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DOING BUSINESS IN ITALY 2013 Smarter Regulations for Small and Medium-sized Enterprises Augusto Lopez-Claros Director, Global Indicators & Analysis World Bank-IFC Rome, Italy - November 14, 2012 Doing Business indicators reflect on some of the most important obstacles firms face Based on Enterprise Surveys in 118 countries around the world Direct responses from representative samples of the private sector Access to finance, electricity, informality and tax rates are the top obstacles across the developing world Percent of firms identifying the problem as the main obstacle to their business activity 0% 2% 4% 6% 8% 10% 12% 14% 16% Access to finance 15.8% Electricity 14.3% Informality 11.1% Tax rates 11.0% Political instability 7.9% Inadequately educated workforce 7.8% Corruption 6.7% Crime, theft and disorder 5.8% Customs and trade regulations 3.3% Transport 3.3% Access to land 3.1% Tax administration 2.9% Business licensing and permits 2.8% Labor regulations Courts 18% 2.6% 0.9% 2 The Doing Business indicators have a strong theoretical foundation The Regulation of Entry: Countries that regulate entry more heavily have greater corruption and larger unofficial economies, but not better quality of public or private goods. Private Credit in 129 Countries: Creditor protection through the legal system and information sharing institutions such as credit bureaus are associated with higher ratios of private credit to GDP. Credit rises after improvements in creditor rights and in information sharing. Trading on Time: Each additional day that a product is delayed prior to being shipped reduces trade by more than one percent. Courts: Procedural formalism is associated with higher expected duration of judicial proceedings, more corruption, less consistency, less honesty, less fairness in judicial decisions, and inferior access to justice The Regulation of Labor: Heavier regulation of labor is associated with a larger unofficial economy, lower labor force participation, and higher unemployment, especially of the young The Effect of Corporate Taxes on Investment and Entrepreneurship: The corporate tax rate has a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. It is also correlated with investment in manufacturing as well as with the size of the informal economy. 3 Doing Business indicators – 11 areas of business regulation (10 included in the DB2013 ranking) covering 185 economies Start-up Expansion Starting a business Registering property Minimum capital requirement, procedures, time and cost Operations Procedures, time and cost Dealing with construction permits Resolving insolvency Getting credit Procedures, time and cost Credit information systems Paying taxes Time, cost and recovery rate Movable collateral laws Payments, time and Total Tax Rate Protecting investors Trading across borders Disclosure and liability in related party transactions Documents, time and cost Getting electricity Enforcing contracts Procedures, time and cost Procedures, time and cost to resolve a commercial dispute Entry Insolvency Property rights Investor protection Access to credit Employing workers (annex) Administrative burden Flexibility in hiring 4 Recovery rate Reallocation of assets 4 How does Doing Business measure a country’s ease of doing business? 1 Singapore Top ranked countries in DB2013 The overall ease of doing business: 2 Honk Kong SAR, China 3 New Zealand (2) Dealing with construction permits 4 United States (3) Getting electricity 5 Denmark (1) Starting a business (4) Registering property (5) Paying taxes 6 Norway 7 United Kingdom (7) Enforcing contracts 8 Korea, Rep. (8) Protecting investors 9 Georgia (6) Trading across borders (9) Getting credit (10) Resolving insolvency 10 Australia 5 Economies that rank high on the ease of doing business tend to combine efficient regulatory processes with strong legal institutions OECD high-income economies have the most business-friendly regulatory environment on both dimensions 6 Italy’s performance in Doing Business 2013 Italy, represented by Rome, ranks 73 out of 185 economies on the ease of doing business. Since 2005 Italy has implemented a total of 14 institutional or regulatory reforms. 7 Italy’s reforms improved various regulatory processes since 2005 8 What do Subnational reports add? • Expand Doing Business indicators beyond the city measured by the annual report • Include rules and regulations at all levels of government • Capture local differences in regulations or enforcement • Provide information on good practices within the same country that can be easily replicated • Give specific locations an opportunity to tell their story • Provide a tool for locations to compete with 185 economies • Combine Doing Business media appeal with active participation of subnational governments in the reform process 9 Subnational reports in over 50 countries • Government buy-in 7 reports funded directly by client governments • 15 economies with 2nd or 3rd-round reports Broad coverage Over 50 economies included • • Over 350 cities covered • BRICs + M included 10 What does Doing Business in Italy 2013 cover? 4 indicators in 13 cities Port of Trieste 1. Starting a business Padua Milan Turin 2. Dealing with construction permits Bologna 3. Registering property Port of Genoa 4. Enforcing contracts L’Aquila Campobasso Rome Cagliari and the port of Cagliari Palermo and the port of Catania Naples and the Port of Naples Potenza Bari and the port of Taranto Trading across borders indicator in 7 ports Data collected from 370 contributors is current as of June 2012 Catanzaro and the port of Gioia Tauro 11 No city outperforms the others in all areas City Ease of starting a business Ease of dealing with construction permits Ease of registering property Ease of enforcing contracts Bari, Apulia Bologna, Emilia-Romagna Cagliari, Sardinia Campobasso, Molise Catanzaro, Calabria L’Aquila, Abruzzo Milan, Lombardy Naples, Campania Padua, Veneto Palermo, Sicily Potenza, Basilicata Rome, Latium Turin, Piedmont 6 4 11 13 1 9 8 12 2 5 3 7 10 9 1 2 8 10 3 3 11 5 12 13 6 7 7 1 6 3 5 9 7 3 12 2 11 13 9 13 11 5 5 7 8 10 2 12 9 3 4 1 12 Trading across borders Transshipment and regional ports Gateway ports 1 2 3 Genoa, Liguria Trieste, Friuli Venezia Giulia Naples, Campania 1 2 3 4 Catania, Sicily Taranto, Apulia Gioia Tauro, Calabria Cagliari, Sardinia 13 Registering property in Bologna, Naples or Palermo — faster than in Japan 14 Local building permits drive time and cost variations in Dealing with construction permits h 15 Starting a business is fast but expensive 16 It is faster to enforce a contract inTurin 17 Exporting — slower than in the average EU economy 18 Italian cities can learn from each other Doing Business indicator Best practices within Italy 6 procedures Starting a business 6 days 12.2% of income per capita 9.7% of income per capita minimum capital requirement 11 procedures Dealing with construction 151 days permits 45.1% of income per capita Registering property Enforcing contracts Bari, Bologna, Cagliari, Catanzaro, L’Aquila, Milan, Naples, Padua, Palermo, Potenza, Rome, Turin Milan, Padua, Rome Bari 78 84 33 103 26 39 123 160 All cities Cagliari, Rome Milan Naples 13 days 4.3% of property value Bologna, Milan, Naples, Palermo, Rome, Turin Bologna, Naples, Palermo Catanzaro 41 procedures All cities 855 days 20.5% of claim value Turin Potenza 3 procedures Italian best Italy’s performance practices compared in DB2013, internationally represented by (global rank) Rome (global rank) Ease of doing business (Hypothetical city “Italiana”) 56 19 73 More new firms are registered after reforms making it easier to start a business 20 Good business regulations and governance In countries where business regulation is efficient and information on documentation requirements and fee schedules is easily accessible, the costs to start a business are much lower. 21 Thank you. For more information: www.doingbusiness.org 22