43077 Suriname Doing Business 2008 Suriname A Project Benchmarking the Regulatory Cost of Doing Business in 178 Economies Doing Business Project World Bank Group © 2007 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 E-mail feedback@worldbank.org All rights reserved. 1 2 3 4 5 09 08 07 06 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 Group does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. 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Contents Introduction......................1 Economy rankings.............2 Reforms...........................3 Summary of indicators........6 Starting a business.............8 Dealing with licenses.........13 Employing workers............18 Registering property...........22 Getting credit....................27 Protecting investors............31 Paying taxes.....................35 Trading across borders.......39 Enforcing contracts............43 Closing a business.............47 Topic details......................51 Introduction Doing Business 2008 is the fifth in a series of annual reports investigating the 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 178 economies-from Afghanistan to Zimbabwe-and over time. Regulations affecting 10 stages of a business's life are measured: starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2008 are current as of June 1, 2007. 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 a country'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, and the underlying strength of institutions -- are not studied directly by Doing Business. To make the data comparable across countries, the indicators refer to a specific type of business -- generally a 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 178 economies: 46 in Sub-Saharan Africa, 31 in Latin America and the Caribbean, 28 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 17 in the Middle East and North Africa and 8 in South Asia-as well as 24 OECD high-income economies as benchmarks. Some of the regions have been divided into subregions to generate a total of 13 regional profiles. The following pages present the summary Doing Business indicators for Suriname along with the comparator economies selected. The data used for this country profile come from the Doing Business database and are summarized in graphs and tables. This report allows a comparison of the economies not only with one another but also with the "best practice" economy for each indicator. The best-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 economies. These best-practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 5. More information is available in the full report. Doing Business 2008 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 . http://www.doingbusiness.org 1 Economy Rankings - Ease of Doing Business Suriname is ranked 142 out of 178 economies. Singapore is the top ranked economy in the Ease of Doing Business. Suriname - Compared to Global Best / Selected Economies: Suriname's ranking in Doing Business 2008 Rank Doing Business 2008 Ease of Doing Business 142 Starting a Business 163 Dealing with Licenses 97 Employing Workers 50 Registering Property 136 Getting Credit 135 Protecting Investors 174 Paying Taxes 23 Trading Across Borders 86 Enforcing Contracts 174 Closing a Business 145 2 Reforms - Who is reforming? This year Egypt tops the list of reformers that are making it easier to do business. Egypt's reforms went deep with reforms in 5 of the 10 areas studied by Doing Business, and it greatly improved its position in the global rankings as a result. Besides Egypt, the other top 10 reformers are, in order, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China, and Bulgaria. 1. Egypt, the top reformer in the region and worldwide, greatly improved its position in the global rankings on the ease of doing business. Its reforms went deep. Egypt cut the minimum capital required to start a business, from 50,000 Egyptian pounds to just 1,000 and halved the time and cost of start-up. It reduced fees for registering property from 3 percent of the property value to a low, fixed amount. It eased the bureaucracy that builders face in getting construction permits. It launched new one-stop shops for traders at Egyptian ports, cutting the time to import by seven days and the time to export by five. And it established a new private credit bureau that will soon be making it easier for borrowers to get credit. 2. Croatia reformed in four of the 10 areas studied by Doing Business. Two years ago, registering property in Croatia took 956 days. Now it takes 174. Company start-up also became faster, with procedures consolidated at a "one-stop shop" and pension and health services registration now online. Credit became easier to access: a new credit bureau was launched, and a unified registry now records charges against movable property in one place. In its first two months, 1.4 billion in credit was registered. In addition, amendments to the country's insolvency law introduced professional requirements for bankruptcy trustees and shorter timelines. 3. Ghana, a top 10 reformer for the second year running, continues to increase the efficiency of its public services. It cut bottlenecks in property registration, reducing delays from six months to one. Greater efficiency at the company registry and the environment agency cut the time for business start-up to 42 days. Changes in the port authority's operations sped up imports. New civil procedure rules and mandatory arbitration and mediation reduced the time it takes to enforce contracts. 4. FYR Macedonia eliminated the minimum capital requirement for business start-up, sped up the process for getting construction permits, lowered the corporate income tax rate to 12 percent (with another cut to 10 percent planned for 2008), and simplified tax payment procedures. Its ranking on the ease of doing business rose from 96 to 75. 5. Georgia reformed in six areas. It strengthened investor protections, including through amendments to its securities law that eliminate loopholes that had allowed corporate insiders to expropriate minority investors. It adopted a new insolvency law that shortens timelines for reorganization of a distressed company or disposition of a debtor's assets. Georgia sped up approvals for construction permits and simplified procedures for registering property. It made starting a business easier by eliminating the paid-in capital requirement. In addition, the country's private credit bureau added payment information from retailers, utilities, and trade creditors to the data it collects and distributes. 6. Colombia, the region's top reformer, has made great strides in easing trade. By extending port operating hours and adopting more selective customs inspections, it reduced the time for port and terminal handling activities by three days. The country strengthened investor protections by increasing disclosure requirements for related-party transactions. It introduced an electronic tax filing system, cutting the average time businesses must spend on tax compliance each year by 188 hours, or 41 percent. And it is progressively reducing the corporate income tax rate, from 35 to 34 percent in 2007 and 33 percent in 2008. 7. Saudi Arabia, the runner-up reformer in the region, eliminated the minimum capital requirement of 1,057 percent of income per capita and reduced the days needed for company start-up from 39 to 15. It launched a commercial credit bureau whose reports include the credit exposure of companies. It also sped up trade, reducing the number of documents required for importing and cutting the time needed for handling at ports and terminals by two days for both imports and exports. 8. Kenya, the region's other top 10 reformer, launched an ambitious licensing reform program. So far the program has eliminated 110 business licenses and simplified eight others. The changes have streamlined business start-up and cut both the time and cost of getting building permits. The program will eventually eliminate or simplify at least 900 more of the country's 1,300 licenses. Property registration is also faster now, thanks to the introduction of competition among land valuers. And the country's private credit bureau now collects a wider range of data. 3 9. In China, a new property law put private property rights on equal footing with state property rights. The law also expanded the range of assets that can be used as collateral to include inventory and accounts receivable. The new bankruptcy law gives secured creditors priority to the proceeds from their collateral. Construction also became easier, with electronic processing of building permits reducing delays by two weeks. 10. Bulgaria eased the tax burden on businesses and made it easier to pay taxes online. Bulgaria also introduced private bailiffs to improve efficiency in enforcing judgments. And it made building inspections less burdensome. Number of reforms in Doing Business 2008 Positive Reform Borders Licenses Workers Property Investors Total Negative Reform Business Contracts Business a with Credit Taxes Across a number of reforms Economy Starting Dealing Employing Registering Getting Protecting Paying Rank Trading Enforcing Closing 1 Egypt 5 2 Croatia 4 3 Ghana 5 4 Macedonia, FYR 3 5 Colombia 3 6 Georgia 6 7 Saudi Arabia 3 8 Kenya 4 9 China 3 10 Bulgaria 3 Suriname 0 Dominican Republic 2 Guyana 0 Haiti 1 Jamaica 0 Puerto Rico 0 Note: Economies are ranked on the number and impact of reforms, Doing Business selects the economies that reformed in 3 or more of the Doing Business topics. Second, it ranks these economies on the increase in rank in Ease of Doing Business from the previous year. The larger the imporvement, the higher the ranking as a reformer. 