59417 Vanuatu © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470; Internet www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher,The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail pubrights@worldbank.org. Additional copies of Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004:Understanding Regulations may be purchased at www.doingbusiness.org. ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Vanuatu. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Vanuatu is ranked 60 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Vanuatu - Compared to global good practice economy as well as selected economies: Vanuatu's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 60 Starting a Business 107 Dealing with Construction Permits 21 Registering Property 108 Getting Credit 72 Protecting Investors 74 Paying Taxes 19 Trading Across Borders 142 Enforcing Contracts 76 Closing a Business 50 2 Summary of Indicators - Vanuatu Starting a Business Procedures (number) 8 Time (days) 39 Cost (% of income per capita) 37.9 Min. capital (% of income per capita) 0.0 Dealing with Construction Permits Procedures (number) 7 Time (days) 51 Cost (% of income per capita) 246.7 Registering Property Procedures (number) 2 Time (days) 188 Cost (% of property value) 7.0 Getting Credit Strength of legal rights index (0-10) 9 Depth of credit information index (0-6) 0 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 0.0 Protecting Investors Extent of disclosure index (0-10) 5 Extent of director liability index (0-10) 6 Ease of shareholder suits index (0-10) 5 Strength of investor protection index (0-10) 5.3 Paying Taxes Payments (number per year) 31 Time (hours per year) 120 Profit tax (%) 0.0 Labor tax and contributions (%) 4.5 Other taxes (%) 3.9 Total tax rate (% profit) 8.4 Trading Across Borders Documents to export (number) 7 Time to export (days) 26 Cost to export (US$ per container) 1565 Documents to import (number) 9 Time to import (days) 30 Cost to import (US$ per container) 1465 3 Enforcing Contracts Procedures (number) 30 Time (days) 430 Cost (% of claim) 74.7 Closing a Business Recovery rate (cents on the dollar) 42.7 Time (years) 2.6 Cost (% of estate) 38 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.08 0.07 0.06 Doing business has 0.05 become easier (DB 0.04 change score) 0.03 0.02 0.01 Doing business has 0.00 become more difficult or more -0.01 Vanuatu Solomon Micronesia, Marshall Samoa Kiribati Palau costly Islands Fed. Sts. Islands 6 1. Benchmarking Starting a Business Regulations: Vanuatu is ranked 107 overall for Starting a Business. Ranking of Vanuatu in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Vanuatu compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Vanuatu 8 39 37.9 0.0 Comparator Economies Kiribati 6 21 40.2 21.7 Marshall Islands 5 17 17.3 0.0 Micronesia, Fed. Sts. 7 16 150.5 0.0 Palau 8 28 4.2 11.2 Samoa 5 9 9.8 0.0 Solomon Islands 7 57 68.1 0.0 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Vanuatu Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 110 107 Procedures (number) 8 8 8 8 Time (days) 39 39 39 39 Cost (% of income per capita) 54.9 54.8 42.0 37.9 Min. capital (% of income per capita) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Starting a Business sub indicators in Vanuatu over the past 4 years: 9 Starting a Business Summary - Vanuatu This table summarizes the procedures and costs associated with setting up a business in Vanuatu. STANDARDIZED COMPANY Legal Form: Private Limited Liability Company City: Port Vila Registration Requirements: No: Procedure Time to complete Cost to complete 1 Check the uniqueness of the company name 1 VUV 1,500 2 Apply for the Vanuatu Financial Services Commission (VFSC) for a 25 VUV 50,000 permit to incorporate company 3 * File the memorandum with the Registrar 21 no charge 4 Apply for a business license from the Ministry of Finance 13 VUV 50,000 5 * Register with the VAT office 3 no charge 6 Registration as an employer with the National Provident fund 7 no charge 7 * Enroll employees in the work accident insurance 3 no charge 8 Make a company seal 1 VUV 3,000 10 * Takes place simultaneously with another procedure. 