Doing Business in Cyprus
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Transcript of Doing Business in Cyprus
Doing Business in Cyprus
Sylvia SolfGlobal Product Lead, Investment Climate
Department, World Bank Group
NicosiaJuly 4th, 2014
Doing Business indicators – measuring business regulations throughout the lifecycle of a firm
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DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets.
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Methodology – How complex are simple transactions if all rules are followed?
• Measure procedural efficiency of the regulatory process• Follow the entrepreneur from the beginning to the end of a basic transaction• Record every step of the process, and the associated time and cost• Gather all the relevant laws, regulations, decrees and fee schedules
Focus on regulations relevant to a small to medium-sized domestic business.
Built on standardized case scenarios.
Are measured for the most populous city in each country.
Are focused on the formal sector.
Extent of Disclosure• Approval of related-party transactions
• Disclosure requirements
Extent of Director Liability• Ability to hold interested party liable
• Available remedies
Ease of Shareholder Suit• Information available during trial
•Access to company documents
Example: Protecting Investors• Measures disclosure requirements,
liability rules and legal recourse options for shareholders when directors do not act in their interest
• Where those rules are stronger, investors are more likely to invest
• Assigns value based on laws, regulation
How strong are regulations in protecting investors and property rights?
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Average ranking on sets of Doing Business indicators
Complexity and cost of regulatory processes
Stre
ngth
of l
egal
insti
tutio
ns
107
88
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Sub-Saha-ran Africa
142
South Asia
100
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Complex and expensive
Stronger
Weaker
Weaker legal institutions but simpler and less expensive regulatory processes
Stronger legal institutions andsimpler and less expensive
regulatory processes
Stronger legal institutions but more complex and expensiveregulatory processes
Weaker legal institutions andmore complex and expensive regulatory processes
Simple and inexpensive
121
Latin America & Caribbean
Europe & Cen-tral Asia
OECD high income
East Asia & Pacific
Middle East & North Africa
High rank on the ease of doing business – a result of efficient regulatory processes and strong legal
institutions
OECD high-income economies have the most business-friendly regulatory environment on both dimensions
Size of bubble represents number of economies 5
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Strong correlation between Ease of Doing Business and Global Competitiveness Index
11 EU members in the top 30 on the ease of doing business
1. Singapore
2. Hong Kong SAR, China
3. New Zealand
4. United States
5. Denmark
6. Malaysia
7. Korea, Rep.
8. Georgia
9. Norway
10. United Kingdom
11. Australia
12. Finland
13. Iceland
14. Sweden
15. Ireland
16. Taiwan, China
17. Lithuania
18. Thailand
19. Canada
20. Mauritius
21. Germany
22. Estonia
23. United Arab Emirates
24. Latvia
25. Macedonia, FYR
26. Saudi Arabia
27. Japan
28. Netherlands
29. Switzerland
30. Austria
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Pace of reforms remains strong in 2012/13: share of economies with at least one reform making it easier to do business
OECD high Income Europe and
Central Asia
Middle East and North Africa
South Asia
East Asia and Pacific
Sub-Saharan Africa
Latin America & the
Caribbean
Worldwide, 114 economies implemented 238 reforms in 2012/2013, 18% rise with respect to 2011/2012. While in the EU, 17 economies implemented 38 reforms in 2012/2013.
66%
40%
75%
60%
58%
53%
73%
61%
EU-28
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Irela
nd
Denm
ark
Unite
d Ki
ngdo
m
Finla
nd
Swed
en
Germ
any
Aust
ria
Neth
erla
nds
Belg
ium
Esto
nia
Lithu
ania
Latv
ia
Spai
n
Fran
ce
Port
ugal
Slov
ak R
epub
lic
Bulg
aria
Cypr
us
Hung
ary
Rom
ania
Luxe
mbo
urg
Italy
Turk
ey
Slov
enia
Pola
nd
Czec
h Re
publ
ic
Gree
ce
Croa
tia
55
60
65
70
75
80
85
90
Distance to Frontier, DB2009-2014
DB2014
DB2009
Malta was not included in Doing Business 2009 report
Cyprus has made efforts to improve its business regulations, but others are moving faster
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On average, Cyprus compares well to other EU countries
MaltaCroatia
Czech RepublicRomania
GreeceItaly
LuxembourgBulgariaHungary
SpainSlovak Republic
Poland Regional average
CyprusFrance
BelgiumSloveniaPortugalAustria
NetherlandsLatvia
EstoniaGermanyLithuania
IrelandSwedenFinland
United KingdomDenmark
0 21 42 63 84 105 126 147 168 189
103 89
75 73 72
65 60
58 54
52 49
45 42
39 38
36 33
31 30
28 24
22 21
17 15 14
12 10
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1
Rank
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But performance varies greatly among different areas of the regulatory environment
Starting a business
Dealing with construction
permits
Getting elec-tricity
Registering property
Getting credit
Protecting investors
Paying taxes Trading across borders
Enforcing contracts
Resolving insolvency
70 76 7464 56
69 62
38 45 3944
86108 103
55
34 33 27
110
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EU-28 in DB 14 Cyprus DB 14
Highest 1
Lowest 189
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Cyprus has a strong regulatory framework in some areas
• Minority shareholders benefit from comparatively strong approval and disclosure requirements in related-party transactions
• Secured transactions legislation supports the use of movable collateral
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But enforcement and commercial dispute resolution can be slow
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How much credit information is shared?
Number of economies in EU with each score on credit information index
Cyprus
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Construction formalities involve multiple agencies and approvals
It takes 677 days to complete all formalities and obtain clearances to build a warehouse in Nicosia
Town planning permit4
Building permit
Updating of the land title
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Getting an electricity connection takes 247 days and involves clearances from at least 6 agencies
Registering property is not complex but comparatively costly
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Transaction costs could be further reduced in other areas as well
Source: Doing Business 2014 report, World Bank Group.
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Complexity and cost of regulatory processes
• Starting a Business: Australia and Canada have a one-stop shop to start a business and have no minimum capital requirement
• Trading across borders: Germany adopted all the good practices in this area, such as allowing electronic submission and processing documents and using risk-based inspections
• Paying Taxes: Spain, Sweden and the United Kingdom have one tax per tax base and allow self-assessment
• Registering Property: Singapore use an electronic database for encumbrances
• Dealing with construction permits: Hong Kong, SAR China has a one-stop shop to deliver building permits
• Getting Electricity: Iceland and Korea, Rep. adopted all the good practices in this area, including providing transparent connection costs and processes
Strength of legal institutions
• Protecting Investors: Canada regulates the approval of related party transactions and clearly define duties for directors
• Getting Credit: Malaysia and United Kingdom allow a general description of collateral and maintain a unified registry
• Enforcing Contracts: Germany adopted all the good practices in this area, such as maintaining specialized commercial courts.
• Resolving Insolvency: Japan and New Zealand have a legal framework for out-of-court workout
Global best performers adopted most of the good practices across all areas measured
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