(2014) Haïti Doing Business 2015: Profil Économique

Haiti Doing Business 2015 Economy Profile 2015 Haiti 92035 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 2 Haiti Doing Business 2015 © 2014 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org All rights reserved. 1 2 3 4 17 16 15 14 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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ISBN (paper): 978-1-4648-0351-2 ISBN (electronic): 978-1-4648-0352-9 DOI: 10.1596/978-1-4648-0351-2 ISSN: 1729-2638 Cover design: Corporate Visions, Inc. 3 Haiti Doing Business 2015 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 6 Starting a business ..................................................................................................................... 16 Dealing with construction permits ........................................................................................... 24 Getting electricity ....................................................................................................................... 31 Registering property .................................................................................................................. 36 Getting credit .............................................................................................................................. 42 Protecting minority investors ................................................................................................... 49 Paying taxes ................................................................................................................................ 57 Trading across borders .............................................................................................................. 61 Enforcing contracts .................................................................................................................... 66 Resolving insolvency .................................................................................................................. 72 Labor market regulation ........................................................................................................... 66 Distance to frontier and ease of doing business ranking ...................................................... 80 Resources on the Doing Business website .............................................................................. 83 4 Haiti Doing Business 2015 INTRODUCTION Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a 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 and labor market regulation. In a series of annual reports Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 189 economies, from Afghanistan to Zimbabwe, over time. The data set covers 47 economies in Sub- Saharan Africa, 32 in Latin America and the Caribbean, 25 in East Asia and the Pacific, 26 in Eastern Europe and Central Asia, 20 in the Middle East and North Africa and 8 in South Asia, as well as 31 OECD high-income economies. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why. This economy profile presents the Doing Business indicators for Haiti. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2014 (except for the paying taxes indicators, which cover the period January–December 2013). The Doing Business methodology has limitations. Other areas important to business—such as an economy’s proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders and getting electricity), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions—are not directly studied by Doing Business. The indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policy makers in designing regulatory reform. More information is available in the full report. Doing Business 2015 presents the indicators, analyzes their relationship with economic outcomes and presents business regulatory reforms. The data, along with information on ordering Doing Business 2015, are available on the Doing Business website at http://www.doingbusiness.org. 5 Haiti Doing Business 2015 CHANGES IN DOING BUSINESS 2015 As part of a 2-year update in methodology, Doing Business 2015 incorporates 7 important changes. First, the ease of doing business ranking as well as all topic- level rankings are now computed on the basis of distance to frontier scores (see the chapter on the distance to frontier and ease of doing business ranking). Second, for the 11 economies with a population of more than 100 million, data for a second city have been added to the data set and the ranking calculation. These economies are Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States. Third, for getting credit, the methodology has been revised for both the strength of legal rights index and the depth of credit