11 Starting a Business Details - Vanuatu Procedure 1 Check the uniqueness of the company name Time to complete: 1 Cost to complete: VUV 1,500 Comment: The company name search process is automated and can be completed on the spot. Procedure 2 Apply for the Vanuatu Financial Services Commission (VFSC) for a permit to incorporate company Time to complete: 25 Cost to complete: VUV 50,000 Comment: Pursuant to the Companies Act [CAP. 191], an application for a company incorporation permit must be filed with the minister responsible. The application must be in the prescribed form and accompanied by the original memorandum and articles of association, duly signed. Any permit granted must be endorsed on the memorandum. In practice, the application for a permit is filed through the Companies Office of the Vanuatu Financial Services Commission. On receipt, the Commission makes recommendations to the Minister who refers the permit application to the Attorney Generals Chambers, which considers the application after liaising with the Commission. Procedure 3 File the memorandum with the Registrar Time to complete: 21 Cost to complete: no charge Comment: If a permit is endorsed on a memorandum of association, the persons who have subscribed their names to it may file the memorandum with the Registrar's Office within 6 months after the permit is granted. The registration fee is calculated on share capital; the minimum payable is VUV 30,000. Registrations are completed in a minimum of 3­4 weeks, after which a company seal can be obtained. Notifications of the directors, secretary, and registered office must be filed within 14 days of incorporation, and to shares issued within 28 days after any allotment. Procedure 4 Apply for a business license from the Ministry of Finance Time to complete: 13 Cost to complete: VUV 50,000 Comment: According to the Business License Act No 19 of 1998, an incorporated company is not entitled to begin operating until it has obtained a business license from the Minister of Finance and the Department of Finance and Customs. It may take 2­3 weeks to obtain such a license. Business license certificates are issued by the Rates and Taxes Authority. The fee varies by type and size of business, as shown below for 2006. Fee schedule for business license (based on annual turnover): - To VUV 10 million (annual turnover): VUV 20 thousand (fee). 12 - To VUV 20 million (annual turnover): VUV 50 thousand (fee). - To VUV 50 million (annual turnover): VUV 100 thousand (fee). - To VUV 100 million (annual turnover): VUV 250 thousand (fee). - To VUV 200 million (annual turnover): VUV 250 thousand (fee). - Over VUV 200 million (annual turnover): VUV 250 thousand (fee). Procedure 5 Register with the VAT office Time to complete: 3 Cost to complete: no charge Comment: A company must register with the value added tax (VAT) office if it anticipates turnover of at least VUV 4 million per year. Procedure 6 Registration as an employer with the National Provident fund Time to complete: 7 Cost to complete: no charge Comment: Procedure 7 Enroll employees in the work accident insurance Time to complete: 3 Cost to complete: no charge Comment: The Workmen's Compensation Act came into force on January 1, 2004, requiring all employers to insure their employees against workplace accidents. Procedure 8 Make a company seal Time to complete: 1 Cost to complete: VUV 3,000 Comment: 13 14 1. Benchmarking Dealing with Construction Permits Regulations: Vanuatu is ranked 21 overall for Dealing with Construction Permits. Ranking of Vanuatu in Dealing with Construction Permits - Compared to good practice and selected economies: 15 The following table shows Dealing with Construction Permits data for Vanuatu compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Vanuatu 7 51 246.7 Comparator Economies Kiribati 14 160 446.5 Marshall Islands 10 55 36.0 Micronesia, Fed. Sts. 14 73 19.2 Palau 25 118 5.1 Samoa 18 88 78.7 Solomon Islands 12 62 665.4 16 2. Historical data: Dealing with Construction Permits in Vanuatu Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 22 21 Procedures (number) 7 7 7 7 Time (days) 51 51 51 51 Cost (% of income per capita) 357.7 356.7 273.5 246.7 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Vanuatu over the past 4 years: 17 Dealing with Construction Permits in Vanuatu The table below summarizes the procedures, time, and costs to build a warehouse in Vanuatu. BUILDING A WAREHOUSE City: Port Vila Registration Requirements: No: Procedure Time to complete Cost to complete 1 Request and obtain building permit from the Town Planning Authority 42 days VUV 5,000 2 * Request and obtain building permit from the municipal council and pay the 48 days VUV 595,270 permit fee 3 * Request and connect to telephone services from Telecom Vanuatu Ltd. 32 days VUV 20,000 4 * Request and connect to water services from the Water Board 7 days VUV 25,000 5 * Request and connect to electricity connection from power company 7 days VUV 35,000 6 Request inspection from the municipal council 1 day no charge 7 Receive inspection from the municipal council 1 day no charge * Takes place simultaneously with another procedure. 