5 Summary of Indicators - Suriname Starting a Business Procedures (number) 13 Duration (days) 694 Cost (% GNI per capita) 141.8 Paid in Min. Capital (% of GNI per capita) 1.1 Dealing with Licenses Procedures (number) 14 Duration (days) 431 Cost (% of income per capita) 158.0 Employing Workers Difficulty of Hiring Index 0 Rigidity of Hours Index 20 Difficulty of Firing Index 50 Rigidity of Employment Index 23 Nonwage labor cost (% of salary) 0 Firing costs (weeks of wages) 26 Registering Property Procedures (number) 4 Duration (days) 193 Cost (% of property value) 13.7 Getting Credit Legal Rights Index 4 Credit Information Index 0 Public registry coverage (% adults) 0.0 Private bureau coverage (% adults) 0.0 Protecting Investors Disclosure Index 2 Director Liability Index 0 Shareholder Suits Index 5 Investor Protection Index 2.3 Paying Taxes Payments (number) 17 Time (hours) 199 Profit tax (%) 27.9 Labor tax and contributions (%) 0.0 Other taxes (%) 0.0 Total tax rate (% profit) 27.9 6 Trading Across Borders Documents for export (number) 8 Time for export (days) 25 Cost to export (US$ per container) 905 Documents for import (number) 7 Time for import (days) 25 Cost to import (US$ per container) 815 Enforcing Contracts Procedures (number) 44 Duration (days) 1715 Cost (% of claim) 37.1 Closing a Business Time (years) 5.0 Cost (% of estate) 30 Recovery rate (cents on the dollar) 7.4 Starting a Business in Suriname: Entry Regulation When entrepreneurs draw up a business plan and try to get under way, the first hurdles they face are the procedures required to incorporate and register the new firm before they can legally operate. Economies differ greatly in how they regulate the entry of new businesses. In some the process is straightforward and affordable. In others the procedures are so burdensome that entrepreneurs may have to bribe officials to speed the process--or may decide to run their business informally. The data on starting a business are based on a survey and research investigating the procedures that a standard small to medium-size company needs to complete to start operations legally. These include obtaining all necessary permits and licenses and completing all required inscriptions, verifications and notifications with authorities to enable the company to formally operate. The time and cost required to complete each procedure under normal circumstances are calculated, as well as the minimum capital that must be paid in. It is assumed that all information is readily available to the entrepreneur, that there has been no prior contact with officials and that all government and nongovernment entities involved in the process function without corruption. To make the data comparable across economies, detailed assumptions about the type of business are used. Among these assumptions are the following: the business is a limited liability company conducting general commercial activities in the largest business city; it is 100% domestically owned, with start-up capital of 10 times income per capita, turnover of at least 100 times income per capita and between 10 and 50 employees; and it does not qualify for any special benefits, nor does it own real estate. Procedures are recorded only where interaction is required with an external party. It is assumed that the founders complete all procedures themselves unless professional services (such as by a notary or lawyer) are required by law. Voluntary procedures are not counted, nor are industry-specific requirements and utility hook-ups. Lawful shortcuts are counted. Cumbersome entry procedures are associated with more corruption, particularly in developing countries. Each procedure is a point of contact--an opportunity to extract a bribe. Analysis shows that burdensome entry regulations do not increase the quality of products, make work safer or reduce pollution. Instead, they constrain private investment; push more people into the informal economy; increase consumer prices; and fuel corruption. 8 1. Historical data: Starting a Business in Suriname Starting a Business data Doing Business Doing Business 2007 2008 Rank 161 163 Procedures (number) 13 13 Duration (days) 694 694 Cost (% GNI per capita) 153.8 141.8 Paid in Min. Capital (% of GNI per capita) 1.4 1.1 2. The following graph illustrates the Starting a Business indicators in Suriname over the past 3 years: 694 694 8. 8. 153 141 13 13 4.1 1.1 mber) ) ta) GNI (days capi of s (nu tion per (% dure ) Dura GNI pital (% .Ca capita Proce Cost Min in per 2006 2007 Paid 9 3. Steps to Starting a Business in Suriname It requires 13 procedures, takes 694 days, and costs 141.81% GNI per capita to start a business in Suriname. List of Procedures: 1. Deposit paid-in minimum capital 2. Verify uniqueness of company name 3. Obtain extract and nationality declaration of each founder 4. Pay fee at the Ministry of Justice and Police 5. Pay fee at the Districts Commissioner 6. Notarize company act 7. Apply for company registration at the Trade Register 8. Obtain approval of the act by the President 9. Publish statement of no objection in Official Gazette 10. Register copy of approved act with the Chamber of Commerce 11. Register company for taxes 12. Register employees for accident insurance 10 13. Obtain trade license More details are available in the appendix. 4. Benchmarking Starting a Business Regulations: Suriname is ranked 163 overall for Starting a Business. Australia is the top ranked economy followed by Canada, New Zealand and United States. Ranking of Suriname in Starting a Business - Compared to best practice and selected economies: 11 The following table shows Starting a Business data for Suriname compared to best practice and comparator economies: Best Practice Economies Procedures Duration Cost (% GNI Paid in Min. (number) (days) per capita) Capital (% of GNI per Australia* 2 2 0.0 Denmark 0.0 Selected Economy Suriname 13 694 141.8 1.1 Comparator Economies Dominican Republic 9 22 31.1 0.0 Guyana 8 44 87.2 0.0 Haiti 12 202 133.9 32.2 Jamaica 6 8 8.7 0.0 Puerto Rico 7 7 0.8 0.0 * The following economies are also best practice economies for : Procedures (number): Canada, New Zealand Paid in Min. Capital (% of GNI per capita): Canada, Ireland, Israel, Mauritius, New Zealand, Puerto Rico, Thailand, Trinidad and Tobago, United Kingdom, United States 12 Dealing with Licenses in Suriname: Building a Warehouse Once entrepreneurs have registered a business, what regulations do they face in operating it? To measure such regulation, Doing Business focuses on the construction sector. Construction companies are under constant pressure--from government to comply with inspections and with licensing and safety regulations and from customers to be quick and cost-effective. These conflicting pressures point to the tradeoff in building regulation--the tradeoff between protecting people (construction workers, tenants, passersby) and keeping the cost of building affordable. In many countries, especially poor ones, complying with building regulations is so costly in time and money that many builders opt out. Builders may pay bribes to pass inspections or simply build illegally--leading to hazardous construction. In other countries compliance is simple, straightforward and inexpensive--yielding better results. The indicators on dealing with licenses record all procedures officially required for an entrepreneur in the construction industry to build a warehouse. These include submitting project documents (building plans, site maps) to the authorities, obtaining all necessary licenses and permits, completing all required notifications and receiving all necessary inspections. They also include procedures for obtaining utility connections, such as electricity, telephone, water and sewerage. The time and cost to complete each procedure under normal circumstances are calculated. All official fees associated with legally completing the procedures are included. Time is recorded in calendar days. The survey assumes that the entrepreneur is aware of all existing regulations and does not use an intermediary to complete the procedures unless required to do so by law. To make the data comparable across economies, several assumptions about the business and its operations are used. The business is a small to medium-size limited liability company, located in the most populous city, domestically owned and operated, in the construction business, with 20 qualified employees. The warehouse to be built: · Is a new construction (there was no previous construction on the land). · Has complete architectural and technical plans prepared by a licensed architect. · Will be connected to electricity, water, sewerage (sewage system, septic tank or their equivalent) and one land phone line. The connection to each utility network will be 32 feet, 10 inches (10 meters) long. · Will be used for general storage, such as of books or stationery. The warehouse will not be used for any goods requiring special conditions, such as food, chemicals or pharmaceuticals. · Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). Where the regulatory burden is large, entrepreneurs move their activity into the informal economy. There they operate with less concern for safety, leaving everyone worse off. 13 1. Historical data: Dealing with Licenses in Suriname Dealing with Licenses data Doing Business Doing Business 2007 2008 Rank 100 97 Procedures (number) 14 14 Duration (days) 431 431 Cost (% of income per capita) 196.3 158.0 2. The following graph illustrates the Dealing with Licenses indicators in Suriname over the past 3 years: 431 431 3. 