(2016) Haïti Doing Business 2016: Profil Économique

Haiti Doing Business 2016 SoEconomy Economy Profile 2016 Haiti Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized 2 Haiti Doing Business 2016 © 2016 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 Some rights reserved 1 2 3 4 18 17 16 15 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): 978-1-4648-0667-4 ISBN (electronic): 978-1-4648-0668-1 DOI: 10.1596/978-1-4648-0667-4 ISSN: 1729-2638 Cover design: Corporate Visions, Inc. 3 Haiti Doing Business 2016 CONTENTS Introduction .................................................................................................................................. 4 Starting a business ..................................................................................................................... 17 Dealing with construction permits ........................................................................................... 25 Getting electricity ....................................................................................................................... 36 Registering property .................................................................................................................. 44 Getting credit .............................................................................................................................. 55 Protecting minority investors ................................................................................................... 60 Paying taxes ................................................................................................................................ 66 Trading across borders .............................................................................................................. 70 Enforcing contracts .................................................................................................................... 76 Resolving insolvency .................................................................................................................. 83 Labor market regulation ........................................................................................................... 90 Distance to frontier and ease of doing business ranking ...................................................... 96 Resources on the Doing Business website ............................................................................ 100 4 Haiti Doing Business 2016 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. Doing Business 2016 presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. 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, 25 in Eastern Europe and Central Asia, 20 in the Middle East and North Africa and 8 in South Asia, as well as 32 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, 2015 (except for the paying taxes indicators, which cover the period January–December 2014). 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 2016 presents the indicators, analyzes their relationship with economic outcomes and presents business regulatory reforms. The data, along with information on ordering Doing Business 2016, are available on the Doing Business website at http://www.doingbusiness.org. 5 Haiti Doing Business 2016 CHANGES IN DOING BUSINESS 2016 As part of a two-year update in methodology, 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 implements small updates to the methodology for another (protecting minority investors). The indicators on dealing with construction 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 contracts 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 advantage, 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 protecting 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. For more details on the changes, see the “What is changing in Doing Business?” chapter starting on page 27 of the Doing Business 2016 report. For more details on the data and methodology, please see the “Data Notes” chapter starting on page 119 of the Doing Business 2016 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 2016 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. Doing Business 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 scores, rounded to two decimals. 