18 Dealing with Construction Permits Details - Vanuatu Procedure 1 Request and obtain building permit from the Town Planning Authority Time to complete: 42 days Cost to complete: VUV 5,000 Agency: Town Planning Authority Comment: BuildCo must submit the construction plans and specifications for approval. Procedure 2 Request and obtain building permit from the municipal council and pay the permit fee Time to complete: 48 days Cost to complete: VUV 595,270 Agency: Municipal Council Comment: BuildCo must submit the plans and specifications along with proof of ownership of the land. During this process, the approval from several departments will be issued: - Approval from the Lands Department to ensure the building is being erected on the correct block of land. - Approval from the Public Works Department to ensure the building methods are feasible. - Approval from the Fire Department. Upon approval, the permit fee must be paid within a year. After payment, the permit is valid for 2 years. The cost is calculated as follows: VUV 10,000 + VUV 585,270 = VUV 595,270. Procedure 3 Request and connect to telephone services from Telecom Vanuatu Ltd. Time to complete: 32 days Cost to complete: VUV 20,000 Agency: Telecom Vanuatu Ltd. Comment: Procedure 4 Request and connect to water services from the Water Board Time to complete: 7 days Cost to complete: VUV 25,000 Agency: Water Board Comment: Procedure 5 Request and connect to electricity connection from power company 19 Time to complete: 7 days Cost to complete: VUV 35,000 Agency: UNELCO Vanuatu Ltd. Comment: Procedure 6 Request inspection from the municipal council Time to complete: 1 day Cost to complete: no charge Agency: Municipal Council Comment: The Municipal Council carries out this inspection to ensure that the correct fees have being paid. All building permit fees are calculated on actual floor area. It is not uncommon to double the building's floor area or add an extra floor after the building permit fees have been paid. The granting of building permits is a revenue-raising activity for the Municipal Council with no serious input from any of the licensing authorities apart from rubber-stamping approvals. Procedure 7 Receive inspection from the municipal council Time to complete: 1 day Cost to complete: no charge Agency: Municipal Council Comment: The Municipal Council carries out this inspection to ensure that the correct fees have being paid. All building permit fees are calculated on actual floor area. It is not uncommon to double the building's floor area or add an extra floor after the building permit fees have been paid. The granting of building permits is a revenue-raising activity for the Municipal Council with no serious input from any of the licensing authorities apart from rubber-stamping approvals. 20 21 1. Benchmarking Registering Property Regulations: Vanuatu is ranked 108 overall for Registering Property. Ranking of Vanuatu in Registering Property - Compared to good practice and selected economies: 22 The following table shows Registering Property data for Vanuatu compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Vanuatu 2 188 7.0 Comparator Economies Kiribati 5 513 0.0 Marshall Islands no practice no practice no practice Micronesia, Fed. Sts. no practice no practice no practice Palau 5 14 0.3 Samoa 5 27 1.6 Solomon Islands 10 297 4.9 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 23 2. Historical data: Registering Property in Vanuatu Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 103 108 Procedures (number) 2 2 2 2 Time (days) 188 188 188 188 Cost (% of property value) 10.0 7.0 7.0 7.0 3. The following graphs illustrate the Registering Property sub indicators in Vanuatu over the