information index. The number of points has been increased in both indices, from 10 to 12 for the strength of legal rights index and from 6 to 8 for the depth of credit information index. In addition, only credit bureaus and registries that cover at least 5% of the adult population can receive a score on the depth of credit information index. Fourth, the name of the protecting investors indicator set has been changed to protecting minority investors to better reflect its scope—and the scope of the indicator set has been expanded to include shareholders’ rights in corporate governance beyond related-party transactions. Fifth, the resolving insolvency indicator set has been expanded to include an index measuring the strength of the legal framework for insolvency. Sixth, the calculation of the distance to frontier score for paying taxes has been changed. The total tax rate component now enters the score in a nonlinear fashion, in an approach different from that used for all other indicators (see the chapter on the distance to frontier and ease of doing business ranking). Finally, the name of the employing workers indicator set has been changed to labor market regulation, and the scope of this indicator set has also been changed. The indicators now focus on labor market regulation applying to the retail sector rather than the manufacturing sector, and their coverage has been expanded to include regulations on labor disputes and on benefits provided to workers. The labor market regulation indicators continue to be excluded from the aggregate distance to frontier score and ranking on the ease of doing business. Beyond these changes there are 3 other updates in methodology. For paying taxes, the financial statement variables have been updated to be proportional to 2012 income per capita; previously they were proportional to 2005 income per capita. For enforcing contracts, the value of the claim is now set at twice the income per capita or $5,000, whichever is greater. For dealing with construction permits, the cost of construction is now set at 50 times income per capita (before, the cost was assessed by the Doing Business respondents). In addition, this indicator set no longer includes the procedures for obtaining a landline telephone connection. For more details on the changes, see the “What is changing in Doing Business?” chapter starting on page 24 of the Doing Business 2015 report. For more details on the data and methodology, please see the “Data Notes” chapter starting on page 114 of the Doing Business 2015 report. For more details on the distance to frontier metric, please see the “Distance to frontier and ease of doing business ranking” chapter in this profile. 6 Haiti Doing Business 2015 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to start is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing business based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size businesses through their life cycle. Economies are ranked from 1 to 189 by the ease of doing business ranking. This year's report presents results for 2 aggregate measures: the distance to frontier score and the ease of doing business ranking. The ranking of economies is determined by sorting the aggregate distance to frontier (DTF) scores. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. 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. (See the chapter on the distance to frontier and ease of doing business). The 10 topics included in the ranking in Doing Business 2015: 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. The labor market regulation indicators (formerly employing workers) are not included in this year’s aggregate ease of doing business ranking, but the data are presented in this year’s economy profile. The aggregate ranking on the ease of doing business benchmarks each economy’s performance on the indicators against that of all other economies in the Doing Business sample (figure 1.1). While this ranking tells much about the business environment in an economy, it does not tell the whole story. The ranking on the ease of doing business, and the underlying indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business. ECONOMY OVERVIEW Region: Latin America & Caribbean Income category: Low income Population: 10,317,461 GNI per capita (US$): 810 DB2015 rank: 180 DB2014 rank: 181* Change in rank: 1 DB 2015 DTF: 42.2 DB 2014 DTF: 41.5 Change in DTF: 0.7 * DB2014 ranking shown is not last year’s published ranking but a comparable ranking for DB2014 that captures the effects of such factors as data corrections and the changes in methodology. See the data notes starting on page 114 of the Doing Business 2015 report for sources and definitions. Haiti Doing