196 158 14 14 mber) ) per (days s (nu tion income ) dure of Dura (% capita Proce Cost 2006 2007 14 3. Steps to Building a Warehouse in Suriname It requires 14 procedures, takes 431 days, and costs 157.98% GNI per capita to build a warehouse in Suriname. List of Procedures: 1. Obtain a site map from a legally approved surveyor 2. Obtain building permit from Ministry of Public Works 3. Receive inspection by fire department 4. Receive inspection by Ministry of Public Works 5. Receive inspection by Ministry of Public Works 6. Receive inspection by Ministry of Public Works 7. Obtain approval from the Electriciteits Bedrijf Suriname (EBS) power company 8. Receive site inspection from EBS prior to installation 9. Obtain approval from the Suriname Water Company (SWM) water supply company 10. Obtain electricity connection 11. Obtain water and sewage connection 12. Receive inspection from SWM 15 13. Obtain a fixed telephone line 14. Obtain inspection certificate from fire department More details are available in the appendix. 4. Benchmarking Dealing with Licenses Regulations: Suriname is ranked 97 overall for Dealing with Licenses. St. Vincent and the Grenadines is the top ranked economy followed by New Zealand, Belize and Marshall Islands. Ranking of Suriname in Dealing with Licenses - Compared to best practice and selected economies: * The following economies are also best practice economies for Building a Warehouse: St. Vincent and the Grenadines 16 The following table shows Dealing with Licenses data for Suriname compared to best practice and comparator economies: Best Practice Economies Procedures Duration Cost (% of (number) (days) income per capita) Denmark 6 Korea 34 United Arab Emirates 1.5 Selected Economy Suriname 14 431 158.0 Comparator Economies Dominican Republic 17 214 116.1 Guyana 12 222 313.9 Haiti 11 1179 817.8 Jamaica 10 236 438.4 Puerto Rico 22 209 550.8 17 Employing Workers in Suriname: Labor Regulations Every economy has established a complex system of laws and institutions intended to protect workers and guarantee a minimum standard of living for its population. This system encompasses four bodies of law: employment, industrial relations, social security and occupational health and safety laws. Doing Business examines government regulation in the area of employment and social security laws. Three measures are presented: a rigidity of employment index, a nonwage labor cost measure and a firing cost measure. The rigidity of employment index is the average of three subindices: difficulty of hiring, rigidity of hours and difficulty of firing. Each index takes values between 0 and 100, with higher values indicating more rigid regulation. The difficulty of hiring index measures the flexibility of contracts and the ratio of the minimum wage to the value added per worker. The rigidity of hours index covers restrictions on weekend and night work, requirements relating to working time and the workweek, and mandated days of annual leave with pay. The difficulty of firing index covers workers' legal protections against dismissal, including the grounds permitted for dismissal and procedures for dismissal (individual and collective). The nonwage labor cost covers all social security payments and payroll taxes associated with hiring an employee, expressed as a percentage of the worker's salary. The firing cost indicator measures the cost of advance notice requirements, severance payments and penalties due when terminating a redundant worker, expressed in weeks of salary. The indicators on employment regulations are based on a detailed study of employment laws. Data are also gathered on the specific constitutional provisions governing the two areas studied. To ensure accuracy, both the actual laws and the applicable collective bargaining agreements are used. Finally, all data are verified and completed by local law firms through a detailed survey of employment regulations. To make the data comparable across economies, a range of assumptions about the worker and the company are used. Assumptions about the worker include that he is a nonexecutive, full-time male employee who has worked in the same company for 20 years and is not a member of the labor union (unless membership is mandatory). The company is assumed to be a limited liability manufacturing corporation that operates in the country's most populous city, is 100% domestically owned and has 201 employees. The company is also assumed to be subject to collective bargaining agreements in countries where such agreements cover more than half the manufacturing sector and apply even to firms not party to them. Most employment regulations are enacted in response to market failures. But that does not mean that today's regulations are optimal. Analysis across countries shows that while employment regulation generally increases the tenure and wages of incumbent workers, rigid regulations have many undesirable side effects. These include less job creation, smaller company size, less investment in research and development, and longer spells of unemployment and thus the obsolescence of skills--all of which may reduce productivity growth. Many countries err on the side of excessive rigidity, to the detriment of businesses and workers alike. 18 1. Historical data: Employing Workers in Suriname Employing Workers data Doing Business Doing Business 2007 2008 Rank 50 50 Rigidity of Employment Index 23 23 Nonwage labor cost (% of salary) 0 0 Firing costs (weeks of wages) 26 26 2. The following graph illustrates the Employing Workers indicators in Suriname over the past 3 years: 26 26 23 23 0 0 of s of yment (% cost of Emplo costs(week) wages dity Index age labor salary) Firing Rigi Nonw 2006 2007 19 3. Benchmarking Employing Workers Regulations: Suriname is ranked 50 overall for Employing Workers. Marshall Islands is the top ranked economy followed by Brunei, Georgia and Tonga. Ranking of Suriname in Employing Workers - Compared to best practice and selected economies: * The following economies are also best practice economies for Employing Workers: Marshall Islands, Singapore 20 The following table shows Employing Workers data for Suriname compared to best practice and comparator economies: Best Practice Economies Rigidity of Nonwage Firing costs Employment labor cost (% (weeks of Index of salary) wages) Bangladesh* 0 Denmark* 0 Hong Kong, China* 0 Selected Economy Suriname 23 0 26 Comparator Economies Dominican Republic 32 14 88 Guyana 24 8 56 Haiti 21 11 17 Jamaica 4 12 61 Puerto Rico 21 13 0 * The following economies are also best practice economies for : Rigidity of Employment Index: Singapore, United States Nonwage labor cost (% of salary): Botswana, Ethiopia, Maldives Firing costs (weeks of wages): New Zealand, United States 21 Registering Property in Suriname: Regulation of Property Transfer Property registries were first developed to help raise tax revenue. Defining and publicizing property rights through registries has also proved to be good for entrepreneurs. Land and buildings account for between half and three-quarters of the wealth in most economies. Securing rights to this property strengthens incentives to invest and facilitates commerce. And with formal property titles, entrepreneurs can obtain mortgages on their home or land and start businesses. Doing Business measures the ease of registering property based on a standard case of an entrepreneur who wants to purchase land and a building in the largest business city. It is assumed that the property is already registered and free of title dispute. The data cover the full sequence of procedures necessary to transfer the property title from the seller to the buyer. Every required procedure is included, whether it is the responsibility of the seller or the buyer or must be completed by a third party on their behalf. Local property lawyers and officials in property registries provide information on required procedures as well as the time and cost to complete each one. For most countries the data are based on responses from both. Based on the responses, three indicators are constructed: · Number of procedures to register property. · Time to register property (in calendar days). · Official costs to register property (as a percentage of the property value). A large share of the property in developing countries is not formally registered, limiting financing opportunities for businesses. Recognizing this constraint, some developing country governments have embarked on extensive property titling programs. Yet bringing assets into the formal sector is of little value unless they stay there. Many titling programs in Africa were futile because people bought and sold property informally--neglecting to update the title records in the property registry. Why? Doing Business shows that completing a simple formal property transfer in the largest business city of an African country costs 12% of the value of the property and takes more than 100 days on average. Worse, the property registries are so poorly organized that they provide little security of ownership. For both reasons, formalized titles quickly go informal again. Efficient property registration reduces transaction costs and helps keep formal titles from slipping into informal status. Simple procedures to register property are also associated with greater perceived security of property rights and less corruption. That benefits all entrepreneurs, especially women, the young and the poor. The rich have few problems protecting their property rights. They can afford to invest in security systems and other measures to defend their property. But small entrepreneurs cannot. Reform can change this. 22 1. Historical data: Registering Property in Suriname Registering Property data Doing Business Doing Business 2007 2008 Rank 119 136 Procedures (number) 4 4 Duration (days) 193 193 Cost (% of property value) 10.2 13.7 2. The following graph illustrates the Registering Property indicators in Suriname over the past 3 years: 193 193 2. 7. 4 4 10 13 mber) ) (days s (nu property tion of ) dure (% Dura value Cost Proce 2006 2007 23 3. Steps to Registering Property in Suriname It requires 4 procedures, takes 193 days, and costs 13.74% GNI per capita to register the property in Suriname. List of Procedures: 1. Conduct title search at Lands Office 2. Execute and notarize final sale purchase agreement 3. Notary registers final sale purchase agreement at the Lands Office 4. Buyer receives original deed proving ownership More details are available in the appendix. 