting responsible borrowing and
lending while protecting the rights of bor-
rowers. The law sets out a legal frame-
work for establishing, organizing and
supervising credit information bureaus.
Namibia improved access to credit
information by legally guaranteeing bor-
rowers’ right to inspect their own data.
Peru fully implemented its new law on
personal data protection, which requires
stronger safeguards in the administration
of borrowers’ personal data.
Two member states of the Central Bank
of West African States (BCEAO), Mali
and Niger, adopted the Uniform Law
on the Regulation of Credit Information
Bureaus—joining Côte d’Ivoire and
Senegal, which did so in 2013/14. In addi-
tion, in January 2015 BCEAO selected
the joint venture Creditinfo VoLo as the
accredited company to operate the new
credit information bureau in the member
countries. The bureau is expected to be
fully operational very soon.
Sub-Saharan Africa was the region with
the largest number of reforms focused
on improving the availability of credit
information. In Rwanda, Zambia and
Zimbabwe credit scoring was introduced
as a value added service to banks and
other financial institutions, supporting
their ability to assess the creditworthi-
ness of potential borrowers.
Elsewhere, credit bureaus in Cyprus and
the Kyrgyz Republic began distribut-
ing both positive and negative credit
information on borrowers—and the one
in Cyprus began reporting five years of
credit history on both borrowers and
guarantors to banks and other financial
institutions. In Mongolia the credit reg-
istry started distributing credit data from
retailers and utility companies. Lao PDR
began requiring loans of all sizes to be
included in the credit registry’s database.
Table 4.3 Costa Rica’s previous and new legal frameworks for secured transactions
Previous framework New framework
Is there a functional secured transactions system?
No. Yes.
Is the collateral registry unified or centralized geographically for the entire economy?
No. Yes.
Is the collateral registry notice-based?
No. Yes.
Does the registry have a modern online system (such as for registrations and amendments)?
No. Yes.
Can security rights in future assets be described in general terms?
No, detailed description of the
assets required by law.
Yes, general description allowed by law.
Can security rights in a combined category of assets be described in general terms?
Can security rights in a single category of assets be described in general terms?
Can parties agree to enforce the security rights out of court?
No, out-of-court enforcement
not permissible by law.
Yes, out-of-court enforcement
of the collateral allowed.

Protecting rights of minority
shareholders
Honduras made the most noteworthy
improvement in minority investor protec-
tions in 2014/15. Five years ago sev-
eral pieces of legislation in Honduras were
quite old; some had not been updated
since 1948.17
The June 2014 Law for the
Creation of Jobs, Fostering of Private
Initiative, Formalization of Businesses
and Protection of Investor Rights there-
fore marked an important milestone in
reforming the business environment in
Honduras. The 2014 law, which amends
several articles of the Honduran Code
of Commerce, directly addresses the
approval of related-party transactions,
shareholders’ right to initiate an action
and sue directors, and their right to inspect
certain internal company documents
before initiating any formal legal action.
The new law introduces several other
improvements in minority investor pro-
tections. It stipulates that transac-
tions representing more than 5% of a
company’s assets must be authorized
by its shareholders and that interested
directors must abstain from voting in this
case. It also prohibits shareholders who
have a self-interest contrary to that of the
company from voting on related resolu-
tions. In addition, the new law allows the
court to declare a transaction involving
a conflict of interest void if plaintiffs can
show that the transaction resulted in
a financial loss to the company and its
shareholders.18
As a result of these and
other amendments, Honduras improved
its score on all three indices measuring
the regulation of conflicts of interest
inside companies (figure 4.9).
Thirteen other economies also strength-
ened minority investor protections in
2014/15. Among them, Albania intro-
duced a requirement for immediate dis-
closure of related-party transactions to
the public. Spain adopted a law amend-
ing its Capital Companies Act with the
aim of improving corporate governance.
The amendment directly addresses
shareholders’ rights and role in important
corporate decisions—for example, requir-
ing shareholders’ approval for major sales
of company assets. Lithuania adopted
amendments to its Stock Company Law
that prohibit subsidiaries from acquiring
and owning shares issued by their par-
ent company, resulting in greater clarity
of ownership and interests. Kazakhstan
introduced amendments to its Joint
Stock Company law requiring disclosure
of information about transactions with
related parties within 72 hours.
Elsewhere, Madagascar amended its Law
on Commercial Companies to require
directors with a conflict of interest to fully
disclose the nature of their interest to the
boardofdirectors.Nigeriaintroducednew
rules requiring that related-party transac-
tions be subject to external review and to
approval by disinterested shareholders.
Rwanda updated its company law to
allow holders of 10% of a company’s
share capital to call for an extraordinary
meeting of shareholders and to require
board members to disclose information
about their other directorships and their
primary employment.
Introducing mechanisms of
alternative dispute resolution
Doing Business recorded 11 reforms making
it easier to enforce contracts in 2014/15. As
in the previous year, the implementation of
electronic filing was a common feature of
the reforms. Two economies—Georgia and
Italy—made their courts more efficient by
introducing electronic systems. As a result,
litigants can now file initial complaints elec-
tronically. Besides expediting the filing and
service process, electronic filing systems
in courts also increase transparency, limit
opportunities for corruption and prevent
the loss, destruction or concealment of
court records.
Overall, however, the implementation of
alternative dispute resolution (ADR) mech-
anisms was the most common feature of
reforms in contract enforcement in the past
year. The availability of ADR creates a better
environment for business.19
ADR processes
lower the direct and indirect costs that
businesses incur in enforcing contracts and
resolving disputes—and provide redress
more quickly and inexpensively than main-
stream court processes, especially where
cost is driven by formal procedures. ADR
can also improve the efficiency of court
systemsbyreducingthebacklogofdisputes
before the courts. Three economies—Côte
d’Ivoire, Latvia and Senegal—increased the
efficiency of their judiciary in 2014/15 by
introducing consolidated laws on specific
ADR mechanisms. These initiatives led to
higher scores on the new quality of judicial
Figure 4.9 Honduras strengthened minority investor protections in 2014/15 for the
first time in more than 10 years
0
2
4
6
8
10
Extent of
corporate
transparency
index
Extent of
ownership
and control
index
Extent of
shareholder
rights index
Ease of
shareholder
suits index
Extent of
director
liability index
Extent of
disclosure index
2014 2015
0
Index score
(0–10)

processes index for all three economies
(figure 4.10).
Côte d’Ivoire has made reforms in the
judiciary a priority in recent years. By
2012 Côte d’Ivoire had created special-
ized commercial courts to deal with
business disputes and appointed profes-
sional judges to work with lay judges.
These measures reduced the time to
resolve a dispute as measured by Doing
Business from 770 days in 2011 to 585
days in 2013. By mid-2014 Côte d’Ivoire
had introduced further improvements by
adopting a law regulating conventional
and judicial mediation in both commer-
cial and civil cases. It also established
several institutions to provide mediation
services.
Latvia adopted a new law consolidat-
ing provisions that regulate arbitration.
Previously, arbitration had been regulated
by a few provisions scattered across differ-
ent legislative instruments and therefore
was scarcely used. Latvia also adopted a
comprehensive new law on mediation.
The law introduces incentives for parties
to attempt mediation, including a partial
refund of state fees if mediation is suc-
cessfully completed. Having all substan-
tial and procedural provisions regulating
commercial arbitration or mediation in
one source makes these mechanisms
more accessible, and increasing acces-
sibility may lead to broader use of ADR.
Other reforms that improved the ease of
enforcing contracts in 2014/15 focused
on increasing access to justice and facili-
tating the resolution of small disputes.
Cyprus and Kazakhstan introduced
simplified procedures to handle small
claims, reducing backlog at the main
trial court and contributing to procedural
efficiency. These simplified procedures
provide a mechanism for quick and
inexpensive resolution of legal disputes
involving small sums of money. Small
claims courts and procedures usually use
informal hearings, simplified rules of evi-
dence and more streamlined rules of civil
procedure. They also typically allow the
parties to represent themselves, keeping
institutional litigators out of court.
Saving viable businesses
through reorganization
In 2014/15 Doing Business recorded
9 reforms making it easier to resolve
insolvency. Caribbean economies con-
tinued to make remarkable progress. In
the previous year Trinidad and Tobago
and St. Kitts and Nevis had modern-
ized their insolvency frameworks. In
2014/15 Jamaica and St. Vincent and
the Grenadines adopted new insol-
vency laws. A common feature of these
reforms was the introduction of in-court
reorganization mechanisms as an alter-
native to liquidation, so that insolvent
companies can continue to operate. All
four economies have also updated their
liquidation proceedings, bringing them
into closer conformity with international
good practices.
The new Insolvency Act of Jamaica,
adopted in October 2014, serves as a
good illustration of the Caribbean reform
agenda. The new act introduced the
option of reorganization for commercial
entities. A debtor or an insolvency
representative can present a reorganiza-
tion proposal to all or only some of the
creditors. The filing of a proposal or of an
intent to submit a proposal automatically
puts on hold all other actions against the
debtor. Among other improvements,
the new act follows international good
practices on facilitating the continuous
operation of debtors during insolvency
proceedings. It also allows courts to
invalidate undervalued transactions con-
cluded by debtors within a year before
insolvency proceedings are commenced,
permits the insolvency representative to
request new financing after the proceed-
ings are commenced and grants priority
to claims of post-commencement credi-
tors. Adoption of the new act substan-
tially improved Jamaica’s score on the
strength of insolvency framework index
(table 4.4).
Most other insolvency reforms recorded
by Doing Business in 2014/15 also focused
on introducing new reorganization
procedures or improving the existing
reorganization framework. Chile and
Cyprus introduced court-supervised
reorganization procedures. Kazakhstan
began allowing creditors to commence
reorganization proceedings, while
Rwanda introduced protections for credi-
tors who vote against a reorganization
plan. Romania introduced time limits on
the reorganization process.
Several insolvency reforms recorded in
2014/15 were aimed at facilitating the
continuation of the debtor’s business
during insolvency proceedings. Cyprus
and Rwanda introduced provisions allow-
ing the invalidation of preferential and
undervalued transactions concluded by
the debtor before the commencement
of insolvency proceedings. Chile prohib-
ited the termination of contracts on the
grounds of insolvency.
The change in Chile came as part of a new
insolvency law that took effect in October
2014.Thenewlawstreamlinedallprovisions
relatedtoreorganizationandliquidationpro-
ceedings, emphasizing the reorganization of
viable businesses as a preferred alternative
to liquidation. Following international good
Figure 4.10 ADR initiatives in three
countries helped improve their scores
on the new quality of judicial processes
index
2014 2015
0
2
4
6
8
10
12
14
16
18
SenegalLatviaCôte
d’Ivoire
Quality of judicial processes
index (0–18)

practices, the new law improved creditors’
participation in the insolvency proceedings
and introduced many new provisions on
reorganization, including minimum stan-
dards and voting procedures. It also created
a public office responsible for the general
administration of proceedings and estab-
lished specialized courts with exclusive
jurisdiction over insolvency cases.
Changing labor market
regulation
The Doing Business indicators on labor
market regulation have historically
measured the flexibility of the regula-
tory framework as it relates to hiring,
work scheduling and redundancy. Over
the past two years the coverage of the
indicators has been expanded to also
capture different aspects of job qual-
ity. In 2014/15 Doing Business recorded
several reforms relating to workers’
eligibility for different benefits as well as
workplace equality and social protection.
For example, Morocco implemented an
unemployment insurance scheme, while
Georgia and New Zealand increased the
length of paid maternity leave.
Four economies revised hiring rules in
2014/15. Germany introduced a first-
ever national minimum wage. Ecuador
prohibited fixed-term contracts for
permanent tasks, while Lao PDR capped
the duration of renewable fixed-term
contracts (previously unlimited) at 36
months. Latvia continued to relax its
labor market regulation by increasing the
maximum duration of a single fixed-term
contract from 36 months to 60.
Four economies changed rules governing
dismissals. Italy adopted new legisla-
tion to simplify redundancy rules and
encourage out-of-court reconciliation of
dismissals, reducing the time and cost
to resolve labor disputes. Lao PDR elimi-
nated the requirement to seek third-party
approval when dismissing fewer than 10
employees and reduced severance pay-
ments for employees with 5 and 10 years
of tenure. Croatia eliminated the require-
ment to retrain or reassign employees
before they can be made redundant. And
Portugal introduced priority rules apply-
ing to individual dismissals. These regu-
lations provide employers with several
criteria to use when making decisions on
dismissals, with performance being the
most important one.
In addition, three economies made impor-
tant changes to their labor laws in 2014/15.
Belarus amended provisions relating to
wage regulation, labor arbitration, the
calculation of overtime pay and grounds for
theterminationofemployment.Italsolifted
prohibitions on concurrent employment.
Italy adopted the Jobs Act in December
2014, which provides an overarching
framework for changes in unemploy-
ment insurance, employment contracts,
and maternity and paternity leave. FYR
Macedonia amended provisions governing
social contributions, employment con-
tracts, annual leave, overtime work, health
inspections and labor disputes.
NOTES
1. Divanbeigi and Ramalho 2015.
2. Braunerhjelm and Eklund 2014.
3. Yakovlev and Zhuravskaya 2013.
4. Ippoliti, Melcarne and Ramello 2014.
5. Dougherty 2014.
6. Garcia-Posada and Mora-Sanguinetti 2015.
7. Giacomelli and Menon 2013.
8. Dougherty 2014.
9. Yakovlev and Zhuravskaya 2013.
10. Lyons 2013.
11. The six agencies are the State Examination
Head Office, the State Fire Control Service,
the State Supervision Agency for Construction
Safety, the Engineering Geological Center, the
Ministry of Ecology and Natural Resources,
and the Hygiene and Epidemiology Center at
the Ministry of Public Health.
12. SAIDI is the average total duration of outages
over the course of a year for each customer
served, while SAIFI is the average number
of service interruptions experienced by a
customer in a year. Doing Business records
these measures for the largest business city
of each economy and, in 11 economies, for the
second largest business city as well.
13. See Royal Decree 1619/2012.
14. The rate was reduced from the standard rate
of 30% to a special rate of 15% for the first
€300,000 and 20% thereafter.
15. Ayyagari, Demirguc-Kunt and Maksimovic
2011; Fox and Murray 2013.
16. Ley de Garantías Mobiliarias was passed by
the Costa Rican Congress on May 7, 2014, and
entered into force on May 20, 2015.
17. World Bank 2010, p. 50.
18. See articles 151, 210 and 222 of the Honduran
Code of Commerce, as amended.
19. Rozdeiczer and Alvarez de la Campa 2006.
Table 4.4 Jamaica’s previous and new legal frameworks for insolvency
Previous framework New framework
Can a debtor initiate reorganization proceedings?
No reorganization available. Yes.
Do creditors vote on the reorganization plan?
No reorganization available. Yes, and only creditors whose rights are
affected by the proposed plan vote on it.
How do creditors vote on the reorganization plan?
No reorganization available. Creditors are divided into classes
and the plan is approved by a simple
majority of creditors in each class.
Can a debtor obtain credit after the commencement of insolvency proceedings?
No specific provisions. New financing after the commencement of
insolvency proceedings is available, and creditors
providing post-commencement finance are
granted priority over claims of existing creditors.
Can a court invalidate undervalued transactions concluded before insolvency?
No specific provisions. Yes.

TABLE 4A.1 Who reduced regulatory complexity and cost or strengthened legal institutions in 2014/15—and what did they do?
Feature Economies Some highlights
Making it easier to start a business
Simplified preregistration and
registration formalities (publication,
notarization, inspection, other
requirements)
Algeria;Angola;Azerbaijan; Belarus; Benin; Brunei
Darussalam; Cambodia; Democratic Republic of
Congo; Ecuador; Estonia; Germany; India; Jamaica;
Kazakhstan; Kenya; Moldova; Mongolia; Morocco;
Myanmar; Slovak Republic; Sweden;Togo; Ukraine
Angola reduced the fees to register a company. Estonia began allowing
minimum capital to be deposited at the time of company registration.
Kenya launched government service centers offering company
preregistration services in major towns. Myanmar eliminated the need
for separate temporary and permanent certificates of incorporation.
Abolished or reduced minimum
capital requirement
Burkina Faso; Comoros; Democratic Republic of
Congo; Gabon; Guinea; India; Kuwait; Mauritania;
Myanmar; Niger; Senegal
India eliminated its minimum capital requirement. Kuwait reduced its
requirement.
Introduced or improved online
procedures
Belarus; Denmark; Indonesia; Lithuania; FYR
Macedonia; Norway; Russian Federation (Moscow);
San Marino; Uganda; Ukraine; Uzbekistan
Uganda introduced an online system for obtaining a trading license.
Belarus expanded the geographic coverage of online registration and
improved online services.
Cut or simplified postregistration
procedures (tax registration, social
security registration, licensing)
Cambodia; Hong Kong SAR, China; Indonesia
(Jakarta); Philippines; Rwanda; Sri Lanka;
Uzbekistan;Vietnam
Hong Kong SAR, China, eliminated the requirement for a company
seal. Rwanda eliminated the need for new companies to open a bank
account in order to register for VAT.
Created or improved one-stop shop Benin; Cambodia; Slovak Republic; Uzbekistan Benin reduced the fees for filing documents with the one-stop shop.
Cambodia simplified company name checks at the one-stop shop.
Making it easier to deal with construction permits
Streamlined procedures Algeria;Armenia;Azerbaijan; Benin; Jamaica;
Kazakhstan; Mauritius; Niger; Sri Lanka;Turkey;
United Arab Emirates;West Bank and Gaza
Algeria eliminated the legal requirement to provide a certified
copy of a property title when applying for a building permit. Sri
Lanka streamlined the internal review process for building permit
applications.
Reduced time for processing permit
applications
Benin; Georgia; Jamaica; Montenegro; Sri Lanka Georgia reduced the official time limit for issuing building permits from
10 days to 5. Montenegro finished implementing amendments to the
Law on Spatial Planning and Construction, which established a 30-day
time limit for issuing building permits.
Adopted new building regulations Armenia;Azerbaijan; Rwanda; Serbia Rwanda adopted a new building code and new urban planning
regulations in May 2015.
Improved building quality control
process
Armenia; Serbia Armenia exempted lower-risk projects from requirements for approval
by an independent expert and for technical supervision of construction.
Introduced or improved one-stop
shop
Azerbaijan; Benin Azerbaijan established a one-stop shop for issuing preapprovals
for project documentation. Benin established a one-stop shop and
reduced the number of signatories required for a building permit.
Reduced fees Democratic Republic of Congo; Serbia The Democratic Republic of Congo halved the cost to obtain a building
permit. Serbia eliminated the land development tax for warehouses.
Making it easier to get electricity
Improved process efficiency Bhutan; Botswana; Costa Rica; Cyprus; Hong Kong
SAR, China; Kenya; Lithuania; Malta; Morocco;
Myanmar; New Zealand; Poland;Taiwan, China;
Uganda; United Arab Emirates;Vietnam
The utility in Kenya reduced delays for new connections by enforcing
service delivery timelines and hiring contractors for meter installation.
The utility in Poland reduced delays in processing applications for new
connections by increasing human resources and enforcing the legal
time limit to issue technical conditions.
Improved regulation of connection
processes and costs
Russian Federation; Senegal The tariff setting committees for Moscow and St. Petersburg revised
the connection fee structure, reducing the cost of getting a new
connection. In Senegal the utility reduced the security deposit by
revising the calculation formula.
Facilitated more reliable power
supply and transparency of tariffs
Cambodia; Oman The utility in Oman started fully recording the duration and frequency
of outages to compute annual SAIDI and SAIFI.
Streamlined approval process India;Togo In Delhi the utility eliminated the internal wiring inspection by the
Electrical Inspectorate. In Mumbai the utility improved internal work
processes and coordination, reducing the procedures and time to
connect to electricity.

Making it easier to register property
Computerized procedures Belgium; Bhutan; Kenya; Kyrgyz Republic; Saudi
Arabia; Switzerland
Bhutan introduced a new computerized land information system
connecting the municipality to the cadastre. Switzerland introduced a
national database to check for encumbrances.
Reduced taxes or fees Cabo Verde; Chad; Republic of Congo; Côte
d’Ivoire; Gabon; Guinea-Bissau; Madagascar;
Nigeria; Senegal
The Republic of Congo lowered the property transfer tax from 15% of
the property value to 7%. Senegal reduced the property transfer tax
from 10% of the property value to 5%.
Combined or eliminated procedures Kazakhstan; Latvia; Morocco; Uzbekistan Latvia introduced a new application form for property transfers.
Kazakhstan eliminated the requirements to obtain a technical passport
for a property transfer and to get the seller’s and buyer’s incorporation
documents notarized. Morocco established electronic communication
links between different tax authorities.
Increased transparency Vanuatu Vanuatu introduced a specific and separate mechanism for complaints
by appointing a land ombudsman.
Introduced fast-track procedures Belarus Belarus introduced a fast-track procedure for property registration.
Set effective time limits Russian Federation Russia passed a new law setting shorter time limits for property
transfer procedures.
Making it easier to pay taxes
Introduced or enhanced electronic
systems
Costa Rica; Cyprus; Indonesia; Jamaica; Malaysia;
Montenegro; Morocco; Mozambique; Peru; Poland;
Rwanda; Serbia; Slovak Republic; Spain;Tajikistan;
Uruguay;Vietnam; Zambia
Serbia introduced an online system for filing and paying VAT and social
security contributions in 2014. Indonesia introduced an online system
for filing and paying social security contributions.
Reduced profit tax rate Angola; Bangladesh; Brunei Darussalam; Finland;
France;The Gambia; Guatemala; Hong Kong SAR,
China; Jamaica; Norway; Portugal; Slovak Republic;
Spain; Swaziland;Tunisia; United Kingdom;Vietnam
Norway reduced the corporate income tax rate from 28% to 27%
for 2014.Tunisia reduced the corporate income tax rate from 30% to
25% for the same year. Spain reduced the corporate income tax rate
for companies incorporated after January 1, 2013, from the standard
rate of 30% to 15% for the first €300,000 and 20% thereafter.
Reduced labor taxes and
mandatory contributions
China (Shanghai); Colombia; France; Greece;
Indonesia; Mexico; Romania; United Kingdom
Romania reduced the social security contribution rate paid by
employers from 20.8% to 15.8% from October 1, 2014.
Allowed more deductible expenses
or depreciation
Brunei Darussalam; Greece; Jamaica; Mozambique;
Portugal; Slovak Republic;Vietnam
Portugal allowed 100% of loss carried forward to be deducted for the
calculation of taxable profit from January 1, 2014. Brunei Darussalam
increased the initial capital allowance for industrial buildings from
20% to 40% and the annual allowance from 4% to 20% for 2014.
Reduced taxes other than profit tax
and labor taxes
The Bahamas; Greece; Malaysia; Russian
Federation; Spain
Malaysia reduced the property tax rate from 12% to 10% of the
annual rental value for commercial properties for 2014.
Merged or eliminated taxes other
than profit tax
Brunei Darussalam; Kosovo; Mexico; Serbia Mexico abolished the business flat tax on January 1, 2014. Serbia
abolished the urban land usage fee starting January 1, 2014.
Simplified tax compliance process The Gambia; Hong Kong SAR, China; Maldives;
Vietnam
The Gambia improved its bookkeeping system for VAT accounts to
better track the requisite input and output records for filing VAT
returns.Vietnam reduced the number of VAT filings for companies with
an annual turnover of 50 billion dong (about $2.3 million) or less from
monthly to quarterly.
Making it easier to trade across borders
Introduced or improved electronic
submission and processing of
documents
The Bahamas; Benin; Brazil; Côte d’Ivoire; Ghana;
Guatemala; Madagascar; Mali; Mauritania;
Suriname;Tajikistan;Tanzania;Togo
Brazil implemented the electronic SISCOMEX Portal system, reducing
the time required for customs clearance and document preparation
and submission for exports.Tajikistan made it possible to submit
customs declarations electronically for both exports and imports.
Introduced or improved risk-based
inspections
Albania Albania implemented a risk-based inspection system at Port of Durres
and reduced border compliance time for exports.
Strengthened transport or port
infrastructure
Madagascar;Tunisia;Vanuatu Vanuatu invested in infrastructure at the port of Vila, increasing the
port’s efficiency for imports.
Improved port procedures Oman; Qatar Oman reduced port handling time for exports and imports by
transferring cargo operations from Sultan Qaboos Port to Sohar Port.
Entered a customs union with
major trading partner
Armenia Armenia joined the Eurasian Economic Union, leading to reductions in
the time and cost for document preparation, customs clearance and
inspections in trade (export and import) with Russia.
Reduced documentary burden Mauritania Mauritania eliminated requirements for two import documents.

Strengthening legal rights of borrowers and lenders
Created a unified or modern
collateral registry for movable
property
Costa Rica; El Salvador; Hong Kong SAR, China;
Indonesia; Liberia; Russian Federation; Uzbekistan
El Salvador established a registry for security interests in movable
property as part of its registry of commerce.
Allowed general description of
assets granted as collateral
El Salvador; Kazakhstan; Mexico; Russian
Federation; Uzbekistan
Mexico implemented new laws allowing a general description of assets
granted as collateral.
Expanded range of movable assets
that can be used as collateral
El Salvador; Madagascar; Mexico; Russian
Federation; Uzbekistan
Madagascar introduced a new law broadening the range of assets that
can be used as collateral to secure a loan.
Introduced a functional secured
transactions system
Costa Rica; El Salvador Costa Rica adopted a new law establishing a modern legal framework
for secured transactions, including functional equivalents to loans
secured with movable property.
Allowed out-of-court enforcement
of security
Costa Rica; El Salvador El Salvador adopted a new law allowing secured creditors to enforce
their security interest out of court, through a public or private auction.
Improving the sharing of credit information
Established a new credit bureau
or registry
Afghanistan; Comoros; Guyana; Lesotho; Seychelles Afghanistan’s central bank established a new credit registry that
banks can consult to assess the creditworthiness of consumer and
commercial borrowers.
Expanded scope of information
collected and reported by credit
bureau or registry
Cyprus; Kyrgyz Republic; Lao PDR; Mongolia;West
Bank and Gaza
In the Kyrgyz Republic the credit bureau Ishenim began distributing
information related to on-time loan repayment patterns in its credit
reports.
Improved regulatory framework for
credit reporting
Latvia; Mali; Namibia; Niger; Peru Latvia adopted a credit bureau law setting out a legal framework for
establishing, licensing and supervising credit information bureaus.
Introduced bureau or registry credit
scores as a value added service
Rwanda; Zambia; Zimbabwe Rwanda’s credit bureau implemented a credit scoring service in May
2015.
Expanded borrower coverage by
credit bureau or registry
Kenya; Lao PDR; Mauritania; Rwanda; Uganda;
Vietnam
Kenya expanded the number of borrowers listed by its credit reference
bureau with information on their borrowing history from the past five
years to more than 5% of the adult population.
Strengthening minority investor protections
Increased disclosure requirements
for related-party transactions
Albania;Azerbaijan; Honduras; Kazakhstan;
Madagascar; Nigeria
Albania introduced a requirement for immediate disclosure of the
terms of related-party transactions as well as the nature and object
of the conflict of interest. Nigeria introduced new rules requiring
that related-party transactions be subject to external review and to
approval by disinterested shareholders.
Enhanced access to information in
shareholder actions
Honduras; Kazakhstan; Zimbabwe Kazakhstan introduced provisions making it easier for shareholders
to compel broad categories of documents at trial without having to
identify specific dates and titles.
Increased director liability Honduras; Ireland; FYR Macedonia Honduras introduced a new law allowing shareholders representing at
least 5% of a company’s share capital to bring an action for damages
against its directors.
Expanded shareholders’ role in
company management
Arab Republic of Egypt; Kazakhstan; Lithuania;
Rwanda; Spain; United Arab Emirates
Spain introduced provisions requiring a general meeting of
shareholders to decide on the acquisition or disposal of assets
representing more than a quarter of a company’s total assets.
Making it easier to enforce contracts
Expanded the framework for
alternative dispute resolution
Côte d’Ivoire; Latvia; Senegal Côte d’Ivoire, Latvia and Senegal introduced laws regulating voluntary
mediation. Latvia also passed a new arbitration law.
Expanded court automation Armenia; United Arab Emirates Armenia introduced a computerized system that randomly assigns
cases to judges in the Yerevan Court of First Instance.The United Arab
Emirates implemented an electronic notification system allowing the
initial summons to be served electronically.
Introduced a small claims court or
a dedicated procedure for small
claims
Cyprus; Kazakhstan Cyprus and Kazakhstan both introduced a fast-track procedure for
small claims and allow litigants to represent themselves during this
procedure.
Introduced electronic filing Georgia; Italy Georgia and Italy both introduced an electronic filing system for
commercial cases, allowing attorneys to submit the initial summons
online.
Made enforcement of judgment
more efficient
Croatia; Romania Croatia introduced an electronic system to handle public sales.
Romania expanded the role of the bailiff and made the use of an
electronic auction registry mandatory.

Making it easier to resolve insolvency
Improved provisions on treatment
of contracts during insolvency
Chile; Jamaica; Romania; Rwanda; St. Vincent and
the Grenadines;Vietnam
Chile made continuation of the debtor’s business during insolvency
proceedings easier by prohibiting termination of contracts on the
grounds of insolvency.
Improved the likelihood of
successful reorganization
Chile; Cyprus; Jamaica; Kazakhstan; Romania;
St. Vincent and the Grenadines
Kazakhstan introduced provisions allowing debtors to apply for post-
commencement finance with corresponding priority rules and allowing
creditors to initiate reorganization proceedings.
Regulated the profession of
insolvency administrators
Jamaica; Moldova; St. Vincent and the Grenadines;
Vietnam
Moldova created governing and supervisory bodies for the profession
of insolvency administrators, introduced a licensing system and stricter
admission rules and created a centralized registry of authorized
insolvency administrators.
Introduced a new restructuring
procedure
Cyprus; Jamaica; St. Vincent and the Grenadines Cyprus established a reorganization procedure for insolvent but viable
companies.
Streamlined and shortened time
frames for insolvency proceedings
Chile; Romania;Vietnam Romania introduced shorter time frames for several stages of
reorganization proceedings as well as a three-year time limit for
implementing the reorganization plan.
Strengthened creditors’ rights Cyprus; Jamaica; St. Vincent and the Grenadines Jamaica granted individual creditors the right to request information
from the insolvency representative on the debtor’s business and
financial affairs.
Changing labor legislation
Altered hiring rules Ecuador; Germany; Lao PDR; Latvia Germany introduced a minimum wage. Latvia increased the maximum
duration of a single fixed-term contract from 36 months to 60.
Altered work scheduling rules Belarus; Hungary; FYR Macedonia Hungary adopted legislation limiting the operating hours for retail
shops.
Changed redundancy cost or
procedures
Croatia; Italy; Lao PDR; Portugal Lao PDR eliminated the requirement for third-party approval before
an employer can dismiss one worker or a group of nine workers and
reduced the severance payment for employees with 5 and 10 years of
tenure.
Reformed legislation regulating
worker protection and social
benefits
Belarus; Italy; FYR Macedonia; Morocco Morocco implemented an unemployment insurance scheme.
Note: Reforms affecting the labor market regulation indicators are included here but do not affect the ranking on the ease of doing business.

Doing Business 2016
S
tarting a business in Haiti takes 12
procedures and more than three
months. Formal registration of a
company is so complicated that the pro-
cess cannot be completed without using
the services of third parties—lawyers and
notaries. Company statutes are often
drafted by an attorney, then need to be
certified by a notary before being submit-
ted for incorporation. The result is an
additional cost burden for entrepreneurs
trying to navigate the complex process to
enter the formal sector. In New Zealand,
by contrast, an entrepreneur can complete
the entire process of company formation
in just a few hours through a single online
procedure. There are many reasons why
Haiti has far fewer registered limited
liability companies relative to population
size—only 6 per 100,000 working-age
people in 2012, compared with 1,507
per 100,000 working-age people in New
Zealand.1
But its burdensome entry regula-
tions are surely one of them.
Formalization has many benefits. Formally
registered companies tend to have greater
profits,investmentsandproductivity,2
while
their employees benefit from social secu-
rity and other legal protections.3
As more
businesses enter the formal sector, the
government’s tax base broadens, yielding
additional revenue for social and economic
policy priorities. Moreover, increases in the
number of registered businesses have been
linked to greater economic growth and job
creation.4
Yet in many economies around
the world, entrepreneurs continue to face
excessively burdensome entry regulations.
Formalizing a business may involve multi-
ple interactions with government agencies
and with third-party private professionals
whose services are either required by law or
desirable because of regulatory complexity
(figure 5.1).5
Even where the use of third parties is not
explicitly required, unnecessary bureau-
cratic steps and long delays at government
agencies can create ample opportunities
for corruption and bribery—and provide
an additional incentive for involving third
parties early in the start-up process. While
administrative delays at some govern-
ment agencies may reflect meticulous due
diligence, research has found that entry
regulation can serve as a mechanism for
rent extraction, with heavier regulation
correlated with greater corruption and a
larger informal sector.6
By capturing the steps in the process
of forming a legal enterprise, the Doing
Business indicators on starting a business
shed light on the necessity for and cost of
third-party involvement in this process. The
indicators record all procedures officially
required—or commonly done in practice—
for a local entrepreneur to start a limited
liability company, along with the time and
cost to complete those procedures and the
paid-in minimum capital requirement. Data
show that the more cumbersome the pro-
cess is, the more likely it is for third-party
professionals to be involved.
THE COSTS OF INVOLVING
THIRD PARTIES
The start-up process can vary consider-
ably in the number and complexity of
procedures. Complying with the require-
ments often necessitates third-party
ƒƒ Most of the cost of starting a business
comes from the fees of third-party
professionals such as lawyers and
notaries.
ƒƒ Entrepreneurs use third-party services
in business start-up mostly because
the process is too complex.
ƒƒ Economies with greater third-party
involvement in business incorporation
tend to have more businesses
operating in the informal sector. They
also tend to have less accessible laws
and regulations and less efficient
systems of civil justice.
ƒƒ Notary services are used in business
start-up in 76 of the 189 economies
covered by Doing Business.
ƒƒ Latin America and the Caribbean has
the largest share of economies where
legal services are used in the start-up
process.
Starting a business
Third-party involvement in company formation

55Starting a Business
involvement, whether by law or in prac-
tice. Entrepreneurs use legal or notary
services to start a business in 53% of the
189 economies covered by Doing Business.
Hiring a lawyer is most common in Latin
America and the Caribbean—while using
a notary’s services is most common in
Sub-Saharan Africa, Latin America and
the Caribbean and the Middle East and
North Africa (figure 5.2).
Where entrepreneurs employ third-party
professionals to assist in start-up, they
often do so for company incorporation
and tax registration. Doing Business data
reveal that these formalities are the
major bottlenecks in the start-up process,
requiring more procedures than other
formalities such as business licensing
and inspections. Company incorporation
alone can involve multiple procedures. In
Bhutan, for example, entrepreneurs want-
ing to set up a company must first submit
a project proposal or business plan to
the Ministry of Economic Affairs before
proceeding to the Office of the Registrar
for incorporation. In the Seychelles
incorporation requires several separate
procedures. First the company founders
must deposit the memorandum and
articles of association at the Companies
Registry. Then the registrar certifies that
the company is incorporated. And after
that the founders must file information
on the directors, company secretary and
the registered business office.
The need to involve third-party profes-
sionals not only adds to the bureaucratic
burden of the start-up process; it also
imposes a cost that can be prohibitive to
entrepreneurship. Indeed, Doing Business
data show that professional services
account for most of the cost to start a
business (figure 5.3).
Entrepreneurs often hire lawyers or
notaries simply because business reg-
istration formalities are so complex that
complying with all the requirements
is almost impossible without external
help. Complex entry regulation can also
encourage businesses to remain informal.
Studies show that informal businesses
are more common in economies where
institutions foster complex rules and
regulations.7
As evidenced by Doing
Business data, high costs for business
incorporation, especially those incurred
through third-party involvement, can
drive entrepreneurs to choose to operate
in the informal sector. Analysis shows
a strong correlation between the cost
of third-party involvement in business
start-up and the level of informality (fig-
ure 5.4). For example, there is a strong
positive association between the cost
incurred in using third-party services in
start-up and both the percentage of firms
competing against the informal sector
and the percentage identifying informal-
ity as a major constraint to their business
operations. In other words, the higher
the cost of third-party services because
of complicated rules and regulations, the
higher the level of informality.
Economies where the start-up process
necessitates third-party involvement
also tend to do worse on indicators
measuring regulatory transparency
and the performance of the civil justice
system. The characteristics of good
regulatory governance include clarity,
Figure 5.1 What business start-up procedures may involve third parties?
• Check proposed
company name
• Deposit minimum
capital in a bank account
Preregistration
• Register with tax authorities
• Obtain a business license
• Enroll employees in
social security
Postregistration
• Draft articles of
incorporation
• Prepare and legalize the
company’s founding
documents
• Represent company
throughout the registration
process
• Prepare company statutes
and registration documents
Legal
Advice
Legal
Advice
• Apply for incorporation
• Pay fees
• Complete other procedures
under the mandate of the
commercial registry
Registration
• Notarize the company’s
deeds and articles of
association before
registration
• Notarize founding acts
• Witness company officers’
signature of the bylaws
• Notarize the incorporation
documents
• Certify and notarize state
registration, legal accounting
books and other
postregistration documents

predictability, autonomy, accountability,
participation and open access to infor-
mation. Each of these aids in making a
regulatory system transparent in the
eyes of stakeholders, helping to attract
investment.8
And introducing online
solutions for regulatory compliance
can help make the process less costly,
encouraging entrepreneurship, eco-
nomic development and growth.9
Analysis shows a strong negative asso-
ciation between third-party involvement
in business start-up and both the
accessibility of laws and regulations and
the efficiency of the civil justice system
(figure 5.5). These relationships remain
significant even after controlling for
income differences across economies.
It is no surprise that where laws are
opaque and the justice system is inef-
ficient, entrepreneurs need to engage
Figure 5.3 Most of the cost of business start-up comes from professional services
0
200
400
600
800
1,000
1,200
OtherPublication
of notices
LicensingBusiness
registration
Notary
services
Legal
services
Average cost to start a business,
by source (US$)
0
10
20
30
40
Third-party
involvement
No third-party
involvement
Average cost to start a business
Figure 5.2 Where are legal or notary services used in starting a business?
IBRD 41853
SEPTEMBER 2015
Legal services used
Notary services used
Both legal and notary services used
Legal and notary services not commonly used

the services of lawyers and notaries
to get things done—an outcome that
in itself runs counter to the principles
of good governance and regulatory
transparency.
NOTARIES AT BUSINESS
START-UP
As public officers, notaries are appointed
by governments and public agencies to
certify documents and make them official.
Among their most fundamental roles is
to maintain impartiality. But while there is
much commonality in what notaries do in
economies around the world, there is also
much variation in the powers they have
and in the use of notary services. Laws
in some economies empower notaries to
perform critical tasks and exercise higher
levels of authority and jurisprudence. The
law defining the role of notaries in Italy,
for example, grants them the sole author-
ity to authenticate property transactions
as well as the authority to draft and
execute public deeds of incorporation,
including company bylaws.10
Entrepreneurs use notary services in
business start-up in 76 of the 189 econo-
mies covered by Doing Business—in more
than 40 of them, at least in part because
of legal requirements to do so. This
practice of using notary services appears
to vary little with differences in income
level (figure 5.6). It differs much more by
region. The practice is most prevalent in
Sub-Saharan Africa and Latin America
and the Caribbean, where notaries play a
notably crucial role in legal transactions,
including the creation of legal entities,
the transfer of land and the verification
Figure 5.4 Economies with greater costs for third-party involvement in business start-up tend to have a higher level of informality
Share of firms identifying informality as a major constraint (%)Share of firms competing against informal sector (%)
Cost of third-party services (% of income per capita) Cost of third-party services (% of income per capita)
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
100
90
80
70
60
50
40
30
20
10
0
0 10 20 30 40 50 60 70 80 90 100
Sources: Doing Business database; Enterprise Surveys database (http://www.enterprisesurveys.org), World Bank.
Note: The cost of third-party services is based on the fees that an entrepreneur in each economy typically pays to lawyers or notaries to start a business. The correlation between
the cost of third-party services and the share of firms competing against the informal sector is 0.31. The correlation between the cost of third-party services and the share of
firms identifying informality as a major constraint is 0.34. The relationships are significant at the 1% level after controlling for income per capita.
Figure 5.5 Greater third-party involvement in start-up is associated with less
regulatory transparency and less efficiency in the civil justice system
0
0.1
0.2
0.3
0.4
0.5
0.6
High third-party
involvement
No third-party
involvement
The laws are publicized
and accessible (score)
0
0.1
0.2
0.3
0.4
0.5
0.6
High third-party
involvement
No third-party
involvement
Civil justice is not subject to
unreasonable delays (score)
Sources: Doing Business database; World Justice Project 2014 database (http://worldjusticeproject.org).
Note: The third-party involvement measure is computed based on the number of interactions an entrepreneur in
each economy needs to have with lawyers or notaries to start a business. World Justice Project scores range from
0 to 1, with 1 being the best possible score. The relationships are significant at the 1% level after controlling for
income per capita.
Figure 5.6 The practice of using
notary services in the start-up process
appears to follow similar patterns across
income levels
0
10
20
30
40
50
High
income
Upper
middle
income
Lower
middle
income
Low
income
Share of economies where
notary services are used (%)

of legal documents (figure 5.7). Indeed,
in most economies in these two regions,
legal transactions can rarely be complet-
ed without the involvement of a notary.
Practices vary among economies in Latin
America. In Argentina, for example, a
company is not obligated to have its
bylaws notarized, but it must have the
specimen signatures of its founding part-
ners certified by a notary. In Guatemala
company founders must present a letter
from a notary to open a bank account, and
the notary also draws up the deed of con-
stitution. In Sub-Saharan Africa there was
a noteworthy change in 2014, when the
Council of Ministers of the Organization
for the Harmonization of Business Law
in Africa (known by its French acronym
OHADA) adopted a revised Uniform
Act on Commercial Companies and
Economic Interest Groups. The new act
made the use of notary services in busi-
ness start-up optional in the 17 OHADA
member states. Yet the practice remains
prevalent in OHADA countries. For
example, in Burkina Faso, where proof of
capital deposit is required for incorpora-
tion, a notary certifies the declaration of
start-up capital subscriptions. In Côte
d’Ivoire a notary usually drafts the com-
pany statutes and certifies the paid-in
capital.
Among OECD high-income economies,
notarization is widely used in business
start-up in Italy and Poland as well as
in the Netherlands, where a company’s
public deed of incorporation and bylaws
are often executed before a notary. The
notary profession in some high-income
economies has seen significant advances
thanks to reforms introducing electronic
systems. In Belgium the e-notariat sys-
tem enables notaries to file a company’s
deed of incorporation electronically with
different institutions and obtain its enter-
prise number within minutes. In Croatia
notaries can use an electronic system to
submit documents to courts.
Across Europe and Central Asia, 31%
of economies include notary services
in business formalization. In Bosnia and
Herzegovina the 2002 Law on Notary
requires that all documents needed for
registering a company be prepared and
certified by a notary. In Turkey a com-
pany’s legal accounting books must be
certified by a notary; in Kazakhstan the
certificate of state registration must be
authenticated.
Notarization not only represents an addi-
tional start-up formality often required by
regulators; it can also be a costly transac-
tion. Globally on average, entrepreneurs
incur notary fees amounting to 5.6% of
income per capita when starting a busi-
ness. Average rates are highest in OECD
high-income economies, followed by
Latin America and the Caribbean (see
figure 5.7). In some economies, such as
Chad and Costa Rica, notary fees for busi-
ness registration are fixed by regulation.11
In others, they represent a percentage
of the company’s start-up capital or are
negotiated on the basis of the services
provided.
ATTORNEYS AT BUSINESS
START-UP
The use of legal services in the company
registration process also adds to the
financial burden of starting a busi-
ness—and even more so than the use of
notary services. Around 17 economies
covered by Doing Business have laws
mandating the use of legal services in
company registration. One of these is The
Bahamas, where a lawyer must prepare a
company’s registration documents, such
as the memorandum of association.
But even in economies where the use
of legal services is not required by law,
some entrepreneurs seek legal guidance
to ensure that the registration process
goes smoothly—because the process
can be far too complex to navigate
without professional assistance. Local
entrepreneurs in St. Kitts and Nevis, for
example, hire lawyers to prepare com-
pany documents even though this is not
required by law. Similarly, in Swaziland
entrepreneurs can use the standard
forms available for the memorandum and
articles of association, but most choose
to hire a lawyer anyway, to facilitate the
start-up process. Worldwide, the most
common reasons for hiring a lawyer at
Figure 5.7 Notary services are most widely used at start-up in Sub-Saharan Africa
and Latin America and the Caribbean—while the fees are highest in OECD high-income
economies
0
10
20
30
40
50
60
East Asia
Pacific
Europe
Central Asia
OECD
high income
Middle East
North Africa
Latin America
Caribbean
Sub-Saharan
Africa
0
280
560
840
1,120
1,400
Share of economies where notary services are used
Average cost of notary services
notary services are used (%)
Average cost of
notary services (US$)
Note: Notary services are not used in business start-up in South Asia. The measure of cost also reflects the
frequency of interaction with notaries because it captures all costs associated with using notary services within
each economy as well as across the economies in each region.

start-up are to prepare and draft articles
and memorandums of association, sign
company documents, prepare company
statutes, conduct name searches and
draft company deeds.
Overall, entrepreneurs use legal services in
the start-up process in 15% of the econo-
mies covered by Doing Business, with the
practice being most common among
upper-middle-income and high-income
economies (figure 5.8). Examples from
several economies illustrate the kinds of
services that lawyers provide. In República
Bolivariana de Venezuela lawyers are
required to provide a legal assessment
as part of the process of preparing a
company’s incorporation documents—a
procedure that takes five days and costs
more than 87% of income per capita. In
St. Lucia entrepreneurs hire a lawyer to
conduct a company name search and get
an approval for the proposed name, which
is rarely granted on the first attempt. Once
the Commercial Registry guarantees
the approval of the company name, an
attorney prepares incorporation docu-
ments, which takes about two days and
costs 18% of income per capita. In Iraq
lawyers must draft a company’s articles of
association and are often responsible for
completing the entire registration process.
While drafting the articles of association
takes only one day, the overall cost of
using legal services for start-up averages
about 19% of income per capita.
Among regions, Latin America and the
Caribbean has the largest share of econ-
omies where entrepreneurs hire lawyers
for company registration (figure 5.9).
It also has the highest average cost of
doing so, with fees ranging from roughly
$70 in Guyana to more than $10,000
in República Bolivariana de Venezuela.
The legal services vary. In Antigua and
Barbuda the owners of a new company
must have a lawyer provide a declara-
tion attesting that they are not bankrupt,
are mentally sound and are over 18 years
old. In practice, they also have an attor-
ney prepare all the incorporation docu-
ments, including the notice of address
and the articles of incorporation. In
Ecuador those starting a new company
hire a lawyer to prepare the minutes of
incorporation, and in Bolivia they engage
an attorney to prepare the articles of
incorporation, bylaws and constitution
acts. The fee schedule established by the
Bolivian lawyers association (Colegio de
Abogados) sets out a minimum fee for
company incorporation amounting to
around 42% of income per capita plus
2% of the company’s capital.
In Sub-Saharan Africa, by contrast, legal
services are rarely used in the com-
pany incorporation process. The prac-
tice is most prevalent in South Sudan,
Swaziland and Uganda. Several other
countries in the region implemented
reforms in recent years eliminating the
need to use legal services when forming
a company. For example, in 2009 Liberia
introduced standard forms for articles
of incorporation, making them avail-
able at several government offices in
Monrovia. These enable entrepreneurs
to register their business without an
attorney. In the same year, the South
African government eliminated the need
to submit documents through a legal
professional.12
While the legal services used in the start-
up process are most costly on average in
Latin America and the Caribbean, they
are also quite costly in the Middle East
and North Africa. In Lebanon each newly
formed company must retain an attorney.
The annual retainer fee, increased in 2012
by the Beirut Bar Association, can be as
Figure 5.8 Entrepreneurs are most
likely to use legal services for business
incorporation in upper-middle-income
economies
0
5
10
15
20
25
High
income
Upper
middle
income
Lower
middle
income
Low
income
legal services are used (%)
Figure 5.9 Legal services for business incorporation are most commonly used—and
most expensive—in Latin America and the Caribbean
0
10
20
30
40
50
60
Sub-Saharan
Africa
OECD
high income
Europe
Central Asia
East Asia
Pacific
South
Asia
Middle East
NorthAfrica
LatinAmerica
Caribbean
0
300
600
900
1,200
1,500
Share of economies where legal services are used
Average cost of legal services
legal services are used (%)
Average cost of
legal services (US$)
Note: The measure of cost also reflects the frequency of interaction with lawyers because it captures all costs
associated with using legal services within each economy as well as across the economies in each region.

high as 20% of income per capita. In
West Bank and Gaza a lawyer is hired to
draft the articles of association and the
company bylaws. Once these documents
are complete, they must be stamped by
the Lawyers Bar Association before being
filed at the company controller. This
procedure alone costs more than $1,000.
Europe and Central Asia has the second
highest average cost of lawyers’ services in
company registration. In Cyprus there is a
statutory requirement to have a lawyer pre-
parethememorandumandarticlesofasso-
ciation, which costs a small or medium-size
company about $1,300. When starting a
business in Hungary, the first procedure is
to hire a lawyer to represent the company,
create the company deed and prepare all
the other founding documents. The use of
a lawyer is required throughout the regis-
tration process, and while the cost varies
depending on the complexity of the case, it
can end up close to $1,000—around 7% of
income per capita.
Globally on average, it costs an entrepre-
neur around 18% of income per capita to
hire a lawyer to assist in starting a busi-
ness, more than the average cost incurred
for notary services. In OECD high-income
economies, by contrast, the average
notary fees for business start-up are
almost four times the average legal fees.
While the cost of using incorporation
lawyers is high, the upside is that once a
lawyer is hired, incorporating a business
usually does not take long. Globally on
average, procedures that involve the
use of a lawyer’s services take only two
days to complete, while those involving
a notary’s services take more than twice
as long. But in some cases the time
requirements can be more burdensome.
In Haiti preparation of the company
statutes, which must be done by a law-
yer, takes 10 days. In Nepal verifying
and drafting memorandums and articles
of association—a procedure for which
entrepreneurs continue to use legal
services even though they are no longer
required to—takes about 5 days.
Where the start-up process entails
complex procedures and many bureau-
cratic hurdles, entrepreneurs are better
off using professional services. Hiring
a lawyer may be expensive, but it can
save time and help ensure that the
process goes smoothly. Better yet
would be a business registration pro-
cess designed so that the use of legal
services is unnecessary. Entrepreneurs,
especially those starting a small busi-
ness, should be able to complete the
process without having to pay exorbi-
tant lawyers’ fees.
REFORMS AND GOOD
PRACTICES
Using the services of third parties in busi-
ness start-up is a common and estab-
lished practice. But governments have
the power to ease the burden that this
represents, saving entrepreneurs both
time and money (box 5.1). One way to do
so is by making the use of such services
optional.
A number of countries have taken steps
to do just that. Burundi enacted a law in
2011 that eliminated the need to have
articles of association notarized.13
This
alone reduced the cost to register a busi-
ness by 21% and the time by four days.
Similarly, Albania adopted a law in 2007
that made the notarization of incorpora-
tion documents optional.14
This led to
cost savings of 8% at business start-up.
In Samoa a new Companies Act enacted
in 2008 created a standard model of
incorporation forms and thus made the
use of lawyers optional. By eliminating
the requirement to visit a lawyer, this
reduced the cost to start a business by
4% and the time by seven days. Hungary
not only made the use of notaries
optional but also limited the role of attor-
neys by introducing standard articles of
association and online incorporation. In
most cases company documents are still
prepared by a lawyer, but the time and
cost have been reduced.15
Establishing and promoting the use of
online registration platforms is a good
practice that can reduce opportunities
for bribery as well as cut costs associated
with third-party services. Online incorpo-
ration systems generally do not require
the involvement of lawyers or notaries as
intermediaries to authenticate company
documents and complete the registra-
tion process. Such platforms may also
enable digital forms of identification,
such as electronic signatures, thereby
replacing some of the functions of nota-
ries. The Republic of Korea eliminated
the requirement to have a company’s
Box 5.1 Indonesia eases the burden of third-party involvement in incorporation
The use of notary services throughout the business start-up process remains inevitable in Indonesia. But the country has intro-
duced changes reducing the burden of third-party involvement. In 2007 Indonesia launched online services related to business
start-up that enabled notaries to complete company name searches and reservations more quickly.a
The following year it in-
troduced standard business incorporation forms. And in 2009 Indonesia reduced notary fees—including the fees for notarizing
company deeds—by amending the official fee schedule. These changes have led to time and cost savings for entrepreneurs. If
Indonesia keeps up the pace in adopting international good practices in the business start-up process, entrepreneurs starting a
simple business like the one in the Doing Business case study soon will no longer need to involve third parties.
a.The online system (Sisminbakum) was introduced on January 31, 2001, by a decree of the minister of justice and human rights (decree M-01.HT.01.01 of October 4, 2000).

articles of association and meeting
minutes notarized through an amend-
ment to its Commercial and Notary
Public Acts in April 2008, then moved
toward online incorporation a couple of
years later. Portugal launched an online
registration portal in 2007 and Germany
did so in 2008, both after adopting the
necessary regulations to allow electronic
incorporation.16
Germany made elec-
tronic registration compulsory in all its
states and allowed online publication of
incorporation notices, reducing start-up
time by six days.
In 2013 the Chilean government made
starting a business simpler by allowing
entrepreneurs to register certain types
of legal entities online free of charge.17
This change reduced the time it takes
to have company statutes registered by
notaries from two days to one. In the
past year the former Yugoslav Republic of
Macedonia made electronic submission
mandatory for registration applications
for new limited liability companies. The
use of electronic signatures on company
documents eliminates the need to get
them notarized.
Governments can also limit the burden
of third-party services in the start-up
process by increasing the number of
notaries available to provide services or
by regulating the fees that notaries can
charge. In the Democratic Republic of
Congo in 2011/12, new public notaries
were appointed in the city of Kinshasa,
where previously only one had been
available. This cut the time required to
get incorporation documents notarized
in half. In Côte d’Ivoire the government
issued a decree in May 2013 that low-
ered the notary fees in forming a limited
liability company by introducing a scale
based on the start-up capital.18
The
notary fees for incorporation were also
reduced in Guinea, through a 2012 agree-
ment between the one-stop shop and the
Chamber of Notaries.
CONCLUSION
Local entrepreneurs seeking to formally
register a new business may confront
several bottlenecks along the way. Where
the business registration process does
not follow good practices, the opportu-
nity costs can be high, especially for small
and medium-size businesses—because
company founders may end up spending
far too much of their scarce resources on
third-party services. Moreover, frequent
use of third-party services in business
incorporation is associated with a higher
level of informality, less regulatory trans-
parency and a less efficient civil justice
system. Many economies have much
room for improvement in the regula-
tory environment for business entry,
particularly in making compliance with
regulatory requirements less complicated
and in limiting the need to use third-party
services. One way to do so is by making
the use of third-party services an option
rather than a requirement.
NOTES
This case study was written by Julia Brouillard-
Soler, Baria Nabil Daye, Morgann Courtney Reeves,
Julie Ryan, Valentina Saltane and Evgenia Ustinova.
1. Entrepreneurship Database (http://www
.doingbusiness.org/data/exploretopics
/entrepreneurship), World Bank Group.
2. Sharma 2014.
3. Rand and Torm 2012.
4. Acs and others 2012.
5. Businesses that are complex or that operate
in medium- to high-risk sectors may
choose to seek the assistance of third-party
professionals. But the discussion here refers
to a simple, “low-risk” business that conducts
general commercial or industrial activities, as
outlined in the Doing Business case study.
6. Djankov and others 2002.
7. Elgin and Oyvat 2013; Bruhn and McKenzie
2014; Williams 2014.
8. Bertolini 2006.
9. Vallbé and Casellas 2014.
10. Law 89 of February 16, 1913.
11. In Chad notary fees were fixed by Decree
004/PR/PM/MJ/2010 of January 5, 2010.
In Costa Rica the fee structure established
by Executive Order 36562-JP of January 31,
2011 (section 95 a), fixes the fee for notarizing
articles of association at 150,000 colones
($288) for any corporation, though notaries
may negotiate other fees.
12. Corporate Law Amendment 63(3) of the
Companies Act.
13. Law on Public and Private Companies,
article 33.
14. Law 9723/2007, on the National Registration
Center, of May 2007.
15. Amendments to the Companies Act made
the use of notaries optional by authorizing an
attorney who drafts a company’s corporate
documents to also authenticate specimen
signatures and other relevant documents.
16. In Portugal a special system of online
incorporation for civil and commercial
companies was created by Decree-
Law 125/2006 of June 29, 2006, and
Administrative-Rule 657-C/2006. In Germany
electronic registration and publication were
enabled by the Act on the Maintenance of
Electronic Commercial Registers, Cooperative
Registers and the Companies Register,
effective January 1, 2007.
17. This change was introduced through Law
20.659.
18. Decree 2013/279, issued May 22, 2013, sets
the notary fees for the formation of limited
liability companies. These fees are 120,000
CFA francs ($228) for companies with
start-up capital of up to 1 million CFA francs
($1,900) and 3% of the share capital for
companies with start-up capital between 3
million CFA francs ($5,700) and 9 million CFA
francs ($17,100).