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 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. The 10 topics included in the ranking in Doing Business 2016: 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 are not included in this year’s aggregate ease of doing business ranking, but the data are presented in the economy profile. ECONOMY OVERVIEW Region: Latin America & Caribbean Income category: Low income Population: 10,461,409 GNI per capita (US$): 830 DB2016 rank: 182 DB2015 rank: 179* Change in rank: -3 DB 2016 DTF: 39.56 DB 2015 DTF: 39.51 Change in DTF: 0.05 * DB2015 ranking shown is not last year’s published ranking but a comparable ranking for DB2015 that captures the effects of such factors as data revisions and the changes in methodology. See the data notes starting on page 119 of the Doing Business 2016 report for sources and definitions. Haiti Doing Business 2016 THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database. Haiti Doing Business 2016 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 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. 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 2016 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) Source: Doing Business database. 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. 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. 10 Haiti Doing Business 2016 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. Starting a business is comparable to 2010. Getting credit, protecting minority investors, paying taxes and resolving insolvency had methodology changes in 2014 and thus are only comparable to 2013. Dealing with construction permits, registering property, trading across borders, enforcing contracts and getting electricity had methodology changes in 2015 and thus are only comparable to 2014. 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 119 of the Doing Business 2016 report for more details on the distance to frontier score. Source: Doing Business database. 11 Haiti Doing Business 2016 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 DB 20 1 6 Haiti DB201 5 Dominican Republic DB201 6 Guyana DB201 6 Jamaica DB201 6 Mexico DB201 6 Puerto Rico (U.S.) DB201 6 Suriname DB201 6 Best performer g lobally DB201 6 Starting a Business (rank) 188 187 110 92 9 65 51 183 New Zealand (1) Starting a Business (DTF Score) 33.53 33.48 83.12 85.42 97.28 88.94 91.11 48.76 New Zealand (99.96) Procedures (number) 12.0 12.0 7.0 7.0 2.0 6.0 6.0 13.0 New Zealand (1.00)* Time (days) 97.0 97.0 14.5 18.0 3.0 6.3 6.0 84.0 New Zealand (0.50) Cost (% of income per capita) 235.3 246.7 16.4 10.9 5.0 17.9 1.3 100.7 Slovenia (0.00) Paid-in min. capital (% of income per capita) 16.7 17.6 39.8 0.0 0.0 0.0 0.0 0.3 105 Economies (0.00)* Dealing with Construction Permits (rank) 167 165 44 138 72 67 135 109 Singapore (1) Dealing with Construction Permits (DTF Score) 52.86 52 75.01 61.76 71.1 71.76 62.21 66.44 Singapore (92.97) Procedures (number) 12.0 12.0 13.0 7.0 17.0 10.5 20.0 10.0 5 Economies (7.00)* 12 Haiti Doing Business 2016 Indicator Haiti DB 20 1 6 Haiti DB201 5 Dominican Republic DB201 6 Guyana DB201 6 Jamaica DB201 6 Mexico DB201 6 Puerto Rico (U.S.) DB201 6 Suriname DB201 6 Best performer g lobally DB201 6 Time (days) 80.0 80.0 184.0 195.0 129.5 86.4 165.0 223.0 Singapore (26.00) Cost (% of warehouse value) 15.7 16.4 1.8 0.6 0.9 10.2 6.2 0.2 Qatar (0.00) Building quality control index (0-15) 5.0 5.0 13.0 1.0 10.0 11.7 12.0 6.5 New Zealand (15.00) Getting Electricity (rank) 136 133 149 165 80 72 57 93 Korea, Rep. (1) Getting Electricity (DTF Score) 55.04 55.48 50.58 43 71.09 73.27 76.58 68.44 Korea, Rep. (99.88) Procedures (number) 4.0 4.0 7.0 8.0 7.0 6.8 5.0 4.0 14 Economies (3.00)* Time (days) 60.0 60.0 82.0 109.0 95.0 78.9 32.0 113.0 Korea, Rep. (18.00)* Cost (% of income per capita) 3,639.1 3,495.8 257.0 411.9 242.9 332.9 346.4 467.2 Japan (0.00) Reliability of supply and transparency of tariff index (0-8) 0.0 0.0 0.0 0.0 7.0 7.0 4.0 3.0 18 Economies (8.00)* Registering Property (rank) 179 178 82 125 122 106 164 176 New Zealand (1) Registering Property (DTF Score) 32.83 32.76 65.24 53.06 53.7 58.74 43.77 36.27 New Zealand (94.46) Procedures (number) 5.0 5.0 6.0 6.0 8.0 6.8 8.0 6.0 4 Economies (1.00)* Time (days) 312.0 312.0 45.0 75.0 18.0 63.7 193.5 106.0 3 Economies (1.00)* Cost (% of property value) 7.1 7.1 3.7 4.6 9.8 5.1 0.9 13.7 Saudi Arabia (0.00) Quality of the land administration index (0- 30) 3.5 3.5 14.5 6.0 14.0 14.3 9.5 8.5 3 Economies (28.50)* 13 Haiti Doing Business 2016 Indicator Haiti DB 20 1 6 Haiti DB201 5 Dominican Republic