82832 Economy Profile: Fiji Doing Business 2014 Fiji 2 © 2013 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 15 14 13 12 A copublication of The World Bank and the International Finance Corporation. This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties. The risk of claims resulting from such infringement rests solely with you. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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Cover design: The Word Express Doing Business 2014 Fiji 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 5 Starting a business ..................................................................................................................... 14 Dealing with construction permits ........................................................................................... 25 Getting electricity ....................................................................................................................... 35 Registering property .................................................................................................................. 42 Getting credit .............................................................................................................................. 51 Protecting investors ................................................................................................................... 58 Paying taxes ................................................................................................................................ 67 Trading across borders .............................................................................................................. 74 Enforcing contracts .................................................................................................................... 82 Resolving insolvency .................................................................................................................. 91 Employing workers .................................................................................................................... 96 Data notes ................................................................................................................................. 103 Resources on the Doing Business website ............................................................................ 109 Doing Business 2014 Fiji 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is the paying taxes indicators, which cover the period for a local entrepreneur to open and run a small to January–December 2012). medium-size business when complying with relevant The Doing Business methodology has limitations. Other regulations. It measures and tracks changes in areas important to business—such as an economy’s regulations affecting 11 areas in the life cycle of a proximity to large markets, the quality of its business: starting a business, dealing with construction infrastructure services (other than those related to permits, getting electricity, registering property, trading across borders and getting electricity), the getting credit, protecting investors, paying taxes, security of property from theft and looting, the trading across borders, enforcing contracts, resolving transparency of government procurement, insolvency and employing workers. macroeconomic conditions or the underlying strength In a series of annual reports Doing Business presents of institutions—are not directly studied by Doing quantitative indicators on business regulations and the Business. The indicators refer to a specific type of protection of property rights that can be compared business, generally a local limited liability company across 189 economies, from Afghanistan to Zimbabwe, operating in the largest business city. Because over time. The data set covers 47 economies in Sub- standard assumptions are used in the data collection, Saharan Africa, 33 in Latin America and the Caribbean, comparisons and benchmarks are valid across 25 in East Asia and the Pacific, 25 in Eastern Europe economies. The data not only highlight the extent of and Central Asia, 20 in the Middle East and North obstacles to doing business; they also help identify the Africa and 8 in South Asia, as well as 31 OECD high- source of those obstacles, supporting policy makers in income economies. The indicators are used to analyze designing regulatory reform. economic outcomes and identify what reforms have More information is available in the full report. Doing worked, where and why. Business 2014 presents the indicators, analyzes their This economy profile presents the Doing Business relationship with economic outcomes and presents indicators for Fiji. To allow useful comparison, it also business regulatory reforms. The data, along with provides data for other selected economies information on ordering Doing Business 2014, are (comparator economies) for each indicator. The data in available on the Doing Business website at this report are current as of June 1, 2013 (except for http://www.doingbusiness.org. Doing Business 2014 Fiji 5 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to ECONOMY OVERVIEW start is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing Region: East Asia & Pacific business based on indicator sets that measure and benchmark regulations applying to domestic small to Income category: Upper middle income medium-size businesses through their life cycle. Economies are ranked from 1 to 189 by the ease of Population: 874,742 doing business index. For each economy the index is calculated as the ranking on the simple average of its GNI per capita (US$): 4,200 percentile rankings on each of the 10 topics included in the index in Doing Business 2014: starting a business, DB2014 rank: 62 dealing with construction permits, getting electricity, registering property, getting credit, protecting DB2013 rank: 58* investors, paying taxes, trading across borders, Change in rank: -4 enforcing contracts and resolving insolvency. The ranking on each topic is the simple average of the DB 2014 DTF: 66.84 percentile rankings on its component indicators (see the data notes for more details). The employing workers DB 2013 DTF: 66.81 indicators are not included in this year’s aggregate ease of doing business ranking, but the data are presented Change in DTF: 0.04 in this year’s economy profile. The aggregate ranking on the ease of doing business * DB2013 ranking shown is not last year’s published benchmarks each economy’s performance on the ranking but a comparable ranking for DB2013 that indicators against that of all other economies in the captures the effects of such factors as data Doing Business sample (figure 1.1). While this ranking corrections and the addition of 4 economies (Libya, tells much about the business environment in an Myanmar, San Marino and South Sudan) to the economy, it does not tell the whole story. The ranking on sample this year. See the data notes for sources and the ease of doing business, and the underlying definitions. indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business. Doing Business 2014 Fiji 6 THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database. Doing Business 2014 Fiji 7 THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy relative to the regional average (figure 1.2). The stands in the aggregate ranking on the ease of economy’s rankings on the topics included in the doing business is useful. Also useful is to know how ease of doing business index provide another it ranks relative to comparator economies and perspective (figure 1.3). Figure 1.2 How Fiji and comparator economies rank on the ease of doing business Source: Doing Business database. Doing Business 2014 Fiji 8 THE BUSINESS ENVIRONMENT Figure 1.3 How Fiji ranks on Doing Business topics Source: Doing Business database. Doing Business 2014 Fiji 9 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business Doing Business introduced the distance to frontier tells only part of the story, so do changes in that ranking. measure. This measure shows how far on average an Yearly movements in rankings can provide some indication economy is from the best performance achieved by any of changes in an economy’s regulatory environment for economy on each Doing Business indicator since 2005, firms, but they are always relative. except for the getting electricity indicators, which were introduced in 2009. Moreover, year-to-year changes in the overall rankings do not reflect how the business regulatory environment in an Comparing the measure for an economy at 2 points in economy has changed over time—or how it has changed time allows users to assess how much the economy’s in different areas. To aid in assessing such changes, regulatory environment as measured by Doing Business has changed over time—how far it has moved toward (or away from) the most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.4). Figure 1.4 How far has Fiji come in the areas measured by Doing Business? Note: The distance to frontier measure shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2005, except for the getting electricity indicators, which were introduced in 2009. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). The overall distance to frontier is the average of the distance to frontier in the first 9 indicator sets shown in the figure and does not include getting electricity. Data on the overall distance to frontier including getting electricity is available at http://www.doingbusiness.org/data/distance-to-frontier. See the data notes for more details on the distance to frontier measure. Source: Doing Business database. Doing Business 2014 Fiji 10 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part business regulation—such as a regulatory process that of the story (table 1.1). The indicators, on their own or can be completed with a small number of procedures in comparison with the indicators of a good practice in a few days and at a low cost. Comparison of the economy or those of comparator economies in the economy’s indicators today with those in the previous region, may reveal bottlenecks reflected in large year may show where substantial bottlenecks persist — numbers of procedures, long delays or high costs. Or and where they are diminishing. they may reveal unexpected strengths in an area of Table 1.1 Summary of Doing Business indicators for Fiji Marshall Islands DB2014 Best performer globally Papua New Guinea Singapore DB2014 Indonesia DB2014 Australia DB2014 Indicator Samoa DB2014 Fiji DB2014 Fiji DB2013 DB2014 DB2014 Starting a Business 141 141 4 175 56 101 33 3 New Zealand (1) (rank) Procedures (number) 11 11 3 10 5 6 4 3 New Zealand (1)* Time (days) 59.0 59.0 2.5 48.0 17.0 53.0 9.0 2.5 New Zealand (0.5) Cost (% of income per 23.1 24.0 0.7 20.5 12.8 13.0 9.6 0.6 Slovenia (0.0) capita) Paid-in Min. Capital (% 0.0 0.0 0.0 38.5 0.0 0.0 0.0 0.0 112 Economies (0.0)* of income per capita) Dealing with Hong Kong SAR, Construction Permits 74 69 10 88 32 165 73 3 China (1) (rank) Hong Kong SAR, Procedures (number) 16 16 11 13 12 21 21 11 China (6) Time (days) 142.0 142.0 112.0 158.0 76.0 219.0 87.0 26.0 Singapore (26.0) Doing Business 2014 Fiji 11 Marshall Islands DB2014 Best performer globally Papua New Guinea Singapore DB2014 Indonesia DB2014 Australia DB2014 Indicator Samoa DB2014 Fiji DB2014 Fiji DB2013 DB2014 DB2014 Cost (% of income per 44.8 46.5 13.3 87.2 124.9 110.0 58.6 15.7 Qatar (1.1) capita) Getting Electricity 81 79 34 121 77 24 37 6 Iceland (1) (rank) Procedures (number) 4 4 5 6 5 4 4 4 10 Economies (3)* Time (days) 81 81 75 101 67 66 34 36 Germany (17) Cost (% of income per 1,835.3 1,904.7 8.7 370.6 729.5 57.5 783.6 27.5 Japan (0.0) capita) Registering Property 63 57 40 101 189 87 39 28 Georgia (1) (rank) no Procedures (number) 4 4 5 6 4 5 5 4 Economies (1)* practice no Time (days) 69.0 69.0 4.5 22.0 72.0 15.0 5.5 New Zealand (1.0)* practice Cost (% of property no 2.0 2.0 5.0 10.9 5.1 3.7 2.9 5 Economies (0.0)* value) practice Getting Credit (rank) 55 52 3 86 86 86 130 3 Malaysia (1)* Strength of legal rights 7 7 10 5 9 5 7 10 10 Economies (10)* index (0-10) Depth of credit 4 4 5 4 0 4 0 5 31 Economies (6)* information index (0-6) Public registry coverage 0.0 0.0 0.0 41.2 0.0 0.0 0.0 0.0 Portugal (100.0)* (% of adults) Private bureau 72.9 69.5 100.0 0.0 0.0 2.8 0.0 60.3 22 Economies (100.0)* coverage (% of adults) Protecting Investors 52 51 68 52 157 68 34 2 New Zealand (1) (rank) Doing Business 2014 Fiji 12 Marshall Islands DB2014 Best performer globally Papua New Guinea Singapore DB2014 Indonesia DB2014 Australia DB2014 Indicator Samoa DB2014 Fiji DB2014 Fiji DB2013 DB2014 DB2014 Extent of disclosure 3 3 8 10 2 4 5 10 10 Economies (10)* index (0-10) Extent of director 8 8 2 5 0 5 6 9 Cambodia (10) liability index (0-10) Ease of shareholder 7 7 7 3 8 8 8 9 3 Economies (10)* suits index (0-10) Strength of investor 6.0 6.0 5.7 6.0 3.3 5.7 6.3 9.3 New Zealand (9.7) protection index (0-10) United Arab Emirates Paying Taxes (rank) 88 91 44 137 96 116 86 5 (1) Payments (number per Hong Kong SAR, 38 34 11 52 21 32 37 5 year) China (3)* United Arab Emirates Time (hours per year) 185 163 105 259 128 207 224 82 (12) Trading Across Borders 111 103 46 54 62 134 58 1 Singapore (1) (rank) Documents to export 9 9 5 4 5 7 5 3 Ireland (2)* (number) Time to export (days) 18 18 9 17 23 23 22 6 5 Economies (6)* Cost to export (US$ per 790 655 1,150 615 695 1,149 490 460 Malaysia (450) container) Documents to import 10 10 7 8 5 9 6 3 Ireland (2)* (number) Time to import (days) 22 22 8 23 25 32 28 4 Singapore (4) Cost to import (US$ per 760 635 1,170 660 720 1,250 575 440 Singapore (440) container) Enforcing Contracts 63 63 14 147 61 168 77 12 Luxembourg (1) (rank) Doing Business 2014 Fiji 13 Marshall Islands DB2014 Best performer globally Papua New Guinea Singapore DB2014 Indonesia DB2014 Australia DB2014 Indicator Samoa DB2014 Fiji DB2014 Fiji DB2013 DB2014 DB2014 Time (days) 397 397 395 498 476 591 455 150 Singapore (150) Cost (% of claim) 38.9 38.9 21.8 139.4 27.4 110.3 19.7 25.8 Bhutan (0.1) Procedures (number) 34 34 28 40 36 42 44 21 Singapore (21)* Resolving Insolvency 50 50 18 144 138 128 139 4 Japan (1) (rank) Time (years) 1.8 1.8 1.0 4.5 2.0 3.0 2.0 0.8 Ireland (0.4) Cost (% of estate) 10 10 8 18 38 23 38 3 Norway (1) Outcome (0 as piecemeal sale and 1 as 0 0 1 0 0 0 0 1 going concern) Recovery rate (cents on 45.6 45.2 81.3 17.9 18.6 23.5 18.2 89.4 Japan (92.8) the dollar) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. For more information on “no practice” marks, see the data notes. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database. Doing Business 2014 Fiji 14 STARTING A BUSINESS Formal registration of companies has many WHAT THE STARTING A BUSINESS immediate benefits for the companies and for business owners and employees. Legal entities can INDICATORS MEASURE outlive their founders. Resources are pooled as several shareholders join forces to start a company. Procedures to legally start and operate a Formally registered companies have access to company (number) services and institutions from courts to banks as Preregistration (for example, name well as to new markets. And their employees can verification or reservation, notarization) benefit from protections provided by the law. An additional benefit comes with limited liability Registration in the economy’s largest companies. These limit the financial liability of business city company owners to their investments, so personal Postregistration (for example, social security assets of the owners are not put at risk. Where registration, company seal) governments make registration easy, more entrepreneurs start businesses in the formal sector, Time required to complete each procedure creating more good jobs and generating more (calendar days) revenue for the government. Does not include time spent gathering What do the indicators cover? information Doing Business measures the ease of starting a Each procedure starts on a separate day (2 business in an economy by recording all procedures cannot start on the same day). procedures officially required or commonly done in Procedures that can be fully completed practice by an entrepreneur to start up and online are an exception to this rule. formally operate an industrial or commercial Procedure completed once final document is business—as well as the time and cost required to received complete these procedures. It also records the paid-in minimum capital that companies must No prior contact with officials deposit before registration (or within 3 months). Cost required to complete each procedure The ranking on the ease of starting a business is (% of income per capita) the simple average of the percentile rankings on the 4 component indicators: procedures, time, cost Official costs only, no bribes and paid-in minimum capital requirement. No professional fees unless services required To make the data comparable across economies, by law Doing Business uses several assumptions about the Paid-in minimum capital (% of income business and the procedures. It assumes that all per capita) information is readily available to the entrepreneur and that there has been no prior contact with Deposited in a bank or with a notary before officials. It also assumes that the entrepreneur will registration (or within 3 months) pay no bribes. And it assumes that the business:  Has a start-up capital of 10 times income per  Is a limited liability company, located in the capita. largest business city and is 100% domestically  Has a turnover of at least 100 times income per owned. capita.  Has between 10 and 50 employees.  Does not qualify for any special benefits.  Conducts general commercial or industrial  Does not own real estate. activities. Doing Business 2014 Fiji 15 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Fiji? According 23.1% of income per capita and requires paid-in to data collected by Doing Business, starting a business minimum capital of 0.0% of income per capita (figure there requires 11 procedures, takes 59.0 days, costs 2.1). Figure 2.1 What it takes to start a business in Fiji Paid-in minimum capital (% of income per capita): 0.0 Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Fiji 16 STARTING A BUSINESS Globally, Fiji stands at 141 in the ranking of 189 regional average ranking provide other useful economies on the ease of starting a business (figure information for assessing how easy it is for an 2.2). The rankings for comparator economies and the entrepreneur in Fiji to start a business. Figure 2.2 How Fiji and comparator economies rank on the ease of starting a business Source: Doing Business database. Doing Business 2014 Fiji 17 STARTING A BUSINESS What are the changes over time? The benchmarks provided by the economies that over 2.3) can help show what is possible in making it easier time have had the best performance regionally or to start a business. And changes in regional averages globally on the procedures, time, cost or paid-in can show where Fiji is keeping up—and where it is minimum capital required to start a business (figure falling behind. Figure 2.3 Has starting a business become easier over time? Procedures (number) Time (days) Doing Business 2014 Fiji 18 STARTING A BUSINESS Cost (% of income per capita) Paid-in minimum capital (% of income per capita) Note: Ninety economies globally have no paid-in minimum capital requirement. DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Fiji 19 STARTING A BUSINESS Economies around the world have taken steps making greater firm satisfaction and savings and more it easier to start a business—streamlining procedures registered businesses, financial resources and job by setting up a one-stop shop, making procedures opportunities. simpler or faster by introducing technology and What business registration reforms has Doing Business reducing or eliminating minimum capital requirements. recorded in Fiji (table 2.1)? Many have undertaken business registration reforms in stages—and they often are part of a larger regulatory reform program. Among the benefits have been Table 2.1 How has Fiji made starting a business easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. Fiji made starting a business more difficult by adding a DB2012 requirement to obtain a tax identification number when registering a new company. Fiji made starting a business more difficult by requiring new companies applying for a business license to obtain a DB2013 certificate from the national fire authority and a letter of compliance from the Ministry of Labor. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 20 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for STANDARDIZED COMPANY Fiji is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new firm. City: Suva These are identified by Doing Business through collaboration with relevant local professionals and Legal Form: Private Limited Liability Company the study of laws, regulations and publicly available Paid in Minimum Capital Requirement: None information on business entry in that economy. Following is a detailed summary of those Start-up Capital: 10 times GNI per capita procedures, along with the associated time and cost. These procedures are those that apply to a company matching the standard assumptions (the “standardized company”) used by Doing Business in collecting the data (see the section in this chapter on what the indicators measure). Summary of procedures for starting a business in Fiji—and the time and cost Time to No. Procedure Cost to complete complete Check the uniqueness of the proposed company name and reserve name The entrepreneur must first conduct a search of the Companies, Business Names, and Trade Marks Register to ensure that the name applied for is not confusingly similar (1–2 days). Computerized (basic) and manual search systems are both available. The Government of Fiji has introduced a website (www.egov.gov.fj) for all applications for name reservation to be made online. Hard copy applications are no longer accepted by the Registrar of Companies unless an online application is made first. Application fees for name reservation can be paid in person at the Registrar of Companies' Office or via the online portal at 8 days FJD 5.65 1 www.egov.gov.fj. Only MasterCards and VISA cards are accepted. Once the payment is completed online, hard copies of the payment confirmation and the name reservation approval are required to be submitted to the Companies Registry. The application will take a week to process, and if it is successful, the company name will be reserved for 30 days (with a one-time extension). Company incorporation documents must be lodged with the Registrar within this time. It costs FJD 5.63 for reservation of the name and FJD 1.13 for company name search. Doing Business 2014 Fiji 21 Time to No. Procedure Cost to complete complete Obtain declaration of due compliance sworn by lawyer Fees may vary from FJD 1,000 to FJD 2,000. The Declaration of Due Compliance can be sworn by a lawyer engaged in the formation of the company or by a director or secretary who is named in the Articles of Association of the company as a director or secretary. The Cost of FJD1200.00 outlined above for a lawyer is not limited to him/her swearing the Declaration of Due Compliance. The Cost includes searches of the various registers to check for similar names, submission of the name reservation application, preparation of the company's 3 days FJD 1,200 2 memorandum of association, articles of association, particulars of directors and secretary, notice of situation of registered office and declaration of due compliance Where a company director or secretary swears the Declaration of Due Compliance, the Cost is not substantially (if at all) reduced because in practice and in most cases lawyers and/or accountants still prepare most of the documents necessary to register a company. Register the company with the Companies Registrar Under the Fiji Companies Act 1985, companies must submit the following company documents to the Companies Registrar along with the following company incorporation documents in order to register the company and obtain a certificate of incorporation: - current reservation of company name; - Memorandum of Association and Articles of Association; - Form 201, Notice of situation of registered office; - Form 203, Particulars of directors and secretary; - Form 208, Declaration of compliance with the requirements of the Registration fee FJD Companies Act (sworn by a lawyer or a director or secretary named in 133 + stamp duty the Articles of Association of the company as such who was engaged in FJD 20 for the the formation of the company). stamping of the memorandum and 3 The Registrar of Companies now requires a Tax Identification Number 21 days articles of (TIN) from Fiji Revenue & Customs Authority before issuing the association ($FIJD Certificate of Incorporation of the company. This was communicated by 10 each) + FJD 12 the Registrar of Companies by a circular dated 13 August 2010. (Forms 201, 203, Accordingly, the practice now is as follows: 208 -$FIJD 4 each) (a) After the documents are lodged at the Companies Office, the Registrar of Companies will release a stamped version of the Memorandum and Articles of Association to the applicant; (b) The applicant then needs to fill in an “Application for New or Changes to Registration of Companies, Partnerships, Trust or Estates” form. The form is available from the FRCA website; (c) After the application form has been completed, the signed original version of the application form together with the stamped version of the Memorandum and Articles of Association (and any other documents that may be required by FRCA) needs to be submitted to Doing Business 2014 Fiji 22 Time to No. Procedure Cost to complete complete the Fiji Revenue & Customs Authority (FRCA) for issue of a TIN (Tax Identification Number) to the company. This requirement is consistent with the circular dated 13 August 2010 issued by the Registrar of Companies and results in a situation which seems FRCA issue a TIN for a legal entity that has yet to come into existence; (d) FRCA will process the application and assuming the application is in order, will issue a letter to the company confirming its TIN. As a result, the process of business incorporation takes longer than before (about 20 calendar days - 15 working days) since the entrepreneur needs to wait until the TIN number is issued in order to incorporate the company at the Companies Registry. The registration fees vary depending on the authorized capital of the company. For example, for a company with an authorized capital of FJD 65,470.00, the registration fee would be approximately FJD163.13 and stamp duty of FJD10.00 for the stamping of the Memorandum of Association and Articles of Association. * Register for Tax Identification Number (TIN) with Fiji Revenue and Customs Authority (FCA) As of August 15th, 2010, a new requirement is in place at the Company 1-2 weeks, registry. Before a company can be registered, it is mandatory to obtain (simultaneous with 4 no charge the TIN number from Fiji Islands Revenue and Customs Authority previous (FIRCA). The TIN number will be required for all other procedures as procedure) well. As a result, this has complicated the process of registration. * Receive inspection by FRCA By law, since December 2004, if VAT registration is required, the Fiji 1 day, Islands Revenue and Customs Authority (FIRCA) requires the inspection (simultaneous with 5 of the business premises. Since 2007, the inspection has been the no charge previous practice as FIRCA inspects that there is a physical office during business procedure) hours. Submit TIN number to Companies Registry to obtain final incorporation certificate 6 1 day no charge Register with Training and Productivity Authority of Fiji for statutory training tax 7 Statutory training tax is 1% of payroll. The submission of these 3 days no charge documents is done by mail. The Training and Productivity Authority will send the form by mail to the office of the new business. Once completed, the form will be mailed back to the agency. Doing Business 2014 Fiji 23 Time to No. Procedure Cost to complete complete * Obtain the National Fire Authority Certificate (NFA) after inspection The compliance requirement is a new requirement of the Suva City Council. The training is for 3 days. The entrepreneur must request NFA for an inspection of the business premises. Once the request has been made, the NFA officials will inspect the premises during opening hours of the business. If NFA is satisfied with the results of the inspection, it 1 to 2 weeks, FJD 50-150 (VAT will then issue a compliance certificate to the entrepreneur. Upon (simultaneous with excluded) 8 receipt of a compliance certificate from NFA, the entrepreneur must previous depending on the conduct fire safety training for its staff. NFA officers can, for a fee, teach procedure) size of the business fire safety preventative and protection measures. The employees are trained to respond to a fire incident and how to use the fire safety equipment installed in the workplace. Quite a number of organizations in Fiji have undertaken this fire warden training. Obtain the compliance letter from the Minister of Labour after inspection Since November 2011, the OHS issues a letter of compliance to all type of businesses after an inspection of workers and non-workers in the workplace. In order to obtain this letter, the entrepreneur needs to submit: - NFA certificate - business registration certificate 9 - TIN letter 3 days FJD 90 After 3 days of submitting the documents, the OHS inspects the business and if all the compliance requirements are met, the compliance letter is issued in situ. The compliance letter needs then to be submitted to the Suva City Council in order to obtain the business license. Apply for a business license from the relevant licensing authority (Suva City Council) The company must obtain a business license from the relevant licensing 10 authority for each place it carries out business. This license is renewable 1-2 weeks FJD 300 annually. Depending on the activity, the fees range from FJD 100 to FJD 500. The