Doing Business 2016
C
onstruction regulations can help
protect the public from faulty
building practices. But to do so
they need to be clear as well as thor-
ough. Where regulations lack clarity,
there is a risk of confusion among both
builders and authorities, which can lead
to unnecessary delays, disputes and
uncertainty. And if regulatory procedures
are too complicated or costly, builders
tend to proceed without a permit.1
By
some estimates 60–80% of building
projects in developing economies are
undertaken without the proper permits
and approvals.2
Where informal construction is rampant,
the public can suffer. Take the case of
Nigeria, which lacks an approved building
code setting the standards for construc-
tion. Without clear rules, enforcing
even basic standards is a daunting task,
and many buildings fail to comply with
proper safety standards. Structural inci-
dents have multiplied. According to the
Nigerian Institute of Building, 84 build-
ings collapsed in the past 20 years, killing
more than 400 people.3
The collapse of Rana Plaza in Bangladesh
in April 2013, which claimed more than
1,000 lives, also resulted from a lack of
the necessary quality control mecha-
nisms. The building was constructed on
a pond without authorization to be on
one, then converted without permission
from commercial to industrial use, then
extended three floors beyond what was
specified in the original building permit.
Moreover, the builders used substandard
construction materials (which led to an
overload of the building’s structure exac-
erbated by vibrations from its genera-
tors).4
Since the collapse of Rana Plaza,
however, Bangladesh has sought the
assistance of the World Bank Group in
strengthening its construction permitting
system, a process that is ongoing.5
In short, quality matters a great deal in
the construction permitting system. Until
this year Doing Business has measured the
efficiency of the system, independent of
its level of quality. Through the dealing
with construction permits indicators,
Doing Business has tracked the proce-
dures, time and cost to comply with the
formalities to build a warehouse—includ-
ing permits, notifications, inspections
and utility connections. It has not taken
into account the existence of any qual-
ity control mechanisms or rewarded
economies for having the proper safety
mechanisms in place. Nor has it directly
assessed the quality or clarity of building
regulations.
This year Doing Business continues to
measure efficiency in construction per-
mitting while also adding a measure of
quality. The building quality control index
assesses both quality control and safety
mechanisms across 189 economies in
six main areas: transparency and quality
of building regulations; quality control
before, during and after construction;
liability and insurance regimes; and pro-
fessional certifications (figure 6.1).
ƒƒ This year Doing Business introduces a
new indicator to measure the quality
of the construction permitting system.
The building quality control index
assesses different dimensions of
quality in the regime underpinning
construction permitting in 189
economies.
ƒƒ High-income economies tend to have
better quality control and safety
mechanisms in place—both in their
legal framework and in practice.
ƒƒ In 68% of economies the building
regulations are available online.
ƒƒ Twenty-two economies have no legal
requirement for inspections of any
type during construction, and 13
economies no legal requirement for a
final inspection.
ƒƒ In the majority of economies the
architect who designed the plans or
the construction company will be held
liable for any structural defects. But
less than half of economies require any
party to purchase insurance to cover
defects.
ƒƒ Economies with a more efficient
construction permitting system tend to
have better quality control and safety
mechanisms in place.
Dealing with construction
permits
Assessing quality control and safety mechanisms

63Dealing With Construction Permits
HOW TRANSPARENT ARE
BUILDING REGULATIONS?
Beyond causing confusion about how to
proceed, construction regulations that
are unclear and overly complicated can
also increase opportunities for corrup-
tion. Analysis of World Bank Enterprise
Survey data shows that the share of firms
expecting to give gifts in exchange for
construction approvals is correlated with
the level of complexity and cost of deal-
ing with construction permits.6
And while
Doing Business does not directly study
urban planning systems across econo-
mies, research studies have highlighted
the importance of good regulations in the
area of urban planning and construction,
finding that regulations that restrict land
use lead to higher housing costs.7
These
higher housing costs reduce access to
housing, though the same regulations
that increase costs may also be improving
the amenity value of the projects that
are completed and therefore enhancing
property values.
To measure the quality and transparency
of building regulations, Doing Business
looks at whether the regulations are avail-
able online, are available at the relevant
permit-issuing agency free of charge, are
distributed through an official gazette
or must be purchased. The results show
that 68% of economies—ranging across
all regions and income levels—have
put their regulations online. Only 16
economies require that the regulations
be purchased—Barbados, Belarus, Fiji,
Ghana, Grenada, Honduras, Moldova,
Samoa, Sierra Leone, St. Kitts and
Nevis, St. Vincent and the Grenadines,
Swaziland, the Syrian Arab Republic,
Trinidad and Tobago, the United States
(Los Angeles) and Vanuatu. And in 18
economies the regulations are not easily
accessible. The rest make their building
regulations available at the relevant
authority or distribute them through an
official gazette.
But simply making building regulations
available is not enough if the require-
ments for obtaining a building permit are
not clearly laid out in the regulations (or
on a website or in a pamphlet). Applicants
need to have a list of the documents and
preapprovals required before applying, so
as to avoid situations where the permit-
issuing authority can arbitrarily impose
additional requirements. And applicants
need to be aware of the required fees and
how they are calculated. While almost
all economies specify the list of required
documents, only three-quarters make the
fee schedule accessible and even fewer
provide a list of the required preapprovals
or of the agencies to which documents
must be submitted.
Azerbaijan is one economy that has taken
serious steps to make its legislation more
comprehensible—by adopting a new
construction code that consolidates its
previous building regulations into a single
framework (box 6.1).
WHERE ARE QUALITY
CONTROLS IN PLACE?
Beyond good regulations, an effective
inspection system is also critical in
protecting public safety. Without an
inspection system in place, there is no
mechanism to ensure that buildings com-
ply with proper safety standards, increas-
ing the chances of structural defects. And
as a first step, having technical experts
review the proposed plans before con-
struction even begins can reduce the risk
of structural failures later on.
Quality control before
construction
In almost all economies (178 of 189) a
government agency is required to verify
that the building plans are in compliance
with the building regulations—and in 19 of
these economies plans must be reviewed
Figure 6.1 What the data for the building quality control index cover
Quality
of building
regulations
Quality
control before
construction
Quality
control during
construction
Quality
control after
construction
Data on the quality of building regulations measure the accessibility of building
regulations and the clarity of requirements for obtaining a building permit.
Data on quality control before construction assess whether licensed or
technical experts are involved in approving building plans.
Data on quality control during construction record the types of inspections that are
legally mandated during construction and whether they are carried out in practice.
Data on quality control after construction record whether final inspections are legally
mandated after construction and whether they are carried out in practice.
Data on liability and insurance regimes record which parties are held legally liable
for structural defects and which are required to obtain insurance policies to cover
damages caused by defects.
Liability and
insurance
regimes
Data on professional certifications assess the qualification requirements for the
professionals who approve building plans and for those who supervise construction.
Professional
certifications

both by a government agency and by
either the national association of architects
or an independent expert (a firm or an
individual). In 9 economies plans may be
reviewed by the national association of
architects or an independent expert alone
without the involvement of a government
agency. Ukraine is the only economy
where construction plans do not need to
be reviewed before a building permit is
issued. For projects like the warehouse in
the Doing Business case study, the builder
simply needs to submit a declaration of the
commencement of construction works.8
In 32 of the economies where a govern-
ment agency reviews and approves the
plans (13 of them in Sub-Saharan Africa),
no licensed architect or engineer is part of
the committee that approves the plans.
Instead, the plans are simply reviewed by a
civil servant who may not have the neces-
sary technical qualifications or expertise.
While low-income economies rely almost
solely on government agencies for the
review, high-income economies tend
to involve independent experts in the
process (figure 6.2). And 13 economies,
all of them upper middle or high income,
require that plans be reviewed by both a
government agency and an independent
expert—Australia; Bosnia and Herzegovina;
Bulgaria; France; Germany; Hong Kong
SAR, China; Latvia; Lebanon; Maldives;
Montenegro; Serbia; Singapore; and Spain.
Quality control during
construction
Quality control during construction is
vital to ensuring the safety of a building. It
also helps in identifying possible defects
as they occur. Economies use different
types of inspection systems. Forty-six
economies do not involve a government
agency at all but instead allow a supervis-
ing engineer or firm to take responsibility
for ensuring the safety of the building.
Twenty-three of them allow the building
company to rely on an in-house engineer
to supervise construction, 16 require the
building company to hire an external
supervisor or firm, and 7 require supervi-
sion by both an in-house engineer and an
external engineer. Many other economies
have a mixed system, requiring the use
of an in-house or external supervising
engineer while also having a government
agency conduct its own inspections.
The practice of having an in-house
engineer conduct inspections during con-
struction is most common in Europe and
Central Asia (used in 73% of economies)
and East Asia and the Pacific (56%) (fig-
ure 6.3). Requirements to hire an external
supervising engineer or firm to conduct
inspections are not common, including
among economies in Europe and Central
Asia and the OECD high-income group.
However, in some OECD high-income
economies, such as Australia, Iceland and
New Zealand, an external firm generally
conducts certain types of inspections. No
economy in South Asia requires the use
of an external firm to conduct inspec-
tions, and very few do so in Latin America
and the Caribbean.
Figure 6.2 Upper-middle-income and high-income economies are more likely than
others to require that independent experts review building plans
0
20
40
60
80
100
Review by government agency Review by association of architects
Review by independent expert
High incomeUpper middle incomeLower middle incomeLow income
Share of economies with type of review
for building plans (%)
Note: The percentages shown in the figure are based on data for 189 economies, though for economies in which
Doing Business collects data for two cities, the data for the two cities are considered separately.
Box 6.1 A new building code in Azerbaijan
In September 2012 the government of Azerbaijan adopted a new Urban Planning and Construction Code. Most of the code’s
provisions came into effect on January 1, 2013, and a series of implementing laws and regulations have followed. The new code
consolidates construction regulations into a single framework covering everything from the issuance of building permits to
inspections of construction, qualification requirements for construction professionals and the issuance of occupancy permits.
Among the noteworthy features introduced by the code: a simplified administrative procedure for small projects, time limits and
a list of required documents for the construction authorization process, and a registry for certified professionals along with a list
of the functions they should perform. The code also classifies construction projects into four categories based on their risk and
complexity, eliminating the need to obtain a building permit for low-risk projects. Finally, the code serves as the foundation for
the new one-stop shop for building permits at the Ministry of Emergency Situations.

Inspections conducted by a government
agency are generally of three types: unan-
nounced or unscheduled inspections (also
known as random inspections), which
can occur at any time and at any stage of
a construction project; phased inspections,
which occur at specific stages of con-
struction, such as at excavation, founda-
tion and so on; and risk-based inspections,
which occur if warranted (for example,
for buildings of a certain size, location
or use). Sub-Saharan African economies
tend to rely on random inspections,
mostly because of a shortage of qualified
staff. Random inspections are sometimes
done simply to verify that a building
permit has been issued. But they can also
become rent-seeking opportunities. In
most cases, however, especially in low-
income Sub-Saharan African economies,
these random inspections do not take
place in practice, even if required by law.9
The majority of economies that rely on
a government agency for quality control
use either phased or risk-based inspec-
tions, though only a few of these opt
for risk-based inspections (figure 6.4).
Phased inspections are most common in
South Asia and East Asia and the Pacific,
used in more than half the economies
in each of these regions. Risk-based
inspections are most common among
OECD high-income economies, though
used in only about a quarter of this group.
Twenty-two economies have no legal
requirement for inspections of any type
during construction. But inspections are
still conducted as a matter of practice in 9
of these economies—Angola, Brazil (Rio
de Janeiro), Equatorial Guinea, Gabon,
the Marshall Islands, Panama, Samoa,
São Tomé and Príncipe and the United
States (New York City). On the other
hand, in 10 economies inspections rarely
occur in practice even though they are
required by law.
Quality control after
construction
While inspections during construction
are an important element of qual-
ity control, verifying that the completed
building was built in accordance with
the approved plans and is safe for use is
equally important. Builders sometimes
deviate from the approved plans. This is
often done to save money, such as when
it costs less to get a building permit for
a smaller building. But the consequences
can be serious. For example, if structural
calculations are done for a two-story
building but the builder adds more lev-
els, this can put excessive stress on the
foundation and lead to the collapse of
the building (similar to the Rana Plaza
case). While some of these issues can be
detected through quality control during
construction, requiring a final inspec-
tion allows a last check for issues that
might have been overlooked earlier and
is essential to ensuring the safety of the
building. Once the building passes this
final inspection, a completion certificate,
certificate of conformity or occupancy
permit is generally issued.
Figure 6.3 Having in-house engineers conduct inspections is more common than
having external engineers or firms conduct them
0
10
20
30
40
50
60
70
80
External engineer or firmIn-house engineer
Sub-Saharan
Africa
Latin
America
Caribbean
Middle East
North Africa
OECD high
income
South AsiaEast Asia
Pacific
Europe
Central Asia
Share of economies with type of engineer
conducting inspections (%)
Figure 6.4 Risk-based inspections are more common in OECD high-income
economies than in other regions
0
10
20
30
40
50
60
70
Risk-based inspectionsPhased inspections
Middle East
North Africa
Europe
Central Asia
OECD high
income
Sub-Saharan
Africa
Latin America
Caribbean
East Asia
Pacific
South Asia
Share of economies with type of
inspection (%)

Economies use different approaches
for the final inspection. Among the 189
economies covered by Doing Business,
84% (159 economies) require one or
more government agencies to conduct
the inspection. Where a joint inspection
is required, it is often done by the permit-
issuing authority and the civil defense
department (or its equivalent). In the 100
economies that allow either an in-house
engineer or an external engineer or firm
to provide supervision during construc-
tion, this engineer is often required to
submit a final report to the permit-issuing
authority attesting that the building was
built in accordance with the approved
plans and regulations. Eleven economies
require this report only from an in-house
engineer, 5 require it only from an exter-
nal party, and only Greece requires it from
both parties (without a final inspection by
a government agency). Yet 50 economies
that require this final report from an in-
house or external engineer still require a
final inspection by a government agency.
All economies in the OECD high-income
group and in Europe and Central Asia
require a final inspection by law (figure
6.5). South Asia and East Asia and the
Pacific have the smallest shares of econo-
mies that do so—though the shares
are still quite large, at 82% and 85%.
Among the 176 economies worldwide
that require a final inspection, 15% rarely
implement it in practice—the majority of
them in Sub-Saharan Africa.
Thirteen economies have no legal require-
ment for a final inspection—Afghanistan,
the Comoros, Equatorial Guinea, Ethiopia,
Guyana, Kiribati, Liberia, Maldives, the
Marshall Islands, the Federated States of
Micronesia, Nicaragua, Samoa and the
Republic of Yemen—almost all of them
low- or lower-middle-income economies.
But in two of these economies—the
Comoros and Samoa—a final inspection
still commonly occurs in practice.
WHO IS HELD LIABLE FOR
STRUCTURAL FLAWS?
When defects are discovered during con-
struction, they are more likely to be easily
remedied. But defects are often discovered
only after the building has been occupied.
Remedying defects at that stage can be
both costly and time-consuming. So it is
important that the responsible party be
held liable and that the parties involved
in the building design, supervision and
construction obtain insurance to cover the
costs of any structural defects.
Under contract and tort laws there can be
a warranty period for the liability, a period
that can be extended for an additional cost
to the owner (because the builder will need
to pay an additional premium to the insur-
ance company). In Belize, New Zealand
and the United Kingdom, for example, the
warranty period can range from one to
three years after the building is completed.
During this period the building contractor
must repair any defects. Contractors com-
monly hold insurance to cover these costs
even if not required to do so by law.
In other economies, however, liability is
generally shared by the contractor and the
architect, often for 10 years. In Australia,
for example, both the contractor and the
architect must have insurance for 10 years.
But even among high-income economies,
very few make this insurance mandatory.
In more than 60% of economies in all
regions except Sub-Saharan Africa, the
architect who designed the plans or the
construction company will be held liable for
any defects, but not the supervising engi-
neer or the agency that conducted inspec-
tions during construction (figure 6.6). In
most cases, who is held liable depends on
the origin of the defect. For example, if the
defect was a result of an error at the design
stage, the architect is usually held liable. In
22% of economies no party is held liable by
law.
Having insurance to cover costs that arise
from structural defects benefits all parties
involved, from clients to contractors. It
ensures that damages will be covered if
defects are detected once the building is
occupied—and when parties know they
are protected, this can encourage more
construction. Having insurance to protect
against the high costs from potential dam-
ages can be particularly important for small
and medium-size construction companies.
More than half of economies (57%) do not
require any party to purchase insurance to
cover structural defects, nor is insurance
commonly purchased as a matter of prac-
tice. While these economies may require
that companies purchase professional
liability insurance or workers’ compensa-
tion insurance, Doing Business looks only
at whether insurance must be purchased
Figure 6.5 Almost all economies require a final inspection by law
0
20
40
60
80
100
South AsiaEast Asia
Pacific
Sub-Saharan
Africa
Latin America
Caribbean
Middle East
North Africa
Europe
Central Asia
OECD high
income
Share of economies that require
a final inspection by law (%)

to cover defects found after the building is
completed. Among the 51 economies that
do require such insurance by law, 75% of
them require the construction company
to have the insurance. Only 15 economies
require the supervising engineer or the
agency that conducts inspections to hold
insurance. And in 30 economies where
insurance is not required by law, most
construction companies and architects
nevertheless purchase insurance as a
matter of practice.
WHAT CERTIFICATIONS ARE
REQUIRED?
The professionals who conduct inspections
ensure safety standards for buildings, so
it is important that they be certified and
have the necessary technical qualifica-
tions. Similarly, the individuals who review
and approve building plans need to have
a technical background in architecture or
engineering to understand whether the
plans meet the necessary safety standards.
Most economies have more stringent qual-
ification requirements for the professionals
responsible for verifying that building
plans are in compliance with the building
regulations than for those who supervise
construction on-site. The professionals
reviewing building plans are required to
have a university degree in architecture or
engineering in 84% of economies—and
must be a registered member of the nation-
al association of architects or engineers in
62%. But only 46% of economies require
these professionals to have a minimum
number of years of practical experience,
and only 28% require them to pass a quali-
fication exam. And 20 economies have no
qualification requirements for the profes-
sionals who review building plans.
The professionals who supervise con-
struction on-site are required to have a
university degree in engineering, con-
struction or construction management
in 73% of economies—and required to
be a registered member of the national
association of engineers in 53% of
economies, the majority of them high-
income economies. Most economies
that have at least two qualification
requirements for the professionals who
supervise construction (one being a
university degree) are also high-income
economies (figure 6.7). Like the profes-
sionals who review building plans, those
who supervise construction on-site
are rarely required to have a minimum
number of years of practical experience
or to pass a qualification exam. And in
28 economies they are subject to no
qualification requirements.
WHY DOES THE QUALITY
MATTER FOR ALL?
The quality of a construction permitting
system matters in ensuring the safety of
construction and consequently of citi-
zens. In general, high-income economies
have better quality control and safety
mechanisms (figure 6.8). Most of these
economies not only have put the neces-
sary safety controls in their legislation but
also have been able to effectively imple-
ment them in practice.
The quality of a construction permitting
system also matters in reducing corrup-
tion—something to which the construc-
tion industry is particularly susceptible in
Figure 6.6 In economies around the world, the architect or construction company is
most likely to be held liable for structural defects
0
20
40
60
80
100
Supervising engineerArchitectConstruction company
Sub-Saharan
Africa
South AsiaEast Asia
Pacific
Latin America
Caribbean
Middle East
North Africa
OECD
high income
Europe
Central Asia
Share of economies where party is
held liable (%)
Figure 6.7 Most high-income
economies have at least two
qualification requirements—including a
university degree—for the professionals
who supervise construction
0
20
40
60
80
100
University degree, minimum years
of experience and certification
University degree plus one other
requirement
No university degree required
High
income
Upper
middle
income
Lower
middle
income
Low
income
Economies by type of qualification
requirements for the professionals who
supervise construction (%)
Note: The percentages shown in the figure are based
on data for 189 economies, though for economies in
which Doing Business collects data for two cities, the
data for the two cities are considered separately.

economiesaroundtheworld.Transparency
and clarity in building regulations can
reduce opportunities for corruption.
Indeed, the findings show that economies
with greater quality and efficiency in their
construction permitting system tend to
have lower levels of perceived corruption
(figure 6.9).
Moreover, the data show that efficiency
goeshandinhandwithquality.Economies
with a more efficient construction per-
mitting system also tend to have better
quality control and safety mechanisms
(figure 6.10). Most of these economies
have managed to put in place systems
that avoid burdensome procedures and
excessive documentation requirements
while still ensuring the necessary reviews
of building plans by qualified profes-
sionals and the necessary safety checks
during construction.
CONCLUSION
Introducing the new building quality
control index has expanded the coverage
of the dealing with construction permits
Figure 6.8 High-income economies have better quality control and safety mechanisms
0
3
6
9
12
15
High
income
Upper
middle
income
Lower middle
income
Low
income
Average building quality
control index (0–15)
0
3
6
9
12
15
Sub-Saharan
Africa
Latin America
Caribbean
East Asia
Pacific
Middle East
North Africa
South AsiaEurope
Central Asia
OECD
high income
Average building quality
control index (0–15)
Figure 6.9 The greater the quality and
efficiency of the construction permitting
system, the lower the level of perceived
corruption in an economy
0
10
20
30
40
50
60
70
76–10051–7526–500–25
Corruption Perceptions Index
(0–100)
construction permits (0–100)
Sources: Doing Business database; Transparency
International data (https://www.transparency.org
/cpi2014/results).
Note: A higher score on the Corruption Perceptions
Index indicates a lower level of perceived corruption.
Data for the Corruption Perceptions Index are for
2014. Economies for which no data are available for
the index are excluded from the sample. These are
Antigua and Barbuda, Belize, Brunei Darussalam,
Equatorial Guinea, Fiji, Grenada, Kiribati, Maldives,
the Marshall Islands, the Federated States of
Micronesia, Palau, San Marino, the Solomon Islands,
St. Kitts and Nevis, St. Lucia, Tonga, Vanuatu, and
West Bank and Gaza. The relationship is significant at
the 1% level after controlling for income per capita.
Figure 6.10 Economies with a more efficient construction permitting system tend to
have better quality control and safety mechanisms
High quality,
low efficiency
High quality,
high efficiency
Low quality,
high efficiency
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score for
building quality control index
Low quality,
low efficiency
Bosnia and
Herzegovina
Afghanistan
Distance to frontier score for efficiency of construction permitting
Taiwan, China
Lao PDR
Note: The figure compares the average distance to frontier score for indicators of the efficiency of construction
permitting (procedures, time and cost to comply with the formalities to build a warehouse) with the distance to
frontier score for the building quality control index. The sample includes all 189 economies. The relationship is
significant at the 5% level after controlling for income per capita.

indicators. Data for this index cover such
key elements as the transparency and
quality of building regulations, the qual-
ity control mechanisms for supervising
construction, and liability and insurance
regimes. The findings show that having
the necessary quality control and safety
mechanisms in place matters in reduc-
ing corruption and that economies with
more efficient construction permitting
systems also tend to have better quality
control and safety mechanisms.
NOTES
This case study was written by Marie Lily Delion,
Anushavan Hambardzumyan, Joyce Antone
Ibrahim and Ana Maria Santillana Farakos.
1. Moullier 2009.
2. De Soto 2000.
3. Agence France Presse, “Nigeria Approves
Building Code,” News24.com, August 3, 2006,
http://www.news24.com/. Because many
cases go unreported, the actual figure is
probably higher.
4. Associated Press, “Bangladesh Official:
Disaster Not ‘Really Serious,’” USA Today,
May 3, 2013; “Nexus of Politics, Corruption
Doomed Rana Plaza,” Dhaka Tribune, April 26,
2013.
5. Ali and Ahmed 2015.
6. World Bank 2009.
7. Glaeser, Gyourko and Saks 2003, 2005.
8. This applies to projects in categories I–III as
defined in Ukraine’s Law on Regulation of
Urban Development of March 12, 2011.
9. For the data on whether inspections during
construction and the final inspection occur in
practice, respondents were asked to assess
whether these inspections occur in practice
all the time, most of the time or not at all.
In cases where respondents gave varied
responses, the team conducted thorough
follow-up with additional respondents to
resolve the differences.

Doing Business 2016
Getting electricity
Measuring reliability, prices and transparency
E
lectricity plays a vital part in the
modern economy. Yet merely hav-
ing access to power is not enough.
The reliability of supply is also crucial.
According to 2013 World Bank Enterprise
Survey data for 135 economies, business
owners perceive an unreliable supply of
electricity as one of the main obstacles to
their activities. In both Sub-Saharan Africa
and South Asia about 45% of firms identi-
fied reliability of the power supply and
connecting to the grid as among the key
constraints to doing business.1
Businesses
in Pakistan estimated losses due to power
outages at up to 34% of annual revenue,
while respondents in the Central African
Republic reported losses of up to 25% of
revenue. Not surprisingly, research shows
that capital (domestic and foreign) tends
to be attracted to countries that are able
to offer a reliable and competitively priced
supply of electricity.2
Since 2011 Doing Business, through its get-
ting electricity indicators, has measured
one aspect of access to electricity—by
recording the time, cost and number of pro-
ceduresrequiredforasmalltomedium-size
business to legally connect a commercial
warehouse to the electrical grid. Over the
years the getting electricity indicators have
served as a benchmarking tool, enabling
utilities and regulators to measure the effi-
ciency of the electricity connection service
and contributing to dialogue on regulatory
reforms and good practices.
But the efficiency of the connection
process—as measured by the time, cost
and number of procedures to get a new
connection—relates to only a small part
of the power sector’s overall performance
in each economy. For this reason Doing
Business introduces two new indicators this
year (figure 7.1). The reliability of supply and
transparency of tariffs index encompasses
quantitative data on the duration and
frequency of power outages as well as
qualitative information on how utilities and
regulators handle power outages and how
tariffsandtariffchangesarecommunicated
to customers. The price of electricity pro-
vides comparable data on electricity prices
for commercial customers (this indicator is
not included in the ranking on the ease of
doing business, however).
The new data broaden the coverage of
the getting electricity indicators, provid-
ing a more comprehensive picture. Yet
the data show that the efficiency of the
connection process and the reliability of
electricity supply appear to be correlated.
In other words, economies where it is
easy to connect to the grid tend to have a
well-developed and reliable network infra-
structure characterized by few outages
(figure 7.2). The Republic of Korea, for
example, has the fastest process for get-
ting a new electricity connection (taking
only 18 days) as well as a low cost to con-
nect (40% of income per capita). Korea
also has the highest possible score on the
reliability of supply and transparency of
tariffs index. Businesses in Seoul typically
experience power outages amounting to
less than an hour a year and can receive
compensation for an outage caused by the
utility if power isn’t restored within five
minutes. The utility uses automated sys-
tems for monitoring outages and restoring
service. And the independent regulatory
ƒƒ This year Doing Business collected new
data in 189 economies on the price of
electricity and the overall quality of
electricity supply.
ƒƒ High electricity prices and frequent
power outages constrain the
operations of businesses and affect
entrepreneurs’ decisions on whether
to establish a business and on how to
operate it.
ƒƒ A sound regulatory environment can
help ensure a stable electricity supply.
In 131 of the 189 economies covered
by Doing Business, a national energy
regulator monitors the frequency and
duration of power outages. In 66 of
these economies utilities compensate
customers or pay fines if outages
exceed the limits set by the regulator.
ƒƒ Electricity tariffs for commercial
customers typically range from 10 to
30 cents per kilowatt-hour, but prices
in some economies are much higher.
Tariffs need to strike a balance—
remaining affordable to customers
while enabling the utility to recover
costs and make a profit.
ƒƒ Information about tariffs needs to
be clear and easily accessible to
customers. Making tariffs readily
available and providing advance
notice of changes in tariffs can help
businesses manage their costs.

71Getting Electricity
body that oversees the sector makes sure
that changes in electricity tariffs are com-
municated ahead of time.
Businesses face a different situation in
Niger, where there is a substantial gap
between the demand for electricity and
its supply and the power infrastructure is
outdated and subject to huge transmis-
sion and distribution losses. In Niamey
getting a new connection takes 115 days
and costs more than 6,200% of income
per capita. Customers experience power
outages almost daily, and the utility still
uses manual systems to monitor outages.
Moreover, there is no active regulatory
body, electricity tariffs are not published
online, and customers receive no com-
pensation when outages occur.
Even so, an efficient connection process
does not automatically translate into
better reliability of supply. The ability of
a distribution utility to provide reliable
supply depends on many factors along
the chain from generation through trans-
mission to delivery of electricity to the
customer.
RELIABILITY OF SUPPLY
Electricity outages can have serious
effects on businesses. They can dam-
age assets (such as electronics) and
inventory. And they can disrupt work by
shutting down equipment and cutting off
lighting, heating or internet connections.
“Our businesses are down because of
these outages; without electricity we
can’t work. We really can’t afford any
more of this,” said Mr. Ali, a businessman
who owned a dry-cleaning company in
downtown Cairo. He was among the
20 million people affected by the city’s
frequent power outages in 2014.3
Constrained by outages, millions of
businesses around the world need to
alter their operations to avoid disrup-
tions or resort to captive power options,
usually diesel generators. According to
the 2013 World Bank Enterprise Survey
data, more than 40% of firms located in
61 developing economies in the Middle
East and North Africa, South Asia and
Sub-Saharan Africa have their own gen-
erator even when they are connected to
the grid.4
Businesses in higher-income
economies also contend with unreli-
able power supply. As a result of the
2000–01 rolling blackouts in the U.S.
state of California, a substantial number
of businesses decided to install backup
generators,5
which typically cost tens of
thousands of dollars and generate very
expensive electricity.
Figure 7.1 New measures have expanded the coverage of the getting electricity
indicators
Getting a connection
to the electrical grid
Procedures
(number)
Time
(calendar
days)
Reliability
of supply and
transparency
of tariffs indexa
Cost
(% of income
per capita)
System average interruption duration index
(SAIDI)
System average interruption frequency
index (SAIFI)
Mechanisms for monitoring outages and
restoring service
Regulatory monitoring
Financial deterrents aimed at limiting
outages
Communication of tariffs and tariff changes
Price of electricitya
Consumption price for commercial
customers (cents per kilowatt-hour)
a. New indicator added this year.The price of electricity is not included in the ranking on the ease of doing business.
Figure 7.2 Economies with an efficient connection process tend to have a reliable
electricity network
0 10 20 30 40 50 60 70 80 90 100
0
20
30
10
40
50
60
70
90
80
100
Distance to frontier score for reliability of
Distance to frontier score for efficiency of connection process
Low efficiency,
high reliability
High efficiency,
high reliability
High efficiency,
low reliability
Low efficiency,
low reliability
Note: The figure compares the average distance to frontier score for indicators of the efficiency of the connection
process (procedures, time and cost) with the distance to frontier score for the reliability of supply and transparency
of tariffs index. The correlation between the two scores is 0.49. The relationship is significant at the 1% level after
controlling for income per capita.

An unstable electricity supply can also
lead to lower employment and to lower
production for firms. Using data from
Nigeria for 1970–2005, a study identi-
fied the inadequate and unstable power
supply to the industrial sector as a major
cause of unemployment in the country.
Industry is a core sector for the genera-
tion of national wealth and employment
in Nigeria, but faced with an electricity
sector hampered by poorly utilized gen-
eration capacity, high transmission losses
and frequent outages, companies turn to
self-provision of electricity. This raises
their production costs, reducing their
competitiveness and thus their demand
for labor. The erratic and inadequate
power supply in Nigeria has often been
cited as the main reason forcing mul-
tinationals to relocate production lines
to other countries.6
Power outages also
affect output levels. As a result of power
supply interruptions in Bangladesh in
2001–03, utilities failed to meet an esti-
mated 13.6% of the industrial sector’s
demand. In 2000–01 the resulting eco-
nomic losses amounted to 1.7% of GDP.7
The effects go beyond economic costs.
An unreliable electricity supply also has
consequences for a society’s well-being
and living conditions. Only 25% of
health facilities in Kenya can count on
a reliable power supply. In India nearly
half of health facilities have no access to
electricity at all.8
Most public services
are compromised when power shuts
down. And outages can pose a threat
to personal safety—such as by putting
out streetlights and traffic lights and by
disabling burglar alarms in homes.
How is the reliability of supply
measured?
The reliability of supply and transparency of
tariffs index provides a tool for benchmark-
ing the performance of utilities in providing
a reliable electricity supply. To assess the
reliability of supply, Doing Business uses two
standard measures: the system average
interruption duration index (SAIDI) and
the system average interruption frequency
index (SAIFI). SAIDI measures the average
total duration of outages, and SAIFI the
average frequency of outages, experienced
by a customer in a year (excluding outages
due to natural disasters). The calculation
of SAIDI and SAIFI values is based on a
standardized approach that is the most
common one in use around the world. To
ensure the comparability of data across
economies, Doing Business relies only on
SAIDI and SAIFI. The data are collected in
the largest business city of each economy
(and, in 11 economies, also in the second
largest business city).
The reliability of supply and transpar-
ency of tariffs index also measures five
qualitative aspects: whether utilities use
automated tools to monitor power out-
ages; whether they use automated tools
to restore power supply; whether a regula-
tor—that is, an entity separate from any
utility—monitors utilities’ performance
on reliability of supply (through periodic
or real-time reviews); whether utilities
face financial deterrents aimed at limiting
outages (such as a requirement to com-
pensate customers or to pay fines); and
whether electricity tariffs are transparent
and easily available (with effective tariffs
available online and customers notified
of a change in tariff ahead of the billing
cycle).
What do the data on reliability
show?
The data show that the occurrence of
outages is associated with several fac-
tors. One is an economy’s income level.
A typical firm operating in a low-income
economy faces nearly 250 outages a year,
lasting close to 1,000 hours in total, while
a typical one in a high-income economy
experiences only 1.5 outages a year,
totaling around 3 hours. The frequency
and duration of outages also vary sub-
stantially among regions. Sub-Saharan
African economies have the longest total
duration of outages, averaging almost
700 hours a year for a customer—while
OECD high-income economies have the
shortest, averaging only about 1 hour a
year (figure 7.3). Economies in South
Asia have the highest frequency of out-
ages, averaging more than 200 outages
Figure 7.3 Electricity customers in Sub-Saharan Africa endure the most time without
power supply on average
0
100
200
300
400
500
600
700
800
OECD
high income
Europe
CentralAsia
LatinAmerica
Caribbean
EastAsia
Pacific
Middle East
NorthAfrica
SouthAsiaSub-Saharan
Africa
Average total duration of power
outages in a year (hours)
Note: The figure shows the average number of hours without electricity supply over the course of a year for a low-
or medium-voltage customer in the largest business city of each economy, as measured by SAIDI. For 10 economies
the data are also collected for the second largest business city. The data are for the most recent year available.
The sample comprises 147 economies. It excludes the following economies, for which no data were available:
Angola; The Bahamas; Bangladesh; Benin; Botswana; the Central African Republic; Chad; the Republic of Congo;
Djibouti; the Arab Republic of Egypt; Equatorial Guinea; Ethiopia; The Gambia; Ghana; Guinea-Bissau; Haiti; Iraq;
Kiribati; the Kyrgyz Republic; Lao PDR; Lebanon; Lesotho; Madagascar; Malawi; Maldives; the Federated States of
Micronesia; Montenegro; Mozambique; Myanmar; Nepal; Qatar; Rwanda; São Tomé and Príncipe; Sierra Leone;
South Africa; St. Kitts and Nevis; St. Vincent and the Grenadines; the Syrian Arab Republic; Tajikistan; Timor-Leste;
República Bolivariana de Venezuela; and the Republic of Yemen.

a year for a typical customer; OECD high-
income economies have the lowest,
averaging 1 outage a year (figure 7.4).
Many issues affecting the quality of sup-
ply are beyond government control. In
some economies the national electricity
supply is undermined by frequent natural
disasters coupled with limited natural
resources. Addressing issues of genera-
tion capacity and reliability of transmis-
sion and distribution grids may take a
long-term approach. But in the shorter
term there are practical actions that
governments can take to ensure more
reliable service. One is to put in place a
robust regulatory framework with the
right oversight and incentives. Electricity
supply is typically a natural monopoly,
so customers dissatisfied with the qual-
ity or price of the service often have no
alternatives to choose from. This makes
it important for regulators to monitor
utilities’ performance on matters relating
to outages and tariffs. But to ensure that
utilities can make the necessary invest-
ments to maintain and improve service,
regulation should not compromise their
balance sheets.
To create incentives to provide adequate
service, one strategy used by regulators
is to set minimum quality standards while
also monitoring data on outages. Among
the economies with less than one hour of
power cuts in 2014, 95% have a regulator
that performs periodic or real-time moni-
toring of outages. Data for low- and lower-
middle-income economies underscore
the importance of regulatory monitoring
(figure 7.5). Regulatory oversight can lead
to stark differences in the duration of out-
ages even among economies with similar
income levels. Guatemala City, where a
regulator monitors power cuts, registered
4 hours of outages in 2013. Tegucigalpa,
Honduras, where there is no regulatory
oversight of outages, had 257 hours of
power interruptions that same year.
Another strategy often used by regula-
tors is to set a limit on the frequency
and duration of outages and then require
utilities to pay compensation to custom-
ers if they exceed that limit. Alternatively,
regulators may impose a fine on utilities.
The size of such penalties varies across
economies. But those that use financial
deterrents to limit outages had 14 power
cuts on average in 2014, lasting around
30 hours in total, while those that don’t
use them had 5 times as many outages,
lasting almost 10 times as long.
Figure 7.4 Electricity customers in South Asia experience the greatest average
frequency of power outages
0
50
100
150
200
250
OECD
high income
Europe
CentralAsia
LatinAmerica
Caribbean
EastAsia
Pacific
Middle East
NorthAfrica
Sub-Saharan
Africa
SouthAsia
Average number of
power outages in a year
Note: The figure shows the average number of power outages over the course of a year for a low- or medium-
voltage customer in the largest business city of each economy, as measured by SAIFI. For 10 economies the data
are also collected for the second largest business city. The data are for the most recent year available. The sample
comprises 147 economies. It excludes the following economies, for which no data were available: Angola; The
Bahamas; Bangladesh; Benin; Botswana; the Central African Republic; Chad; the Republic of Congo; Djibouti; the
Arab Republic of Egypt; Equatorial Guinea; Ethiopia; The Gambia; Ghana; Guinea-Bissau; Haiti; Iraq; Kiribati; the
Kyrgyz Republic; Lao PDR; Lebanon; Lesotho; Madagascar; Malawi; Maldives; the Federated States of Micronesia;
Montenegro; Mozambique; Myanmar; Nepal; Qatar; Rwanda; São Tomé and Príncipe; Sierra Leone; South Africa;
St. Kitts and Nevis; St. Vincent and the Grenadines; the Syrian Arab Republic; Tajikistan; Timor-Leste; República
Bolivariana de Venezuela; and the Republic of Yemen.
Figure 7.5 Among low- and lower-middle-income economies, customers endure far
less time without power supply in those with regulatory monitoring of outages
0
200
400
600
800
1,000
1,200
Average for low-
and lower-middle-income
economies without
regulatory monitoring
Global average for low-
economies
Average for low-
economies with
regulatory monitoring
Average total duration of power
outages in a year (hours)
Note: The figure shows the average number of hours without electricity supply over the course of a year for a low-
or medium-voltage customer in the largest business city of each economy, as measured by SAIDI. For four low- or
lower-middle-income economies the data are also collected for the second largest business city. The data are for
the most recent year available. Regulatory monitoring refers to periodic or real-time monitoring of outages. The
sample comprises 51 economies.

Like regulators, utilities can also take
action to improve the reliability of supply.
One way is to invest in the information
technology systems used to monitor
power interruptions and restore service.
Because of financial constraints and
the cost of introducing such systems,
many utilities continue to rely on call
centers to record outages, then send out
maintenance crews to find the location
of the fault and identify the cause. This
process typically takes several hours.
In 119 economies, however, utilities are
able to rely instead on an electronic
system, such as a Supervisory Control
and Data Acquisition (SCADA) system
or an Incidence Management System. A
SCADA system, for example, transfers
data in real time between the substations
and the operator terminals. When an
outage occurs, information on the exact
location and cause of the power cut can
immediately be sent to a dispatch crew.9
A SCADA system can also automatically
restore power flow once it is safe to do so.
This automation not only helps increase
reliability; by reducing damage to equip-
ment, it also helps lower costs.
Beyond investing in adequate tools to
monitor and restore power outages,
utilities also need to directly address
the sources of power failures—which in
economies with high SAIDI and SAIFI
values are usually faulty equipment,
inadequate generation capacity and
outdated power system infrastructure.
Tackling these issues requires consider-
able investments (box 7.1). But making
these expenditures should not neces-
sarily price out the majority of custom-
ers—evidence suggests that expensive
electricity bills do not ensure efficient
service. Indeed, an analysis covering 189
economies that controls for income per
capita shows that it is possible to have a
stable supply even with low tariffs. This
combination is most commonly found in
economies that are rich in fuel energy
resources. But there are exceptions. One
of them is Turkey. Electricity customers
in Istanbul experience five outages a
year on average, and tariffs amount to
14 cents per kilowatt-hour, considerably
lower than the global average.
PRICE OF ELECTRICITY—
AND TRANSPARENCY
Efficient pricing is central to a well-
functioning power sector. Utilities need
to be able to recover their costs and make
a profit by charging their customers
reasonable tariffs. At the same time, the
private sector takes into account the cost
of electricity when making investment
decisions, and businesses often try to
curb their energy costs through energy
efficiency measures. But achieving effi-
cient power pricing is easier said than
done. The power sector is characterized
by substantial up-front fixed costs, and
it takes many years for initial invest-
ments to pay off. Beyond that, costs vary
between different times of the day (peak,
off-peak), seasons (dry, rainy), types
of users (residential, commercial) and
geographic areas (urban, rural).10
Tariffs, as well as any changes in them,
need to be clearly communicated to
customers—whether through the utility’s
and regulator’s websites, the media, pub-
lic hearings or other means. Customers
need this information so that they can
plan their expenses, understand the util-
ity’s billing system and, if needed, contest
the charges. Businesses want to know in
advance of any change in expenditure
so that they can adjust their allocation
of financial resources accordingly. In
some economies the law requires utili-
ties to announce changes several billing
cycles ahead. In others, the regulator
helps ensure that tariffs are published in
BOX 7.1 Improving the reliability of power supply in Mexico
Mexico’s capital has had a big improvement in the reliability of electricity supply. In 2010 a typical customer living in the Mexico
City metropolitan area experienced 7.33 hours of power outages. In 2014, just four years later, the same customer would have
had to deal with outages totaling only 55 minutes.
Power interruptions are often caused by aging infrastructure, faulty equipment, electricity supply shortages and even such
factors as erratic weather or falling trees. The local utility in Mexico City, the Comisión Federal de Electricidad (CFE), has been
tackling these problems. Between 2010 and 2014 the utility invested 3.76 billion Mexican pesos (about $244 million) in modern-
izing electrical circuits and underground networks; improving the maintenance of substations, power plants and other assets;
and pruning trees.a
Besides investing in infrastructure, the utility also relies on a robust system for monitoring outages, to ensure a timely response
in detecting power cuts and restoring supply. Thanks to its SCADA system, the utility can conduct real-time monitoring of power
interruptions and electronically restore electricity supply in the city.
At the national level too there is a sophisticated monitoring system in place. In 2012 Mexico’s Electric Research Institute devel-
oped an electronic tool based on GIS (geographic information system) technology to forecast the effects of hurricanes on the
country’s electricity infrastructure. This has helped improve the planning and preparation for weather-related power outages,
reducing the total duration of supply interruptions in Mexico.b
a. Comisión Federal de Electricidad 2015.
b. Espinosa Reza, González Castro and Sierra Rodríguez 2011; Mena Hernández 2012.

different media outlets and that the infor-
mation is clear and detailed enough so
that customers can calculate their prices.
In Pakistan, for example, customers are
informed if the regulator and the util-
ity even have a consultation on potential
tariff changes.
How are prices and their
transparency measured?
To measure the price of electricity, Doing
Business computes a monthly bill for a
small to medium-size business in the
largest business city of each economy
(and, in 11 economies, in the second
largest business city as well). To ensure
comparability of the data across econo-
mies, Doing Business uses a standardized
case study centered on a commercial
warehouse with a subscribed capacity
and level of energy use typical of this kind
of customer: the warehouse requires a
capacity of 140 kilovolt-amperes (kVA)
and has an hourly consumption of 112
kilowatt-hours. The case study assumes
that the warehouse uses electricity
30 days a month, in March, and from
9:00 a.m. to 5:00 p.m. (which amounts
to a monthly consumption of 26,880
kilowatt-hours). When multiple electric-
ity suppliers exist, it is assumed that
the cheapest supplier is used. To allow
comparison of the price of electricity for
businesses around the world, the total
price is then converted to U.S. dollars and
expressed in cents per kilowatt-hour.
By compiling a standard electricity bill,
Doing Business adopts the perspective
of a local entrepreneur—measuring the
price and not the cost of electricity. Price
is what final customers pay for electricity
supply. Cost is the expense incurred by
the utility company to produce, purchase,
transport and distribute electricity.
There may be a considerable difference
between the price of electricity and its
cost. In some economies, for example,
the government subsidizes the price
customers pay for electricity by paying a
portion of the energy costs to the utility.
To assess the transparency of prices,
Doing Business scores economies on
whether tariffs are made available
online and communicated properly to
customers and whether tariff changes
are announced ahead of the billing cycle
through a means of communication
reaching a majority of customers (televi-
sion, radio, courier, newspapers). This
score is part of the reliability of supply
and transparency of tariffs index.
What do the data on prices
show?
The price of electricity as measured
by Doing Business varies widely among
regions (figure 7.6). It is lowest on aver-
age in the Middle East and North Africa
(11 cents per kilowatt-hour) and highest
on average in East Asia and the Pacific
(27 cents per kilowatt-hour).
Many factors drive the price of electric-
ity in an economy, with some of the
important ones being the availability of
domestic energy resources, the condi-
tion of power sector infrastructure, the
adequacy of generation capacity and the
existence and extent of subsidy regimes.
A combination of these factors typi-
cally explains the differences in the prices
observed, and these in turn may affect
the electrification rate—the share of the
population with access to electricity.
Indeed, in the business sector high elec-
tricity prices can discourage investments
and also raise questions about whether it
makes more sense to connect to the grid
or to use a captive power option.
Interestingly, however, data for a sample
of 187 economies suggest that electricity
prices do not affect average electrifica-
tion rates across income groups—except
perhaps when prices exceed 40 cents
per kilowatt-hour (figure 7.7). Indeed, in
Liberia, where the price per kilowatt-hour
is 56 cents—nearly four times the price in
Finland—only 9.8% of the population has
access to electricity. Prices this high can
be a strong deterrent to establishing a
formal connection to electricity—and this
indirectly contributes to electricity theft
and to revenue losses for the utility,11
trig-
gering a vicious cycle in which it struggles
to adequately serve its customers. Even
so, utilities need to adopt prices that
allow them to maintain the necessary
power system infrastructure and provide
quality services.
The price of electricity has an important
effect on power consumption. According
to a report from the U.S. Department of
Energy, customers adjust their consump-
tion patterns to changes in price as well as
Figure 7.6 The average price of electricity varies widely among regions
0
5
10
15
20
25
30
Middle East
NorthAfrica
Europe
CentralAsia
OECD
high income
SouthAsiaSub-Saharan
Africa
LatinAmerica
Caribbean
EastAsia
Pacific
Average price of electricity
(cents per kilowatt-hour)
Note: The price of electricity is derived from the monthly consumption cost for the commercial warehouse in
the Doing Business case study. The sample comprises 188 economies. Excluded from the sample is República
Bolivariana de Venezuela.

to changes in the structure of tariffs, such
as the introduction of a time-of-use (TOU)
tariff.12
Fluctuations in price can affect
decision making by businesses, for which
electricity bills represent a considerable
expense.13
Data for 152 economies show a
negative correlation between the price of
electricity and manufacturing value added
as a percentage of GDP.14
An increase in
electricity prices may lead to firms switch-
ing to industries with fewer opportunities
for enhancing productivity—and away
from manufacturing.15
Moving up the
value chain becomes difficult where elec-
tricity prices are high.
The structure of a tariff schedule is as
important as the tariff itself in sending
the right signals to customers. Pricing
for nonresidential customers tends to
be complex. It is usually structured
as a three-part tariff consisting of a
monthly fixed charge (determined by the
characteristics of the network), a capac-
ity charge (determined by the highest
recorded power demand over the billing
period) and a volume charge (defined
by the energy consumption). In addition,
volume charges may be differentiated by
time of use, to adjust to differences in the
level of energy consumption between
different times of day or between week-
ends and weekdays. Where TOU tariffs
are used, lower tariffs typically apply
during times when aggregate consump-
tion is lower, such as at night and on
the weekend, and higher tariffs during
“peak consumption” periods. Complex
tariffs like these are commonly used in
industrial economies—as in the United
States, for example, where nonresidential
customers account for 60% of electricity
consumption.16
Among the 189 economies covered by
Doing Business, 52% have a TOU tariff
option for commercial or industrial cus-
tomers. This time-based tariff schedule
exists in 93% of OECD high-income
economies but only 35% of economies in
East Asia and the Pacific. In South Africa,
for example, the utility defines different
daily TOU periods for different types of
connections. For most commercial cus-
tomers there are three daily TOU rates:
peak, standard and off-peak. Peak rates
apply on weekdays from 7:00 a.m. to
10:00 a.m. and from 6:00 p.m. to 8:00
p.m. Standard rates apply throughout
the rest of the day, and off-peak rates at
night. On Saturdays the TOU periods are
different, and on Sundays only off-peak
rates apply. The tariffs for each TOU
period then vary according to the season,
with higher rates charged between June
and August. The complexity of the tariff
schedule does not end there: volume
charges also vary, depending on the
transmission zone (based on the trans-
mission distance) and on voltage levels.
Finally, the utility charges customers sev-
eral other fees each month—for capacity,
administration, network access, service,
reliability, reactive energy and other net-
work subsidies. Up to 10 different charges
may apply, all of them varying according
to the characteristics of a customer’s
connection.17
The complexity of tariff schedules makes
it important for utilities to circulate clear
information on tariffs. Some utilities go
a step further. With the aim of helping
customers, Malaysia’s largest electric
utility company, Tenaga Nasional Berhad,
set up a web page with a bill calculator
for residential, commercial and industrial
connections—making it easy for custom-
ers to estimate their future electricity
costs based on the voltage level and sub-
scribed capacity of their connection and
their estimated monthly consumption
during peak and off-peak periods. The
website also offers businesses advice on
how to boost their energy savings. And
it provides an “energy audit calculator” to
estimate the electricity consumption of
different appliances.18
Such tools not only
help customers understand their electric-
ity bills; they also allow them to analyze
their electricity use and identify ways to
increase efficiency.
CONCLUSION
Ensuring a reliable supply of electricity,
under transparent and efficient pricing,
plays a key part in promoting investment
opportunities and economic growth—
and thus represents a key challenge for
Figure 7.7 Electrification rates vary among income groups, but the effect of
electricity prices is unclear
0
20
40
60
80
100
10 cents
10–20 cents
20–30 cents
30–40 cents
40 cents
Average price of electricity (cents per kilowatt-hour)
Average electrification rate
(% of population)
Sources: Doing Business database; World Development Indicators database (http://data.worldbank.org/indicator),
World Bank.
Note: The price of electricity is derived from the monthly consumption cost for the commercial warehouse in the
Doing Business case study. The sample comprises 187 economies. Excluded from the sample are Taiwan, China; and
República Bolivariana de Venezuela.

governments around the world. As Doing
Business data suggest, governments can
use regulatory measures to encourage
good practices in electricity supply
systems. These regulatory measures
need to strike the right balance, ensur-
ing that customers receive a reliable
and reasonably priced electricity supply
without compromising utilities’ revenues.
Utilities can also take practical measures
to increase the reliability of supply and
the accessibility of tariff information to
customers.
NOTES
This case study was written by Jean Arlet, Volha
Hrytskevich, Haya Mortada, Tigran Parvanyan,
Jayashree Srinivasan and Erick Tjong.
1. Enterprise Surveys database (http://www
.enterprisesurveys.org/), World Bank.
2. Audinet and Rodriguez Pardina 2010.
3. Arwa Ibrahim, “Egypt’s Power Outages
Continue to Intensify,” Middle East Eye,
September 5, 2014, http://www
.middleeasteye.net/news/egypts-power
-outages-compound-559103879.
4. Enterprise Surveys database (http://www
.enterprisesurveys.org/), World Bank. These
economies are Afghanistan; Algeria; Angola;
Bangladesh; Benin; Bhutan; Botswana; Burkina
Faso; Burundi; Cabo Verde; Cameroon;
the Central African Republic; Chad; the
Democratic Republic of Congo; the Republic
of Congo; Côte d’Ivoire; Djibouti; the Arab
Republic of Egypt; Eritrea; Ethiopia; Gabon;
The Gambia; Ghana; Guinea; Guinea-
Bissau; India; Iraq; Jordan; Kenya; Lebanon;
Lesotho; Liberia; Madagascar; Malawi;
Mali; Mauritania; Mauritius; Morocco;
Mozambique; Namibia; Nepal; Niger; Nigeria;
Pakistan; Rwanda; Senegal; Sierra Leone;
South Africa; South Sudan; Sri Lanka; Sudan;
the Syrian Arab Republic; Swaziland; Tanzania;
Togo; Tunisia; Uganda; West Bank and
Gaza; the Republic of Yemen; Zambia; and
Zimbabwe.
5. Black, Larsen and Ryan 2002.
6. George and Oseni 2012.
7. Wijayatunga and Jayalath 2008.
8. Practical Action 2013.
9. Terezinho 2015.
10. Briceño-Garmendia and Shkaratan 2011.
11. According to a recent study, global losses due
to electricity theft amount to $89.3 billion a
year (Northeast Group 2014).
12. U.S. Department of Energy 2006.
13. Jewell 2006.
14. Doing Business finds that the correlation
between manufacturing value added and the
price of electricity is −0.21. The relationship is
significant at the 1% level after controlling for
income per capita. The data on manufacturing
are a three-year moving average for 2012–14
and refer to industries belonging to the
International Standard Industrial Classification
(ISIC) divisions 15–37. These data are from
the World Development Indicators database
(http://data.worldbank.org/indicator), World
Bank. The data on the price of electricity are
derived from the monthly consumption cost
for the commercial warehouse in the Doing
Business case study. The sample comprises
152 economies.
15. Abeberese 2013.
16. Brief and Davids 2011.
17. See Eskom’s website at http://www.eskom
.co.za/.
18. See Tenaga Nasional Berhad’s website at
http://www.tnb.com.my/.

Doing Business 2016
T
en years ago, transferring property
in Rwanda took more than a year.
Today, thanks to the web-based
Land Administration Information System
implemented in Kigali, the process takes
only a month. Rwanda’s case is not
unique. Over the past five years 37 econ-
omies computerized their land registry.
The average time required to register a
property transfer in these economies fell
by 38%—from 47 days to 29—while the
global average only decreased from 55
days to 48 (figure 8.1).
Economies that invest in a digital land
registration system benefit in several
ways. One way is through greater effi-
ciency. Computerization helps reduce
duplication in the storage of information
and makes it possible to consolidate
a large amount of information in one
database. It also optimizes processes by
streamlining workflows and helps com-
pile information in ways not possible with
manual systems. Faster processes reduce
the time involved in transferring property
rights and speed up mortgage applica-
tions, saving the land registry and appli-
cants much time. Computerization also
allows a land registry to set up tracking
mechanisms to assess its performance
and improve its services to customers.1
Data accuracy is another advantage.
Because each transaction entered in a
computerized system can be automati-
cally registered, information is up to date.
A computerized system also provides
built-in mechanisms for quality control,
allowing land registry staff to perform
consistency checks and verify data
instantly.
Computerization can increase security
by allowing backup copies to be made.
The latest data can be saved in different
locations and protected from natural
disasters such as floods or from events
such as arson or civil war.
Computerization also strengthens
transparency by making land records
more accessible to all stakeholders. A
computerized system makes it easier for
different people to access data in differ-
ent locations at the same time. By sharing
information online, it takes away discre-
tion and reduces opportunities for arbi-
trary action. With simple and transparent
rules, a digital system emboldens citizens
and businesses to question unreason-
able procedures. When the Indian state
of Karnataka digitized its land records,
ƒƒ Over the past five years 37 economies
computerized their land registry.
ƒƒ In the economies that digitized their
registry, the time required to transfer
property has fallen by 38% since 2011.
In those that did not, the time has
decreased by only 7%.
ƒƒ Before making the transition to a
digital land registry, policy makers
need to take into account such
considerations as the legal framework,
technological capabilities, and human
and social factors.
ƒƒ Going digital can be done in several
steps—starting with computerization
of the registry and moving on to fully
online registration of immovable
property.
ƒƒ Beyond going digital, land registries
can develop new services—such
as mobile applications and
interconnection with other agencies.
The paths of digitization
Figure 8.1 The time required to
register a property transfer fell sharply
in economies that digitized their land
registry
0
10
20
30
40
50
60
2011 2015
Economies with no
digitization reforms
Economies with
digitization reforms
Average time to register property
(days)

79Registering Property
it also made the records more open—to
empower citizens to challenge arbitrary
actions.2
Land registries with robust inter-
nal data recording, control and validation
systems are more easily accessible and
more open for collaboration with external
stakeholders. In several cases this has
had an impact on access to credit, such
as in urban areas of India.3
Land registries need not go fully digital
all at once. They can start by shifting
from paper to digital record keeping and
then move to fully online registration.
Economies around the world have suc-
cessfully made the transition—including
England and Wales, where 24 million
titles were digitized, and Ireland, where
about 1.7 million individual titles repre-
senting 32,000 paper map sheets were
digitized (box 8.1). Their experiences offer
information not only on the process of
digitization but also on its benefits—and
can serve as an inspiration for economies
still struggling with a paper-based land
registry.
Digitization is not reserved for high-
income economies; many developing
economies have also digitized their land
registry. Cabo Verde is one of them. In
its two biggest cities, Praia and Sal, all
property titles have been fully scanned,
and software to process registrations
successfully implemented. In Kenya the
land registry of Nairobi has recently gone
through a full digitization of its records
and is now developing new electronic
services for its customers. Going digital
is a step-by-step process that can take
different paths (figure 8.2).
BEFORE GOING DIGITAL
The transition from a paper-based land
administration system to a digital one
involves several considerations, including
the legal framework, technological capa-
bilities, and human and social factors.
A necessary first step before going digital
is to review current laws and regulations
relating to land registration. Out-of-date
legislation can be an impediment. In
Guinea-Bissau, for example, titles were
required to be handwritten and so could
not be processed by computer. This
requirement was removed in 2013. In
other cases new regulations were needed
to support computerized systems. In
Malaysia the National Land Code had
to be amended in 1992 to introduce
new provisions relating to functions of
the computerized land administration
system, such as recording changes to
land titles and extracting data from land
records. In the United States the Uniform
Real Property Electronic Recording Act,
allowing electronic documents, was
passed in 2004.4
Box 8.1 How did one of the oldest land registration systems become a modern digital organization?
Her Majesty’s Land Registry—covering England and Wales—is one of the oldest land registration authorities in existence today.
Launched 153 years ago, it was modeled on a pilot project in South Australia that spread to most of the English-speaking world.
In London the first land registry opened in 1862, with six staff. Land registration then gradually expanded across England and
Wales.
In recent decades digitization has transformed the land registration system of England and Wales. Computerization of the land
registry was recommended by a study in 1968 and began in 1974; work on computerizing the index of property owners’ names
began three years later. The conversion of paper land registers into computerized format began in 1986. Development of internal
computerized casework systems also started in the 1980s. Each land registry office’s information technology network was con-
nected to a main data processing center, which updated the land register in real time. The new system was rolled out over several
years, and by 1992 the land registry had 10 million titles registered in its database.
In 1997 the land registry began scanning the historical land records—272 volumes containing a mix of handwritten and typed
pages made from parchment, waxed linen or paper along with printed documents. By 1998 the total number of titles registered
in the database had reached 15 million, while the total number of stored deeds, kept on 80 miles of shelving, was estimated at
almost 100 million.
The next major step was the Land Registration Act of 2002, which introduced online registration to transfer property. The first
internet service was launched in 2005, allowing any applicant to obtain information on any property by entering the identifica-
tion data. Then it became possible to electronically update the land register in cases not affecting ownership. Finally, it became
possible to actually transfer property online using electronic signatures.
In January 2013 the British government gave itself 400 days to transform 25 major services—including land registration—by
making them simpler, clearer and faster to use. In 2013/14 the land registry increased its productivity by 21% despite a 16% rise
in applications. Some 76% of substantive applications were submitted electronically in 2014, and today about 24 million titles
are registered.
Additional improvements are planned in the future. During the Queen’s speech at the opening of Parliament in 2014, Queen
Elizabeth II announced a new infrastructure bill to “help make the United Kingdom the most attractive place to start, finance and
grow a business”—including by supporting the delivery of new digital services by the land registry.
Sources: Cooke 2003; Mayer and Pemberton 2000.