24 4. Benchmarking Registering Property Regulations: Suriname is ranked 136 overall for Registering Property. New Zealand is the top ranked economy followed by Armenia, Saudi Arabia and Lithuania. Ranking of Suriname in Registering Property - Compared to best practice and selected economies: 25 The following table shows Registering Property data for Suriname compared to best practice and comparator economies: Best Practice Economies Procedures Duration Cost (% of (number) (days) property value) New Zealand* 2 Norway* 1 Saudi Arabia* 0.0 Selected Economy Suriname 4 193 13.7 Comparator Economies Dominican Republic 7 60 5.1 Guyana 6 34 4.5 Haiti 5 405 6.5 Jamaica 5 54 13.5 Puerto Rico 8 194 1.4 * The following economies are also best practice economies for : Procedures (number): Sweden Duration (days): Sweden, Thailand Cost (% of property value): Bhutan 26 Getting Credit in Suriname: Legal Rights and Credit Information Firms consistently rate access to credit as among the greatest barriers to their operation and growth. Doing Business constructs two sets of indicators of how well credit markets function--one on credit registries and the other on legal rights of borrowers and lenders. Credit registries--institutions that collect and distribute credit information on borrowers--can greatly expand access to credit. By sharing credit information, they help lenders assess risk and allocate credit more efficiently. And they free entrepreneurs from having to rely on personal connections alone when trying to obtain credit. Three indicators are constructed to measure the sharing of credit information: · Public registry coverage, which reports the number of individuals and firms covered by a public credit registry as a percentage of the adult population. · Private bureau coverage, which reports the number of individuals and firms covered by a private credit bureau as a percentage of the adult population. · Depth of credit information index, which measures the extent to which the rules of a credit information system facilitate lending based on the scope of information distributed, the ease of access to information and the quality of information. The data are from surveys of public registries and the largest private credit bureau in the country. Effective regulation of secured lending--through collateral and bankruptcy laws--can also ease credit constraints. By giving a lender the right to seize and sell a borrower's secured assets upon default, collateral limits the lender's potential losses and acts as a screening device for borrowers. The strength of legal rights index measures 10 aspects of the rights of borrowers and creditors in collateral and bankruptcy laws, including whether: · General rather than specific description of assets and debt is permitted in collateral agreements (expanding the scope of assets and debt covered). · Any legal or natural person may grant or take security in assets. · A unified registry operates that includes charges over movable property. · Secured creditors have priority both within bankruptcy and outside it. · Parties may agree on out-of-court enforcement of collateral by contract. · Creditors may both seize and sell collateral out of court, no automatic stay or "asset freeze" applies upon bankruptcy, and the bankrupt debtor does not retain control of the firm. The index ranges from 0 (weak legal rights) to 10 (strong legal rights). The data were obtained by examining collateral and bankruptcy laws and legal summaries and verified through a survey of financial lawyers. Where good-quality credit information is available and legal rights are stronger, more credit is extended. Benefits flow beyond those gaining access to credit. With better-functioning credit markets, unemployment is lower, and women and low-income people benefit the most. 27 1. Historical data: Getting Credit in Suriname Getting Credit data Doing Business Doing Business 2007 2008 Rank 132 135 Legal Rights Index 4 4 Public registry coverage (% adults) 0.0 0.0 Private bureau coverage (% adults) 0.0 0.0 2. The following graph illustrates the Getting Credit indicators in Suriname over the past 3 years: 4 4 0 0 0 0 Index ge(% ge (% Rights covera covera ts) au ts) Legal registryadul bure adul te lic Pub Priva 2006 2007 28 3. Benchmarking Getting Credit Regulations: Suriname is ranked 135 overall for Getting Credit. United Kingdom is the top ranked economy followed by Hong Kong, China, Germany and Australia. Ranking of Suriname in Getting Credit - Compared to best practice and selected economies: 29 The following table shows Getting Credit data for Suriname compared to best practice and comparator economies: Best Practice Economies Legal Rights Public Private Index registry bureau coverage (% coverage (% Argentina* 100.0 Hong Kong, China* 10 Portugal 67.1 Selected Economy Suriname 4 0.0 0.0 Comparator Economies Dominican Republic 4 13.3 35.4 Guyana 3 0.0 0.0 Haiti 3 0.7 0.0 Jamaica 5 0.0 0.0 Puerto Rico 6 0.0 62.0 * The following economies are also best practice economies for : Legal Rights Index: United Kingdom Private bureau coverage (% adults): Australia, Canada, Iceland, Ireland, New Zealand, Nicaragua, Norway, Sweden, United States 30 Protecting Investors in Suriname Officials at Elf Aquitaine, France's largest oil company, awarded business deals in return for large side payments. Along with the extra cash, they got seven years in jail and a 2 million fine for abuse of power. Russian oil firm Gazprom purchased materials for new pipelines through intermediaries owned by company officers. The high cost raised eyebrows, but not court battles. Big cases make headlines. But looting by corporate insiders occurs every day on a smaller scale, and often goes unnoticed. To document the protections investors have, Doing Business measures how countries regulate a standard case of self-dealing--use of corporate assets for personal gain. The case facts are simple. Mr. James, a director and the majority shareholder of a public company, proposes that the company purchase used trucks from another company he owns. The price is higher than the going price for used trucks. The transaction goes forward. All required approvals are obtained, and all required disclosures made, though the transaction is unfair to the purchasing company. Shareholders sue the interested parties and the members of the board of directors. Several questions arise. Who approves the transaction? What information must be disclosed? What company documents can investors access? What do minority shareholders have to prove to get the transaction stopped or to receive compensation from Mr. James? Three indices of investor protection are constructed based on the answers to these and other questions. All indices range from 0 to 10, with higher values indicating more protections or greater disclosure. The extent of disclosure index covers approval procedures, requirements for immediate disclosure to the public and shareholders of proposed transactions, requirements for disclosure in periodic filings and reports and the availability of external review of transactions before they take place. The extent of director liability index covers the ability of investors to hold Mr. James and the board of directors liable for damages, the ability to rescind the transaction, the availability of fines and jail time associated with self-dealing, the availability of direct or derivative suits and the ability to require Mr. James to pay back his personal profits from the transaction. The ease of shareholder suits index covers the availability of documents that can be used during trial, the ability of the investor to examine the defendant and other witnesses, shareholders' access to internal documents of the company, the appointment of an inspector to investigate the transaction and the standard of proof applicable to a civil suit against the directors. These three indices are averaged to create the strength of investor protection index. This index ranges from 0 to 10, with higher values indicating better investor protection. If the rights of investors are not protected, majority ownership in a business is the only way to eliminate expropriation. But then investors must devote more oversight attention to fewer investments. The result: entrepreneurship is suppressed, and fewer profitable investment projects are undertaken. Where self-dealing is curbed, equity investment is higher, ownership concentration lower and trust in the business sector deeper. Investors gain portfolio diversification, and entrepreneurs gain access to cash. 31 1. Historical data: Protecting Investors in Suriname Protecting Investors data Doing Business Doing Business 2007 2008 Rank 173 174 Investor Protection Index 2.3 2.3 2. The following graph illustrates the Protecting Investors index in Suriname compared to best practice and selected Economies: 7.9 0.7 3.5 3.5 0.4 0.3 3.2 iti c ame bli Ha yana Repu Gu Surin can Jamaica Rico Zealand Puerto w Ne Domini Note: The higher the score, the greater the investor protection. 