list of industries is comprehensive. Doing Business 2014 Fiji 24 Time to No. Procedure Cost to complete complete * Register as an employer with the Fiji National Provident Fund 1-2 weeks, (simultaneous with 11 no charge previous procedure) * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2014 Fiji 25 DEALING WITH CONSTRUCTION PERMITS Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION public. But it needs to be efficient, to avoid PERMITS INDICATORS MEASURE excessive constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in Procedures to legally build a warehouse time and money, many builders opt out. They may (number) pay bribes to pass inspections or simply build Submitting all relevant documents and illegally, leading to hazardous construction that obtaining all necessary clearances, licenses, puts public safety at risk. Where compliance is permits and certificates simple, straightforward and inexpensive, everyone Submitting all required notifications and is better off. receiving all necessary inspections What do the indicators cover? Obtaining utility connections for water, Doing Business records the procedures, time and sewerage and a land telephone line cost for a business in the construction industry to Registering the warehouse after its obtain all the necessary approvals to build a completion (if required for use as collateral or warehouse in the economy’s largest business city, for transfer of the warehouse) connect it to basic utilities and register the Time required to complete each procedure property so that it can be used as collateral or (calendar days) transferred to another entity. Does not include time spent gathering The ranking on the ease of dealing with information construction permits is the simple average of the Each procedure starts on a separate day. percentile rankings on its component indicators: Procedures that can be fully completed online procedures, time and cost. are an exception to this rule. To make the data comparable across economies, Procedure considered completed once final Doing Business uses several assumptions about the document is received business and the warehouse, including the utility connections. No prior contact with officials The business: Cost required to complete each procedure (% of income per capita)  Is a limited liability company operating in Official costs only, no bribes the construction business and located in the largest business city.  Will be connected to water, sewerage (sewage system, septic tank or their  Is domestically owned and operated. equivalent) and a fixed telephone line. The  Has 60 builders and other employees. connection to each utility network will be 10 The warehouse: meters (32 feet, 10 inches) long.  Is a new construction (there was no  Will be used for general storage, such as of previous construction on the land). books or stationery (not for goods requiring special conditions).  Has complete architectural and technical plans prepared by a licensed architect or  Will take 30 weeks to construct (excluding all engineer. delays due to administrative and regulatory requirements). Doing Business 2014 Fiji 26 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to there requires 16 procedures, takes 142.0 days and build a warehouse in Fiji? According to data collected costs 44.8% of income per capita (figure 3.1). by Doing Business, dealing with construction permits Figure 3.1 What it takes to comply with formalities to build a warehouse in Fiji Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Fiji 27 DEALING WITH CONSTRUCTION PERMITS Globally, Fiji stands at 74 in the ranking of 189 economies and the regional average ranking provide economies on the ease of dealing with construction other useful information for assessing how easy it is for permits (figure 3.2). The rankings for comparator an entrepreneur in Fiji to legally build a warehouse. Figure 3.2 How Fiji and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database. Doing Business 2014 Fiji 28 DEALING WITH CONSTRUCTION PERMITS What are the changes over time? The benchmarks provided by the economies that over what is possible in making it easier to deal with time have had the best performance regionally or construction permits. And changes in regional globally on the procedures, time or cost required to averages can show where Fiji is keeping up—and deal with construction permits (figure 3.3) help show where it is falling behind. Figure 3.3 Has dealing with construction permits become easier over time? Procedures (number) Time (days) Doing Business 2014 Fiji 29 DEALING WITH CONSTRUCTION PERMITS Cost (% of income per capita) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB201 3 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. For more information on “no practice” marks, see the data notes. Source: Doing Business database. Doing Business 2014 Fiji 30 DEALING WITH CONSTRUCTION PERMITS Smart regulation ensures that standards are met while building safety while keeping compliance costs making compliance easy and accessible to all. reasonable, governments around the world have Coherent and transparent rules, efficient processes and worked on consolidating permitting requirements. adequate allocation of resources are especially What construction permitting reforms has Doing important in sectors where safety is at stake. Business recorded in Fiji (table 3.1)? Construction is one of them. In an effort to ensure Table 3.1 How has Fiji made dealing with construction permits easier—or not? By Doing Business report year DB year Reform The City Council adopted new regulations that added three DB2009 new pre-approval procedures related to health, fire safety, and water and sewage connections. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. Fiji made obtaining a construction permit more expensive by DB2013 implementing a fee for the fire department clearance. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 31 DEALING WITH CONSTRUCTION PERMITS What are the details? The indicators reported here for Fiji are based on a BUILDING A WAREHOUSE set of specific procedures—the steps that a company must complete to legally build a warehouse—identified by Doing Business through City : Suva information collected from experts in construction licensing, including architects, civil engineers, Estimated construction lawyers, construction firms, utility FJD 1,040,480 Warehouse Value : service providers and public officials who deal with building regulations. These procedures are those The procedures, along with the associated time and that apply to a company and structure matching cost, are summarized below. the standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Summary of procedures for dealing with construction permits in Fiji —and the time and cost Time to No. Procedure Cost to complete complete Obtain a set of design requirements and conditions of development 1 1 day no charge * Obtain project pre-approval from the Department of Occupational Health and Safety (OHS) 2 The cost is FJD 110.00 per hour of work. One 1 hour of work is what the 7 days FJD 110 agency would charge for our case study. * Obtain project pre-approval from National Fire Authority (NAF) 4 copies of the building structural and architectural plans must be submitted. A form is completed by the architect (download from Internet) to request the approval of the safety structure of the building. 3 Payment is made by check, cash or direct deposit. 21 days FJD 65 Once the inspection is done, the architect will collect 3 copies, all duly stamped by the NFA. 1 copy will be kept by NFA for their record. * Obtain project pre-approval from the Water and sewage authority 4 7 days no charge Doing Business 2014 Fiji 32 Time to No. Procedure Cost to complete complete Request and obtain development permission from Department of Town & Country Planning (TCP) This application, also known as the Town Planning Form, must be 5 accompanied by general building plans (three copies), specifications 20 days no charge and detailed structural drawings (two copies), and the locality plan (three copies). Request and obtain building permit with Suva City Council and pay building permit fee The application should be accompanied by the development permission (three copies), the locality plan (one copy), building plans (three copies), specifications (two copies), and copy of title plan. The plans are reviewed by the following Suva City Council staff: a structural engineer, civil engineer, health department, and city planner. The fee is paid at the time of permit application and is calculated on the project value: FJD 88.00 for construction projects of up to FJD 60 days FJD 2,333 6 20,000.00 plus FJD 2.20 for every FJD 1,000.00, or part of thereof, in excess of FJD 20,000.00 (see the schedule in the attached building application form). For a building valued at FJD 975,450.00 (FJD 720 per sq. m. * 1300.6 sq. m.). In theory, Suva City Council carries out Procedures 3 -- 5, but in most cases, to expedite the process, the applicant visits the relevant authorities in person. * Submit the EIA screening application to the Department of Environment The form must have attached to it a locality plan sufficient to identify the land or premises to which the proposal relates and any other information, plans or drawings needed to describe the proposed development. The locality plan must clearly show the location of the site in relation to 7 the surrounding area. It must be of sufficient quality to be used by 7 days FJD 250 Officers of this Department to locate the site for the purposes of a site inspection. 5 hard copies and one electronic copy of this completed form and of the locality plans, together with the fee must be sent to the approving authority for the proposal. Notify and receive inspection from the Engineering Department of Suva City Council about completion of foundation work 8 The inspection needs to be requested 1 day in advance, but they 1 day no charge reliably come. It does not delay the construction process. Doing Business 2014 Fiji 33 Time to No. Procedure Cost to complete complete Notify and receive inspection from the Engineering Department about setup of the structure 9 The inspection needs to be requested 1 day in advance, but they 1 day no charge reliably come. It does not delay the construction process. Notify and receive inspection from the Engineering Department about completion of the roof 10 The inspection needs to be requested 1 day in advance, but they 1 day no charge reliably come. It does not delay the construction process. Notify and receive inspection from the Engineering Department about completion of the project 11 1 day no charge Receive final inspection from National Fire Authority The NFA is notified by the architect one day before the final inspection is required. Inspections are carried out on Tuesdays and Thursdays 12 only. A report will be provided by NFA that will be required for the final 5 days no charge inspection by the City Council. There is no cost for that final inspection. NFA will inspect the building yearly. Obtain water and sewage connection from Water Authority of Fiji (WAF) 13 30 days FJD 400 The cost cited here is for commercial real estate. * Receive plumbing and sanitary inspection from Water Authority of Fiji (WAF) This inspection is carried during construction, and not after everything 1 day no charge 14 is done. The plumber and electrician must be on the construction site, so that they can address any remarks. * Receive final inspection from local authority and obtain occupancy permit Both Engineers and health department will inspect the warehouse after construction. The request is done by phone 24 hours prior to the visit. This inspection is for the certificate of completion. Several documents 3 days no charge 15 must be provided in order to receive the report 1. A letter from the plumber certifying that the plumbing is in accordance to the law 2. Final Report from the NFA 3. Letter from the Architect 4. Letter from the electrician Doing Business 2014 Fiji 34 Time to No. Procedure Cost to complete complete 5. Letter from the Engineer (the one who designed the structural plans) * Request and receive connection to telephone from Telecom Fiji 16 8 days FJD 350 * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2014 Fiji 35 GETTING ELECTRICITY Access to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITY for businesses. To counter weak electricity supply, many firms in developing economies have to rely INDICATORS MEASURE on self-supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the Procedures to obtain an electricity first step for a customer is always to gain access by connection (number) obtaining a connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for Completing all required notifications and a local business to obtain a permanent electricity receiving all necessary inspections connection and supply for a standardized warehouse, as well as the time and cost to Obtaining external installation works and complete them. These procedures include possibly purchasing material for these works applications and contracts with electricity utilities, Concluding any necessary supply contract and clearances from other agencies and the external obtaining final supply and final connection works. The ranking on the ease of getting electricity is the simple average of Time required to complete each procedure the percentile rankings on its component (calendar days) indicators: procedures, time and cost. To make the Is at least 1 calendar day data comparable across economies, several assumptions are used. Each procedure starts on a separate day The warehouse: Does not include time spent gathering information  Is located in the economy’s largest business city, in an area where other Reflects the time spent in practice, with little warehouses are located. follow-up and no prior contact with officials  Is not in a special economic zone where Cost required to complete each procedure the connection would be eligible for (% of income per capita) subsidization or faster service. Official costs only, no bribes  Has road access. The connection works Excludes value added tax involve the crossing of a road or roads but are carried out on public land.  