Another important first step is to review
existing practices at the land registry.
Going digital does not mean computeriz-
ing every process at the registry. Manual
systems for land administration can be
cumbersome. A review of the registry’s
practices can identify procedures that
are redundant and processes that need
to be reengineered to enable electronic
submission of records. As successful land
registry reforms have shown, the process
for obtaining approvals required for land
transfers can be simplified if a robust
registration system is in place.
Choosing appropriate technology is a key
step in designing a new digital system.
Different stages of development require
different technology solutions that take
into account any constraints and limita-
tions. Ghana and Uganda each developed
a technology approach in line with their
capacity, objectives and resources.
Uganda opted for proprietary software
while Ghana relied on open-source
software. The open-source solution is
likely to save on annual software fees,
but it requires Ghana to develop the
local capacity to maintain the programs.5
Developing such capacity is critical to
ensuring that the system is sustainable.
Any successful plan for going digital
also needs to take into account potential
obstacles in the overall land administra-
tion system. This includes obstacles that
the design of the new system might pose
for different stakeholders. Having many
different land databases with no links
between them can be one such obstacle.
In several cases a preliminary step in
digitization was to consolidate all the dif-
ferent databases into one—fundamental
not only for strengthening the system’s
organizational structure and efficiency
but also for providing security of title.
Belarus started its digitization program
by unifying the land and building regis-
tries’ databases. Denmark also began
by centralizing information. The country
had a complex system with an archive
of 80 million paper documents man-
aged by local district courts that were
not connected to one another. Denmark
centralized the information in the Land
Registry Court, which now administers
the registration of rights on all property
in the country.
Investments in the land registry’s infra-
structure need to be complemented by
well-prepared and well-trained staff.
Without buy-in and full understand-
ing among the registry employees, no
new digital system will succeed. And
adequate training is essential for achiev-
ing top-quality services and efficient
management of land records. In Croatia
more than 2,000 land registry employ-
ees benefited from detailed training on
the new information technology system
put in place throughout the country.6
In
India several thousand civil servants were
trained in the states where digitization
was initiated.7
Successful training policies
can contribute to innovative construction
processes and to the development of real
estate products.8
GOING DIGITAL—
IN SEVERAL WAYS
Once an appropriate legal framework
and data system have been established,
the land records can be converted into a
digital format so that they are properly
stored and protected from the effects of
time (excessive use, moisture) or even
natural disasters (floods, earthquakes).9
One viable way to digitize historical
records is to scan or microfilm them
(figure 8.3). After a flood affecting
land records in 2000, Mozambique
scanned most of its titles in Maputo in
2013. Scanning land documents offers
several advantages. It allows a backup
system for data and helps maintain the
integrity of public records over time for
a limited cost. And scanned archives can
be easily shared with the parties to a land
transaction.
But scanned records, while a big step
up from paper-based databases, do not
allow users to extract information—
because by definition they are stored as
images. An alternative to scanning is to
input the information from land records
into a digital database. This approach is
costlier and more time-consuming, but it
has a much greater effect on efficiency. A
digital database allows users to conduct
quick title searches and provides power-
ful protection against double registration.
Digital records also make it easier to
access information about a property,
including liens and encumbrances.
Computerizing a land administration sys-
tem takes time and yields results only in
the long run—as the example of Denmark
illustrates (figure 8.4). Mauritius imple-
mented a new electronic system in 2011.
The system allows automatic population
of information on registered properties
dating back to 1978 and enables differ-
ent branches of the Registrar-General’s
Figure 8.2 What are the stages in projects for digitizing land records?
Going beyond digital
Going digital
Before going digital
Reviewing the legal
framework
Conducting a cost-benefit
analysis of the technology
involved
Taking into account
human, social and
organizational factors
Offering online services
for land transactions
Providing information on
the real estate market
Connecting the registry
to other agencies
Computerizing the land
registry
Scanning land ownership
documents
Having fully digital land
records

81Registering Property
Department to share information,
increasing efficiency. The system also
allows users to copy information from
scanned deeds. In four years, thanks to
the new system, Mauritius was able to
reduce the time for registration from 210
days to 14.
GOING BEYOND DIGITAL
RECORDS
For a land registry, launching a fully digital
database is a crucial step in increasing
the reliability of its records and services.
It is also a first step toward greater con-
nectivity with other agencies involved in
property transfers, such as the cadastre
and tax authority. And it is a precondition
for offering online services.
With a digital database in place, a land
administration system can start to offer
electronic certificates of nonencum-
brance, which guarantee that there is
no lien on the property. The system in
many economies allows users to conduct
title searches online and immediately
issues the certificate of nonencumbrance
through its web portal or sends the cer-
tificate to the user within minutes (figure
8.5). In Costa Rica, for example, users can
obtain property certificates and certified
cadastral plan images on the same web-
site. In Azerbaijan notaries have been able
to obtain nonencumbrance certificates
online since 2014. Where electronic cer-
tificates are introduced, the law may need
to be amended to make the certificates
legally binding—a critical step.
Some digital land registries go further,
allowing online registration of property
transfers—now possible in 40 econo-
mies. Some set very high standards. In
countries such as the Netherlands and
New Zealand customers file their appli-
cation through the land registry’s web
portal. In New Zealand a lawyer can pro-
cess the transfer immediately through the
registry’s portal. In Austria applications
for a property transfer must be submitted
electronically through a data exchange
system, an online communication system
used by notaries, lawyers and the courts
(where the land registry is based) to
submit claims, briefs and applications
and deliver court transcripts, orders and
decisions. This system provides standard
forms for different kinds of applications,
such as for registration of ownership and
registration of mortgages.
Some land registries are using their
online systems to offer more mobile
services. In some economies the land
registry offers to have a trained member
of staff come to the customer to register
the property transfer. In Portugal banks
can request that a registry employee
come to their premises with a laptop
and secure access to the registry’s data-
base to complete the property transfer
there. In other economies a customer
can complete the registration using any
computer connected to the internet. The
United Arab Emirates has developed a
mobile application to help customers
complete a property transfer using their
mobile phone.
Online systems can do more than stream-
line the process at the registry. Setting up
a single system or portal connecting all
agencies involved in property transfers
can ease the burden for firms or individu-
als in complying with requirements from
the different agencies. It can also aid
the government, by helping to eliminate
duplications of effort and inconsistencies
in records. A single system or intercon-
nected portal ensures that all agencies
are automatically updated once an appli-
cation is processed. This is the case in
Panama, for example. Colombia, Italy and
Peru have developed portals that connect
the notary to the land registry and the
ministry of finance.
To ensure complete information about
property, mapping agencies in 89 econo-
mies have an electronic database to
record property boundaries, check maps
Figure 8.3 The type of land records
varies widely across income groups
0
20
40
60
80
100
Fully digital Scanned
Paper
High
income
Middle
income
Low
income
Economies by type of
land records (%)
Figure 8.4 Denmark implemented a fully computerized system over several years,
reducing the time and procedures to register property
0
5
10
15
20
25
30
35
40
45
201520142013201220112010200920082007200620052004
0
1
2
3
4
5
6
7
Time Procedures
Time (days) Procedures (number)

and provide cadastral information. Some
have geographic information systems,
which allow users to integrate, store, edit,
analyze, share and display geograph-
ic information. Combining information on
the location of the plot with information
on liens and encumbrances streamlines
the due diligence process.
In addition to offering services online,
making information readily available on a
portal or website is also considered good
practice. The land registry in Zambia
displays a detailed list of procedures and
documents required for the registration
process on its website. In 104 economies
people can find the land registry’s fee
schedule for the largest business city
online. Some land registries have devel-
oped a fee calculator plug-in on their
website so that customers can calculate
the expected cost for a particular prop-
erty transfer. Publishing such information
saves customers time in inquiring about
the process. It also eliminates asym-
metries in information between users
and officials, minimizing the possibilities
for informal payments and abuses of the
system.
Land registries have also been using their
online systems to enhance the transpar-
ency of their operations and improve
customer service. This is the case in
Bangladesh, where technology is consid-
ered critical to increasing the efficiency
of the land administration system.10
Several land registries use their electronic
systems to share information about
their activities. Lithuania’s land registry
publishes statistics on its performance
on its website. Panama’s publishes
monthly data on the number of transac-
tions that it completes, broken down by
type—mortgages, first registrations and
transfers. The land registry in the United
Arab Emirates uses social media to keep
the public informed about its operations.
Some governments have provided cus-
tomers with an online tool to track their
applications and file complaints about
land services. In Nicaragua applicants
can use a tracking number to check the
status of their deed registration on the
registry’s website.
CONCLUSION
While many economies have modernized
their land registry and are looking into the
next steps, others still rely on archaic
record-keeping systems. In 74 of the 189
economies covered by Doing Business,
property titles in the largest business city
are kept only in paper format. This can
substantially undermine the quality and
efficiency of the land registry’s services.
Developing economies should not be dis-
couragedbythemagnitudeofthechanges
involved in going digital. Economies with
varied circumstances and income levels
have been able to digitize their land regis-
try and substantially reorganize their land
administration system—many through a
step-by-step approach. Digitizing a land
registry offers benefits not only through
greater efficiency but also through safer
and more reliable records and a more
transparent process. It also improves the
functioning of property markets by mak-
ing land information instantly available.
And it benefits citizens by improving the
security of title and the accessibility of
information.
NOTES
This case study was written by Laura Diniz,
Frédéric Meunier, Haya Mortada, Parvina
Rakhimova and Joonas Taras.
1. Whitman 1999.
2. Bhatnagar 2003.
3. Deininger and Goyal 2012.
4. Kampamba, Tembo and Nkwae 2014.
5. Cheremshynskyi and Byamugisha 2014.
6. Croatia, Ministry of Justice 2010.
7. Habibullah and Ahuja 2005.
8. UNECE 2012.
9. Barthel, Barnes and Stanfield 2000.
10. Imtiaz and Rahman 2014.
Figure 8.5 Electronic databases to check for encumbrances are very common in
OECD high-income economies and Europe and Central Asia
0
20
40
60
80
100
South AsiaSub-Saharan
Africa
East Asia
Pacific
Middle East
North Africa
Latin America
Caribbean
Europe
Central Asia
OECD
high income
0
Share of economies with a
database for encumbrances (%)

Doing Business 2016
Trading across borders
A new approach to measuring trade processes
I
n the past 10 years international trade
patterns have been defined by the rise
of developing economies, the expan-
sion of global value chains, the increase
in commodity prices (and the growing
importance of commodity exports) and
the increasingly global nature of macro-
economic shocks. Each of these trends
has reshaped the role of trade in facilitat-
ing development.1
The restoration of more open trade follow-
ingWorldWarIIinvolvedmajormultilater-
alandpreferentialtradeagreementsaimed
at lowering tariff and nontariff barriers to
trade. For the first time economic relations
and international trade were governed by a
multilateral system of rules, including the
General Agreement on Tariffs and Trade
(GATT) and the Bretton Woods institu-
tions. These trade agreements, combined
with tremendous advances in transport
and communications technology, have
led to unprecedented rates of growth
in international trade. Between 1950
and 2007, for example, real world trade
grew by 6.2% a year while real income
per capita grew by 2% a year.2
Greater
international trade is strongly correlated
with economic growth. A study using data
from 118 countries over nearly 50 years
(1950–98) found that those opening up
their trade regimes experienced a boost in
their average annual growth rates of about
1.5 percentage points.3
Evidence suggests that one important
channel by which international trade
leads to economic growth is through
imports of technology and associ-
ated gains in productivity.4
A study of 16
OECD countries over 135 years revealed
a robust relationship between total factor
productivity and imports of knowledge
(measured by imports of patent-based
technology). Indeed, the study found that
93% of the increase in total factor pro-
ductivity over the past century in OECD
countries was due solely to these tech-
nology imports. These results suggest
that international trade is a critical chan-
nel for the transmission of knowledge,
which in turn improves capital intensity
and economic growth.
The relationship between trade and eco-
nomic growth can also be observed at the
firm level. Substantial evidence suggests
that knowledge flows from international
buyers and competitors help improve
the performance of exporting firms. A
review of 54 studies at the firm level
in 34 countries reveals that firms that
export are more productive than those
that do not (though exporting does not
necessarily improve productivity).5
This
is in large part because firms participat-
ing in international markets are exposed
to more intense competition and must
improve faster than firms that sell their
products domestically.
While access to international markets
is important for all economies, develop-
ing economies are uniquely affected by
trade policy. Because they are skewed
toward labor-intensive activities, their
growth depends on their ability to import
capital-intensive products.6
Without
access to international markets, develop-
ing economies must produce these goods
themselves and at a higher cost, which
pullsresourcesawayfromareaswherethey
hold a comparative advantage. In addition,
ƒƒ Using a new methodology, Doing
Business measures the time and cost
for three sets of procedures needed for
exporting and importing: documentary
compliance, border compliance and
domestic transport.
ƒƒ For the first time this year, Doing
Business considers the product of
comparative advantage for each
economy when measuring export
procedures, while for import
procedures it focuses on a single, very
common manufactured product (auto
parts).
ƒƒ Among economies requiring
product-specific inspections for their
exported agricultural product, border
compliance times range from 11 hours
to 210. This variation suggests that it
is possible to protect consumers and
businesses without unduly delaying
trade.
ƒƒ For economies in a customs union
with their case study trading partner,
the time for documentary and border
compliance is substantially lower on
average than for others.
ƒƒ Economies that are less efficient
importers also tend to be less efficient
exporters.

low income per capita limits domestic
opportunities for economies of scale. A
trade regime that permits low-cost produc-
ers to expand their output well beyond
local demand can therefore boost business
opportunities. Thus while international
trade can benefit developed and develop-
ing economies alike, trade policy is clearly
inseparable from development policy.
An important issue touching on both trade
and development policy is that exporting
agricultural products is more costly and
time-consuming than exporting other
kinds of merchandise. New data collected
by Doing Business show that in economies
whose top export is an agricultural product,
complying with border and documentary
requirements takes considerably longer
on average than in economies whose
top export is a nonagricultural product.
The data also show that a much larger
share of economies whose top export is
an agricultural product require product-
specific inspections and procedures for
their export. That said, among economies
requiring product-specific inspections for
agricultural exports, border compliance
times vary widely.
In many economies inefficient processes,
unnecessary bureaucracy and redundant
procedures add to the time and cost
for border and documentary compli-
ance. Only recently has the relationship
between administrative controls and
trade volumes attracted the attention of
multilateral trade networks (see box 9.1
for several explanations for this recent
Box 9.1 Why the renewed focus on trade facilitation?
The recent interest in trade facilitation has come about for several reasons. First, tariff and quota barriers, particularly on general
merchandise flows, are lower than in the past thanks to the success of multilateral and preferential trade agreements along with
the global recognition of the benefits of international trade. This has sharpened the focus of policy makers and traders on the
costs of international trade, which can pose a substantial barrier to trade.
Second, the next major frontier for multilateral trade negotiations—as well as for poverty reduction programs—is the facilitation
of global trade in agricultural products (broadly comprising animal and plant-based products). Three-quarters of the world’s
poorest people depend, directly or indirectly, on agriculture as their main source of income,a
so policies affecting agriculture af-
fect poverty, inequality and overall economic growth.b
And agricultural products are more regulated and controlled than general
merchandise. While phytosanitary and other sanitary standards are widely, and justifiably, adhered to by both importers and ex-
porters of these products, public officials attempting to protect domestic agriculture and mining from international competition
can impose high costs on traders and, in some cases, discourage international trade through protectionist measures. For bulk
agricultural commodities the costs of regulation are magnified by the long downward trend in prices as global supply outpaces
global demand.c
Third, as researchers have gained access to great quantities of microeconomic data in recent decades, certain stylized facts
have emerged about firms and their participation in international markets that reveal the significant costs of trade.d
Trading in-
ternationally is certainly more expensive than engaging in domestic trade. For example, compared with other firms in the same
industry, those that engage in international trade tend to be larger and more productive as well as capital and skill intensive—and
they tend to pay higher wages. In addition, there is substantial evidence of fixed costs of entry into foreign markets—firms that
engaged in international trade in the past are much more likely to do so again.
Yet Doing Business indicators are best understood as measuring marginal rather than fixed costs of trading internationally. The
trading across borders case study assumes that the exporter or importer has already established its business and is fully op-
erational. The one-time cost to obtain a trade license or customs identification number is not measured. The data capture
other costs that are not related to entry into the market but do not necessarily vary with the volume of trade (such as the costs
of customs procedures, inspections by government agencies and obtaining, preparing and submitting documents). However,
differences in marginal trade costs captured by Doing Business have a greater impact on the number of firms participating in
international trade.
Recent research has made progress in quantifying the effect of changes in marginal costs on trade volumes and participation.
One study finds that a 7% reduction in the median number of days spent in Albanian customs leads to a 7% increase in the value
of imports.e
Another finds that a 10% increase in customs delays results in a 3.8% decline in exports in Uruguay.f
Delays increase
costs for exporters, forcing them to reduce their foreign sales. Buyers also experience higher costs and downsize (or eliminate)
purchases from firms that experience such delays.
a. World Bank 2007.
b. World Bank Group and WTO 2015.
c. World Bank 2007.
d. See Tybout (2003) and Melitz and Redding (2014) for extensive reviews of the empirical and theoretical literature.
e. Fernandes, Hillberry and Mendoza Alcantara 2015.
f. Volpe Martincus, Carballo and Graziano 2015.

85Trading Across Borders
interest in trade facilitation). In 2013,
for example, members of the World
Trade Organization (WTO) concluded
a Trade Facilitation Agreement aimed
at streamlining trade procedures. The
Organisation for Economic Co-operation
and Development (OECD) estimates
that fully implementing the WTO Trade
Facilitation Agreement could reduce
trade costs by 14.1% for low-income
economies, 15.1% for lower-middle-
income economies and 12.9% for upper-
middle-income economies. Adopting
even its simple (though often still costly)
recommendations, such as automating
trade and customs processes, could
reduce costs for these income groups by
2.1–2.4%.7
In measuring the time and cost
associated with border and documentary
compliance across 189 economies, Doing
Business supports more efficient regula-
tory practices for trading across borders.
A NEW APPROACH
The Doing Business indicators on trading
across borders were among the first glob-
al measures of the administrative, regula-
tory and logistical burdens that add to the
time and cost for trading internationally.
This year’s report introduces important
changes in the methodology for the
indicators. These changes are aimed
at increasing the economic and policy
relevance of the indicators, improving the
consistency and replicability of the data
and clarifying the context in which the
data should be interpreted as well as the
caveats that should be kept in mind.
Under the new methodology Doing
Business customizes the case study
assumptions for exports and imports.
For exports, it measures the time and
cost to export a shipment of 15 metric
tons of the economy’s top nonextractive
export product. The case study follows
the shipment from a warehouse in the
economy’s largest business city to the
most widely used land border or port
through which the shipment would be
exported to the main export partner for
the product.8
Time and cost are recorded
for border compliance (both handling and
clearance and inspections), documentary
compliance and domestic transport. For
imports, the case study follows the ship-
ment from the economy’s most widely
used land border or port to a warehouse
in its largest business city. The shipment
consists of 15 metric tons of container-
ized auto parts for all economies, and
the trading partner is the main import
partner for the product.
The basic premise of the new methodol-
ogy is that the case study should reflect
the actual directions and volumes of
international trade—and that the admin-
istrative and regulatory burdens faced by
traders differ greatly across different traded
products and trading partners. Trade flows
are governed by comparative advantage,
by the preferences of consumers, by the
international structure of production and
by the size and geographic location of an
economy and its trading partners. The type
of traded product determines the standards
to which it is held (for example, food items
are subject to more safety inspections than
computer equipment). And along with the
type of product, the identity of the trading
partner determines the probability of intru-
sive and nonintrusiveinspectionsunder risk
management systems commonly used at
ports and borders around the world.
In recent decades two additional forces
have shaped international trade flows.
The first is the emergence of multilateral
trade agreements—and, increasingly, of
regional ones—aimed at reducing the
barriers to trade. The new methodology
allows an economy to be in a customs
union with its case study trading partners.
Box 9.2 details several of the interest-
ing findings from this year’s data on the
impact of customs union membership.
The second is the application of infor-
mation and communication technol-
ogy in international trade. The process
of international trade is a long and
complicated one: multiple economic and
government agencies interact at many
stages, exchanging numerous pieces of
information at each level. Any technol-
ogy that makes this flow of information
faster and more efficient is likely to have
a large effect on trade costs and on the
time spent on different procedures.
Acknowledging the already large number
of economies that have adopted some
version of an electronic data interchange,
and anticipating more digitization in the
future, Doing Business now measures the
time to trade in hours rather than in days.
EXPORTING A PRODUCT OF
COMPARATIVE ADVANTAGE
By selecting the top nonextractive
export product for the case study in
each economy, Doing Business ensures
that it measures the time and cost to
export a product that is relevant to the
economy as well as to policy makers. Of
the 97 possible products at the two-digit
level in the Harmonized System (1996)
of classification, 39 emerge as the top
export products for the 189 economies
covered by Doing Business. These range
from dairy products to machinery and
mechanical appliances. Grouping these
products into broad categories shows
that 37% of economies have an agricul-
tural product as their top export, 29%
a heavy manufacturing product, 22% a
light manufacturing product and 12% a
metal-based product. Mapping these
data reveals intuitive patterns (figure 9.1).
For example, most economies whose top
export is an agricultural product are in
Africa or Oceania, while most whose top
export is a heavy manufacturing product
are in North America or Europe.
Analysis of outcomes such as the time and
cost for border compliance and documen-
tary compliance reveals some interesting
trends. In economies whose top export is
an agricultural product, border compliance
takes 70% more time (35 more hours) on
average than in other economies, while
documentary compliance takes twice as
much time (figure 9.2). The difference in
cost for documentary compliance is also

large: obtaining, preparing and submit-
ting documents for agricultural products
is twice as costly as doing so for other
product categories.
The main reason for these differences is
that 81% of economies whose top export
is an agricultural product require product-
specific inspections and procedures (such
as fumigation or phytosanitary inspec-
tions) to export that product, while only
21% of other economies do so for their top
export product. Differences that are even
more striking emerge when comparing
agricultural products with manufacturing
products (excluding metal-based prod-
ucts). Only 20% of economies whose top
export is a manufacturing product require
product-specific inspections and proce-
dures for that export.
Yet even among economies whose
top export is an agricultural product,
documentary and border compliance times
vary widely. Border compliance times for
agricultural products subject to product-
specific inspections range from 11 hours
BOX 9.2 Does customs union membership affect the time and cost for trading?
Forty-seven years ago, while the rest of the international community was negotiating the levels of tariffs and quotas, the European
Union embarked on a grand experiment—the launch of a customs union. There would be no customs duties at internal borders
between the EU member states; there would be common customs duties on imports from outside the European Union as well as
common rules of origin for products from outside; and there would be a common definition of customs value.
While the EU customs union remains one of the best examples of trade facilitation between disparate nations, it is far from
alone. More than half the 189 economies covered by Doing Business are in a customs union today. Moreover, 33 economies are
in a customs union with their case study export partner, and 39 are in a customs union with their case study import partner. For
these economies the time for documentary and border compliance is substantially lower on average than for others—as data for
EU member economies illustrate (see figure).
Being in the same customs union as an export or import partner tends to reduce the time to trade
Average time for
documentary compliance (hours)
Average time for
border compliance (hours)
EU member economy exporting
to EU member economy
EU member economy exporting
to non-EU member economy
0.8
2.0
3.5
19.9
But not all customs unions are equal. Customs unions among OECD high-income economies (essentially the EU customs union)
perform substantially better than others, followed by customs unions in Europe and Central Asia and then by those in Sub-
Saharan Africa. In Latin America and the Caribbean membership in the same customs union as the top export partner does not
significantly improve the border compliance time to export. But it does have an effect on documentary compliance time. For
imports, customs unions reduce border compliance time in Latin America and the Caribbean as well as other regions. In Latin
America and the Caribbean, however, documentary compliance time is actually greater if the import partner is within the same
customs union. This may be due to the requirement for a certificate of origin to prove that products are being traded within the
customs union.
Note: A customs union is understood as the substitution of a single customs territory for two or more customs territories, where members apply a common external tariff.
The analysis therefore excludes entities that began as a single customs territory, such as the U.S. customs territory (the United States and Puerto Rico [territory of the
United States]) and the main customs territory of China (with Hong Kong SAR, China; and Taiwan, China) as well as treaties extended by the EU customs area (San Marino
and Turkey). Because the data on the cost to export or import do not include customs duties and tariffs, the analysis also excludes free trade areas (such as NAFTA), where
trade within the group is duty free but members set their own tariffs on imports from nonmembers.

to 210. This variation suggests that it is
possible to protect consumers and busi-
nesses while still facilitating (or at least
not impeding) trade. By including only the
product-specific procedures required by
an economy’s own government authorities
in the time and cost for border compli-
ance, Doing Business is able to distinguish
between the effects of policies imposed by
a government on its own consumers and
businesses—and thus within its control—
and those of procedures imposed from
abroad.
Figure 9.1 What are the trading patterns revealed by each economy’s top export product and partner?
to Japan
to Japan
to France
to the
Netherlands
to Belgiumto United Kingdom to United
Kingdom
to Spain
to Italy
to Germany
to Switzerland to Norway
toChinatoChina
to India
to United States
to Singapore
to India
to
China
to India
MAURITIUS
MADAGASCAR
SEYCHELLES
COMOROS
LESOTHO
SOUTH
AFRICA
SWAZILAND
BOTSWANA
NAMIBIA
ZIMBABWE MOZAMBIQUE
MALAWI
ZAMBIA
ANGOLA
DEM. REP. OF
CONGO
RWANDA
BURUNDI
TANZANIA
KENYAUGANDA
ETHIOPIA
GABON
REP. OF
CONGO
CENTRAL
AFRICAN REP.
CAMEROON
SUDAN
SOUTH
SUDAN
ERITREACHAD
NIGER
MALI
BURKINA FASO
BENIN NIGERIA
TOGO
EQUATORIAL GUINEA
SÃO TOMÉ AND PRÍNCIPE
GHANACÔTE
D’IVOIRE
LIBERIA
SIERRA LEONE
GUINEAGUINEA-BISSAU
SENEGAL
MAURITANIA
THE GAMBIA
CABO VERDE
OMANUNITED ARAB
EMIRATES
SAUDI
ARABIA
I.R. OF IRAN
QATAR
BAHRAIN
KUWAIT
IRAQ
LIBYA
ALGERIA
MOROCCO
TUNISIA
DJIBOUTI
LEBANON
WEST BANK GAZA
JORDAN
SYRIAN
A.R.
MALTA
ARAB
REP. OF
EGYPT
REP. OF
YEMEN
SOMALIA
MAURITIUS
MADAGASCAR
SEYCHELLES
COMOROS
LESOTHO
SOUTH
AFRICA
SWAZILAND
BOTSWANA
NAMIBIA
ZIMBABWE MOZAMBIQUE
MALAWI
ZAMBIA
ANGOLA
DEM. REP. OF
CONGO
RWANDA
BURUNDI
TANZANIA
KENYAUGANDA
ETHIOPIA
GABON
REP. OF
CONGO
CENTRAL
AFRICAN REP.
CAMEROON
SUDAN
SOUTH
SUDAN
ERITREACHAD
NIGER
MALI
BURKINA FASO
BENIN NIGERIA
TOGO
EQUATORIAL GUINEA
SÃO TOMÉ AND PRÍNCIPE
GHANACÔTE
D’IVOIRE
LIBERIA
SIERRA LEONE
GUINEAGUINEA-BISSAU
SENEGAL
MAURITANIA
THE GAMBIA
CABO VERDE
OMANUNITED ARAB
EMIRATES
SAUDI
ARABIA
I.R. OF IRAN
QATAR
BAHRAIN
KUWAIT
IRAQ
LIBYA
ALGERIA
MOROCCO
TUNISIA
DJIBOUTI
SOMALIA
LEBANON
WEST BANK GAZA
JORDAN
SYRIAN
A.R.
MALTA
ARAB
REP. OF
EGYPT
REP. OF
YEMEN
IBRD 41850
SEPTEMBER 2015
Top export product by type
Agricultural
Metal based
Light manufacturing
Heavy manufacturing
Economies not in the
Middle East and North Africa or
Sub-Saharan Africa
to Russian Fed
eration
to United Kingdom
to Germany
to United Kingdom
to China
to China
to Germany
to United States to Canada
BRAZIL
URUGUAY
PARAGUAY
COLOMBIA
BOLIVIA
MEXICO
ECUADOR
R. B. DE
VENEZUELA
PERU
ARGENTINA
DOMINICAN
REP.
THE BAHAMAS
COSTA RICA
HAITI
Puerto Rico
(US)
PANAMA
TRINIDAD AND TOBAGO
GRENADA
ST. VINCENT AND THE GRENADINES
ST. LUCIA
BARBADOS
DOMINICA
ANTIGUA AND BARBUDA
ST. KITTS AND NEVIS
GUYANA
SURINAME
BELIZE
HONDURAS
NICARAGUA
JAMAICA
GUATEMALA
EL SALVADOR
BRAZIL
URUGUAY
PARAGUAY
COLOMBIA
BOLIVIA
MEXICO
ECUADOR
R. B. DE
VENEZUELA
PERU
ARGENTINA
DOMINICAN
REP.
THE BAHAMAS
COSTA RICA
HAITI
Puerto Rico
(US)
PANAMA
TRINIDAD AND TOBAGO
GRENADA
ST. VINCENT AND THE GRENADINES
ST. LUCIA
BARBADOS
DOMINICA
ANTIGUA AND BARBUDA
ST. KITTS AND NEVIS
GUYANA
SURINAME
BELIZE
HONDURAS
NICARAGUA
JAMAICA
GUATEMALA
EL SALVADOR
IBRD 41832
SEPTEMBER 2015
Agricultural
Metal based
Light manufacturing
Heavy manufacturing
Economies not in Latin America
and the Caribbean
F I J I
C H I N A
M O N G O L I A
THAILAND
CAMBODIA
P A P U A
N E W
G U I N E A
PALAU
FEDERATED STATES
OF MICRONESIA
MARSHALL
ISLANDS
K I R I B A T I
SOLOMON
ISLANDS
VANUATU
MYANMAR
I N D O N E S I A
LAO
P. D. R.
VIETNAM
TIMOR-LESTE
SINGPORE
BRUNEI
DARUSSALAM
PHILIPPINES
TONGA
SAMOA
M
A LA YSI
A
BHUTAN
NEPAL
INDIA BANGLADESH
SRI
LANKA
MALDIVES
PAKISTAN
AFGHANISTAN
Hong Kong,
SAR, China
Taiwan,
China
to United Kingdom
to Netherlands
to Germany
to United States
to United States
to Germany
to Australia
to Japan
to Rep.
of Korea
F I J I
C H I N A
M O N G O L I A
THAILAND
CAMBODIA
P A P U A
N E W
G U I N E A
PALAU
FEDERATED STATES
OF MICRONESIA
MARSHALL
ISLANDS
K I R I B A T I
SOLOMON
ISLANDS
VANUATU
MYANMAR
I N D O N E S I A
LAO
P. D. R.
VIETNAM
TIMOR-LESTE
SINGPORE
BRUNEI
DARUSSALAM
PHILIPPINES
TONGA
SAMOA
M
A LA YSI
A
BHUTAN
NEPAL
INDIA BANGLADESH
SRI
LANKA
MALDIVES
PAKISTAN
AFGHANISTAN
Hong Kong,
SAR, China
Taiwan,
China
IBRD 41849
SEPTEMBER 2015
Agricultural
Metal based
Light manufacturing
Heavy manufacturing
Economies not in South Asia or
East Asia and the Paciﬁc
to China
AUSTRALIA
CANADA
UNITED STATES JAPAN
NEW
ZEALAND
CHILE
ISRAEL
EUROPE
REP. OF
KOREA
AUSTRALIA
CANADA
UNITED STATES JAPAN
REP. OF
KOREA
NEW
ZEALAND
CHILE
ISRAEL
EUROPE
IBRD 41803
SEPTEMBER 2015
Agricultural
Metal based
Light manufacturing
Heavy manufacturing
Economies not in the OECD
high-income group
to Sweden
to Germany
to Austria
to Iraq
to Greece
to China
to China
to Brazil
toFrance
to Italy
KAZAKHSTAN
KYRGYZ REP.
TAJIKISTAN
UZBEKISTAN
TURKEY
CYPRUS
BULGARIAFYR
MACEDONIA
ALBANIA
MONTE-
NEGRO
SAN
MARINO
ROMANIA
CROATIA
BOSNIA
HERZ. SERBIA
KOSOVO
LITHUANIA
LATVIA
AZERBAIJAN
GEORGIA
ARMENIA
RUSSIAN FEDERATION
MOLDOVA
UKRAINE
BELARUS
RUSSIAN
FED.
KAZAKHSTAN
KYRGYZ REP.
TAJIKISTAN
UZBEKISTAN
TURKEY
CYPRUS
BULGARIAFYR
MACEDONIA
ALBANIA
MONTE-
NEGRO
SAN
MARINO
ROMANIA
CROATIA
BOSNIA
HERZ. SERBIA
KOSOVO
LITHUANIA
LATVIA
AZERBAIJAN
GEORGIA
ARMENIA
RUSSIAN FEDERATION
MOLDOVA
UKRAINE
BELARUS
RUSSIAN
FED.
IBRD 41828
SEPTEMBER 2015 Top export product by type
Agricultural
Metal based
Light manufacturing
Heavy manufacturing
Economies not in Europe and
Central Asia
Note: The figure reflects World Bank regional classifications, which may differ from common geographic classifications, especially in the case of OECD high-income economies.

Of 69 economies whose top export
is an agricultural product, 56 have
product-specific procedures for this
export—while among 118 economies
whose top export is a metal-based, heavy
manufacturing or light manufacturing
product, only 25 have product-specific
procedures for it. These economies
span all regions and income groups,
from Norway among OECD high-
income economies to Guinea-Bissau in
Sub-Saharan Africa. Both Grenada and
Australia, for example, require sanitary
inspections and certificates for their top
export product. Yet completing border
compliance procedures takes 101 hours
and $1,034 for an exporter of nutmeg in
Grenada, while it takes only 36 hours and
$749 for an exporter of meat in Australia.
And completing documentary compli-
ance takes 10 times as many hours for
the exporter in Grenada (77) as it does
for the exporter in Australia (7). The
exporter in Grenada must contact the
Ministry of Agriculture several days in
advance and wait to obtain a hard-copy
document to clear customs. In Australia,
by contrast, quarantine authorities work
closely with both producers and customs
authorities throughout the production
process. What matters is not whether
enhanced inspections and procedures are
required—but whether they are carried
out efficiently.
IMPORTING AUTO PARTS
While top export products vary widely, all
189 economies import similar products.
The explanation for this is intraindustry
trade, driven mostly by the global nature
of modern production techniques. Supply
chains (for raw materials, intermediate
goods and final products) extend around
the globe in search of higher quality and
lower prices—both benefiting from and
inducing reductions in the time and cost
for international trade. This phenomenon
is represented in manufactured products,
and it allows the selection of a single
import product—auto parts—for all 189
economies. Focusing the case study on
the import process for a single homoge-
neous product makes the resulting data
even more comparable.
Importing auto parts involves greater
time and cost on average than export-
ing does. Intuitively, it makes sense that
imports face more inspections (increas-
ing border compliance time and cost)
as well as more procedures (increasing
documentary compliance time and
cost). In fact, 40% of economies require
inspections by other agencies in addition
to customs when importing auto parts.
Yet why are the average time and cost to
import auto parts almost in line with the
averages to export agricultural products?
One reason is that another 17% of
economies also require preshipment
inspections—inspections conducted in the
economyoforiginbythird-partycompanies.
These economies have significantly greater
border and documentary compliance times
and costs for importing auto parts (figure
9.3). While the existence of protectionist
measures cannot be denied, some import
inspections are important in protecting con-
sumers.Evenso,thereispotentialtoimprove
the efficiency of preshipment inspections
and reduce costs for traders. Among the
economies requiring such inspections
for auto parts, border compliance times
range from 56 hours to 1,330, revealing
much room for improvement.
While importing generally requires great-
er time and cost than exporting, compar-
ing the data for economies shows that
those that perform well in the time and
cost to export their product of compara-
tive advantage often also perform well in
the time and cost to import auto parts.
Of the top 10 performers in the border
compliance time to export (excluding the
European Union), 6 are also in the top 10
in the border compliance time to import.
This pattern is repeated at the other end
of the spectrum, with 5 of the bottom 10
performers on this measure for exporting
also being in the bottom 10 for importing.
Similar patterns emerge across regions.
Importing takes substantially less
time on average in OECD high-income
economies than in other economies,
and so does exporting. Take the example
of Canada, where traders benefit from
a well-functioning electronic system
linking Canadian and U.S. customs.
The entire border compliance process
between Canada and the United States
can be completed in two hours.
Figure 9.2 Exporting agricultural products takes more time and cost than exporting
other products
0
100
200
300
400
500
600
Nonagricultural productsAgricultural products
CostTimeCostTime
Documentary compliance Border compliance
Average time (hours)
Average cost (US$)

And completing border compliance
procedures costs about the same for
a Canadian importer ($172) as it does
for a Canadian exporter ($167). In Sub-
Saharan Africa, by contrast, border com-
pliance takes 160 hours on average for an
importer and 108 hours for an exporter.
In Cameroon, for example, exporting a
shipment of cocoa takes 202 hours and
costs $983—in part because exports of
cocoa undergo a phytosanitary inspec-
tion. But importing auto parts, which
requires a preshipment inspection, takes
271 hours and costs $1,407. It seems safe
to conclude that economies that are less
efficient importers also tend to be less
efficient exporters.
THE BIG ROLE OF
GEOGRAPHY
For millennia, geography has determined
whether economies trade with each
other and what products are exchanged.
The Silk Road was so named because the
long distances and extremely high trans-
port costs made trading only high-value
products like silk worthwhile. Advances
in technology have increased the flow of
information and goods, but geography
continues to play a very important role.
The new methodology accounts for the
role of geography in two ways. The first
is by assuming, for each economy, that
trade is with its natural trading partners
(the largest buyer of its export product
and its largest source of auto parts),
regardless of the mode or route of trans-
port. In 97% of cases the natural trading
partner for the export product also hap-
pens to be the largest trading partner
overall. Thus the measures of time and
cost have broader applicability.
Geography and distance play a role in
determining export partners—large
economies and landlocked economies
tend to trade with regional neighbors.
Yet the distribution of import partners
for auto parts reveals much greater
geographic dispersion, with 57% of
economies importing auto parts from
one of four economies: Germany, Japan,
the United States or France. This shows
that geography and distance play less
of a role when it comes to choosing the
most efficient, reliable and high-quality
supplier of auto parts.
Of the 189 economies covered, 42 are
landlocked, 28 have a coastline but trade
with their case study export partner
through a land border, and the rest have
a coastline and trade with their export
partner through their port. While the
export partner is an immediate geo-
graphic neighbor for 33% of landlocked
economies, this is the case for only 22%
of economies with a coastline (excluding
islands). Most economies that trade with
their geographic neighbor are OECD high-
income economies in Europe. Among the
189 economies studied by Doing Business,
the most common export partners
are OECD high-income economies in
Europe, followed by OECD high-income
economies outside of Europe, and then
by economies in East Asia and the Pacific.
The second way in which the new
methodology accounts for geography
is through the domestic transport time
and cost measures. Under the previous
methodology Doing Business measured
the time and cost for transport to the
main port, which meant transport across
borders for landlocked economies. Under
the new methodology it considers only
domestic transport within the borders of
an economy, capturing the time and cost
associated with transporting a shipment
between a warehouse in the largest busi-
ness city and the economy’s most widely
used seaport (or airport) or land border.
The time and cost for domestic transport
also include the loading and unloading of
the shipment at the warehouse.
In this year’s report, however, the time and
cost for domestic transport do not affect
the ranking on the ease of doing business.
These measures are excluded from the
calculation of the ranking because they
depend on predetermined factors such
as topography and geographic distances.
While infrastructure, traffic regulations
and transport industry regulations can
mitigate the effects of geography, most
such factors are beyond a government’s
ability to change through reforms.
Nevertheless, the speed of domestic
transport and the cost per kilometer can
provide a starting point in evaluating the
efficiency of infrastructure and relevant
transport and traffic regulations across
Figure 9.3 Importing auto parts requires greater time and cost in economies
requiring preshipment inspections
0
100
200
300
400
500
600
700
800
Documentary complianceBorder compliance
CostTimeCostTimeCostTime
Only customs inspections Customs and other inspections Preshipment inspections
Average time (hours)
Average cost (US$)

economies. Data show that the cost and
speed vary by income group, region and
type of geography, while there is a clear
pattern showing that domestic trans-
port speed increases with the level of
economic development (figure 9.4).
CONCLUSION
The data collected under the new method-
ology for the trading across borders indica-
tors reveal that economies’ top export
products are quite region specific—for
example, OECD high-income economies
tend to export manufactured products
while Sub-Saharan African economies tend
to export agricultural products. The identity
of the top export partner also reveals the
importance of geography; economies tend
to export to those close to them. Trade in
auto parts, however, is highly concentrated,
with just four economies being the major
suppliers to 57% of the world. This reflects
the nature of comparative advantage as
well as the global span of modern produc-
tion techniques.
The benchmark data collected for this
year’s report reveal that both the type of
product being traded and the geographic
location of trading partners affect trade
costs. But one of the determinants of
the time and cost for trading across
borders is the efficiency of regulation
and its implementation. Exporting an
agricultural product involves greater time
and cost than exporting a machine. But
among the economies whose top export
is an agricultural product, the time and
cost to export that product vary greatly.
This suggests that neither comparative
advantage nor geography is destiny.
Smart regulations that are implemented
well can protect national borders without
unduly penalizing traders, consumers or
producers.
NOTES
This case study was written by Cécile Ferro,
Khrystyna Kushnir, Mathilde Lugger, Valentina
Saltane, Brandon Thompson and Inés Zabalbeitia
Múgica.
1. WTO 2014.
2. WTO 2008.
3. Wacziarg and Welch 2008.
4. Madsen 2007.
5. Wagner 2007.
6. Krueger 1998.
7. OECD 2014.
8. For 11 economies the data are collected
separately for both the largest business city
and the second largest one.
Figure 9.4 The cost and speed of domestic transport vary across income groups
0
5
10
15
20
25
30
Domestic transport costDomestic transport speed
0
5
10
15
20
25
30
Average domestic transport speed
(kilometers per hour)
Average domestic transport cost
(US$ per kilometer)

Doing Business 2016
E
fficient contract enforcement is
essential to economic development
and sustained growth.1
Economic
and social progress cannot be achieved
without respect for the rule of law and
effective protection of rights, both of
which require a well-functioning judiciary
that resolves cases in a reasonable time
and is predictable and accessible to the
public.2
Economies with a more efficient
judiciary, in which courts can effectively
enforce contractual obligations, have
more developed credit markets and a
higher level of development overall.3
A stronger judiciary is also associated
with more rapid growth of small firms.4
Overall, enhancing the efficiency of the
judicial system can improve the busi-
ness climate, foster innovation, attract
foreign direct investment and secure tax
revenues.5
A study examining court efficiency in dif-
ferent provinces in Argentina and Brazil
found that firms located in provinces
with more effective courts have greater
access to credit.6
Another study, focusing
on Mexico, found that states with bet-
ter court systems have larger and more
efficient firms.7
Effective courts reduce
the risks faced by firms and increase their
willingness to invest.8
Firms in Brazil,
Peru and the Philippines report that they
would be willing to invest more if they
had greater confidence in the courts.9
Where legal institutions are ineffective,
improvements in the law may have lim-
ited impact. A study of the transitioning
economies of Eastern Europe and the
former Soviet Union between 1992 and
1998 found that reforms in corporate
and bankruptcy laws had little effect
on the development of their financial
institutions. Improvements began only
once their legal institutions became more
efficient.10
The efficiency of courts continues to
vary greatly around the world. Enforcing
a contract through the courts can take
less than 10 months in New Zealand,
Norway and Rwanda but almost 4 years
in Bangladesh. And the cost of doing so
ranges from less than 10% of the value
of the claim in Iceland, Luxembourg and
Norway to more than 80% in Burkina
Faso and Zimbabwe. In five economies,
including Indonesia and Mozambique,
the cost can exceed the value in dispute,
suggesting that litigation may not be a
cost-effective way to resolve disputes.
AN EXPANDED FOCUS FOR
THE INDICATORS
Over the years the Doing Business
indicators on enforcing contracts have
measured the time, cost and procedural
complexity to resolve a standardized
commercial dispute between two
domestic businesses through local first-
instance courts. The dispute involves the
breach of a sales contract worth twice the
income per capita or $5,000, whichever
is greater. The case study assumes that
a seller delivers custom-made goods to a
buyer who refuses delivery, alleging that
the goods are of inadequate quality. To
enforce the sales agreement, the seller
files a claim with a local court, which
ƒƒ Doing Business introduces a new
measure in the enforcing contracts
indicator set this year, the quality of
judicial processes index. This indicator
tests whether each economy has
implemented a series of good practices
in the areas of court structure and
proceedings, case management, court
automation and alternative dispute
resolution.
ƒƒ On average, OECD high-income
economies have the largest number
of judicial good practices in place as
measured by the new index, while
Sub-Saharan African economies have
the fewest.
ƒƒ Economies that score well on the new
index tend to have faster and less
costly dispute resolution as measured
by the enforcing contracts indicators.
ƒƒ None of the 189 economies covered by
Doing Business receive full points on the
new index, showing that all economies
still have room for improvement in
judicial efficiency.
Enforcing contracts
Measuring good practices in the judiciary

hears arguments on the merits of the
case. Before reaching a decision in favor
of the seller, the judge appoints an expert
to provide an opinion on the quality of the
goods in dispute, which distinguishes the
case from simple debt enforcement.
This year Doing Business introduces
an important change in methodology
for the enforcing contracts indicators.
While it continues to measure the
time and cost to resolve a standardized
commercial dispute under the same
assumptions, it now also tests whether
each economy has adopted a series of
good practices that promote quality and
efficiency in the commercial court sys-
tem. For this purpose it has replaced the
indicator on procedural complexity with
a new indicator, the quality of judicial
processes index. The aim is to capture
new and more actionable aspects of the
judicial system in each economy, provid-
ing a picture of judicial efficiency that
goes beyond the time and cost associ-
ated with resolving a dispute.
The quality of judicial processes index
covers a set of good practices across
four areas, corresponding to the four
components of the index: court structure
and proceedings, case management,
court automation and alternative dispute
resolution (figure 10.1). These practices
can result in a more efficient and trans-
parent judiciary, greater access to justice,
a smaller case backlog, faster and less
costly contract enforcement and, in some
cases, more qualitative judgments.
This case study discusses many of the
good practices encompassed by the
quality of judicial processes index. It
first looks at two aspects of the court
structure and proceedings index—the
availability of dedicated mechanisms
to resolve commercial disputes and the
availability of dedicated mechanisms to
resolve small claims. It then moves on
to case management and court automa-
tion, intertwined concepts often treated
together. Finally, it explores mechanisms
of alternative dispute resolution.
USING DEDICATED
SYSTEMS FOR COMMERCIAL
CASES AND SMALL CLAIMS
Dedicated systems for commercial cases
and small claims can make a big differ-
ence in the effectiveness of a judiciary.11
Having specialized commercial courts or
divisions reduces the number of cases
pending before the main first-instance
court and thus can lead to shorter resolu-
tiontimeswithinthemaintrialcourt—one
reason that economies have sometimes
introduced specialized courts as a case
management tool. But the benefits do
not end there. Commercial courts and
divisions tend to promote consistency in
the application of the law, increasing pre-
dictability for court users.12
And judges
in such courts develop expertise in their
field, which likely leads to faster and more
qualitative dispute resolution.13
The data show that 97 of the 189 econo-
mies covered by Doing Business have
a specialized commercial jurisdiction
—established by setting up a dedicated
stand-alone court, a specialized com-
mercial section within an existing court
or specialized judges within a general
civil court. In the 16 Sub-Saharan African
economies that have introduced com-
mercial courts or sections over the
past ten years—Benin, Burkina Faso,
Cameroon, Côte d’Ivoire, Ghana,
Guinea-Bissau, Lesotho, Liberia, Malawi,
Mauritius, Mozambique, Rwanda,
Senegal, the Seychelles, Sierra Leone
and Togo—the average time to resolve
the standardized case measured by
Doing Business was reduced by about 2.5
months. In Côte d’Ivoire the reduction
was more than 6 months. In 2011 resolv-
ing a commercial dispute in Abidjan took
770 days. In 2013, after the creation of
a specialized commercial court, it took
only 585 days.
Small claims courts or simplified pro-
cedures for small claims, as the form of
justice most likely to be encountered by
the general public, play a special part in
Figure 10.1 Areas covered by the quality of judicial processes index
Case
management
Court
automation
Alternative dispute
resolution
Court structure and
proceedings
Availability of
a specialized
commercial court
or division
Criteria used
to assign cases
to judges
Availability
of pretrial
attachment
Availability of a
small claims court
or simplified
procedure for
small claims
Regulations
setting time
standards for key
court events
Use of pretrial
conference
Availability of
performance
measurement
mechanisms
Regulations on
adjournments
and continuances
Ability to file
initial complaint
electronically
Publication of
judgments
Ability to pay
court fees
electronically
Ability to serve
process
electronically
Availability and
regulation of
arbitration
Availability and
regulation of
voluntary
mediation or
conciliation
Availability of an
electronic case
management
system

93Enforcing Contracts
building public trust and confidence in
the judicial system.14
They help meet the
modern objectives of efficiency and cost-
effectiveness by providing a mechanism
for quick and inexpensive resolution of
legal disputes involving small sums of
money.15
In addition, they tend to reduce
backlogs and caseloads in higher courts.
Small claims courts usually use informal
hearings, simplified rules of evidence and
more streamlined rules of civil procedure
—and typically allow the parties to repre-
sent themselves.16
Faster and less costly dispute resolu-
tion matters to small and medium-size
enterprises, which may not have the
resources to stay in business during
long, costly litigation. If a claim could not
be enforced because the relative cost is
prohibitive, there would be a denial of
justice.17
By providing a venue for resolv-
ing claims with costs and procedures that
are realistic and proportionate to the size
of the dispute, small claims courts and
simplified procedures for small claims
increase access to justice for businesses
and individuals.18
According to Doing Business data, 128
economies have either a stand-alone
small claims court or a simplified pro-
cedure for small claims within the first-
instance court.19
Of these 128 economies,
116 allow parties to represent themselves
during the proceedings. Across regions,
Latin America and the Caribbean and
the OECD high-income group have the
largest shares of economies with a court
or simplified procedure for small claims in
place—91% in both cases (figure 10.2).
MANAGING THE FLOW
OF CASES
Case management refers to a set of
principles and techniques intended to
ensure the timely and organized flow of
cases through the court from initial filing
through disposition. Case management
enhances processing efficiency and
promotes early court control of cases.20
When well implemented, case manage-
ment techniques can enhance record-
keeping, reduce delays and case backlogs
and provide information to support stra-
tegic allocation of time and resources—
all of which encourage generally better
services from courts.21
They can also
improve the predictability of court events,
which can ensure accountability, increase
public trust, reduce opportunities for cor-
ruption and enhance the transparency of
court administration.22
While the case management principles
adopted by courts vary depending on their
needsandthelocallegalculture,somehave
been applied so consistently worldwide as
to have evolved into a set of core principles.
These include early court intervention,
establishing meaningful events such as
the filing of a plea or the submission of the
final judgment, establishing time frames for
these events and for disposition, creating
realistic schedules and expectations that
events will occur as scheduled, introducing
early options for settlement, establishing
firm and realistic appearance dates and
developing mechanisms that control frivo-
lous adjournments.23
Doing Business collects data on three
of the recognized core principles: the
availability of regulations setting time
standards for key court events, the avail-
ability of regulations on adjournments
and continuances, and the possibility of
holding a pretrial conference—a hearing
to narrow down contentious issues and
evidentiary questions before the trial,
explore the complexity of the case and
the projected length of the trial, create a
schedule for the proceedings and check
with the parties on the possibility of
settlement. When collecting data relat-
ing to regulations on time standards and
adjournments, Doing Business also sur-
veys experts on whether these standards
are respected in practice.
The data show that having a pretrial con-
ference is a common case management
tool, used in 87 economies (figure 10.3).
Laws or regulations setting time standards
for key court events exist in 111 economies,
thoughthesetimestandardsarerespected
in practice in only 76 of these economies.
Detailed rules regulating adjournments
are available in only 50 economies.
Another way to support effective
implementation of case management
techniques is to use case management
reports that compile and analyze case
performance data.24
These can show
Figure 10.2 Most economies in Latin America and the Caribbean have a court or
procedure for small claims in place
0
20
40
60
80
100
Sub-Saharan
Africa
Europe
CentralAsia
EastAsia
Pacific
Middle East
NorthAfrica
SouthAsiaOECD
high income
LatinAmerica
Caribbean
Share of economies with a court
or procedure for small claims (%)

whether case management goals have
been met in individual cases or at the
court level—such as through data on
the number of cases pending before the
court, the clearance rate, the average
disposition time or the age of the pending
caseload. Such reports can show court
administrators where inefficiencies and
bottlenecks lie and also help them track
the progress of ongoing case manage-
ment initiatives. And by breaking data
down at the judge level, they can serve
as a performance measurement tool—an
important use, since research shows that
many delays in litigation are attributable
to lax case management by the judge.25
Data collected this year on the availabil-
ity of four of the more common types of
performance management reports show
that at least two of these types are pub-
licly available in 71 economies.26
Some economies have introduced
electronic systems to support case
management by automating many of its
components.27
Features available through
electronic case management systems
may include access to laws, regulations
and case law; access to forms to be sub-
mitted to the court; automatic generation
of a hearing schedule; management of
electronic notifications; tracking of the
status of cases; management of case
documents; electronic filing of briefs
and motions; and access to court orders
and decisions. Such systems may be
available to a range of users, from judges
to lawyers, court administrators and
court users. Doing Business looks at their
availability to judges and to lawyers.
The data show that they are more com-
monly available to judges: an electronic
case management system as defined by
Doing Business is available to judges in 41
economies, while such a system is avail-
able to lawyers in only 37 economies.28
AUTOMATING PROCESSES
As courts around the world have made
increasing use of electronic systems,
court users have seen the benefits—in
greater judicial transparency as well as
greater court efficiency.
Automation and judicial
transparency
Until this year Doing Business measured
court automation only in connection with
the availability of electronic filing of the
initial summons. This year it began look-
ing at two additional features: electronic
service of process and electronic payment
of court fees. Just as for electronic filing
of the initial summons, Doing Business
tests only whether these features are
in place, not whether they are used by
the majority of court users. For all these
features the court of reference is the one
that would have jurisdiction to hear the
Doing Business standardized case.
These features streamline and speed up
the process of commencing a lawsuit.
But they also have broader benefits.
Electronic records tend to be more con-
venient and reliable. Reducing in-person
interactions with court officers minimizes
the chances for corruption and results in
speedier trials, better access to courts
and more reliable service of process.
These features also reduce the cost to
enforce a contract—court users save
in reproduction costs and courthouse
visits, while courts save in storage costs,
archiving costs and court officers’ costs.
And studies show that after electronic
filing is introduced in courts, the acces-
sibility of information increases and
Figure 10.3 Some of the features covered by the quality of judicial processes index exist in far more economies than others
0
20
40
60
80
100
120
140
160
180
200
Electronicfiling
Electronicserviceofprocess
Automatedcasemanagement(lawyers)
Automatedcasemanagement(judges)
Electronicfeepayment
Rulesonadjournments*
Performancereports
Pretrialconference
Commercialcourtordivision
Publicationofjudgments*
Rulesontimestandards*
Smallclaimscourtorprocedure
Mediationorconciliation*
Randomassignmentofcases*
Arbitration*
Pretrialattachment
Number of economies
with feature
Note: For features marked with an asterisk, an economy must have received a score of at least 0.5 to be included in the count. For details on the scoring, see the data notes.

access to and delivery of justice improve
considerably.29
In the past five years Doing Business
recorded 13 reforms focused on intro-
ducing an electronic filing system for
commercial cases and allowing attor-
neys to submit the initial complaint
online. Introducing electronic filing was
the most common feature of enforcing
contracts reforms recorded in last year’s
report and is among the most common
in this year’s report. Today electronic
filing of the initial complaint is allowed
in 24 economies. Electronic service of
process is slightly more common—the
initial summons can be served by e-mail,
fax or text messaging in 27 economies.
Electronic payment of court fees is the
most commonly available feature of
court automation measured by Doing
Business—allowed in 45 economies.
Even so, these three features, along with
electronic case management, remain the
least common of the good practices cov-
ered by the quality of judicial processes
index (figure 10.4).
Doing Business also explores two dimen-
sions that are closely intertwined with
court automation and, ultimately, with
judicial transparency. The first relates to
how cases are assigned to judges within
the competent court. A credible system
for random assignment of cases mini-
mizes the chances for corruption.30
While
almost all economies (172) provide for
random assignment of cases, only 48
have a fully automated process.
The second relates to whether judgments
rendered in commercial cases at all levels
are made publicly available.31
Publishing
judgments contributes to transparency
and predictability, allowing litigants to
rely on existing case law and judges to
consistently build on it. Access to the
results of commercial cases benefits
companies that invest in a particular juris-
diction, clarifying the scope of their rights
and duties.32
Making judgments available
does not necessarily require substantial
resources, but it does require internal
organization. Case decisions must be
accessible and catalogued efficiently so
that they can be easily searched.
In 42 economies courts publish virtu-
ally all recent judgments in commercial
cases either online or through publicly
available gazettes. Sub-Saharan Africa
accounts for only two of these econo-
mies; the Middle East and North Africa
and South Asia also account for only two
each.
Automation and court efficiency
Sophisticated court automation can
support effective case management.
Courts that have automated processes
for actions such as serving documents
or submitting a claim can more easily
implement electronic case management
systems. Even where case management
is not fully automated, some court
automation can be an effective tool for
court administrators, enabling them to
more easily monitor the movement of
cases through the court. Economies in
the OECD high-income group and Europe
and Central Asia tend to have both great-
er court automation and more developed
case management than those in any
other region. Together, these two regions
account for 17 of the 24 economies
worldwide that make electronic filing
available and for 23 of the 34 economies
that offer an electronic case management
system for both judges and lawyers.
Outside these regions, court automation
remains limited: 74 economies score a 0
on the court automation index.
The Republic of Korea and Singapore are
two of only four economies worldwide
that receive full points on the court
automation index; they also score points
for the availability of electronic case
management systems for both judges
and lawyers. Unsurprisingly, both these
economies reformed in this area in the
past few years. Korea launched an elec-
tronic case filing system in 2010 that
allows electronic document submission,
registration, service notification and
access to court documents (box 10.1).
Singapore introduced a new electronic
litigation system in 2014. The system
allows litigants to file cases online—and
it enables courts to keep litigants and
lawyers informed about their cases
through e-mail, text alerts and text
messages; to manage hearing dates;
and even to hold certain hearings by
videoconference.
Figure 10.4 Court automation and case management are two areas where many
economies can improve
0
20
40
60
80
100
Court automation indexCase management index
Court structure and proceedings indexAlternative dispute resolution index
Sub-Saharan
Africa
East Asia
Pacific
Middle East
North Africa
Europe
Central Asia
Caribbean
OECD
high income
Average index score
as % of best score

The data suggest a striking relationship
between court automation and case
management on the one hand and the
time and cost for dispute resolution on
the other. Singapore has the shortest
resolution time worldwide—150 days for
the standardized commercial dispute.
Korea is a short step away, with a reso-
lution time of 230 days. Korea also has
among the lowest costs worldwide to
resolve a commercial dispute, at about
10.3% of the value of the claim. And
both Korea and Singapore are among the
economies that have been promoting
judicial transparency and the develop-
ment of consistent case law through the
online publication of judgments rendered
at all levels.
USING ALTERNATIVE
MEANS TO RESOLVE
DISPUTES
While the Doing Business indicators on
enforcing contracts have traditionally
measured dispute resolution through
the local court system, this year the
focus has broadened to also cover
mechanisms of alternative dispute
resolution (ADR)—in particular, arbi-
tration, voluntary mediation and con-
ciliation. In commercial arbitration the
parties agree to submit their dispute to
an independent arbitrator or arbitral tri-
bunal, which issues a final and binding
decision. In a mediation or conciliation
process the parties ask a third person
to assist them in reaching an amicable
settlement of their dispute.
ADR should be seen not as something
that can replace traditional litigation but
as a tool that can assist courts in resolv-
ing disputes in a timely, cost-effective
and transparent way. ADR mechanisms
can improve efficiency in the court sys-
tem as a whole by helping to reduce case
backlogs and bottlenecks.33
They can
reduce delays where these are caused
by complex formal procedures or inade-
quate court resources—and reduce high
costs where these are driven by formal
procedures, high filing fees and court
delays. Economies with an integrated
system of courts and ADR tend to have
a more reliable judiciary, benefiting the
courts, the parties involved and the
economy as a whole.34
When used as an alternative to the
judicial process, ADR has its own set
of benefits. It gives the parties more
control over the resolution of disputes
and in most cases increases their sat-
isfaction with outcomes. A study in the
Canadian province of Quebec has even
shown that a form of ADR known as
judge-presided settlement conference
promotes access to justice.35
Effective systems of domestic commer-
cial arbitration and mediation or concili-
ation matter to investors.36
Lawyers and
business owners know that high litigation
costs and long delays make resolving
commercial disputes in court difficult
and expensive and may look elsewhere
for dispute resolution—and businesses
may pass the costs on to consumers or
abstain from investing in a jurisdiction.37
Especially in smaller cases, having a
neutral mediator or arbitrator saves busi-
nesses time and money in resolving com-
mercial disputes and provides greater
control over outcomes and confidential-
ity.38
It also reduces the instances in
which a dispute leads to the termination
of a commercial relationship.39
And with
today’s increasingly complex business
dealings, specialized ADR programs
focusing on particular types of technical
or complex disputes can be more effec-
tive and produce better settlements than
courts, increasing litigants’ satisfaction
with outcomes.
Almost all (183) of the economies sur-
veyed recognize arbitration in one way
or another as a mechanism for dispute
resolution. Most (171) also recognize
voluntary mediation or conciliation. To
be effective, ADR mechanisms need
to be accessible. They also need to be
comprehensively regulated, with all
substantive and procedural provisions
available in a single source, such as a
specific statute. The data show that this
is more often the case for arbitration:
while 179 economies have a dedicated
law or chapter on arbitration, only 102
have a similar instrument on voluntary
mediation or conciliation.
Economies worldwide have consis-
tently focused on promoting and regu-
lating arbitration and mediation. Three
economies—Côte d’Ivoire, Latvia and
Senegal—have made such issues a prior-
ity over the past year, introducing new
laws that regulate mediation.
BOX 10.1 The computerization of Korean courts
Today Korean courts are fully computerized, but this did not happen overnight. The process started in the late 1970s with the
creation of a database of cases flowing through courts. In the early 1980s a word processing software was introduced to sup-
port judges in writing judgments. In 1986 a case management system was launched, enabling clerks and judges to search all
civil cases in the database and deal more efficiently with their caseloads. Soon after, a master plan for creating e-courts was
conceived—and this was followed by steps to make the case management system accessible to external users, add electronic
signatures and digital certificates to the system and make real-time national data on court activities available. Finally, in 2010
Korea launched an electronic case filing system. The system enables some judges to adjudicate up to 3,000 cases a year, man-
age up to 400 a month and hear up to 100 pleas a month.
Sources: Doing Business research; interview with Korean Judge Hoshin Won, Daegu District Court, Seoul.

WHY DOES ALL THIS
MATTER?
OECD high-income economies tend to
focus more consistently on implementing
judicial good practices. On average, these
economies have the largest number
of judicial good practices as measured
by Doing Business (table 10.1). But top
performers can be found in all income
groups. Of the three economies with the
highest scores on the quality of judicial
processes index—Singapore, Australia
and the former Yugoslav Republic of
Macedonia—only two are high-income
economies. And while some regions
have relatively low average scores on the
new index, top performers can be found
in these regions as well. In Sub-Saharan
Africa, for example, Mauritius receives
13 of 18 possible points, a higher score
than the average for OECD high-income
economies.
A well-organized, reliable and stream-
lined judiciary plays an important part
in the efficient delivery of justice. The
data for the enforcing contracts indica-
tors show that economies that have
more judicial good practices in place
also tend to have faster and less expen-
sive commercial dispute resolution
(figure 10.5).
The availability of good practices making
contract enforcement easier and more
efficient matters to businesses and,
indeed, even plays a role in the level of
domestic credit provided by the financial
sector to the economy. Economies that
score well on the quality of judicial pro-
cesses index have higher levels of credit
provided to the private sector by domes-
tic financial institutions (figure 10.6).
CONCLUSION
Data for the new quality of judicial pro-
cesses index highlight great variation in
the implementation of judicial good prac-
tices across the 189 economies covered.
Some practices—such as the availability
of arbitration or the availability of a small
claims court or procedure—are wide-
spread; others still need attention in even
the most sophisticated economies. One
example is electronic case management,
available to judges in only 41 economies
and to lawyers in only 37.
Table 10.1 On average, OECD high-income economies have the highest number of judicial good practices in place as measured by
the new indices
Region
Court structure and
proceedings index
(0–5)
Case management
index (0–6)
Court automation
index (0–4)
Alternative dispute
resolution index
(0–3)
Quality of judicial
processes index
(0–18)
OECD high income 3.70 2.96 1.85 2.45 10.96
Europe Central Asia 3.54 3.24 1.52 2.18 10.48
Latin America Caribbean 3.48 1.84 0.75 2.30 8.37
East Asia Pacific 2.74 1.91 0.94 2.02 7.61
South Asia 3.06 0.63 0.56 2.25 6.50
Middle East North Africa 3.25 0.75 0.35 2.13 6.48
Sub-Saharan Africa 3.11 1.11 0.23 1.98 6.43
Note: The quality of judicial processes index is the sum of the four other indices shown here, with 18 being the highest possible score. For details on how the indices are
constructed, see the data notes.
Figure 10.5 Economies with more judicial good practices in place tend to have faster
and less costly contract enforcement
0 10 20 30 40 50 60 70 80 90 100
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score for quality
of judicial processes index
Distance to frontier score for time and cost to enforce a contract
Note: The correlation between the distance to frontier score for the quality of judicial processes index and the
distance to frontier score for the time and cost to enforce a contract is 0.37. The relationship is significant at the
1% level after controlling for income per capita.