Business 201 5 THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global rank ing on the ease of doing business Source: Doing Business database. Haiti Doing Business 2015 THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy stands in the aggregate ranking on the ease of doing business is useful. Also useful is to know how it ranks relative to comparator economies and relative to the regional average (figure 1.2). The economy’s rankings (figure 1.3) and distance to frontier scores (figure 1.4) on the topics included in the ease of doing business ranking provide another perspective. Figure 1.2 How Haiti and comparator economies rank on the ease of doing business Note: The rankings are benchmarked to June 2014 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. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. 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. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. 9 Haiti Doing Business 2015 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Haiti (Scale: Rank 189 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - Haiti (Scale: Score 0 center, Score 100 outer edge) Note: The rankings are benchmarked to June 2014 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. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. 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. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. 10 Haiti Doing Business 2015 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business tells only part of the story, so do changes in that ranking. Yearly movements in rankings can provide some indication of changes in an economy’s regulatory environment for firms, but they are always relative. Moreover, year-to-year changes in the overall rankings do not reflect how the business regulatory environment in an economy has changed over time—or how it has changed in different areas. To aid in assessing such changes, Doing Business introduced the distance to frontier score. This measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator. Comparing the measure for an economy at 2 points in time allows users to assess how much the economy’s regulatory environment as measured by Doing Business has changed over time—how far it has moved toward (or away from) the most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.5). Figure 1.5 How far has Haiti come in the areas measured by Doing Business? Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2010, except for getting credit, paying taxes, protecting minority investors and resolving insolvency which had methodology changes in 2014 and thus are only comparable to 2013. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing Business 2015 report for more details on the distance to frontier score. Source: Doing Business database. 11 Haiti Doing Business 2015 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part of the story (table 1.1). The indicators, on their own or in comparison with the indicators of a good practice economy or those of comparator economies in the region, may reveal bottlenecks reflected in large numbers of procedures, long delays or high costs. Or they may reveal unexpected strengths in an area of business regulation—such as a regulatory process that can be completed with a small number of procedures in a few days and at a low cost. Comparison of the economy’s indicators today with those in the previous year may show where substantial bottlenecks persist—and where they are diminishing. Table 1.1 Summary of Doing Business indicators for Haiti Indicator Haiti DB2015 Haiti DB2014 Dominican Republic DB2015 Guyana DB2015 Jamaica DB2015 Mexico DB2015 Puerto Rico (U.S.) DB2015 Suriname DB2015 Best performer globally DB2015 Starting a Business (rank) 188 187 113 99 20 67 48 181 New Zealand (1) Starting a Business (DTF Score) 33.48 33.39 81.60 83.62 94.13 88.85 91.17 48.05 New Zealand (99.96) Procedures (number) 12.0 12.0 7.0 8.0 2.0 6.0 6.0 13.0 New Zealand (1.0 )* Time (days) 97.0 97.0 19.5 19.0 15.0 6.3 6.0 84.0 New Zealand ( 0.5) Cost (% of income per capita) 246.7 264.8 16.9 11.5 6.0 18.6 0.8 106.4 Slovenia ( 0.0) Paid-in min. capital (% of income per capita) 17.6 19.1 43.0 0.0 0.0 0.0 0.0 0.3 112 Economies (0 .0)* Dealing with Construction Permits (rank) 132 138 96 38 26 108 158 79 Hong Kong SAR, China (1) Dealing with Construction Permits (DTF Score) 64.42 62.35 70.88 80.06 83.17 68.43 56.28 74.13 Hong Kong SAR, China (95.53) 12 Haiti Doing Business 2015 Indicator Haiti DB2015 Haiti DB2014 Dominican Republic DB2015 Guyana DB2015 Jamaica DB2015 Mexico DB2015 Puerto Rico (U.S.) DB2015 Suriname DB2015 Best performer globally DB2015 Procedures (number) 8.0 8.0 13.0 7.0 7.0 11.3 20.0 10.0 