Is to either the low-voltage or the medium-  Is a new construction being connected to voltage distribution network and either overhead electricity for the first time. or underground, whichever is more common in the economy and area where the warehouse is  Has 2 stories, both above ground, with a located. The length of any connection in the total surface of about 1,300.6 square customer’s private domain is negligible. meters (14,000 square feet), and is built on a plot of 929 square meters (10,000 square  Requires crossing of a 10-meter road but all the feet). works are carried out in a public land, so there is no crossing into other people's private property. The electricity connection:  Involves installing one electricity meter. The  Is 150 meters long and is a 3-phase, 4-wire Y, monthly electricity consumption will be 0.07 140-kilovolt-ampere (kVA) (subscribed gigawatt-hour (GWh). The internal electrical capacity) connection. wiring has been completed. Doing Business 2014 Fiji 36 GETTING ELECTRICITY Where does the economy stand today? What does it take to obtain a new electricity procedures, takes 81 days and costs 1835.3% of connection in Fiji? According to data collected by income per capita (figure 4.1). Doing Business, getting electricity there requires 4 Figure 4.1 What it takes to obtain an electricity connection in Fiji Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Fiji 37 GETTING ELECTRICITY Globally, Fiji stands at 81 in the ranking of 189 regional average ranking provide another perspective economies on the ease of getting electricity (figure in assessing how easy it is for an entrepreneur in Fiji to 4.2). The rankings for comparator economies and the connect a warehouse to electricity. Figure 4.2 How Fiji and comparator economies rank on the ease of getting electricity Source: Doing Business database. Doing Business 2014 Fiji 38 GETTING ELECTRICITY Even more helpful than rankings on the ease of getting performers on these indicators may provide useful electricity may be the indicators underlying those benchmarks. rankings (table 4.1). And regional and global best Table 4.1 The ease of getting electricity in Fiji Best performer in Best performer Indicator Fiji DB2014 Fiji DB2013 East Asia & Pacific globally DB2014 DB2014 Rank Hong Kong SAR, 81 79 Iceland (1) China (5) Procedures (number) 4 4 Timor-Leste* (3) 10 Economies* (3) Time (days) 81 81 Taiwan, China (24) Germany (17) Cost (% of income per Hong Kong SAR, capita) 1,835.3 1,904.7 Japan (0.0) China (1.5) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB201 3 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. * Two or more economies share the top ranking on this indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database. Doing Business 2014 Fiji 39 GETTING ELECTRICITY Obtaining an electricity connection is essential to safety in the connection process while keeping enable a business to conduct its most basic operations. connection costs reasonable, governments around the In many economies the connection process is world have worked to consolidate requirements for complicated by the multiple laws and regulations obtaining an electricity connection. What reforms in involved—covering service quality, general safety, getting electricity has Doing Business recorded in Fiji technical standards, procurement practices and (table 4.2)? internal wiring installations. In an effort to ensure Table 4.2 How has Fiji made getting electricity easier—or not? By Doing Business report year DB year Reform DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Source: Doing Business database. Doing Business 2014 Fiji 40 GETTING ELECTRICITY What are the details? The indicators reported here for Fiji are based on a set OBTAINING AN ELECTRICITY CONNECTION of specific procedures—the steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution utility—identified by City: Suva Doing Business. Data are collected from the distribution utility, then completed and verified by Name of Utility: Fiji Electricity Authority electricity regulatory agencies and independent professionals such as electrical engineers, electrical The procedures are those that apply to a warehouse contractors and construction companies. The electricity and electricity connection matching the standard distribution utility surveyed is the one serving the area assumptions used by Doing Business in collecting the (or areas) in which warehouses are located. If there is a data (see the section in this chapter on what the choice of distribution utilities, the one serving the indicators cover). The procedures, along with the largest number of customers is selected. associated time and cost, are summarized below. Summary of procedures for getting electricity in Fiji—and the time and cost Time to No. Procedure Cost to complete complete Submit appication to Fiji Electricity Authority (FEA) and await site inspection An application for Permanent Permit & Power Supply form completed with all installation details is lodged in by an Electrical Contractor. Documents needed are: Title copy, application letter; Electrical Permit; ID 1 of owner. The electrical contractor or consultant would submit a permit 7 calendar days no charge for electrical wiring (this permit is obtained during the Building permit process, and is a part of the Building Permit) and a covering letter giving details of the electrical installation including maximum power demand and the location to FEA. Receive site visit from FEA and await estimate After a site check for the shortest route for the network extension works and the load flow studies carried out to check the impact of the load growth to the end of line (normal opening point) voltage regulation. Upon check that the voltage is being within the limits stipulated by the FEA (Fiji Electricity Authority) Grid Code, a copy of the result is forwarded to the Systems Protection & Control team to carryout the necessary 46 calendar days FJD 138,378.7 2 protection co-ordination and advising to the switching team. A quotation for the capital works is then sent to the potential customer/developer. Doing Business 2014 Fiji 41 Time to No. Procedure Cost to complete complete FEA conducts external connection works FEA opens a job file which is then sent to the Finance department and supply team to check if all materials are available. The utility conducts all external connection works including installing pad mounted transformer and service cables. Upon receipt of payment, an acknowledgement shall be made to the developer/potential customer and also reminded of progressing to the construction of the plinth in ground and furnishing a civil engineering certificate of the completed plinth. The Authority's team will prepare a project execution file which will comprise of all copies of the correspondences, the payment details, the project drawing with the single line drawing, the flood-flow detail and the project estimate with the bill of materials, and the project cost. A Capital Expenditure Authorization form, with the GL code for the project cash flow control, is also attached for the Finance team to approve the cash flow and activate the Bill of Materials in our Inventory system. The file will also be 3 circulated to the Supply Chain to confirm the availability of all relevant 21 calendar days no charge materials are in the stores bin. The Systems Control & Protection team, in parallel, is requested to carry out the protection co-ordination and recommendation of protections. The job file once approved & bill of material confirmed is sent to the Distribution Projects Manager to co- ordinate the necessary switching co-ordination and then implementing the actual work and commissioning of the power supply to the extended grid. A formal advise is then sent back to the Design team of the commissioning of supply to the new grid. Design team will then process the "Application for Permit & Power Supply form" (which was kept in the scheme file until capital works is completed) The connection fees and two months' security deposit is mentioned on the approved form for the client to pay. This form is then sent to the Regulatory team to co- ordinate electrical wiring works inspection & connections for supply from the grid to installation. FEA conducts internal wiring inspection, installs meter and electricity is turned on 4 FEA installs the meter, does all the final connections to the utility mains, 7 calendar days FJD 5,387.7 and turns on electricity. * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2014 Fiji 42 REGISTERING PROPERTY Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY Effective administration of land is part of that. If INDICATORS MEASURE formal property transfer is too costly or complicated, formal titles might go informal again. And where property is informal or poorly Procedures to legally transfer title on administered, it has little chance of being immovable property (number) accepted as collateral for loans—limiting access to Preregistration (for example, checking for liens, finance. notarizing sales agreement, paying property transfer taxes) What do the indicators cover? Registration in the economy’s largest business Doing Business records the full sequence of city procedures necessary for a business to purchase property from another business and transfer the Postregistration (for example, filing title with the municipality) property title to the buyer’s name. The transaction is considered complete when it is opposable to Time required to complete each procedure third parties and when the buyer can use the (calendar days) property, use it as collateral for a bank loan or Does not include time spent gathering resell it. The ranking on the ease of registering information property is the simple average of the percentile rankings on its component indicators: procedures, Each procedure starts on a separate day. time and cost. Procedures that can be fully completed online are an exception to this rule. To make the data comparable across economies, Procedure considered completed once final several assumptions about the parties to the document is received transaction, the property and the procedures are used. No prior contact with officials The parties (buyer and seller): Cost required to complete each procedure (% of property value)  Are limited liability companies, 100% domestically and privately owned. Official costs only, no bribes  Are located in the economy’s largest No value added or capital gains taxes included business city. and no rezoning is required.  Have 50 employees each, all of whom are  Has no mortgages attached and has been nationals. under the same ownership for the past 10  Perform general commercial activities. years. The property (fully owned by the seller):  Consists of 557.4 square meters (6,000 square feet) of land and a 10-year-old, 2-story  Has a value of 50 times income per capita. warehouse of 929 square meters (10,000 The sale price equals the value. square feet). The warehouse is in good  Is registered in the land registry or cada- condition and complies with all safety stre, or both, and is free of title disputes. standards, building codes and legal requirements. There is no heating system. The  Is located in a periurban commercial zone, property will be transferred in its entirety. Doing Business 2014 Fiji 43 REGISTERING PROPERTY Where does the economy stand today? What does it take to complete a property transfer in 69.0 days and costs 2.0% of the property value (figure Fiji? According to data collected by Doing Business, 5.1). registering property there requires 4 procedures, takes Figure 5.1 What it takes to register property in Fiji Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the registering property indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2014 Fiji 44 REGISTERING PROPERTY Globally, Fiji stands at 63 in the ranking of 189 regional average ranking provide other useful economies on the ease of registering property (figure information for assessing how easy it is for an 5.2). The rankings for comparator economies and the entrepreneur in Fiji to transfer property. Figure 5.2 How Fiji and comparator economies rank on the ease of registering property Source: Doing Business database. Doing Business 2014 Fiji 45 REGISTERING PROPERTY What are the changes over time? The benchmarks provided by the economies that over what is possible in making it easier to register time have had the best performance regionally or property. And changes in regional averages can show globally on the procedures, time or cost required to where Fiji is keeping up—and where it is falling behind. complete a property transfer (figure 5.3) help show Figure 5.3 Has registering property become easier over time? Procedures (number) Time (days) Doing Business 2014 Fiji 46 REGISTERING PROPERTY Cost (% of property value) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. For more information on “no practice” marks, see the data notes. Source: Doing Business database. Doing Business 2014 Fiji 47 REGISTERING PROPERTY Economies worldwide have been making it easier for have cut the time required substantially—enabling entrepreneurs to register and transfer property—such buyers to use or mortgage their property earlier. What as by computerizing land registries, introducing time property registration reforms has Doing Business limits for procedures and setting low fixed fees. Many recorded in Fiji (table 5.1)? Table 5.1 How has Fiji made registering property easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. Fiji made transferring property more difficult by requiring parties to a property transaction to obtain a capital gains tax DB2013 clearance certificate from the Fiji Revenue and Customs Authority. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 48 REGISTERING PROPERTY What are the details? The indicators reported here are based on a set of STANDARD PROPERTY TRANSFER specific procedures—the steps that a buyer and seller must complete to transfer the property to the buyer’s name—identified by Doing Business through information collected from local property City: Suva lawyers, notaries and property registries. These procedures are those that apply to a transaction Property Value: FJD 391,671 matching the standard assumptions used by Doing Business in collecting the data (see the section in The procedures, along with the associated time and this chapter on what the indicators cover). cost, are summarized below. Summary of procedures for registering property in Fiji—and the time and cost Time to No. Procedure Cost to complete complete Carry out titles searches at the Titles Office The title search is carried out in the Titles Office manually. Counter clerks perform search of needed information through volumes of data. The originals are never given, the counter clerks photocopy the originals and 1 day 50-60 cents per 1 charge only for making copies (around 50-60 cents). The procedure takes copy between a couple of hours and up to several days if the necessary document got lost or replaced in the archives. * Present transfer documents for stamping at the Stamp Duty Office and pay stamp duty The transfer documents are submitted together with copies of the title 7 days 2,02% of property 2 for stamping and payment of 2.02% tax at the Stamp Duties Office which value (Stamp duty) is based within the Fiji Revenue and Customs Authority (FRCA) office. * The seller submits documents to FRCA to obtain the Capital Gains Tax Clearance Certificate The seller needs to register and obtain a Capital Gains Tax Clearance Certificate from FRCA confirming either that CGT has been paid, or satisfactory arrangement for payment of the tax has been made, or no 3 tax is payable. The seller needs to submit the following documents: 7 days no cost a) CGT Declaration form (which is available at the following link from the FRCA website: http://www.frca.org.fj/docs/forms/2011/IRS228%20CGT%20Statutory%20 Declaration.pdf) (b) CGT Return form (which is available at the following link from the Doing Business 2014 Fiji 49 Time to No. Procedure Cost to complete complete FRCA website: http://www.frca.org.fj/docs/forms/2011/IRS230- CGT%20Return.pdf) (c) copy of the certificate of title (d) copy of the last registered transfer of the subject property in favour of the seller (e) copy of the stamped transfer of the property from the seller to the buyer It would be advisable to attach documentary evidence of all claims in respect of the ‘cost of the property’ so that there is timely processing of the application for CGT Clearance Certificate by FRCA.Where documentary evidence is not available, letters could be written or statutory declarations could be provided to FRCA to explain the reasons for non-availability of the required documents. This would assist FRCA to process and issue of the CGT Clearance Certificate. Where CGT is payable and the seller does not have the funds to pay the CGT, arrangements could be made with FRCA for issue of the CGT Clearance Certificate based on an undertaking from the seller’s lawyer to FRCA to the effect that the lawyer will hold the sale proceeds in the trust account and will pay the CGT to FRCA before paying the balance sale proceeds to the seller. Settlement takes place at the Registrar of Titles Office Parties meet at the Registrar of Titles Office for settlement. They first double check encumbrances on the property and then exchange the titles for the payment. When this formality is accomplished, they submit the transfer documents for registration. The registration fee (FDJ 10 for properties over FDJ 100,000 + VAT of 12.5%) is paid. The Registrar of Titles must not register an instrument for the transfer of a capital asset unless the seller or the purchaser furnishes the Registrar with a CGT Clearance Certificate confirming that CGT has been paid or satisfactory arrangement for payment of the tax has been made or no tax is payable. It is possible that some new mortgages might still be in "the pipeline" and are not yet 4 recorded on the property at the settlement (the mortgage has been 60 days FJD 10 submitted in the registry, but it has not been inscribed yet). To avoid finding later about a mortgage on the property, it is possible to request a "guaranteed search" (under section 30, 31 and 32 of the Land Transfer act) where the registry checks and certifies that there are no other mortgages registered. Under the Land Transfer Act Amendment Decree No. 34 of 2011, the Registrar of Titles now requires certified copies of any one of the following Identifications of both parties to be lodged with the Transfer: (a) letter from FRCA confirming the Tax Identification Number (for individuals and companies) or (b) certified true copy of the Certificate of Incorporation or Certificate of Name Change (for companies only) or (c) Passport bio data page (for individuals only) or Doing Business 2014 Fiji 50 Time to No. Procedure Cost to complete complete (d) Driving licence (for individuals only). * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2014 Fiji 51 GETTING CREDIT Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS credit and improve its allocation: credit information MEASURE systems and borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable lenders’ rights to view a potential borrower’s Strength of legal rights index (0–10) financial history (positive or negative)—valuable Rights of borrowers and lenders through information to consider when assessing risk. And collateral laws they permit borrowers to establish a good credit Protection of secured creditors’ rights through history that will allow easier access to credit. Sound bankruptcy laws collateral laws enable businesses to use their assets, especially movable property, as security to generate Depth of credit information index (0–6) capital—while strong creditors’ rights have been Scope and accessibility of credit information associated with higher ratios of private sector credit distributed by public credit registries and to GDP. private credit bureaus What do the indicators cover? Public credit registry coverage (% of adults) Doing Business assesses the sharing of credit Number of individuals and firms listed in information and the legal rights of borrowers and public credit registry as percentage of adult lenders with respect to secured transactions population through 2 sets of indicators. The depth of credit Private credit bureau coverage (% of adults) information index measures rules and practices Number of individuals and firms listed in affecting the coverage, scope and accessibility of largest private credit bureau as percentage of credit information available through a public credit adult population registry or a private credit bureau. The strength of legal rights index measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. Doing Business uses case scenarios to determine the scope of the  Has up to 100 employees. secured transactions system, involving a secured  Is 100% domestically owned, as is the lender. borrower and a secured lender and examining legal The ranking on the ease of getting credit is based on restrictions on the use of movable collateral. These the percentile rankings on the sum of its component scenarios assume that the borrower: indicators: the depth of credit information index and  Is a private, incorporated, limited liability the strength of legal rights index. company.  Has its headquarters and only base of operations in the largest business city. Doing Business 2014 Fiji 52 GETTING CREDIT Where does the economy stand today? How well do the credit information system and Globally, Fiji stands at 55 in the ranking of 189 collateral and bankruptcy laws in Fiji facilitate access to economies on the ease of getting credit (figure 6.1). credit? The economy has a score of 4 on the depth of The rankings for comparator economies and the credit information index and a score of 7 on the regional average ranking provide other useful strength of legal rights index (see the summary of information for assessing how well regulations and scoring at the end of this chapter for details). Higher institutions in Fiji support lending and borrowing. scores indicate more credit information and stronger legal rights for borrowers and lenders. Figure 6.1 How Fiji and comparator economies rank on the ease of getting credit Source: Doing Business database. Doing Business 2014 Fiji 53 GETTING CREDIT What are the changes over time? While the most recent Doing Business data reflect how and regulations have been strengthened—and where well the credit information system and collateral and they have not (table 6.1). That can help identify where bankruptcy laws in Fiji support lending and borrowing the potential for improvement is greatest. today, data over time can help show where institutions Table 6.1 The ease of getting credit in Fiji over time By Doing Business report year Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 DB2014 Rank .. .. .. .. .. .. .. .. 52 55 Strength of legal rights 7 7 7 7 7 7 7 7 7 7 index (0-10) Depth of credit 4 4 4 4 4 4 4 4 4 4 information index (0-6) Public registry coverage 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (% of adults) Private bureau 28.3 28.3 33.4 41.2 42.3 48.6 47.7 67.6 69.5 72.9 coverage (% of adults) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Fiji 54 GETTING CREDIT One way to put an economy’s score on the getting the number of economies with this score in 2013 as credit indicators into context is to see where the well as the regional average score. Figure 6.3 shows economy stands in the distribution of scores across the same thing for the depth of credit information economies. Figure 6.2 highlights the score on the index. strength of legal rights index for Fiji in 2013 and shows Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared— and lenders? and how widely? Number of economies with each score on strength of legal Number of economies with each score on depth of credit rights index (0–10), 2013 information index (0–6), 2013 Note: Higher scores indicate that collateral and bankruptcy Note: Higher scores indicate the availability of more credit laws are better designed to facilitate access to credit. information, from either a credit registry or a credit bureau, Source: Doing Business database. to facilitate lending decisions. Regional averages for the depth of credit information index exclude economies with no credit registry or credit bureau. Source: Doing Business database. Doing Business 2014 Fiji 55 GETTING CREDIT When economies strengthen the legal rights of lenders credit information, they can increase entrepreneurs’ and borrowers under collateral and bankruptcy laws, access to credit. What credit reforms has Doing and increase the scope, coverage and accessibility of Business recorded in Fiji (table 6.2)? Table 6.2 How has Fiji made getting credit easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 56 GETTING CREDIT What are the details? The getting credit indicators reported here for Fiji are The data on the legal rights of borrowers and lenders based on detailed information collected in that are gathered through a survey of financial lawyers and economy. The data on credit information sharing are verified through analysis of laws and regulations as collected through a survey of a credit registry and/or well as public sources of information on collateral and credit bureau (if one exists). To construct the depth of bankruptcy laws. For the strength of legal rights index, credit information index, a score of 1 is assigned for a score of 1 is assigned for each of 8 aspects related to each of 6 features of the credit registry or credit legal rights in collateral law and 2 aspects in bureau (see summary of scoring below). bankruptcy law. Summary of scoring for the getting credit indicators in Fiji East Asia & Pacific OECD high income Indicator Fiji average average Strength of legal rights index (0-10) 7 7 7 Depth of credit information index (0-6) 4 4 5 Public registry coverage (% of adults) 0.0 35.6 42.9 Private bureau coverage (% of adults) 72.9 44.8 73.9 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Regional averages for the depth of credit information index exclude economies with no credit registry or credit bureau. Regional averages for the credit registry coverage exclude economies with no credit registry. Regional averages for the credit bureau coverage exclude economies with no credit bureau. Strength of legal rights index (0–10) Index score: 7 Can any business use movable assets as collateral while keeping possession of the assets; and Yes any financial institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of Yes movable assets, without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of Yes its assets, without requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically Yes to the products, proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement Yes include a maximum amount for which the assets are encumbered? Is a collateral registry in operation, that is unified geographically and by asset type, with an No electronic database indexed by debtor's names? Doing Business 2014 Fiji 57 Strength of legal rights index (0–10) Index score: 7 Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor No defaults outside an insolvency procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is No liquidated? Are secured creditors either not subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure, or does the law provide secured Yes creditors with grounds for relief from an automatic stay or/and sets a time limit to it? Does the law allow parties to agree in a collateral agreement that the lender may enforce its Yes security right out of court, at the time a security interest is created? Depth of credit information index (0–6) Credit bureau Credit registry Index score: 4 Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade creditors or utility companies as well as Yes No 1 financial institutions? Are more than 2 years of historical credit information Yes No 1 distributed? Is data on all loans below 1% of income per capita Yes No 1 distributed? Is it guaranteed by law that borrowers can inspect No No 0 their data in the largest credit registry? Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry. Credit bureau Credit registry Coverage (% of adults) (% of adults) Number of firms 82,715 0 Number of individuals 337,556 0 Source: Doing Business database. Doing Business 2014 Fiji 58 PROTECTING INVESTORS Protecting investors matters for the ability of WHAT THE PROTECTING INVESTORS companies to raise the capital they need to grow, INDICATORS MEASURE innovate, diversify and compete. If the laws do not protect minority shareholders, investors may be reluctant to provide funding to companies through Extent of disclosure index (0–10) the purchase of shares unless they become the Approval process for related-party controlling shareholders. Effective regulations define transactions related-party transactions precisely, promote clear Disclosure requirements in case of related- and efficient disclosure requirements, require party transactions shareholder participation in major decisions of the company and set detailed standards of accountability Extent of director liability index (0–10) for company insiders. Ability of minority shareholders to file a direct or derivative lawsuit What do the indicators cover? Ability of minority shareholders to hold Doing Business measures the strength of minority interested parties and members of the shareholder protections against directors’ use of approving body liable for prejudicial related- corporate assets for personal gain—or self-dealing. party transactions The indicators distinguish 3 dimensions of investor protections: transparency of related-party Available legal remedies (damages, repayment of profits, fines, imprisonment and rescission transactions (extent of disclosure index), liability for of the transaction) self-dealing (extent of director liability index) and minority shareholders’ access to evidence before and Ease of shareholder suits index (0–10) during trial (ease of shareholder suits index). The Access to internal corporate documents ranking on the strength of investor protection index is (directly or through a government inspector) the simple average of the percentile rankings on these 3 indices. To make the data comparable across Documents and information available during trial economies, a case study uses several assumptions about the business and the transaction. Strength of investor protection index (0–10) The business (Buyer): Simple average of the extent of disclosure, extent of director liability and ease of  Is a publicly traded corporation listed on the shareholder suits indices economy’s most important stock exchange (or at least a large private company with multiple shareholders). the company purchase used trucks from another company he owns.  Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of  The price is higher than the going price for used Buyer where permitted, even if this is not trucks, but the transaction goes forward. specifically required by law.  