None of the 189 economies covered by
Doing Business receive full points on the
quality of judicial processes index. By
helping to identify specific areas needing
attention, the index can be a useful tool
for governments seeking to reform and
modernize their judiciary.
NOTES
This case study was written by Erica Bosio, Salima
Daadouche, Christian De la Medina Soto and
Maksym Iavorskyi.
1. Esposito, Lanau and Pompe 2014; Dakolias
1999; Ball and Kesan 2010; Klerman 2006;
Dam 2006; Rosales-López 2008.
2. Dakolias 1999; Sherwood, Shepherd and
De Souza 1994.
3. Dam 2006.
4. Islam 2003.
5. Esposito, Lanau and Pompe 2014.
6. World Bank 2004.
7. World Bank 2004.
8. World Bank 2004.
9. Castelar-Pinheiro 1998; Sereno, de Dios and
Capuano 2001; Herrero and Henderson 2001.
10. Pistor, Raiser and Gelfer 2000.
11. Djankov and others 2003.
12. Zimmer 2009.
13. Zimmer 2009.
14. Ramsay 1996.
15. Axworthy 1976; Ramsay 1998.
16. HALT 2007; Baldwin 2000.
17. Axworthy 1976.
18. Baldwin 2000.
19. Throughout this case study, any economy
for which Doing Business covers two cities
is included in the count of economies with
a particular feature as long as the feature is
available in at least one of the two cities.
20. Michigan State Court Administrative Office
2004; Gramckow and Nussenblatt 2013.
2004; Gramckow and Nussenblatt 2013;
Rooze 2010; Steelman, Goerdt and McMillan
2004.
22. USAID, Center for Democracy and
Governance 2001; Gramckow and
Nussenblatt 2013; Rooze 2010; Steelman,
Goerdt and McMillan 2004.
2004; Gramckow and Nussenblatt 2013;
Rooze 2010; Steelman, Goerdt and McMillan
2004.
24. Gramckow and Nussenblatt 2013; Steelman,
Goerdt and McMillan 2004.
25. Steelman 2008.
26. The four types of reports are time to
disposition report, clearance rate report, age
of pending caseload report and single case
progress report.
27. Rooze 2010.
28. Under the Doing Business methodology, an
economy is considered to have an electronic
case management system available to judges
if judges in the relevant court can use such
a system for at least four of eight specified
purposes. An economy is considered to have
an electronic case management system
available to lawyers if lawyers can use such
a system for at least four of a different set of
seven purposes. For more details, see the data
notes.
29. Berkman Center for Internet Society at
Harvard University 2010; Zorza 2013.
30. USAID 2009.
31. An exclusion is made for very small cases and
cases in which privacy may be an issue.
32. Byfield 2011.
33. Love 2011.
34. World Bank Group, Investment Climate
Advisory Services 2011.
35. Roberge 2014.
36. Pouget 2013.
37. National Arbitration Forum 2005.
38. Pouget 2013; Stipanowich 2004; Love 2011.
39. UNCITRAL 2004b.
Figure 10.6 Economies with more judicial good practices in place have higher levels
of domestic credit provided to the private sector
0 10 20 30 40 50 60 70 80 90 100
0
50
100
150
200
250
300
Domestic credit to private sector
(% of GDP)
Distance to frontier score for quality of judicial processes index
Sources: Doing Business database; World Development Indicators database (http://data.worldbank.org
/indicator), World Bank.
Note: Domestic credit to private sector refers to financial resources provided to the private sector by financial
corporations, such as through loans, purchases of nonequity securities, and trade credits and other accounts
receivable, that establish a claim for repayment. The data for this indicator are for 2014. The correlation between
the distance to frontier score for the quality of judicial processes index and domestic credit to private sector as a
percentage of GDP is 0.40. The relationship is significant at the 1% level after controlling for income per capita.

Doing Business 2016
W
hen Kodak filed for bankruptcy
in January 2012, few were
surprised. The company had
dominated the U.S. photographic film
industry for decades, but technology in the
form of digital photography and camera-
equipped smartphones had advanced fast-
er than its ability to adapt. Yet 20 months
later Kodak emerged from a successful
reorganization with a new business focus.
In between, Kodak had received $950
million in new loans that were crucial for
paying vendors and suppliers and running
its day-to-day business operations while it
underwent reorganization.1
As the Kodak example shows, businesses
in financial distress may need new money
to survive. Yet lending to companies that
are finding it difficult to honor promises
made to existing creditors hardly seems
a profitable venture. A framework is
needed that allows access to new funds
for financially distressed but potentially
viable businesses while ensuring a high
probability of repayment. Creating such a
framework can be a challenge.
When a company becomes insolvent—
when it cannot pay its debts as they fall
due—either the company itself or its
creditors may start insolvency proceedings.
In an efficient insolvency system these pro-
ceedings will result in the reorganization of
the insolvent company if it is viable or in its
liquidationifitisnot.Continuedoperationof
the debtor’s business during the insolvency
proceedings is imperative for successful
reorganization. It can also be important in
liquidation, where the goal is to maintain
and maximize the value of the debtor’s
assets.2
But to continue operating, the
insolvent company will need access to
additional funds.3
It is unlikely to be able
to rely on internal sources to finance its
costs—including payments for the goods
and services needed to continue the busi-
ness. So the company may need to seek
external funding (figure 11.1).
New funding provided to an insolvent
company after the start of insol-
vency proceedings is known as post-
commencement finance.4
It can become
necessary at different stages of insolvency
proceedings—immediately after the appli-
cation for insolvency, during the prepara-
tion and approval of a reorganization plan
or before the sale of assets in a liquidation.
Besides paying for goods and services
essential to continued operation, new funds
are often used to cover labor costs, insur-
ance, rent and other expenses necessary
to maintain the value of the assets.5
But
it is important that post-commencement
financemechanismsbeusedjudiciously.To
avoid restricting the availability of credit in
regular commercial transactions, the use of
post-commencement finance should be
limited to supporting the reorganization of
viable firms or enabling the sale of busi-
nesses as a going concern in liquidation—
and only if new credit would lead to higher
returns to existing stakeholders in the
distressed business (box 11.1).
What are some good
practices?
Insolvency law can create a predictable
and enforceable framework for lending
to companies in insolvency proceedings
through provisions explicitly allowing
ƒƒ New funding provided to an insolvent
company after the start of insolvency
proceedings—known as post-
commencement finance—can enable
the business to continue operating
during insolvency.
ƒƒ The authorization of post-
commencement finance and
the treatment of the claims of
post-commencement creditors are
two important areas that need to be
addressed in insolvency law. But half
the 189 economies covered by Doing
Business have no provisions in these
areas.
ƒƒ Clear and effective regulations on post-
commencement finance may improve
the availability and terms of new
funding for viable firms undergoing
insolvency proceedings—funding
that can support their successful
reorganization or enable their sale as a
going concern in liquidation.
ƒƒ Financially distressed businesses are
more likely to pursue reorganization—
and more likely to emerge from
insolvency proceedings as a going
concern—in economies that have
provisions on post-commencement
finance.
ƒƒ Many economies are introducing
finance as part of an overall effort to
strengthen mechanisms for business
rescue.
Resolving insolvency
New funding and business survival

post-commencement borrowing and
providing some assurance of payment.
Without such provisions, lenders are
unlikely to make new funds available
on acceptable terms—or indeed on any
terms at all.6
Several competing interests come
into play: the insolvent debtor aims to
continue its operations or maximize
the value of its assets (or both); exist-
ing creditors want to have their rights
recognized and preserved; and potential
new creditors need assurance that they
will be paid. These concerns can be
addressed through provisions in two
areas: explicit authorization of post-
commencement finance and treatment
of the claims of post-commencement
creditors. Good practices in these areas
have been recommended by a range
of international institutions, including
the United Nations Commission on
International Trade Law, the World Bank,
the International Monetary Fund and the
Asian Development Bank.
As a first step, insolvency law needs
to include clear provisions authorizing
post-commencement finance as well as
efficient mechanisms for obtaining such
finance.7
The law can grant the power to
obtain new loans either to the debtor or to
the insolvency representative managing
the debtor’s assets. The law can address
the form of the new money—loans and
other forms of finance from new or exist-
ing lenders. And to ensure that the power
to take on new loans is used prudently,
the law may require that the court or the
creditors approve all new borrowing.8
In Serbia the law gives bankruptcy
administrators the power to obtain new
loans during insolvency proceedings.9
In
Finland a debtor can take on new debt
without the approval of the insolvency
representative as long as the debt is
connected with the debtor’s regular
activities and the amount and terms are
not unusual; all other loans require the
approval of the insolvency representa-
tive.10
In Japan debtors in reorganization
Figure 11.1 Post-commencement finance can be critical in helping a business go
from insolvency to recovery
$$ $
$
Business suffers
financial difficulties
Business or creditors
start insolvency
proceedings
Business attempts to
restructure
In exchange, claims of
post-commencement
creditors are given
priority
Creditors offer
post-commencement
finance
Business needs new
funds to continue
operating
Thanks to new funds,
business continues to
operate
Business restructuring
is successful
Business is rescued,
jobs are saved,
creditors get paid
Box 11.1 New funding comes to the rescue
Marvel Entertainment Group—the company behind the Avengers, Spider-Man and the Fantastic Four—went through a tumultu-
ous time in the late 1990s. A failed investment strategy and shrinking comic book market had left the company reeling, and its
main investors could not agree on the best way forward. Unable to resolve its problems out of court, Marvel filed for reorganiza-
tion in 1996. The proposed reorganization plan included large infusions of equity and credit to finance a new strategic invest-
ment program. But the company needed immediate assistance to pay its suppliers and employees and to meet its operating and
investment needs during reorganization. The court approved a $100 million loan from a bank group led by Chase Manhattan.
This loan helped keep the company operating during the several months of negotiations that followed. Marvel proved that it was
worth the investment: its latest film, Avengers: Age of Ultron, had pulled in more than $1 billion at the worldwide box office only
24 days after its release in May 2015.
Sources: Marvel Entertainment Group 1996; Lambie 2015; Variety 1997; Pedersen 2015.

101Resolving insolvency
proceedings can seek the permission of
the court to borrow money.11
In liquida-
tion proceedings the power to request
the court’s approval rests with the bank-
ruptcy trustee.12
Besides explicitly authorizing post-
commencement finance, insolvency
law needs to establish clear rules for
ranking the claims of existing and post-
commencement creditors.13
Ranking
rules determine which creditors get paid
first, second or last from the proceeds
received from the sale of the debtor’s
assets. The higher a creditor’s ranking
priority, the greater the likelihood that the
creditor will be paid. So it is no surprise
that the ranking priority that a debtor
(or an insolvency representative acting
for the debtor) can offer to potential
creditors is among the central issues in
the regulation of post-commencement
finance.14
At the same time, the rights and
priorities of existing creditors, especially
secured creditors, must be upheld to the
extent possible. This ensures fairness and
predictability, important aspects of any
credit system.15
Achieving a balance between provid-
ing incentives to potential lenders and
respecting the rights of existing creditors
is not easy. Two main practices are gen-
erally recommended. First, the law needs
to explicitly allow debtors to obtain new
funding by pledging assets as collateral
to secure the loans, as a way to provide
assurance of payment. But the provision
of this new security should not affect
the priority of existing secured creditors
without these creditors receiving alterna-
tive protection—or at least notice of the
change and an opportunity to be heard.
Second, the law needs to enable debtors
to obtain new funding without security.
For this unsecured post-commencement
finance, the law needs to grant the
claims of post-commencement creditors
priority over those of existing unsecured
creditors.16
As a general rule, granting
post-commencement finance “super-
priority” over all existing claims (secured
and unsecured) is not recommended,
because this approach risks disrupting
the extension of secured credit in regular
commercial transactions.17
In South Africa new financing may be
either unsecured or secured by any asset
of the company that is not already subject
to existing claims. Post-commencement
finance receives preference over all unse-
cured claims against the company except
those related to employment and to costs
of bankruptcy proceedings.18
In Serbia
post-commencement finance is treated
as an expense of the bankruptcy estate
and is paid first before other claims,
including claims of existing creditors. But
it does not affect prior rights of secured
creditors unless these creditors agree
otherwise.19
In Belgium the law gives
debts arising during judicial reorganiza-
tion priority over all other unsecured debt
in the event of a subsequent liquidation.20
The aim is to support continued opera-
tion of the debtor’s business and the
availability of credit for the debtor during
the reorganization proceedings.
chances of business
survival
Economies around the world have
undertaken reforms aimed at improv-
ing their insolvency systems (box 11.2).
The majority of those recorded by Doing
Business in the past five years focused on
introducing or strengthening reorganiza-
tion mechanisms.21
Providing an effective
and efficient framework for saving viable
businesses is at the heart of internation-
ally established good practices in the area
of insolvency.22
Empirical evidence on how insolvency
reforms affect credit markets is clear—
they lead to greater access to credit for
firms, at lower cost.23
Empirical evidence
on how these reforms affect the chances
of business survival is limited, however.
Objective data on business rescue are
difficult to establish, and elements
contributing to successful results are
difficult to isolate.24
But one vital factor
appears to be the availability of post-
commencement finance.25
Indeed,
adequate interim financing to ensure
the continued operation of distressed
businesses has been identified as one of
four critical components of turnaround
success—along with competent
management, a viable core operation
and a motivated labor force.26
Real-life
examples support this conclusion (box
Box 11.2 New provisions on post-commencement credit in Mexico
Mexico initiated an important financial reform in 2013 with the aim of increasing the availability of credit for businesses and en-
couraging economic growth. This effort culminated in the Financial Reform Act of 2014. Some of the changes targeted the coun-
try’s Insolvency Law. Adopted in 2000, this law had been part of a series of measures aimed at modernizing Mexico’s insolvency
framework—which had been in place for more than half a century—and promoting business rescue in the wake of the 1994 peso
crisis. But its effects fell short of expectations: by 2013 less than a thousand insolvency cases had been filed under the new law.a
It became apparent that if distressed businesses were to preserve their financial viability and the jobs they create, changes were
needed to make insolvency proceedings more attractive to both debtors and creditors. Several new features were introduced.
These include the possibility for a debtor to obtain new finance during reorganization proceedings, to enable continued opera-
tion of its business. The new credit would have priority over existing credit, both secured and unsecured.
a. De la Rosa 2014.

11.3). Research also provides support,
showing that constraints on external
financing—arising as a result of events
such as a financial crisis—impede
successful restructuring.27
Every year the Doing Business team col-
lects data on the efficiency of insolvency
proceedings in economies around the
world. One aspect captured by the data is
the type of proceeding that a distressed
business is most likely to encounter in
each economy. Another is the likelihood
that a distressed but potentially viable
business can survive insolvency and
continue operating as a going concern.
The data are collected through question-
naires that ask insolvency experts in each
economy to estimate the most likely type
of insolvency proceeding and the most
likely outcome of such proceeding based
on specific assumptions about the debtor
and the creditors. Starting with last year’s
report, the team has also collected data
on certain aspects of insolvency laws and
regulations in each economy, including
the availability and priority of post-
commencement finance. The data are
collected through readings of the law and
through consultations with insolvency
experts in each economy.28
The Doing Business data show possible
connections between the existence of
regulations on post-commencement
finance and the likelihood of business
survival. While these connections do not
necessarily establish a causal relation-
ship, they do show that business rescue
is more likely in economies where the
law provides for post-commencement
finance. So it is possible that having a pre-
dictable and enforceable framework for
post-commencement lending improves
the availability and terms of new funding
for viable businesses during insolvency
proceedings, thus allowing such busi-
nesses to successfully reorganize and
continue operating. This reasoning
also applies to liquidation proceedings,
where post-commencement finance can
support the temporary continuation of
a business to enable its sale as a going
concern.
Of the 189 economies covered by Doing
Business, 84 have explicit provisions
authorizing post-commencement finance
in their laws while 84 do not. (The other
21 economies have no recorded insol-
vency practice and are therefore excluded
from the analysis.)29
Of the 84 economies
that have provisions authorizing post-
commencement finance, only 9 have no
special provisions on how the claims of
post-commencement creditors should
be ranked relative to existing claims. The
other 75 economies establish priority in
the applicable insolvency law: 36 rank the
above those of existing unsecured credi-
tors only, and 39 rank such claims above
those of all existing creditors (figure 11.2).
Provisions on post-commencement
finance are often part of a larger mecha-
nism of corporate reorganization. In
Finland, for example, the Restructuring of
Enterprises Act includes such provisions
while the Bankruptcy Act is silent on this
subject.30
The reason is that the purpose
of post-commencement finance is to
encourage and facilitate the continued
operation of a business during insolvency
proceedings, which is particularly impor-
tant in reorganization. More than 90%
of economies that have provisions on
post-commencement finance also have
specific provisions on corporate reorgani-
zation as part of their insolvency law.
But the availability of a reorganization
mechanism does not guarantee that
it can or will be used in practice. The
German Insolvency Code, for example,
provides a mechanism for business
rescue, yet only a small percentage of
financially distressed businesses use
this mechanism with successful results.31
What role might be played by the exis-
tence of provisions on post-commence-
ment finance? One way to look at this
Box 11.3 New funding can save companies with viable operations
Fruit of the Loom, a manufacturer of leisure clothing, was struggling in the late 1990s. The company filed for reorganization
after suffering steep losses in 1999. This step allowed the company certain protections from creditors while it attempted to
restructure the business. At the time, Fruit of the Loom was a Chicago-based company with operations in several countries and
40,000 employees. Although the company’s U.S. branch was going through insolvency proceedings, its Canadian and European
subsidiaries continued operating. So it was imperative that the company receive interim financing to fund operations. A $625
million loan led by Bank of America was key in ensuring a successful resolution. The company was purchased in 2001 by Warren
Buffett’s Berkshire Hathaway for $835 million in cash.
Sources: Gamble 2003; Florida Times-Union 1999; Chicago Tribune 2001.
Figure 11.2 Half the economies
studied have no provisions on post-
commencement finance
84
No PCF
provisions
21
9
36
39
PCF authorized and
ranked above all creditors
PCF authorized
and ranked
above unsecured
creditors only
No practice
PCF authorized
with no priority
of ranking
Economies by treatment of
post-commencement finance
Note: PCF = post-commencement finance.

103Resolving insolvency
question is to compare two sets of data
collected by Doing Business: the data on
which economies have provisions on
post-commencement finance and the
data on which insolvency proceeding is
most common in each economy.
The results suggest that distressed
businesses are more likely to pursue
reorganization in economies that have
finance. Successful reorganization is the
most common insolvency proceeding in
19% of these economies, while attempted
but unsuccessful reorganization is
the most common in 40% (figure
11.3). By contrast, among economies
with no explicit provisions on post-
commencement finance, attempted but
unsuccessfulreorganizationiscommonin
only 11%, and successful reorganization is
unlikely (recorded in only one economy).
The positive correlation between
finance and the likelihood of attempted
or successful reorganization holds even
after taking into account differences in
the income level of economies.32
Moreover, the Doing Business data show
that survival of distressed businesses at
the end of insolvency proceedings is more
likely in economies with provisions on
post-commencement finance. Survival
as a going concern is the most common
outcome of insolvency proceedings in
only 47 of the 189 economies studied.
This outcome can be a result of either
reorganization proceedings or the sale of
an existing business as a going concern
to new owners at the end of liquidation
or foreclosure proceedings.33
Of the 47
economies where survival is the most
common outcome, 37 have explicit pro-
visions on post-commencement lending
while the other 10 do not (figure 11.4).
The existence of post-commencement
finance provisions does not guarantee
business survival, however. In South
Africa, for example, amendments to the
Companies Act in 2011 included detailed
rules on post-commencement finance
and its priority.34
Yet the most common
outcome of insolvency proceedings in
the country continues to be liquidation of
the distressed business and its piecemeal
sale. Indeed, the Doing Business data show
that this is the most common outcome in
the majority of economies with provisions
on post-commencement finance. Survival
of the business as a going concern is likely
in only 44% of economies with such
provisions. Even so, this represents a
significantly higher probability of survival
than in economies without provisions on
post-commencement finance: survival
as a going concern is the likely outcome
of insolvency proceedings in only 12%
of these economies. The positive cor-
relation between post-commencement
finance provisions and the outcome of
proceedings holds even after taking into
account differences in the income level of
economies.35
Conclusion
Data collected by Doing Business
show that well-structured provisions
on post-commencement finance are
important. By establishing predictable
and enforceable rules on lending during
insolvency proceedings, these provisions
may encourage creditors to lend to viable
businesses capable of reorganization—
and to do so on better terms. They may
also encourage creditors to provide the
necessary bridge financing to enable the
sale of businesses as a going concern in
liquidation. When financially distressed
businesses have legally sanctioned
access to new funds, they may be more
likely to attempt reorganization and to
emerge from the process successfully.
The data validate the emphasis put on
the continuation of business operations
during insolvency proceedings as a
way to facilitate reorganization and to
preserve and maximize the value of the
debtor’s assets.
These results also explain why a growing
number of economies are amending their
insolvency laws to include or improve
finance. One of these is Mexico, whose
Financial Reform Act of 2014 intro-
duced the possibility of requesting
post-commencement finance during
Figure 11.3 Distressed businesses are
more likely to pursue reorganization in
economies with post-commencement
finance provisions
0
20
40
60
80
100
Economies with
PCF provisions
Economies with
no PCF provisions
Successful reorganization
Attempted but unsuccessful reorganization
Other proceedings
Economies in each group by most
common proceeding (%)
Note: PCF = post-commencement finance. Other
proceedings include liquidation, foreclosure and
receivership.
Figure 11.4 Businesses are more likely
to emerge from insolvency proceedings
as a going concern in economies with
post-commencement finance provisions
0
20
40
60
80
Economies with
PCF provisions
Economies with
no PCF provisions
Number of economies in each group by most
likely outcome of insolvency proceedings
Survival as a going concern
Piecemeal sale
Note: PCF = post-commencement finance.

reorganization proceedings and gave the
priority over those of existing creditors.
Similarly, in the past two years Cyprus,
Jamaica, the Seychelles, and Trinidad and
Tobago introduced provisions on post-
commencement finance and its priority
as part of an overall effort to strengthen
and modernize mechanisms for business
rescue.
Nevertheless, half the economies cov-
ered by Doing Business have no provisions
on post-commencement finance. And
even economies that do have such provi-
sions often see little or no use of them
in practice. Doing Business data show
that focusing on post-commencement
finance as part of the effort to facilitate
and promote business rescue can lead
to more attempts at reorganization and
higher rates of business survival.
NOTES
This case study was written by Maksym Iavorskyi,
Klaus Koch Saldarriaga, Olena Koltko and María
Antonia Quesada Gámez.
1. Kodak 2012.
2. UNCITRAL 2004a, p. 113.
3. Clift 2011.
4. Post-commencement finance as described
in this case study differs from trade credit
extended by vendors that continue to trade
with a debtor during the insolvency process.
The rules and priorities for trade credit often
differ from those for post-commencement
finance.
5. UNCITRAL 2004a, pp. 113-14, and World
Bank 2011, principle C9.
6. See comment to global principle 31 in
American Law Institute (2012).
7. UNCITRAL 2004a, p. 118.
8. UNCITRAL 2004a, pp. 113–15, 117–18.
9. Law on Bankruptcy (Law 104/09 of
December 16, 2009), article 27(2).
10. Restructuring of Enterprises Act (Act 47/
1993, as subsequently amended), section 29.
11. Civil Rehabilitation Act (Act 225 of December
22, 1999), article 41.
12. Bankruptcy Act (Act 75 of June 2, 2004),
article 78(v).
13. See standard 5.6 in Asian Development Bank
(2000, p. 35).
14. IMF, Legal Department 1999.
15. See principle C12 in World Bank (2011,
pp. 18–19).
16. See recommendations 63–68 in UNCITRAL
(2004a, pp. 113–19).
17. IMF, Legal Department 1999.
18. Companies Act 2008 (Act 71 of 2008),
section 135.
19. Law on Bankruptcy (Law 104/09 of
December 16, 2009), article 27.
20. Loi relative à la continuité des entreprises (law
related to companies’ continuation), article 37.
21. In the five years from 2009 to 2014, 60
economies implemented 87 reforms affecting
the Doing Business indicators on resolving
insolvency. Reforms in the area of corporate
reorganization were the most common: 10
economies introduced a new reorganization
proceeding, and 21 promoted reorganization
or made improvements to their existing
reorganization framework.
22. See, for example, World Bank (2011) and
UNCITRAL (2004a).
23. Armour and others 2015.
24. Vriesendorp and Gramatikov 2010.
25. See comment to global principle 31 in
American Law Institute (2012).
26. Bibeault 1982, p. 112.
27. Vriesendorp and Gramatikov 2010.
28. For a detailed description of the methodology
for the resolving insolvency indicators, see the
data notes.
29. For a definition of “no practice” economies
as recorded by the resolving insolvency
indicators, see the data notes.
30. Restructuring of Enterprises Act (Act 47/
1993, as subsequently amended), sections 29,
32 and 34.
31. According to Germany’s Federal Statistical
Office, 24,085 businesses filed for insolvency
in the country in 2014. Doing Business
respondents estimate that less than a quarter
of businesses filing for insolvency successfully
undergo restructuring proceedings.
32. The correlation between the score that
economies receive on explicit authorization
of post-commencement finance and the
most likely type of proceeding as measured
by Doing Business is 0.49. The relationship is
significant at the 1% level after controlling for
income per capita.
33. For a detailed explanation of the methodology
used to determine the outcome of insolvency
proceedings, see the data notes.
34. Companies Act 2008 (Act 71 of 2008),
section 135.
35. The correlation between the score that
economies receive on explicit authorization
of post-commencement finance and the
outcome of insolvency proceedings as
measured by Doing Business is 0.36. The
relationship is significant at the 1% level after
controlling for income per capita.

Doing Business 2016
Legal research findings on
business regulation and the law
H
ow laws and regulations affect
the life of a local company is a
complex question. The Doing
Business report has endeavored to pro-
vide a cross-country comparison of the
regulatory environment for local small
and medium-size businesses since its
inception 13 years ago. Its analysis has
traditionally focused on two aspects of
the regulatory environment as it applies
to the topics covered: the efficiency with
which a regulatory goal is achieved and
the quality of the rule itself. The data
collected for the Doing Business indicators
over the years have served as a source of
information for articles published in peer-
reviewed academic journals and for work-
ing papers. In reviewing this research,
past editions of the Doing Business report
presented the economic perspective on
the findings.1
But the indicators are also
part of a broader discussion on what con-
stitutes “business friendly” rule of law.
This chapter reviews articles that were
published in legal journals ranked among
the top 70 and that focus on areas
covered by four sets of Doing Business
indicators—including articles whose
core analysis centers either on the
adequacy of legislation as compared with
internationally accepted standards or
on the application of the law.2
The four
sets of indicators are those on enforcing
contracts, getting credit (legal rights),
protecting minority investors and resolv-
ing insolvency. While most of these indi-
cators are based primarily on a study of
substantive law, some also examine the
efficiency of the judiciary in dealing with
commercial disputes and insolvencies.
The review reveals four thematic axes
(table 12.1). First, a number of articles
study the impact of court efficiency and
the role of alternative dispute resolution
(ADR) in countries’ development by ana-
lyzing the symbiotic relationship between
the two.3
Second, many articles examine
the rights and obligations of different
types of shareholders in a company and
the rules of corporate governance that
can help ensure good corporate manage-
ment. Third, researchers have looked
at how creditors’ rights affect access to
finance, often focusing on the importance
of a modern secured transactions system.
Finally, studies have debated the impor-
tance of reorganization procedures in an
insolvency framework, particularly in the
light of the U.S. reorganization model.
COURT EFFICIENCY AND
ALTERNATIVE DISPUTE
RESOLUTION
The Doing Business indicators on enforc-
ing contracts have historically touched
on some of the issues of judicial efficien-
cy explored by legal research in recent
years, and a new indicator introduced
this year—the quality of judicial pro-
cesses index—broadens their coverage
to include several additional aspects.
One of these is the availability of arbitra-
tion and voluntary mediation as ADR
mechanisms. Several studies discuss
aspects of ADR and its relationship
with court efficiency, including Dakolias
(1999), Ryan (2000) and Drahozal and
O’Connor (2014).
ƒƒ The legal research findings relevant
to the Doing Business indicators cover
four main areas: court efficiency
and alternative dispute resolution;
corporate governance; creditors’ rights
and collateral laws; and insolvency
rules and reorganization procedures.
ƒƒ Alternative dispute resolution
mechanisms tend to have a symbiotic
relationship with court efficiency.
Where available, these mechanisms
tend to be linked with faster dispute
resolution in courts.
ƒƒ The corporate governance literature
highlights the need for a clear set of
rules on who makes key decisions,
who needs to be informed about those
decisions and how abuse from different
stakeholders can be prevented.
ƒƒ The creditors’ rights literature focuses
on analyzing whether the legal
framework can help maximize the
value of collateral held by small and
medium-size companies while giving
secured creditors the assurance that
their rights will be protected.
ƒƒ The main objective of insolvency
legislation is to ensure the survival of
viable businesses, on the one hand,
and the most equitable return for
stakeholders in businesses that should
ultimately be liquidated, on the other.

Another aspect measured by the new
index is the use of technology in ways that
can increase court efficiency and reduce
corruption—such as electronic filing, elec-
tronic delivery of legal documents to the
parties to a case, electronic payment of
court fees, random assignment of cases to
the judges, publication of judgments and
electronic case management systems.
As Cabral and others (2012) suggest,
technology can also improve access to
justice. Beyond these aspects, the index
also measures elements of the court
structure (such as the availability of a
specialized commercial court and a court
or simplified procedure for small claims)
as well as the case management system
(such as the existence of specific rules on
adjournments or time limits for key court
events like delivery of the final judgment).4
Added to the traditional indicators on
the time and cost to enforce a contract,
the new index provides broader insights
into judicial efficiency and the quality of
judicial processes and can help policy
makers around the world make more
informed decisions when undertaking
judicial reform. A review of the literature
suggests that the enforcing contracts
indicators are a unique tool for policy
makers, as cross-country data on court
efficiency are scarce and no other data
set compares judicial efficiency in as
many as 189 economies.
Until recently there was also little quan-
titative research on judicial efficiency.
Researchers preferred to focus instead
on the qualitative aspect of comparative
law. Dakolias (1999) was among the first
to carry out a comparative analysis of the
performance of judicial administration.
Focusing on 11 economies in different
regions, the author’s analysis was based
on data provided by public sources on
the following metrics: number of cases
filed per year, number of cases disposed
per year, number of cases pending at
year-end, clearance rate (ratio of cases
disposed to cases filed), congestion rate
(pending and filed cases over resolved
cases), average duration of each case and
number of judges per 100,000 inhabit-
ants (figure 12.1).
The results show that in many of these
economies the judiciary was able to meet
demand at a specific point in time; as time
TABLE 12.1 Four thematic axes in the literature
Court efficiency
and ADR Corporate governance
Creditors’ rights and collateral
laws
Insolvency rules and
reorganization procedures
Performance of judicial
administration
–– Dakolias (1999)
ADR mechanisms and procedural
safeguards
–– Ryan (2000)
Scope of arbitration clauses
–– Drahozal and O’Connor (2014)
Technology and access to justice
–– Cabral and others (2012)
Regulatory convergence in
shareholder protection and
–– Katelouzou and Siems (2015)
–– Aytekin, Miles and Esen (2013)
Director versus shareholder
primacy
–– Bainbridge (2014)
Agency cost in principal-agent
relationship
–– Hill and McDonnell (2015)
–– Gilson and Gordon (2013)
Company form and rights of
shareholders
–– De Jong (forthcoming)
Relationship between shareholder
and worker protection
–– Gahan, Ramsay and Welsh
(2014)
Importance of secured
transactions regimes
–– Kozolchyk and Furnish (2006)
Legal and collateral registry
reform in Malawi
–– Dubovec and Kambili (2013)
Secured transactions reform in
Ghana
–– Dubovec and Osei-Tutu (2013)
Statutory erosion of creditors’
rights and the U.K. example
–– Walters (2014)
Good insolvency practices
–– Azar (2008)
Deciding between liquidation and
reorganization proceedings
–– Adams (1993)
Relationship between
reorganization law and the
performance of reorganization
systems
–– Eisenberg and Sundgren (1997)
–– LoPucki and Triantis (1994)
Secured creditors’ rights in
reorganization proceedings
–– Segal (2007)
Voting on reorganization plans
–– Kordana and Posner (1999)
Figure 12.1 The number of judges relative to the population varies widely across
economies
0 1 2 3 4 5 6 7 8 9
France
Germany
Brasília
Panama
Hungary
São Paulo
Peru
Ecuador
Chile
Singapore
Colombia
Ukraine
Number of judges per 100,000 inhabitants
Source: Adapted from Dakolias (1999).

107Legal research findings on business regulation and the law
passed, however, difficulties arose and
reforms were needed to address deficien-
cies. Some of the solutions proposed
by Dakolias involve introducing ADR
mechanisms to address backlogs, increas-
ing the number of judges by establishing
temporary courts and using information
technology to improve productivity—all
areas addressed by Doing Business.
Researchers have studied some of these
solutions more broadly. For example,
Cabral and others (2012) analyze how
the use of technology by courts and
legal aid organizations can help improve
access to justice for low-income litigants
in the United States. While great strides
have been made through the use of
web-based delivery models (such as
electronic filing and document assem-
bly), accessibility and usability are still far
from ideal. Indeed, the authors argue that
to avoid penalizing the parties to a case,
courts implementing new technologies
should consider the barriers that some
litigants might face in accessing the
technologies—such as self-represented
litigants, litigants located in rural areas
and persons with disabilities or with
limited English proficiency.
In addition, Cabral and his coauthors
argue that mobile devices, for example,
will become one of the primary means of
accessing information and that the legal
community needs to adapt accordingly.
And they emphasize the need to improve
well-accepted technological enhance-
ments such as electronic filing systems.
The adoption of open technical standards
for electronic filing, the authors contend,
could ensure universal access for liti-
gants. They also propose a triage system
that would recommend cost-efficient
choices for litigants. Finally, the authors
analyze different barriers to the adoption
of effective technology strategies that
could improve access to justice. They
identify eight sometimes overlapping
barriers (for example, lack of funding, a
lack of uniformity or standardization and
a perception that using technology is not
full justice) as well as potential solutions
(such as the adoption of standardized
forms or the use of incentives like grants)
to foster technology.
ADR mechanisms have long been recog-
nized as an important tool for enhancing
court efficiency, either by helping to
alleviate court congestion or by provid-
ing a faster, less costly and more flexible
solution for litigants. Today ADR mecha-
nisms are commonly incorporated into
the litigation process (such as through
court-annexed arbitration),5
and even if
there is criticism of these mechanisms,
models such as contractual arbitration
and mediation are undeniably popular in
the business community. Ryan (2000)
argues that the widespread use of ADR
needs to be accompanied by procedural
safeguards so as to ensure the rights of
the parties involved. The author suggests
that among the most important develop-
ments in judicial ADR has been the desig-
nation of uniform standards of ethics and
procedure. The author provides further
recommendations in areas relating to
confidentiality, evidence, public account-
ability, ethical issues and quality control.
The relationship between courts and ADR
mechanisms can be particularly complex
when a contractual relationship is agreed
between sophisticated parties. Drahozal
and O’Connor (2014) argue that when
the parties to a contract choose between
courts and arbitration, an ex ante proce-
dural unbundling occurs when they select
specific claims and remedies rather than
an “a la carte” choice of individual proce-
dures. For example, it is common practice
for arbitration clauses to exclude certain
claims and remedies or for parties to agree
that even when going to court they will
still rely on arbitration to resolve particular
matters.6
These practices, referred to as
“carve-ins” and “carve-outs,” are used to
ensure greater performance incentives
and lower dispute resolution costs.
The authors gather empirical data on
procedural unbundling for different
types of contracts (such as franchise
agreements, technology contracts and
joint venture agreements) and find,
among other things, that almost all
franchise contracts include “carve-outs”
in their arbitration clauses. In addition,
the authors argue that where there is
mistrust in the courts, parties will rely on
arbitration procedures. And they show
that contractual value is lost if parties
cannot rely on courts to protect the value
of their information and innovation.
CORPORATE GOVERNANCE—
WHO SHOULD HAVE
CONTROL?
TheDoingBusinessindicatorsonprotecting
minority investors measure the protection
of minority shareholders from conflicts
of interest as well as shareholders’ rights
in corporate governance. To construct
these indicators, Doing Business applies a
consistent methodology and case study
to assess whether each economy has
implemented a set of good practices in
litigation and corporate governance that
protect minority shareholders. As Aytekin,
Miles and Esen (2013) illustrate, econo-
mies can benefit from the lessons drawn
from comparisons with good practices
worldwide. And the authors confirm ear-
lier Doing Business findings that developing
economies are closing the gap in regula-
tory frameworks. Indeed, Katelouzou
and Siems (2015) suggest that there is
a pattern of global convergence toward
regulatory good practices as measured by
Doing Business, regardless of legal origin or
tradition.
Hill and McDonnell (2015) concur on
the importance of measurements and
benchmarks, suggesting that they have
contributed to reducing the agency prob-
lem in modern company law in the past
decade. Gilson and Gordon (2013) also
reflect on the agency issue. Nevertheless,
as Bainbridge (2014) shows, whether
shareholder-centric or board-centric
company law is more beneficial depends
on myriad characteristics specific to
each economy. In line with the updated
methodology for the protecting minority

investors indicators, De Jong (forthcom-
ing) attempts to shed further light on
differences between regulatory frame-
works applicable to listed and nonlisted
companies and on the consequences for
the rights of investors.
Research on company law and corporate
governance models has generated three
commonly accepted paradigms: First,
this area of law may be path-dependent
and thus not subject to many significant
changes in a given jurisdiction. Second,
the influence of the U.S. corporate gov-
ernance model has led to the dominance
of market-oriented company law. And
third, an economy’s legal origin and stage
of economic development are important
factors in determining shareholder
protection. Yet Katelouzou and Siems
(2015), using leximetric data measuring
the strength of formal legal protections
in 30 countries over a 24-year period,
demonstrate the weakening of these
paradigms. To do so, they construct a
shareholder protection index by measur-
ing 10 aspects of shareholder protection,
some of which are also covered by the
protecting minority investors indicators.
According to the authors’ findings, the
U.S. model of company law is not the
norm. In addition, since the financial cri-
sis, interest in reform has shifted to other
areas of law. And countries with similar
levels of shareholder protection do not
necessarily have the same legal origin
or stage of economic development. The
authors also suggest that all 30 countries
in their study increased shareholder pro-
tection over the period covered (figure
12.2).
Comparisons of countries with different
legal traditions and levels of develop-
ment can help identify good practices
as well as weaknesses in law. Aytekin,
Miles and Esen (2013) use a comparative
approach to analyze the development of
corporate governance in Turkey, particu-
larly after 2006. They use a comparison
with Canada to identify strengths and
weaknesses in the Turkish system and
to determine whether Turkey is making
faster progress in corporate governance
practices than Canada is. The authors
find that Turkey has improved in many
aspects of modern corporate governance,
though the development of effective and
efficient boards remains an area of slower
progress. And they provide support for
the claim that developing countries are
closing the corporate governance gap
with high-income countries.
In another important finding, Aytekin,
Miles and Esen show that while there
was no change in Turkey’s positive trend
of corporate governance development
during the 2008–09 financial crisis,
Canada’s corporate governance practices
and reputation were adversely affected
during this period. The authors conclude
that researchers and practitioners need
to give special attention to the develop-
ment and functioning of company boards
in Canada as well as Turkey, because
they find that this element of corporate
governance is weaker than others in both
these countries.
For a corporation to flourish, a clear set of
rules is needed on who makes key deci-
sions, who needs to be informed about
those decisions and how abuse from
different company stakeholders can be
prevented. Bainbridge (2014) discusses
whether shareholders or management
should ultimately have control in corpo-
rate decisions and whose interests should
ultimately prevail. The author examines
the general assumption that shareholder
primacy is a defining characteristic of New
Zealand company law and compares the
means and ends of corporate governance
in that body of law with those in the
considerably more board-centric regime
of the United States. He finds that New
Zealand company law both establishes
shareholder wealth maximization as the
objective of corporate governance and,
despite assigning managerial authority to
the board of directors, gives shareholders
significant control rights. This contrasts
with the separation of ownership and con-
trol mandated by the U.S. system. Arguing
that this separation of ownership and con-
trol has significant efficiency advantages,
the author suggests that New Zealand
has opted for a more shareholder-centric
model because there are only a small
number of New Zealand firms for which
director primacy would be optimal.
Transparency in the decision-making
structure is also imperative to ensure the
performance of corporations—especially
since performance can be understood in
Figure 12.2 Shareholder protection increased between 1990 and 2013 in all 30
countries in a study
0
1
2
3
4
5
6
7
8
9
10
Shareholder protection index (0–10)
MalaysiaFrance
UnitedStates
UnitedKingdom
JapanCanada
IndiaBrazil
SouthAfricaSpainSweden
ItalyLithuaniaGermanyBelgiumArgentinaTurkey
SwitzerlandPolandPakistan
RussianFederation
ChileMexico
CzechRepublicLatviaCyprus
NetherlandsEstoniaSloveniaChina1990
2013
Source: Adapted from Katelouzou and Siems (2015, figure 1).
Note: Higher scores on the shareholder protection index (as defined in Katelouzou and Siems 2015) indicate stronger
protection of shareholders in the law.

different ways. Hill and McDonnell (2015)
illustrate how corporate managers may
favor themselves at the cost of corpora-
tions or shareholders and thus become bad
agents. They argue that the agency cost
paradigm, by emphasizing the maximiza-
tion of shareholder value as the duty of
corporate managers, has had some good
effects, but also some bad effects and
some ugly ones. The good is to provide a
benchmark that can make it easy to identify
bad management performance. The bad
effect extends to actions with ambiguous
consequences, such as takeovers aimed
primarily at reducing development costs,
which may entail results worse even than
the self-gain of corporate managers. The
ugly effect emerges when managers, by
focusing on increasing shareholders’ value,
boost their own first through questionably
defined performance payments.
Gilson and Gordon (2013) analyze
the costs of ownership by institutional
investment intermediaries—the agency
costs of agency capitalism in the United
States and other jurisdictions. According
to the authors, such costs emerge from a
divergence of interests, not only between
owners and managers but also between
owners of record (institutional investors)
and beneficial owners. These costs can
be lessened with the aid of shareholder
activists, serving as an additional set of
specialists who can intervene and chal-
lenge institutional investors.
The form of a company is also rel-
evant in corporate governance. De Jong
(forthcoming) analyzes the distinction
between public and private (limited)
companies and its relevance to company
law in the Netherlands and the United
Kingdom. In both jurisdictions the private
company is of more recent origin than the
public company and currently the most
common company form. The author dis-
cusses the motives for choosing the pub-
lic company form over the more lightly
regulated private company one as well as
the justifications for the more extensive
regulation of the public company. De
Jong argues that both British and Dutch
law could relax certain mandatory provi-
sions for nonlisted public companies and
thus offer more flexibility to shareholders.
In contrast with British law, under Dutch
law a private company can make public
offers of its securities and become listed,
though there is no appropriate legislative
regime as there is for a public company.
The author concludes with a discussion
on several areas in which British or Dutch
company law distinguishes between
public and private companies, including
capital protection, resolutions and meet-
ings, rights attached to shares, the board,
accounting law and dispute resolution.
Finally, Gahan, Ramsay and Welsh (2014)
use leximetric analysis to document
changes in the level of worker protection
and shareholder protection in six coun-
tries over the period 1970–2005. They
find that both worker and shareholder
protection increased in five of the six
countries—France, Germany, India, the
United Kingdom and the United States.
By contrast, in the sixth country, Australia,
shareholder protection increased while
the level of worker protection in 2005
was similar to that in 1970. Statistical
tests show that greater formal protection
for shareholders does not come at the
expense of formal protection for workers
(figure 12.3).
CREDITORS’ RIGHTS AND
COLLATERAL LAWS
One of the Doing Business indicators on
getting credit, the strength of legal rights
index, centers on the key stages in the
life cycle of a security interest in movable
property: creation, publicity and enforce-
ment. These are the pillars of a modern
secured transactions system. The index
also measures aspects of the interactions
between collateral law and bankruptcy
regimes, providing guidance on good
practices according to internationally
accepted standards. Recent articles look
at closely related issues. Kozolchyk and
Furnish (2006) highlight the importance
of modern secured transactions systems,
while Dubovec and Kambili (2013) and
Dubovec and Osei-Tutu (2013) reflect
on the experiences of different countries
in implementing such systems. Going
in another direction, Walters (2014)
looks at ways in which lenders are able
to adjust to changes in bankruptcy law
perceived as affecting their interests.
When thinking about secured transac-
tions reform, policy makers and research-
ers tackle two main issues: What type
of legal framework can help maximize
the value of collateral held by small and
medium-size companies while giving
secured creditors the assurance that their
rights will be protected? And how does
the secured transactions system in place
affect the relative competitiveness of the
private sector through its impact on the
cost of commercial credit?
Kozolchyk and Furnish (2006) examine
these issues through an analysis of the
basic principles of modern secured trans-
actions law. They explain that the main
reason such laws are essential is that
they enable the use of movable assets as
collateral, increasing access to affordable
credit and thus promoting economic
development. The authors review the
historical evolution of security interests
in Latin America and the development
by the Organization of American States
of the Model Inter-American Law on
Secured Transactions, which can help
address shortcomings in the existing
legislation of different countries in the
region. Finally, the authors compare
Mexico’s amendments of secured trans-
actions laws in 2000 and 2003 with the
model law and the U.S. and Canadian
paradigms and provide suggestions on
how the country could continue the
reform process.
Dubovec and Kambili (2013) examine the
ongoing legal and collateral registry reform
in Malawi and its potential for creating a
modern, efficient secured transactions
system. In Malawi, as in Sub-Saharan
Africa generally, getting access to credit
has been a major challenge for small and

medium-size enterprises. The country’s
legal framework for secured transactions
consists of outdated laws whose applica-
tion varies depending on many criteria,
resulting in greater monitoring costs for
lenders, unnecessary formalities and
registration deficiencies that lead to the
voiding of transactions. These issues led to
an inability to improve access to affordable
credit for the private sector, prompting the
decision to reform the legal framework.
The suggested reform is the functional
approach to secured transactions, which
simplifies the legal framework by bringing
all security devices under a single law—in
Malawi, the Personal Property Security
Act signed by the president in 2013. The
authors argue in favor of taking a methodi-
cal approach to secured transactions
reform by using a model law—such as the
New Zealand Personal Property Securities
Act, used as a model in Malawi—as well
as the recommendations of the UNCITRAL
Legislative Guide on Secured Transactions
(UNCITRAL 2010). The authors also note
the need to take into account the local
legal and socioeconomic context.
Several other reform initiatives have
taken a similar approach. One such initia-
tive was in Ghana. According to Dubovec
and Osei-Tutu (2013), the prereform
legal framework in Ghana, based on
English law, was outdated. Ghana’s new
secured transactions law—the Borrowers
and Lenders Act of 2008—and new col-
lateral registry have the potential to serve
as models for other African countries.
But these are not typical examples of a
modern secured transactions law and
collateral registry, as they could still be
improved. The authors argue that the
reforms did not meet all international
standards as set out in the UNCITRAL
Legislative Guide on Secured Transactions
(UNCITRAL 2010) and the Secured
Transactions Systems and Collateral
Registries toolkit (World Bank Group,
Investment Climate Advisory Services
2010). A drafting group that includes the
authors suggested amendments to the
law and steps to modernize the collateral
registry. These suggestions led to a rede-
sign of the collateral registry, making it
the first modern one in Africa.
Walters (2014) draws on his experience
in the jurisdiction of England and Wales
to describe two cases of secured lend-
ers successfully adjusting to statutory
erosion of their rights. Secured lenders
responded to a redistribution of priority
rights between secured and unsecured
creditors by introducing transactional
innovations. And they adjusted to an
abolition of administrative receivership
aimed at eroding their control rights by
exerting their remaining control rights in
new ways.7
INSOLVENCY RULES
AND REORGANIZATION
PROCEDURES
The Doing Business indicators on resolving
insolvency measure the recovery rate for
secured creditors and the extent to which
domestic law has incorporated certain
internationally accepted legal principles
on liquidation and reorganization pro-
ceedings. The indicators address several
themes discussed in the literature. One
Figure 12.3 Greater shareholder protection did not come at the cost of worker protection in France and Germany between 1970
and 2005
-3
-2
-1
0
1
2
3
4
1970 1975 1980 1985 1990 1995 2000 2005
-3
-2
-1
0
1
2
3
4
1970 1975 1980 1985 1990 1995 2000 2005
France Germany
-score for index
Worker protection index (Gahan, Ramsay and Welsh 2014)
Shareholder protection index (Gahan, Ramsay and Welsh 2014)
Z -score for indexZ
Source: Adapted from Gahan, Ramsay and Welsh (2014, figure 1).
Note: Higher scores on the worker and shareholder protection indices (as defined in Gahan, Ramsay and Welsh 2014) indicate stronger worker and shareholder protection in
the law. As noted in the source, the figure “graphs the z-score for each index, which measures the different indices in a standard (equivalent) way that enables comparison
across the indices. The z-score represents the distance between the raw score and the population mean in units of the standard deviation and is calculated as z = (x-μ)/σ,
where x is the raw index value for an individual year, μ is the mean value of the index number of all years, and σ is the standard deviation of the index number over all years for
which data are observed. A negative z-score means the raw score is below the mean, positive when above” (Gahan, Ramsay and Welsh 2014, footnote 54).

is key insolvency principles in the law,
a question explored by Azar (2008).
Another is the availability of reorganiza-
tion proceedings to enable insolvent but
viable businesses to continue operating.
Aspects of reorganization proceedings
are the focus of an important part of
the literature, including Eisenberg and
Sundgren (1997), LoPucki and Triantis
(1994), Segal (2007) and Kordana and
Posner (1999). A related theme is the
problem of making the right choice in
deciding whether to start liquidation pro-
ceedings or reorganization proceedings,
discussed by Adams (1993).
The main objective of insolvency legisla-
tion is to ensure the survival of viable
businesses, on the one hand, and to
ensure the most equitable return for
stakeholders in businesses that should
ultimately be liquidated, on the other. The
question of which insolvency practices
support this objective has been exten-
sively debated. Azar (2008) looks at
this issue through a comparative analysis
of seven key bankruptcy themes in 50
countries around the world. The author
argues that replacing the management
of a company undergoing reorganization
provides better protection for creditors
but is not without costs—and that the
mechanisms for selling a debtor’s assets
in liquidation should be prompt, efficient,
flexible and transparent. Assessing the
importance of the stay of individual pro-
ceedings in bankruptcy, he argues that
without it, recovery rates for creditors
are lower.8
And on the fate of executory
contracts, the author argues that if the
debtor’s value is maximized through the
continuous exploitation of its business,
bankruptcy should first preserve essen-
tial contractual relationships that arose
before the start of insolvency proceed-
ings and allow the bankruptcy estate to
discard nonbeneficial ones.9
Azar also discusses the concept of
preference in bankruptcy. He argues
that preferences to creditors should be
objectively defined to include transactions
in the ordinary course of business when
these violate the pari passu principle—the
principle according to which creditors will
be treated equally and creditors within a
class will be repaid on a pro rata basis—to
allow the trustee to bring important assets
back to the estate. In addition, bank-
ruptcy law should provide mechanisms to
encourage post-commencement finance
and should protect creditors whose claims
arose before the start of proceedings
without freezing the debtor’s access to the
new financing.10
Finally, turning to the role of the court
and creditor participation, Azar argues
that the court’s role should be limited
to guaranteeing the transparency of the
collective proceeding and to providing
a forum for the parties to negotiate and
vote on a viable reorganization plan.
Creditors should participate in important
decisions through a creditors’ committee,
a principle promoted by Doing Business.
Reorganization procedures have
dominated the academic research on
insolvency law. Chapter 11 of the U.S.
Bankruptcy Code is among the reorga-
nization models most discussed in the
comparative law literature. For example,
Eisenberg and Sundgren (1997) compare
data on reorganizations in the United
States and Finland to assess whether dif-
ferences between the two countries’ laws
affect the performance of their reorgani-
zation systems. The two countries’ laws
are alike in many important respects.
Under both systems, debtors can
preserve pending contracts and obtain
post-commencement credit on a priority
basis, reorganization plans are permitted
to affect the rights of secured creditors,
and payments under a reorganization
plan must be at least equal to what credi-
tors would receive in liquidation.
But the systems also differ in impor-
tant ways. One main difference is that
Finland’s system routinely appoints
administrators, while the U.S. system
uses the debtor-in-possession model.11
Another difference is that Finland’s
system provides more substantive
early screening of cases, while underlying
Chapter 11 is a de facto presumption that
nearly all firms should be given a chance
to reorganize. The authors find that
Finland’s more stringent initial screening
leads to faster processing of cases; for
U.S. firms, proceedings take almost three
times as long. In addition, they find that
Chapter 11, while perceived as being more
pro-debtor, does not lead to reorganiza-
tion plans that leave creditors with only
the liquidation value of the assets while
leaving the debtor’s owners with the reor-
ganization surplus. The authors also find
that unsecured creditors receive more
under the U.S. system than they do under
the Finnish one.
LoPucki and Triantis (1994) use a “sys-
tems” approach to compare the judicial
reorganization systems of the United
States and Canada. Although U.S. and
Canadian lawmakers set out to create
very different systems, these systems
came to function in very similar ways.
The authors suggest that this functional
convergence was bound to happen: given
the countries’ broadly similar objectives
for reorganization and shared economic
background (market economy), there
was a limited range of alternative designs
that could result in a functioning system.
They speculate that functional impera-
tives such as these may be the principal
determinant of any system that attempts
to effect court-supervised reorganization
through a coordinated plan.
Many critiques of the Chapter 11 system
have focused on firms’ attempting reor-
ganization when liquidation is the more
efficient solution and the effects this
has on the costs of bankruptcy. Adams
(1993) proposes a two-part revision to
the Chapter 11 system to reduce these
costs: First, establishing a bifurcated
debtor-in-possession structure in which
a bankruptcy trustee makes fundamental
bankruptcy decisions and the entity’s
existing management makes business
activity decisions. Second, providing the
trustee with a methodology for determin-
ing whether reorganization or liquidation

is the proper course of action. Under
this methodology the trustee would first
determine the present value of the future
earnings of the reorganized firm and the
liquidation value of the firm. Relying on
experience, the trustee would then adjust
the present value of the future earnings
upward to reflect intrinsic values of the
reorganization. After making this adjust-
ment the trustee would consider the two
values and decide whether to reorganize
or liquidate the entity.
Segal (2007) presents a comparative
perspective on the rights of secured cred-
itors during reorganization proceedings.
The author does so in reference to the
operation and effect of both the English
(administration) and U.S. (Chapter 11)
regimes, without seeking to address
the broader topic of secured creditors’
treatment in these regimes. He identifies
six core areas of comparison: secured
creditors’ enforcement rights, automatic
stay, the after-acquired property clause in
bankruptcy proceedings, debtors’ power
to use and sell the collateral free of securi-
ty interests, costs that arise after the start
of the proceedings and the cram-down of
security interests in bankruptcy proceed-
ings.12
The comparison reveals that the
English and U.S. approaches still differ,
with secured creditors having stronger
rights in reorganization proceedings in
the United Kingdom, yet legal evolution
has brought the two jurisdictions closer
to each other.
Kordana and Posner (1999) address
the debate about whether the voting
system in U.S. reorganizations is efficient
or whether it should be replaced with
a system that avoids voting and relies
on a more market-driven valuation of
the bankruptcy firm, such as an auc-
tion system. The authors expand on
existing bargaining models to consider
bargaining with multiple creditors, paying
particular attention to difficulties posed
by imperfect information, and analyze
the major voting rules in Chapter 11.
They find that the bargaining system
under Chapter 11 is more flexible within
the constraints provided by a supervis-
ing judge. Bargaining enables parties to
agree to a reorganization when parties
have substantial interests arising after
the start of bankruptcy proceedings that
cannot be the object of a contract. The
auction approach does not allow the
confirmation of such plans unless parties
with interests arising after bankruptcy
proceedings can borrow enough to pur-
chase the firm or can buy the claims of
other parties.
CONCLUSION
This literature review confirms the inter-
est in the areas of business regulation
covered by Doing Business. The enforcing
contracts, protecting minority investors,
getting credit (legal rights) and resolving
insolvency indicators address the four
thematic axes identified in the literature:
court efficiency and the role of ADR;
corporate governance rules; creditors’
rights and collateral laws ; and insolvency
rules and reorganization procedures.
Doing Business has benefited greatly from
academic discussion and has expanded
its methodology to keep abreast of devel-
opments in academic research.
Doing Business has also expanded its
methodology to produce new data
sets and indicators that quantify new
aspects of regulation. Last year’s report
introduced new data sets on the rights
of shareholders in corporate governance,
on the adoption of a functional approach
to secured transactions, on additional
aspects of collateral registries and extra-
judicial enforcement, and on the quality of
insolvency legislation. This year’s report
includes new data sets on the quality of
judicial processes. By introducing these
changes, Doing Business provides empiri-
cal evidence to support the testing of
existing legal theories and creates new
empirical foundations to inform further
academic work.
NOTES
This chapter was written by Santiago Croci
Downes, Magdalini Konidari and María Antonia
Quesada Gámez.
1. See, for example, the chapter on research on
the effects of business regulations in Doing
Business 2014 (World Bank 2013).
2. The review relied on the rankings of legal
journals produced by the Washington and Lee
University School of Law, available at http://
lawlib.wlu.edu/LJ/. A few exceptions were
made for articles that were published in law
journals not in the top 70 but whose content
was highly relevant to the areas covered by
the indicators.
3. ADR refers to mechanisms for settling
disputes without litigation. Such mechanisms
include negotiation, mediation and arbitration.
4. Adjournment is the act of a court to dissolve
a session, temporarily or permanently, and
dismiss the business in hand, temporarily or
permanently.
5. In court-annexed arbitration, courts divert
certain cases to arbitration rather than trial.
The cases are typically heard by experienced
lawyers rather than judges, under the general
supervision of the courts.
6. An arbitration clause in a contract requires the
parties to resolve their disputes through an
arbitration process.
7. Administrative receivership is a procedure in
which an administrative receiver is appointed
in order to facilitate the repayment of creditors
through secured debt.
8. Under a stay of individual proceedings in
bankruptcy, individual actions by creditors
against a debtor (such as lawsuits or
foreclosures) must stop at the moment a
bankruptcy petition is filed.
9. An executory contract is one that has not
been fully performed by all the parties to the
contract at the time bankruptcy proceedings
are commenced. Bankruptcy estate refers to
all interests of the debtor in property at the
time of the filing for bankruptcy.
10. Post-commencement finance is new funding
provided to an insolvent company after the
start of insolvency proceedings. For further
discussion of post-commencement finance,
see the resolving insolvency case study in this
report.
11. A debtor-in-possession in U.S. bankruptcy law
is an individual or corporation that has filed for
reorganization (under Chapter 11 of the U.S.
Bankruptcy Code) and remains in control of
the property and retains the power to operate
the business while proceedings are ongoing, in
lieu of a trustee.
12. An after-acquired property clause defines
whether an asset acquired after the
commencement of bankruptcy proceedings is
considered to be collateral. A cram-down of
security interests is an involuntary change or
discharge in rights of secured creditors by the
reorganization plan without the consent of the
affected creditors.

