Doing Business in the Arab World

1. Doing Businessin the Arab World Dahlia Khalifa Senior Strategy Adviser Abu Dhabi November 8, 2009

2. DoingBusiness – Overview • Launched 8 years ago. Doing Business in the Arab World for 2nd year • Goal: to provide an objective basis for understanding and improving the regulatory environment for business. • From 5 indicator sets in 133 economies to 10 in 183 economies. • The objective: efficient regulations, accessible to all, and simple in their implementation. • Focus on regulations relevant to the life cycle of a small to medium-sized domestic business based on standardized case • DO NOT measure all aspects of the business environment.

3. Top 30 on the ease of Doing Business 2010

4. Arab World overall performance on Doing Business 2008/09 • Saudi Arabia leads the way in the ease of doing business, followed by Bahrain. • Top 6 economies in Arab world from GCC • UAE and Egypt greatest jump in rankings this year, top global reformers – Egypt for 4th time

5. Key findings in this year’s report • Against backdrop of global financial and economic crisis, record number of reforms recorded: 287 reforms in 131 countries; 20% more than in the year before. • Focus on SMEs for job creation. Regulatory ease of starting, operating and closing a business influences how well firms can cope and adjust. • Reforms more likely in developing economies: Two-thirds of reforms in low- and lower-middle-income economies. • Rwanda first Sub-Saharan African country to become top reformer: Reforms in 7 of the 10 areas; from143 to 67 in aggregate ranking. • 2 regions stand out for reform pace in 2008/9: Eastern Europe and Central Asia (sixth year in a row) and Middle East and North Africa (and Arab World)

6. Arab World average ranking: 103

7. DB Top Reformers in 2008/09

8. Arab world recorded a total of 38 positive reforms in 9 areas in 2008/09, 16 of 20 economies in the Arab world reformed

9. Arab world– one of the leaders in the number of reforming countries Percentage of countries with at least one positive reform in 2008/09 96% High Income OECD Eastern Europe and Central Asia 59% 63% 63% 71% 75% 80% Arab World South Asia Latin America and Caribbean East Asia and Pacific Sub-Saharan Africa

10. In what topics does Arab World do the best? Average rankings per topic 2008/09

11. Consistent reform programs: Egypt, global top reformer for the fourth time Egypt, global top reformer for the fourth time: Egypt moved from being ranked 116 to 106 among 183 economies on the overall ease of doing business. Egypt made business start-up less costly, simplified construction permits, expanded credit information, and created commercial courts to expedite contract dispute settlements.

12. Arab world performance – Ranking on the ease of Doing Business by indicator

13. Starting a Business in Arab World: Saudi Arabia and Egypt lead the way and 8 economies reform Arab World Reformers in Starting a Business • Egypt, Arab. Rep. • Jordan • Lebanon • Oman • Saudi Arabia • Syrian Arab Republic • United Arab Emirates • Yemen, Rep.

14. Big improvements in starting a business since 2004 including in the region where average time dropped by almost half 8 Arab economies have reduced or eliminated the minimum capital requirement since 2005. 5 of these used to have among the highest such requirements in the world—up to the equivalent of $120,000. The UAE was among the economies abolishing the minimum capital requirement in 2008/09, perhaps inspired by the example of Egypt, Saudi Arabia, Tunisia and the Republic of Yemen.

15. Saudi Arabia eased business start up with the introduction of a new one-stop Unified Office for business start-up Cost (% of income p.c.) Number of Procedures Time (days) Saudi Arabia rose from 15 to 13 on the global ease of doing business—making it the highest-ranked economy in the region—by establishing a one-stop shop for business registration and a faster process for construction permits

16. Dealing with Construction Permits in Arab World: Bahrain and United Arab Emirates lead the way

17. One-stop shops and risk-based systems popular in construction permitting

18. United Arab Emirates, global top reformer list for the first time The UAE eased the process of dealing with construction permits in 2008/09 and is now ranked 2nd in the region after Bahrain 2008 2009 Time (in days) The United Arab Emirates moved from 47 to 33 on global ease of doing business and became one of the world’s 10 most active reformers by eliminating the minimum capital requirement, simplifying registration for new businesses, in addition to easing construction permitting and trading across borders.

19. Egypt eliminates most pre-approvals for construction permits Cost (% of income p.c.) Number of Procedures Time (days)

20. Getting Credit in Arab World: Bahrain has the highest coverage and Sudan the highest score on legal rights

21. Example of a successful reform: Morocco introduced private credit bureaus • Morocco strengthened access to credit information by introducing a private credit bureau • distributes positive and negative information • keeps credit information for more than 2 years • includes small loans on borrowers

22. Protecting Investors in Arab World: Saudi Arabia and Kuwait lead the way

23. Colombia- the road to the top 10 in Protecting Investors • Colombia has reformed investor protections for 3 years. • Passed a new decree which makes it easier to sue directors involved in prejudicial party transactions. • If directors found guilty they must pay damages and disgorge the profit from the transaction.

24. Protecting Investors reforms in Tunisia • The new provisions require approval of related party transactions by both the board of directors and a shareholders meeting • Interested parties are no longer allowed to participate in the approval process • Requires review of the terms of such transactions by an independent auditor

25. Trading across Borders in Arab World: United Arab Emirates and Saudi Arabia lead the way

26. After reforms United Arab Emirates leads the Arab World in Trading across Borders at #5 globally Cost to export (USD per container) Cost to import (USD per container) Time to export (days) Time to import (days) Documents for export Documents for import 7 5 5 4

27. Enforcing contracts in the Arab world: an opportunity for reform

28. Enforcing contracts: Top 10 and global good practices • Streamline provisions on mandatory mediation. • Increase number of mediators and court masters. • Have specialized commercial courts/chambers • Expand range of functions of court masters. • Explore enhanced use of technology in court systems. • Keep statistics on judicial performance. • Luxembourg • Iceland • Hong Kong, China • Norway • Korea, Rep. • France • Germany • Finland • United States • New Zealand

29. Peer-learning and benchmarking: completed reforms motivated or informed by DB 127 reforms in 2008/9 About 270 reforms since 2004 270 Note: Reforms informed by Doing Business refers to reforms that were either supported by technical assistance or where governments indicated that the reform dialogue and process were informed by DB.

30. Thank you. For more information:www.doingbusiness.org For more information visit: www.doingbusiness.org