Hong Kong SAR, China (5.0) Time (days) 71.0 71.0 184.0 195.0 135.0 87.6 165.0 223.0 Singap ore (26.0) Cost (% of warehouse value) 16.4 17.6 2.0 0.6 2.2 10.3 6.2 0.2 Qatar (0.0)* Getting Electricity (rank) 94 95 119 155 111 116 32 69 Korea, Rep. (1) Getting Electricity (DTF Score) 73.97 72.72 67.36 57.21 70.36 68.47 85.41 78.68 Korea, Rep. (99.83) Procedures (number) 4.0 4.0 7.0 8.0 6.0 6.8 5.0 4.0 12 Economies (3.0)* Time (days) 60.0 60.0 82.0 109.0 96.0 78.9 32.0 113.0 Korea, Re p. (18.0)* Cost (% of income per capita) 3,495.8 3,800.1 276.9 442.9 406.3 346.1 352.9 486.1 Japan (0.0) Registering Property (rank) 175 176 82 103 126 110 163 178 Georgia (1) Registering Property (DTF Score) 39.79 39.64 69.90 64.08 59.36 62.45 47.90 38.92 Georgia (99.88) Procedures (number) 5.0 5.0 6.0 6.0 6.0 6.8 8.0 6.0 4 Economies (1.0)* Time (days) 312.0 312.0 51.0 75.0 36.0 63.6 193.5 106.0 3 Econo mies (1.0)* Cost (% of property value) 7.1 7.2 3.7 4.6 9.5 5.1 0.9 13.7 4 Economies (0.0)* Getting Credit (rank) 171 169 89 165 12 12 7 171 New Zealand (1) Getting Credit (DTF Score) 10.00 10.00 45.00 15.00 80.00 80.00 85.00 10.00 New Zealand (100) Strength of legal rights index (0-12) 2 2 1 3 10 8 10 2 3 Economies (12)* 13 Haiti Doing Business 2015 Indicator Haiti DB2015 Haiti DB2014 Dominican Republic DB2015 Guyana DB2015 Jamaica DB2015 Mexico DB2015 Puerto Rico (U.S.) DB2015 Suriname DB2015 Best performer globally DB2015 Depth of credit information index (0-8) 0 0 8 0 6 8 7 0 23 Economies (8)* Credit registry coverage (% of adults) 1.1 1.1 38.1 0.0 0.0 0.0 0.0 0.0 Portugal (100.0) Credit bureau coverage (% of adults) 0.0 0.0 63.1 0.0 10.1 100.0 100.0 0.0 23 Economies (100.0)* Protecting Minority Investors (rank) 187 187 83 135 71 62 78 171 New Zealand (1) Protecting Minority Investors (DTF Score) 20.00 20.00 54.17 44.17 56.67 57.50 55.00 34.17 New Zealand (81.67) Extent of conflict of interest regulation index (0-10) 3.0 3.0 5.3 5.3 5.7 6.0 7.0 2.3 Singapore (9.3)* Extent of shareholder governance index (0- 10) 1.0 1.0 5.5 3.5 5.7 5.5 4.0 4.5 France (7.8)* Strength of minority investor protection index (0-10) 2.0 2.0 5.4 4.4 5.7 5.8 5.5 3.4 New Zealand (8.2) Paying Taxes (rank) 142 137 80 115 147 105 133 71 United Arab Emirates (1)* Paying Taxes (DTF Score) 61.87 61.87 74.24 68.69 59.01 71.17 63.83 76.45 United Arab Emirates (99.44)* Payments (number per year) 47.0 47.0 9.0 35.0 36.0 6.0 16.0 30.0 Hong Kong SAR, China (3.0)* Time (hours per year) 184.0 184.0 324.0 256.0 368.0 334.0 218.0 199.0 Lux embourg (55.0) Trading Across Borders (rank) 142 147 24 82 115 44 84 106 Singapore (1) Trading Across Borders 59.98 56.35 85.56 74.63 68.22 81.26 74.53 69.42 Singapore (96.47) 14 Haiti Doing Business 2015 Indicator Haiti DB2015 Haiti DB2014 Dominican Republic DB2015 Guyana DB2015 Jamaica DB2015 Mexico DB2015 Puerto Rico (U.S.) DB2015 Suriname DB2015 Best performer globally DB2015 (DTF Score) Documents to export (number) 8 8 4 6 6 4 5 8 Ireland (2)* Time to export (days) 28.0 33.0 8.0 19.0 20.0 12.0 15.0 22.0 5 Economies (6.0)* Cost to export (US$ per container) 1,200.0 1,200.0 1,040.0 730.0 1,580.0 1,499.3 1,300 .0 1,050.0 Timor-Leste (410.0) Cost to export (deflated US$ per container) 1,200.0 1,274.3 1,040.0 730.0 1,580.0 1,499.3 1,300 .0 1,050.0 Documents to import (number) 9 9 5 7 7 4 8 6 Ireland (2)* Time to import (days) 26.0 31.0 10.0 22.0 17.0 11.2 15.0 19.0 Singapore ( 4.0) Cost to import (US$ per container) 1,555.0 1,555.0 1,145.0 720.0 2,180.0 1,887.6 1,350 .0 1,190.0 Singapore (440.0) Cost to import (deflated US$ per container) 1,555.0 1,651.2 1,145.0 720.0 2,180.0 1,887.6 1,350 .0 1,190.0 Enforcing Contracts (rank) 89 89 73 71 117 57 92 184 Singapore (1) Enforcing Contracts (DTF Score) 58.28 58.28 61.87 62.37 53.74 64.61 58.03 28.84 Singapore (89.54) Time (days) 530.0 530.0 460.0 581.0 655.0 388.9 620.0 1,715.0 S ingapore (150.0) Cost (% of claim) 42.6 42.6 40.9 25.2 45.6 30.9 25.6 37.1 Iceland (9. 0) Procedures (number) 35.0 35.0 34.0 36.0 35.0 36.8 39.0 44.0 Singapore ( 21.0)* Resolving Insolvency (rank) 189 189 158 150 59 27 7 130 Finland (1) Resolving Insolvency (DTF Score) 0.00 0.00 23.75 28.50 53.29 72.59 86.37 34.27 Finland (93.85) 15 Haiti Doing Business 2015 Indicator Haiti DB2015 Haiti DB2014 Dominican Republic DB2015 Guyana DB2015 Jamaica DB2015 Mexico DB2015 Puerto Rico (U.S.) DB2015 Suriname DB2015 Best performer globally DB2015 Time (years) no practice no practice 3.5 3.0 1.1 1.8 2.5 5.0 Ireland (0.4) Cost (% of estate) no practice no practice 38.0 28.5 18.0 18.0 8.0 30.0 Norway (1.0) Outcome (0 as piecemeal sale and 1 as going concern) 0 0 0 0 1 1 1 0 Recovery rate (cents on the dollar) 0.0 0.0 9.3 18.1 64.2 68.1 73.4 8.5 Japan (92.9) Strength of insolvency framework index (0-16) no practice no practice 6.0 6.0 6.0 11.5 15.0 9.5 5 Economies (15.0)* Note: DB2014 rankings shown are not last year’s published rankings but comparable rankings for DB2014 that capture the effects of such factors as data corrections and changes to the methodology. Trading across borders deflated and non-deflated values are identical in DB2015 because it is defined as the base year for the deflator. The best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2015 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database. 