Doing Business 2016
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Doing Business 2016
Data notes
T
he indicators presented and
analyzed in Doing Business mea-
sure business regulation and the
protection of property rights—and their
effect on businesses, especially small and
medium-size domestic firms. First, the
indicators document the complexity of
regulation, such as the number of proce-
dures to start a business or to register a
transfer of commercial property. Second,
they gauge the time and cost to achieve a
regulatory goal or comply with regulation,
such as the time and cost to enforce a
contract, go through bankruptcy or trade
across borders. Third, they measure the
extent of legal protections of property,
for example, the protections of minor-
ity investors against looting by company
directors or the range of assets that can
be used as collateral according to secured
transactions laws. Fourth, a set of indi-
cators documents the tax burden on
businesses. Finally, a set of data covers
different aspects of employment regula-
tion. The 11 sets of indicators measured
in Doing Business were added over time,
TABLE 13.1 Topics and economies covered by each Doing Business report
Topic
DB
2004
DB
2005
DB
2006
DB
2007
DB
2008
DB
2009
DB
2010
DB
2011
DB
2012
DB
2013
DB
2014
DB
2015
DB
2016
Getting
electricity
Dealing with
construction
permits
Trading across
borders
Paying taxes
Protecting
minority
investors
Registering
property
Getting credit
Resolving
insolvency
Enforcing
contracts
Labor market
regulation
Starting a
business
Number of
economies
133 145 155 175 178 181 183 183 183 185 189 189 189
Note: Data for the economies added to the sample each year are back-calculated to the previous year.The exceptions
are Kosovo and Montenegro, which were added to the sample after they became members of the World Bank Group.
Eleven cities (though no additional economies) were added to the sample starting in Doing Business 2015.

and the sample of economies and cities
expanded (table 13.1).
The data for all sets of indicators in Doing
Business 2016 are for June 2015.1
METHODOLOGY
The Doing Business data are collected in
a standardized way. To start, the Doing
Business team, with academic advisers,
designs a questionnaire. The questionnaire
uses a simple business case to ensure
comparability across economies and over
time—with assumptions about the legal
formofthebusiness,itssize,itslocationand
the nature of its operations. Questionnaires
are administered to more than 11,400 local
experts, including lawyers, business con-
sultants, accountants, freight forwarders,
government officials and other profession-
als routinely administering or advising on
legal and regulatory requirements (table
13.2). These experts have several rounds
of interaction with the Doing Business
team, involving conference calls, written
correspondence and visits by the team. For
Doing Business 2016 team members visited
33 economies to verify data and recruit
respondents. The data from questionnaires
are subjected to numerous rounds of verifi-
cation, leading to revisions or expansions of
the information collected.
The Doing Business methodology offers
several advantages. It is transparent,
using factual information about what
laws and regulations say and allowing
multiple interactions with local respon-
dents to clarify potential misinterpreta-
tions of questions. Having representative
samples of respondents is not an issue;
Doing Business is not a statistical survey,
and the texts of the relevant laws and
regulations are collected and answers
checked for accuracy. The methodology
is inexpensive and easily replicable, so
data can be collected in a large sample of
economies. Because standard assump-
tions are used in the data collection,
comparisons and benchmarks are valid
across economies. Finally, the data not
Economy characteristics
Gross national income per capita
Doing Business 2016 reports 2014 income per capita as published in the World Bank’s World Development Indicators 2015. Income
is calculated using the Atlas method (in current U.S. dollars). For cost indicators expressed as a percentage of income per capita,
2014 gross national income (GNI) per capita in current U.S. dollars is used as the denominator. GNI data based on the Atlas
method were not available for Austria; Bahrain; Barbados; Belize; Brunei Darussalam; the Czech Republic; Djibouti; Finland; the
Islamic Republic of Iran; Jamaica; Kuwait; Luxembourg; Malta; the Marshall Islands; the Federated States of Micronesia; New
Zealand; Oman; Papua New Guinea; Puerto Rico (territory of the United States); San Marino; Saudi Arabia; the Slovak Republic;
Slovenia; Spain; Suriname; Switzerland; the Syrian Arab Republic; Taiwan, China; Trinidad and Tobago; Tunisia; Vanuatu; West
Bank and Gaza; and the Republic of Yemen. In these cases GDP or GNP per capita data and growth rates from other sources,
such as the International Monetary Fund’s World Economic Outlook database and the Economist Intelligence Unit, were used.
Region and income group
Doing Business uses the World Bank regional and income group classifications, available at http://data.worldbank.org/about
/country-and-lending-groups. Regional averages presented in figures and tables in the Doing Business report include economies
from all income groups (low, lower middle, upper middle and high income), though high-income OECD economies are assigned
the “regional” classification OECD high income.
Population
Doing Business 2016 reports midyear 2014 population statistics as published in World Development Indicators 2015.
TABLE 13.2 How many experts does Doing Business consult?
Indicator set Respondents
Economies with given number
of respondents (%)
1–2 3–5 5+
Starting a business 1,857 11 26 63
Dealing with construction permits 1,136 15 44 41
Getting electricity 1,094 12 44 44
Registering property 1,295 18 35 47
Getting credit 1,596 7 26 67
Protecting minority investors 1,175 21 35 44
Paying taxes 1,321 5 45 50
Trading across borders 933 20 47 33
Enforcing contracts 1,437 20 34 46
Resolving insolvency 1,191 19 42 39
Labor market regulation 1,198 17 43 40
Total 14,233 15 38 47

121Data Notes
only highlight the extent of specific
regulatory obstacles to business but also
identify their source and point to what
might be reformed.
LIMITS TO WHAT IS
MEASURED
The Doing Business methodology has five
limitations that should be considered when
interpreting the data. First, for most econo-
mies the collected data refer to businesses
in the largest business city (which in some
economies differs from the capital) and
may not be representative of regulation in
other parts of the economy. (The excep-
tions are 11 economies with a population
of more than 100 million as of 2013, where
Doing Business now also collects data for the
second largest business city.)2
To address
this limitation, subnational Doing Business
indicators were created (box 13.1). Second,
the data often focus on a specific business
form—generally a limited liability com-
pany (or its legal equivalent) of a specified
size—and may not be representative of the
regulation on other businesses (for example,
sole proprietorships). Third, transactions
described in a standardized case scenario
refer to a specific set of issues and may not
represent the full set of issues that a business
encounters. Fourth, the measures of time
involve an element of judgment by the expert
respondents. When sources indicate differ-
ent estimates, the time indicators reported in
DoingBusinessrepresentthemedianvaluesof
several responses given under the assump-
tions of the standardized case.
Finally, the methodology assumes that a
business has full information on what is
required and does not waste time when
completing procedures. In practice, com-
pleting a procedure may take longer if the
business lacks information or is unable to
follow up promptly. Alternatively, the busi-
ness may choose to disregard some burden-
some procedures. For both reasons the time
delaysreportedinDoingBusiness2016would
differ from the recollection of entrepreneurs
reported in the World Bank Enterprise
Surveys or other firm-level surveys.
CHANGES IN WHAT IS
MEASURED
As part of a two-year update in method-
ology, Doing Business 2016 expands the
focus of five indicator sets (dealing with
construction permits, getting electricity,
registering property, enforcing contracts
and labor market regulation), substantially
revises the methodology for one indicator
set (trading across borders) and imple-
ments small updates to the methodology
for another (protecting minority investors).
The indicators on dealing with construc-
tion permits now include an index of
the quality of building regulation and its
implementation. The getting electricity
indicators now include a measure of the
price of electricity consumption and an
index of the reliability of electricity supply
and transparency of tariffs. Starting this
year, the registering property indicators
include an index of the quality of the land
administration system in each economy in
addition to the indicators on the number
of procedures and the time and cost to
transfer property. And for enforcing con-
tracts an index of the quality and efficiency
of judicial processes has been added while
the indicator on the number of procedures
to enforce a contract has been dropped.
The scope of the labor market regulation
indicator set has also been expanded, to
include more areas capturing aspects of
job quality. The labor market regulation
indicators continue to be excluded from
the aggregate distance to frontier score
and ranking on the ease of doing business.
The case study underlying the trading
across borders indicators has been
changed to increase its relevance. For
each economy the export product and
partner are now determined on the basis
of the economy’s comparative advan-
tage, the import product is auto parts,
and the import partner is selected on the
basis of which economy has the highest
trade value in that product. The indicators
continue to measure the time and cost to
export and import.
Beyond these changes there is one other
update in methodology, for the protect-
ing minority investors indicators. A few
points for the extent of shareholder
governance index have been fine-tuned,
and the index now also measures aspects
of the regulations applicable to limited
companies rather than privately held joint
stock companies.
Despite the changes in methodology
introduced this year, the data under the
old and new methodologies are highly
BOX 13.1 Subnational Doing Business indicators
Subnational Doing Business studies point to differences in business regulation and its implementation—as well as in the pace of
regulatory reform—across cities in the same economy or region. For several economies subnational studies are now periodically
updated to measure change over time or to expand geographic coverage to additional cities.
This year subnational studies were completed in the Dominican Republic, Poland, South Africa, Spain and six Central American
countries—Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. In addition, a study was launched in
Afghanistan, and ongoing studies updated data for locations in Kenya, Mexico and the United Arab Emirates. And for the first
time subnational studies collected and analyzed data on industry-specific local business licenses—through pilot studies in the
food industry in South Africa and the industrial sector in Spain.

correlated. Comparing the ease of doing
business rankings as calculated using the
Doing Business 2015 data and methodology
with the rankings as calculated using the
Doing Business 2015 data but the Doing
Business 2016 methodology shows a cor-
relation of 0.97 (table 13.3). In previous
years the correlations between same-year
data under the methodology for that year
and the methodology for the subsequent
year were even stronger.
DATA CHALLENGES AND
REVISIONS
Most laws and regulations underlying
the Doing Business data are available
on the Doing Business website at http://
www.doingbusiness.org. All the sample
questionnaires and the details underlying
the indicators are also published on the
website. Questions on the methodology
and challenges to data can be submitted
through email at rru@worldbank.org.
Doing Business publishes 21,800 indicators
(109 indicators per economy) each year.
To create these indicators, the team mea-
sures more than 110,000 data points, each
of which is made available on the Doing
Business website. Historical data for each
indicator and economy are available on
the website, beginning with the first year
the indicator or economy was included
in the report. To provide a comparable
time series for research, the data set is
back-calculated to adjust for changes in
methodology and any revisions in data
due to corrections. This year, however,
the trading across borders indicators are
back-calculated for only one year because
of the significant changes in methodol-
ogy for this indicator set. The website also
makes available all original data sets used
for background papers. The correction rate
between Doing Business 2015 and Doing
Business 2016 is 6.1%.3
Governmentssubmitqueriesonthedataand
provide new information to Doing Business.
During the Doing Business 2016 production
cycle the team received 107 such queries
from governments. In addition, the team
held multiple videoconferences with gov-
ernment representatives in 50 economies
and in-person meetings with government
representatives in 20 economies.
STARTING A BUSINESS
Doing Business records all procedures
officially required, or commonly done in
practice, for an entrepreneur to start up and
formally operate an industrial or commer-
cial business, as well as the time and cost to
complete these procedures and the paid-in
minimum capital requirement (figure
13.1). These procedures include obtaining
all necessary licenses and permits and
completing any required notifications, veri-
fications or inscriptions for the company
and employees with relevant authorities.
The ranking of economies on the ease of
starting a business is determined by sorting
their distance to frontier scores for starting
a business. These scores are the simple
average of the distance to frontier scores
for each of the component indicators
(figure 13.2). The distance to frontier score
shows the distance of an economy to the
“frontier,” which is derived from the most
efficient practice or highest score achieved
on each indicator.
After a study of laws, regulations and
publicly available information on busi-
ness entry, a detailed list of procedures
is developed, along with the time and
cost to comply with each procedure
under normal circumstances and the
paid-in minimum capital requirement.
Figure 13.1 What are the time, cost, paid-in minimum capital and number of
procedures to get a local limited liability company up and running?
$
Cost
Paid-in
minimum
capital
Number of
procedures
Preregistration PostregistrationRegistration,
incorporation
Time
(days)
Formal operation
Entrepreneur
TABLE 13.3 Correlation between rankings under old and new methodologies after
each set of changes in methodology
DB2015 DB2014 DB2013 DB2012 DB2011 DB2010 DB2009
DB2015 0.974
DB2014 0.980
DB2013 0.996
DB2012 0.995
DB2011 0.987
DB2010 0.989
DB2009 0.998
Note: The correlation in each case is based on data for the same year but methodologies for consecutive years (for
the same year as for the data and for the subsequent year).

123Data Notes
Subsequently, local incorporation law-
yers, notaries and government officials
complete and verify the data.
Information is also collected on the
sequence in which procedures are to
be completed and whether procedures
may be carried out simultaneously. It is
assumed that any required information
is readily available and that the entre-
preneur will pay no bribes. If answers
by local experts differ, inquiries continue
until the data are reconciled.
To make the data comparable across
economies, several assumptions about
the business and the procedures are used.
Assumptions about the business
The business:
ƒƒ Is a limited liability company (or its
legal equivalent). If there is more than
one type of limited liability company
in the economy, the limited liability
form most common among domestic
firms is chosen. Information on the
most common form is obtained from
incorporation lawyers or the statisti-
cal office.
ƒƒ Operates in the economy’s largest
business city. For 11 economies the
data are also collected for the second
largest business city (see table 13A.1
at the end of the data notes).
ƒƒ Is 100% domestically owned and has
five owners, none of whom is a legal
entity.
ƒƒ Has start-up capital of 10 times
income per capita.
ƒƒ Performs general industrial or com-
mercial activities, such as the produc-
tion or sale to the public of products
or services. The business does not
perform foreign trade activities and
does not handle products subject to a
special tax regime, for example, liquor
or tobacco. It is not using heavily pol-
luting production processes.
ƒƒ Leases the commercial plant or offices
and is not a proprietor of real estate.
ƒƒ Does not qualify for investment
incentives or any special benefits.
ƒƒ Has at least 10 and up to 50 employ-
ees one month after the commence-
ment of operations, all of them
domestic nationals.
ƒƒ Has a turnover of at least 100 times
income per capita.
ƒƒ Has a company deed 10 pages long.
Procedures
A procedure is defined as any interac-
tion of the company founders with
external parties (for example, gov-
ernment agencies, lawyers, auditors
or notaries). Interactions between
company founders or company officers
and employees are not counted as
procedures. Procedures that must be
completed in the same building but in
different offices or at different counters
are counted as separate procedures. If
founders have to visit the same office
several times for different sequential
procedures, each is counted separately.
The founders are assumed to complete
all procedures themselves, without
middlemen, facilitators, accountants or
lawyers, unless the use of such a third
party is mandated by law or solicited
by the majority of entrepreneurs. If the
services of professionals are required,
procedures conducted by such profes-
sionals on behalf of the company are
counted as separate procedures. Each
electronic procedure is counted as a
separate procedure.
Both pre- and postincorporation proce-
dures that are officially required for an
entrepreneur to formally operate a busi-
ness are recorded (table 13.4).
Procedures required for official cor-
respondence or transactions with public
agencies are also included. For example,
if a company seal or stamp is required
on official documents, such as tax dec-
larations, obtaining the seal or stamp is
counted. Similarly, if a company must
open a bank account in order to complete
any subsequent procedure—such as reg-
istering for value added tax or showing
proof of minimum capital deposit—this
transaction is included as a procedure.
Shortcuts are counted only if they fulfill
TABLE 13.4 What do the starting
a business indicators measure?
Procedures to legally start and operate a
company (number)
Preregistration (for example, name verification or
reservation, notarization)
Registration in the economy’s largest business citya
Postregistration (for example, social security
registration, company seal)
Time required to complete each procedure
(calendar days)
Does not include time spent gathering
information
Each procedure starts on a separate day
(two procedures cannot start on the same day)—
though procedures that can be fully completed
online are an exception to this rule
Registration process considered completed once
final incorporation document is received or
company can start operating
No prior contact with officials takes place
Cost required to complete each procedure
Official costs only, no bribes
No professional fees unless services required by
law or commonly used in practice
Paid-in minimum capital (% of income per
capita)
Funds deposited in a bank or with a notary
before registration (or up to three months after
incorporation)
a. For 11 economies the data are also collected for
the second largest business city.
Figure 13.2 Starting a business:
getting a local limited liability company
up and running
As % of income
per capita, no
bribes included
Preregistration,
registration and
postregistration
(in calendar days)
Funds deposited in a
bank or with a notary
before registration (or
up to three months after
incorporation), as %
of income per capita
Procedures are
completed when
final document
is received
25%
Paid-in
minimum
capital
25%
Time
25%
Cost
25%
Procedures
Rankings are based on distance to
frontier scores for four indicators

four criteria: they are legal, they are avail-
able to the general public, they are used
by the majority of companies, and avoid-
ing them causes delays.
Only procedures required of all busi-
nesses are covered. Industry-specific
procedures are excluded. For example,
procedures to comply with environmental
regulations are included only when they
apply to all businesses conducting gen-
eral commercial or industrial activities.
Procedures that the company undergoes
to connect to electricity, water, gas and
waste disposal services are not included
in the starting a business indicators.
Time
Time is recorded in calendar days. The
measure captures the median duration
that incorporation lawyers or notaries
indicate is necessary in practice to com-
plete a procedure with minimum follow-
up with government agencies and no
unofficial payments. It is assumed that
the minimum time required for each pro-
cedure is one day, except for procedures
that can be fully completed online, for
which the time required is recorded as
half a day. Although procedures may take
place simultaneously, they cannot start
on the same day (that is, simultaneous
procedures start on consecutive days),
again with the exception of procedures
that can be fully completed online. A
registration process is considered com-
pleted once the company has received
the final incorporation document or can
commence business operations. If a pro-
cedure can be accelerated legally for an
additional cost, the fastest procedure is
chosen if that option is more beneficial
to the economy’s ranking. It is assumed
that the entrepreneur does not waste
time and commits to completing each
remaining procedure without delay.
The time that the entrepreneur spends
on gathering information is ignored.
It is assumed that the entrepreneur is
aware of all entry requirements and
their sequence from the beginning but
has had no prior contact with any of the
officials involved.
Cost
Cost is recorded as a percentage of the
economy’s income per capita. It includes
all official fees and fees for legal or
professional services if such services
are required by law or commonly used
in practice. Fees for purchasing and
legalizing company books are included
if these transactions are required by law.
Although value added tax registration
can be counted as a separate procedure,
value added tax is not part of the incor-
poration cost. The company law, the
commercial code and specific regulations
and fee schedules are used as sources
for calculating costs. In the absence of
fee schedules, a government officer’s
estimate is taken as an official source.
In the absence of a government officer’s
estimate, estimates by incorporation
lawyers are used. If several incorporation
lawyers provide different estimates, the
median reported value is applied. In all
cases the cost excludes bribes.
Paid-in minimum capital
The paid-in minimum capital require-
ment reflects the amount that the
entrepreneur needs to deposit in a bank
or with a notary before registration or up
to three months after incorporation and
is recorded as a percentage of the econ-
omy’s income per capita. The amount
is typically specified in the commercial
code or the company law. Many econo-
mies require minimum capital but allow
businesses to pay only a part of it before
registration, with the rest to be paid after
the first year of operation. In Turkey in
June 2015, for example, the minimum
capital requirement was 10,000 Turkish
liras, of which one-fourth needed to be
paid before registration. The paid-in
minimum capital recorded for Turkey is
therefore 2,500 Turkish liras, or 11.0% of
income per capita.
The data details on starting a business can
be found for each economy at http://www
.doingbusiness.org. This methodology was
developed by Djankov and others (2002)
and is adopted here with minor changes.
DEALING WITH
CONSTRUCTION PERMITS
required for a business in the construc-
tion industry to build a warehouse along
with the time and cost to complete each
procedure. In addition, this year Doing
Business introduces a new measure, the
building quality control index, evaluating
the quality of building regulations, the
strength of quality control and safety
mechanisms, liability and insurance
regimes, and professional certification
requirements. Information is collected
through a questionnaire administered
to experts in construction licensing,
including architects, civil engineers,
construction lawyers, construction firms,
utility service providers and public offi-
cials who deal with building regulations,
including approvals, permit issuance and
inspections.
The ranking of economies on the ease
of dealing with construction permits is
determined by sorting their distance to
frontier scores for dealing with construc-
tion permits. These scores are the simple
Figure 13.3 Dealing with construction
permits: efficiency and quality of building
regulation
Days to comply
with formalities
to build a
warehouse
Cost to comply
with formalities,
as % of
warehouse value
Quality of building
regulation and its
implementation
Steps to comply
with formalities;
completed when
final document is
received
25%
Building
quality
control
index
25%
Time
25%
Cost
25%
Procedures

125Data Notes
(figure 13.3).
Efficiency of
construction permitting
Doing Business divides the process of
building a warehouse into distinct pro-
cedures in the questionnaire and solicits
data for calculating the time and cost to
complete each procedure (figure 13.4).
These procedures include obtaining and
submitting all relevant project-specific
documents (for example, building plans,
site maps and certificates of urbanism) to
the authorities; hiring external third-party
supervisors, engineers or inspectors (if
necessary); obtaining all necessary clear-
ances, licenses, permits and certificates;
submitting all required notifications;
and requesting and receiving all neces-
sary inspections (unless completed by
a private, third-party inspector). Doing
Business also records procedures for
obtaining connections for water and sew-
erage. Procedures necessary to register
the warehouse so that it can be used as
collateral or transferred to another entity
are also counted.
the construction company, the ware-
house project and the utility connections
are used.
Assumptions about the
construction company
The construction company (BuildCo):
ƒƒ Is a limited liability company (or its
legal equivalent).
largest business city (see table 13A.1).
ƒƒ Is 100% domestically and privately
owned.
ƒƒ Has five owners, none of whom is a
legal entity.
ƒƒ Is fully licensed and insured to carry
out construction projects, such as
building warehouses.
ƒƒ Has 60 builders and other employees,
all of them nationals with the techni-
cal expertise and professional experi-
ence necessary to obtain construction
permits and approvals.
ƒƒ Has at least one employee who is a
licensed architect or engineer and
registered with the local association of
architects or engineers. BuildCo is not
assumed to have any other employees
who are technical or licensed experts,
such as geological or topographical
experts.
ƒƒ Has paid all taxes and taken out all
necessary insurance applicable to its
general business activity (for example,
accidental insurance for construction
workers and third-person liability).
ƒƒ Owns the land on which the ware-
house will be built and will sell the
warehouse upon its completion.
warehouse
The warehouse:
ƒƒ Will be used for general storage
activities, such as storage of books or
stationery. The warehouse will not be
used for any goods requiring special
conditions, such as food, chemicals or
pharmaceuticals.
ƒƒ Will have two stories, both above
ground, with a total constructed area of
approximately 1,300.6 square meters
(14,000 square feet). Each floor will be
3 meters (9 feet, 10 inches) high.
ƒƒ Will have road access and be located
in the periurban area of the economy’s
largest business city (that is, on the
fringes of the city but still within its
official limits). For 11 economies the
largest business city.
ƒƒ Will not be located in a special eco-
nomic or industrial zone.
ƒƒ Will be located on a land plot of
approximately 929 square meters
(10,000 square feet) that is 100%
owned by BuildCo and is accurately
registered in the cadastre and land
registry.
ƒƒ Is valued at 50 times income per
capita.
ƒƒ Will be a new construction (there was
no previous construction on the land),
with no trees, natural water sources,
natural reserves or historical monu-
ments of any kind on the plot.
ƒƒ Will have complete architectural and
technical plans prepared by a licensed
architect. If preparation of the plans
requires such steps as obtaining fur-
ther documentation or getting prior
approvals from external agencies,
these are counted as procedures.
ƒƒ Will include all technical equipment
required to be fully operational.
ƒƒ Will take 30 weeks to construct
(excluding all delays due to adminis-
trative and regulatory requirements).
Figure 13.4 What are the time, cost and number of procedures to comply with
formalities to build a warehouse?
Completed
warehouse
Preconstruction Construction Postconstruction
and utilities
A business in the
construction
industry
Cost
(% of warehouse value)
Number of
procedures
Time
(days)

Assumptions about the utility
connections
The water and sewerage connections:
ƒƒ Will be 150 meters (492 feet) from
the existing water source and sewer
tap. If there is no water delivery infra-
structure in the economy, a borehole
will be dug. If there is no sewerage
infrastructure, a septic tank in the
smallest size available will be installed
or built.
ƒƒ Will not require water for fire protection
reasons; a fire extinguishing system
(dry system) will be used instead. If a
wet fire protection system is required
by law, it is assumed that the water
demand specified below also covers
the water needed for fire protection.
ƒƒ Will have an average water use of
662 liters (175 gallons) a day and an
average wastewater flow of 568 liters
(150 gallons) a day. Will have a peak
water use of 1,325 liters (350 gallons)
a day and a peak wastewater flow of
1,136 liters (300 gallons) a day.
ƒƒ Will have a constant level of water
demand and wastewater flow
throughout the year.
ƒƒ Will be 1 inch in diameter for the water
connection and 4 inches in diameter
for the sewerage connection.
Procedures
A procedure is any interaction of the
company’s employees or managers,
or any party acting on behalf of the
company, with external parties, includ-
ing government agencies, notaries,
the land registry, the cadastre, utility
companies and public inspectors—or
the hiring of private inspectors and
technical experts apart from in-house
architects and engineers. Interactions
between company employees, such as
development of the warehouse plans
and inspections conducted by employ-
ees, are not counted as procedures.
However, interactions with external
parties that are required for the archi-
tect to prepare the plans and drawings
(such as obtaining topographic or
geological surveys), or to have such
documents approved or stamped by
external parties, are counted as pro-
cedures. Procedures that the company
undergoes to connect the warehouse
to water and sewerage are included. All
procedures that are legally required, or
that are done in practice by the majority
of companies, to build a warehouse are
counted, even if they may be avoided in
exceptional cases (table 13.5).
Time
that local experts indicate is necessary
to complete a procedure in practice. It is
assumed that the minimum time required
for each procedure is one day, except for
procedures that can be fully completed
online, for which the time required is
recorded as half a day. Although proce-
dures may take place simultaneously,
they cannot start on the same day (that
is, simultaneous procedures start on con-
secutive days), again with the exception
of procedures that can be fully completed
online. If a procedure can be accelerated
legally for an additional cost and the accel-
erated procedure is used by the majority of
companies, the fastest procedure is cho-
sen. It is assumed that BuildCo does not
waste time and commits to completing
each remaining procedure without delay.
The time that BuildCo spends on gather-
ing information is not taken into account.
It is assumed that BuildCo is aware of all
building requirements and their sequence
from the beginning.
Cost
warehouse value (assumed to be 50
times income per capita). Only official
costs are recorded. All the fees associated
with completing the procedures to legally
build a warehouse are recorded, including
those associated with obtaining land use
approvals and preconstruction design
clearances; receiving inspections before,
during and after construction; obtain-
ing utility connections; and registering
the warehouse property. Nonrecurring
taxes required for the completion of the
warehouse project are also recorded.
Sales taxes (such as value added tax)
or capital gains taxes are not recorded.
Nor are deposits that must be paid up
front and are later refunded. The building
code, information from local experts, and
specific regulations and fee schedules are
used as sources for costs. If several local
partners provide different estimates, the
median reported value is used.
Building quality control
The building quality control index is based
on six other indices—the quality of build-
ing regulations, quality control before
construction, quality control during con-
struction, quality control after construc-
tion, liability and insurance regimes, and
professional certifications indices (table
13.6). The indicator is based on the same
case study assumptions as the measures
of efficiency.
TABLE 13.5 What do the indicators on
the efficiency of construction permitting
measure?
Procedures to legally build a warehouse
(number)
Submitting all relevant documents and obtaining
all necessary clearances, licenses, permits and
certificates
Submitting all required notifications and receiving
all necessary inspections
Obtaining utility connections for water and
sewerage
Registering the warehouse after its completion
(if required for use as collateral or for transfer of
the warehouse)
(calendar days)
information
Each procedure starts on a separate day—
Procedure considered completed once final
document is received
No prior contact with officials
(% of warehouse value)

127Data Notes
Quality of building regulations
index
The quality of building regulations index
has two components:
ƒƒ How easily accessible the building
regulations are. A score of 1 is assigned
if any building regulations (including
the building code) or any regulations
dealing with construction permits are
available on a website that is updated
as soon as the regulations change; 0.5
if the building regulations are avail-
able free of charge (or for a nominal
fee) at the relevant permit-issuing
authority; 0 if the building regulations
are distributed to building profession-
als through an official gazette free of
charge (or for a nominal fee), if they
must be purchased or if they are not
made easily accessible anywhere.
ƒƒ How clearly specified the require-
ments for obtaining a building permit
are. A score of 1 is assigned if the
building regulations (including the
building code) or any accessible
website, brochure or pamphlet clearly
specifies the list of required docu-
ments to submit, the fees to be paid
and all required preapprovals of the
drawings or plans by the relevant
agencies; 0 if none of these sources
specify any of these requirements or if
these sources specify fewer than the
three requirements.
The index ranges from 0 to 2, with
higher values indicating clearer and more
transparent building regulations. In the
United Kingdom, for example, all relevant
legislation can be found on an official
government website (a score of 1). The
legislation specifies the list of required
documents to submit, the fees to be paid
and all required preapprovals of the draw-
ings or plans by the relevant agencies (a
score of 1). Adding these numbers gives
the United Kingdom a score of 2 on the
quality of building regulations index.
Quality control before
construction index
The quality control before construction
index has one component:
ƒƒ Whether a licensed architect or
licensed engineer is part of the com-
mittee or team that reviews and
approves building permit applications.
A score of 1 is assigned if the national
association of architects or engineers
(or its equivalent) must review the
building plans, if an independent firm
or expert who is a licensed architect or
engineer must review the plans, if the
architect or engineer who prepared
the plans must submit an attestation
to the permit-issuing authority stating
that the plans are in compliance with
the building regulations or if a licensed
architect or engineer is part of the
committee or team that approves the
plans at the relevant permit-issuing
authority; 0 if no licensed architect or
engineer is involved in the review of
the plans to ensure their compliance
with building regulations.
The index ranges from 0 to 1, with higher
values indicating better quality control
in the review of the building plans. In
Rwanda, for example, the City Hall in
Kigali must review the building permit
application, including the plans and draw-
ings, and both a licensed architect and a
licensed engineer are part of the team
that reviews the plans and drawings.
Rwanda therefore receives a score of 1
on the quality control before construction
index.
Quality control during
construction index
The quality control during construction
index has two components:
ƒƒ Whether inspections are mandated
by law during the construction pro-
cess. A score of 2 is assigned if both
of the following conditions are met:
first, an in-house supervising engineer
(that is, an employee of the building
company), an external supervising
engineer or an external inspections
firm is legally mandated to oversee
the construction of the building
throughout the entire construction
period, or a government agency is
legally mandated to conduct phased
inspections; and second, at least one
party is legally mandated to conduct
risk-based inspections. A score of 1
is assigned if an in-house supervis-
ing engineer (that is, an employee of
the building company), an external
supervising engineer or an external
inspections firm is legally mandated
to oversee the construction of the
building throughout the entire con-
struction period, or if a government
agency is legally mandated to con-
duct phased or risk-based inspections
alone, with no mandate for having
risk-based inspections with another
Table 13.6 What do the indicators on
building quality control measure?
Quality of building regulations index (0–2)
Accessibility of building regulations
Clarity of requirements for obtaining a building
permit
Quality control before construction index
(0–1)
Whether licensed or technical experts approve
building plans
Quality control during construction index
(0–3)
Types of inspections legally mandated during
construction
Implementation of legally mandated inspections
in practice
Quality control after construction index
(0–3)
Final inspection legally mandated after
construction
Implementation of legally mandated final
inspection in practice
Liability and insurance regimes index (0–2)
Parties held legally liable for structural flaws after
building occupancy
Parties legally mandated to obtain insurance to
cover structural flaws after building occupancy or
insurance is commonly obtained in practice
Professional certifications index (0–4)
Qualification requirements for individual who
approves building plans
Qualification requirements for individual who
supervises construction or conducts inspections
Building quality control index (0–15)
Sum of the quality of building regulations, quality
control before construction, quality control during
construction, quality control after construction,
liability and insurance regimes, and professional
certifications indices

type of inspection as well. A score of 0
is assigned if a government agency is
legally mandated to conduct unsched-
uled inspections, if legally mandated
inspections are to inspect only the
safety of the construction site and not
the safety of the building itself, or if
no inspections are mandated by law
during construction.
ƒƒ Whether inspections during con-
struction are implemented in practice.
A score of 1 is assigned if the legally
mandated inspections during con-
struction always occur in practice
(including if a supervising engineer
or firm must be hired); 0 if the legally
mandated inspections do not occur in
practice, if the inspections occur most
of the time but not always, if inspec-
tions commonly occur in practice
even if not mandated by law or if the
inspections that occur in practice are
unscheduled inspections.
during the construction process. In
Antigua and Barbuda, for example, the
Development Control Authority is legally
mandated to conduct phased inspections
under the Physical Planning Act of 2003
(a score of 1). However, the Development
Control Authority rarely conducts these
inspections in practice (a score of 0).
Adding these numbers gives Antigua and
Barbuda a score of 1 on the quality control
during construction index.
Quality control after
construction index
The quality control after construction
index has two components:
ƒƒ Whether a final inspection is man-
dated by law in order to verify that
the building was built in accordance
with the approved plans and existing
building regulations. A score of 2 is
assigned if an in-house supervising
engineer (that is, an employee of the
building company), an external super-
vising engineer or an external inspec-
tions firm is legally mandated to take
responsibility for verifying that the
building has been built in accordance
building regulations or if a government
agency is legally mandated to conduct
a final inspection upon completion of
the building; 0 if no final inspection is
mandated by law after construction
and no third party is required to take
responsibility for verifying that the
building has been built in accordance
building regulations.
ƒƒ Whether the final inspection is imple-
mented in practice. A score of 1 is
assigned if the legally mandated final
inspection after construction always
occurs in practice or if a supervising
engineer or firm takes responsibil-
ity for verifying that the building has
been built in accordance with the
approved plans and existing building
regulations; 0 if the legally mandated
final inspection does not occur in
practice, if the legally mandated final
inspection occurs most of the time
but not always or if a final inspection
commonly occurs in practice even if
not mandated by law.
higher values indicating better quality
control after the construction process.
In Belize, for example, the Central
Building Authority is legally mandated
to conduct a final inspection under the
Belize Building Act of 2003 (a score of
2). However, most of the time the final
inspection does not occur in practice (a
Belize a score of 2 on the quality control
after construction index.
Liability and insurance regimes
index
The liability and insurance regimes index
has two components:
ƒƒ Whether any parties involved in the
construction process are held legally
liable for structural flaws or problems
in the building once it is occupied.
A score of 1 is assigned if at least
two of the following parties are held
legally liable for structural flaws or
problems in the building once it is
occupied: the architect or engineer
who designed the plans for the build-
ing, the professional in charge of
supervising the construction, the pro-
fessional or agency that conducted
the inspections or the construction
company; 0.5 if one of the parties is
held legally liable for structural flaws
or problems in the building once it is
occupied; 0 if no party is held legally
liable for structural flaws or problems
in the building once it is occupied, if
the project owner or investor is the
only party held liable, if the liability
must be determined by the court or
if the liability must be stipulated in a
contract.
ƒƒ Whether any parties involved in
the construction process are legally
required to obtain an insurance policy
to cover possible structural flaws or
problems in the building once it is
occupied. A score of 1 is assigned
if the architect or engineer who
designed the plans for the building,
the professional in charge of supervis-
ing the construction, the professional
or agency that conducted the inspec-
tions, the construction company,
or the project owner or investor is
required by law to obtain an insurance
policy to cover possible structural
flaws or problems in the building once
it is occupied or if an insurance policy
is commonly obtained in practice by
the majority of any of these parties
even if not required by law; 0 if no
party is required by law to obtain
insurance and insurance is not com-
monly obtained in practice by any
party, if the requirement to obtain an
insurance policy is stipulated in a con-
tract and not in the law, if any party
must obtain workers’ safety insurance
to cover the safety of workers during
construction but not insurance that
would cover defects after building
occupancy or if any party is required
to pay for any damages caused on
their own without having to obtain an
insurance policy.

129Data Notes
values indicating more stringent liability
and insurance regimes. In Madagascar,
for example, under article 1792 of the Civil
Code both the architect who designed the
plans and the construction company are
held liable for 10 years after the comple-
tion of the building (a score of 1). However,
there is no legal requirement for any party
to obtain an insurance policy, nor do most
parties obtain insurance in practice (a
Madagascar a score of 1 on the liability
and insurance regimes index.
Professional certifications index
The professional certifications index has
two components:
ƒƒ What the qualification requirements
are for the professional responsible for
verifying that the architectural plans
or drawings are in compliance with
the building regulations. A score of 2
is assigned if this professional must
have a minimum number of years of
practical experience, must have a uni-
versity degree (a minimum of a bach-
elor’s) in architecture or engineering
and must also either be a registered
member of the national order (asso-
ciation) of architects or engineers or
pass a qualification exam. A score of
1 is assigned if the professional must
have a university degree (a minimum
of a bachelor’s) in architecture or
engineering and must also either
practical experience or be a registered
meet only one of the requirements, if
the professional must meet two of the
requirements but neither of the two is
to have a university degree, or if the
professional is subject to no qualifica-
tion requirements.
ƒƒ What the qualification require-
ments are for the professional who
supervises the construction on-site
or conducts inspections. A score of
2 is assigned if this professional must
practical experience, must have a uni-
versity degree (a minimum of a bach-
elor’s) in architecture or engineering
and must also either be a registered
have a university degree (a minimum
of a bachelor’s) in architecture or
engineering and must also either
practical experience or be a registered
meet only one of the requirements, if
the professional must meet two of the
requirements but neither of the two is
to have a university degree, or if the
professional is subject to no qualifica-
tion requirements.
values indicating greater professional
certification requirements. In Cambodia,
for example, the professional responsible
for verifying that the architectural plans
or drawings are in compliance with the
building regulations must have a relevant
university degree and must pass a quali-
fication exam (a score of 1). However, the
professional supervising construction
must only have a university degree (a
Cambodia a score of 1 on the professional
certifications index.
Building quality control index
The building quality control index is the
sum of the scores on the quality of build-
ing regulations, quality control before
construction, quality control during con-
struction, quality control after construc-
tion, liability and insurance regimes, and
professional certifications indices. The
index ranges from 0 to 15, with higher
and safety mechanisms in the construc-
tion permitting system.
If an economy issued no building permits
between June 2014 and June 2015 or if
the applicable building legislation in the
economy is not being implemented, the
economy receives a “no practice” mark
on the procedures, time and cost indica-
tors. In addition, a “no practice” economy
receives a score of 0 on the building
quality control index even if its legal
framework includes provisions related
to building quality control and safety
mechanisms.
The data details on dealing with construc-
tion permits can be found for each economy
at http://www.doingbusiness.org.
GETTING ELECTRICITY
required for a business to obtain a perma-
nent electricity connection and supply for
a standardized warehouse (figure 13.5).
These procedures include applications
and contracts with electricity utilities,
all necessary inspections and clearances
from the distribution utility and other
agencies, and the external and final con-
nection works. The questionnaire divides
the process of getting an electricity
connection into distinct procedures and
solicits data for calculating the time and
cost to complete each procedure.
In addition, this year Doing Business
adds two new measures: the reli-
ability of supply and transparency of
tariffs index (included in the aggregate
distance to frontier score and ranking
on the ease of doing business) and the
price of electricity (omitted from these
aggregate measures). The reliability of
encompasses quantitative data on the
duration and frequency of power out-
ages as well as qualitative information
on the mechanisms put in place by the
utility for monitoring power outages
and restoring power supply, the report-
ing relationship between the utility and
the regulator for power outages, the
transparency and accessibility of tariffs

and whether the utility faces a financial
deterrent aimed at limiting outages
(such as a requirement to compensate
customers or pay fines when outages
exceed a certain cap).
getting electricity is determined by sort-
ing their distance to frontier scores for
getting electricity. These scores are the
simple average of the distance to frontier
scores for all the component indicators
except the price of electricity (figure
13.6).
Data are collected from the electricity
distribution utility, then completed and
verified by electricity regulatory agencies
and independent professionals such as
electrical engineers, electrical contrac-
tors and construction companies. The
electricity distribution utility consulted
is the one serving the area (or areas)
where warehouses are located. If there is
a choice of distribution utilities, the one
serving the largest number of customers
is selected.
the warehouse, the electricity connection
and the monthly consumption are used.
warehouse
The warehouse:
ƒƒ Is owned by a local entrepreneur.
ƒƒ Is located in the economy’s largest
ƒƒ Is located in an area where similar
warehouses are typically located. In
this area a new electricity connection
is not eligible for a special investment
promotion regime (offering special
subsidization or faster service, for
example).
ƒƒ Is located in an area with no physical
constraints. For example, the property
is not near a railway.
ƒƒ Is a new construction and is being
connected to electricity for the first
time.
ƒƒ Has two stories, both above
ground, with a total surface area of
approximately 1,300.6 square meters
(14,000 square feet). The plot of
land on which it is built is 929 square
meters (10,000 square feet).
ƒƒ Is used for storage of goods.
electricity connection
The electricity connection:
ƒƒ Is a permanent one.
ƒƒ Is a three-phase, four-wire Y, 140-kilo-
volt-ampere (kVA) (subscribed
capacity) connection (where the volt-
age is 120/208 V, the current would
be 400 amperes; where it is 230/400
B, the current would be nearly 200
amperes).
ƒƒ Is 150 meters long. The connection
is to either the low-voltage or the
medium-voltage distribution network
and either overhead or underground,
whichever is more common in the
area where the warehouse is located.
ƒƒ Requires works that involve the cross-
ing of a 10-meter road (such as by
excavation or overhead lines) but are
all carried out on public land. There is
no crossing of other owners’ private
property because the warehouse has
access to a road.
ƒƒ Includes only a negligible length in the
customer’s private domain.
ƒƒ Will supply monthly electricity con-
sumption of 26,880 kilowatt-hours
(kWh).
ƒƒ Does not involve work to install the
internal electrical wiring. This has
already been completed, up to and
including the customer’s service panel
or switchboard and installation of the
meter base.
Figure 13.6 Getting electricity:
efficiency, reliability and transparency
Days to obtain
an electricity
connection
Cost to obtain a
connection, as % of
income per capita
Power outages
and regulatory
mechanisms in
place to monitor
and reduce them;
transparency of
tariffs
Steps to file a connection
application, prepare
a design, complete
works, obtain approvals,
go through inspections,
install a meter and
sign a supply
contract
25%
Reliability
of supply and
transparency
of tariffs
25%
Time
25%
Cost
25%
Procedures
Note: The price of electricity is measured but does
not count for the rankings.
Figure 13.5 Doing Business measures the connection process at the level of
distribution utilities
Generation Transmission
Distribution
u New connections
Network operation and maintenance
Metering and billing
Customer

131Data Notes
Assumptions about the monthly
consumption
ƒƒ It is assumed that the warehouse
operates 8 hours a day for 30 days
a month, with equipment utilized at
80% of capacity on average, and that
there are no electricity cuts (assumed
for simplicity). The subscribed capac-
ity of the warehouse is 140 kVA, with
a power factor of 1 (1 kVA = 1 kW).
The monthly energy consumption
is therefore 26,880 kWh, and the
hourly consumption 112 kWh (26,880
kWh/30 days/8 hours).
ƒƒ If multiple electricity suppliers exist,
the warehouse is served by the
cheapest supplier.
ƒƒ Tariffs effective in March of the cur-
rent year are used for calculation
of the price of electricity for the
warehouse.
Procedures
A procedure is defined as any interac-
tion of the company’s employees or its
main electrician or electrical engineer
(that is, the one who may have done
the internal wiring) with external par-
ties, such as the electricity distribution
utility, electricity supply utilities, gov-
ernment agencies, electrical contrac-
tors and electrical firms. Interactions
between company employees and steps
related to the internal electrical wiring,
such as the design and execution of the
internal electrical installation plans, are
not counted as procedures. Procedures
that must be completed with the same
utility but with different departments
are counted as separate procedures
(table 13.7).
The company’s employees are assumed
to complete all procedures themselves
unless the use of a third party is man-
dated (for example, if only an electrician
registered with the utility is allowed to
submit an application). If the company
can, but is not required to, request the
services of professionals (such as a pri-
vate firm rather than the utility for the
external works), these procedures are
recorded if they are commonly done.
For all procedures only the most likely
cases (for example, more than 50% of
the time the utility has the material)
and those followed in practice for con-
necting a warehouse to electricity are
counted.
Time
that the electricity utility and experts
indicate is necessary in practice, rather
than required by law, to complete a
procedure with minimum follow-up and
no extra payments. It is assumed that
the minimum time required for each
procedure is one day. Although proce-
dures may take place simultaneously,
they cannot start on the same day (that
is, simultaneous procedures start on
consecutive days). It is assumed that
the company does not waste time and
commits to completing each remaining
procedure without delay. The time that
the company spends on gathering infor-
mation is not taken into account. It is
assumed that the company is aware of
all electricity connection requirements
and their sequence from the beginning.
Cost
economy’s income per capita. Costs are
recorded exclusive of value added tax.
All the fees and costs associated with
completing the procedures to connect
a warehouse to electricity are recorded,
including those related to obtaining
clearances from government agencies,
applying for the connection, receiving
inspections of both the site and the inter-
nal wiring, purchasing material, getting
the actual connection works and paying
a security deposit. Information from local
experts and specific regulations and fee
schedules are used as sources for costs.
If several local partners provide different
estimates, the median reported value is
used. In all cases the cost excludes bribes.
Security deposit
Utilities require security deposits as a
guarantee against the possible failure of
customers to pay their consumption bills.
For this reason the security deposit for a
new customer is most often calculated
as a function of the customer’s estimated
consumption.
Doing Business does not record the full
amount of the security deposit. If the
deposit is based on the customer’s
actual consumption, this basis is the one
assumed in the case study. Rather than
the full amount of the security deposit,
Doing Business records the present value
TABLE 13.7 What do the getting
electricity indicators measure?
Procedures to obtain an electricity
connection (number)
Submitting all relevant documents and obtaining
all necessary clearances and permits
Completing all required notifications and
receiving all necessary inspections
Obtaining external installation works and
possibly purchasing material for these works
Concluding any necessary supply contract and
obtaining final supply
(calendar days)
Is at least one calendar day
Each procedure starts on a separate day
information
Reflects the time spent in practice, with little
follow-up and no prior contact with officials
Value added tax excluded
Reliability of supply and transparency of
tariffs index (0–8)
Duration and frequency of power outages
Tools to monitor power outages
Tools to restore power supply
Regulatory monitoring of utilities’ performance
Financial deterrents aimed at limiting outages
Transparency and accessibility of tariffs
Price of electricity (cents per kilowatt-hour)
Price based on monthly bill for commercial
warehouse in case study
Note: While Doing Business measures the price
of electricity, it does not include these data when
calculating the distance to frontier score for getting
electricity or the ranking on the ease of getting
electricity.

of the losses in interest earnings expe-
rienced by the customer because the
utility holds the security deposit over a
prolonged period, in most cases until the
end of the contract (assumed to be after
five years). In cases where the security
deposit is used to cover the first monthly
consumption bills, it is not recorded. To
calculate the present value of the lost
interest earnings, the end-2014 lending
rates from the International Monetary
Fund’s International Financial Statistics are
used. In cases where the security deposit
is returned with interest, the difference
between the lending rate and the interest
paid by the utility is used to calculate the
present value.
In some economies the security deposit
can be put up in the form of a bond: the
company can obtain from a bank or an
insurance company a guarantee issued
on the assets it holds with that financial
institution. In contrast to the scenario
in which the customer pays the deposit
in cash to the utility, in this scenario the
company does not lose ownership con-
trol over the full amount and can continue
using it. In return the company will pay
the bank a commission for obtaining
the bond. The commission charged may
vary depending on the credit standing of
the company. The best possible credit
standing and thus the lowest possible
commission are assumed. Where a bond
can be put up, the value recorded for the
deposit is the annual commission times
the five years assumed to be the length
of the contract. If both options exist, the
cheaper alternative is recorded.
In Honduras in June 2015 a customer
requesting a 140-kVA electricity con-
nection would have had to put up a
security deposit of 126,894 Honduran
lempiras ($6,025) in cash or check, and
the deposit would have been returned
only at the end of the contract. The
customer could instead have invested
this money at the prevailing lending
rate of 20.61%. Over the five years of
the contract this would imply a present
value of lost interest earnings of 77,174.76
lempiras ($3,664). In contrast, if the cus-
tomer chose to settle the deposit with a
bank guarantee at an annual rate of 2.5%,
the amount lost over the five years would
be just 15,861.75 lempiras ($753).
Reliability of supply and
transparency of tariffs index
Doing Business uses the system average
interruption duration index (SAIDI)
and the system average interruption
frequency index (SAIFI) to measure the
duration and frequency of power out-
ages in the largest business city of each
economy (for 11 economies the data are
also collected for the second largest busi-
ness city; see table 13A.1). SAIDI is the
average total duration of outages over
the course of a year for each customer
served, while SAIFI is the average number
of service interruptions experienced by a
customer in a year. Annual data (covering
the calendar year) are collected from dis-
tribution utility companies and national
regulators on SAIDI and SAIFI. Both
SAIDI and SAIFI estimates include load
shedding.
An economy is eligible to obtain a score
on the reliability of supply and transpar-
ency of tariffs index if the utility collects
data on electricity outages (measuring
the average total duration of outages
per customer and the average number
of outages per customer) and the SAIDI
value is below a threshold of 100 hours
and the SAIFI value below a threshold of
100 outages.
Because the focus is on measuring the
reliability of the electricity supply in each
economy’s largest business city (and, in
11 economies, also in the second largest
business city), an economy is not eligible
to obtain a score on the index if data on
power outages are not collected. Nor is
an economy eligible to obtain a score if
outages are too frequent or long-lasting
for the electricity supply to be consid-
ered reliable—that is, if the SAIDI value
exceeds the threshold of 100 hours or the
SAIFI value exceeds the threshold of 100
outages.4
For all economies that meet the criteria
as determined by Doing Business, a
score on the reliability of supply and
transparency of tariffs index is calcu-
lated on the basis of the following six
components:
ƒƒ What the SAIDI and SAIFI values are.
If SAIDI and SAIFI are 12 (equivalent
to an outage of one hour each month)
or below, a score of 1 is assigned. If
SAIDI and SAIFI are 4 (equivalent
to an outage of one hour each quar-
ter) or below, 1 additional point is
assigned. Finally, if SAIDI and SAIFI
are 1 (equivalent to an outage of one
hour per year) or below, 1 more point
is assigned.
ƒƒ What tools are used by the distribu-
tion utility to monitor power out-
ages. A score of 1 is assigned if the
utility uses automated tools, such
as the Supervisory Control and Data
Acquisition (SCADA) system; 0 if it
relies solely on calls from customers
and records and monitors outages
manually.
ƒƒ What tools are used by the distribu-
tion utility to restore power supply. A
score of 1 is assigned if the utility uses
automated tools, such as the SCADA
system; 0 if it relies solely on manual
resources for service restoration,
such as field crews or maintenance
personnel.
ƒƒ Whether a regulator—that is, an
entity separate from the utility—
monitors the utility’s performance
on reliability of supply. A score of 1
is assigned if the regulator performs
periodic or real-time reviews; 0 if it
does not monitor power outages and
does not require the utility to report
on reliability of supply.
ƒƒ Whether financial deterrents exist to
limit outages. A score of 1 is assigned
if the utility compensates customers
when outages exceed a certain cap,
if the utility is fined by the regulator
when outages exceed a certain cap or
if both these conditions are met; 0 if
no compensation mechanism of any
kind is available.

133Data Notes
ƒƒ Whether electricity tariffs are trans-
parent and easily available. A score
of 1 is assigned if effective tariffs are
available online and customers are
notified of a change in tariff ahead of
the next billing cycle; 0 if not.
values indicating greater reliability of
electricity supply and greater transpar-
ency of tariffs. In the Czech Republic,
for example, the distribution utility com-
pany PREdistribuce uses SAIDI and SAIFI
metrics to monitor and collect data on
power outages. In 2014 the average total
duration of power outages in Prague was
0.53 hours per customer and the average
number of outages experienced by a
customer was 0.27. Both SAIDI and SAIFI
are below the threshold and indicate that
there was less than one outage a year per
customer, for a total duration of less than
one hour. So the economy not only meets
the eligibility criteria for obtaining a score
on the index, it also receives a score of
3 on the first component of the index.
The utility uses an automated system
(SCADA) to identify faults in the network
(a score of 1) and restore electricity ser-
vice (a score of 1). The national regulator
actively reviews the utility’s performance
in providing reliable electricity service
(a score of 1) and requires the utility to
compensate customers if outages last
longer than a maximum period defined
by the regulator (a score of 1). Customers
are notified of a change in tariffs ahead of
the next billing cycle and can easily check
effective tariffs online (a score of 1).
Adding these numbers gives the Czech
Republic a score of 8 on the reliability of
On the other hand, several economies
receive a score of 0 on the reliability of
The reason may be that outages occur
more than once a month and none of the
mechanisms and tools measured by the
index are in place. An economy may also
receive a score of 0 if either the SAIDI
or SAIFI value (or both) exceeds the
threshold of 100. For Mali, for example,
the SAIDI value (168) exceeds the
threshold. Based on the criteria estab-
lished, Mali cannot receive a score on
the index even though the country has
regulatory monitoring of outages and
there is a compensation mechanism for
customers.
Price of electricity
Doing Business measures the price of
electricity but does not include these data
when calculating the distance to frontier
score for getting electricity or the ranking
on the ease of getting electricity. (The
data are available on the Doing Business
website, at http://www.doingbusiness.org).
The data on electricity prices are based
on standardized assumptions to ensure
comparability across economies.
The price of electricity is measured in
cents per kilowatt-hour. On the basis of
the assumptions about monthly con-
sumption, a monthly bill for a commercial
warehouse in the largest business city of
the economy is computed for the month
of March (for 11 economies the data are
also collected for the second largest
business city; see table 13A.1). As noted,
the warehouse uses electricity 30 days a
month, from 9:00 a.m. to 5:00 p.m., so
different tariff schedules may apply if a
time-of-use tariff is available.
The data details on getting electricity
can be found for each economy at http://
www.doingbusiness.org. The initial meth-
odology was developed by Geginat and
Ramalho (2015) and is adopted here with
minor changes.
REGISTERING PROPERTY
Doing Business records the full sequence
of procedures necessary for a business
(the buyer) to purchase a property from
another business (the seller) and to trans-
fer the property title to the buyer’s name
so that the buyer can use the property for
expanding its business, use the property as
collateral in taking new loans or, if neces-
sary, sell the property to another business.
It also measures the time and cost to
complete each of these procedures.
In addition, this year Doing Business adds
a new measure to the set of registering
property indicators, an index of the qual-
ity of the land administration system
in each economy. The quality of land
administration index has four dimensions:
reliability of infrastructure, transparency
of information, geographic coverage and
land dispute resolution.
of registering property is determined by
sorting their distance to frontier scores
for registering property. These scores
are the simple average of the distance to
frontier scores for each of the component
indicators (figure 13.7).
Efficiency of transferring
property
As recorded by Doing Business, the pro-
cess of transferring property starts with
obtaining the necessary documents, such
as a copy of the seller’s title if necessary,
and conducting due diligence if required.
The transaction is considered complete
when it is opposable to third parties and
when the buyer can use the property, use
it as collateral for a bank loan or resell it
Figure 13.7 Registering property:
efficiency and quality of land
administration system
Days to transfer
property between two
local companies
Cost to transfer
property, as % of
property value
Steps to transfer
property so that it
can be sold or used
as collateral
25%
Quality
of land
administration
index
25%
Time
25%
Cost
25%
Procedures
Reliability,
transparency and
coverage of land
administration
system; protection
against land disputes

(figure 13.8). Every procedure required by
law or necessary in practice is included,
whether it is the responsibility of the sell-
er or the buyer or must be completed by a
third party on their behalf. Local property
lawyers, notaries and property registries
provide information on procedures as
well as the time and cost to complete
each of them.
the parties to the transaction, the prop-
erty and the procedures are used.
Assumptions about the parties
The parties (buyer and seller):
ƒƒ Are limited liability companies (or the
legal equivalent).
ƒƒ Are located in the periurban area of
the economy’s largest business city.
For 11 economies the data are also col-
lected for the second largest business
city (see table 13A.1).
ƒƒ Are 100% domestically and privately
owned.
ƒƒ Have 50 employees each, all of whom
are nationals.
ƒƒ Perform general commercial activities.
Assumptions about the property
The property:
ƒƒ Has a value of 50 times income per
capita. The sale price equals the value.
ƒƒ Is fully owned by the seller.
ƒƒ Has no mortgages attached and has
been under the same ownership for
the past 10 years.
ƒƒ Is registered in the land registry or
cadastre, or both, and is free of title
disputes.
ƒƒ Is located in a periurban commercial
zone, and no rezoning is required.
ƒƒ Consists of land and a building. The
land area is 557.4 square meters
(6,000 square feet). A two-story
warehouse of 929 square meters
(10,000 square feet) is located on the
land. The warehouse is 10 years old, is
in good condition and complies with
all safety standards, building codes
and other legal requirements. It has
no heating system. The property of
land and building will be transferred in
its entirety.
ƒƒ Will not be subject to renovations
or additional building following the
purchase.
ƒƒ Has no trees, natural water sources,
natural reserves or historical monu-
ments of any kind.
ƒƒ Will not be used for special purposes,
and no special permits, such as for
residential use, industrial plants,
waste storage or certain types of agri-
cultural activities, are required.
ƒƒ Has no occupants, and no other party
holds a legal interest in it.
Procedures
A procedure is defined as any interaction
of the buyer or the seller, their agents (if
an agent is legally or in practice required)
or the property with external parties,
including government agencies, inspec-
tors, notaries and lawyers. Interactions
between company officers and employees
are not considered. All procedures that
are legally or in practice required for
registering property are recorded, even if
they may be avoided in exceptional cases
(table 13.8). It is assumed that the buyer
follows the fastest legal option available
and used by the majority of property own-
ers. Although the buyer may use lawyers
or other professionals where necessary
in the registration process, it is assumed
that the buyer does not employ an outside
facilitator in the registration process unless
legally or in practice required to do so.
Time
that property lawyers, notaries or registry
officials indicate is necessary to complete
a procedure. It is assumed that the mini-
mum time required for each procedure is
one day, except for procedures that can
be fully completed online, for which the
time required is recorded as half a day.
Although procedures may take place
Figure 13.8 What are the time, cost and number of procedures required to transfer
property between two local companies?
Number of
procedures
Buyer can use
the property,
resell it or
use it as
collateral
Preregistration PostregistrationRegistration
Time
(days)
Cost
(% of property value)
Seller with property
registered and no
title disputes
Land two-story
warehouse
TABLE 13.8 What do the indicators on
the efficiency of transferring property
measure?
Procedures to legally transfer title on
immovable property (number)
Preregistration procedures (for example, checking
for liens, notarizing sales agreement, paying
property transfer taxes)
Registration procedures in the economy’s largest
business citya
Postregistration procedures (for example, filing
title with municipality)
(calendar days)
information
Each procedure starts on a separate day—
Procedure considered completed once final
document is received
No prior contact with officials
(% of property value)
No value added or capital gains taxes included
a. For 11 economies the data are also collected for
the second largest business city.

135Data Notes
simultaneously, they cannot start on the
same day, again with the exception of
procedures that can be fully completed
online. It is assumed that the buyer does
not waste time and commits to complet-
ing each remaining procedure without
delay. If a procedure can be accelerated
for an additional cost, the fastest legal
procedure available and used by the
majority of property owners is chosen.
If procedures can be undertaken simul-
taneously, it is assumed that they are.
It is assumed that the parties involved
are aware of all requirements and their
sequence from the beginning. Time
spent on gathering information is not
considered.
Cost
property value, assumed to be equivalent
to 50 times income per capita. Only offi-
cial costs required by law are recorded,
including fees, transfer taxes, stamp
duties and any other payment to the
property registry, notaries, public agen-
cies or lawyers. Other taxes, such as
capital gains tax or value added tax, are
excluded from the cost measure. Both
costs borne by the buyer and those borne
by the seller are included. If cost esti-
mates differ among sources, the median
reported value is used.
Quality of land
administration
is measured as the sum of the scores on
four other indices: the reliability of infra-
structure, transparency of information,
geographic coverage and land dispute
resolution indices (table 13.9). Data are
collected for each economy’s largest
business city. For 11 economies the data
are also collected for the second largest
business city.
Reliability of infrastructure
index
The reliability of infrastructure index has
six components:
ƒƒ How land titles are kept at the registry
of the largest business city of the
economy. A score of 2 is assigned
if the majority of land titles are fully
digital; 1 if the majority are scanned;
0 if the majority are kept in paper
format.
ƒƒ Whether there is an electronic data-
base for checking for encumbrances.
A score of 1 is assigned if yes; 0 if no.
ƒƒ How maps of land plots are kept at
the mapping agency of the largest
business city of the economy. A score
of 2 is assigned if the majority of maps
are fully digital; 1 if the majority are
scanned; 0 if the majority are kept in
paper format.
ƒƒ Whether there is a geographic
information system—an electronic
database for recording boundar-
ies, checking plans and providing
cadastral information. A score of 1 is
assigned if yes; 0 if no.
ƒƒ How the land ownership registry
and mapping agency are linked. A
score of 1 is assigned if information
about land ownership and maps are
kept in a single database or in linked
databases; 0 if there is no connection
between the different databases.
ƒƒ How immovable property is identified.
A score of 1 is assigned if there is a
unique number to identify properties;
0 if there are multiple identifiers.
values indicating a higher quality of
infrastructure for ensuring the reliabil-
ity of information on property titles and
boundaries. In Turkey, for example, the
land registry offices in Istanbul maintain
titles in a fully digital format (a score of
2) and have a fully electronic database
to check for encumbrances (a score of
1). The Cadastral Directorate offices in
Istanbul have digital maps (a score of
2), and the Geographical Information
Directorate has a public portal allowing
users to check the plans and cadastral
information on parcels along with satel-
lite images (a score of 1). Databases
about land ownership and maps are
Table 13.9 What do the indicators on the quality of land administration measure?
Reliability of infrastructure index (0–8)
Type of system for archiving information on land ownership
Availability of electronic database to check for encumbrances
Type of system for archiving maps
Availability of geographic information system
Link between property ownership registry and mapping system
Transparency of information index (0–6)
Accessibility of information on land ownership
Accessibility of maps of land plots
Publication of fee schedules, lists of registration documents, service standards
Availability of a specific and separate mechanism for complaints
Publication of statistics about the number of property transactions
Geographic coverage index (0–8)
Coverage of land registry at the level of the largest business city and the economya
Coverage of mapping agency at the level of the largest business city and the economya
Land dispute resolution index (0–8)
Legal framework for immovable property registration
Mechanisms to prevent and resolve land disputes
Quality of land administration index (0–30)
Sum of the reliability of infrastructure, transparency of information, geographic coverage and land dispute
resolution indices
a. For 11 economies the data are also collected for the second largest business city.

linked to each other through the TAKBIS
system, an integrated information system
for the land registry offices and cadastral
offices (a score of 1). Finally, there is a
unique identifying number for properties
(a score of 1). Adding these numbers
gives Turkey a score of 8 on the reliability
of infrastructure index.
Transparency of information
index
The transparency of information index
has 10 components:
ƒƒ Whether information on land owner-
ship is made publicly available. A
score of 1 is assigned if information
on land ownership is accessible by
anyone; 0 if access is restricted.
ƒƒ Whether the list of documents
required for completing any type of
property transaction is made publicly
available. A score of 0.5 is assigned
if the list of documents is accessible
online or on a public board; 0 if it is
not made available to the public or if it
can be obtained only in person.
ƒƒ Whether the fee schedule for
completing any type of property
transaction is made publicly available.
A score of 0.5 is assigned if the fee
schedule is accessible online or on a
public board or is free of charge; 0 if
it is not made available to the public
or if it can be obtained only in person.
ƒƒ Whether the agency in charge of
immovable property registration
commits to delivering a legally
binding document that proves prop-
erty ownership within a specific time
frame. A score of 0.5 is assigned if the
service standard is accessible online
or on a public board; 0 if it is not made
available to the public or if it can be
obtained only in person.
ƒƒ Whether there is a specific and sepa-
rate mechanism for filing complaints
about a problem that occurred at
the agency in charge of immovable
property registration. A score of 1
is assigned if there is a specific and
separate mechanism for filing a
complaint; 0 if there is only a general
mechanism or no mechanism.
ƒƒ Whether there are publicly available
official statistics tracking the number
of transactions at the immovable
property registration agency. A score
of 0.5 is assigned if statistics are
published about property transfers in
the largest business city in the past
calendar year; 0 if no such statistics
are made publicly available.
ƒƒ Whether maps of land plots are made
publicly available. A score of 0.5 is
assigned if maps are accessible by
anyone; 0 if access is restricted.
ƒƒ Whether the fee schedule for access-
ing maps is made publicly available.
A score of 0.5 is assigned if the fee
schedule is accessible online or on a
public board or free of charge; 0 if it is
not made available to the public or if it
can be obtained only in person.
ƒƒ Whether the mapping agency com-
mits to delivering an updated map
within a specific time frame. A score
of 0.5 is assigned if the service stan-
dard is accessible online or on a public
board; 0 if it is not made available to
the public or if it can be obtained only
in person.
ƒƒ Whether there is a specific and sepa-
rate mechanism for filing complaints
about a problem that occurred at
the mapping agency. A score of
0.5 is assigned if there is a specific
and separate mechanism for filing a
complaint; 0 if there is only a general
mechanism or no mechanism.
values indicating greater transparency in
the land administration system. In the
Netherlands, for example, anyone who
pays a fee can consult the land owner-
ship database (a score of 1). Information
can be obtained at the office, by mail
or online using the Kadaster website
(http://www.kadaster.nl). Anyone can
also get information online about the
list of documents to submit for prop-
erty registration (a score of 0.5), the
fee schedule for registration (a score of
0.5) and the service standards (a score
of 0.5). And anyone facing a problem
at the land registry can file a complaint
or report an error by filling in a specific
form online (a score of 1). In addition,
the Kadaster makes statistics about
land transactions available to the public,
reporting a total of 110,094 property
transfers in Amsterdam in 2014 (a score
of 0.5). Moreover, anyone who pays a
fee can consult online cadastral maps
(a score of 0.5). It is also possible to
get public access to the fee schedule
for map consultation (a score of 0.5),
the service standards for delivery of an
updated plan (a score of 0.5) and a spe-
cific mechanism for filing a complaint
about a map (a score of 0.5). Adding
these numbers gives the Netherlands a
score of 6 on the transparency of infor-
mation index.
Geographic coverage index
The geographic coverage index has four
components:
ƒƒ How complete the coverage of the
land registry is at the level of the
largest business city. A score of 2 is
assigned if all privately held land plots
in the city are formally registered at
the land registry; 0 if not.
land registry is at the level of the
if all privately held land plots in the
economy are formally registered at
the land registry; 0 if not.
mapping agency is at the level of the
assigned if all privately held land plots
in the city are mapped; 0 if not.
mapping agency is at the level of the
if all privately held land plots in the
economy are mapped; 0 if not.
values indicating greater geographic
coverage in land ownership registration
and cadastral mapping. In the Republic
of Korea, for example, all privately held
land plots are formally registered at the
land registry in Seoul (a score of 2) and
in the economy as a whole (a score of 2).