All required approvals are obtained, and all The transaction involves the following details: required disclosures made, though the transaction is prejudicial to Buyer.  Mr. James, a director and the majority shareholder of the company, proposes that  Shareholders sue the interested parties and the members of the board of directors. Doing Business 2014 Fiji 59 PROTECTING INVESTORS Where does the economy stand today? How strong are investor protections against self- index (figure 7.1). While the indicator does not dealing in Fiji? The economy has a score of 6.0 on the measure all aspects related to the protection of strength of investor protection index, with a higher minority investors, a higher ranking does indicate that score indicating stronger protections (see the an economy’s regulations offer stronger investor summary of scoring at the end of this chapter for protections against self-dealing in the areas measured. details). Globally, Fiji stands at 52 in the ranking of 189 economies on the strength of investor protection Figure 7.1 How Fiji and comparator economies rank on the strength of investor protection index Source: Doing Business database. Doing Business 2014 Fiji 60 PROTECTING INVESTORS What are the changes over time? While the most recent Doing Business data reflect how on the strength of investor protection index over time well regulations in Fiji protect minority investors today, shows whether the economy is slipping behind other data over time show whether the protections have economies in investor protections—or surpassing been strengthened (table 7.1). And the global ranking them. Table 7.1 The strength of investor protections in Fiji over time By Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 DB2013 DB2014 Rank .. .. .. .. .. .. .. 51 52 Extent of disclosure 3 3 3 3 3 3 3 3 3 index (0-10) Extent of director 8 8 8 8 8 8 8 8 8 liability index (0-10) Ease of shareholder 7 7 7 7 7 7 7 7 7 suits index (0-10) Strength of investor protection index (0- 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 10) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Fiji 61 PROTECTING INVESTORS One way to put an economy’s scores on the protecting the number of economies with this score in 2013 as investors indicators into context is to see where the well as the regional average score. Figure 7.3 applies to economy stands in the distribution of scores across the extent of director liability index, and figure 7.4 to economies. Figure 7.2 highlights the score on the the ease of shareholder suits index. extent of disclosure index for Fiji in 2013 and shows Figure 7.2 How strong are disclosure requirements? Figure 7.3 How strong is the liability regime for directors? Number of economies with each score on the extent of Number of economies with each score on the extent of director liability index (0–10), 2013 disclosure index (0–10), 2013 Note: Higher scores indicate greater liability of directors. Note: Higher scores indicate greater disclosure. Source: Doing Business database. Source: Doing Business database. Doing Business 2014 Fiji 62 PROTECTING INVESTORS Figure 7.4 How easy is accessing internal corporate documents? Number of economies with each score on the ease of shareholder suits index (0–10), 2013 Note: Higher scores indicate greater minority shareholder access to evidence before and during trial. Source: Doing Business database. Doing Business 2014 Fiji 63 PROTECTING INVESTORS The scores recorded over time for Fiji on the strength (figure 7.5). Equally interesting may be the changes of investor protection index may also be revealing over time in the regional average score on this index. Figure 7.5 Have investor protections become stronger over time? Strength of investor protection index (0–10) Note: The higher the score, the stronger the protections. Source: Doing Business database. Doing Business 2014 Fiji 64 PROTECTING INVESTORS Economies with the strongest protections of minority reasonable time. As a result, reforms to strengthen investors from self-dealing require detailed disclosure investor protections may move ahead on different and define clear duties for directors. They also have fronts—such as through new or amended company well-functioning courts and up-to-date procedural laws, securities regulations or civil procedure rules. rules that give minority shareholders the means to What investor protection reforms has Doing Business prove their case and obtain a judgment within a recorded in Fiji (table 7.2)? Table 7.2 How has Fiji strengthened investor protections—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 65 PROTECTING INVESTORS What are the details? The protecting investors indicators reported here for ease of shareholder suits indices, scores are assigned Fiji are based on detailed information collected to each based on a range of conditions relating to through a survey of corporate and securities lawyers disclosure, director liability and shareholder suits in a about securities regulations, company laws and court standard case study transaction (see the data notes at rules of evidence and procedure. To construct the the end of this chapter). The summary below shows extent of disclosure, extent of director liability and the details underlying the scores for Fiji. Summary of scoring for the protecting investors indicators in Fiji East Asia & OECD high income Indicator Fiji Pacific average average Extent of disclosure index (0-10) 3 5 7 Extent of director liability index (0-10) 8 5 5 Ease of shareholder suits index (0-10) 7 6 7 Strength of investor protection index (0-10) 6.0 5.3 6.2 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Score Score description Extent of disclosure index (0-10) 3 What corporate body provides legally sufficient 0 CEO approval for the transaction? Whether disclosure of the conflict of interest by Mr. 2 Full disclosure of all material facts James to the board of directors is required? Whether immediate disclosure of the transaction to 0 No disclosure obligation the public and/or shareholders is required? Whether disclosure of the transaction in published 1 Disclosure on the transaction only periodic filings (annual reports) is required? Whether an external body must review the terms of 0 No the transaction before it takes place? Extent of director liability index (0-10) 8 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction 1 Yes causes to the company? Whether shareholders can hold Mr. James liable for Liable for unfair/oppressive the damage that the Buyer-Seller transaction causes 2 transaction or prejudicial to minority to the company? shareholders Whether shareholders can hold members of the Liable for unfair/oppressive approving body liable for the damage that the Buyer- 2 transaction or prejudicial to minority Seller transaction causes to the company? shareholders Doing Business 2014 Fiji 66 Score Score description Possible when the transaction is Whether a court can void the transaction upon a 1 oppressive or prejudicial to minority successful claim by a shareholder plaintiff? shareholders Whether Mr. James pays damages for the harm caused to the company upon a successful claim by 1 Yes the shareholder plaintiff? Whether Mr. James repays profits made from the transaction upon a successful claim by the 1 Yes shareholder plaintiff? Whether fines and imprisonment can be applied 0 No against Mr. James? Ease of shareholder suits index (0-10) 7 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before 0 No filing suit? Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the 0 No transaction? Whether the plaintiff can obtain any documents from Any information that is relevant to the 3 the defendant and witnesses during trial? subject matter of the claim Whether the plaintiff can request categories of documents from the defendant without identifying 1 Yes specific ones? Whether the plaintiff can directly question the 2 Yes, without approval from the judge defendant and witnesses during trial? Whether the level of proof required for civil suits is 1 Yes lower than that of criminal cases? Strength of investor protection index (0-10) 6.0 Source: Doing Business database. Doing Business 2014 Fiji 67 PAYING TAXES Taxes are essential. They fund the public amenities, WHAT THE PAYING TAXES INDICATORS infrastructure and services that are crucial for a MEASURE properly functioning economy. But the level of tax rates needs to be carefully chosen—and needless Tax payments for a manufacturing company complexity in tax rules avoided. According to in 2012 (number per year adjusted for Doing Business data, in economies where it is more electronic and joint filing and payment) difficult and costly to pay taxes, larger shares of economic activity end up in the informal sector — Total number of taxes and contributions paid, where businesses pay no taxes at all. including consumption taxes (value added tax, sales tax or goods and service tax) What do the indicators cover? Method and frequency of filing and payment Using a case scenario, Doing Business measures Time required to comply with 3 major taxes the taxes and mandatory contributions that a (hours per year) medium-size company must pay in a given year as well as the administrative burden of paying taxes Collecting information and computing the tax and contributions. This case scenario uses a set of payable financial statements and assumptions about Completing tax return forms, filing with transactions made over the year. Information is proper agencies also compiled on the frequency of filing and Arranging payment or withholding payments as well as time taken to comply with tax laws. The ranking on the ease of paying taxes is Preparing separate tax accounting books, if the simple average of the percentile rankings on required its component indicators: number of annual Total tax rate (% of profit before all taxes) payments, time and total tax rate, with a threshold 1 Profit or corporate income tax being applied to the total tax rate. To make the data comparable across economies, several Social contributions and labor taxes paid by assumptions about the business and the taxes and the employer contributions are used. Property and property transfer taxes  TaxpayerCo is a medium-size business that Dividend, capital gains and financial started operations on January 1, 2011. transactions taxes  The business starts from the same financial Waste collection, vehicle, road and other taxes position in each economy. All the taxes  Taxes and mandatory contributions include and mandatory contributions paid during corporate income tax, turnover tax and all the second year of operation are recorded. labor taxes and contributions paid by the  Taxes and mandatory contributions are company. measured at all levels of government.  A range of standard deductions and exemptions are also recorded. 1 The threshold is defined as the highest total tax rate among the top 15% of economies in the ranking on the total tax rate. It is calculated and adjusted on a yearly basis. The threshold is not based on any economic theory of an “optimal tax rate” that minimizes distortions or maximizes efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set at the lower end of the distribution of tax rates levied on medium-size enterprises in the manufacturing sector as observed through the paying taxes indicators. This reduces the bias in the indicators toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company because they raise public revenue in other ways—for example, through taxes on foreign companies, through taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of the methodology). This year’s threshold is 25.5%. Doing Business 2014 Fiji 68 PAYING TAXES Where does the economy stand today? What is the administrative burden of complying with Globally, Fiji stands at 88 in the ranking of 189 taxes in Fiji—and how much do firms pay in taxes? On economies on the ease of paying taxes (figure 8.1). The average, firms make 38 tax payments a year, spend rankings for comparator economies and the regional 185 hours a year filing, preparing and paying taxes and average ranking provide other useful information for pay total taxes amounting to 31.2% of profit (see the assessing the tax compliance burden for businesses in summary at the end of this chapter for details). Fiji. Figure 8.1 How Fiji and comparator economies rank on the ease of paying taxes Source: Doing Business database. Doing Business 2014 Fiji 69 PAYING TAXES What are the changes over time? The benchmarks provided by the economies that over show what is possible in easing the administrative time have had the best performance regionally or burden of tax compliance. And changes in regional globally on the number of payments or the time averages can show where Fiji is keeping up—and required to prepare and file taxes (figure 8.2) help where it is falling behind. Figure 8.2 Has paying taxes become easier over time? Payments (number per year) Time (hours per year) Doing Business 2014 Fiji 70 PAYING TAXES Total tax rate (% of profit) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB201 3 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. DB2013 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 25.5% applied in DB2014, the total tax rate is set at 25.5% for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database. Doing Business 2014 Fiji 71 PAYING TAXES Economies around the world have made paying taxes concrete results. Some economies simplifying tax faster and easier for businesses—such as by payment and reducing rates have seen tax revenue consolidating filings, reducing the frequency of rise. What tax reforms has Doing Business recorded in payments or offering electronic filing and payment. Fiji (table 8.1)? Many have lowered tax rates. Changes have brought Table 8.1 How has Fiji made paying taxes easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. Fiji relieved the tax burden on companies by reducing the DB2010 corporate income tax rate from 31% to 29% while imposing road user levy on all vehicles DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. Fiji made paying taxes less costly for companies by reducing the DB2013 profit tax rate. At the same time, Fiji introduced capital gains tax. Fiji made paying taxes more complicated for companies by transferring the fringe benefit tax liability from employees to DB2014 employers and by limiting the deductibility of mandatory contributions. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 72 PAYING TAXES What are the details? The indicators reported here for Fiji are based on a LOCATION OF STANDARDIZED COMPANY standard set of taxes and contributions that would be paid by the case study company used by Doing Business in collecting the data (see the section in City: Suva this chapter on what the indicators cover). Tax practitioners are asked to review standard financial statements as well as a standard list of transactions that the company completed during the year. The taxes and contributions paid are listed in the Respondents are asked how much in taxes and summary below, along with the associated number of mandatory contributions the business must pay payments, time and tax rate. and what the process is for doing so. Summary of tax rates and administrative burden in Fiji East Asia & Pacific OECD high income Indicator Fiji average average Payments (number per year) 38 25 12 Time (hours per year) 185 208 175 Profit tax (%) 20.5 16.4 16.1 Labor tax and contributions (%) 10.4 10.7 23.1 Other taxes (%) 0.2 7.4 2.0 Total tax rate (% profit) 31.2 34.5 41.3 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate taxable Corporate income tax 4 57 20% 20 profit Employer paid - gross Superannuation fund (Social 12 68 8% 9 salaries security contributions) Employer paid - Training gross 2 0 1% 1.1 levy salaries Doing Business 2014 Fiji 73 Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate capital Capital gains tax 1 0 10% 0.5 gains fringe Fringe Benefit Tax 4 0 25% 0.3 benefit assessed Property tax 1 0 2% property 0.2 value value not Value added tax (VAT) 12 60 15% 0 added included small Municipal business license 1 0 fixed fee 0 amount type and small Vehicle tax 1 0 use of 0 amount vehicle Totals 38 185 31.2 Source: Doing Business database. Doing Business 2014 Fiji 74 TRADING ACROSS BORDERS In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS economies easier is increasingly important for INDICATORS MEASURE business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to Documents required to export and import extra costs and delays for exporters and importers, (number) stifling trade potential. Research shows that Bank documents exporters in developing countries gain more from Customs clearance documents a 10% drop in their trading costs than from a similar reduction in the tariffs applied to their Port and terminal handling documents products in global markets. Transport documents What do the indicators cover? Time required to export and import (days) Doing Business measures the time and cost Obtaining, filling out and submitting all the (excluding tariffs and the time and cost for sea documents transport) associated with exporting and importing Inland transport and handling a standard shipment of goods by sea transport, and the number of documents necessary to Customs clearance and inspections complete the transaction. The indicators cover Port and terminal handling procedural requirements such as documentation Does not include sea transport time requirements and procedures at customs and other regulatory agencies as well as at the port. They also Cost required to export and import (US$ per cover trade logistics, including the time and cost of container) inland transport to the largest business city. The All documentation ranking on the ease of trading across borders is the simple average of the percentile rankings on its Inland transport and handling component indicators: documents, time and cost Customs clearance and inspections to export and import. Port and terminal handling To make the data comparable across economies, Official costs only, no bribes Doing Business uses several assumptions about the business and the traded goods. The business: military items.  Is of medium size and employs 60 people.  Do not require refrigeration or any other special environment.  Is located in the periurban area of the economy’s largest business city.  Do not require any special phytosanitary or environmental safety standards other than  Is a private, limited liability company, accepted international standards. domestically owned, formally registered and operating under commercial laws and  Are one of the economy’s leading export or regulations of the economy. import products. The traded goods:  Are transported in a dry-cargo, 20-foot full container load.  Are not hazardous nor do they include Doing Business 2014 Fiji 75 TRADING ACROSS BORDERS Where does the economy stand today? What does it take to export or import in Fiji? According Globally, Fiji stands at 111 in the ranking of 189 to data collected by Doing Business, exporting a economies on the ease of trading across borders standard container of goods requires 9 documents, (figure 9.1). The rankings for comparator economies takes 18 days and costs $790. Importing the same and the regional average ranking provide other useful container of goods requires 10 documents, takes 22 information for assessing how easy it is for a business days and costs $760 (see the summary of procedures in Fiji to export and import goods. and documents at the end of this chapter for details). Figure 9.1 How Fiji and comparator economies rank on the ease of trading across borders Source: Doing Business database. Doing Business 2014 Fiji 76 TRADING ACROSS BORDERS What are the changes over time? The benchmarks provided by the economies that over possible in making it easier to trade across borders. time have had the best performance regionally or And changes in regional averages can show where Fiji globally on the documents, time or cost required to is keeping up—and where it is falling behind. export or import (figure 9.2) help show what is Figure 9.2 Has trading across borders become easier over time? Documents to export (number) Time to export (days) Doing Business 2014 Fiji 77 TRADING ACROSS BORDERS Cost to export (US$ per container) Documents to import (number) Doing Business 2014 Fiji 78 TRADING ACROSS BORDERS Time to import (days) Cost to import (US$ per container) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB201 3 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Fiji 79 TRADING ACROSS BORDERS In economies around the world, trading across borders systems. These changes help improve the trading as measured by Doing Business has become faster and environment and boost firms’ international easier over the years. Governments have introduced competitiveness. What trade reforms has Doing tools to facilitate trade—including single windows, Business recorded in Fiji (table 9.1)? risk-based inspections and electronic data interchange Table 9.1 How has Fiji made trading across borders easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. Fiji made trading easier by opening customer care service DB2011 centers and improving customs operations. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 80 TRADING ACROSS BORDERS What are the details? The indicators reported here for Fiji are based on a LOCATION OF STANDARDIZED COMPANY set of specific procedural requirements for trading a standard shipment of goods by ocean transport (see the section in this chapter on what the City: Suva indicators cover). Information on the procedures as well as the required documents and the time and cost to complete each procedure is collected from The procedural requirements, and the associated time local freight forwarders, shipping lines, customs and cost, for exporting and importing a standard brokers, port officials and banks. shipment of goods are listed in the summary below, along with the required documents. Summary of procedures and documents for trading across borders in Fiji East Asia & Pacific OECD high income Indicator Fiji average average Documents to export (number) 9 6 4 Time to export (days) 18 21 11 Cost to export (US$ per container) 790 856 1,070 Documents to import (number) 10 7 4 Time to import (days) 22 22 10 Cost to import (US$ per container) 760 884 1,090 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Procedures to export Time (days) Cost (US$) Documents preparation 10 180 Customs clearance and technical control 2 85 Ports and terminal handling 3 315 Inland transportation and handling 3 210 Totals 18 790 Procedures to import Time (days) Cost (US$) Documents preparation 10 150 Doing Business 2014 Fiji 81 Procedures to import Time (days) Cost (US$) Customs clearance and technical control 2 85 Ports and terminal handling 8 315 Inland transportation and handling 2 210 Totals 22 760 Documents to export Documents to import Bill of lading Bill of lading Cargo release order Cargo release order Commercial invoice Certificate of origin Customs export declaration Commercial invoice Export license Customs import declaration Foreign exchange authorization Foreign exchange authorisation Inspection report and health certificate Import license Packing list Packing list Terminal handling receipts Technical standard/health certificate Source: Doing Business database. Terminal handling receipts Doing Business 2014 Fiji 82 ENFORCING CONTRACTS Effective commercial dispute resolution has many WHAT THE ENFORCING CONTRACTS benefits. Courts are essential for entrepreneurs INDICATORS MEASURE because they interpret the rules of the market and protect economic rights. Efficient and transparent Procedures to enforce a contract through courts encourage new business relationships the courts (number) because businesses know they can rely on the courts if a new customer fails to pay. Speedy trials Steps to file and serve the case are essential for small enterprises, which may lack Steps for trial and judgment the resources to stay in business while awaiting the outcome of a long court dispute. Steps to enforce the judgment Time required to complete procedures What do the indicators cover? (calendar days) Doing Business measures the efficiency of the Time to file and serve the case judicial system in resolving a commercial dispute before local courts. Following the step-by-step Time for trial and obtaining judgment evolution of a standardized case study, it collects Time to enforce the judgment data relating to the time, cost and procedural complexity of resolving a commercial lawsuit. The Cost required to complete procedures (% of ranking on the ease of enforcing contracts is the claim) simple average of the percentile rankings on its Average attorney fees component indicators: procedures, time and cost. Court costs The dispute in the case study involves the breach Enforcement costs of a sales contract between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. To make the data comparable across economies, Doing Business uses several assumptions about the case:  The seller and buyer are located in the economy’s largest business city.  The dispute on the quality of the goods requires an expert opinion.  The buyer orders custom-made goods, then fails to pay.  The judge decides in favor of the seller; there is no appeal.  The seller sues the buyer before a competent court.  The seller enforces the judgment through a public sale of the buyer’s movable assets.  The value of the claim is 200% of income per capita.  The seller requests a pretrial attachment to secure the claim. Doing Business 2014 Fiji 83 ENFORCING CONTRACTS Where does the economy stand today? How efficient is the process of resolving a commercial Globally, Fiji stands at 63 in the ranking of 189 dispute through the courts in Fiji? According to data economies on the ease of enforcing contracts (figure collected by Doing Business, contract enforcement 10.1). The rankings for comparator economies and the takes 397 days, costs 38.9% of the value of the claim regional average ranking provide other useful and requires 34 procedures (see the summary at the benchmarks for assessing the efficiency of contract end of this chapter for details). enforcement in Fiji. Figure 10.1 How Fiji and comparator economies rank on the ease of enforcing contracts Source: Doing Business database. Doing Business 2014 Fiji 84 ENFORCING CONTRACTS What are the changes over time? The benchmarks provided by the economies that over help show what is possible in improving the efficiency time have had the best performance regionally or of contract enforcement. And changes in regional globally on the number of steps, time or cost required averages can show where Fiji is keeping up—and to enforce a contract through the courts (figure 10.2) where it is falling behind. Figure 10.2 Has enforcing contracts become easier over time? Time (days) Cost (% of claim) Doing Business 2014 Fiji 85 ENFORCING CONTRACTS Procedures (number) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. Source: Doing Business database. Doing Business 2014 Fiji 86 ENFORCING CONTRACTS Economies in all regions have improved contract often work on reducing backlogs by introducing enforcement in recent years. A judiciary can be periodic reviews to clear inactive cases from the docket improved in different ways. Higher-income economies and by making procedures faster. What reforms tend to look for ways to enhance efficiency by making it easier (or more difficult) to enforce contracts introducing new technology. Lower-income economies has Doing Business recorded in Fiji (table 10.1)? Table 10.1 How has Fiji made enforcing contracts easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 87 ENFORCING CONTRACTS What are the details? The indicators reported here for Fiji are based on a COURT NAME set of specific procedural steps required to resolve a standardized commercial dispute through the courts (see the section in this chapter on what the City: Suva indicators cover). These procedures, and the time and cost of completing them, are identified Claim Value LCU: 15096 through study of the codes of civil procedure and other court regulations, as well as through surveys Court Name: Suva Magistrates Court completed by local litigation lawyers (and, in a quarter of the economies covered by Doing The procedures for resolving a commercial lawsuit, and Business, by judges as well). the associated time and cost, are listed in the summary below. Summary of procedures for enforcing a contract in Fiji—and the time and cost East Asia & Pacific OECD high income Indicator Fiji average average Time (days) 397 551 529 Filing and service 36 Trial and judgment 206 Enforcement of judgment 155 Cost (% of claim) 38.9 48.7 21.0 Attorney cost (% of claim) 28.6 Court cost (% of claim) 0.3 Enforcement Cost (% of claim) 10.0 Procedures (number) 34 37 31 Note: In cases where an economy’s regional classification is “OECD high income,” regional averages above are only displayed once. Doing Business 2014 Fiji 88 ENFORCING CONTRACTS No. Procedure Filing and service: Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply with the 1 contract. 