CREATING JOBS 2006

Egypt among top reformers ?!

"Doing Business in 2006: Creating Jobs" – the annual report just released by the World Bank and the International Finance Corporation - finds that reforms, while often simple, can create many new jobs.

"Jobs are a priority for every country, and especially the poorest countries. Doing more to improve regulation and help entrepreneurs is key to creating more jobs--and more growth. It is also a key to fighting poverty. Women, who make up three quarters of the work force in some developing economies, will be big beneficiaries." said Paul Wolfowitz, President of the World Bank Group.

The annual report, which for the first time provides a global ranking of 155 nations on key business regulations and reforms, finds that Middle Eastern and North African nations impose many regulatory obstacles on entrepreneurs and have been the second-slowest reformers over the past year, after Sub-Saharan Africa.

The report tracks a set of regulatory indicators related to business startup, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements. It does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.

Overall, European nations were the most active in enacting reforms. The top 12 reformers in the past year, in order, were Serbia and Montenegro, Georgia, Vietnam, Slovakia, Germany, Egypt, Finland, Romania, Latvia, Pakistan, Rwanda, and the Netherlands.

"Many Middle Eastern and North African countries that desperately need new enterprises and jobs risk falling even further behind other countries that are simplifying regulation and making their investment climates more business friendly," said Michael Klein, World Bank/IFC Vice President for Private Sector Development and IFC Chief Economist.

However, the authors of the study did note exceptions: Egypt is among the biggest reformers in the past year, with reforms in the company registry, the credit registry, the property registry, and the customs office. Saudi Arabia also implemented several reforms, for example, establishing a private credit bureau and easing the entry of new businesses. Tunisia has one of the most efficient court systems in the world: it takes only a month to enforce a simple commercial contract. In the United Arab Emirates, it takes a business only 12 hours a year to comply with all tax regulations.

Some of the reforms in Middle Eastern and North African countries in the past year: Tunisia reduced the minimum capital requirement for starting a business to a tenth of what it had been. Egypt cut the fees for registering commercial property by a third, from 4.5 to 3 percent of the property value. The credit registry in Lebanon decreased its loan cutoff from $6,600 to $6,000, adding 10,000 more borrowers to the registry. This reform helps lenders evaluate creditworthiness. Egypt was the world's top reformer of customs procedures. It established a single window for trade documentation and merged 26 approvals into 5. Improvements at customs were part of a broader reform that cut the number of tariff bands from 27 to 6 and simplified inspection procedures at the border. In the United Arab Emirates new berths were added at Jebel Ali port. Last year it took 6 days to load cargo - now, an average of 17 hours.

Doing Business in 2006 updates the work of last year's report in seven sets of business environment indicators: starting a business, hiring and firing workers, enforcing contracts, registering property, getting credit, protecting investors, and closing a business. It expands the research to 155 countries and adds three new indicators, dealing with business licenses, trading across borders, and paying taxes.

The top 30 economies in the world in terms of the report's ease-of-doing-business index, in order, are New Zealand, Singapore, the United States, Canada, Norway, Australia, Hong Kong/China, Denmark, the United Kingdom, Japan, Ireland, Iceland, Finland, Sweden, Lithuania, Estonia, Switzerland, Belgium, Germany, Thailand, Malaysia, Puerto Rico, Mauritius, the Netherlands, Chile, Latvia, Korea, South Africa, Israel, and Spain.

All the top countries regulate businesses, but they do so in less costly and burdensome ways. The Nordic countries, all of which are on the top 30 list, do not regulate too little. Instead, they have simple regulations that allow businesses to be productive and focus intervention where it counts-protecting property rights and providing social services

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