137Data Notes
In addition, all privately held land plots
are mapped in Seoul (a score of 2) and
in the economy as a whole (a score of
2). Adding these numbers gives Korea
a score of 8 on the geographic coverage
index.
Land dispute resolution index
The land dispute resolution index assess-
es the legal framework for immovable
property registration and the accessibility
of dispute resolution mechanisms. The
index has eight components:
ƒƒ Whether the law requires that all
property sale transactions be reg-
istered at the immovable property
registry to make them opposable to
third parties. A score of 1.5 is assigned
if yes; 0 if no.
ƒƒ Whether the formal system of
immovable property registration is
subject to a guarantee. A score of 0.5
is assigned if either a state or private
guarantee over immovable property
registration is required by law; 0 if no
such guarantee is required.
ƒƒ Whether there is a specific compen-
sation mechanism to cover for losses
incurred by parties who engaged in
good faith in a property transaction
based on erroneous information
certified by the immovable property
registry. A score of 0.5 is assigned if
yes; 0 if no.
ƒƒ Whether the legal system requires
verification of the legal validity of the
documents necessary for a property
transaction. A score of 0.5 is assigned
if there is a review of legal validity,
either by the registrar or by a profes-
sional (such as a notary or lawyer); 0
if there is no review.
ƒƒ Whether the legal system requires
verification of the identity of the
parties to a property transaction. A
score of 0.5 is assigned if there is
verification of identity, either by the
registrar or by a professional (such as
a notary or lawyer); 0 if there is no
verification.
ƒƒ Whether there is a national database
to verify the accuracy of identity
documents. A score of 1 is assigned if
such a national database is available;
0 if not.
ƒƒ How much time it takes to obtain a
decision from a court of first instance
(without appeal) in a standard land
dispute between two local businesses
over tenure rights worth 50 times
income per capita and located in the
assigned if it takes less than one year;
2 if it takes between one and two
years; 1 if it takes between two and
three years; 0 if it takes more than
three years.
ƒƒ Whether there are publicly available
statistics on the number of land
disputes in the first instance. A score
of 0.5 is assigned if statistics are
published about land disputes in the
economy in the past calendar year; 0
if no such statistics are made publicly
available.
higher values indicating greater protec-
tion against land disputes. In Lithuania,
for example, according to the Civil
Code and the Law on the Real Property
Register, property transactions must
be registered at the land registry to
make them opposable to third parties
(a score of 1.5). The property transfer
system is guaranteed by the state (a
score of 0.5) and has a compensation
mechanism to cover for losses incurred
by parties who engaged in good faith
in a property transaction based on an
error by the registry (a score of 0.5). A
notary verifies the legal validity of the
documents in a property transaction
(a score of 0.5) and the identity of the
parties (a score of 0.5), in accordance
with the Law on the Notary Office
(Law I-2882). Lithuania has a national
database to verify the accuracy of
identity documents (a score of 1). In a
land dispute between two Lithuanian
companies over the tenure rights of a
property worth $745,000, the Vilnius
District Court gives a decision in less
than one year (a score of 3). Finally,
statistics about land disputes are col-
lected and published; there were a
total of 71 land disputes in the country
in 2014 (a score of 0.5). Adding these
numbers gives Lithuania a score of 8 on
the land dispute resolution index.
Quality of land administration
index
is the sum of the scores on the reliability
of infrastructure, transparency of infor-
mation, geographic coverage and land
dispute resolution indices. The index
ranges from 0 to 30, with higher values
indicating better quality of the land
administration system.
If private sector entities were unable to
register property transfers in an economy
between June 2014 and June 2015, the
economy receives a “no practice” mark on
the procedures, time and cost indicators.
A “no practice” economy receives a score
of 0 on the quality of land administration
index even if its legal framework includes
provisions related to land administration.
The data details on registering property
www.doingbusiness.org.
GETTING CREDIT
Doing Business measures the legal rights
of borrowers and lenders with respect
to secured transactions through one
set of indicators and the reporting of
credit information through another. The
first set of indicators measures whether
certain features that facilitate lending
exist within the applicable collateral
and bankruptcy laws. The second set
measures the coverage, scope and
accessibility of credit information avail-
able through credit reporting service
providers such as credit bureaus or
credit registries (figure 13.9). The rank-
ing of economies on the ease of getting
credit is determined by sorting their
distance to frontier scores for getting
credit. These scores are the distance
to frontier score for the sum of the
strength of legal rights index and the

depth of credit information index (fig-
ure 13.10).
Legal rights of borrowers
and lenders
The data on the legal rights of borrow-
ers and lenders are gathered through a
questionnaire administered to financial
lawyers and verified through analysis of
laws and regulations as well as public
sources of information on collateral and
bankruptcy laws. Questionnaire respons-
es are verified through several rounds of
follow-up communication with respon-
dents as well as by contacting third par-
ties and consulting public sources. The
questionnaire data are confirmed through
teleconference calls or on-site visits in all
economies.
Strength of legal rights index
The strength of legal rights index mea-
sures the degree to which collateral and
bankruptcy laws protect the rights of
borrowers and lenders and thus facilitate
lending (table 13.10). For each economy
it is first determined whether a unitary
secured transactions system exists. Then
two case scenarios, case A and case B,
are used to determine how a nonpos-
sessory security interest is created,
publicized and enforced according to the
law. Special emphasis is given to how the
collateral registry operates (if registration
of security interests is possible). The case
scenarios involve a secured borrower,
company ABC, and a secured lender,
BizBank.
In some economies the legal framework
for secured transactions will allow only
case A or case B (not both) to apply.
Both cases examine the same set of legal
provisions relating to the use of movable
collateral.
Several assumptions about the secured
borrower (ABC) and lender (BizBank) are
used:
ƒƒ ABC is a domestic limited liability
company (or its legal equivalent).
ƒƒ ABC has up to 50 employees.
ƒƒ ABC has its headquarters and only
base of operations in the economy’s
largest business city. For 11 economies
the data are also collected for the sec-
ond largest business city (see table
13A.1).
ƒƒ Both ABC and BizBank are 100%
domestically owned.
The case scenarios also involve assump-
tions. In case A, as collateral for the loan,
ABC grants BizBank a nonpossessory
security interest in one category of mov-
able assets, for example, its machinery
or its inventory. ABC wants to keep
both possession and ownership of the
collateral. In economies where the law
does not allow nonpossessory security
interests in movable property, ABC and
BizBank use a fiduciary transfer-of-title
arrangement (or a similar substitute for
nonpossessory security interests).
In case B, ABC grants BizBank a busi-
ness charge, enterprise charge, floating
charge or any charge that gives BizBank
a security interest over ABC’s combined
movable assets (or as much of ABC’s
movable assets as possible). ABC keeps
ownership and possession of the assets.
The strength of legal rights index covers
functional equivalents to security inter-
ests in movable assets (such as financial
leases and sales with retention of title)
only in its first component, to assess how
integrated or unified the economy’s legal
framework for secured transactions is.
The strength of legal rights index includes
10 aspects related to legal rights in col-
lateral law and 2 aspects in bankruptcy
Figure 13.9 Do lenders have credit information on entrepreneurs seeking credit? Is
the law favorable to borrowers and lenders using movable assets as collateral?
Movable
asset
Collateral
registry
Lender Credit bureaus
and registries
Potential
borrower
What types can be
used as collateral?
Can lenders
access credit
information on
borrowers?
Can movable assets be
used as collateral?
Credit information
Figure 13.10 Getting credit: collateral
rules and credit information
Regulations on nonpossessory security
interests in movable property
Scope, quality and accessibility of credit
information through credit bureaus and registries
100%
Sum of strength of
legal rights index (0–12)
and
depth of credit
information index
(0–8)
Rankings are based on distance to frontier
scores for the sum of two indicators
Note: Credit bureau coverage and credit registry
coverage are measured but do not count for the
rankings.
TABLE 13.10 What do the getting
credit indicators measure?
Strength of legal rights index (0–12)
Protection of rights of borrowers and lenders
through collateral laws
Protection of secured creditors’ rights through
bankruptcy laws
Depth of credit information index (0–8)
Scope and accessibility of credit information
distributed by credit bureaus and credit registries
Credit bureau coverage (% of adults)
Number of individuals and firms listed in the
largest credit bureau as percentage of adult
population
Credit registry coverage (% of adults)
Number of individuals and firms listed in a credit
registry as percentage of adult population

139Data Notes
law. A score of 1 is assigned for each of
the following features of the laws:
ƒƒ The economy has an integrated or
unified legal framework for secured
transactions that extends to the
creation, publicity and enforcement of
four functional equivalents to security
interests in movable assets: fiduciary
transfers of title; financial leases;
assignments or transfers of receiv-
ables; and sales with retention of title.
ƒƒ The law allows a business to grant
a nonpossessory security right in a
single category of movable assets
(such as machinery or inventory),
without requiring a specific descrip-
tion of the collateral.
ƒƒ The law allows a business to grant
a nonpossessory security right in
substantially all its movable assets,
without requiring a specific descrip-
tion of the collateral.
ƒƒ A security right can be given over
future or after-acquired assets and
extends automatically to the prod-
ucts, proceeds or replacements of the
original assets.
ƒƒ A general description of debts and
obligations is permitted in the col-
lateral agreement and in registration
documents, all types of debts and
obligations can be secured between
the parties, and the collateral
agreement can include a maximum
amount for which the assets are
encumbered.
ƒƒ A collateral registry or registration
institution for security interests
granted over movable property by
incorporated and nonincorporated
entities is in operation, unified geo-
graphically and with an electronic
database indexed by debtors’ names.
ƒƒ The collateral registry is a notice-
based registry—a registry that files
only a notice of the existence of a
security interest (not the underlying
documents) and does not perform a
legal review of the transaction. The
registry also publicizes functional
equivalents to security interests.
ƒƒ The collateral registry has modern
features such as those that allow
secured creditors (or their represen-
tatives) to register, search, amend or
cancel security interests online.
ƒƒ Secured creditors are paid first
(for example, before tax claims
and employee claims) when a
debtor defaults outside an insolvency
procedure.
ƒƒ Secured creditors are paid first (for
example, before tax claims and
employee claims) when a business is
liquidated.
ƒƒ Secured creditors are subject to
an automatic stay on enforcement
procedures when a debtor enters a
court-supervised reorganization pro-
cedure, but the law protects secured
creditors’ rights by providing clear
grounds for relief from the automatic
stay (for example, if the movable
property is in danger) or setting a
time limit for it.
ƒƒ The law allows parties to agree in the
collateral agreement that the lender
may enforce its security right out
of court; the law allows public and
private auctions and also permits the
secured creditor to take the asset in
satisfaction of the debt.
higher scores indicating that collateral
and bankruptcy laws are better designed
to expand access to credit.
Credit information
The data on the reporting of credit
information are built in two stages. First,
banking supervision authorities and
public information sources are surveyed
to confirm the presence of a credit
reporting service provider, such as a
credit bureau or credit registry. Second,
when applicable, a detailed question-
naire on the credit bureau’s or credit
registry’s structure, laws and associated
rules is administered to the entity itself.
Questionnaire responses are verified
through several rounds of follow-up
communication with respondents as
well as by contacting third parties and
consulting public sources. The ques-
tionnaire data are confirmed through
teleconference calls or on-site visits in
all economies.
Depth of credit information
index
The depth of credit information index
measures rules and practices affecting
the coverage, scope and accessibility
of credit information available through
either a credit bureau or a credit registry.
A score of 1 is assigned for each of the fol-
lowing eight features of the credit bureau
or credit registry (or both):
ƒƒ Data on both firms and individuals are
distributed.
ƒƒ Both positive credit information (for
example, original loan amounts, out-
standing loan amounts and a pattern
of on-time repayments) and negative
information (for example, late pay-
ments and the number and amount of
defaults) are distributed.
ƒƒ Data from retailers or utility compa-
nies are distributed in addition to data
from financial institutions.
ƒƒ At least two years of historical data
are distributed. Credit bureaus
and registries that erase data on
defaults as soon as they are repaid
or distribute negative information
more than 10 years after defaults are
repaid receive a score of 0 for this
component.
ƒƒ Data on loan amounts below 1% of
income per capita are distributed.
ƒƒ By law, borrowers have the right to
access their data in the largest credit
bureau or registry in the economy.
Credit bureaus and registries that
charge more than 1% of income per
capita for borrowers to inspect their
data receive a score of 0 for this
component.
ƒƒ Banks and other financial institu-
tions have online access to the credit
information (for example, through a
web interface, a system-to-system
connection or both).
ƒƒ Bureau or registry credit scores are
offered as a value added service to
help banks and other financial institu-
tions assess the creditworthiness of
borrowers.

values indicating the availability of more
credit information, from either a credit
bureau or a credit registry, to facilitate
lending decisions. If the credit bureau
or registry is not operational or covers
less than 5% of the adult population, the
score on the depth of credit information
index is 0.
In Lithuania, for example, both a credit
bureau and a credit registry operate. Both
distribute data on firms and individuals
(a score of 1). Both distribute positive
and negative information (a score of 1).
Although the credit registry does not
distribute data from retailers or utilities,
the credit bureau does (a score of 1). Both
distribute at least two years of historical
data (a score of 1). Although the credit
registry has a threshold of €290, the
credit bureau distributes data on loans
of any value (a score of 1). Borrowers
have the right to access their data in both
the credit bureau and the credit registry
free of charge once a year (a score of 1).
Both entities provide data users access
to databases through a web interface (a
score of 1). Although the credit registry
does not provide credit scores, the credit
bureau does (a score of 1). Adding these
numbers gives Lithuania a score of 8 on
the depth of credit information index.
Credit bureau coverage
Credit bureau coverage reports the
number of individuals and firms listed in
a credit bureau’s database as of January
1, 2015, with information on their bor-
rowing history within the past five years,
plus the number of individuals and firms
that have had no borrowing history in
the past five years but for which a lender
requested a credit report from the bureau
in the period between January 1, 2014,
and January 1, 2015. The number is
expressed as a percentage of the adult
population (the population age 15 and
above in 2014 according to the World
Bank’s World Development Indicators). A
credit bureau is defined as a private firm
or nonprofit organization that maintains
a database on the creditworthiness
of borrowers (individuals or firms) in
the financial system and facilitates the
exchange of credit information among
creditors. (Many credit bureaus support
banking and overall financial supervision
activities in practice, though this is not
their primary objective.) Credit investiga-
tive bureaus that do not directly facilitate
information exchange among banks and
other financial institutions are not con-
sidered. If no credit bureau operates, the
coverage value is 0.0%.
Credit registry coverage
Credit registry coverage reports the
number of individuals and firms listed in a
credit registry’s database as of January 1,
2015, with information on their borrowing
history within the past five years, plus the
number of individuals and firms that have
had no borrowing history in the past five
years but for which a lender requested
a credit report from the registry in the
period between January 1, 2014, and
January 1, 2015. The number is expressed
as a percentage of the adult population
(the population age 15 and above in 2014
according to the World Bank’s World
Development Indicators). A credit registry
is defined as a database managed by the
public sector, usually by the central bank
or the superintendent of banks, that col-
lects information on the creditworthiness
of borrowers (individuals or firms) in
the financial system and facilitates the
exchange of credit information among
banks and other regulated financial insti-
tutions (while their primary objective is
to assist banking supervision). If no credit
registry operates, the coverage value is
0.0%.
The data details on getting credit can be
found for each economy at http://www
.doingbusiness.org. The initial methodology
was developed by Djankov, McLiesh and
Shleifer (2007) and is adopted here with
minor changes.
PROTECTING MINORITY
INVESTORS
Doing Business measures the protection
of minority investors from conflicts of
interest through one set of indicators and
Table 13.11 What do the protecting minority investors indicators measure?
Extent of disclosure index (0–10) Extent of shareholder rights index (0–10)
Review and approval requirements for related-party
transactions
Shareholders’ rights and role in major corporate
decisions
Internal, immediate and periodic disclosure
requirements for related-party transactions
Extent of director liability index (0–10) Extent of ownership and control index (0–10)
Minority shareholders’ ability to sue and hold
interested directors liable for prejudicial related-
party transactions
Governance safeguards protecting shareholders
from undue board control and entrenchment
Available legal remedies (damages, disgorgement
of profits, fines, imprisonment, rescission of
transactions)
Ease of shareholder suits index (0–10) Extent of corporate transparency index (0–10)
Access to internal corporate documents Corporate transparency on ownership stakes,
compensation, audits and financial prospects
Evidence obtainable during trial
Allocation of legal expenses
Extent of conflict of interest regulation index
(0–10)
Extent of shareholder governance index
(0–10)
Simple average of the extent of disclosure, extent
of director liability and ease of shareholder suits
indices
Simple average of the extent of shareholder rights,
extent of ownership and control and extent of
corporate transparency indices
Strength of minority investor protection index (0–10)
Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices

141Data Notes
shareholders’ rights in corporate gover-
nance through another (table 13.11). The
data come from a questionnaire adminis-
tered to corporate and securities lawyers
and are based on securities regulations,
company laws, civil procedure codes
and court rules of evidence. The ranking
of economies on the strength of minor-
ity investor protections is determined by
for protecting minority investors. These
scores are the simple average of the
distance to frontier scores for the extent
of conflict of interest regulation index and
the extent of shareholder governance
index (figure 13.11).
Protection of
shareholders from
conflicts of interest
The extent of conflict of interest regula-
tion index measures the protection of
shareholders against directors’ misuse
of corporate assets for personal gain
by distinguishing three dimensions
of regulation that address conflicts of
interest: transparency of related-party
transactions (extent of disclosure index),
shareholders’ ability to sue and hold
directors liable for self-dealing (extent
of director liability index) and access to
evidence and allocation of legal expenses
in shareholder litigation (ease of share-
holder suits index). To make the data
comparable across economies, several
assumptions about the business and the
transaction are used (figure 13.12).
The business (Buyer):
ƒƒ Is a publicly traded corporation listed
on the economy’s most important
stock exchange. If the number of
publicly traded companies listed
on that exchange is less than 10, or
if there is no stock exchange in the
economy, it is assumed that Buyer is
a large private company with multiple
shareholders.
ƒƒ Has a board of directors and a chief
executive officer (CEO) who may
legally act on behalf of Buyer where
permitted, even if this is not specifi-
cally required by law.
ƒƒ Has a supervisory board (applicable
to economies with a two-tier board
system) on which 60% of the
shareholder-elected members have
been appointed by Mr. James, who
is Buyer’s controlling shareholder
and a member of Buyer’s board of
directors.
ƒƒ Has not adopted any bylaws or
articles of association that differ
from default minimum standards and
does not follow any nonmandatory
codes, principles, recommendations
or guidelines relating to corporate
governance.
ƒƒ Is a manufacturing company with its
own distribution network.
transaction
ƒƒ Mr. James owns 60% of Buyer and
elected two directors to Buyer’s five-
member board.
ƒƒ Mr. James also owns 90% of Seller,
a company that operates a chain of
retail hardware stores. Seller recently
closed a large number of its stores.
ƒƒ Mr. James proposes that Buyer pur-
chase Seller’s unused fleet of trucks to
expand Buyer’s distribution of its food
products, a proposal to which Buyer
agrees. The price is equal to 10% of
Buyer’s assets and is higher than the
market value.
ƒƒ The proposed transaction is part
of the company’s ordinary course
of business and is not outside the
authority of the company.
ƒƒ Buyer enters into the transaction. All
required approvals are obtained, and
all required disclosures made (that is,
the transaction is not fraudulent).
ƒƒ The transaction causes damages to
Buyer. Shareholders sue Mr. James
and the other parties that approved
the transaction.
Extent of disclosure index
The extent of disclosure index has five
components:
ƒƒ Which corporate body can provide
legally sufficient approval for the
transaction. A score of 0 is assigned if
it is the CEO or the managing director
alone; 1 if the board of directors, the
supervisory board or shareholders
must vote and Mr. James is permitted
to vote; 2 if the board of directors or
the supervisory board must vote and
Mr. James is not permitted to vote;
3 if shareholders must vote and Mr.
James is not permitted to vote.
Figure 13.12 How well are minority shareholders protected from conflicts of
interest?
Extent of disclosure
Disclosure and approval requirements
Extent of director liability
Ability to sue directors for damages
Ease of shareholder suits
Access by shareholders to documents
plus other evidence for trial
90%
ownership,
sits on board
of directors
60%
ownership,
sits on board
of directors
Company B
(seller)
Company A
(buyer)
Transaction
involving
conflict of interest
Mr. James
Minority
shareholders
Lawsuit
Figure 13.11 Protecting minority
investors: shareholders’ rights in conflicts
of interest and corporate governance
frontier scores for two indicators
50%
Extent of
conflict of
interest
regulation
index
50%
Extent of
shareholder
governance
index

ƒƒ Whether it is required that an external
body, for example, an external auditor,
review the transaction before it takes
place. A score of 0 is assigned if no;
1 if yes.
ƒƒ Whether disclosure by Mr. James to
the board of directors or the super-
visory board is required. A score
of 0 is assigned if no disclosure is
required; 1 if a general disclosure of
the existence of a conflict of interest is
required without any specifics; 2 if full
disclosure of all material facts relating
to Mr. James’s interest in the Buyer-
Seller transaction is required.
ƒƒ Whether immediate disclosure of the
transaction to the public, the regula-
tor or the shareholders is required.5
A
score of 0 is assigned if no disclosure
is required; 1 if disclosure on the terms
of the transaction is required but not
on Mr. James’s conflict of interest; 2 if
disclosure on both the terms and Mr.
James’s conflict of interest is required.
ƒƒ Whether disclosure in the annual
report is required. A score of 0 is
assigned if no disclosure on the
transaction is required; 1 if disclosure
on the terms of the transaction is
required but not on Mr. James’s con-
flict of interest; 2 if disclosure on both
the terms and Mr. James’s conflict of
interest is required.
values indicating greater disclosure. In
Poland, for example, the board of directors
must approve the transaction and Mr.
James is not allowed to vote (a score of 2).
Poland does not require an external body to
reviewthetransaction(ascoreof0).Before
the transaction Mr. James must disclose his
conflict of interest to the other directors,
but he is not required to provide specific
information about it (a score of 1). Buyer is
required to disclose immediately all infor-
mation affecting the stock price, including
the conflict of interest (a score of 2). In its
annual report Buyer must also disclose the
terms of the transaction and Mr. James’s
ownership in Buyer and Seller (a score of
2). Adding these numbers gives Poland a
score of 7 on the extent of disclosure index.
Extent of director liability index
The extent of director liability index has
seven components:6
ƒƒ Whether shareholder plaintiffs are
able to sue directly or derivatively for
the damage the transaction causes to
the company. A score of 0 is assigned
if suits are unavailable or are available
only for shareholders holding more
than 10% of the company’s share
capital; 1 if direct or derivative suits
are available for shareholders holding
10% of share capital.
ƒƒ Whether a shareholder plaintiff is
able to hold Mr. James liable for the
damage the Buyer-Seller transaction
causes to the company. A score of 0 is
assigned if Mr. James cannot be held
liable or can be held liable only for
fraud, bad faith or gross negligence;
1 if Mr. James can be held liable only
if he influenced the approval of the
transaction or was negligent; 2 if Mr.
James can be held liable when the
transaction is unfair or prejudicial to
the other shareholders.
ƒƒ Whether a shareholder plaintiff is
able to hold the approving body
(the CEO, members of the board of
directors or members of the super-
visory board) liable for the damage
the transaction causes to the com-
pany. A score of 0 is assigned if the
approving body cannot be held liable
or can be held liable only for fraud,
bad faith or gross negligence; 1 if the
approving body can be held liable for
negligence; 2 if the approving body
can be held liable when the transac-
tion is unfair or prejudicial to the
other shareholders.
ƒƒ Whether Mr. James pays damages for
the harm caused to the company upon
a successful claim by the shareholder
plaintiff. A score of 0 is assigned if no;
1 if yes.
ƒƒ Whether Mr. James repays profits
made from the transaction upon a
successful claim by the shareholder
plaintiff. A score of 0 is assigned if no;
1 if yes.
ƒƒ Whether Mr. James is fined and
imprisoned or disqualified upon a
successful claim by the shareholder
plaintiff. A score of 0 is assigned if
no; 1 if he is fined and imprisoned or if
he is disqualified—that is, disallowed
from representing or holding a mana-
gerial position in any company for a
year or more.
ƒƒ Whether a court can void the trans-
action upon a successful claim by a
shareholder plaintiff. A score of 0 is
assigned if rescission is unavailable or
is available only in case of fraud, bad
faith or gross negligence; 1 if rescis-
sion is available when the transaction
is oppressive or prejudicial to the
other shareholders; 2 if rescission
is available when the transaction is
unfair or entails a conflict of interest.
higher values indicating greater liabil-
ity of directors. In Panama, for example,
direct or derivative suits are available
for shareholders holding 10% of share
capital (a score of 1). Assuming that the
prejudicial transaction was duly approved
and disclosed, in order to hold Mr. James
liable a plaintiff must prove that Mr.
James influenced the approving body or
acted negligently (a score of 1). To hold
the other directors liable, a plaintiff must
prove that they acted negligently (a score
of 1). If Mr. James is found liable, he must
pay damages (a score of 1) but he is not
required to disgorge his profits (a score
of 0). Mr. James can be neither fined and
imprisoned nor disqualified (a score of
0). The prejudicial transaction cannot
be voided (a score of 0). Adding these
numbers gives Panama a score of 4 on
the extent of director liability index.
Ease of shareholder suits index
The ease of shareholder suits index has
six components:
ƒƒ Whether shareholders owning 10% of
the company’s share capital have the
right to inspect the transaction docu-
ments before filing suit or request that
a government inspector investigate
the Buyer-Seller transaction without
filing suit. A score of 0 is assigned if
no; 1 if yes.

143Data Notes
ƒƒ What range of documents is available
to the shareholder plaintiff from the
defendant and witnesses during trial.
A score of 1 is assigned for each of the
following types of documents avail-
able: information that the defendant
has indicated he intends to rely on for
his defense; information that directly
proves specific facts in the plaintiff’s
claim; and any information relevant to
the subject matter of the claim.
ƒƒ Whether the plaintiff can obtain cat-
egories of relevant documents from
the defendant without identifying
each document specifically. A score
of 0 is assigned if no; 1 if yes.
ƒƒ Whether the plaintiff can directly
examine the defendant and witnesses
during trial. A score of 0 is assigned
if no; 1 if yes, with prior approval of
the questions by the judge; 2 if yes,
without prior approval.
ƒƒ Whether the standard of proof for
civil suits is lower than that for a
criminal case. A score of 0 is assigned
if no; 1 if yes.
ƒƒ Whether shareholder plaintiffs can
recover their legal expenses from the
company. A score of 0 is assigned
if no; 1 if plaintiffs can recover their
legal expenses from the company
only upon a successful outcome of
their legal action or if payment of
their attorney fees is contingent on a
successful outcome; 2 if plaintiffs can
recover their legal expenses from the
company regardless of the outcome
of their legal action.
values indicating greater powers of share-
holders to challenge the transaction. In
Croatia, for example, a shareholder hold-
ing 10% of Buyer’s shares can request
that a government inspector review
suspected mismanagement by Mr. James
and the CEO without filing suit in court
(a score of 1). The plaintiff can access
documents that the defendant intends
to rely on for his defense (a score of 1).
The plaintiff must specifically identify the
documents being sought (for example,
the Buyer-Seller purchase agreement of
July 15, 2014) and cannot simply request
categories (for example, all documents
related to the transaction) (a score of 0).
The plaintiff can examine the defendant
and witnesses during trial, without prior
approval of the questions by the court (a
score of 2). The standard of proof for civil
suits is preponderance of the evidence,
while the standard for a criminal case is
beyond a reasonable doubt (a score of 1).
The plaintiff can recover legal expenses
from the company only upon a successful
outcome of the legal action (a score of
1). Adding these numbers gives Croatia
a score of 6 on the ease of shareholder
suits index.
Extent of conflict of interest
regulation index
The extent of conflict of interest regula-
tion index is the average of the extent of
disclosure index, the extent of director
liability index and the ease of shareholder
suits index. The index ranges from 0 to
10, with higher values indicating stronger
regulation of conflicts of interest.
Shareholders’ rights in
The extent of shareholder governance
index measures shareholders’ rights in
corporate governance by distinguishing
three dimensions of good governance:
shareholders’ rights and role in major cor-
porate decisions (extent of shareholder
rights index), governance safeguards
protecting shareholders from undue
board control and entrenchment (extent
of ownership and control index) and cor-
porate transparency on ownership stakes,
compensation, audits and financial pros-
pects (extent of corporate transparency
index). The index also measures whether
a subset of relevant rights and safeguards
are available in limited companies.
Extent of shareholder rights
index
For each component of the extent of
shareholder rights index, a score of 0 is
assigned if the answer is no; 1 if yes. The
index has 10 components:
ƒƒ Whether the sale of 51% of Buyer’s
assets requires shareholder approval.7
ƒƒ Whether shareholders representing
10% of Buyer’s share capital have the
right to call for an extraordinary meet-
ing of shareholders.
ƒƒ Whether Buyer must obtain its share-
holders’ approval every time it issues
new shares.
ƒƒ Whether shareholders automatically
receive preemption or subscription
rights every time Buyer issues new
shares.
ƒƒ Whether the election and dismissal of
the external auditor must be approved
by the shareholders.
ƒƒ Whether changes to the voting rights
of a class of shares must be approved
only by the holders of the affected
shares.
ƒƒ Assuming that Buyer is a limited
company, whether the sale of 51% of
Buyer’s assets requires shareholder
approval.8
company, whether shareholders rep-
resenting 10% of Buyer’s share capital
have the right to call for an extraordi-
nary meeting of shareholders.
company, whether Buyer must obtain
its shareholders’ approval every time
it issues new shares.
company, whether shareholders auto-
matically receive preemption or
subscription rights every time Buyer
issues new shares.
Extent of ownership and control
index
ownership and control index, a score of
0 is assigned if the answer is no; 1 if yes.
The index has 10 components:
ƒƒ Whether the CEO is prohibited from
alsobeingchairoftheboardofdirectors.
ƒƒ Whether the board of directors must
include independent and nonexecu-
tive board members.
ƒƒ Whether members of Buyer’s board
of directors can be removed without
cause by shareholders before the end
of their term.
ƒƒ Whether Buyer’s board of direc-
tors must include a separate audit
committee.

ƒƒ Whether a potential acquirer must
make a tender offer to all shareholders
upon acquiring 50% of Buyer.
ƒƒ Whether Buyer must pay dividends
within a maximum period set by law
after the declaration date.9
ƒƒ Whether a subsidiary is prohibited
from acquiring shares issued by its
parent company.
ƒƒ Assuming that Buyer is a limited com-
pany, whether members of Buyer’s
board of directors can be removed
without cause by shareholders before
the end of their term.
ƒƒ Assuming that Buyer is a lim-
ited company, whether a potential
acquirer must make a tender offer
to all shareholders upon acquiring
50% of Buyer.
company, whether Buyer must pay
dividends within a maximum period
set by law after the declaration
date.10
Extent of corporate
transparency index
corporate transparency index, a score of
0 is assigned if the answer is no; 1 if yes.
The index has 10 components:
ƒƒ Whether Buyer must disclose direct
and indirect beneficial ownership
stakes representing 5%.11
ƒƒ Whether Buyer must disclose infor-
mation about board members’ other
directorships as well as basic informa-
tion on their primary employment.
ƒƒ Whether Buyer must disclose the
compensation of individual managers.
ƒƒ Whether a detailed notice of general
meeting must be sent 30 days before
the meeting.12
ƒƒ Whether shareholders representing
5% of Buyer’s share capital can put
items on the agenda for the general
meeting.13
ƒƒ Whether Buyer must have its annual
financial statements audited by an
external auditor.
ƒƒ Whether Buyer must disclose its
audit reports to the public.
company, whether a detailed notice
of general meeting must be sent 30
days before the meeting.14
company, whether shareholders rep-
resenting 5% of Buyer’s share capital
can put items on the agenda for the
general meeting.15
ƒƒ Assuming that Buyer is a limited com-
pany, whether Buyer must have its
annual financial statements audited
by an external auditor.
Extent of shareholder
governance index
The extent of shareholder governance
index is the average of the extent of
shareholder rights index, the extent of
ownership and control index and the
extent of corporate transparency index.
higher values indicating stronger rights
of shareholders in corporate governance.
Strength of minority investor
protection index
The strength of minority investor protec-
tion index is the average of the extent of
conflict of interest regulation index and
the extent of shareholder governance
index. The index ranges from 0 to 10,
rounded to the nearest decimal place,
with higher values indicating stronger
minority investor protections.
The data details on protecting minority
investors can be found for each economy at
http://www.doingbusiness.org. The initial
methodology was developed by Djankov, La
Porta and others (2008).
PAYING TAXES
Doing Business records the taxes and
mandatory contributions that a medium-
size company must pay in a given year as
well as measures of the administrative
burden of paying taxes and contributions
(figure 13.13). The project was developed
and implemented in cooperation with
PwC.16
Taxes and contributions measured
include the profit or corporate income tax,
social contributions and labor taxes paid
by the employer, property taxes, property
transfer taxes, dividend tax, capital gains
tax, financial transactions tax, waste col-
lection taxes, vehicle and road taxes, and
any other small taxes or fees.
of paying taxes is determined by sorting
their distance to frontier scores for pay-
ing taxes. These scores are the simple
(figure 13.14), with a threshold and a
nonlinear transformation applied to one
of the component indicators, the total
tax rate.17
The threshold is defined as
the total tax rate at the 15th percentile
of the overall distribution for all years
Figure 13.13 What are the time, total tax rate and number of payments necessary
for a local medium-size company to pay all taxes?
Number of payments
(per year)
Total tax rate Time
Hours
per year
% of profit
before all taxes
To prepare, file and
pay value added or
sales tax, profit tax
and labor taxes and
contributions

145Data Notes
included in the analysis up to and includ-
ing Doing Business 2015, which is 26.1%.
All economies with a total tax rate below
this threshold receive the same score as
the economy at the threshold.
The threshold is not based on any eco-
nomic theory of an “optimal tax rate”
that minimizes distortions or maximizes
efficiency in an economy’s overall tax
system. Instead, it is mainly empirical in
nature, set at the lower end of the distri-
bution of tax rates levied on medium-size
enterprises in the manufacturing sector
as observed through the paying taxes
indicators. This reduces the bias in the
total tax rate indicator toward economies
that do not need to levy significant taxes
on companies like the Doing Business
standardized case study company
because they raise public revenue in
other ways—for example, through taxes
on foreign companies, through taxes
on sectors other than manufacturing or
from natural resources (all of which are
outside the scope of the methodology).
Doing Business measures all taxes and
contributions that are government
mandated (at any level—federal,
state or local) and that apply to the
standardized business and have an
impact in its financial statements. In
doing so, Doing Business goes beyond
the traditional definition of a tax. As
defined for the purposes of government
national accounts, taxes include only
compulsory, unrequited payments to
general government. Doing Business
departs from this definition because it
measures imposed charges that affect
business accounts, not government
accounts. One main difference relates
to labor contributions. The Doing
Business measure includes government-
mandated contributions paid by the
employer to a requited private pension
fund or workers’ insurance fund. It
includes, for example, Australia’s com-
pulsory superannuation guarantee and
workers’ compensation insurance. For
the purpose of calculating the total tax
rate (defined below), only taxes borne
are included. For example, value added
taxes are generally excluded (provided
that they are not irrecoverable) because
they do not affect the accounting prof-
its of the business—that is, they are not
reflected in the income statement. They
are, however, included for the purpose
of the compliance measures (time and
payments), as they add to the burden of
complying with the tax system.
Doing Business uses a case scenario to
measure the taxes and contributions
paid by a standardized business and the
complexity of an economy’s tax compli-
ance system. This case scenario uses a
set of financial statements and assump-
tions about transactions made over the
course of the year. In each economy
tax experts from a number of different
firms (in many economies these include
PwC) compute the taxes and manda-
tory contributions due in their jurisdiction
based on the standardized case study
facts. Information is also compiled on
the frequency of filing and payments as
well as the time taken to comply with tax
laws in an economy. To make the data
taxes and contributions are used.
The business:
ƒƒ Is a limited liability, taxable com-
pany. If there is more than one type
of limited liability company in the
economy, the limited liability form
most common among domestic firms
is chosen. The most common form is
reported by incorporation lawyers or
the statistical office.
ƒƒ Started operations on January 1, 2013.
At that time the company purchased
all the assets shown in its balance
sheet and hired all its workers.
ƒƒ Is 100% domestically owned and has
five owners, all of whom are natural
persons.
ƒƒ At the end of 2013, has a start-up
capital of 102 times income per capita.
ƒƒ Performs general industrial or
commercial activities. Specifically,
it produces ceramic flowerpots
and sells them at retail. It does
not participate in foreign trade (no
import or export) and does not
handle products subject to a special
tax regime, for example, liquor or
tobacco.
ƒƒ At the beginning of 2014, owns two
plots of land, one building, machinery,
office equipment, computers and one
truck and leases one truck.
ƒƒ Does not qualify for investment
incentives or any benefits apart from
those related to the age or size of the
company.
ƒƒ Has 60 employees—4 managers,
8 assistants and 48 workers. All
are nationals, and one manager is
also an owner. The company pays
for additional medical insurance
for employees (not mandated by
any law) as an additional ben-
efit. In addition, in some economies
reimbursable business travel and
client entertainment expenses are
considered fringe benefits. When
applicable, it is assumed that the
company pays the fringe benefit
Figure 13.14 Paying taxes: tax
compliance for a local manufacturing
company
Number of hours
per year to prepare,
file returns and
pay taxes
Firm tax liability
as % of profits
before all taxes
borne
Number of tax payments per year
33.3%
Payments
33.3%
Time
33.3%
Total tax
rate
frontier scores for three indicators
Note: All economies below the threshold receive the
same score in the total tax rate component as the
economies at the threshold.

tax on this expense or that the ben-
efit becomes taxable income for the
employee. The case study assumes
no additional salary additions for
meals, transportation, education or
others. Therefore, even when such
benefits are frequent, they are not
added to or removed from the tax-
able gross salaries to arrive at the
labor tax or contribution calculation.
ƒƒ Has a turnover of 1,050 times income
per capita.
ƒƒ Makes a loss in the first year of
operation.
ƒƒ Has a gross margin (pretax) of 20%
(that is, sales are 120% of the cost of
goods sold).
ƒƒ Distributes 50% of its net profits as
dividends to the owners at the end of
the second year.
ƒƒ Sells one of its plots of land at a profit
at the beginning of the second year.
ƒƒ Is subject to a series of detailed
assumptions on expenses and
transactions to further standardize
the case. For example, the owner
who is also a manager spends 10%
of income per capita on traveling for
the company (20% of this owner’s
expenses are purely private, 20%
are for entertaining customers, and
60% are for business travel). All
financial statement variables are
proportional to 2012 income per
capita (this is an update from Doing
Business 2013 and previous years’
reports, where the variables were
proportional to 2005 income per
capita). For some economies a mul-
tiple of two or three times income
per capita has been used to estimate
the financial statement variables.18
The 2012 income per capita was not
sufficient to bring the salaries of all
the case study employees up to the
minimum wage thresholds that exist
in these economies.
Assumptions about the taxes
and contributions
ƒƒ All the taxes and contributions
recorded are those paid in the second
year of operation (calendar year
2014). A tax or contribution is consid-
ered distinct if it has a different name
or is collected by a different agency.
Taxes and contributions with the
same name and agency, but charged
at different rates depending on the
business, are counted as the same tax
or contribution.
ƒƒ The number of times the company
pays taxes and contributions in a
year is the number of different taxes
or contributions multiplied by the
frequency of payment (or withhold-
ing) for each tax. The frequency of
payment includes advance payments
(or withholding) as well as regular
payments (or withholding).
Tax payments
The tax payments indicator reflects the
total number of taxes and contribu-
tions paid, the method of payment, the
frequency of payment, the frequency
of filing and the number of agencies
involved for the standardized case study
company during the second year of
operation (table 13.12). It includes taxes
withheld by the company, such as sales
tax, value added tax and employee-borne
labor taxes. These taxes are tradition-
ally collected by the company from the
consumer or employee on behalf of the
tax agencies. Although they do not affect
the income statements of the company,
they add to the administrative burden of
complying with the tax system and so are
included in the tax payments measure.
The number of payments takes into
account electronic filing. Where full elec-
tronic filing and payment is allowed and
it is used by the majority of medium-size
businesses, the tax is counted as paid
once a year even if filings and payments
are more frequent. For payments made
through third parties, such as tax on
interest paid by a financial institution or
fuel tax paid by a fuel distributor, only one
payment is included even if payments are
more frequent.
Where two or more taxes or contributions
are filed for and paid jointly using the
same form, each of these joint payments
is counted once. For example, if manda-
tory health insurance contributions and
mandatory pension contributions are
filed for and paid together, only one of
these contributions would be included in
the number of payments.
Time
Time is recorded in hours per year. The
indicator measures the time taken to
prepare, file and pay three major types
of taxes and contributions: the corporate
income tax, value added or sales tax, and
labor taxes, including payroll taxes and
social contributions. Preparation time
includes the time to collect all information
necessary to compute the tax payable
and to calculate the amount payable. If
separate accounting books must be kept
for tax purposes—or separate calculations
made—the time associated with these
processes is included. This extra time
is included only if the regular account-
ing work is not enough to fulfill the tax
accounting requirements. Filing time
TABLE 13.12 What do the paying
taxes indicators measure?
Tax payments for a manufacturing company
in 2014 (number per year adjusted for
electronic and joint filing and payment)
Total number of taxes and contributions paid,
including consumption taxes (value added tax,
sales tax or goods and service tax)
Method and frequency of filing and payment
Time required to comply with three major
taxes (hours per year)
Collecting information and computing the tax
payable
Completing tax return forms, filing with proper
agencies
Arranging payment or withholding
Preparing separate mandatory tax accounting
books, if required
Total tax rate (% of profit before all taxes)
Profit or corporate income tax
Social contributions and labor taxes paid by the
employer
Property and property transfer taxes
Dividend, capital gains and financial transactions
taxes
Waste collection, vehicle, road and other taxes

147Data Notes
includes the time to complete all neces-
sary tax return forms and file the relevant
returns at the tax authority. Payment time
considers the hours needed to make the
payment online or in person. Where taxes
and contributions are paid in person, the
time includes delays while waiting.
Total tax rate
The total tax rate measures the amount of
taxes and mandatory contributions borne
by the business in the second year of oper-
ation, expressed as a share of commercial
profit. Doing Business 2016 reports the total
tax rate for calendar year 2014. The total
amount of taxes borne is the sum of all
the different taxes and contributions
payable after accounting for allowable
deductions and exemptions. The taxes
withheld (such as personal income tax)
or collected by the company and remit-
ted to the tax authorities (such as value
added tax, sales tax or goods and service
tax) but not borne by the company are
excluded. The taxes included can be
divided into five categories: profit or cor-
porate income tax, social contributions
and labor taxes paid by the employer (for
which all mandatory contributions are
included, even if paid to a private entity
such as a requited pension fund), prop-
erty taxes, turnover taxes and other taxes
(such as municipal fees and vehicle tax-
es). Fuel taxes are no longer included in
the total tax rate because of the difficulty
of computing these taxes in a consistent
way for all economies covered. The fuel
tax amounts are in most cases very small,
and measuring these amounts is often
complicated because they depend on
fuel consumption. Fuel taxes continue to
be counted in the number of payments.
The total tax rate is designed to provide
a comprehensive measure of the cost of
all the taxes a business bears. It differs
from the statutory tax rate, which merely
provides the factor to be applied to the
tax base. In computing the total tax rate,
the actual tax payable is divided by com-
mercial profit. Data for Iraq are provided
as an example (table 13.13).
Commercial profit is essentially net profit
before all taxes borne. It differs from the
conventional profit before tax, reported in
financial statements. In computing profit
before tax, many of the taxes borne by a
firm are deductible. In computing com-
mercial profit, these taxes are not deduct-
ible. Commercial profit therefore presents
a clear picture of the actual profit of a
business before any of the taxes it bears in
the course of the fiscal year.
Commercial profit is computed as
sales minus cost of goods sold, minus
gross salaries, minus administrative
expenses, minus other expenses, minus
provisions, plus capital gains (from the
property sale) minus interest expense,
plus interest income and minus com-
mercial depreciation. To compute the
commercial depreciation, a straight-line
depreciation method is applied, with
the following rates: 0% for the land, 5%
for the building, 10% for the machinery,
33% for the computers, 20% for the
office equipment, 20% for the truck and
10% for business development expenses.
Commercial profit amounts to 59.4 times
income per capita.
The methodology for calculating the
total tax rate is broadly consistent with
the Total Tax Contribution framework
developed by PwC and the calculation
within this framework for taxes borne.
But while the work undertaken by PwC is
usually based on data received from the
largest companies in the economy, Doing
Business focuses on a case study for a
standardized medium-size company.
The data details on paying taxes can be
found for each economy at http://www
developed by Djankov and others (2010).
TRADING ACROSS BORDERS
Doing Business records the time and
cost associated with the logistical
process of exporting and importing
goods. Under the new methodol-
ogy introduced this year, Doing Business
measures the time and cost (excluding
tariffs) associated with three sets of
procedures—documentary compliance,
border compliance and domestic
transport—within the overall process
of exporting or importing a shipment of
goods. Figure 13.15, using the example
of Brazil (as exporter) and China (as
importer), shows the process of export-
ing a shipment from a warehouse in the
origin economy to a warehouse in an
overseas trading partner through a port.
Figure 13.16, using the example of Kenya
(as exporter) and Uganda (as importer),
shows the process of exporting a ship-
ment from a warehouse in the origin
economy to a warehouse in a regional
trading partner through a land border.
trading across borders is determined by
for trading across borders. These scores
are the simple average of the distance
to frontier scores for the time and cost
TABLE 13.13 Computing the total tax rate for Iraq
Type of tax (tax base)
Statutory
rate
r
(%)
Statutory tax
base
b
(ID)
Actual tax
payable
a = r × b
(ID)
Commercial
profit*
c
(ID)
Total tax
rate
t = a/c
(%)
Corporate income tax
(taxable income)
15 432,461,855 64,869,278 453,188,210 14.3
Employer-paid social
security contributions
(taxable wages)
12 511,191,307 61,342,957 453,188,210 13.5
Total 126,212,235 27.8
Note: Commercial profit is assumed to be 59.4 times income per capita. ID is Iraqi dinar.
* Profit before all taxes borne.

for documentary compliance and border
compliance to export and import (figure
13.17).
Although Doing Business collects and
publishes data on the time and cost
for domestic transport, it does not use
these data in calculating the distance to
frontier score for trading across borders
or the ranking on the ease of trading
across borders. The main reason for this
is that the time and cost for domestic
transport are affected by many external
factors—such as the geography and
topography of the transit territory, road
capacity and general infrastructure,
proximity to the nearest port or border,
and the location of warehouses where
the traded goods are stored—and so are
not directly influenced by an economy’s
trade policies and reforms. In addition,
Doing Business continues to collect data
on the number of documents needed
to trade internationally (these data are
available on the Doing Business website,
at http://www.doingbusiness.org). Unlike
in previous years, however, these data
too are excluded from the calculation of
the distance to frontier score and rank-
ing. The time and cost for documentary
compliance serve as better measures of
the overall cost and complexity of com-
pliance with documentary requirements
than does the number of documents
required.
The data on trading across borders are
gathered through a questionnaire admin-
istered to local freight forwarders, cus-
toms brokers and traders. Questionnaire
responses are verified through several
rounds of follow-up communication with
respondents as well as by contacting
third parties and consulting public sourc-
es. The questionnaire data are confirmed
through teleconference calls or on-site
visits in all economies.
If an economy has no formal, large-scale,
private sector cross-border trade taking
place as a result of government restric-
tions, armed conflict or a natural disaster,
it is considered a “no practice” economy.
A “no practice” economy receives a
distance to frontier score of 0 for all the
trading across borders indicators.
Assumptions of the case study
economies, a few assumptions are
made about the traded goods and the
transactions:
ƒƒ For each of the 189 economies cov-
ered by Doing Business, it is assumed
that a shipment travels from a
warehouse in the largest business
city of the exporting economy to a
warehouse in the largest business
city of the importing economy. For 11
economies the data are also collected,
under the same case study assump-
tions, for the second largest business
city (see table 13A.1).
ƒƒ The import and export case studies
assume different traded products. It is
assumed that each economy imports
a standardized shipment of 15 metric
tons of containerized auto parts (HS
8708) from its natural import partner—
the economy from which it imports
Figure 13.17 Trading across borders:
time and cost to export and import
frontier scores for eight indicators
Time for documentary
compliance and border
compliance when
exporting the product
of comparative
advantage
Cost for documentary
compliance when
exporting the product
of comparative
advantage
Time for documentary
compliance when
importing auto parts
Cost for documentary
compliance when
importing auto parts
25%
Cost
to import
25%
Time
to export
25%
Cost
to export
25%
Time
to import
Note: The time and cost for domestic transport and
the number of documents to export and import are
measured but do not count for the rankings.
Figure 13.15 What makes up the time and cost to export to an overseas trading
partner?
Rio de Janeiro
Shanghai
Domestic transport: 16 hours, $1,779
Port handling and customs clearance
at Port Santos: 47 hours, $959
Export declaration submission through
SISCOMEX online system: 2 hours
Figure 13.16 What makes up the time and cost to export to a regional trading
partner?
III
IIIIIII
Nairobi
Kampala
at Malaba border crossing:
9 hours, $140

149Data Notes
the largest value (price times quantity)
of auto parts. It is assumed that each
economy exports the product of its
comparative advantage (defined by
the largest export value) to its natural
export partner—the economy that is
the largest purchaser of this product.
Precious metal and gems, live animals
and pharmaceuticals are excluded from
the list of possible export products,
however, and the second largest prod-
uct category is considered as needed.19
ƒƒ A shipment is a unit of trade. Export
shipments do not necessarily need to
be containerized, while import ship-
ments of auto parts are assumed to
be containerized.
ƒƒ Shipping cost based on weight is
assumed to be greater than shipping
cost based on volume.
ƒƒ If government fees are determined by
the value of the shipment, the value is
assumed to be $50,000.
ƒƒ The product is new, not secondhand
or used merchandise.
ƒƒ The exporting firm hires and pays for a
freight forwarder or customs broker (or
both) and pays for all costs related to
international shipping, domestic trans-
port, clearance and mandatory inspec-
tions by customs and other government
agencies, port or border handling, docu-
mentary compliance fees and the like.
ƒƒ The mode of transport is the one most
widely used for the chosen export or
import product and the trading part-
ner, as is the seaport, airport or land
border crossing.
ƒƒ All electronic submissions of informa-
tion requested by any government
agency in connection with the ship-
ment are considered to be documents
obtained, prepared and submitted
during the export or import process.
ƒƒ A port or border is defined as a place
(seaport, airport or land border cross-
ing) where merchandise can enter or
leave an economy.
ƒƒ Government agencies considered
relevant are agencies such as customs,
port authorities, road police, border
guards, standardization agencies, min-
istries or departments of agriculture
or industry, national security agencies
and any other government authorities.
Time
Time is measured in hours, and 1 day
is 24 hours (for example, 22 days are
recorded as 22 × 24 = 528 hours). If cus-
toms clearance takes 7.5 hours, the data
are recorded as is. Alternatively, suppose
that documents are submitted to a cus-
toms agency at 8:00 a.m., are processed
overnight and can be picked up at 8:00
a.m. the next day. In this case the time for
customs clearance would be recorded as
24 hours because the actual procedure
took 24 hours.
Cost
Insurance cost and informal payments for
which no receipt is issued are excluded
from the costs recorded. Costs are
reported in U.S. dollars. Contributors are
asked to convert local currency into U.S.
dollars based on the exchange rate pre-
vailing on the day they answer the ques-
tionnaire. Contributors are private sector
experts in international trade logistics
and are informed about exchange rates
and their movements.
Documentary compliance
Documentary compliance captures the
time and cost associated with compli-
ance with the documentary requirements
of all government agencies of the origin
economy, the destination economy and
any transit economies (table 13.14). The
aim is to measure the total burden of pre-
paring the bundle of documents that will
enable completion of the international
trade for the product and partner pair
assumed in the case study. As a ship-
ment moves from Mumbai to New York
City, for example, the freight forwarder
must prepare and submit documents to
the customs agency in India, to the port
authorities in Mumbai and to the cus-
toms agency in New York City.
The time and cost for documentary
compliance include the time and cost
for obtaining documents (such as time
spent undergoing inspections to obtain
a certificate of conformity or certificate
of origin); preparing documents (such
Table 13.14 What do the indicators on the time and cost to export and import
cover?
Documentary compliance
Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border
handling in origin economy
Obtaining, preparing and submitting documents required by destination economy and any transit
economies
Covers all documents required by law and in practice, including electronic submissions of information as
well as non-shipment-specific documents necessary to complete the trade
Border compliance
Customs clearance and inspections by customs
Inspections by other agencies (if applied to more than 10% of shipments)
Port or border handling at most widely used port or border of economy
Obtaining, preparing and submitting documents during clearance, inspections and port or border handling
Domestic transport
Loading and unloading of shipment at warehouse, dry port or border
Transport by most widely used mode between warehouse and terminal or dry port for clearance and
inspections
Transport by most widely used mode between terminal or dry port and most widely used border or port of
economy
Obtaining, preparing and submitting documents during domestic transport
Traffic delays and road police checks while shipment is en route

as time spent gathering information to
complete the customs declaration or
certificate of origin); processing docu-
ments (such as time spent waiting for the
relevant authority to issue a phytosani-
tary certificate); presenting documents
(such as time spent showing a customs
declaration to road police or showing a
port terminal receipt to port authorities);
and submitting documents (such as time
spent submitting a customs declara-
tion to the customs agency in person or
electronically).
All electronic or paper submissions of
information requested by any govern-
ment agency in connection with the
shipment are considered to be docu-
ments obtained, prepared and submit-
ted during the export or import process.
All documents prepared by the freight
forwarder or customs broker for the
product and partner pair assumed in
the case study are included regardless
of whether they are required by law or
in practice. Any documents prepared
and submitted so as to get access to
preferential treatment—for example,
a certificate of origin—are included in
the calculation of the time and cost
for documentary compliance. Any
documents prepared and submitted
because of a perception that they ease
the passage of the shipment are also
included (for example, freight forward-
ers may prepare a packing list because
in their experience this reduces the
probability of physical or other intrusive
inspections).
In addition, any documents that are
mandatory for exporting or importing
are included in the calculation of time
and cost. Documents that need to be
obtained only once are not counted,
however. And Doing Business does not
include documents needed to produce
and sell in the domestic market—such
as certificates of third-party safety stan-
dards testing that may be required to sell
toys domestically—unless a government
agency needs to see these documents
during the export process.
Doing Business includes all documents that
are sufficient to complete the international
trade. This distinction is important in
cases where there are different versions of
documents. In Uruguay, for example, meat
exporters are required to obtain a sanitary
certificate. Obtaining a provisional cer-
tificate, which will allow the goods to be
exported, takes 72 hours. Obtaining the
definitive certificate (procured for tax or
other purposes) takes longer. In this case
Doing Business counts only the provisional
certificate, because that is sufficient to
export the product.
The set of procedures for documentary
compliance is potentially simultaneous
with those for domestic transport and is
highly likely to be simultaneous with port
or border handling, with customs clear-
ance and with inspections. In Uruguay,
for example, the sanitary inspection (tak-
ing 72 hours) leads to the firm obtaining
the sanitary certificate.
Border compliance
Border compliance captures the time and
cost associated with compliance with
the economy’s customs regulations and
with regulations relating to other inspec-
tions that are mandatory in order for the
shipment to cross the economy’s border,
as well as the time and cost for handling
that takes place at its port or border. The
time and cost for this segment include
time and cost for obtaining, preparing
and submitting documents during port
or border handling, customs clearance
and inspection procedures. For example,
the time and cost for obtaining the port
terminal receipt would be included here.
The computation of border compliance
time and cost depends on where the
border compliance procedures take
place, who requires and conducts the
procedures and what the probability is
that inspections will be conducted. If all
customs clearance and other inspections
take place at the port or border, the time
estimate for border compliance takes this
simultaneity into account. It is entirely
possible that the border compliance time
and cost could be negligible or zero, as
in the case of trade between members
of the European Union or other customs
unions.
If some or all customs or other inspec-
tions take place at other locations, the
time and cost for these procedures are
added to the time and cost for those
that take place at the port or border. In
Kazakhstan, for example, all customs
clearance and inspections take place at
a customs post in Almaty that is not at
the land border between Kazakhstan and
China. In this case border compliance
time is the sum of the time spent at the
terminal in Almaty and the handling time
at the border.
Doing Business asks contributors to
estimate the time and cost for clearance
and inspections by customs agencies—
defined as documentary and physical
inspections for the purpose of calculating
duties by verifying product classification,
confirming quantity, determining origin
and checking the veracity of other infor-
mation on the customs declaration. (This
category includes all inspections aimed
at preventing smuggling.) These are
clearance and inspection procedures that
take place in the majority of cases and
thus are considered the “standard” case.
The time and cost estimates capture the
efficiency of the customs agency of the
economy.
Doing Business also asks contributors to
estimate the total time and cost for clear-
ance and inspections by customs and all
other government agencies for the speci-
fied product. These estimates account
for inspections related to health, safety,
phytosanitary standards, conformity and
the like, and thus capture the efficiency of
agencies that require and conduct these
additional inspections.
If inspections by agencies other than
customs are conducted in 10% or fewer
cases, the border compliance time and
cost measures take into account only
clearance and inspections by customs

151Data Notes
(the standard case). If inspections by
other agencies take place in more than
10% of cases, the time and cost mea-
sures account for clearance and inspec-
tions by all agencies. Different types of
inspections may take place with different
probabilities—for example, scanning may
take place in 100% of cases while physi-
cal inspection occurs in 5%. In situations
like this, Doing Business would count the
time only for scanning because it hap-
pens in more than 10% of cases while
physical inspection does not.
The border compliance time and cost for
an economy do not include the time and
cost for compliance with the regulations
of any other economy. Consider Israel,
whose main export partner in the Doing
Business case study is the United States.
For the export shipment to be loaded
onto the ship, the shipment must clear
Israeli customs and inspections (1.5
hours) and be handled in the Haifa port
(36 hours). In addition, the United States
requires all shipments to be inspected by
a private company (located in the Haifa
port) before being loaded onto the ship, a
process that takes up to 72 hours during
which the shipment is at the Haifa port.
But because this inspection is required
by U.S. authorities, it is not counted in
the border compliance time and cost for
Israel even though it takes place in 100%
of cases and adds considerably to the
time for exports.
A counterexample relates to imports
of auto parts into Rwanda from China.
Rwandan authorities require a certificate
of conformity for all import shipments.
For the shipment of auto parts in the
Doing Business case study, this certificate
would be issued by a private company
after inspections at the warehouse or
factory in China. The 245 hours that
it takes to obtain this certificate are
included in the border compliance time
for Rwanda because this time is spent in
fulfilling the requirements of Rwandan
authorities and because such inspec-
tions are imposed on more than 10% of
import shipments.
Domestic transport
Domestic transport captures the time
and cost associated with transporting the
shipment from a warehouse in the larg-
est business city of the economy to the
most widely used seaport, airport or land
border of the economy. For 11 economies
the data are also collected for the second
This set of procedures captures the time
for (and cost of) the actual transport; any
traffic delays and road police checks; as
well as time spent on loading or unload-
ing at the warehouse or border. The time
included in this segment includes time
spent on obtaining, preparing and sub-
mitting documents during the transport
process.
For a coastal economy with an overseas
trading partner, domestic transport cap-
tures the time and cost from the loading
of the shipment at the warehouse until
the shipment reaches the economy’s port
(see figure 13.15).
For an economy trading through a land
border, domestic transport captures the
time and cost from the loading of the
shipment at the warehouse until the
shipment reaches the economy’s land
border (see figure 13.16). In some cases
the cost within the economy’s territory
is interpolated from the total cost from
warehouse to warehouse. For Belgium,
for example, the main export partner in
the Doing Business case study is Germany,
and transporting a shipment weighing 15
tons the 760 kilometers from Brussels
to Berlin costs $1,400. The shipment
travels 125 kilometers within Belgium, so
the domestic transport cost attributed to
Belgium is $265. These calculations are
based on the distance traveled along the
most widely used route (as reported by
contributors).
The time and cost estimates are based on
the most widely used mode of transport
(truck, train, riverboat) and the most
widely used route (road, port, border
posts) as reported by contributors. In
the overwhelming majority of cases all
contributors in an economy agree on the
mode and route. In the few remaining
cases Doing Business consulted additional
contributors to get a sense of why there
was disagreement. In these cases time
and cost estimates are based on the
mode and route chosen by the majority
of contributors. For the 11 economies for
which data are collected for both the larg-
est and the second largest business city,
Doing Business allows the most widely
used route and the most widely used
mode of transport to be different for the
two cities, if so reported by private sector
contributors. For example, shipments
from Delhi are transported by train to
Mundra port for export, while shipments
from Mumbai travel by truck to Nhava
Sheva port to be exported.
In the export case study, as noted, Doing
Business does not assume a containerized
shipment, and time and cost estimates
may be based on the transport of 15 tons
of noncontainerized products. In the
import case study auto parts are assumed
to be containerized, and the shipment
may consist of more than one container.
In the cases where cargo is containerized,
the time and cost for transport and other
procedures are based on a shipment con-
sisting of homogeneous cargo belonging
to a single Harmonized System (HS)
classification code. This assumption is
particularly important for inspections,
because shipments of homogeneous
products are often subject to fewer and
shorter inspections than shipments of
products belonging to various HS codes.
In some cases the shipment travels from
the warehouse to a customs post or
terminal for clearance or inspections and
then travels onward to the port or border.
In these cases the domestic transport
time (cost) is the sum of the time (cost)
for both transport segments. The time
and cost for clearance or inspections
are included in the measures for border
compliance, however, not in those for
domestic transport.