16 Haiti Doing Business 2015 STARTING A BUSINESS Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government. What do the indicators cover? Doing Business measures the ease of starting a business in an economy by recording all procedures officially required or commonly done in practice by an entrepreneur to start up and formally operate an industrial or commercial business—as well as the time and cost required to complete these procedures. It also records the paid-in minimum capital that companies must deposit before registration (or within 3 months). 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. To make the data comparable across economies, Doing Business uses several assumptions about the business and the procedures. It assumes that all information is readily available to the entrepreneur and that there has been no prior contact with officials. It also assumes that the entrepreneur will pay no bribes. And it assumes that the business: • Is a limited liability company, located in the largest business city and is 100% domestically owned 1 . • Has between 10 and 50 employees. • Conducts general commercial or industrial activities. WHAT 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 city 1 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 (2 procedures cannot start on the same day). Procedures that can be fully completed online are recorded as ½ day. Procedure completed once final document is received No prior contact with officials Cost required to complete each procedure (% of income per capita) Official costs only, no bribes No professional fees unless services required by law Paid-in minimum capital (% of income per capita) Deposited in a bank or with a notary before registration (or within 3 months) • Has a start-up capital of 10 times income per capita. • Has a turnover of at least 100 times income per capita. • Does not qualify for any special benefits. • Does not own real estate. 1 For the 11 economies with a population of more than 100 million, data for a second city have been added. 17 Haiti Doing Business 2015 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Haiti? According to data collected by Doing Business, starting a business there requires 12.0 procedures, takes 97.0 days, costs 246.7% of income per capita and requires paid-in minimum capital of 17.6% of income per capita (figure 2.1). Most indicator sets refer to a case scenario in the largest business city of an economy, except for 11 economies for which the data are a population-weighted average of the 2 largest business cities. See the chapter on distance to frontier and ease of doing business ranking at the end of this profile for more details. Figure 2.1 What it takes to start a business in Haiti - Paid-in minimum capital (% of income per capita): 17.6 Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. 18 Haiti Doing Business 2015 STARTING A BUSINESS Globally, Haiti stands at 188 in the ranking of 189 economies on the ease of starting a business (figure 2.2). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how easy it is for an entrepreneur in Haiti to start a business. Figure 2.2 How Haiti and comparator economies rank on the ease of starting a business Source: Doing Business database. 19 Haiti Doing Business 2015 STARTING A BUSINESS Economies around the world have taken steps making it easier to start a business—streamlining procedures by setting up a one-stop shop, making procedures simpler or faster by introducing technology and reducing or eliminating minimum capital requirements. Many have undertaken business registration reforms in stages—and they often are part of a larger regulatory reform program. Among the benefits have been greater firm satisfaction and savings and more registered businesses, financial resources and job opportunities. What business registration reforms has Doing Business recorded in Haiti (table 2.1)? Table 2.1 How has Haiti made starting a business easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform DB2011 Haiti eased business start-up by eliminating the review by the president’s or the prime minister’s office of the incorporation act submitted for publication. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. 20 Haiti Doing Business 2015 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for Haiti is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new firm. These are identified by Doing Business through collaboration with relevant local professionals and the study of laws, regulations and publicly available information on business entry in that economy. Following is a detailed summary of those procedures, along with the associated time and cost. These procedures are those that apply to a company matching the standard assumptions (the “standardized company”) used by Doing Business in collecting the data (see the section in this chapter on what the indicators measure). STANDARDIZED COMPANY Legal form: Société Anonyme Paid in minimum capital requirement: HTG 6,250 City: Port au Prince Start-up Capital: 10 times GNI per capita Table 2.2 Summary of time, cost and procedures for starting a business in Haiti - No. Procedure Time to complete Cost to complete 1 Prepare the company statutes ( Articles and Memorandum of Association) The lawyer charges approximately HTG 30,000 for the drafting of the company statutes in the case of a Société Anonyme. Prices can vary depending on the notary. Agency: Lawyer 10 days included in the notary fees 2 Notarize the company deeds and articles of association The notary public must handwrite and notarize the documents at a fee of between 15,000 and 25,000 depending on the complexity of the service. Agency: Notary 7 days HTG 15,000-HTG 25,000 3 Deposit the legally required initial capital in the National Bank and obtain deposit evidence The notary deposits the legally required initial capital in the National Bank (Banque Nationale de Credit) and obtains proof of deposit. A certified check need to be used to pay in the National Bank, where proof of payment is provided. 1 day no charge [... middle sections omitted for long document ...] 80 Haiti Doing Business 2015 DISTANCE TO FRONTIER AND EASE OF DOING BUSINESS RAN KING This year’s report presents results for 2 aggregate measures: the distance to frontier score and the ease of doing business ranking, which for the first time this year is based on the distance to frontier score. The ease of doing business 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 performance and a measure of best practice across the entire sample of 31 indicators for 10 Doing Business topics (the labor market regulation indicators are excluded). For starting a business, for example, Canada 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 110 other economies have no paid-in minimum capital requirement (table 15.1 in the Doing Business 2015 report). Calculation of the distance to frontier score Calculating the distance to frontier score for each economy involves 2 main steps. First, individual component indicators are normalized to a common unit where each of the 31 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 after data for the indicator were collected for the first time. For legal indicators such as those on getting credit or protecting minority investors, 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. For the time to pay taxes the frontier is defined as the lowest time recorded among all economies that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and value added tax (VAT) or sales tax. In addition, the cost to export and cost to import for each year are divided by the GDP deflator, to take the general price level into account when benchmarking these absolute-cost indicators across economies with different inflation trends. The base year for the deflator is 2013 for all economies. In the same formulation, to mitigate the effects of extreme outliers in the distributions of the rescaled data for most component 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, 2 rules were defined: the 95th percentile is used for the indicators with the most dispersed distributions (including time, cost, minimum capital and number of payments to pay taxes), and the 99th percentile is used for number of procedures and number of documents to trade. No outlier was removed for component indicators 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 15.1 in the Doing Business 2015 report). Second, for each economy the scores obtained for individual indicators 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 electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing 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 6 . Thus Doing Business uses the simplest 6 See Djankov, Manraj and others (2005). Principal components and unobserved components methods yield a ranking nearly identical to 81 Haiti Doing Business 2015 method: weighting all topics equally and, within each topic, giving equal weight to each of the topic components 7 . 