DB201 6 Guyana DB201 6 Jamaica DB201 6 Mexico DB201 6 Puerto Rico (U.S.) DB201 6 Suriname DB201 6 Best performer g lobally DB201 6 Getting Credit (rank) 174 171 97 167 7 5 7 174 New Zealand (1) Getting Credit (DTF Score) 10 10 45 15 85 90 85 10 New Zealand (100) Strength of legal rights index (0-12) 2.0 2.0 1.0 3.0 10.0 10.0 10.0 2.0 3 Economies (12.00)* Depth of credit information index (0-8) 0.0 0.0 8.0 0.0 7.0 8.0 7.0 0.0 26 Economies (8.00)* Credit registry coverage (% of adults) 1.6 1.1 23.2 0.0 0.0 0.0 0.0 0.0 Portugal (100.00) Credit bureau coverage (% of adults) 0.0 0.0 74.6 2.4 22.4 100.0 100.0 0.0 22 Economies (100.00)* Protecting Minority Investors (rank) 187 187 81 99 57 57 88 166 Singapore (1)* Protecting Minority Investors (DTF Score) 20 20 55 51.67 58.33 58.33 53.33 35 Singapore (83.33)* Strength of minority investor protection index (0-10) 2.0 2.0 5.5 5.2 5.8 5.8 5.3 3.5 3 Economies (8.30)* 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 (9.30)* Extent of shareholder governance index (0- 10) 1.0 1.0 5.7 5.0 6.0 5.7 3.7 4.7 4 Economies (8.00)* Paying Taxes (rank) 143 141 77 117 146 92 134 75 United Arab Emirates (1)* Paying Taxes (DTF Score) 61.87 61.87 76.29 68.69 60.95 73.67 63.93 76.45 United Arab Emirates (99.44)* Payments (number per 47.0 47.0 7.0 35.0 37.0 6.0 16.0 30.0 Hong Kong SAR, 14 Haiti Doing Business 2016 Indicator Haiti DB 20 1 6 Haiti DB201 5 Dominican Republic DB201 6 Guyana DB201 6 Jamaica DB201 6 Mexico DB201 6 Puerto Rico (U.S.) DB201 6 Suriname DB201 6 Best performer g lobally DB201 6 year) China (3.00)* Time (hours per year) 184.0 184.0 316.0 256.0 358.0 286.0 218.0 199.0 Luxembourg (55.00) Total tax rate (% of profit) 40.3 40.3 42.4 32.3 35.2 51.7 65.8 27.9 Ireland (25.90) Trading Across Borders (rank) 76 75 57 139 146 59 93 77 Denmark (1)* Trading Across Borders (DTF Score) 77.01 77.01 83.51 55.6 50.84 82.09 70.16 75.37 Denmark (100)* Time to export: Border compliance (hours) 30 30 16 72 82 20 48 84 15 Economies (0.00)* Cost to export: Border compliance (USD) 268 268 488 278 599 400 586 348 18 Economies (0.00)* Time to export: Documentary compliance (hours) 4 4 10 200 62 8 2 48 Jordan (0.00) Cost to export: Documentary compliance (USD) 48 48 15 178 314 60 223 40 20 Economies (0.00)* Time to import: Border compliance (hours) 91 91 24 84 106 44 48 48 19 Economies (0.00)* Cost to import: Border compliance (USD) 583 583 579 265 606 450 586 505 28 Economies (0.00)* Time to import: Documentary compliance (hours) 60 60 14 156 87 18 2 24 21 Economies (1.00)* Cost to import: Documentary compliance (USD) 150 150 40 163 331 100 223 40 30 Economies (0.00)* Enforcing Contracts 123 120 115 87 107 41 100 186 Singapore (1) 15 Haiti Doing Business 2016 Indicator Haiti DB 20 1 6 Haiti DB201 5 Dominican Republic DB201 6 Guyana DB201 6 Jamaica DB201 6 Mexico DB201 6 Puerto Rico (U.S.) DB201 6 Suriname DB201 6 Best performer g lobally DB201 6 (rank) Enforcing Contracts (DTF Score) 52.49 52.49 54.12 58.55 55.36 67.39 56.41 25.94 Singapore (84.91) Time (days) 530.0 530.0 460.0 581.0 655.0 389.0 620.0 1,715.0 Singapore (150.00) Cost (% of claim) 42.6 42.6 40.9 25.2 45.6 30.9 25.6 37.1 Iceland (9.00) Quality of judicial processes index (0-18) 7.0 7.0 6.5 7.5 11.0 10.6 7.0 3.5 3 Economies (15.50)* Resolving Insolvency (rank) 189 189 159 156 35 28 7 128 Finland (1) Resolving Insolvency (DTF Score) 0 0 23.7 25.55 69.08 73.03 84.84 34.21 Finland (93.81) Recovery rate (cents on the dollar) 0.0 0.0 9.2 18.4 64.5 68.9 70.5 8.4 Japan (92.90) Time (years) no practice no practice 3.5 3.0 1.1 1.8 2.5 5.0 Ireland (0.40) Cost (% of estate) no practice no practice 38.0 28.5 18.0 18.0 11.0 30.0 Norway (1.00) Outcome (0 as piecemeal sale and 1 as going concern) 0 0 0 0 1 1 1 0 Strength of insolvency framework index (0-16) 0.0 0.0 6.0 5.0 11.0 11.5 15.0 9.5 4 Economies (15.00)* Source: Doing Business database. Note: DB2015 rankings shown are not last year’s published rankings but comparable rankings for DB2015 that capture the effects of such factors as data revisions and changes to the methodology. The global best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2016 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” 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 16 Haiti Doing Business 2016 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). 