Luke Haggarty General Manager, IFC Advisory Service Office, Latin America and the Caribbean

Transcription

1 Improving the Business Environment through Sub-national Regulatory Simplification Luke Haggarty General Manager, IFC Advisory Service Office, Latin America and the Caribbean OECD, Global Forum for Governance. Rio de Janeiro, Oct. 2007

2 What is the IFC? International Finance Corporation, founded in Part of the World Bank Group The arm of the World Bank Group that is focused on Private Sector Development as the engine for growth, poverty alleviation and improving the quality of life in developing countries. IFC has two main lines of Business: Investment (Credit, Guarantees, Equity, etc) Advisory Services: Business Environment, Access to finance, PPPs in infrastructure, Supply Chains and Increasing local benefits in extractive industry investment. 2

3 REGULATORY SIMPLIFICATION Where do you need to work? How do you implement? Some data and ideas. 3

4 Average Rank Latin America is in the middle of the worlds regions Ease of Doing Business (Average Rank ) OECD E. Europe & C.Asia E. Asia & Pacific LAC MENA S. Asia Africa Source: Doing Business,

5 ..and Brazil is one of the least reforming countries in the region 1 Singapore Ranking Global Chile 44 México Easier to do Business 58 Perú 65 Panamá 98 Uruguay 109 Argentina 115 Costa Rica 122 Brasil 172 Venezuela Source: Doing Business Countries More Difficult to do business 5

6 Rank of 178 Countries There is large variation in its performance across variables depending upon level of Govt. 160 Doing Business 2008 rank 140 Central Govt. Control Local Govt. Control Protecting Investors Getting Credit Trading Across Borders Enforcing Contracts Dealing with Licenses Registering Property Employing Workers Starting a Business Closing a Business Paying Taxes Source: Doing Business

7 % of mgrs who agree The interpretation of regulation is not predictable according to the private sector Interpretation of regulation by officials is predicitable LAC ECA MENA Africa OECD EAP S. Asia Source: WBG Firm Survey

8 % of Mgr and Brazil is below the regional average 80 Interpretation of Regulations by Officials is Predictable Argentina Bolivia Peru Brazil Paraguay Guatemala Rep. Dom. Ecuador Honduras Mexico Nicaragua El Salvador Colombia Costa Rica Panama Chile 8 : WBG Firm Survey 2006

9 Where is the problem? National or Sub-national level? Municipal license is about 70% of total process 1. Verificar o nome da firma 2. Pagar direitos de registro 3. Registrar-se na câmara de Comércio 4. Registrar-se para taxas federais 5. Registrar-se para taxas estaduais 6. Conseguir autorização estadual para emitir recibos 7. Inscrever-se no registro municipal de contribuintes 8. Pagar taxa de fiscalização do estabelecimento 9. Conseguir autorização municipal para emitir recibos 10. Imprimir recibos 11. Solicitar licença de funcionamento 12. Inspeção da autoridade municipal 13. Abrir um fundo especial de desemprego no banco (FGTS) 14. Inscrever empregados no programa de integração social 15. Notificar o ministério de emprego 9

10 Variation in Time and Cost for Operating License Time Cost Vitória Porto Alegre Maceió Campo Grande Florianópolis João Pessoa Londrina Recif e Teresina Joinville São Luis Goiânia Salvador Duque de Caxias Aracaju São Paulo Cuiabá Curitiba São Bernardo do Campo Diadema Fortaleza Belém Belo Horizonte Manaus Guarulhos Dias Porto Alegre Diadema Londrina Cuiabá São Bernardo do Campo Belo Horizonte Curitiba Guarulhos Joinville Florianópolis Manaus Campo Grande São Paulo Vitória Duque de Caxias Aracaju Goiânia João Pessoa Fortaleza Maceió Salvador Teresina Recif e Belém São Luis 0% 1% 1% 2% 2% 3% 3% 3% 3% 3% 4% 4% 5% 5% 5% 5% 6% 7% 7% 7% 8% 8% 8% 9% 9% 0% 2% 4% 6% 8% 10% Custo (como % do PIB per capita) Source: Municipal Scorecard,

11 Business Enabling Environment Program in LAC Why work at the local level? Because many of the main problems are due to poor local implementation : Inspections Commercial Registry & Operating Permits Building Permits Transparency in public procurement Environmental Regulation With decentralization, sub-national regulation will only increase in importance. 11

12 Methodology for Sub-national simplification Implemented with agencies involved Diagnostic (time and motion study) Process simplification proposal Implementation Monitoring and Evaluation and Continous Improvement 12

13 Simplification: A 4-Phase Process Step 1: Diagnosis Conduct detailed analysis and mapping of existing regulatory processes Conduct legal analysis of applicable laws, by-laws & regulations Examine ability of municipality s regulatory policy to maintain effective implementation and balanced enforcement of simplification initiative Remember to consider ancillary processes (e.g., inspections) as well 13

14 Simplification: A 4-Phase Process Step 2: Reform design Design a simplified regulatory process and ensure municipality can support technological requirements Examine requirements of existing process and reduce requirements to minimum number necessary Document results in process map A Visual representation of workflow; illustrates document requirements, how it is submitted and what happens during course of processing. Must be done in conjunction with agency no parachuting consultants! 14

15 Simplification: A 4-Phase Process Step 3: Implementation Training, Training, Training Give staff the tools to better serve the public. Empower people to make necessary decisions push decision making down, with responsibility. Align Incentives - Institute client feedback systems and public-private oversight boards focusing on key results, and reward staff accorgingly. 15

16 Simplification: A 4-Phase Process Step 4: Monitoring, Evaluation and continuous improvement Ensure strong baseline data without this you do not know what you have done. Invite 3 rd party scrutiny - including academic and public-private oversight. Review continuously for improvement opportunities install active and continuous learning culture. Apply lessons to other areas. 16

17 Real Results in Operating License Reform Average Results to date: 85% faster processes 300% growth in licenses 30,000 more firms registered 700% Increase in licensed firms 600% 500% 400% 300% 200% 100% 0% Nicaragua (León, Granada y Masaya) Honduras* (Tegucigalpa & San Pedro Sula) Peru (Lima) Peru* (Arequipa, Ica) Honduras results f or 9 mths, Peru (Ica & Arequipa) f or 3months Source: BEE Municipal Database 17

18 Institutionalizing Sub-national Reform Since sub-national governments are autonomous, you need a five-step approach to build a market for reform: Provide high-profile pilot case Provide proven methodology and make it available Create local capacity (build consulting capacity) Provide information (high profile public ranking) Have beneficiaries (private sector) lead discussions with their governments. Current IFC Program: 8 Countries/60 municipalities 6 National or State Programs 18

19 Municipal Scorecard: Instilling Competition for good governance Making information is available to Municipalities, Government and the Private Sector Regional Report Country Report Municipal Report Card Reporte Perú Reporte Perú MSC 2008 will expand to 10 countries and add variables on: Paying (Local) Taxes Municipal Procurement (Pilot) 19

20 How to Prioritize what to improve? 20

21 Thank You Servicios de Asesoría Latinoamérica y el Caribe Programa de Mejora del Ambiente de Negocios. 21