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 5 decimals. However, indicator ranking calculations and the ease of doing business ranking calculations are based on 2 decimals. The difference between an economy’s distance to frontier score in any previous year and its score in 2014 illustrates the extent to which the economy has closed 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 This year, for the first time, the total tax rate component of the paying 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 in the calculation done in previous years (line B is smaller than line A in figure 15.2 of the Doing Business 2015 report). 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 before (line D is bigger than line C in figure 15.2 of the Doing Business 2015 report). The nonlinear transformation is not based on any economic theory of an “optimal tax rate” that minimizes distortions or maximizes efficiency in an economy’s 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. 7 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 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 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). In addition, it acknowledges the need of economies to collect taxes from firms. Calculation of scores for economies with 2 cities covered For each of the 11 economies for which a second city was added in this year’s report, the distance to frontier score is calculated as the population-weighted average of the distance to frontier scores for the 2 cities covered (table 12.1). This is done for the aggregate score, the scores for each topic and the scores for all the component indicators for each topic. Table 12.1 Weights used in calculating the distance to frontier scores for economies with 2 cities covered Source: United Nations, Department of Economic and Social Affairs, Population Division, World Urbanization Prospects, 2014 Revision. http://esa.un.org/unpd/wup/CD- ROM/Default.aspx. Economy City Weight (%) Dhaka 78 Chittagong 22 São Paulo 61 Rio de Janeiro 39 Shanghai 55 Beijing 45 Mumbai 47 Delhi 53 Jakarta 78 Surabaya 22 Tokyo 65 Osaka 35 Mexico City 83 Monterrey 17 Lagos 77 Kano 23 Karachi 65 Lahore 35 Moscow 70 St. Petersburg 30 New York 60 Los Angeles 40 Mexico Nigeria Pakistan Russian Federation United States Japan Bangladesh Brazil China India Indonesia 82 Haiti Doing Business 2015 Economies that improved the most across 3 or more Doing Business topics in 2013/14 Doing Business 2015 uses a simple method to calculate which economies improved the ease of doing business the most. First, it selects the economies that in 2013/14 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. Twenty-one economies meet this criterion: Azerbaijan; Benin; the Democratic Republic of Congo; Côte d’Ivoire; the Czech Republic; Greece; India; Ireland; Kazakhstan; Lithuania; the former Yugoslav Republic of Macedonia; Poland; Senegal; the Seychelles; Spain; Switzerland; Taiwan, China; Tajikistan; Togo; Trinidad and Tobago; and the United Arab Emirates. Second, Doing Business sorts these economies on the increase in their distance to frontier score from the previous year using comparable data. Selecting the economies that implemented regulatory reforms in at least 3 topics and had the biggest improvements 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 environment 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 2 decimals. 83 Haiti Doing Business 2015 RESOURCES ON THE DOING BUSINESS 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, reform 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 DB2015 business regulation reforms, lists of reforms since DB2008 and a ranking simulation tool 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 10,700 specialists in 189 economies who participate in Doing Business http://www.doingbusiness.org/contributors/doing- business Entrepreneurship data Data on business density (number of newly registered companies per 1,000 working-age people) for 139 economies http://www.doingbusiness.org/data/exploretopics/ent repreneurship Distance to frontier Data benchmarking 189 economies to the frontier in regulatory practice http://www.doingbusiness.org/data/distance-to- frontier Information on good practices Showing where the many good practices identified by Doing Business have been adopted http://www.doingbusiness.org/data/good-practice Doing Business iPhone App Doing Business at a Glance—presenting the full report, rankings and highlights for each topic for the iPhone, iPad and iPod touch http://www.doingbusiness.org/specialfeatures/ iphone 84 Haiti Doing Business 2015