The data details on trading across borders
www.doingbusiness.org.
ENFORCING CONTRACTS
Doing Business measures the time and
cost for resolving a commercial dispute
through a local first-instance court. In
addition, this year it introduces a new
measure, the quality of judicial processes
index, evaluating whether each economy
has adopted a series of good practices
that promote quality and efficiency in the
court system. This new index replaces
the indicator on procedures, which was
eliminated this year. The data are col-
lected through study of the codes of civil
procedure and other court regulations as
well as questionnaires completed by local
litigation lawyers and judges. The ranking
of economies on the ease of enforcing
contracts is determined by sorting their
distance to frontier scores for enforcing
contracts. These scores are the simple
(figure 13.18).
Efficiency of resolving a
commercial dispute
The data on time and cost are built by
following the step-by-step evolution of
a commercial sale dispute (figure 13.19).
The data are collected for a specific court
for each city covered, under the assump-
tions about the case described below
(table 13.15). The court is the one with
jurisdiction over disputes worth 200% of
income per capita or $5,000, whichever
is greater. The name of the relevant court
in each economy is published on the
Doing Business website at http://www
.doingbusiness.org/data/exploretopics
/enforcing-contracts. For the 11 econo-
mies for which the data are also collected
for the second largest business city, the
name of the relevant court in that city is
given as well.
Assumptions about the case
ƒƒ The value of the claim is equal to
200% of the economy’s income per
capita or $5,000, whichever is greater.
ƒƒ The dispute concerns a lawful transac-
tion between two businesses (Seller
and Buyer), both located in the
economy’s largest business city. For 11
economies the data are also collected
for the second largest business city
(seetable13A.1).Pursuanttoacontract
between the businesses, Seller sells
some custom-made furniture to Buyer
worth 200% of the economy’s income
per capita or $5,000, whichever is
greater. After Seller delivers the goods
to Buyer, Buyer refuses to pay the con-
tract price, alleging that the goods are
not of adequate quality. Because they
were custom-made, Seller is unable to
sell them to anyone else.
ƒƒ Seller (the plaintiff) sues Buyer (the
defendant) to recover the amount
under the sales agreement. The
dispute is brought before the court
located in the economy’s largest busi-
ness city with jurisdiction over com-
mercial cases worth 200% of income
greater. As noted, for 11 economies
the data are also collected for the
second largest business city.
ƒƒ At the outset of the dispute, Seller
decides to attach Buyer’s movable
assets (for example, office equipment
and vehicles) because Seller fears that
Buyer may hide its assets or otherwise
become insolvent.
ƒƒ The claim is disputed on the merits
because of Buyer’s allegation that the
quality of the goods was not adequate.
Because the court cannot decide the
case on the basis of documentary
evidence or legal title alone, an expert
opinion is given on the quality of the
goods. If it is standard practice in the
economy for each party to call its own
expert witness, the parties each call
one expert witness. If it is standard
practice for the judge to appoint an
independent expert, the judge does
so. In this case the judge does not
allow opposing expert testimony.
Figure 13.18 Enforcing contracts:
efficiency and quality of commercial
dispute resolution
Attorney, court and
enforcement costs as
% of claim value
Days to resolve
commercial sale dispute
through the courts
33.3%
Quality of judicial
processes
index
33.3%
Time
33.3%
Cost
frontier scores for three indicators
Use of good practices promoting
quality and efficiency
Figure 13.19 What are the time and
cost to resolve a commercial dispute
through the courts?
Court
Filing
service
Trial
judgment
Enforcement
Company A
(seller
plaintiff)
Company B
(buyer
defendant)
Time
Cost
Commercial
dispute
TABLE 13.15 What do the indicators
on the efficiency of resolving a
commercial dispute measure?
Time required to enforce a contract through
the courts (calendar days)
Time to file and serve the case
Time for trial and to obtain the judgment
Time to enforce the judgment
Cost required to enforce a contract through
the courts (% of claim)
Average attorney fees
Court costs
Enforcement costs

153Data Notes
ƒƒ Following the expert opinion, the
judge decides that the goods deliv-
ered by Seller were of adequate
quality and that Buyer must pay the
contract price. The judge thus renders
a final judgment that is 100% in favor
of Seller.
ƒƒ Buyer does not appeal the judgment.
Seller decides to start enforcing the
judgment as soon as the time allo-
cated by law for appeal lapses.
ƒƒ Seller takes all required steps for
prompt enforcement of the judgment.
The money is successfully collected
through a public sale of Buyer’s mov-
able assets (for example, office equip-
ment and vehicles).
Time
Time is recorded in calendar days,
counted from the moment the plaintiff
decides to file the lawsuit in court until
payment. This includes both the days
when actions take place and the waiting
periods in between. The average dura-
tion of three different stages of dispute
resolution is recorded: the completion of
service of process (time to file and serve
the case), the issuance of judgment (time
for trial and to obtain the judgment) and
the recovery of the claim value through a
public sale (time for enforcement of the
judgment).
Cost
claim, assumed to be equivalent to 200%
of income per capita or $5,000, which-
ever is greater. Three types of costs are
recorded: court costs, enforcement costs
and average attorney fees.
Court costs include all costs that Seller
(plaintiff) must advance to the court,
regardless of the final cost borne by
Seller. Court costs include the fees that
must be paid to obtain an expert opinion.
Enforcement costs are all costs that Seller
(plaintiff) must advance to enforce the
judgment through a public sale of Buyer’s
movable assets, regardless of the final
cost borne by Seller. Average attorney
fees are the fees that Seller (plaintiff)
must advance to a local attorney to
represent Seller in the standardized case.
Bribes are not taken into account.
Quality of judicial
processes
The quality of judicial processes index
measures whether each economy has
adopted a series of good practices in its
court system in four areas: court struc-
ture and proceedings, case management,
resolution (table 13.16).
Court structure and proceedings
index
The court structure and proceedings
index has four components:
ƒƒ Whether a specialized commercial
court or a section dedicated solely to
hearing commercial cases is in place.
A score of 1.5 is assigned if yes; 0 if no.
ƒƒ Whether a small claims court or a
fast-track procedure for small claims
is in place. A score of 1 is assigned if
such a court or procedure is in place,
it is applicable to all civil cases and the
law sets a cap on the value of cases
that can be handled through this court
or procedure. If small claims are han-
dled by a stand-alone court, the point
is assigned only if this court applies
a simplified procedure. An additional
score of 0.5 is assigned if parties
can represent themselves before
this court or during this procedure.
If no small claims court or simplified
procedure is in place, a score of 0 is
assigned.
ƒƒ Whether plaintiffs can obtain pretrial
attachment of the defendant’s mov-
able assets if they fear the assets may
be moved out of the jurisdiction or
otherwise dissipated. A score of 1 is
ƒƒ Whether cases are assigned randomly
and automatically to judges through-
out the competent court. A score of 1
Table 13.16 What do the indicators on the quality of judicial processes measure?
Court structure and proceedings index (0–5)
Availability of specialized commercial court, division or section
Availability of small claims court or simplified procedure for small claims
Availability of pretrial attachment
Criteria used to assign cases to judges
Case management index (0–6)
Regulations setting time standards for key court events
Regulations on adjournments and continuances
Availability of performance measurement mechanisms
Use of pretrial conference
Availability of electronic case management system for judges
Availability of electronic case management system for lawyers
Court automation index (0–4)
Ability to file initial complaint electronically
Ability to serve process electronically
Ability to pay court fees electronically
Publication of judgments
Alternative dispute resolution index (0–3)
Arbitration
Voluntary mediation or conciliation
Quality of judicial processes index (0–18)
Sum of the court structure and proceedings, case management, court automation and alternative dispute
resolution indices

is assigned if the assignment of cases
is random and automated; 0.5 if it is
random but not automated; 0 if it is
neither random nor automated.
values indicating a more sophisticated
and streamlined court structure. In Bosnia
and Herzegovina, for example, a special-
ized commercial court is in place (a score
of 1.5), and small claims can be resolved
through a dedicated court in which self-
representation is allowed (a score of 1.5).
Plaintiffs can obtain pretrial attachment
of the defendant’s movable assets if they
fear dissipation during trial (a score of 1).
Cases are assigned randomly through an
electronic case management system (a
Bosnia and Herzegovina a score of 5
on the court structure and proceedings
index.
Case management index
The case management index has six
components:
ƒƒ Whether any of the applicable laws or
regulations on civil procedure contain
time standards for at least three of the
following key court events: (i) service
of process; (ii) first hearing; (iii) filing
of the statement of defense; (iv) com-
pletion of the evidence period; and
(v) submission of the final judgment.
A score of 1 is assigned if such time
standards are available and respected
in more than 50% of cases; 0.5 if they
are available but not respected in
more than 50% of cases; 0 if there are
time standards for less than three of
these key court events.
ƒƒ Whether there are any laws regulat-
ing the maximum number of adjourn-
ments or continuances that can
be granted, whether adjournments
are limited by law to unforeseen
and exceptional circumstances and
whether these rules are respected
in more than 50% of cases. A score
of 1 is assigned if all three conditions
are met; 0.5 if only two of the three
conditions are met; 0 if only one of the
conditions is met or if none are.
ƒƒ Whether there are any performance
measurement reports that can be
generated about the competent court
to monitor the court’s performance, to
monitor the progress of cases through
the court and to ensure compliance
with established time standards. A
score of 1 is assigned if at least two
of the following four reports are made
publicly available: (i) time to disposi-
tion report; (ii) clearance rate report;
(iii) age of pending cases report; and
(iv) single case progress report. A
score of 0 is assigned if only one of
these reports is available or if none
are.
ƒƒ Whether a pretrial conference is
among the case management tech-
niques used before the competent
court and at least three of the follow-
ing issues are discussed during the
pretrial conference: (i) scheduling
(including the time frame for filing
motions and other documents with
the court); (ii) case complexity and
projected length of trial; (iii) possibil-
ity of settlement or alternative dispute
resolution; (iv) exchange of witness
lists; (v) evidence; (vi) jurisdiction
and other procedural issues; and (vii)
the narrowing down of contentious
issues. A score of 1 is assigned if a
pretrial conference in which at least
three of these events are discussed is
held within the competent court; 0 if
not.
ƒƒ Whether judges within the compe-
tent court can use an electronic case
management system for at least
four of the following purposes: (i) to
access laws, regulations and case
law; (ii) to automatically generate a
hearing schedule for all cases on their
docket; (iii) to send notifications (for
example, e-mails) to lawyers; (iv)
to track the status of a case on their
docket; (v) to view and manage case
documents (briefs, motions); (vi) to
assist in writing judgments; (vii) to
semiautomatically generate court
orders; and (viii) to view court orders
and judgments in a particular case. A
score of 1 is assigned if an electronic
case management system is available
that judges can use for at least four of
these purposes; 0 if not.
ƒƒ Whether lawyers can use an elec-
tronic case management system for
at least four of the following pur-
poses: (i) to access laws, regulations
and case law; (ii) to access forms
to be submitted to the court; (iii) to
receive notifications (for example,
e-mails); (iv) to track the status of a
case; (v) to view and manage case
documents (briefs, motions); (vi) to
file briefs and documents with the
court; and (vii) to view court orders
and decisions in a particular case. A
score of 1 is assigned if an electronic
case management system is available
that lawyers can use for at least four
of these purposes; 0 if not.
values indicating a more qualitative and
efficient case management system. In
Croatia, for example, time standards for at
least three key court events are contained
in applicable civil procedure instruments
and are respected in more than 50% of
cases (a score of 1). The law stipulates
that adjournments can be granted
only for unforeseen and exceptional
circumstances and this rule is respected
in more than 50% of cases (a score of
0.5). A time to disposition report and a
clearance rate report can be generated
about the competent court (a score of 1).
A pretrial conference is among the case
management techniques used before the
Zagreb Commercial Court (a score of 1).
An electronic case management system
satisfying the criteria outlined above
is available to judges (a score of 1) and
to lawyers (a score of 1). Adding these
numbers gives Croatia a score of 5.5 on
the case management index, the highest
score attained by any economy on this
index.
Court automation index
The court automation index has four
components:
ƒƒ Whether the initial complaint can
be filed electronically through a

155Data Notes
dedicated platform (not e-mail or fax)
within the relevant court. A score of 1
is assigned if yes; 0 if no.
ƒƒ Whether the initial complaint can be
served on the defendant electroni-
cally, through a dedicated system or
by e-mail, fax or SMS (short message
service). A score of 1 is assigned if yes;
0 if no.
ƒƒ Whether court fees can be paid elec-
tronically, either through a dedicated
platform or through online banking. A
score of 1 is assigned if yes; 0 if no.
ƒƒ Whether judgments rendered by
local courts are made available to the
general public through publication in
official gazettes, in newspapers or on
the internet. A score of 1 is assigned
if judgments rendered in commercial
cases at all levels are made avail-
able to the general public; 0.5 if only
judgments rendered at the appeal
and supreme court level are made
available to the general public; 0 in all
other instances.
values indicating a more automated,
efficient and transparent court system. In
Korea, for example, the initial summons
can be filed online (a score of 1), it can
be served on the defendant electroni-
cally (a score of 1), and court fees can
be paid electronically as well (a score of
1). In addition, judgments in commercial
cases at all levels are made publicly
available through the internet (a score of
1). Adding these numbers gives Korea a
score of 4 on the court automation index.
Alternative dispute resolution
index
The alternative dispute resolution index
has six components:
ƒƒ Whether domestic commercial arbi-
tration is governed by a consolidated
law or consolidated chapter or section
of the applicable code of civil proce-
dure encompassing substantially all
its aspects. A score of 0.5 is assigned
if yes; 0 if no.
ƒƒ Whether commercial disputes of all
kinds—aside from those dealing with
public order, public policy, bankruptcy,
consumer rights, employment issues
or intellectual property—can be sub-
mitted to arbitration. A score of 0.5 is
ƒƒ Whether valid arbitration clauses
or agreements are enforced by local
courts in more than 50% of cases. A
score of 0.5 is assigned if yes; 0 if no.
ƒƒ Whether voluntary mediation, con-
ciliation or both are a recognized way
of resolving commercial disputes. A
score of 0.5 is assigned if yes; 0 if no.
ƒƒ Whether voluntary mediation, con-
ciliation or both are governed by a
consolidated law or consolidated
chapter or section of the applicable
code of civil procedure encompassing
substantially all their aspects. A score
of 0.5 is assigned if yes; 0 if no.
ƒƒ Whether there are any financial incen-
tives for parties to attempt mediation
or conciliation (for example, if media-
tion or conciliation is successful, a
refund of court filing fees, an income
tax credit or the like). A score of 0.5 is
higher values associated with greater
availability of mechanisms of alternative
dispute resolution. In Israel, for example,
arbitration is regulated through a dedi-
cated statute (a score of 0.5), all relevant
commercial disputes can be submitted
to arbitration (a score of 0.5), and valid
arbitration clauses are usually enforced
by the courts (a score of 0.5). Voluntary
mediation is a recognized way of resolv-
ing commercial disputes (a score of 0.5),
it is regulated through a dedicated statute
(a score of 0.5), and part of the filing fees
is reimbursed if the process is successful
(a score of 0.5). Adding these numbers
gives Israel a score of 3 on the alternative
dispute resolution index.
Quality of judicial processes
index
The quality of judicial processes index is
the sum of the scores on the court struc-
ture and proceedings, case management,
resolution indices. The index ranges from
0 to 18, with higher values indicating bet-
ter and more efficient judicial processes.
The data details on enforcing contracts can
be found for each economy at http://www
initially developed by Djankov and others
(2003) and is adopted here with several
changes. The quality of judicial processes
index was introduced in Doing Business
2016. The good practices tested in this index
were developed on the basis of internation-
ally recognized good practices promoting
judicial efficiency.
RESOLVING INSOLVENCY
Doing Business studies the time, cost and
outcome of insolvency proceedings involv-
ing domestic entities as well as the strength
of the legal framework applicable to liqui-
dation and reorganization proceedings. The
data for the resolving insolvency indicators
are derived from questionnaire responses
by local insolvency practitioners and veri-
fied through a study of laws and regulations
as well as public information on insolvency
systems. The ranking of economies on the
ease of resolving insolvency is determined
by sorting their distance to frontier scores
for resolving insolvency. These scores
are the simple average of the distance to
frontier scores for the recovery rate and
the strength of insolvency framework index
(figure 13.20).
Recovery of debt in
insolvency
To make the data on the time, cost and
outcome of insolvency proceedings
case are used.
The business:
ƒƒ Is a limited liability company.

ƒƒ Is 100% domestically owned, with the
founder, who is also chairman of the
supervisory board, owning 51% (no
other shareholder holds more than
5% of shares).
ƒƒ Has downtown real estate, where it
runs a hotel, as its major asset.
ƒƒ Has a professional general manager.
ƒƒ Has 201 employees and 50 suppliers,
each of which is owed money for the
last delivery.
ƒƒ Has a 10-year loan agreement with a
domestic bank secured by a mortgage
over the hotel’s real estate prop-
erty. A universal business charge (an
enterprise charge) is also assumed
in economies where such collat-
eral is recognized. If the laws of the
economy do not specifically provide
for an enterprise charge but contracts
commonly use some other provision
to that effect, this provision is speci-
fied in the loan agreement.
ƒƒ Has observed the payment schedule
and all other conditions of the loan up
to now.
ƒƒ Has a market value, operating as a
going concern, of 100 times income
greater. The market value of the com-
pany’s assets, if sold piecemeal, is 70%
of the market value of the business.
Assumptions about the case
The business is experiencing liquidity
problems. The company’s loss in 2014
reduced its net worth to a negative figure.
It is January 1, 2015. There is no cash to
pay the bank interest or principal in full,
due the next day, January 2. The busi-
ness will therefore default on its loan.
Management believes that losses will
be incurred in 2015 and 2016 as well.
But it expects 2015 cash flow to cover all
operating expenses, including supplier
payments, salaries, maintenance costs
and taxes, though not principal or interest
payments to the bank.
The amount outstanding under the
loan agreement is exactly equal to the
market value of the hotel business and
represents 74% of the company’s total
debt. The other 26% of its debt is held by
unsecured creditors (suppliers, employ-
ees, tax authorities).
The company has too many creditors
to negotiate an informal out-of-court
workout. The following options are
available: a judicial procedure aimed at
the rehabilitation or reorganization of
the company to permit its continued
operation; a judicial procedure aimed
at the liquidation or winding-up of the
company; or a judicial debt enforcement
procedure (foreclosure or receivership)
against the company.
Assumptions about the parties
The bank wants to recover as much as
possible of its loan, as quickly and cheap-
ly as possible. The unsecured creditors
will do everything permitted under the
applicable laws to avoid a piecemeal sale
of the assets. The majority shareholder
wants to keep the company operating
and under his control. Management
wants to keep the company operating
and preserve its employees’ jobs. All the
parties are local entities or citizens; no
foreign parties are involved.
Time
Time for creditors to recover their credit
is recorded in calendar years (table 13.17).
The period of time measured by Doing
Business is from the company’s default
until the payment of some or all of the
money owed to the bank. Potential delay
tactics by the parties, such as the filing
of dilatory appeals or requests for exten-
sion, are taken into consideration.
Cost
The cost of the proceedings is recorded as
a percentage of the value of the debtor’s
estate. The cost is calculated on the basis
of questionnaire responses and includes
court fees and government levies; fees of
insolvency administrators, auctioneers,
assessors and lawyers; and all other fees
and costs.
Outcome
Recovery by creditors depends on
whether the hotel business emerges from
the proceedings as a going concern or the
company’s assets are sold piecemeal. If
the business continues operating, 100%
of the hotel value is preserved. If the
assets are sold piecemeal, the maximum
amount that can be recovered is 70% of
the value of the hotel.
Figure 13.20 Resolving insolvency:
recovery rate and strength of insolvency
framework
50%
Recovery
rate
50%
Strength of
insolvency
framework
index
frontier scores for two indicators
on debt recovery in insolvency
measure?
Time required to recover debt (years)
Measured in calendar years
Appeals and requests for extension are included
Cost required to recover debt (% of debtor’s
estate)
Measured as percentage of estate value
Court fees
Fees of insolvency administrators
Lawyers’ fees
Assessors’ and auctioneers’ fees
Other related fees
Outcome
Whether the business continues operating as
a going concern or whether its assets are sold
piecemeal
Recovery rate for secured creditors (cents
on the dollar)
Measures the cents on the dollar recovered by
secured creditors
Present value of debt recovered
Official costs of the insolvency proceedings are
deducted
Depreciation of furniture is taken into account
Outcome for the business (survival or not) affects
the maximum value that can be recovered

157Data Notes
Recovery rate
The recovery rate is recorded as cents on
the dollar recovered by secured creditors
throughreorganization,liquidationordebt
enforcement (foreclosure or receiver-
ship) proceedings (figure 13.21). The cal-
culation takes into account the outcome:
whether the business emerges from the
proceedings as a going concern or the
assets are sold piecemeal. Then the costs
of the proceedings are deducted (1 cent
for each percentage point of the value of
the debtor’s estate). Finally, the value lost
as a result of the time the money remains
tied up in insolvency proceedings is taken
into account, including the loss of value
due to depreciation of the hotel furniture.
Consistent with international accounting
practice, the annual depreciation rate for
furniture is taken to be 20%. The furniture
is assumed to account for a quarter of the
total value of assets. The recovery rate is
the present value of the remaining pro-
ceeds, based on end-2014 lending rates
from the International Monetary Fund’s
International Financial Statistics, supple-
mented with data from central banks and
the Economist Intelligence Unit.
If an economy had zero cases a year over
the past five years involving a judicial
reorganization, judicial liquidation or debt
enforcement procedure (foreclosure or
receivership), the economy receives a
“no practice” mark on the time, cost and
outcome indicators. This means that
creditors are unlikely to recover their
money through a formal legal process.
The recovery rate for “no practice”
economies is zero. In addition, a “no
practice” economy receives a score of 0
on the strength of insolvency framework
index even if its legal framework includes
provisions related to insolvency proceed-
ings (liquidation or reorganization).
Strength of insolvency
framework
The strength of insolvency framework
index is based on four other indices:
commencement of proceedings index,
management of debtor’s assets index,
reorganization proceedings index and
creditor participation index (figure 13.22;
table 13.18).
Commencement of proceedings
index
The commencement of proceedings
index has three components:
ƒƒ Whether debtors can initiate both
liquidation and reorganization pro-
ceedings. A score of 1 is assigned if
debtors can initiate both types of pro-
ceedings; 0.5 if they can initiate only
one of these types (either liquidation
or reorganization); 0 if they cannot
initiate insolvency proceedings.
ƒƒ Whether creditors can initiate both
liquidation and reorganization pro-
ceedings. A score of 1 is assigned if
creditors can initiate both types of
proceedings; 0.5 if they can initiate
only one of these types (either liquida-
tion or reorganization); 0 if they can-
not initiate insolvency proceedings.
ƒƒ What standard is used for commence-
ment of insolvency proceedings. A
score of 1 is assigned if a liquidity test
(the debtor is generally unable to pay
its debts as they mature) is used; 0.5
if the balance sheet test (the liabilities
of the debtor exceed its assets) is
used; 1 if both the liquidity and bal-
ance sheet tests are available but only
one is required to initiate insolvency
proceedings; 0.5 if both tests are
required; 0 if a different test is used.
higher values indicating greater access
to insolvency proceedings. In Bulgaria, for
example, debtors can initiate both liqui-
dation and reorganization proceedings (a
Figure 13.22 Strength of insolvency
framework index measures the quality
of insolvency laws that govern relations
between debtors, creditors and the court
Management of
debtor’s assets
index
Commencement
of proceedings
index
Reorganization
proceedings index
Creditor
participation
index
Court
DebtorCreditors
on the strength of the insolvency
framework measure?
Commencement of proceedings index (0–3)
Availability of liquidation and reorganization to
debtors and creditors
Standards for commencement of insolvency
proceedings
Management of debtor’s assets index (0–6)
Continuation and rejection of contracts during
insolvency
Avoidance of preferential and undervalued
transactions
Post-commencement finance
Reorganization proceedings index (0–3)
Approval and content of reorganization plan
Creditor participation index (0–4)
Creditors’ participation in and rights during
liquidation and reorganization proceedings
Strength of insolvency framework index
(0–16)
Sum of the commencement of proceedings,
management of debtor’s assets, reorganization
proceedings and creditor participation indices
Figure 13.21 Recovery rate is a function of the time, cost and outcome of insolvency
proceedings against a local company
Secured creditor
with unpaid claim
Recovery rate
Reorganization, liquidation
or foreclosure proceedings
Time Cost Outcome

score of 1), but creditors can initiate only
liquidation proceedings (a score of 0.5).
Either the liquidity test or the balance
sheet test can be used to commence
insolvency proceedings (a score of 1).
Adding these numbers gives Bulgaria a
score of 2.5 on the commencement of
proceedings index.
Management of debtor’s assets
index
The management of debtor’s assets index
has six components:
ƒƒ Whether the debtor (or an insolvency
representative on its behalf) can con-
tinue performing contracts essential
to the debtor’s survival. A score of 1
is assigned if yes; 0 if continuation of
contracts is not possible or if the law
contains no provisions on this subject.
ƒƒ Whether the debtor (or an insolvency
representative on its behalf) can reject
overly burdensome contracts. A score
of 1 is assigned if yes; 0 if rejection of
contracts is not possible.
ƒƒ Whether transactions entered into
before commencement of insolvency
proceedings that give preference
to one or several creditors can be
avoided after proceedings are initi-
ated. A score of 1 is assigned if yes;
0 if avoidance of such transactions is
not possible.
ƒƒ Whether undervalued transactions
entered into before commencement
of insolvency proceedings can be
avoided after proceedings are initi-
ated. A score of 1 is assigned if yes;
0 if avoidance of such transactions is
not possible.
ƒƒ Whether the insolvency framework
includes specific provisions that allow
the debtor (or an insolvency represen-
tative on its behalf), after commence-
ment of insolvency proceedings, to
obtain financing necessary to func-
tion during the proceedings. A score
of 1 is assigned if yes; 0 if obtaining
post-commencement finance is not
possible or if the law contains no
provisions on this subject.
ƒƒ Whether post-commencement finance
receives priority over ordinary
unsecured creditors during distribu-
tion of assets. A score of 1 is assigned
if yes; 0.5 if post-commencement
finance is granted superpriority over
all creditors, secured and unsecured;
0 if no priority is granted to post-
commencement finance.
values indicating more advantageous
treatment of the debtor’s assets from the
perspective of the company’s stakehold-
ers. In Mozambique, for example, debtors
can continue essential contracts (a score
of 1) and reject burdensome ones (a
score of 1) during insolvency proceed-
ings. The insolvency framework allows
avoidance of preferential transactions
(a score of 1) and undervalued ones (a
score of 1). But the insolvency framework
contains no provisions allowing post-
commencement finance (a score of 0)
or granting priority to such finance (a
Mozambique a score of 4 on the man-
agement of debtor’s assets index.
Reorganization proceedings
index
The reorganization proceedings index has
three components:
ƒƒ Whether the reorganization plan is
voted on only by the creditors whose
rights are modified or affected by the
plan. A score of 1 is assigned if yes; 0.5
if all creditors vote on the plan, regard-
less of its impact on their interests; 0
if creditors do not vote on the plan or
if reorganization is not available.
ƒƒ Whether creditors entitled to vote
on the plan are divided into classes,
each class votes separately and the
creditors within each class are treated
equally. A score of 1 is assigned if
the voting procedure has these three
features; 0 if the voting procedure
does not have these three features or
if reorganization is not available.
ƒƒ Whether the insolvency framework
requires that dissenting creditors
receive as much under the reorganiza-
tion plan as they would have received
in liquidation. A score of 1 is assigned
if yes; 0 if no such provisions exist or if
reorganization is not available.
values indicating greater compliance
with internationally accepted practices.
Nicaragua, for example, has no judicial
reorganization proceedings and therefore
receives a score of 0 on the reorganiza-
tion proceedings index. In Estonia,
another example, only creditors whose
rights are affected by the reorganization
plan are allowed to vote (a score of 1).
The reorganization plan divides creditors
into classes, each class votes separately
and creditors within the same class are
treated equally (a score of 1). But there
are no provisions requiring that the return
to dissenting creditors be equal to what
they would have received in liquidation (a
Estonia a score of 2 on the reorganization
proceedings index.
Creditor participation index
The creditor participation index has four
components:
ƒƒ Whether creditors participate in the
selection of an insolvency representa-
tive. A score of 1 is assigned if yes; 0
if no.
ƒƒ Whether creditors are required
to approve the sale of substantial
assets of the debtor in the course of
insolvency proceedings. A score of 1 is
ƒƒ Whether an individual creditor has the
right to access financial information
about the debtor during insolvency
proceedings, either by requesting it
from an insolvency representative or
by reviewing the official records. A
score of 1 is assigned if yes; 0 if no.
ƒƒ Whether an individual creditor can
object to a decision of the court or
of the insolvency representative to
approve or reject claims against the
debtor brought by the creditor itself
and by other creditors. A score of 1 is
higher values indicating greater

159Data Notes
participation of creditors. In Iceland, for
example, the court appoints the insol-
vency representative, without creditors’
approval (a score of 0). The insolvency
representative decides unilaterally on
the sale of the debtor’s assets (a score of
0). Any creditor can inspect the records
kept by the insolvency representative (a
score of 1). And any creditor is allowed
to challenge a decision of the insolvency
representative to approve all claims if
this decision affects the creditor’s rights
(a score of 1). Adding these numbers
gives Iceland a score of 2 on the creditor
participation index.
Strength of insolvency
framework index
The strength of insolvency framework
index is the sum of the scores on the
commencement of proceedings index,
management of debtor’s assets index,
reorganization proceedings index and
creditor participation index. The index
ranges from 0 to 16, with higher values
indicating insolvency legislation that is
better designed for rehabilitating viable
firms and liquidating nonviable ones.
ThismethodologywasdevelopedbyDjankov,
Hart and others (2008) and is adopted here
with several changes. The strength of insol-
vency framework index was introduced in
Doing Business 2015. The good practices
tested in this index were developed on the
basis of the World Bank’s Principles for
Effective Insolvency and Creditor/Debtor
Regimes (World Bank 2011) and the United
Nations Commission on International Trade
Law’s Legislative Guide on Insolvency
Law (UNCITRAL 2004a).
LABOR MARKET
REGULATION
Doing Business has historically studied the
flexibility of regulation of employment,
specifically as it relates to the areas of
hiring, working hours and redundancy.
This year Doing Business has expanded
the scope of the labor market regulation
indicators by adding 16 new questions,
most of which focus on measuring job
quality (figure 13.23).
Over the period from 2007 to 2011
improvements were made to align
the methodology for the labor market
regulation indicators (formerly the
employing workers indicators) with the
letterandspiritoftheInternationalLabour
Organization (ILO) conventions. Ten of
the 189 ILO conventions cover areas now
measured by Doing Business (up from
four previously): employee termination,
weekend work, holiday with pay, night
work, protection against unemployment,
sickness benefits, maternity protection,
working hours, equal remuneration and
labor inspections.
Between 2009 and 2011 the World
Bank Group worked with a consultative
group—including labor lawyers, employ-
er and employee representatives, and
experts from the ILO, the Organisation
for Economic Co-operation and
Development (OECD), civil society
and the private sector—to review the
methodology for the labor market
regulation indicators and explore future
areas of research.20
A full report with the
conclusions of the consultative group,
along with the methodology it pro-
posed, is available on the Doing Business
website at http://www.doingbusiness.org
/methodology/labor-market-regulation.
Doing Business 2016 presents the data for
the labor market regulation indicators in
an annex. The report does not present
rankings of economies on these indica-
tors or include the topic in the aggregate
distance to frontier score or ranking on
the ease of doing business. Detailed
data collected on labor market regula-
tion are available on the Doing Business
website (http://www.doingbusiness.
org). The data on labor market regula-
tion are based on a detailed question-
naire on employment regulations that is
completed by local lawyers and public
officials. Employment laws and regula-
tions as well as secondary sources are
reviewed to ensure accuracy.
the worker and the business are used.
Assumptions about the worker
The worker:
ƒƒ Is a cashier in a supermarket or gro-
cery store, age 19, with one year of
work experience.
ƒƒ Is a full-time employee.
ƒƒ Is not a member of the labor union,
unless membership is mandatory.
Figure 13.23 What do the labor market regulation indicators cover?
1. Hiring 3. Redundancy
2. Working
hours
4. Job
quality

The business:
ƒƒ Is a limited liability company (or the
equivalent in the economy).
ƒƒ Operates a supermarket or grocery
store in the economy’s largest busi-
ness city. For 11 economies the data
are also collected for the second larg-
est business city (see table 13A.1).
ƒƒ Has 60 employees.
ƒƒ Is subject to collective bargaining
agreements if such agreements cover
more than 50% of the food retail sec-
tor and they apply even to firms that
are not party to them.
ƒƒ Abides by every law and regulation
but does not grant workers more
benefits than those mandated by law,
regulation or (if applicable) collective
bargaining agreements.
Employment
Data on employment cover three areas:
hiring, working hours and redundancy
(table 13.19).
Data on hiring cover five questions: (i)
whether fixed-term contracts are prohib-
ited for permanent tasks; (ii) the maxi-
mum cumulative duration of fixed-term
contracts; (iii) the minimum wage for
a cashier, age 19, with one year of work
experience; (iv) the ratio of the minimum
wage to the average value added per
worker;21
and (v) the availability of incen-
tives for employers to hire employees
under the age of 25.22
Data on working hours cover nine
questions: (i) the maximum number of
working days allowed per week; (ii) the
premium for night work (as a percentage
of hourly pay); (iii) the premium for work
on a weekly rest day (as a percentage
of hourly pay); (iv) the premium for
overtime work (as a percentage of hourly
pay);23
(v) whether there are restrictions
on night work; (vi) whether nonpregnant
and nonnursing women can work the
same night hours as men;24
(vii) whether
there are restrictions on weekly holiday
work; (viii) whether there are restrictions
on overtime work;25
and (ix) the average
paid annual leave for workers with 1 year
of tenure, 5 years of tenure and 10 years
of tenure.
Data on redundancy cover nine questions:
(i) the length of the maximum probation-
ary period (in months) for permanent
employees; (ii) whether redundancy is
allowed as a basis for terminating work-
ers; (iii) whether the employer needs to
notify a third party (such as a government
agency) to terminate one redundant
worker; (iv) whether the employer needs
to notify a third party to terminate a group
of nine redundant workers; (v) whether
the employer needs approval from a
third party to terminate one redundant
worker; (vi) whether the employer needs
approval from a third party to terminate
a group of nine redundant workers; (vii)
TABLE 13.19 What do the labor market regulation indicators include?
Employment
Hiring
Whether fixed-term contracts are prohibited for permanent tasks
Maximum duration of fixed-term contracts (in months), including renewals
Minimum wage for a cashier, age 19, with one year of work experience (US$/month)
Ratio of minimum wage to value added per worker
Availability of incentives for employers to hire employees under the age of 25
Working hours
Maximum number of working days per week
Premium for night work, work on weekly rest day and overtime work (% of hourly pay)
Whether there are restrictions on night work, weekly holiday work and overtime work
Whether nonpregnant and nonnursing women can work the same night hours as men
Paid annual vacation days for workers with 1 year of tenure, 5 years of tenure and 10 years of tenure
Redundancy
Length of maximum probationary period (in months) for permanent employees
Whether redundancy is allowed as grounds for termination
Whether third-party notification is required for termination of a redundant worker or group of workers
Whether third-party approval is required for termination of a redundant worker or group of workers
Whether employer is obligated to reassign or retrain and to follow priority rules for redundancy and
reemployment
Redundancy cost
Notice requirements and severance payments due when terminating a redundant worker, expressed
in weeks of salary
Job quality
Whether the law mandates equal remuneration for work of equal value
Whether the law mandates nondiscrimination based on gender in hiring
Whether the law mandates paid or unpaid maternity leave
Minimum length of paid maternity leave (calendar days)
Whether employees on maternity leave receive 100% of wages
Availability of five fully paid days of sick leave a year
Availability of on-the-job training at no cost to employee
Whether unemployment protection is available after one year of employment
Minimum duration of contribution period (in months) required for unemployment protection
Whether an employee can create or join a union
Availability of administrative or judicial relief in case of infringement of employees’ rights
Availability of labor inspection system

161Data Notes
whether the law requires the employer to
reassign or retrain a worker before mak-
ing the worker redundant; (viii) whether
priority rules apply for redundancies;
and (ix) whether priority rules apply for
reemployment.
Redundancy cost
Redundancy cost measures the cost of
advance notice requirements and sever-
ance payments due when terminating a
redundant worker, expressed in weeks
of salary. The average value of notice
requirements and severance payments
applicable to a worker with 1 year of ten-
ure, a worker with 5 years and a worker
with 10 years is considered. One month is
recorded as 4 and 1/3 weeks.
Job quality
This year Doing Business introduces new
data on job quality that cover 12 ques-
tions: (i) whether the law mandates
equal remuneration for work of equal
value; (ii) whether the law mandates
nondiscrimination based on gender in
hiring; (iii) whether the law mandates
paid or unpaid maternity leave;26
(iv)
the minimum length of paid maternity
leave (in calendar days);27
(v) whether
employees on maternity leave receive
100% of wages;28
(vi) the availability of
five fully paid days of sick leave a year;
(vii) the availability of on-the-job train-
ing at no cost to the employee; (viii)
whether a worker is eligible for an
unemployment protection scheme after
one year of service; (ix) the minimum
duration of the contribution period (in
months) required for unemployment
protection; (x) whether an employee
can create or join a union; (xi) the avail-
ability of administrative or judicial relief
in case of infringement of employees’
rights; and (xii) the availability of a labor
inspection system.
The data details on labor market regula-
tion can be found for each economy at
http://www.doingbusiness.org. The Doing
Business website also provides historical
data sets. The methodology was developed
by Botero and others (2004). Doing
Business 2016 does not present rankings
of economies on the labor market regula-
tion indicators.
Notes
1. The data for paying taxes refer to January–
December 2014.
2. These are Bangladesh, Brazil, China, India,
Indonesia, Japan, Mexico, Nigeria, Pakistan,
the Russian Federation and the United States.
3. This correction rate reflects changes that
exceed 5% up or down.
4. According to a study by Chakravorty, Pelli and
Marchand (2014) based on evidence from
India between 1994 and 2005, a higher-
quality electricity supply, with no more than
two outages a week (or no more than about
100 a year), leads to higher nonagricultural
incomes.
5. This matter is usually regulated by stock
exchange or securities laws. Points are
awarded only to economies with more than
10 listed firms in their most important stock
exchange.
6. When evaluating the regime of liability for
company directors for a prejudicial related-
party transaction, Doing Business assumes
that the transaction was duly disclosed and
approved. Doing Business does not measure
director liability in the event of fraud.
7. This component is revised in Doing Business
2016 to capture the sale of 51% of Buyer’s
assets.
2016 to capture the sale of 51% of Buyer’s
assets in a limited company.
9. This component is new in Doing Business 2016.
2016 to capture the disclosure of indirect
ownership stakes representing 5%.
16. PwC refers to the network of member firms of
PricewaterhouseCoopers International Limited
(PwCIL) or, as the context requires, individual
member firms of the PwC network. Each
member firm is a separate legal entity and
does not act as agent of PwCIL or any other
member firm. PwCIL does not provide any
services to clients. PwCIL is not responsible
or liable for the acts or omissions of any of its
member firms nor can it control the exercise
of their professional judgment or bind them
in any way. No member firm is responsible or
liable for the acts or omissions of any other
member firm nor can it control the exercise of
another member firm’s professional judgment
or bind another member firm or PwCIL in any
way.
17. The nonlinear distance to frontier score for
the total tax rate is equal to the distance
to frontier score for the total tax rate to the
power of 0.8.
18. The economies for which a multiple of three
times income per capita has been used are
Honduras, Mozambique, West Bank and
Gaza, and Zimbabwe. Those for which a
multiple of two times income per capita
has been used are Belize, Benin, Bosnia and
Herzegovina, Burkina Faso, the Central African
Republic, Chad, Fiji, Guatemala, Haiti, Kenya,
Lesotho, Madagascar, the Federated States of
Micronesia, Morocco, Nepal, Nicaragua, Niger,
Nigeria, the Philippines, the Solomon Islands,
South Africa, South Sudan, Tanzania, Togo,
Vanuatu and Zambia.
19. To identify the trading partners and export
product for each economy, Doing Business
collected data on trade flows for the most
recent four-year period from international
databases such as the United Nations
Commodity Trade Statistics Database (UN
Comtrade). For economies for which trade
flow data were not available, data from
ancillary government sources (various
ministries and departments) and World
Bank Group country offices were used to
identify the export product and natural trading
partners.
20. For the terms of reference and composition
of the consultative group, see World Bank,
“Doing Business Employing Workers Indicator
Consultative Group,” http://www
.doingbusiness.org.
21. The average value added per worker is the
ratio of an economy’s GNI per capita to the
working-age population as a percentage of the
total population.
26. If no maternity leave is mandated by law,
parental leave is measured if applicable.
27. The minimum number of days that legally
have to be paid by the government, the
employer or both. If no maternity leave is
mandated by law, parental leave is measured
if applicable.
28. If no maternity leave is mandated by law,
parental leave is measured if applicable.

TABLE 13A.1 Cities covered in each economy by the Doing Business report
Economy City or cities Economy City or cities Economy City or cities
Afghanistan Kabul Greece Athens Pakistan Karachi, Lahore
Albania Tirana Grenada St. George’s Palau Koror
Algeria Algiers Guatemala Guatemala City Panama Panama City
Angola Luanda Guinea Conakry Papua New Guinea Port Moresby
Antigua and Barbuda St. John’s Guinea-Bissau Bissau Paraguay Asunción
Argentina Buenos Aires Guyana Georgetown Peru Lima
Armenia Yerevan Haiti Port-au-Prince Philippines Quezon City
Australia Sydney Honduras Tegucigalpa Poland Warsaw
Austria Vienna Hong Kong SAR, China Hong Kong SAR Portugal Lisbon
Azerbaijan Baku Hungary Budapest Puerto Rico (U.S.) San Juan
Bahamas, The Nassau Iceland Reykjavik Qatar Doha
Bahrain Manama India Mumbai, Delhi Romania Bucharest
Bangladesh Dhaka, Chittagong Indonesia Jakarta, Surabaya Russian Federation Moscow, St. Petersburg
Barbados Bridgetown Iran, Islamic Rep. Tehran Rwanda Kigali
Belarus Minsk Iraq Baghdad Samoa Apia
Belgium Brussels Ireland Dublin San Marino San Marino
Belize Belize City Israel Tel Aviv São Tomé and Príncipe São Tomé
Benin Cotonou Italy Rome Saudi Arabia Riyadh
Bhutan Thimphu Jamaica Kingston Senegal Dakar
Bolivia La Paz Japan Tokyo, Osaka Serbia Belgrade
Bosnia and Herzegovina Sarajevo Jordan Amman Seychelles Victoria
Botswana Gaborone Kazakhstan Almaty Sierra Leone Freetown
Brazil São Paulo, Rio de Janeiro Kenya Nairobi Singapore Singapore
Brunei Darussalam Bandar Seri Begawan Kiribati Tarawa Slovak Republic Bratislava
Bulgaria Sofia Korea, Rep. Seoul Slovenia Ljubljana
Burkina Faso Ouagadougou Kosovo Pristina Solomon Islands Honiara
Burundi Bujumbura Kuwait Kuwait City South Africa Johannesburg
Cabo Verde Praia Kyrgyz Republic Bishkek South Sudan Juba
Cambodia Phnom Penh Lao PDR Vientiane Spain Madrid
Cameroon Douala Latvia Riga Sri Lanka Colombo
Canada Toronto Lebanon Beirut St. Kitts and Nevis Basseterre
Central African Republic Bangui Lesotho Maseru St. Lucia Castries
Chad N’Djamena Liberia Monrovia St.Vincent and the Grenadines Kingstown
Chile Santiago Libya Tripoli Sudan Khartoum
China Shanghai, Beijing Lithuania Vilnius Suriname Paramaribo
Colombia Bogotá Luxembourg Luxembourg Swaziland Mbabane
Comoros Moroni Macedonia, FYR Skopje Sweden Stockholm
Congo, Dem. Rep. Kinshasa Madagascar Antananarivo Switzerland Zurich
Congo, Rep. Brazzaville Malawi Blantyre Syrian Arab Republic Damascus
Costa Rica San José Malaysia Kuala Lumpur Taiwan, China Taipei
Côte d’Ivoire Abidjan Maldives Malé Tajikistan Dushanbe
Croatia Zagreb Mali Bamako Tanzania Dar es Salaam
Cyprus Nicosia Malta Valletta Thailand Bangkok
Czech Republic Prague Marshall Islands Majuro Timor-Leste Dili
Denmark Copenhagen Mauritania Nouakchott Togo Lomé
Djibouti Djibouti Ville Mauritius Port Louis Tonga Nuku’alofa
Dominica Roseau Mexico Mexico City, Monterrey Trinidad and Tobago Port of Spain
Dominican Republic Santo Domingo Micronesia, Fed. Sts. Island of Pohnpei Tunisia Tunis
Ecuador Quito Moldova Chi¸sin˘au Turkey Istanbul
Egypt, Arab Rep. Cairo Mongolia Ulaanbaatar Uganda Kampala
El Salvador San Salvador Montenegro Podgorica Ukraine Kiev
Equatorial Guinea Malabo Morocco Casablanca United Arab Emirates Dubai
Eritrea Asmara Mozambique Maputo United Kingdom London
Estonia Tallinn Myanmar Yangon United States New York City, Los Angeles
Ethiopia Addis Ababa Namibia Windhoek Uruguay Montevideo
Fiji Suva Nepal Kathmandu Uzbekistan Tashkent
Finland Helsinki Netherlands Amsterdam Vanuatu Port-Vila
France Paris New Zealand Auckland Venezuela, RB Caracas
Gabon Libreville Nicaragua Managua Vietnam Ho Chi Minh City
Gambia, The Banjul Niger Niamey West Bank and Gaza Ramallah
Georgia Tbilisi Nigeria Lagos, Kano Yemen, Rep. Sana’a
Germany Berlin Norway Oslo Zambia Lusaka
Ghana Accra Oman Muscat Zimbabwe Harare

Doing Business 2016
Distance to frontier and ease of
doing business ranking
T
he Doing Business report presents
results for two aggregate mea-
sures: the distance to frontier
score and the ease of doing business
ranking, which is based on the distance
to frontier score. The ease of doing busi-
ness ranking compares economies with
one another; the distance to frontier
score benchmarks economies with
respect to regulatory best practice,
showing the absolute distance to the
best performance on each Doing Business
indicator. When compared across years,
the distance to frontier score shows how
much the regulatory environment for
local entrepreneurs in an economy has
changed over time in absolute terms,
while the ease of doing business ranking
can show only how much the regulatory
environment has changed relative to
that in other economies.
DISTANCE TO FRONTIER
The distance to frontier score captures
the gap between an economy’s perfor-
mance and a measure of best practice
across the entire sample of 36 indica-
tors for 10 Doing Business topics (the
labor market regulation indicators are
excluded). For starting a business, for
example, the former Yugoslav Republic
of Macedonia and New Zealand have
the smallest number of procedures
required (1), and New Zealand the
shortest time to fulfill them (0.5 days).
Slovenia has the lowest cost (0.0),
and Australia, Colombia and 103 other
economies have no paid-in minimum
capital requirement (table 14.1).
Calculation of the distance to
frontier score
Calculating the distance to frontier
score for each economy involves two
main steps. In the first step individual
component indicators are normalized
to a common unit where each of the 36
component indicators y (except for the
total tax rate) is rescaled using the linear
transformation (worst − y)/(worst −
frontier). In this formulation the frontier
represents the best performance on the
indicator across all economies since
2005 or the third year in which data for
the indicator were collected. Both the best
performance and the worst performance
are established every five years based
on the Doing Business data for the year in
which they are established, and remain
at that level for the five years regardless
of any changes in data in interim years.
Thus an economy may set the frontier for
an indicator even though it is no longer at
the frontier in a subsequent year.
For scores such as those on the strength
of legal rights index or the quality of land
administration index, the frontier is set
at the highest possible value. For the
total tax rate, consistent with the use of
a threshold in calculating the rankings on
this indicator, the frontier is defined as the
total tax rate at the 15th percentile of the
overall distribution for all years included
in the analysis up to and including Doing
Business 2015. For the time to pay taxes
the frontier is defined as the lowest time
recorded among all economies that levy
the three major taxes: profit tax, labor
taxes and mandatory contributions,
and value added tax (VAT) or sales tax.

TABLE 14.1 What is the frontier in regulatory practice?
Topic and indicator Who set the frontier Frontier Worst performance
Starting a business
Procedures (number) FYR Macedonia; New Zealand 1 18a
Time (days) New Zealand 0.5 100b
Cost (% of income per capita) Slovenia 0.0 200.0b
Minimum capital (% of income per capita) Australia; Colombiac
0.0 400.0b
Dealing with construction permits
Procedures (number) No economy was at the frontier as of
June 1, 2015.
5 30a
Time (days) Singapore 26 373b
Cost (% of warehouse value) Qatar 0.0 20.0b
Building quality control index (0–15) New Zealand 15 0d
Getting electricity
Procedures (number) Germany; Republic of Koreae
3 9a
Time (days) Republic of Korea; St. Kitts and Nevis 18 248b
Cost (% of income per capita) Japan 0.0 8,100.0b
Reliability of supply and transparency of tariffs index (0–8) Belgium; Ireland; Malaysiaf
8 0d
Procedures (number) Georgia; Norway; Portugal; Sweden 1 13a
Time (days) Georgia; New Zealand; Portugal 1 210b
Cost (% of property value) Saudi Arabia 0.0 15.0b
Quality of land administration index (0–30) No economy has attained the frontier yet. 30 0d
Getting credit
Strength of legal rights index (0–12) Colombia; Montenegro; New Zealand 12 0d
Depth of credit information index (0–8) Ecuador; United Kingdomg
8 0d
Protecting minority investors
Extent of conflict of interest regulation index (0–10) No economy has attained the frontier yet. 10 0d
Extent of shareholder governance index (0–10) No economy has attained the frontier yet. 10 0d
Paying taxes
Payments (number per year) Hong Kong SAR, China; Saudi Arabia 3 63b
Time (hours per year) Qatar; United Arab Emirates 49h
696b
Total tax rate (% of profit) Singaporei
26.1j
84.0b
Trading across borders
Time to export
Documentary compliance (hours) Canada; Poland; Spaink
1l
170b
Border compliance (hours) Austria; Belgium; Denmarkm
1l
160b
Cost to export
Documentary compliance (US$) Luxembourg; Norway; Swedenn
0.0 400.0b
Border compliance (US$) France; Netherlands; Portugalo
0.0 1,060.0b
Time to import
Documentary compliance (hours) Republic of Korea; New Zealand; Singaporep
1l
240b
Border compliance (hours) Estonia; France; Germanyq
1l
280b
Cost to import
Documentary compliance (US$) Iceland; Latvia; United Kingdomr
0.0 700.0b
Border compliance (US$) Belgium; Denmark; Estonias
0.0 1,200.0b
(continued)

165Distance to frontier and ease of doing business ranking
For the different times to trade across
borders, the frontier is defined as 1 hour
even though in many economies the time
is less than that.
In the same formulation, to mitigate the
effects of extreme outliers in the distribu-
tionsoftherescaleddataformostcompo-
nent indicators (very few economies need
700 days to complete the procedures to
start a business, but many need 9 days),
the worst performance is calculated after
the removal of outliers. The definition of
outliers is based on the distribution for
each component indicator. To simplify
the process two rules were defined: the
95th percentile is used for the indicators
with the most dispersed distributions
(including minimum capital, number of
payments to pay taxes, and the time and
cost indicators), and the 99th percentile
is used for number of procedures. No
outlier is removed for component indica-
tors bound by definition or construction,
including legal index scores (such as the
depth of credit information index, extent
of conflict of interest regulation index and
strength of insolvency framework index)
and the recovery rate (figure 14.1).
In the second step for calculating the
distance to frontier score, the scores
obtained for individual indicators for each
economy are aggregated through simple
averaging into one distance to frontier
score, first for each topic and then across
all 10 topics: starting a business, dealing
with construction permits, getting elec-
tricity, registering property, getting credit,
protecting minority investors, paying
contracts and resolving insolvency. More
complex aggregation methods—such as
principal components and unobserved
components—yield a ranking nearly
identical to the simple average used
by Doing Business.1
Thus Doing Business
uses the simplest method: weighting all
topics equally and, within each topic,
giving equal weight to each of the topic
components.2
An economy’s distance to frontier score is
indicated on a scale from 0 to 100, where
0 represents the worst performance and
100 the frontier. All distance to frontier
calculations are based on a maximum of
five decimals. However, indicator ranking
calculations and the ease of doing busi-
ness ranking calculations are based on
two decimals.
The difference between an economy’s
distance to frontier score in any previous
year and its score in 2015 illustrates the
extent to which the economy has closed
Enforcing contracts
Time (days) Singapore 120 1,340b
Cost (% of claim) Bhutan 0.1 89.0b
Quality of judicial processes index (0–18) No economy has attained the frontier yet. 18 0d
Resolving insolvency
Recovery rate (cents on the dollar) Japan 92.9 0d
Strength of insolvency framework index (0–16) No economy has attained the frontier yet. 16 0d
a. Worst performance is defined as the 99th percentile among all economies in the Doing Business sample.
b. Worst performance is defined as the 95th percentile among all economies in the Doing Business sample.
c. Another 103 economies also have a paid-in minimum capital requirement of 0.
d. Worst performance is the worst value recorded.
e. In 12 other economies it also takes only 3 procedures to get an electricity connection.
f. Another 15 economies also have a score of 8 on the reliability of supply and transparency of tariffs index.
g. Another 24 economies also have a score of 8 on the depth of credit information index.
h. Defined as the lowest time recorded among all economies in the Doing Business sample that levy the three major taxes: profit tax, labor taxes and mandatory contributions,
and VAT or sales tax.
i. Another 32 economies also have a total tax rate equal to or lower than 26.1% of profit.
j. Defined as the highest total tax rate among the 15% of economies with the lowest total tax rate in the Doing Business sample for all years included in the analysis up to and
including Doing Business 2015.
k. Another 21 economies also have a documentary compliance time to export of no more than 1 hour.
l. Defined as 1 hour even though in many economies the time is less than that.
m. Another 15 economies also have a border compliance time to export of no more than 1 hour.
n. Another 17 economies also have a documentary compliance cost to export of 0.0.
o. Another 15 economies also have a border compliance cost to export of 0.0.
p. Another 27 economies also have a documentary compliance time to import of no more than 1 hour.
q. Another 22 economies also have a border compliance time to import of no more than 1 hour.
r. Another 27 economies also have a documentary compliance cost to import of 0.0.
s. Another 25 economies also have a border compliance cost to import of 0.0.
TABLE 14.1 What is the frontier in regulatory practice? (continued)
Topic and indicator Who set the frontier Frontier Worst performance

the gap to the regulatory frontier over
time. And in any given year the score
measures how far an economy is from
the best performance at that time.
Treatment of the total tax rate
The total tax rate component of the pay-
ing taxes indicator set enters the distance
to frontier calculation in a different way
than any other indicator. The distance to
frontier score obtained for the total tax
rate is transformed in a nonlinear fashion
before it enters the distance to frontier
score for paying taxes. As a result of the
nonlinear transformation, an increase in
the total tax rate has a smaller impact on
the distance to frontier score for the total
tax rate—and therefore on the distance
to frontier score for paying taxes—for
economies with a below-average total
tax rate than it would have had before
this approach was adopted in Doing
Business 2015 (line B is smaller than line
A in figure 14.2). And for economies with
an extreme total tax rate (a rate that is
very high relative to the average), an
increase has a greater impact on both
these distance to frontier scores than it
would have had before (line D is bigger
than line C in figure 14.2).
The nonlinear transformation is not based
on any economic theory of an “optimal tax
rate” that minimizes distortions or maxi-
mizes efficiency in an economy’s overall
tax system. Instead, it is mainly empirical
in nature. The nonlinear transformation
along with the threshold reduces the bias
in the indicator toward economies that
do not need to levy significant taxes on
companies like the Doing Business stan-
dardized case study company because
they raise public revenue in other ways—
for example, through taxes on foreign
companies, through taxes on sectors
other than manufacturing or from natural
resources (all of which are outside the
scope of the methodology). In addition, it
acknowledges the need of economies to
collect taxes from firms.
Calculation of scores for
economies with two cities
covered
For each of the 11 economies in which
Doing Business collects data for the sec-
ond largest business city as well as the
largest one, the distance to frontier score
is calculated as the population-weighted
for these two cities (table 14.2). This is
done for the aggregate score, the scores
for each topic and the scores for all the
component indicators for each topic.
Variability of economies’ scores
across topics
Eachindicatorsetmeasuresadifferentaspect
of the business regulatory environment. The
Figure 14.1 How are distance to frontier scores calculated for indicators?
Two examples
100
80
60
40
20
0
0 5 10 15 20 25 30 35
Distance to frontier
score for procedures
A time-and-motion topic: dealing with construction permits
A legal topic: protecting minority investors
100
80
60
40
20
0
Procedures (number)
Distance to frontier score for extent
of shareholder governance index
Extent of shareholder governance index (0–10)
0 1 2 3 4 5 6 7 8 9 10
Best performance
(frontier):
10 points
Worst performance:
0 points
Regulatory frontier
Regulatory frontier
Best performance
(frontier):
5 procedures
Worst
performance
(99th percentile):
30 procedures

167Distance to frontier and ease of doing business ranking
distance to frontier scores and associ-
ated rankings of an economy can vary,
sometimes significantly, across indicator
sets. The average correlation coefficient
between the 10 indicator sets included in
the aggregate distance to frontier score is
0.44, and the coefficients between 2 sets
of indicators range from 0.28 (between
getting credit and paying taxes) to 0.62
(between registering property and enforc-
ing contracts). These correlations suggest
that economies rarely score universally
well or universally badly on the indicators
(table 14.3).
Consider the example of Portugal. Its
aggregate distance to frontier score is
77.57. Its score is 96.28 for starting a
business and 100.00 for trading across
borders. But its score is only 56.67 for
protecting minority investors and 45.00
for getting credit.
Figure 2.1 in the chapter “About Doing
Business” illustrates the degree of vari-
ability for each economy’s performance
across the different areas of business
regulation covered by Doing Business. The
figure draws attention to economies with
a particularly uneven performance by
showing, for each economy, the distance
between the average of its highest three
distance to frontier scores and the aver-
age of its lowest three across the 10 topics
included in this year’s aggregate distance
to frontier score. While a relatively small
distance between these two averages
suggests a broadly consistent approach
across the areas of business regulation
measured by Doing Business, a relatively
large distance suggests a more uneven
approach, with greater room for improve-
ment in some areas than in others.
Variation in performance across the indi-
cator sets is not at all unusual. It reflects
differences in the degree of priority that
government authorities give to particular
areas of business regulation reform and
in the ability of different government
agencies to deliver tangible results in
their area of responsibility.
Economies improving the most
across three or more Doing
Business topics in 2014/15
Doing Business 2016 uses a simple method
to calculate which economies improved
the ease of doing business the most. First,
it selects the economies that in 2014/15
implemented regulatory reforms making
it easier to do business in 3 or more of the
10 topics included in this year’s aggregate
distance to frontier score.3
Twenty-four
economies meet this criterion: Armenia;
Azerbaijan; Benin; Costa Rica; Côte
d’Ivoire; Cyprus; Hong Kong SAR, China;
Indonesia; Jamaica; Kazakhstan; Kenya;
Lithuania; Madagascar; Mauritania;
Morocco; Romania; the Russian
Federation; Rwanda; Senegal; Togo;
Uganda; the United Arab Emirates;
Uzbekistan; and Vietnam. Second, Doing
Business sorts these economies on the
Figure 14.2 How the nonlinear transformation affects the distance to frontier score
for the total tax rate
Total tax rate (%)
for total tax rate
0 10 20 30 40 50 60 70 80 90 100
100
80
60
40
20
0
A
B
C
D
Linear distance to frontier
score for total tax rate
Nonlinear distance to frontier
score for total tax rate
Regulatory frontier
Note: The nonlinear distance to frontier score for the total tax rate is equal to the distance to frontier score for the
total tax rate to the power of 0.8.
TABLE 14.2 Weights used in calculating
the distance to frontier scores for
economies with two cities covered
Economy City
Weight
(%)
Bangladesh Dhaka 78
Chittagong 22
Brazil São Paulo 61
Rio de Janeiro 39
China Shanghai 55
Beijing 45
India Mumbai 47
Delhi 53
Indonesia Jakarta 78
Surabaya 22
Japan Tokyo 65
Osaka 35
Mexico Mexico City 83
Monterrey 17
Nigeria Lagos 77
Kano 23
Pakistan Karachi 65
Lahore 35
Russian
Federation
Moscow 70
St. Petersburg 30
United States New York City 60
Los Angeles 40
Source: United Nations, Department of Economic and
Social Affairs, Population Division, World Urbanization
Prospects, 2014 Revision, “File 12: Population of
Urban Agglomerations with 300,000 Inhabitants or
More in 2014, by Country, 1950–2030 (thousands),”
http://esa.un.org/unpd/wup/CD-ROM/Default.aspx.

increase in their distance to frontier score
from the previous year using comparable
data.
Selecting the economies that imple-
mented regulatory reforms in at least
three topics and had the biggest improve-
ments in their distance to frontier scores
is intended to highlight economies with
ongoing, broad-based reform programs.
The improvement in the distance to
frontier score is used to identify the top
improvers because this allows a focus on
the absolute improvement—in contrast
with the relative improvement shown by
a change in rankings—that economies
have made in their regulatory environ-
ment for business.
EASE OF DOING BUSINESS
RANKING
The ease of doing business ranking ranges
from 1 to 189. The ranking of economies
is determined by sorting the aggregate
distance to frontier scores, rounded to
two decimals.
Notes
1. See Djankov, Manraj and others (2005).
Principal components and unobserved
components methods yield a ranking nearly
identical to that from the simple average
method because both these methods assign
roughly equal weights to the topics, since the
pairwise correlations among indicators do
not differ much. An alternative to the simple
average method is to give different weights to
the topics, depending on which are considered
of more or less importance in the context of a
specific economy.
2. For getting credit, indicators are weighted
proportionally, according to their contribution
to the total score, with a weight of 60%
assigned to the strength of legal rights index
and 40% to the depth of credit information
index. Indicators for all other topics are
assigned equal weights.
3. Changes making it more difficult to do
business are subtracted from the total number
of those making it easier to do business.
TABLE 14.3 Correlations between economy distance to frontier scores for Doing Business topics
Dealing with
construction
permits
Getting
electricity
Registering
property
Getting
credit
Protecting
minority
investors Paying taxes
Trading
across
borders
Enforcing
contracts
Resolving
insolvency
Starting a business 0.39 0.40 0.45 0.39 0.48 0.50 0.42 0.43 0.46
Dealing with
construction permits
0.41 0.48 0.30 0.32 0.41 0.38 0.35 0.35
Getting electricity 0.50 0.38 0.42 0.47 0.55 0.54 0.54
Registering property 0.48 0.50 0.47 0.46 0.62 0.52
Getting credit 0.51 0.28 0.42 0.37 0.54
Protecting minority
investors
0.36 0.42 0.43 0.58
Paying taxes 0.50 0.37 0.35
Trading across
borders
0.44 0.56
Enforcing contracts 0.45

Doing Business 2016
Summaries of DoingBusiness
reforms in 2014/15
Doing Business reforms affecting all sets
of indicators included in this year’s report,
implemented from June 2014 to June
2015.
✔✔ Reform making it easier to do business
✘✘ Change making it more difficult to do
business
Afghanistan
✘✘ Starting a business
Afghanistan made starting a business
more costly by increasing the registra-
tion and publication fees.
✔✔ Getting credit
Afghanistan improved access to credit
information by launching a credit
registry.
Albania
✘✘ Dealing with construction permits
Albania made dealing with construc-
tion permits more difficult by suspend-
ing the issuance of building permits.
✔✔ Protecting minority investors
Albania strengthened minority inves-
tor protections by introducing legal
requirements for immediate disclosure
of related-party transactions to the
public.
✔✔ Trading across borders
Albania made exporting easier by
implementing an electronic risk-based
inspection system, which reduced the
time for border compliance.
Algeria
✔✔ Starting a business
Algeria made starting a business
easier by eliminating the requirement
to obtain managers’ criminal records.
✔✔ Dealing with construction permits
Algeria made dealing with construc-
tion permits easier by eliminating the
legal requirement to provide a certified
copy of a property title when applying
for a building permit.
Angola
Angola made starting a business
easier by improving registration proce-
dures and reducing the fees to register
a company.
✔✔ Paying taxes
Angola made paying taxes less costly
for companies by reducing the corpo-
rate income tax rate.
Armenia
Armenia made dealing with construc-
tion permits easier by exempting lower-
risk projects from requirements for
approval of the architectural drawings by
an independent expert and for technical
supervision of the construction.
Armenia reduced the time and cost for
for trade with the Russian Federation
Reforms affecting the labor market regulation indicators are included here but do not affect the ranking
on the ease of doing business.

by joining the Eurasian Economic
Union.
✔✔ Enforcing contracts
Armenia made enforcing contracts
easier through a new law requiring that
cases be assigned to judges randomly,
and through a fully automated system,
in courts throughout the country.
Azerbaijan
Azerbaijan made starting a business
easier by abolishing the requirement to
use a corporate seal.
Azerbaijan made dealing with con-
struction permits easier by establishing
a one-stop shop for issuing preapprov-
als for project documentation.
Azerbaijan strengthened minor-
ity investor protections by introduc-
ing requirements that related-party
transactions undergo external review
and be voted on by disinterested
shareholders.
Bahamas, The
The Bahamas made starting a business
more difficult by adding a requirement
for value added tax (VAT) registration.
✔✔ Paying taxes
The Bahamas made paying taxes less
costly for companies by reducing the
business license tax—though it also
raised the wage ceiling used in calcu-
lating social security contributions.
The Bahamas made trading across
borders easier by fully implementing
an electronic data interchange system,
which reduced the time for preparation
and submission of trade documents
for both exporting and importing.
Bangladesh
✔✔ Paying taxes
Bangladesh made paying taxes less
corporate income tax rate. This reform
applies to both Chittagong and Dhaka.
Barbados
✘✘ Paying taxes
Barbados made paying taxes more
costly for companies by raising the
ceiling for social security contributions
and introducing a new municipal solid
waste tax.
Belarus
Belarus made starting a business
simpler by expanding the geographic
coverage of online registration and
improving online services.
✔✔ Registering property
Belarus made transferring property
easier by introducing a new expedited
procedure.
Labor market regulation
Belarus amended the provisions of its
Labor Code relating to wage regula-
tion, labor arbitration, calculation of
overtime pay and grounds for termina-
tion of employment. It also lifted pro-
hibitions on concurrent employment.
Belgium
Belgium made transferring property
easier by introducing electronic prop-
erty registration.
Benin
Benin made starting a business less
costly by reducing the fees for filing
company documents at the one-stop
shop.
Benin made dealing with construc-
tion permits less time-consuming by
establishing a one-stop shop and by
reducing the number of signatories
required on building permits.
Benin made trading across borders
easier by further developing its elec-
tronic single-window system, which
reduced the time for border compli-
ance for both exporting and importing.
Bhutan
✔✔ Getting electricity
Bhutan made getting electricity easier
by speeding up the process for obtain-
ing a new connection.
Bhutan made transferring property
easier by introducing a computerized
land information system.
Botswana
The utility in Botswana made getting
electricity easier by enforcing service
delivery timelines for new connections
and improving the stock of materials
for connection works.
Brazil
✘✘ Registering property
Brazil made transferring property in
São Paulo more expensive by increas-
ing the property transfer tax.
Brazil reduced the time for documen-
tary and border compliance for export-
ing by implementing the electronic
SISCOMEX Portal system. This reform
applies to both Rio de Janeiro and São
Paulo.
Brunei Darussalam
Brunei Darussalam made starting a
business easier by improving online
procedures and simplifying registration
and postregistration requirements.