17 Haiti Doing Business 2016 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 records all procedures officially required, or commonly done in practice, for an entrepreneur to start up and formally operate an industrial or commercial business, as well as the time and cost to complete these procedures and the paid- in minimum capital requirement. These procedures include obtaining all necessary licenses and permits and completing any required notifications, verifications 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. To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. Assumptions about the business:  Is a limited liability company (or its legal equivalent), located in the largest business city and is 100% domestically owned 1 with five owners, none of whom is a legal entity.  Has at least 10 and up to 50 employees, all of them domestic nationals.  Performs 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 or commonly used in practice 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 and a turnover of at least 100 times income per capita.  Has a company deed 10 pages long.  Does not qualify for any special benefits.  Leases the commercial plant or offices and is not a proprietor of real estate. 1 For 11 economies the data are also collected for the second largest business city. 18 Haiti Doing Business 2016 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 12.00 procedures, takes 97.00 days, costs 235.30% of income per capita and requires paid-in minimum capital of 16.70% 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): 16.70 Source: Doing Business database. 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. 19 Haiti Doing Business 2016 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. 20 Haiti Doing Business 2016 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 DB2011 to DB2016 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. Source: Doing Business database. 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. [... middle sections omitted for long document ...] 97 Haiti Doing Business 2016 identical to the simple average used by Doing Business 4 . Thus Doing Business uses the simplest method: weighting all topics equally and, within each topic, giving equal weight to each of the topic components 5 . 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 business 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 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 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 had before this approach was adopted in Doing Business 2015 (line B is smaller than line A in figure 14.2 of the Doing Business 2016 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 it would have had before (line D is bigger than line C in figure 14.2 of the Doing Business 2016 report). 4 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. 5 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 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 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 in which Doing Business collects data for the second largest business city as well as the largest one, the distance to frontier score is calculated as the population-weighted average of the distance to frontier scores for these two cities (table 13.1). This is done for the aggregate score, the scores for each topic and the scores for all the component indicators for each topic. 98 Haiti Doing Business 2016 Table 13.1 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. Economies that improved the most across 3 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. Changes making it more difficult to do business are subtracted from the total number of those making it easier to do business. 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 increase in their distance to frontier score from the previous year using comparable data. Selecting the economies that implemented regulatory reforms in at least three 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. 99 Haiti Doing Business 2016 100 Haiti Doing Business 2016 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, 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 business density (number of newly registered companies per 1,000 working-age people) for 136 economies http://www.doingbusiness.org/data/exploretopics/ent repreneurship Distance to frontier Data benchmarking 189 economies to the frontier in regulatory practice and a distance to frontier calculator 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 101 Haiti Doing Business 2016