32 3. Benchmarking Protecting Investors Regulations: Suriname is ranked 174 overall for Protecting Investors. New Zealand is the top ranked economy followed by Singapore, Hong Kong, China and Malaysia. Ranking of Suriname in Protecting Investors - Compared to best practice and selected economies: 33 The following table shows Protecting Investors data for Suriname compared to best practice and comparator economies: Best Practice Economies Investor Protection Index New Zealand 9.7 Selected Economy Suriname 2.3 Comparator Economies Dominican Republic 4.0 Guyana 5.3 Haiti 3.0 Jamaica 5.3 Puerto Rico 7.0 34 Paying Taxes: Tax Payable and Compliance in Suriname Taxes are essential. Without them there would be no money to fund schools, hospitals, courts, roads, water, waste collection and other public services that help businesses to be more productive. Still, there are good ways and bad ways to collect taxes. The Doing Business tax survey records the effective tax that a company must pay and the administrative costs of doing so. Imagine a medium-size business, TaxpayerCo, that started operations last year. Doing Business asked accountants in 178 economies to review TaxpayerCo's financial statements and a standard list of transactions the company completed during the year. Respondents were asked how much tax the business must pay and what the process is for doing so. The business starts from the same financial position in each country. All the taxes and contributions paid during the second year of operation are recorded. Taxes and contributions are measured at all levels of government and include corporate income tax, turnover tax, all labor contributions paid by the company (including mandatory contributions paid to private pension or insurance funds), property tax, property transfer tax, dividend tax, capital gains tax, financial transactions tax, vehicle tax and other small taxes (such as fuel tax, stamp duty and local taxes). A range of standard deductions and exemptions are also recorded. Three indicators are constructed: · Number of tax payments, which takes into account the method of payment or withholding, the frequency of payment or withholding and the number of agencies involved for the standard case. · Time, which measures the hours per year necessary to prepare, file and pay the corporate income tax, value added or sales tax and labor taxes. · Total tax rate, which measures the amount of taxes payable by the company during the second year of operation. This amount, expressed as a percentage of commercial profit, is the sum of all the different taxes payable after accounting for various deductions and exemptions. Businesses care about what they get for their taxes and contributions, such as the quality of infrastructure and social services. Poor countries tend to use businesses as a collection point for taxes. Rich countries tend to have lower tax rates and less complex tax systems. And rich countries get more from their taxes. Simple, moderate taxes and fast, cheap administration mean less hassle for businesses--and also more revenue collected and better public services. More burdensome tax regimes create an incentive to evade taxes. 35 1. Historical data: Paying Taxes in Suriname Paying Taxes data Doing Business Doing Business 2007 2008 Rank 24 23 Time (hours) 199 199 Total tax rate (% profit) 27.9 27.9 Payments (number) 17 17 2. The following graph illustrates the Paying Taxes indicators in Suriname over the past 3 years: 199 199 9. 9. 27 27 17 17 mber) ) t) urs (nu Time (ho profi (% rate ments tax Pay tal 2006 2007 To 36 3. Benchmarking Paying Taxes Regulations: Suriname is ranked 23 overall for Paying Taxes. Maldives is the top ranked economy followed by Singapore, Hong Kong, China and United Arab Emirates. Ranking of Suriname in Paying Taxes - Compared to best practice and selected economies: * The following economies are also best practice economies for Paying Taxes: Maldives 37 The following table shows Paying Taxes data for Suriname compared to best practice and comparator economies: Best Practice Economies Payments Time (hours) Total tax (number) rate (% profit) Sweden* 2 United Arab Emirates* 12 Vanuatu 8.4 Selected Economy Suriname 17 199 27.9 Comparator Economies Dominican Republic 74 286 40.2 Guyana 34 288 39.0 Haiti 53 160 40.0 Jamaica 72 414 51.3 Puerto Rico 16 140 44.3 * The following economies are also best practice economies for : Payments (number): Maldives Time (hours): Maldives 38 Trading Across Borders: Importing and Exporting from Suriname The benefits of trade are well documented--as are the obstacles to trade. Tariffs, quotas and distance from large markets greatly increase the cost of goods or prevent trading altogether. But with faster ships and bigger planes, the world is shrinking. Global and regional agreements have brought down trade barriers. Yet Africa's share of global trade is smaller today than it was 25 years ago. So is the Middle East's, excluding oil exports. The reason is simple: many entrepreneurs face numerous hurdles to exporting or importing goods. They often give up. Others never try. Doing Business compiles procedural requirements for trading a standard shipment of goods by ocean transport. Every official procedure--and the associated documents, time and cost--for importing and exporting the goods is recorded, starting with the contractual agreement between the two parties and ending with delivery of the goods. For importing the goods, the procedures measured range from the vessel's arrival at the port of entry to the shipment's delivery at the factory warehouse. For exporting the goods, the procedures measured range from the packing of the goods at the factory to their departure from the port of exit. To make the data comparable across countries, several assumptions about the business and the traded goods are used. The business is of medium size, with 100 or more employees, and is located in the periurban area of the country's most populous city. It is a private, limited liability company, domestically owned, formally registered and operating under commercial laws and regulations of the country. The traded goods are ordinary, legally manufactured products, and they travel in a dry-cargo, 20-foot FCL (full container load) container. Documents recorded include port filing documents, customs declaration and clearance documents, and official documents exchanged between the concerned parties. Time is recorded in calendar days, from start to finish of each procedure. Cost measures the fees levied on a 20-foot container in U.S. dollars. All the fees associated with completing the procedures to export or import the goods are included, such as costs for documents, administrative fees for customs clearance and technical control, terminal handling charges and inland transport. The cost measure does not include tariffs or trade taxes. Countries that have efficient customs, good transport networks and fewer document requirements--making compliance with export and import procedures faster and cheaper--are more competitive globally. That leads to more exports--and exports are associated with faster growth and more jobs. Conversely, a need to file many documents is associated with more corruption in customs. Faced with long delays and frequent demands for bribes, many traders avoid customs altogether. Instead, they smuggle goods across the border. That defeats the very purpose in having border control of trade--to levy taxes and ensure high quality of goods. 39 1. Historical data: Trading Across Borders in Suriname Trading Across Borders data Doing Business Doing Business 2007 2008 Rank 71 86 Documents for export (number) 8 8 Time for export (days) 25 25 Cost to export (US$ per container) 905 905 Documents for import (number) 7 7 Time for import (days) 25 25 Cost to import (US$ per container) 815 815 2. The following graph illustrates the Trading Across Borders indicators in Suriname over the past 3 years: 905 905 815 815 8 8 25 25 7 7 25 25 ) rt export per ) per (US$ impo (days for rt (days rt for (US$ nts mber) expo nts mber) er) (nu (nu import to Docume Time for expo er) to contain Cost Docume Time for import contain Cost 2006 2007 40 3. Benchmarking Trading Across Borders Regulations: Suriname is ranked 86 overall for Trading Across Borders. Singapore is the top ranked economy followed by Denmark, Hong Kong, China and Norway. Ranking of Suriname in Trading Across Borders - Compared to best practice and selected economies: 41 The following table shows Trading Across Borders data for Suriname compared to best practice and comparator economies: Best Practice Economies Documents Time for Cost to Documents Time for Cost to for export export (days) export (US$ for import import (days) import (US$ (number) per (number) per Canada* 3 China 390 Denmark* 5 3 Singapore 3 367 Selected Economy Suriname 8 25 905 7 25 815 Comparator Economies Dominican Republic 6 12 815 7 13 1015 Guyana 7 30 850 8 35 856 Haiti 8 52 1650 10 53 1860 Jamaica 6 21 1750 6 22 1350 Puerto Rico 7 15 1225 10 16 1225 * The following economies are also best practice economies for : Documents for export (number): Estonia, Micronesia, Panama Time for export (days): Estonia, Singapore Documents for import (number): Sweden 42 Enforcing Contracts: Court Efficiency in Suriname Where contract enforcement is efficient, businesses are more likely to engage with new borrowers or customers. Doing Business tracks the efficiency of the judicial system in resolving a commercial dispute, following the step-by-step evolution of a commercial sale dispute before local courts. The data are collected through study of the codes of civil procedure and other court regulations as well as surveys completed by local litigation lawyers (and, in a quarter of the countries, by judges as well). The dispute, between two businesses (the Seller and the Buyer) located in the country's most populous city, concerns a contract for the sale of goods. The Seller agrees to deliver the goods, worth 200% of the country's income per capita, to the Buyer. After receiving and inspecting the goods, the Buyer concludes that their quality is inadequate. The Buyer sends the goods back without paying for them. The Seller disagrees and argues that their quality is adequate. The Seller seeks full payment from the Buyer, arguing that the goods cannot be sold to a third party because they were custom-made for the Buyer. The Seller sues the Buyer before the court in the most populous city to recover the amount due under the sales agreement (200% of the country's income per capita). Three indicators of the efficiency