WASHINGTON, Economies in Latin America and the Caribbean carried out 25 reforms during the past year to improve the ease of doing business for domestic small and medium enterprises, says the World Bank Group’s Doing Business 2019: Training for Reform report, released today.
The reforms were carried out in 18 of the region’s 32 economies. No economy from the region is featured in this year’s top 10 improvers.
Mexico remains the region’s top-ranked economy, in 54th place this year. Brazil led the reform agenda, with four reforms, a record in a single year for the country. As a result, Brazil advances to a global rank of 109.
The reforms in Brazil included making starting a business easier with the introduction of online systems for company registration, licensing and employment notifications. The reform, which applies to both Rio de Janeiro and São Paulo, the two cities covered in the Doing Business report, reduced the time for starting a business to 20 days, from 82 days. Access to credit and Trading Across Borders were also made easier in both cities. In addition, São Paulo improved the reliability of electricity by modernizing its grid network and introducing new software programs allowing better outage management and distribution planning. However, Registering Property became more expensive in Rio de Janeiro with an increase in property transfer tax.
Peru, the Bahamas, El Salvador and Paraguay, carried out two reforms each. Peru introduced measures to strengthened construction quality control and also facilitated the process of starting a new business for entrepreneurs. In El Salvador, construction permitting and cross-border trade were made easier, while Paraguay also made it easier to trade across borders and made Getting Electricity easier by improving the reliability of power supply.
In the Caribbean, the Bahamas improved access to credit by introducing regulations governing the licensing, functioning, and regulation of credit bureaus in the country. Paying Taxes was also made easier in the Bahamas with an online system for filing and paying value added tax.
In El Salvador, construction permitting and cross-border trade were made easier, while Paraguay also made it easier to trade across borders and made Getting Electricity easier by improving the reliability of power supply.
Of the 25 reforms carried out in the region during the past year, seven were in the area of Getting Credit. Besides Brazil and the Bahamas, among the other economies that improved credit information systems were Antigua and Barbuda, Grenada, Haiti, and Jamaica.
Another area which saw reforms by several economies was Starting a Business. In addition to Brazil and Peru, Argentina, Bolivia, and Guatemala also improved their business registration processes.
“It is encouraging to see the steady implementation of reforms in Latin America and the Caribbean, although many economies could benefit from an acceleration in the pace of the reform agenda,” said Santiago Croci Downes, Program Manager of the Doing Business Unit. “Continued and sustained progress is key to improving the domestic business climate and enabling private enterprise.”
The region’s economies perform best in the areas of Getting Electricity and Getting Credit. Obtaining an electricity connection in the region takes on average only 66 days, which is faster than 77-day average in OECD high-income economies. However, the cost to connect to the electricity grid in the region remains high, with an average of 946 percent of the income per capita, compared to 64 percent income per capita in OECD economies. In the area of Getting Credit, Mexico and Colombia are among the top 10 economies in the world, and a third of the region’s economies perform well on access to credit measures.
The biggest challenges for the region are in the areas of Paying Taxes, Registering Property and Protecting Minority Investors. For example, 27 payments are required on average for a medium sized company in the region to comply with tax obligations, compared to 11 procedures among OECD high-income economies.
Since Doing Business began in 2003, Starting a Business has seen the most reforms in Latin America and the Caribbean. As a result, the average time to start a business in the region has been halved to 32 days, from 78 days in 2003, and the cost has been significantly reduced to 49 percent of income per capita, from 75 percent income per capita in 2003.
And, despite the challenges that continue, Paying Taxes has also been an area of many reforms in the region. However, the time needed for a company to prepare, file and pay taxes remains high at an average of 330 hours, which is more than double the 159-hour in OECD high-income economies.
This year, Doing Business collected data on training provided to both public officials and users of business and land registries. A case study in the report, which analyzes this data, finds that mandatory and annual training for relevant officials is associated with higher business land registry efficiency. A second study, on enforcing contracts and resolving insolvency, examines the education and training of judges worldwide. It highlights the Chilean initiative of 2014 to make insolvency law training for civil judges dealing with insolvency proceedings compulsory (Insolvency and Re-Entrepreneurship law of 2014). Two other case studies focus on the benefits of accrediting electricians and training customs clearance officials.
The full report and its datasets are available at www.doingbusiness.org