past 4 years: 24 Registering Property in Vanuatu This topic examines the steps, time, and cost involved in registering property in Vanuatu. STANDARDIZED PROPERTY Property Value: 13,786,916.21 City: Port Vila Registration Requirements: No: Procedure Time to complete Cost to complete 1 Payment of stamp duty at the Vanuatu Financial 1-14 days 2% stamp duty on the value Services Commission of the lease (stamp duty) 2 Apply for registration of the deed of transfer at the 180 days 5% registration fee on the Department of Lands Records value of the lease (registration fee) 25 Registering Property Details - Vanuatu Procedure 1 Payment of stamp duty at the Vanuatu Financial Services Commission Time to complete: 1-14 days Cost to complete: 2% stamp duty on the value of the lease (stamp duty) Agency: Vanuatu Financial Services Commission Comment: Transfer of a lease is done by mean of an instrument in the prescribed form. The seller, must provide warranty that there are no outstanding payment (such as the ren). The buyer should provide warranty that he/she will pay the rent and other obligations. After the agreement is executed by the parties, with no need to engage the services of a lawyer, the stamp duty must be paid. The stamp duty is paid at the Vanuatu Financial Services Commission. The Controller of Stamp Duties may take from one to 14 days to stamp the document. It depends on what type of lease documents are submitted to that Office. The Controller of Stamp Duty may require further details from the parties to assist that office to assess duty. In cases when a lease is transferred, before the parties may execute a transfer, the vendor (registered proprietor of the registered Lease) must have ready to hand to the purchaser a consent granted by the lessor (either the Government or custom owners as the case may be) agreeing to such transfer of the interests comprised in the lease. The stamp duties act establishes stamp duty at 2% of property value. The 2007 amendement reduced it from 5 to 2%. Procedure 2 Apply for registration of the deed of transfer at the Department of Lands Records Time to complete: 180 days Cost to complete: 5% registration fee on the value of the lease (registration fee) Agency: Department of Lands Records Comment: The buyer applies for registration of the deed of transfer at the Department of Lands Records. The registration fee is paid at the Department of Lands Records. The fee is established in the Land lease act. The amendement of 2004 increased it from 2 to 6% and the amendement of 2006 decreased it from 6 to 5%. 26 27 1. Benchmarking Getting Credit Regulations: Vanuatu is ranked 72 overall for Getting Credit. Ranking of Vanuatu in Getting Credit - Compared to good practice and selected economies: 28 The following table shows Getting Credit data for Vanuatu compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Vanuatu 9 0 0.0 0.0 Comparator Economies Kiribati 5 0 0.0 0.0 Marshall Islands 8 0 0.0 0.0 Micronesia, Fed. Sts. 7 0 0.0 0.0 Palau 0 0 0.0 0.0 Samoa 6 0 0.0 0.0 Solomon Islands 8 0 0.0 0.0 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 29 2. Historical data: Getting Credit in Vanuatu Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 69 72 Strength of legal rights index (0-10) 5 8 9 9 Depth of credit information index (0-6) 0 0 0 0 Private bureau coverage (% of adults) 0.0 0.0 0.0 0.0 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Vanuatu over the past 4 years: 30 Getting Credit in Vanuatu The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Vanuatu. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 0 bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? No No 0 Is data on all loans below 1% of income per capita distributed? No No 0 Is it guaranteed by law that borrowers can inspect their data in the No No 0 largest credit registry? Coverage 0.0 0.0 Number of individuals 0 0 Number of firms 0 0 31 Strength of legal rights index (0-10) 9 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, Yes without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without Yes requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, Yes proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the Yes grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes Do secured creditors have absolute priority to their collateral in bankruptcy procedures? Yes