of commercial contract enforcement are developed: · Number of procedures, which includes all those that demand interaction between the parties or between them and the judge or court officer. · Time, which counts the number of days from the moment the plaintiff files the lawsuit in court until the moment of payment. This measure includes both the days on which actions take place and the waiting periods between actions. · Cost, which measures the official cost of going through court procedures, expressed as a percentage of the claim (assumed to be equivalent to 200% of income per capita). The cost includes court costs, enforcement costs and attorney fees where the use of attorneys is mandatory or common. Businesses that have little or no access to efficient courts must rely on other mechanisms, both formal and informal--such as trade associations, social networks, credit bureaus or private information channels--to decide whom to do business with and under what conditions. Or they might adopt a conservative approach to business, dealing only with a small group of people linked through kinship, ethnic origin or previous dealings and structuring transactions to forestall disputes. In either case economic and social value may be lost. The main reason to regulate procedures in commercial dispute resolution is that informal justice is vulnerable to subversion by the rich and powerful. But heavy regulation of dispute resolution backfires. Across countries, the more procedures it takes to enforce a contract, the longer the delays and the higher the cost. The result: less wealth is created. 43 1. Historical data: Enforcing Contracts in Suriname Enforcing Contracts data Doing Business Doing Business 2007 2008 Rank 174 174 Procedures (number) 44 44 Duration (days) 1715 1715 Cost (% of claim) 37.1 37.1 2. The following graph illustrates the Enforcing Contracts indicators in Suriname over the past 3 years: 1715 1715 1. 1. 44 44 37 37 mber) ) (days claim) s (nu of tion (% dure Dura Cost Proce 2006 2007 44 3. Benchmarking Enforcing Contracts Regulations: Suriname is ranked 174 overall for Enforcing Contracts. Hong Kong, China is the top ranked economy followed by Luxembourg, Latvia and Singapore. Ranking of Suriname in Enforcing Contracts - Compared to best practice and selected economies: 45 The following table shows Enforcing Contracts data for Suriname compared to best practice and comparator economies: Best Practice Economies Procedures Duration Cost (% of (number) (days) claim) Bhutan 0.1 Ireland 20 Singapore 120 Selected Economy Suriname 44 1715 37.1 Comparator Economies Dominican Republic 34 460 40.9 Guyana 36 581 25.2 Haiti 35 508 42.6 Jamaica 34 565 45.6 Puerto Rico 41 620 16.4 46 Closing Business in Suriname: Bankruptcy The economic crises of the 1990s in emerging markets--from East Asia to Latin America, from Russia to Mexico--raised concerns about the design of bankruptcy systems and the ability of such systems to help reorganize viable companies and close down unviable ones. In countries where bankruptcy is inefficient, unviable businesses linger for years, keeping assets and human capital from being reallocated to more productive uses. The Doing Business indicators identify weaknesses in the bankruptcy law as well as the main procedural and administrative bottlenecks in the bankruptcy process. In many developing countries bankruptcy is so inefficient that creditors hardly ever use it. In countries such as these, reform would best focus on improving contract enforcement outside bankruptcy. The data on closing a business are developed using a standard set of case assumptions to track a company going through the step-by-step procedures of the bankruptcy process. It is assumed that the company is a domestically owned, limited liability corporation operating a hotel in the country's most populous city. The company has 201 employees, 1 main secured creditor and 50 unsecured creditors. Assumptions are also made about the debt structure and future cash flows. The case is designed so that the company has a higher value as a going concern--that is, the efficient outcome is either reorganization or sale as a going concern, not piecemeal liquidation. The data are derived from questionnaires answered by attorneys at private law firms. Three measures are constructed from the survey responses: the time to go through the insolvency process, the cost to go through the process and the recovery rate--how much of the insolvency estate is recovered by stakeholders, taking into account the time, cost, depreciation of assets and the outcome of the insolvency proceeding. Bottlenecks in bankruptcy cut into the amount claimants can recover. In countries where bankruptcy is used, this is a strong deterrent to investment. Access to credit shrinks, and nonperforming loans and financial risk grow because creditors cannot recover overdue loans. Conversely, efficient bankruptcy laws can encourage entrepreneurs. The freedom to fail, and to do so through an efficient process, puts people and capital to their most effective use. The result is more productive businesses and more jobs. 47 1. Historical data: Closing Business in Suriname Closing a Business data Doing Business Doing Business 2007 2008 Rank 144 145 Time (years) 5.0 5.0 Cost (% of estate) 30 30 Recovery rate (cents on the dollar) 7 7.4 2. The following graph illustrates the Closing Business indicators in Suriname over the past 3 years: 30 30 7 4.7 5 5 ) the ) on estate (cents) Time (years of (% y ratedollar Cost cover Re 2006 2007 48 3. Benchmarking Closing Business Regulations: Suriname is ranked 145 overall for Closing a Business. Japan is the top ranked economy followed by Singapore, Norway and Canada. Ranking of Suriname in Closing Business - Compared to best practice and selected economies: 49 The following table shows Closing Business data for Suriname compared to best practice and comparator economies: Best Practice Economies Recovery Time (years) Cost (% of rate (cents estate) on the Colombia 1 Ireland 0.4 Japan 92.6 Selected Economy Suriname 7.4 5.0 30 Comparator Economies Dominican Republic 8.4 3.5 38 Guyana 17.4 3.0 29 Haiti 3.1 5.7 30 Jamaica 64.3 1.1 18 Puerto Rico 54.1 3.8 8 50 APPENDICES Starting a Business in Suriname This table summarizes the procedures and costs associated with setting up a business in Suriname. STANDARDIZED COMPANY Legal Form: Private Limited Liability Company Minimum Capital Requirement: SRD 100 City: Paramaribo Registration Requirements: No: Procedure Time to complete Cost to complete 1 Deposit paid-in minimum capital 1 day no charge 2 Verify uniqueness of company name 1 day SRD 25 3 Obtain extract and nationality declaration from the Civil Registry 1 day SRD 5 (SRD 1 per of each founder founder) 4 Pay fee at the Accountancy and Finance Department of the 1 day included in procedure Ministry of Justice and Police 6 5 Pay fee at the Districts Commissioner 1 day included in procedure 6 6 Notarize company articles of association 3 days see comments 7 Apply for company registration at the Trade Register in the 1-2 days SRD 50 to 100 Chamber of Commerce 8 Obtain approval of the act by the President 500 days no charge 9 Publish statement of no objection in Official Gazette 2-3 days SRD 1500 10 * Register copy of approved act with the Trade Register of the 1 day (simultaneous no charge Chamber of Commerce and Industry with previous procedure) 11 * Register company for taxes at the tax office of the Ministry of 1 to 2 days no charge Finance (simultaneous with previous procedures) 12 * Register employees with an accident insurance 2 to 3 days SRD 60 per person per (simultaneous with year previous procedure) 13 * Obtain trade license 6 months SRD 550 (simultaneous with previous procedure) * Takes place simultaneously with another procedure. 51 Procedure 1 Deposit paid-in minimum capital Time to complete: 1 day Cost to complete: no charge Comment: At least 10% of the subscribed capital should be deposited in the bank. Procedure 2 Verify uniqueness of company name Time to complete: 1 day Cost to complete: SRD 25 Comment: The company name search is done at the Chamber of Commerce. Procedure 3 Obtain extract and nationality declaration from the Civil Registry of each founder Time to complete: 1 day Cost to complete: SRD 5 (SRD 1 per founder) Comment: Procedure 4 Pay fee at the Accountancy and Finance Department of the Ministry of Justice and Police Time to complete: 1 day Cost to complete: included in procedure 6 Comment: Procedure 5 Pay fee at the Districts Commissioner Time to complete: 1 day Cost to complete: included in procedure 6 Comment: Procedure 6 Notarize company articles of association Time to complete: 3 days Cost to complete: see comments Comment: Limited liability companies must be founded through a notarized act, written in Dutch. The company must submit draft articles of association and a request to start the company so the notary can provide a declaration. Fee schedule for notarizing articles of association: - SRD 2,100 for the first SRD 1,000 of nominal capital. For the outstanding amount of nominal capital, an extra SRD 85 is added for every SRD 1,000. The SRD 2,100 includes the SRD 350 for Procedure 4 and the SRD 27 for Procedure 5. In addition, a turnover tax of 8% of the total fee is paid for the notary's service. 