171Summaries of Doing Business reforms in 2014/15
✔✔ Paying taxes
Brunei Darussalam made paying
taxes easier and less costly for com-
panies by merging contributions for
the Employee Provident Fund and
the Supplemental Pension Fund and
increasing the capital allowance for
industrial buildings. In addition, it
reduced the corporate income tax rate,
though it also abolished the partial
exemption of income and introduced
a flat rate.
Burkina Faso
Burkina Faso made starting a business
easier by reducing the minimum capi-
tal requirement.
Cabo Verde
Cabo Verde made transferring proper-
ty less costly by lowering the property
registration tax.
Cambodia
Cambodia made starting a business
easier by simplifying company name
checks, streamlining tax registration
and eliminating the requirement
to publish information on the new
company’s incorporation in the official
gazette.
Cambodia reduced the average fre-
quency and duration of power outages
experienced by a customer over the
course of a year in Phnom Penh by
increasing power generation capacity.
Chad
Chad made transferring property less
costly by lowering the property trans-
fer tax.
Chile
✘✘ Paying taxes
Chile made paying taxes more costly
for companies by increasing the cor-
porate income tax rate.
✔✔ Resolving insolvency
Chile made resolving insolvency easier
by clarifying and simplifying provisions
on liquidation and reorganization,
introducing provisions to facilitate
the continuation of the debtor’s busi-
ness during insolvency, establishing
a public office responsible for the
general administration of insolvency
proceedings and creating specialized
insolvency courts.
China
✔✔ Paying taxes
China made paying taxes less costly
for companies in Shanghai by reducing
the social security contribution rate
paid by employers.
Colombia
✔✔ Paying taxes
Colombia made paying taxes less
costly for companies by reducing
the payroll tax rate and introducing
exemptions for health care contribu-
tions paid by employers.
Comoros
The Comoros made starting a busi-
ness easier by reducing the minimum
capital requirement.
The Comoros improved access to
credit information by establishing a
new credit registry.
Congo, Dem. Rep.
The Democratic Republic of Congo
made starting a business easier by
simplifying registration procedures
and reducing the minimum capital
requirement.
made dealing with construction per-
mits less expensive by halving the cost
to obtain a building permit.
✘✘ Paying taxes
made paying taxes more complicated
for companies by introducing a new
social security contribution paid by
employers, though it subsequently
reduced the rate of the contribution.
✘✘ Trading across borders
made trading across borders more
difficult by increasing the port han-
dling time and cost for exporting and
importing.
Congo, Rep.
The Republic of Congo made transfer-
ring property less costly by lowering
the property transfer tax rate.
Costa Rica
The utility in Costa Rica made getting
electricity easier by reducing the time
required for preparing the design of
the external connection works and for
installing the meter and initiating the
electricity supply.
Costa Rica improved access to credit
by adopting a new secured transac-
tions law that establishes a functional
secured transactions system and a
modern, centralized, notice-based col-
lateral registry. The law broadens the
range of assets that can be used as col-
lateral, allows a general description of
assets granted as collateral and allows
out-of-court enforcement of collateral.
✔✔ Paying taxes
Costa Rica made paying taxes easier
for companies by promoting the use
of its electronic filing and payment
system for corporate income tax and
general sales tax.

Côte d’Ivoire
Côte d’Ivoire made transferring
property less costly by lowering the
property transfer tax rate.
Côte d’Ivoire made trading across
borders easier by implementing a
single-window platform for importing,
which reduced the time required for
documentary compliance.
Côte d’Ivoire made enforcing contracts
easier by introducing new provisions
on voluntary mediation.
Croatia
Croatia made enforcing contracts
easier by introducing an electronic
system to handle public sales of mov-
able assets and by streamlining the
enforcement process as a whole.
Croatia eliminated the requirement to
retrain or reassign employees before
they can be made redundant.
Cyprus
The utility in Cyprus made getting
electricity easier by reducing the
time required for obtaining a new
connection.
Cyprus improved access to credit
information by allowing credit bureaus
to collect and report positive credit
information and to report credit histo-
ries for both borrowers and guarantors.
✔✔ Paying taxes
Cyprus made paying taxes easier
for companies by facilitating online
payment of corporate income tax.
At the same time, Cyprus raised the
contribution rate for social insur-
ance paid by employers, lowered
the tax brackets for the social
contribution fund, raised the rate on
interest income and increased the
vehicle tax.
Cyprus made enforcing contracts
easier by introducing a fast-track sim-
plified procedure for claims worth less
than €3,000.
Cyprus made resolving insolvency
easier by introducing a reorganiza-
tion procedure as well as provisions
to facilitate the continuation of the
debtor’s business during insolvency
proceedings and allow creditors great-
er participation in important decisions
during the proceedings.
Denmark
Denmark made starting a business
easier by introducing an online plat-
form allowing simultaneous comple-
tion of business and tax registration.
Ecuador
Ecuador made starting a business
easier by simplifying the registration
process and by eliminating the need to
deposit 50% of the minimum capital in
a special account.
Ecuador eliminated fixed-term con-
tracts for permanent tasks.
Egypt, Arab Rep.
The Arab Republic of Egypt strength-
ened minority investor protections by
barring subsidiaries from acquiring
shares issued by their parent company.
El Salvador
ElSalvadorimprovedaccesstocreditby
adopting the Law on Movable Property,
which includes provisions allowing
a functional approach to secured
transactions; establishing a modern,
centralized, notice-based collateral
registry; allowing a general description
of a single category of assets granted
as collateral; permitting a security right
to extend to future assets and after-
acquired property, including proceeds,
products and replacements; and allow-
ing out-of-court enforcement.
El Salvador increased the border com-
pliance time for exporting and import-
ing by adding an extra, nonintrusive
inspection at the Anguiatú border
crossing with Guatemala.
Estonia
Estonia made starting a business sim-
pler by allowing minimum capital to
be deposited at the time of company
registration.
Finland
✔✔ Paying taxes
Finland made paying taxes less costly
rate income tax rate—though it also
increased the total rate for social secu-
rity contributions paid by employers,
and reduced the allowed deductible
amount for owners’ expenses.
France
✔✔ Paying taxes
France made paying taxes less costly
for companies by introducing a credit
against corporate income tax and
reducing labor tax rates paid by
employers.
Gabon
Gabon made starting a business easier
by reducing the paid-in minimum capi-
tal requirement.
Gabon made dealing with construc-
tion permits more complicated by

increasing the time required for obtain-
ing a building permit.
Gabon made transferring property
less costly by lowering the property
registration tax.
✘✘ Paying taxes
Gabon made paying taxes more costly
for companies by reducing the depre-
ciation rates for some types of fixed
assets.
Gambia, The
✔✔ Paying taxes
The Gambia made paying taxes easier
for companies by introducing a VAT
system that is less complicated than
the previous sales tax system—and
made paying taxes less costly by
reducing the corporate income tax
rate.
Georgia
Georgia made dealing with construc-
tion permits easier by reducing the
time needed for issuing building
permits.
Georgia made enforcing contracts
easier by introducing an electronic fil-
ing system for court users.
Germany
Germany made starting a business
easier by making the process more
efficient and less costly.
Germany introduced a minimum
wage of €8.50 an hour in accordance
with the Act on Minimum Wages
(Mindestlohngesetz), which took
effect on January 1, 2015.
Ghana
Ghana reduced the documentary and
border compliance time for importing
by developing electronic channels for
submitting and collecting the final
classification and valuation report.
Greece
✔✔ Paying taxes
Greece made paying taxes less costly
for companies by reducing the rates
for social security contributions paid
by employers, making insurance
premiums fully tax deductible and
lowering property tax rates. At the
same time, it defined entertainment
expenses as nondeductible, reduced
the depreciation rates for some types
of fixed assets and increased the tax on
interest income.
Guatemala
✔✔ Paying taxes
Guatemala made paying taxes less
corporate income tax rate.
Guatemala reduced the documen-
tary and border compliance time for
importing by making electronic sub-
mission of documents compulsory and
eliminating the need for many hard-
copy documents.
Guinea
Guinea made starting a business
tal requirement.
Guinea-Bissau
Guinea-Bissau made transferring
property easier by lowering the prop-
erty registration tax.
Guyana
Guyana improved access to credit
information by establishing a new
credit bureau.
Honduras
Honduras strengthened minor-
ity investor protections by introducing
provisions requiring greater disclosure
of related-party transactions, prohibit-
ing interested parties from voting on
a related-party transaction, allowing
shareholders representing at least 5%
of a company’s share capital to bring
a direct action for damages against
its directors and giving any share-
holder the right to inspect company
documents.
✘✘ Paying taxes
Honduras made paying taxes more
costly for companies by introducing an
alternative minimum income tax.
Hong Kong SAR, China
Hong Kong SAR, China, made starting
a business easier by eliminating the
requirement for a company seal.
The utility in Hong Kong SAR, China,
made getting electricity easier by
streamlining the process for review-
ing connection applications and for
completing the connection works and
meter installation. In addition, the time
needed to issue an excavation permit
was reduced.
Hong Kong SAR, China, improved
access to credit by implementing a
modern collateral registry.
✔✔ Paying taxes
Hong Kong SAR, China, made pay-
ing taxes easier and less costly for
companies by simplifying compliance
with the mandatory provident fund
obligations and increasing the allow-
ance for profit tax. At the same time,
it increased the maximum contribution
to the mandatory provident fund and
reduced the property tax waiver.

Hungary
Hungary adopted legislation limiting
the operating hours for retail shops.
India
India made starting a business easier
by eliminating the minimum capital
requirement and the need to obtain
a certificate to commence business
operations. This reform applies to both
Delhi and Mumbai.
The utility in Delhi made the process
for getting an electricity connection
simpler and faster by eliminating
the internal wiring inspection by the
Electrical Inspectorate. The utility in
Mumbai reduced the procedures and
time required to connect to electricity
by improving internal work processes
and coordination.
Indonesia
Indonesia made starting a business
in Jakarta easier by reducing the time
needed to register with the Ministry of
Manpower.
Indonesia improved access to credit by
enabling searches of the collateral reg-
istry by the debtor’s name. This reform
applies to both Jakarta and Surabaya.
✔✔ Paying taxes
Indonesiamadepayingtaxeseasierand
less costly for companies by introduc-
ing an online system for paying social
security contributions and by reduc-
ing both the rate and the ceiling for
the contributions paid by employers.
This reform applies to both Jakarta and
Surabaya.
Ireland
Ireland strengthened minority investor
protections by introducing provisions
stipulating that directors can be held
liable for breach of their fiduciary
duties.
✘✘ Paying taxes
Ireland made paying taxes more costly
and complicated for companies by
increasing landfill levies and by requir-
ing additional financial statements
to be submitted with the income tax
return.
Israel
✘✘ Paying taxes
Israel made paying taxes more costly
for companies by increasing the cor-
porate income tax rate, the rate for
social security contributions paid by
employers for the upper wage bracket
and municipal taxes.
Italy
Italy made enforcing contracts easier
by introducing a mandatory electronic
filing system for court users, simplify-
ing the rules for electronic service of
process and automating the enforce-
ment process.
Italy adopted the Jobs Act, which
simplifies redundancy rules and
encourages out-of-court recon-
ciliation, reducing the time and cost
for resolving labor disputes. The new
legislation also broadens the coverage
of unemployment insurance.
Jamaica
Jamaica made starting a business eas-
ier by streamlining internal procedures.
Jamaica made dealing with construc-
tion permits easier by implementing a
new workflow for processing building
permit applications.
✔✔ Paying taxes
Jamaica made paying taxes easier
and less costly for companies by
encouraging taxpayers to pay their
taxes online, introducing an employ-
ment tax credit and increasing the
depreciation rate for industrial build-
ings. At the same time, Jamaica intro-
duced a minimum business tax, raised
the contribution rate for the national
insurance scheme paid by employers
and increased the rates for stamp duty,
the property tax, the property transfer
tax and the education tax.
Jamaica made resolving insolvency
easier by introducing a reorganization
procedure; introducing provisions
to facilitate the continuation of the
debtor’s business during insolvency
proceedings and allow creditors great-
er participation in important decisions
during the proceedings; and establish-
ing a public office responsible for the
general administration of insolvency
proceedings.
Kazakhstan
Kazakhstan made starting a business
simpler by eliminating registration
fees for small and medium-size firms,
shortening registration times and
eliminating the legal requirement to
use a company seal.
Kazakhstan made dealing with
construction permits easier by
eliminating the requirement to obtain
a topographic survey of the land plot.
Kazakhstan made transferring prop-
erty easier by eliminating the require-
ment to obtain a technical passport
for the transfer and to have the seller’s
and buyer’s incorporation documents
notarized.
Kazakhstan improved access to credit
by adopting a new law on secured
transactions allowing a general
description of a combined category of
assets granted as collateral.

Kazakhstan strengthened minority
investor protections through new
provisions requiring both immediate
disclosure of related-party transactions
and detailed disclosure in annual
financial statements; expanding the
way evidence can be obtained at trial;
requiring that a change in the rights
associated with shares be subject to
approval by a vote of two-thirds of the
affected shares; prohibiting subsidiaries
from acquiring shares issued by
their parent company; and requiring
disclosure of information about board
members’ other directorships as well
as their primary employment.
Kazakhstan made enforcing contracts
easier by introducing a simplified fast-
track procedure for small claims and by
streamlining the rules for enforcement
proceedings.
Kazakhstan made resolving insolvency
easier by allowing creditors to initi-
ate reorganization proceedings and
encouraging sales of assets as a going
concern. Kazakhstan also improved its
bankruptcy regime, by explicitly autho-
rizing post-commencement finance
and granting it priority over existing
unsecured claims.
Kenya
Kenya made starting a business easier
by reducing the time it takes to assess
and pay stamp duty.
Kenya made dealing with construction
permits more difficult by requiring an
additional approval before issuance of
the building permit and by increasing
the costs for both water and sewerage
connections.
The utility in Kenya reduced delays for
new connections by enforcing service
delivery timelines and hiring contrac-
tors for meter installation.
Kenya made property transfers faster
by improving electronic document
management at the land registry
and introducing a unified form for
registration.
Kenya improved access to credit
information by passing legislation that
allows the sharing of positive infor-
mation and by expanding borrower
coverage.
Korea, Rep.
✘✘ Paying taxes
The Republic of Korea made paying
taxes more complicated and costly
for companies by requiring separate
filing and payment of the local income
tax and by increasing the rates for
unemployment insurance and national
health insurance paid by employers.
Kosovo
✔✔ Paying taxes
Kosovo made paying taxes easier for
companies by abolishing the annual
business license fee.
Kuwait
Kuwait made starting a business
tal requirement.
Kyrgyz Republic
The Kyrgyz Republic made transfer-
ring property easier by introducing
an online procedure for obtaining the
nonencumbrance certificates.
IntheKyrgyzRepublicthecreditbureau
improved access to credit information
by beginning to distribute both positive
and negative credit information.
Lao PDR
The Lao People’s Democratic Republic
improved access to credit information
by eliminating the threshold for the
minimum size of loans to be included
in the credit registry’s database and by
expanding borrower coverage.
Lao PDR capped the duration of renew-
able fixed-term contracts (previously
unlimited) at 36 months and reduced
the maximum length of a probation-
ary period from 3 months to 2. It also
eliminated the requirement for third-
party approval before an employer can
dismiss one worker or a group of nine
workers and reduced the severance
payment for employees with 5 and 10
years of tenure.
Latvia
Latvia made dealing with construction
permits more time-consuming by
increasing the time required to obtain
a building permit—despite having
streamlined the process by having the
building permit issued together with
the architectural planning conditions.
Latvia made transferring property
easier by introducing a new application
form for transfers.
Latvia improved its credit information
system through a new law governing
the licensing and functioning of credit
bureaus.
✘✘ Paying taxes
Latvia made paying taxes more com-
plicated for companies by eliminating
the possibility of deducting bad debt
provisions. On the other hand, Latvia
reduced the rate for social security
contributions paid by employers.
Latvia made enforcing contracts
easier by restructuring its courts and

by introducing comprehensive special-
ized laws regulating domestic arbitra-
tion and voluntary mediation.
Latvia increased the maximum dura-
tion of a single fixed-term contract
from 36 months to 60.
Lebanon
✘✘ Registering property
Lebanon made transferring property
more complex by increasing the time
required for property registration.
Lesotho
Lesotho improved access to credit
information by establishing its first
credit bureau.
Liberia
Liberia improved access to credit by
adopting new laws on secured transac-
tions that establish a modern, unified
and notice-based collateral registry.
✘✘ Paying taxes
Liberia made paying taxes more costly
for companies by introducing a mini-
mum corporate income tax.
Lithuania
Lithuania made starting a business
easier by introducing online VAT
registration.
The utility in Lithuania reduced the
time required to get an electricity
connection by enforcing the legal time
limit for completing the external con-
nection works.
Lithuania strengthened minority inves-
tor protections by prohibiting subsid-
iaries from acquiring shares issued by
their parent company.
Macedonia, FYR
The former Yugoslav Republic of
Macedonia made starting a business
simpler by introducing compulsory
online registration carried out by certi-
fied agents.
FYR Macedonia strengthened minority
investor protections by providing for
both fines and imprisonment of inter-
ested directors in prejudicial related-
party transactions.
FYR Macedonia introduced amend-
ments to its Labor Relations Act
relating to social contributions,
employment contracts, independent
contractors, annual leave, overtime
work, health inspections and labor
disputes.
Madagascar
Madagascar made starting a business
more difficult by requiring a bank-
certified check to pay the tax authority.
Madagascar made transferring
property less costly by lowering the
property transfer tax.
Madagascar improved access to credit
by broadening the range of assets that
can be used as collateral (including
future assets), by allowing a general
description of assets granted as collat-
eral and by allowing a general descrip-
tion of debts and obligations.
Madagascar strengthened minority
investor protections by requiring that
directors with a conflict of interest fully
disclose the nature of their interest to
the board of directors.
Madagascar reduced the time for
border compliance for both export-
ing and importing by upgrading port
infrastructure—and also reduced the
time for documentary compliance for
importing.
Malaysia
✔✔ Paying taxes
Malaysia made paying taxes easier
and less costly for companies by mak-
ing electronic filing mandatory and
reducing the property tax rate. At the
same time, it also increased the capital
gains tax.
Maldives
Maldives made dealing with construc-
tion permits more difficult by requiring
that building plans be stamped and
approved by private structural and
architecturalexpertsbeforetherequest
for a building permit is submitted.
✔✔ Paying taxes
Maldives made paying taxes easier
for companies by introducing more
payment counters at the tax authority
and express counters at peak periods.
At the same time, Maldives introduced
additional disclosure requirements for
filing corporate income tax returns.
Mali
Mali improved its credit information
system by introducing regulations that
govern the licensing and functioning of
credit bureaus in the member states
of the West African Economic and
Monetary Union (UEMOA).
Mali reduced the time for documen-
tary compliance for both exporting and
importing by introducing an electronic
data interchange system.
Malta
The utility in Malta reduced the time
required for getting an electricity con-
nection by improving its supervision of
trenching works.

Mauritania
Mauritania made starting a business
easier by eliminating the minimum
capital requirement.
Mauritania improved access to credit
information by lowering the threshold
for the minimum size of loans to
be included in the credit registry’s
database and by expanding borrower
coverage.
Mauritania reduced the documen-
tary and border compliance time for
importing by eliminating the preimport
declaration and value attestation and
making the manifest electronic.
Mauritius
In Mauritius the time required for
dealing with construction permits
was reduced by the hiring of a more
efficient subcontractor to establish
sewerage connections.
Mexico
Mexico improved access to credit by
implementing a decree allowing a gen-
eral description of assets granted as
collateral. This reform applies to both
Mexico City and Monterrey.
✔✔ Paying taxes
Mexico made paying taxes easier for
companies by abolishing the business
flat tax—though it also made paying
taxes more costly by allowing only a
portion of salaries to be deductible.
These changes apply to both Mexico
City and Monterrey. In addition, the
payroll tax rate paid by employers was
increased for Mexico City.
Moldova
Moldova made starting a business
easier by eliminating an inspection by
the Territorial State Fiscal Inspectorate.
Moldova improved its insolvency
system by introducing a licensing sys-
tem for insolvency administrators, by
increasing qualification requirements
to include a professional exam as well
as training and by establishing supervi-
sory bodies to regulate the profession
of insolvency administrators.
Mongolia
Mongolia made starting a business
easier by reducing the number of days
required to register a new company.
In Mongolia the credit registry
began distributing data from a utility
company, improving access to credit
information.
Montenegro
Montenegro made dealing with con-
struction permits easier by reducing
the time needed to issue building
permits.
✔✔ Paying taxes
Montenegro made paying taxes
easier for companies by introducing an
electronic system for filing and paying
labor taxes—though it also extended
the application of the “crisis tax” for an
indefinite period on income exceeding
€720 a month.
Morocco
Morocco made starting a business
easier by eliminating the need to file a
declaration of business incorporation
with the Ministry of Labor.
Morocco made dealing with construc-
tion permits more difficult by requiring
architects to submit the building
permit request online, along with sup-
porting documents, and to follow up
with a hard-copy submission. On the
other hand, Morocco reduced the time
required to obtain an urban certificate.
The utility in Morocco reduced the
time required for getting an electricity
connection by providing fee estimates
more quickly.
Morocco made property transfers
faster by establishing electronic com-
munication links between different tax
authorities.
✔✔ Paying taxes
Morocco made paying taxes easier for
companies by improving the electronic
platform for filing and paying corporate
income tax, VAT and labor taxes. On
the other hand, Morocco increased
the rate of the social charge paid by
employers.
Morocco implemented an unemploy-
ment insurance scheme.
Mozambique
✔✔ Paying taxes
Mozambique made paying taxes
easier and less costly for companies
by implementing an online system for
filing social security contributions and
by increasing the depreciation rate for
copying machines.
Myanmar
Myanmar made starting a business
easier by eliminating the minimum
capital requirement for local compa-
nies and streamlining incorporation
procedures.

Myanmar made getting an electric-
ity connection easier by reducing the
number of approvals required.
✘✘ Paying taxes
Myanmar made paying taxes more
costly and complicated for com-
panies by increasing the rate paid
by employers and ceiling for social
security contributions, requiring
additional documents for commercial
tax returns and introducing quarterly
preparation, filing and payment of cor-
porate income tax. At the same time,
Myanmar increased the rate of allow-
able depreciation.
Namibia
In Namibia the process of dealing with
construction permits became more
time-consuming as a result of inef-
ficiency at the municipality.
Namibia improved access to credit
information by guaranteeing by law
borrowers’ right to inspect their own
data.
Netherlands
✘✘ Paying taxes
The Netherlands made paying taxes
more costly for companies by increas-
ing employer-paid labor contributions
as well as road taxes, property taxes
and polder board taxes.
New Zealand
The utility in New Zealand reduced the
time required for getting an electricity
connection by improving its payment
monitoring and confirmation process
for the connection works.
Niger
Niger made starting a business eas-
ier by reducing the minimum capital
requirement.
Niger made dealing with construction
permits easier by reducing the time
required for companies to obtain a
water connection.
Niger improved its credit information
system by introducing regulations that
govern the licensing and functioning of
credit bureaus in the member states
of the West African Economic and
Monetary Union (UEMOA).
Niger increased the time and cost for
for importing by making a preshipment
inspection mandatory.
Nigeria
Nigeria made transferring property in
Lagos less costly by reducing fees for
property transactions.
Nigeria strengthened minority inves-
tor protections by requiring that
related-party transactions be subject
to external review and to approval
by disinterested shareholders. This
reform applies to both Kano and Lagos.
Norway
Norway made starting a business
easier by offering online government
registration and online bank account
registration.
✔✔ Paying taxes
Norway made paying taxes less costly
Oman
Oman improved the regulation of
outages by beginning to record data
for the annual system average inter-
ruption duration index (SAIDI) and
system average interruption frequency
index (SAIFI).
Oman reduced the time for border
compliance for both exporting and
importing by transferring cargo opera-
tions from Sultan Qaboos Port to Sohar
Port.
Peru
Peru improved its credit information
system by implementing a new law on
personal data protection.
✔✔ Paying taxes
Peru made paying taxes easier for
companies by creating an advanced
online registry with up-to-date infor-
mation on employees.
Philippines
The Philippines made starting a busi-
ness easier by streamlining commu-
nications between the Securities and
Exchange Commission and the Social
Security System and thereby expedit-
ing the process of issuing an employer
registration number.
Poland
The utility in Poland reduced delays
in processing applications for new
electricity connections by increasing
human and capital resources and by
enforcing service delivery timelines.
✔✔ Paying taxes
Poland made paying taxes easier for
companies by introducing an electron-
ic system for filing and paying VAT and
transport tax—though it also made
paying taxes more costly by increasing
transport tax rates and contributions
to the National Disabled Fund paid by
employers.
Portugal
✔✔ Paying taxes
Portugal made paying taxes less costly
rate income tax rate and increasing the

allowable amount of the loss carried
forward. At the same time, Portugal
slightly increased the vehicle tax.
Portugal introduced priority rules
for redundancy dismissals and new
regulations for collective bargaining
agreements.
Qatar
Qatar reduced the time for border
compliance for importing by reducing
the number of days of free storage at
the port and thus the time required for
port handling.
Romania
✔✔ Paying taxes
Romania made paying taxes less costly
for companies by reducing the rate for
social security contributions and the
rate for acccident risk fund contribu-
tions paid by employers.
Romania made enforcing contracts
easier by transferring some enforce-
ment responsibilities from the court
to the bailiff, by making it easier for
the bailiff to obtain information from
third parties and by making use of the
electronic auction registry mandatory.
Romania improved its insolvency
system by introducing time limits for
the observation period (during which
a reorganization plan must be con-
firmed or a declaration of bankruptcy
made) and for the implementation
of the reorganization plan; by intro-
ducing additional minimum voting
requirements for the approval of the
reorganization plan; and by clarifying
rules on voidable transactions and on
payment priority for claims of post-
commencement creditors.
Russian Federation
The Russian Federation made starting
a business in Moscow easier by reduc-
ing the number of days required to
open a corporate bank account.
Russia made the process of obtain-
ing an electricity connection simpler,
faster and less costly by eliminating a
meter inspection by electricity provid-
ers and revising connection tariffs. This
reform applies to both Moscow and St.
Petersburg.
Russia made transferring property
easier by reducing the time required
for property registration. This reform
applies to both Moscow and St.
Petersburg.
Russia improved access to credit by
adopting a new law on secured trans-
actions that established a centralized
collateral registry and allows a general
description of a combined category
of assets granted as collateral. This
reform applies to both Moscow and St.
Petersburg.
✔✔ Paying taxes
Russia made paying taxes less costly
for companies by excluding movable
property from the corporate prop-
erty tax base—though it also raised the
wage ceiling used in calculating social
contributions. These changes apply to
both Moscow and St. Petersburg. In
addition, the cadastral value of land in
Moscow was updated.
Rwanda
Rwanda made starting a business
easier by eliminating the need for new
companies to open a bank account in
order to register for VAT.
Rwanda made dealing with construc-
tion permits easier by adopting a new
building code and new urban planning
regulations.
In Rwanda the credit bureau started
to provide credit scores to banks and
other financial institutions while the
credit registry expanded borrower
coverage, strengthening the credit
reporting system.
Rwanda strengthened minority inves-
tor protections by introducing provi-
sions allowing holders of 10% of
a company’s shares to call for an
extraordinary meeting of shareholders,
requiring holders of special classes of
shares to vote on decisions affecting
their shares, requiring board members
to disclose information about their
directorships and primary employ-
ment and requiring that audit reports
for listed companies be published in a
newspaper.
✔✔ Paying taxes
Rwanda made paying taxes easier for
companies by introducing electronic
filing and making its use compulsory.
Rwanda increased the time and cost for
for importing by making preshipment
inspection mandatory for all imported
products.
Rwanda improved its insolvency sys-
tem by introducing provisions on void-
able transactions and the approval of
reorganization plans and by establish-
ing additional safeguards for creditors
in reorganization proceedings.
San Marino
San Marino made starting a business
easier by encouraging the use of the
online system for obtaining the opera-
tor code and business license.

Saudi Arabia
Saudi Arabia made property transfers
faster by introducing a new computer-
ized system at the land registry.
Senegal
Senegal made starting a business
tal requirement.
The utility in Senegal made getting
an electricity connection less time-
consuming by streamlining the review
of applications and the process for the
final connection as well as by reducing
the time needed to issue an excavation
permit. It also made getting electric-
ity less costly by reducing the security
deposit.
Senegal made transferring property
less costly by lowering the property
transfer tax.
Senegal made enforcing contracts
easier by introducing a law regulating
voluntary mediation.
Serbia
Serbia made dealing with construction
permits less costly by eliminating the
land development tax for warehouses.
On the other hand, it also introduced
a mandatory inspection of foundation
works.
✔✔ Paying taxes
Serbia made paying taxes easier for
companies by introducing an electron-
ic system for filing and paying VAT and
social security contributions as well as
by abolishing the urban land usage fee.
On the other hand, Serbia increased
the property tax and environmental
tax rates.
Seychelles
The Seychelles improved access to
credit information by establishing a
credit registry.
Slovak Republic
The Slovak Republic simplified the
process of starting a business by
introducing court registration at the
one-stop shop.
✔✔ Paying taxes
The Slovak Republic made paying taxes
easier for companies by introducing an
electronic filing and payment system
for VAT—and made paying taxes
less costly by reducing the corporate
income tax rate and making medical
health insurance tax deductible. At
the same time, the Slovak Republic
reduced the limit on losses carried
forward.
Spain
Spain strengthened minority investor
protections by requiring that major
sales of company assets be subject to
shareholder approval.
✔✔ Paying taxes
Spain made paying taxes less costly
for companies by reducing rates for
corporate income, capital gains and
environment taxes—and made it
easier by introducing the online Cl@ve
system for filing VAT returns. At the
same time, Spain reduced the amount
allowable for depreciation of fixed
assets and raised the ceiling for social
security contributions.
Sri Lanka
Sri Lanka made starting a business
to notify the Registrar of Companies
of the payment of stamp duty for the
initial issuance of shares.
Sri Lanka made dealing with construc-
tion permits less time-consuming by
streamlining the internal review pro-
cess for building permit applications.
St. Vincent and the Grenadines
St. Vincent and the Grenadines made
resolving insolvency easier by intro-
ducing a rehabilitation procedure;
introducing provisions to facilitate the
continuation of the debtor’s business
during insolvency proceedings and
allow creditors greater participation
in important decisions during the
proceedings; and establishing a public
office responsible for the general
administration of insolvency cases.
Suriname
Suriname reduced the time for
for exporting and importing by
implementing an automated customs
data management system, ASYCUDA
(Automated System for Customs
Data) World.
Swaziland
✔✔ Paying taxes
Swaziland made paying taxes less
corporate income tax rate. On the
other hand, Swaziland raised the ceil-
ing for the National Provident Fund
contribution.
Sweden
Sweden made starting a business
easier by requiring the company regis-
try to register a company in five days.
Switzerland
Switzerland made transferring prop-
erty easier by introducing a national
database to check for encumbrances.

Taiwan, China
The utility in Taiwan, China, reduced
the time required for getting an elec-
tricity connection through a simplified
procedure for obtaining excavation
permits from the municipality.
Tajikistan
✔✔ Paying taxes
Tajikistan made paying taxes easier
for companies by introducing an elec-
tronic filing and payment system for
corporate income tax, VAT and labor
taxes. On the other hand, it increased
real estate tax fees.
Tajikistan made trading across borders
easier by making it possible to submit
customs declarations electronically.
Tanzania
Tanzania reduced the time for both
exporting and importing by imple-
menting the Tanzania Customs
Integrated System (TANCIS), an online
system for downloading and process-
ing customs documents.
Togo
Togo made starting a business less
costly by reducing the fees to register
with the tax authority.
The utility in Togo reduced the time
and procedures for getting an electric-
ity connection through several initia-
tives, including by creating a single
window enabling customers to pay all
fees at once.
Togo reduced the time for documen-
tary and border compliance for import-
ing by implementing an electronic
platform connecting several agencies
for import procedures and payments.
Tonga
✘✘ Paying taxes
Tonga made paying taxes more compli-
cated for companies by reintroducing
the annual fee for a business license.
Trinidad and Tobago
✘✘ Getting electricity
Trinidad and Tobago made getting
electricity more costly by introducing a
capital contribution toward connection
costs.
Tunisia
✔✔ Paying taxes
Tunisia made paying taxes less costly
Tunisia reduced border compliance
time for both exporting and importing
by improving the efficiency of its state-
owned port handling company and
investing in port infrastructure at the
port of Rades.
Turkey
Turkey made dealing with construction
permits easier by streamlining the pro-
cess for obtaining the fire clearance.
Uganda
Uganda made starting a business
easier by introducing an online system
for obtaining a trading license and by
reducing business incorporation fees.
The utility in Uganda reduced delays
for new electricity connections by
deploying more customer service engi-
neers and reducing the time needed for
the inspection and meter installation.
In Uganda the credit bureau expanded
borrower coverage, improving access
to credit information.
Ukraine
Ukraine made starting a business
for VAT registration and by eliminating
business registration fees.
United Arab Emirates
The United Arab Emirates made deal-
ing with construction permits easier by
streamlining the process for obtaining
the civil defense approval.
The United Arab Emirates made get-
ting electricity easier by reducing the
time needed to provide a connection
cost estimate.
The United Arab Emirates strength-
ened minority investor protections by
barring a subsidiary from acquiring
shares in its parent company and by
requiring that a potential acquirer,
upon reaching 50% or more of the
capital of a company, make a purchase
offer to all shareholders.
The United Arab Emirates made
enforcing contracts easier by imple-
menting electronic service of process,
by introducing a new case manage-
ment office within the competent court
and by further developing the “Smart
Petitions” service allowing litigants to
file and track motions online.
United Kingdom
✔✔ Paying taxes
The United Kingdom made paying
taxes less costly for companies by
reducing the corporate income tax rate
and increasing the wage amount per
employee that is exempted from social
security contributions paid by employ-
ers. On the other hand, the United
Kingdom increased municipal tax rates
and environment taxes.

✘✘ Enforcing contracts
The United Kingdom made enforcing
contracts more costly by increasing
the court fees for filing a claim.
Uruguay
Uruguay made starting a business
more difficult by increasing incorpora-
tion costs.
✔✔ Paying taxes
Uruguay made paying taxes easier for
companies by continually upgrading
and improving the electronic system
for filing and paying the major taxes.
Uzbekistan
Uzbekistan made starting a business
easier by introducing an online one-
stop shop and streamlining registra-
tion procedures.
Uzbekistan made transferring property
to provide several different nonen-
cumbrance certificates, though it also
increased the costs associated with
property transfers.
Uzbekistan improved access to credit
by adopting new laws on secured
transactions that allow a general
description of assets granted as col-
lateral and establish a modern, unified,
notice-based collateral registry.
Vanuatu
Vanuatu improved the quality of land
administration by appointing a land
ombudsman to deal with complaints
relating to the land registry.
Vanuatu reduced the border compli-
ance time for importing by improving
infrastructure at the port of Vila.
Venezuela, RB
República Bolivariana de Venezuela
made starting a business more difficult
by increasing incorporation costs.
Vietnam
Vietnam made starting a business
to get the company seal engraved and
registered.
The utility in Vietnam reduced the
time required for getting an electric-
ity connection by reducing delays and
increasing efficiency in approving con-
nection applications and designs for
connection works.
Vietnam guaranteed borrowers’ right
to inspect their credit data while the
new credit bureau expanded borrower
coverage, improving the credit infor-
mation system.
✔✔ Paying taxes
Vietnam made paying taxes less
corporate income tax rate—and made
it easier by reducing the number of
procedures and documents for filing
VAT and social security contributions,
introducing electronic filing, reduc-
ing the number of filings for VAT and
replacing quarterly filings of corporate
income tax with quarterly advance
payments. On the other hand, Vietnam
increased the rate for social security
contributions paid by employers.
Vietnam made resolving insolvency
easier by clarifying and simplifying
provisions on liquidation and reor-
ganization, modifying the standard
for commencement of insolvency
proceedings, changing provisions on
voidable transactions, regulating the
profession of insolvency trustees and
establishing the rules for enterprise
asset managers.
West Bank and Gaza
West Bank and Gaza made dealing
with construction permits easier by
streamlining the process for obtaining
the civil defense permit and for sub-
mitting the stamped concrete casting
permit to the municipality.
The credit registry in West Bank and
Gaza began to distribute credit data
from retailers and utility companies.
Zambia
Zambia made starting a business more
difficult by increasing the registration
fees.
In Zambia the credit bureau began to
provide credit scores.
✔✔ Paying taxes
Zambia made paying taxes easier for
companies by implementing electronic
filing and payment for VAT. At the
same time, Zambia made paying taxes
more costly by increasing the property
transfer tax rate.
Zambia increased the documentary
and border compliance time for both
exporting and importing by shifting
all clearance authority to a central
processing center at the initial stage of
implementing a web-based customs
platform (ASYCUDA World).
Zimbabwe
In Zimbabwe the credit bureau began
to provide credit scores.
Zimbabwe strengthened minor-
ity investor protections by introducing
provisions allowing legal practitioners
to enter into contingency fee agree-
ments with clients.

Country tables
✔ Reform making it easier to do business ✘ Change making it more difficult to do business
Afghanistan South Asia GNI per capita (US$) 680
Ease of doing business rank (1–189) 177 Overall distance to frontier (DTF) score (0–100) 40.58 Population (m) 31.3
✘ Starting a business (rank) 34 ✔ Getting credit (rank) 97 Trading across borders (rank) 174
DTF score for starting a business (0–100) 93.05 DTF score for getting credit (0–100) 45.00 DTF score for trading across borders (0–100) 28.90
Procedures (number) 3 Strength of legal rights index (0–12) 9 Time to export
Time (days) 7 Depth of credit information index (0–8) 0 Documentary compliance (hours) 243
Cost (% of income per capita) 19.0 Credit bureau coverage (% of adults) 0.0 Border compliance (hours) 48
Minimum capital (% of income per capita) 0.0 Credit registry coverage (% of adults) 0.5 Domestic transport (hours) 14
Cost to export
Dealing with construction permits (rank) 185 Protecting minority investors (rank) 189 Documentary compliance (US$) 344
DTF score for dealing with construction permits (0–100) 22.94 DTF score for protecting minority investors (0–100) 10.00 Border compliance (US$) 511
Procedures (number) 11 Extent of conflict of interest regulation index (0–10) 1.7 Domestic transport (US$) 400
Time (days) 353 Extent of shareholder governance index (0–10) 0.3 Time to import
Cost (% of warehouse value) 76.6 Strength of minority investor protection index (0–10) 1.0 Documentary compliance (hours) 336
Building quality control index (0–15) 1.5 Border compliance (hours) 96
Paying taxes (rank) 89 Domestic transport (hours) 24
Getting electricity (rank) 156 DTF score for paying taxes (0–100) 74.14 Cost to import
DTF score for getting electricity (0–100) 45.52 Payments (number per year) 20 Documentary compliance (US$) 900
Procedures (number) 5 Time (hours per year) 275 Border compliance (US$) 850
Time (days) 114 Total tax rate (% of profit) 36.3 Domestic transport (US$) 400
Cost (% of income per capita) 3,469.7
Reliability of supply and transparency of tariffs index (0–8) 0 Enforcing contracts (rank) 172 Resolving insolvency (rank) 160
DTF score for enforcing contracts (0–100) 35.11 DTF score for resolving insolvency (0–100) 23.62
Registering property (rank) 184 Time (days) 1,642 Time (years) 2.0
DTF score for registering property (0–100) 27.50 Cost (% of claim) 25.0 Cost (% of estate) 25
Procedures (number) 9 Quality of judicial processes index (0–18) 6 Recovery rate (cents on the dollar) 26.5
Time (days) 250 Strength of insolvency framework index (0–16) 3
Cost (% of property value) 5.0
Quality of land administration index (0–30) 3
Albania Europe Central Asia GNI per capita (US$) 4,460
Starting a business (rank) 58 Getting credit (rank) 42 ✔ Trading across borders (rank) 37
Time (days) 5.5 Depth of credit information index (0–8) 6 Documentary compliance (hours) 6
Cost to export
✘ Dealing with construction permits (rank) 189 ✔ Protecting minority investors (rank) 8 Documentary compliance (US$) 57
Procedures (number) NO PRACTICE Extent of conflict of interest regulation index (0–10) 7.7 Domestic transport (US$) 143
Time (days) NO PRACTICE Extent of shareholder governance index (0–10) 7.0 Time to import
Cost (% of warehouse value) NO PRACTICE Strength of minority investor protection index (0–10) 7.3 Documentary compliance (hours) 8
Building quality control index (0–15) 0 Border compliance (hours) 9
Cost (% of income per capita) 491.4
Registering property (rank) 107 Time (days) 525 Time (years) 2.0
Note: Most indicator sets refer to a case scenario in the largest business city of an economy, though for 11 economies the data are a population-weighted average for the two largest business cities. For some
indicators a result of “no practice” may be recorded for an economy; see the data notes for more details.

Algeria Middle East North Africa GNI per capita (US$) 5,340
✔ Starting a business (rank) 145 Getting credit (rank) 174 Trading across borders (rank) 176
Cost to export
✔ Dealing with construction permits (rank) 122 Protecting minority investors (rank) 174 Documentary compliance (US$) 374
Procedures (number) 10 Quality of judicial processes index (0–18) 5.5 Recovery rate (cents on the dollar) 50.8
Time (days) 55 Strength of insolvency framework index (0–16) 6.5
Angola Sub-Saharan Africa GNI per capita (US$) 5,300
Cost to export
✔ Paying taxes (rank) 141 Domestic transport (hours) 5
Registering property (rank) 169 Time (days) 1,296 Time (years) NO PRACTICE
DTF score for registering property (0–100) 40.87 Cost (% of claim) 44.4 Cost (% of estate) NO PRACTICE
Antigua and Barbuda Latin America Caribbean GNI per capita (US$) 13,360
Starting a business (rank) 107 Getting credit (rank) 152 Trading across borders (rank) 114
Cost to export

185Country Tables
Argentina Latin America Caribbean GNI per capita (US$) 14,560
Cost to export
Procedures (number) 21 Extent of conflict of interest regulation index (0–10) 5.0 Domestic transport (US$) 1,700
Procedures (number) 6 Time (hours per year) 405 Border compliance (US$) 1,200
Time (days) 51.5 Strength of insolvency framework index (0–16) 9.5
Armenia Europe Central Asia GNI per capita (US$) 3,810
Cost to export
Reliability of supply and transparency of tariffs index (0–8) 4 ✔ Enforcing contracts (rank) 28 Resolving insolvency (rank) 71
Australia OECD high income GNI per capita (US$) 64,680
Cost to export
Time (days) 4.5 Strength of insolvency framework index (0–16) 12

Austria OECD high income GNI per capita (US$) 49,366
Cost to export
Azerbaijan Europe Central Asia GNI per capita (US$) 7,590
Cost to export
✔ Dealing with construction permits (rank) 114 ✔ Protecting minority investors (rank) 36 Documentary compliance (US$) 300
Quality of land administration index (0–30) 15.5
Bahamas, The Latin America Caribbean GNI per capita (US$) 21,010
✘ Starting a business (rank) 118 Getting credit (rank) 133 ✔ Trading across borders (rank) 97
Cost to export

187Country Tables
Bahrain Middle East North Africa GNI per capita (US$) 28,272
Cost to export
Bangladesh South Asia GNI per capita (US$) 1,080
Cost (% of income per capita) 13.9 Credit bureau coverage (% of adults) 0.0 Border compliance (hours) 99.7
Cost to export
DTF score for dealing with construction permits (0–100) 65.27 DTF score for protecting minority investors (0–100) 53.33 Border compliance (US$) 408.2
Procedures (number) 13.4 Extent of conflict of interest regulation index (0–10) 6.3 Domestic transport (US$) 196.9
Procedures (number) 9 Time (hours per year) 302 Border compliance (US$) 1,293.8
Time (days) 428.9 Total tax rate (% of profit) 31.6 Domestic transport (US$) 196.9
Barbados Latin America Caribbean GNI per capita (US$) 15,579
Cost to export
✘ Paying taxes (rank) 99 Domestic transport (hours) 1

Belarus Europe Central Asia GNI per capita (US$) 7,340
Cost to export
✔ Registering property (rank) 7 Time (days) 275 Time (years) 3.0
Belgium OECD high income GNI per capita (US$) 47,030
Cost to export
Belize Latin America Caribbean GNI per capita (US$) 4,760
Cost to export

189Country Tables
Benin Sub-Saharan Africa GNI per capita (US$) 810
✔ Starting a business (rank) 115 Getting credit (rank) 133 ✔ Trading across borders (rank) 116
Cost to export
Bhutan South Asia GNI per capita (US$) 2,390
Cost to export
✔ Getting electricity (rank) 50 DTF score for paying taxes (0–100) 85.50 Cost to import
✔ Registering property (rank) 51 Time (days) 225 Time (years) NO PRACTICE
Bolivia Latin America Caribbean GNI per capita (US$) 2,830
Cost to export
Procedures (number) 8 Time (hours per year) 1,025 Border compliance (US$) 315

Bosnia and Herzegovina Europe Central Asia GNI per capita (US$) 4,770
Cost to export
Botswana Sub-Saharan Africa GNI per capita (US$) 7,880
Cost to export
Brazil Latin America Caribbean GNI per capita (US$) 11,760
Minimum capital (% of income per capita) 0.0 Credit registry coverage (% of adults) 55.1 Domestic transport (hours) 11.4
Cost to export
Dealing with construction permits (rank) 169 Protecting minority investors (rank) 29 Documentary compliance (US$) 226.4
Procedures (number) 18.2 Extent of conflict of interest regulation index (0–10) 5.7 Domestic transport (US$) 1,159
Time (days) 425.7 Extent of shareholder governance index (0–10) 7.3 Time to import
Cost (% of warehouse value) 0.4 Strength of minority investor protection index (0–10) 6.5 Documentary compliance (hours) 146.1
Building quality control index (0–15) 9.4 Border compliance (hours) 63.1
Paying taxes (rank) 178 Domestic transport (hours) 13.4
DTF score for getting electricity (0–100) 85.50 Payments (number per year) 9.6 Documentary compliance (US$) 106.9
Procedures (number) 4 Time (hours per year) 2,600 Border compliance (US$) 969.6
Time (days) 43.6 Total tax rate (% of profit) 69.2 Domestic transport (US$) 1,159
Reliability of supply and transparency of tariffs index (0–8) 5.6 Enforcing contracts (rank) 45 Resolving insolvency (rank) 62
✘ Registering property (rank) 130 Time (days) 731 Time (years) 4.0
Procedures (number) 13.6 Quality of judicial processes index (0–18) 13.1 Recovery rate (cents on the dollar) 22.4

191Country Tables
Brunei Darussalam East Asia Pacific GNI per capita (US$) 36,607
Cost to export
Bulgaria Europe Central Asia GNI per capita (US$) 7,420
Cost to export
Burkina Faso Sub-Saharan Africa GNI per capita (US$) 710
Cost to export

Burundi Sub-Saharan Africa GNI per capita (US$) 270
Cost to export
DTF score for getting electricity (0–100) 26.45 Payments (number per year) 25 Documentary compliance (US$) 1,025
Cabo Verde Sub-Saharan Africa GNI per capita (US$) 3,520
Cost to export
✔ Registering property (rank) 74 Time (days) 425 Time (years) NO PRACTICE
Cambodia East Asia Pacific GNI per capita (US$) 1,010
Cost to export
Time (days) 179 Total tax rate (% of profit) 21.0 Domestic transport (US$) 1,125

193Country Tables
Cameroon Sub-Saharan Africa GNI per capita (US$) 1,350
Cost to export
Canada OECD high income GNI per capita (US$) 51,690
Cost to export
Central African Republic Sub-Saharan Africa GNI per capita (US$) 330
Cost to export

Chad Sub-Saharan Africa GNI per capita (US$) 1,010
Cost to export
Chile OECD high income GNI per capita (US$) 14,900
Cost to export
Reliability of supply and transparency of tariffs index (0–8) 6 Enforcing contracts (rank) 56 ✔ Resolving insolvency (rank) 58
China East Asia Pacific GNI per capita (US$) 7,380
Ease of doing business rank (1–189) 84 Overall distance to frontier (DTF) score (0–100) 62.93 Population (m) 1,364.3
Time (days) 31.4 Depth of credit information index (0–8) 6 Documentary compliance (hours) 21.2
Cost (% of income per capita) 0.7 Credit bureau coverage (% of adults) 0.0 Border compliance (hours) 25.9
Minimum capital (% of income per capita) 0.0 Credit registry coverage (% of adults) 89.5 Domestic transport (hours) 6.7
Cost to export
Dealing with construction permits (rank) 176 Protecting minority investors (rank) 134 Documentary compliance (US$) 84.6
Time (days) 244.3 Extent of shareholder governance index (0–10) 3.7 Time to import
Cost (% of warehouse value) 7.2 Strength of minority investor protection index (0–10) 4.3 Documentary compliance (hours) 65.7
Building quality control index (0–15) 9 Border compliance (hours) 92.3
✔ Paying taxes (rank) 132 Domestic transport (hours) 6.7
DTF score for getting electricity (0–100) 68.66 Payments (number per year) 9 Documentary compliance (US$) 170.9
Procedures (number) 5.5 Time (hours per year) 261 Border compliance (US$) 776.6
Time (days) 143.2 Total tax rate (% of profit) 67.8 Domestic transport (US$) 319.6
Registering property (rank) 43 Time (days) 452.8 Time (years) 1.7

195Country Tables
Colombia Latin America Caribbean GNI per capita (US$) 7,780
Cost to export
Comoros Sub-Saharan Africa GNI per capita (US$) 840
✔ Starting a business (rank) 163 ✔ Getting credit (rank) 109 Trading across borders (rank) 80
Cost to export
Registering property (rank) 123 Time (days) 506 Time (years) NO PRACTICE
Congo, Dem. Rep. Sub-Saharan Africa GNI per capita (US$) 410
✔ Starting a business (rank) 89 Getting credit (rank) 133 ✘ Trading across borders (rank) 187
Cost to export
✔ Dealing with construction permits (rank) 131 Protecting minority investors (rank) 174 Documentary compliance (US$) 2,500
DTF score for dealing with construction permits (0–100) 62.43 DTF score for protecting minority investors (0–100) 33.33 Border compliance (US$) 1,323

Congo, Rep. Sub-Saharan Africa GNI per capita (US$) 2,680
Cost to export
Costa Rica Latin America Caribbean GNI per capita (US$) 9,750
Starting a business (rank) 121 ✔ Getting credit (rank) 7 Trading across borders (rank) 67
Cost to export
Côte d’Ivoire Sub-Saharan Africa GNI per capita (US$) 1,550
Cost to export

197Country Tables
Croatia Europe Central Asia GNI per capita (US$) 13,020
Cost to export
Cyprus Europe Central Asia GNI per capita (US$) 26,370
Starting a business (rank) 64 ✔ Getting credit (rank) 42 Trading across borders (rank) 43
Cost to export
Procedures (number) 5 Time (hours per year) 145.5 Border compliance (US$) 335
Reliability of supply and transparency of tariffs index (0–8) 7 ✔ Enforcing contracts (rank) 143 ✔ Resolving insolvency (rank) 17
Czech Republic OECD high income GNI per capita (US$) 17,795
Cost to export

Denmark OECD high income GNI per capita (US$) 61,310
Cost to export
Djibouti Middle East North Africa GNI per capita (US$) 1,692
Cost to export
Dealing with construction permits (rank) 124 Protecting minority investors (rank) 174 Documentary compliance (US$) 1,717
DTF score for getting electricity (0–100) 38.90 Payments (number per year) 36 Documentary compliance (US$) 1,737
Dominica Latin America Caribbean GNI per capita (US$) 7,070
Cost to export

199Country Tables
Dominican Republic Latin America Caribbean GNI per capita (US$) 5,950
Cost to export
Ecuador Latin America Caribbean GNI per capita (US$) 6,040
Cost to export
Egypt, Arab Rep. Middle East North Africa GNI per capita (US$) 3,280
Cost to export
Dealing with construction permits (rank) 113 ✔ Protecting minority investors (rank) 122 Documentary compliance (US$) 100

El Salvador Latin America Caribbean GNI per capita (US$) 3,780
Starting a business (rank) 125 ✔ Getting credit (rank) 15 ✘ Trading across borders (rank) 46
Cost to export
Equatorial Guinea Sub-Saharan Africa GNI per capita (US$) 13,340
Cost to export
Eritrea Sub-Saharan Africa GNI per capita (US$) 530
Time (days) 84 Depth of credit information index (0–8) 0 Documentary compliance (hours) NO PRACTICE
Cost (% of income per capita) 38.1 Credit bureau coverage (% of adults) 0.0 Border compliance (hours) NO PRACTICE
Minimum capital (% of income per capita) 167.2 Credit registry coverage (% of adults) 0.0 Domestic transport (hours) NO PRACTICE
Cost to export
Dealing with construction permits (rank) 189 Protecting minority investors (rank) 122 Documentary compliance (US$) NO PRACTICE
DTF score for dealing with construction permits (0–100) 0.00 DTF score for protecting minority investors (0–100) 45.00 Border compliance (US$) NO PRACTICE
Procedures (number) NO PRACTICE Extent of conflict of interest regulation index (0–10) 4.7 Domestic transport (US$) NO PRACTICE
Time (days) NO PRACTICE Extent of shareholder governance index (0–10) 4.3 Time to import
Cost (% of warehouse value) NO PRACTICE Strength of minority investor protection index (0–10) 4.5 Documentary compliance (hours) NO PRACTICE
Building quality control index (0–15) 0 Border compliance (hours) NO PRACTICE
Paying taxes (rank) 174 Domestic transport (hours) NO PRACTICE
DTF score for getting electricity (0–100) 53.43 Payments (number per year) 30 Documentary compliance (US$) NO PRACTICE
Procedures (number) 5 Time (hours per year) 216 Border compliance (US$) NO PRACTICE
Time (days) 59 Total tax rate (% of profit) 83.7 Domestic transport (US$) NO PRACTICE

201Country Tables
Estonia OECD high income GNI per capita (US$) 18,530
Cost to export
Ethiopia Sub-Saharan Africa GNI per capita (US$) 550
Cost to export
Fiji East Asia Pacific GNI per capita (US$) 4,540
Cost to export

Finland OECD high income GNI per capita (US$) 47,380
Cost to export
France OECD high income GNI per capita (US$) 43,080
Cost to export
Gabon Sub-Saharan Africa GNI per capita (US$) 9,320
Cost to export
✘ Dealing with construction permits (rank) 164 Protecting minority investors (rank) 155 Documentary compliance (US$) 328
✔ Registering property (rank) 173 Time (days) 1,070 Time (years) 5.0

203Country Tables
Gambia, The Sub-Saharan Africa GNI per capita (US$) 450
Cost to export
Georgia Europe Central Asia GNI per capita (US$) 3,720
Cost to export
Germany OECD high income GNI per capita (US$) 47,640
Cost to export

Ghana Sub-Saharan Africa GNI per capita (US$) 1,620
Cost to export
Greece OECD high income GNI per capita (US$) 22,090
Cost to export
Grenada Latin America Caribbean GNI per capita (US$) 7,850
Cost to export

205Country Tables
Guatemala Latin America Caribbean GNI per capita (US$) 3,440
Cost to export
Guinea Sub-Saharan Africa GNI per capita (US$) 480
Cost to export
Guinea-Bissau Sub-Saharan Africa GNI per capita (US$) 570
Cost (% of income per capita) 43.2 Cre

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