During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? Yes 32 33 1. Benchmarking Protecting Investors Regulations: Vanuatu is ranked 74 overall for Protecting Investors. Ranking of Vanuatu in Protecting Investors - Compared to good practice and selected economies: 34 The following table shows Protecting Investors data for Vanuatu compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Vanuatu 5.3 Comparator Economies Kiribati 6.0 Marshall Islands 3.3 Micronesia, Fed. Sts. 2.7 Palau 2.7 Samoa 6.3 Solomon Islands 5.7 35 2. Historical data: Protecting Investors in Vanuatu Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 73 74 Strength of investor protection index (0-10) 5.3 5.3 5.3 5.3 3. The following graph illustrates the Protecting Investors index in Vanuatu compared to best practice and selected Economies: 9.7 6.3 6.0 5.7 5.3 3.3 2.7 2.7 i at nd on oa nd u tu nd ll St ia, ib Is lom la sha la m ua d. es ir a s Pa Sa al K s Fe ron an ar s. So Ze la M V ic ew Is M N Note: The higher the score, the greater the investor protection. 36 Protecting Investors in Vanuatu The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Vanuatu. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 5 1 What corporate body provides legally sufficient approval for the transaction? 0 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 2 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 2 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 6 2 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 37 1 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 5 4 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 0 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 0 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 5.3 38 39 1. Benchmarking Paying Taxes Regulations: Vanuatu is ranked 19 overall for Paying Taxes. Ranking of Vanuatu in Paying Taxes - Compared to good practice and selected economies: 40 The following table shows Paying Taxes data for Vanuatu compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Vanuatu 31 120 8.4 Comparator Economies Kiribati 7 120 31.8 Marshall Islands 21 128 64.9 Micronesia, Fed. Sts. 21 128 58.7 Palau 19 128 73.0 Samoa 37 224 18.9 Solomon Islands 33 80 36.4 * The following economies are also good practice economies for : Payments (number per year): Qatar 41 2. Historical data: Paying Taxes in Vanuatu Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 20 19 Total tax rate (% profit) 8.4 8.4 8.4 8.4 Payments (number per year) 31 31 31 31 Time (hours per year) 120 120 120 120 3. The following graphs illustrate the Paying Taxes sub indicators in Vanuatu over the past 4 years: 42 Paying Taxes in Vanuatu The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Vanuatu, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Stamp duty 1 various rates contract value Value added tax (VAT) 12 96 12.5% value added National Government 2 0 various rates unimproved 0.40 land tax land value Vehicle tax 1 fixed fee 0.50 (VUV 55,000) Municipal property taxes 2 0 various rates unimproved 0.50 land value Business license 1 0 various fees turnover 2.50 depending on turnover (VUV 250,000) Social Security 12 24 4.0% gross salaries 4.50 contributions Totals 31 120 8.4 43 44 1. Benchmarking Trading Across Borders Regulations: Vanuatu is ranked 142 overall for Trading Across Borders. Ranking of Vanuatu in Trading Across Borders - Compared to good practice and selected economies: 45 The following table shows Trading Across Borders data for Vanuatu compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Vanuatu 7 26 1565 9 30 1465 Comparator Economies Kiribati 6 21 1070 7 21 1070 Marshall Islands 5 21 945 5 33 945 Micronesia, Fed. Sts. 3 30 1295 6 30 1295 Palau 6 29 1070 10 33 1022 Samoa 7 27 820 7 31 848 Solomon Islands 7 24 1023 4 21 1237 * The following economies are also good practice economies for : Time to export (days): Estonia 46 2. Historical data: Trading Across Borders in Vanuatu Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 140 142 Cost to export (US$ per container) 1815 1497 1497 1565 Cost to import (US$ per container) 2225 1392 1392 1465 Documents to export (number) 7 7 7 7 Documents to import (number) 9 9 9 9 Time to export (days) 26 26 26 26 Time to import (days) 30 30 30 30 3. The following graphs illustrate the Trading Across Borders sub indicators in Vanuatu over the past 4 years: 47 48 Trading Across Borders in Vanuatu These tables list the procedures necessary to import and export a standardized cargo of goods in Vanuatu. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 4 300 Customs clearance and technical control 2 65 Ports and terminal handling 17 600 Inland transportation and handling 3 600 Totals 26 1565 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 6 250 Customs clearance and technical control 5 65 Ports and terminal handling 17 550 Inland transportation and handling 2 600 Totals 30 1465 49 Documents for Export and Import Export Bill of lading Certificate of origin Commercial invoice Customs export declaration Packing list Pre-shipment inspection clean report of findings Technical standard/health certificate Import Bill of lading Cargo release order Certificate of origin Collection order Commercial invoice Customs import declaration Packing list Technical standard/health certificate Terminal handling receipts 50 51 1. Benchmarking Enforcing Contracts Regulations: Vanuatu is ranked 76 overall for Enforcing Contracts. Ranking of Vanuatu in Enforcing Contracts - Compared to good practice and selected economies: 52 The following table shows Enforcing Contracts data for Vanuatu compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Vanuatu 30 430 74.7 Comparator Economies Kiribati 32 660 25.8 Marshall Islands 36 476 27.4 Micronesia, Fed. Sts. 34 965 66.0 Palau 38 885 35.3 Samoa 44 455 19.7 Solomon Islands 37 455 78.9 53 2. Historical data: Enforcing Contracts in Vanuatu Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 75 76 Procedures (number) 30 30 30 30 Time (days) 430 430 430 430 Cost (% of claim) 74.7 74.7 74.7 74.7 3. The following graphs illustrate the Enforcing Contracts sub indicators in Vanuatu over the past 4 years: 54 Enforcing Contracts in Vanuatu This topic looks at the efficiency of contract enforcement in Vanuatu. Nature of Procedure (2010) Indicator Procedures (number) 30 Time (days) 430 Filing and service 30.0 Trial and judgment 200.0 Enforcement of judgment 200.0 Cost (% of claim)* 74.70 Attorney cost (% of claim) 58.6 Court cost (% of claim) 7.3 Enforcement Cost (% of claim) 8.8 55 Court information: Port Vila Magistrates Court * Claim assumed to be equivalent to 200% of income per capita. 56 57 1. Benchmarking Closing Business Regulations: Vanuatu is ranked 50 overall for Closing a Business. Ranking of Vanuatu in Closing Business - Compared to good practice and selected economies: 58 The following table shows Closing Business data for Vanuatu compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Vanuatu 42.7 2.6 38 Comparator Economies Kiribati 0.0 no practice no practice Marshall Islands 17.9 2.0 38 Micronesia, Fed. Sts. 3.2 5.3 38 Palau 37.9 1.0 23 Samoa 14.6 2.5 38 Solomon Islands 23.4 1.0 38 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 59 2. Historical data: Closing Business in Vanuatu Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 52 50 Time (years) 2.6 2.6 2.6 2.6 Cost (% of estate) 38 38 38 38 Recovery rate (cents on the dollar) 39.3 41.2 41.2 42.7 3. The following graphs illustrate the Closing Business sub indicators in Vanuatu over the past 4 years: 60 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 61 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Marshall Islands The Marshall Islands improved access to credit through a new law on secured transactions that establishes a central collateral registry, broadens the range of assets that can be used as collateral, allows a general description of debts and obligations and assets granted as collateral and establishes clear priority rules outside bankruptcy for secured creditors. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Samoa Samoa shifted from a deed system to a title system and fully computerized its land registry, which reduced the time required to register property by 4 months. Solomon Islands The Solomon Islands strengthened access to credit by passing a new secured transactions law that broadens the range of assets that can be used as collateral, allows a general description of debts and obligations secured by collateral, permits out-of-court enforcement and creates a collateral registry. Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. 62 Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 63 64