52 Procedure 7 Apply for company registration at the Trade Register in the Chamber of Commerce Time to complete: 1-2 days Cost to complete: SRD 50 to 100 Comment: The following documents must be filed with the Trade Register to apply for company registration: - Draft statutes. - Letter from notary on founding of the limited liability company. - Recent passport picture of each founder (one). - Passport or identity card of each founder (copy). - Extract from Civil Registry of each founder (one). The company is registered as a limited liability company "in establishment" before obtaining the approval of the President of Suriname. Upon approval, the notary public converts the draft articles of association into the articles of association and notarizes the company act. The annual registration fee is also referred to as the contribution fee. Procedure 8 Obtain approval of the act by the President Time to complete: 500 days Cost to complete: no charge Comment: The company act must be approved by the President of Suriname with a statement of no objection, published in the Official Gazette. Before a company is officially established, it becomes a limited liability company "in establishment." While in establishment, the company can carry out activities, but the owners are fully liable. The following documents are submitted for the President's approval of the company act: - Request to form a company (two copies). - Draft company statutes (three copies). - Abstract for the Trade Registry (original). - Proof of payment at the Civil Registry. Procedure 9 Publish statement of no objection in Official Gazette Time to complete: 2-3 days Cost to complete: SRD 1500 Comment: The Official Gazette is published every Thursday and Friday, but the company can continue with the other formalities without waiting for the statement to be published. It is only after the publication that company founders cease to be personally liable. Procedure 10 Register copy of approved act with the Trade Register of the Chamber of Commerce and Industry Time to complete: 1 day (simultaneous with previous procedure) Cost to complete: no charge Comment: Procedure 11 Register company for taxes at the tax office of the Ministry of Finance Time to complete: 1 to 2 days (simultaneous with previous procedures) 53 Cost to complete: no charge Comment: With the registration extract, the founder can obtain the tax number. The registration must be completed in person. Suriname has a self-assessment system for taxes. Limited liability companies pay a fixed tariff. Regardless of the taxable income, the tariff is 36% a year. Turnover tax on taxable services is 8%, and on taxable goods, 10%. The self-assessment forms must be filled out by the company and submitted to the Tax Office. Procedure 12 Register employees with an accident insurance Time to complete: 2 to 3 days (simultaneous with previous procedure) Cost to complete: SRD 60 per person per year Comment: All companies must provide their employees with accident insurance. Other social insurance is not compulsory. Procedure 13 Obtain trade license Time to complete: 6 months (simultaneous with previous procedure) Cost to complete: SRD 550 Comment: The trade license fee is SRD 300, but there are many additional fees. A one-stop shop in the Chamber of Commerce centralizes all the steps for the SRD 550 fee. 54 Dealing with Licenses in Suriname The table below summarizes the procedures, time, and costs to build a warehouse in Suriname. BUILDING A WAREHOUSE Date as of: January 2,007 Estimated Warehouse Value: City: Paramaribo Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain a site map from a legally approved surveyor 2 days USD 250 2 Obtain building permit from Ministry of Public Works 180 days USD 260 3 Receive inspection by fire department 1 day no charge 4 Receive inspection by Ministry of Public Works 1 day no charge 5 Receive inspection by Ministry of Public Works 1 day no charge 6 Receive inspection by Ministry of Public Works 1 day no charge 7 Obtain approval from the Electriciteits Bedrijf Suriname (EBS) power 30 days no charge company 8 Receive site inspection from EBS prior to installation 14 days no charge 9 * Obtain approval from the Suriname Water Company (SWM) water 30 days SRD 56 supply company 10 Obtain electricity connection 7 days no charge 11 Obtain water and sewage connection 180 days SRD 11,160 12 Receive inspection from SWM 30 days SRD 837 13 Obtain a fixed telephone line 14 days SRD 419 14 Obtain inspection certificate from fire department 21 days no charge * Takes place simultaneously with another procedure. 55 Procedure 1 Obtain a site map from a legally approved surveyor Time to complete: 2 days Cost to complete: USD 250 Comment: Procedure 2 Obtain building permit from Ministry of Public Works Time to complete: 180 days Cost to complete: USD 260 Comment: The building's owner (BuildCo) must obtain a building permit at the Ministry of Public Works. This must be done before the start of construction. The following documents must be submitted: - The application form (a standard form). - Architectural plans. - Construction drawings and structural calculation. - A site map made by a legally approved surveyor. - The professional license of the building's owner (BuildCo). The ministry will consult with the fire department and any other agency (a district commissioner, for example), if required. Procedure 3 Receive inspection by fire department Time to complete: 1 day Cost to complete: no charge Comment: Procedure 4 Receive inspection by Ministry of Public Works Time to complete: 1 day Cost to complete: no charge Comment: Procedure 5 Receive inspection by Ministry of Public Works Time to complete: 1 day Cost to complete: no charge Comment: Procedure 6 Receive inspection by Ministry of Public Works Time to complete: 1 day 56 Cost to complete: no charge Comment: Procedure 7 Obtain approval from the Electriciteits Bedrijf Suriname (EBS) power company Time to complete: 30 days Cost to complete: no charge Comment: Approval from the electricity provider (Electriciteits Bedrijf Suriname, EBS) can be obtained during construction. The items to be submitted are the electrical plans and details. Submissions can be done only by an installation firm approved by the EBS. Procedure 8 Receive site inspection from EBS prior to installation Time to complete: 14 days Cost to complete: no charge Comment: Procedure 9 Obtain approval from the Suriname Water Company (SWM) water supply company Time to complete: 30 days Cost to complete: SRD 56 Comment: Approval from the Suriname Water Company (SWM) can be obtained during construction and requires submissions of a plan of the water supply system. Installations can be done only by a firm approved by the SWM. Procedure 10 Obtain electricity connection Time to complete: 7 days Cost to complete: no charge Comment: Procedure 11 Obtain water and sewage connection Time to complete: 180 days Cost to complete: SRD 11,160 Comment: Procedure 12 Receive inspection from SWM Time to complete: 30 days 57 Cost to complete: SRD 837 Comment: Procedure 13 Obtain a fixed telephone line Time to complete: 14 days Cost to complete: SRD 419 Comment: Procedure 14 Obtain inspection certificate from fire department Time to complete: 21 days Cost to complete: no charge Comment: By law, each construction project should be inspected by the Ministry of Public Works at least two to ten times. In reality, construction projects are never inspected. Other agencies, such as the fire department, power company, and water company, run one check to grant approval. 58 Employing Workers in Suriname Employing workers indices are based on responses to survey questions. The table below shows these responses in Suriname. Employing Workers Indicators (2007) Answer Score Rigidity of Employment Index 23.3 Difficulty of Hiring Index 0.0 Are fixed-term contracts prohibited for permanent tasks? No 0 What is the maximum duration of fixed-term contracts (including renewals)? (in months) No limit 0.0 What is the ratio of mandated minimum wage to the average value added per worker? 0.00 0.00 Rigidity of Hours Index 20.0 Can the workweek extend to 50 hours (including overtime) for 2 months per year to respond to a Yes 0 seasonal increase in production? What is the maximum number of working days per week? 6 0 Are there restrictions on night work? No 0 Are there restrictions on "weekly holiday" work? Yes 1 What is the paid annual vacation (in working days) for an employee with 20 years of service? 18 0 Difficulty of Firing Index 50.0 Is the termination of workers due to redundancy legally authorized? Yes 0 Must the employer notify a third party before terminating one redundant worker? Yes 1 Does the employer need the approval of a third party to terminate one redundant worker? Yes 2 Must the employer notify a third party before terminating a group of 25 redundant workers? Yes 1 Does the employer need the approval of a third party to terminate a group of 25 redundant Yes 1 workers? Can an employer make redundant a worker only if the worker could not have been reassigned or No 0 retrained? Are there priority rules applying to redundancies? No 0 Are there priority rules applying to re-employment? No 0 Firing costs (weeks of wages) 26.0 What is the notice period for redundancy dismissal after 20 years of continuous employment? 0.0 (weeks of salary) 59 What is the severance pay for redundancy dismissal after 20 years of employment? (weeks of 26.0 salary) What is the legally mandated penalty for redundancy dismissal? (weeks of salary) 0.0 Nonwage labor cost (% of salary) 0.0 Note: The first three indices measure how difficult it is to hire a new worker, how rigid the regulations are on working hours, and how difficult it is to dismiss a redundant worker. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The overall Rigidity of Employment Index is an average of the three indices. 60 Registering Property in Suriname This topic examines the steps, time, and cost involved in registering property in Suriname. STANDARDIZED PROPERTY Property Value: 160,000.00 City: Paramaribo Registration Requirements: No: Procedure Time to complete Cost to complete 1 Conduct title search at Lands Office 2-3 days 5 SRD 2 Execute and notarize final sale purchase agreement 1 day 7% property price (registration fee) + 3% property price (notary fees) + 8% of notary fees (VAT) + 3.5% property price (government levied tax) 3 Notary registers final sale purchase agreement at the 3 ­ 14 days already paid in procedure Lands Office 2 4 Buyer receives original deed proving ownership 180 days already paid in procedure 2 61 Procedure 1 Conduct title search at Lands Office Time to complete: 2-3 days Cost to complete: 5 SRD Comment: The lawyer (or parties) will conduct a search on the title at the Lands Office to check ownership, encumbrances and the limitations of the property. Procedure 2 Execute and notarize final sale purchase agreement Time to complete: 1 day Cost to complete: 7% property price (registration fee) + 3% property price (notary fees) + 8% of notary fees (VAT) + 3.5% property price (government levied tax) Comment: The parties execute the final sale purchase agreement that the notary then notarizes, as required by law. At this time the parties also pay the registration fee (buyer) and the notary fees (between the parties). The notary will transfer the registration fee to the Lands Office when he submits the final sale purchase agreement for registration. Procedure 3 Notary registers final sale purchase agreement at the Lands Office Time to complete: 3 ­ 14 days Cost to complete: already paid in procedure 2 Comment: The notary brings the final sale purchase agreement to be registered at the Lands Office. After 3 -14 days the Lands Office will send a stamped and registered copy back to the notary. Procedure 4 Buyer receives original deed proving ownership Time to complete: 180 days Cost to complete: already paid in procedure 2 Comment: The notary receives a stamped and registered sale purchase agreement from the Lands Office and delivers it to the buyer. 62 Getting Credit in Suriname The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Suriname. Getting Credit Indicators (2007) Indicator Private credit Public credit Private bureau coverage (% 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 creditors or No No 0 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 largest No No 0 credit registry? Coverage 0.0 0.0 Number of individuals 0 0 Number of firms 0 0 Legal Rights Index 4 Does the law allow all natural and legal persons to be party to collateral agreements? Yes Does the law allow for general descriptions of assets, so that all types of assets can be used as collateral? No Does the law allow for general descriptions of debt, so that all types of obligations can be secured? Yes Does a unified registry exist for all security rights in movable property? No Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? Yes During reorganization, is management's control of the company's assets suspended? No Does the law authorize parties to agree on out of court enforcement? Yes May parties have recourse to out of court enforcement without restrictions? No 63 Protecting Investors in Suriname The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Suriname. Protecting Investors Data (2007) Indicator Disclosure Index 2 What corporate body provides legally sufficient approval for the transaction? (0-3; see notes) 0 Immediate disclosure to the public and/or shareholders (0-2; see notes) 1 Disclosures in published periodic filings (0-2; see notes) 1 Disclosures by Mr. James to board of directors (0-2; see notes) 0 Requirement that an external body review the transaction before it takes place (0=no, 1=yes) 0 Director Liability Index 0 Shareholder plaintiff's ability to hold Mr. James liable for damage the Buyer-Seller transaction causes to 0 the company. (0-2; see notes) Shareholder plaintiff's ability to hold the approving body (the CEO or board of directors) liable for for 0 damage to the company. (0-2; see notes) Whether a court can void the transaction upon a successful claim by a shareholder plaintiff (0-2; see 0 notes) Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the 0 shareholder plaintiff (0=no, 1=yes) Whether Mr. James repays profits made from the transaction upon a successful claim by the 0 shareholder plaintiff (0=no, 1=yes) Whether fines and imprisonment can be applied against Mr. James (0=no, 1=yes) 0 Shareholder plaintiff's ability to sue directly or derivatively for damage the transaction causes to the 0 company (0-1; see notes) Shareholder Suits Index 5 Documents available to the plaintiff from the defendant and witnesses during trial (0-4; see notes) 2 Ability of plaintiffs to directly question the defendant and witnesses during trial (0-2; see notes) 2 Plaintiff can request categories of documents from the defendant without identifying specific ones (0=no, 1 1=yes) Shareholders owning 10% or less of Buyer's shares can request an inspector investigate the transaction 0 (0=no, 1=yes) Level of proof required for civil suits is lower than that for criminal cases (0=no, 1=yes) 0 Shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit 0 (0=no, 1=yes) 64 Investor Protection Index 2.3 Notes: Extent of Disclosure Index What corporate body provides legally sufficient approval for the transaction? 0=CEO or managing director alone; 1=shareholders or board of directors vote and Mr. James can vote; 2=board of directors votes and Mr. James cannot vote; 3 = shareholders vote and Mr. James cannot vote Immediate disclosure to the public and/or shareholders 0=none; 1=disclosure on the transaction only; 2=disclosure on the transaction and Mr. James' conflict of interest Disclosures in published periodic filings 0=none; 1=disclosure on the transaction only; 2=disclosure on the transaction and Mr. James' conflict of interest Disclosures by Mr. James to board of directors 0=none; 1=existence of a conflict without any specifics; 2= full disclosure of all material facts Director Liability Index Shareholder plaintiff's ability to hold Mr. James liable for damage the Buyer-Seller transaction causes to the company 0= Mr. James is not liable or liable only if he acted fraudulently or in bad faith; 1= Mr. James is liable if he influenced the approval or was negligent; 2= Mr. James is liable if the transaction was unfair, oppressive or prejudicial to minority shareholders Shareholder plaintiff's ability to hold the approving body (the CEO or board of directors) liable for for damage to the company 0=members of the approving body are either not liable or liable only if they acted fraudulently or in bad faith; 1=liable for negligence in the approval of the transaction; 2=liable if the transaction is unfair, oppressive, or prejudicial to minority shareholders Whether a court can void the transaction upon a successful claim by a shareholder plaintiff 0=rescission is unavailable or available only in case of Seller's fraud or bad faith; 1=available when the transaction is oppressive or prejudicial to minority shareholders; 2=available when the transaction is unfair or entails a conflict of interest Shareholder plaintiffs' ability to sue directly or derivatively for damage the transaction causes to the company 0=not available; 1=direct or derivative suit available for shareholders holding 10% of share capital or less Shareholder Suits Index Documents available to the plaintiff from the defendant and witnesses during trail Score 1 each for (1) information that the defendant has indicated he intends to rely on for his defense; (2) information that directly proves specific facts in the plaintiff's claim; (3) any information that is relevant to the subject matter of the claim; and (4) any information that may lead to the discovery of relevant information. Ability of plaintiffs to directly question the defendant and witnesses during trial 0=no; 1=yes, with prior approval by the court of the questions posed; 2=yes, without prior approval 65 Paying Taxes in Suriname The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Suriname, 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 Personal income tax 0 withheld 24 8% to 38% net salaries withheld Stamp duty 1 various small amount rates Value added tax (VAT) 12 48 10.0% value added not included Corporate Income tax 4 126 36.0% taxable 27.87 profits Totals 17 199 27.9 Notes: a) data not collected b) VAT is not included in the total tax rate because it is a tax levied on consumers c) very small amount d) included in other taxes e) Withheld tax f) electronic filling available g) paid jointly with another tax Name of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. When there is more than one statutory tax rate, the one applicable to TaxpayerCo is reported. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. 66 Trading Across Borders in Suriname These tables list the procedures necessary to import and exports a standardized cargo of goods in Suriname. The documents required to export and import the goods are also shown. Nature of Export Procedures (2007) Duration (days) US$ Cost Documents preparation 14 65 Customs clearance and technical control 3 125 Ports and terminal handling 5 165 Inland transportation and handling 3 550 Totals 25 905 Nature of Import Procedures (2007) Duration (days) US$ Cost Documents preparation 14 65 Customs clearance and technical control 5 125 Ports and terminal handling 4 75 Inland transportation and handling 2 550 Totals 25 815 Export Bill of lading Cargo release order Certificate of origin Commercial invoice Customs export declaration Customs inspection report Packing list Terminal handling receipts Import Bill of lading Certificate of origin Chamber of commerce registration number Commercial invoice Customs import declaration 67 Packing list Tax office registration number 68 Enforcing Contracts in Suriname This topic looks at the efficiency of contract enforcement in Suriname. Nature of Procedure (2007) Indicator Procedures (number) 44.00 Duration (days) 1,715.00 Filing and service 165.0 Trial and judgment 1,095.0 Enforcement of judgment 455.0 Cost (% of claim)* 37.10 Attorney cost (% of claim) 17.7 Court cost (% of claim) 5.3 Enforcement Cost (% of claim) 14.1 Court information: Paramaribo District Court * Claim assumed to be equivalent to 200% of income per capita. 69