2 Plaintiff’s hiring of lawyer: Plaintiff hires a lawyer to represent him before the court. Plaintiff’s filing of summons and complaint: Plaintiff files his summons and complaint with the court, orally * or in writing. * Plaintiff’s payment of court fees: Plaintiff pays court duties, stamp duties, or any other type of court fee. Registration of court case: The court administration registers the lawsuit or court case. This includes 3 assigning a reference number to the lawsuit or court case. Assignment of court case to a judge: The court case is assigned to a specific judge through a random * procedure, automated system, ruling of an administrative judge, court officer, etc. Arrangements for physical delivery of summons and complaint: Plaintiff takes whatever steps are * necessary to arrange for physical service of process on Defendant, such as instructing a court officer or a (private) bailiff. First attempt at physical delivery: A first attempt to physically deliver summons and complaint to 4 Defendant is successful in the majority of cases. * Proof of service: Plaintiff submits proof of service to court. Application for pre-judgment attachment: Plaintiff submits an application in writing for the attachment of * Defendant's property prior to judgment. (see assumption 5) Decision on pre-judgment attachment: The judge decides whether to grant Plaintiff’s request for pre- * judgment attachment of Defendant’s property and notifies Plaintiff and Defendant of the decision. This step may include requesting that Plaintiff submit guarantees or bonds to secure Defendant Pre-judgment attachment.: Defendant's property is attached prior to judgment. Attachment is either 5 physical or achieved by registering, marking, debiting or separating assets. (see assumption 5) Trial and judgment: Defendant’s filing of defense or answer to Plaintiff’s claim: D efendant files a written pleading which includes his defense or answer on the merits of the case. Defendant's written answer may or may not 6 include witness statements, expert statements, the documents Defendant relies on as evidence and the legal authori Deadline for Plaintiff to answer Defendant's defense or answer: Judge sets the deadline by which Plaintiff 7 will be allowed to answer Defendant's defense or answer. Plaintiff’s written response to Defendant's defense or answer: Plaintiff responds to Defendant’s defense or 8 answer with a written pleading. Plaintiff's answer may or may not include a witness statements or expert (witness) statements. Doing Business 2014 Fiji 89 No. Procedure Filing of pleadings: Plaintiff and Defendant file written pleadings and submissions with the court and 9 transmit copies of the written pleadings or submissions to one another. The pleadings may or may not include witness statements or expert (witness) statements. Adjournments: Court procedure is delayed because one or both parties request and obtain an 10 adjournment to submit written pleadings. Discovery requests: Plaintiff and Defendant make requests for the disclosure of documents, attempting to * force the other party to reveal potentially detrimental documents. Discovery disputes: Following a request for discovery of documentary evidence, the other party disputes 11 the request and calls upon the judge to decide the issue. 12 Request for oral hearing or trial: Plaintiff applies for the date(s) for the oral hearing or trial. * Setting of date(s) for oral hearing or trial: The judge sets the date(s) for the oral hearing or trial. * List of (expert) witnesses: The parties file a list of (expert) witnesses with the court. (see assumption 6-a) Summoning of (expert) witnesses: The court summons (expert) witnesses to appear in court for the oral 13 hearing or trial. (see assumption 6-a) Adjournments: Court proceedings are delayed because one or both parties request and obtain an 14 adjournment to prepare for the oral hearing or trial. Trial (prevalent in common law): The parties argue the merits of the case at (an) oral session(s) before the 15 court. Witnesses and expert witnesses are questioned and cross-examined during trial. Adjournments: Court proceedings are delayed because one or both parties request and obtain an 16 adjournment during the oral hearing or trial, resulting in an additional or later trial or hearing date. Final arguments: The parties present their final factual and legal arguments to the court either by oral * presentation or by a written submission. 17 Notification of judgment in court: The parties are notified of the judgment at a court hearing. 18 Writing of judgment: The judge produces a written copy of the judgment. Registration of judgment: The court office registers the judgment after receiving a written copy of the 19 judgment. 20 Plaintiff's receipt of a copy of written judgment: Plaintiff receives a copy of the written judgment. Notification of Defendant of judgment: Plaintiff or court formally notifies the Defendant of the judgment. 21 The appeal period starts to run the day the Defendant is formally notified of the judgment. Appeal period: By law, Defendant has the opportunity to appeal the judgment during a period specified in 22 the law. Defendant decides not to appeal. Judgment becomes final the day the appeal period ends. Reimbursement by Defendant of Plaintiff's court fees: The judgment obliges Defendant to reimburse 23 Plaintiff for the court fees Plaintiff has advanced, because Defendant has lost the case. Enforcement of judgment: Plaintiff’s hiring of lawyer: Plaintiff hires a lawyer to enforce the judgment or continues to be represented * by a lawyer during the enforcement of judgment phase. Doing Business 2014 Fiji 90 No. Procedure Plaintiff's approaching of court enforcement officer or (private) bailiff to enforce the judgment: To enforce 24 the judgment, Plaintiff approaches a court enforcement officer such as a court bailiff or sheriff, or a private bailiff. Plaintiff’s request for enforcement order: Plaintiff applies to the court to obtain the enforcement order * ('seal' on judgment). Plaintiff’s advancement of enforcement fees: Plaintiff pays the fees related to the enforcement of the 25 judgment. Attachment of enforcement order to judgment: The judge attaches the enforcement order (‘seal’) to the 26 judgment. Delivery of enforcement order: The court's enforcement order is delivered to a court enforcement officer * or a (private) bailiff. Request to Defendant to comply voluntarily with judgment: Plaintiff, a court enforcement officer or a 27 (private) bailiff requests Defendant to voluntarily comply with the judgment, giving Defendant a last chance to comply voluntarily with the judgment. Identification of Defendant's assets for attachment by court official or Defendant: Judge, a court 28 enforcement officer, a (private) bailiff or the Defendant himself identifies Defendant's movable assets for attachment. Attachment: Defendant’s movable goods are attached (physically or by registering, marking or separating 29 assets). Call for public auction: The judge calls a public auction by, for example, advertising or publication in the 30 newspapers. 31 Sale through public auction: The Defendant’s movable property is sold at public auction. Distribution of proceeds: The proceeds of the public auction are distributed to various creditors (including 32 Plaintiff), according to the rules of priority. Reimbursement of Plaintiff’s enforcement fees: Defendant reimburses Plaintiff's enforcement fees which 33 Plaintiff had advanced previously. 34 Payment: Court orders that the proceeds of the public auction or the direct sale be delivered to Plaintiff. * Not counted in the total number of procedures. Source: Doing Business database. Doing Business 2014 Fiji 91 RESOLVING INSOLVENCY A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY ensuring the survival of economically efficient companies and reallocating the resources of INDICATORS MEASURE inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of Time required to recover debt (years) businesses to normal operation and increase Measured in calendar years returns to creditors. By improving the expectations of creditors and debtors about the outcome of Appeals and requests for extension are insolvency proceedings, well-functioning included insolvency systems can facilitate access to finance, Cost required to recover debt (% of debtor’s save more viable businesses and thereby improve estate) growth and sustainability in the economy overall. Measured as percentage of estate value What do the indicators cover? Court fees Doing Business studies the time, cost and outcome Fees of insolvency administrators of insolvency proceedings involving domestic entities. It does not measure insolvency Lawyers’ fees proceedings of individuals and financial Assessors’ and auctioneers’ fees institutions. The data are derived from survey Other related fees responses by local insolvency practitioners and verified through a study of laws and regulations as Outcome well as public information on bankruptcy systems. Whether business continues operating as a The ranking on the ease of resolving insolvency is going concern or business assets are sold based on the recovery rate, which is recorded as piecemeal cents on the dollar recouped by creditors through Recovery rate for creditors (cents on the reorganization, liquidation or debt enforcement dollar) (foreclosure) proceedings. The recovery rate is a Measures the cents on the dollar recovered function of time, cost and other factors, such as by creditors lending rate and the likelihood of the company continuing to operate. Present value of debt recovered To make the data comparable across economies, Official costs of the insolvency proceedings Doing Business uses several assumptions about the are deducted business and the case. It assumes that the Depreciation of furniture is taken into company: account  Is a domestically owned, limited liability Outcome for the business (survival or not) company operating a hotel. affects the maximum value that can be recovered  Operates in the economy’s largest business city.  Has 201 employees, 1 main secured  Has a higher value as a going concern—and creditor and 50 unsecured creditors. the efficient outcome is either reorganization or sale as a going concern, not piecemeal liquidation. Doing Business 2014 Fiji 92 RESOLVING INSOLVENCY Where does the economy stand today? Speed, low costs and continuation of viable businesses Globally, Fiji stands at 50 in the ranking of 189 characterize the top-performing economies. How economies on the ease of resolving insolvency (figure efficient are insolvency proceedings in Fiji? According 11.1). The rankings for comparator economies and the to data collected by Doing Business, resolving regional average ranking provide other useful insolvency takes 1.8 years on average and costs 10% of benchmarks for assessing the efficiency of insolvency the debtor’s estate, with the most likely outcome being proceedings in Fiji. that the company will be sold as piecemeal sale. The average recovery rate is 45.6 cents on the dollar. Figure 11.1 How Fiji and comparator economies rank on the ease of resolving insolvency Source: Doing Business database. Doing Business 2014 Fiji 93 RESOLVING INSOLVENCY What are the changes over time? The benchmarks provided by the economies that over possible in improving the efficiency of insolvency time have had the best performance regionally or proceedings. And changes in regional averages can globally on the time or cost of insolvency proceedings show where Fiji is keeping up—and where it is falling or on the recovery rate (figure 11.2) help show what is behind. Figure 11.2 Has resolving insolvency become easier over time? Time (years) Cost (% of estate) Doing Business 2014 Fiji 94 RESOLVING INSOLVENCY Recovery rate (cents on the dollar) Note: DB2013 rankings shown are not last year’s published rankings but comparable rankings for DB2013 that capture the effects of such factors as data corrections and the addition of 4 economies (Libya, Myanmar, San Marino and South Sudan) to the sample this year. “No practice” indicates that in each of the previous 5 years the economy had no cases involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure). This means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for “no practice” economies is 0. Regional averages on time and cost exclude economies with a “no practice” mark. Source: Doing Business database. Doing Business 2014 Fiji 95 RESOLVING INSOLVENCY A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have companies that are financially distressed but been aimed at helping more of the viable businesses economically viable from inefficient companies that survive. What insolvency reforms has Doing Business should be liquidated. But in some insolvency systems recorded in Fiji (table 11.1)? even viable businesses are liquidated. This is starting to Table 11.1 How has Fiji made resolving insolvency easier—or not? By Doing Business report year DB year Reform DB2009 No reform as measured by Doing Business. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2014 Fiji 96 EMPLOYING WORKERS Doing Business measures flexibility in the regulation of employing workers methodology proposed by the employment, specifically as it affects the hiring and consultative group are available on the Doing Business redundancy of workers and the rigidity of working website (http://www.doingbusiness.org). The data on hours. Over the period from 2007 to 2011 employing workers are based on a detailed survey of improvements were made to align the methodology employment regulations that is completed by local for the employing workers indicators with the letter lawyers and public officials. Employment laws and and spirit of the International Labour Organization regulations as well as secondary sources are reviewed (ILO) conventions. Only 4 of the 188 ILO conventions to ensure accuracy. cover areas measured by Doing Business: employee To make the data comparable across economies, termination, weekend work, holiday with pay and night several assumptions about the worker and the work. The Doing Business methodology is fully business are used. consistent with these 4 conventions. The ILO conventions covering areas related to the Employing The worker: Workers indicators do not include the ILO core labor  Earns a salary plus benefits equal to the standards—8 conventions covering the right to economy’s average wage during the entire collective bargaining, the elimination of forced labor, period of his employment. the abolition of child labor and equitable treatment in  Has a pay period that is the most common for workers in the economy. employment practices.  Is a lawful citizen who belongs to the same race and religion as the majority of the Between 2009 and 2011 the World Bank Group worked economy’s population. with a consultative group—including labor lawyers,  Resides in the economy’s largest business city. employer and employee representatives, and experts  Is not a member of a labor union, unless from the ILO, OECD, civil society and the private membership is mandatory. sector—to review the employing workers methodology and explore future areas of research. A i The business:  Is a limited liability company. full report with the conclusions of the consultative  Operates in the economy’s largest business group is available at city. http://www.doingbusiness.org/methodology/employin  Is 100% domestically owned. g-workers.  Operates in the manufacturing sector.  Has 60 employees. This year Doing Business continued research collecting  Is subject to collective bargaining agreements additional data on regulations covering the in economies where such agreements cover probationary period for new employees. more than half the manufacturing sector and apply even to firms not party to them. Doing Business 2014 presents the data on the  Abides by every law and regulation but does not grant workers more benefits than employing workers indicators in an annex. The report mandated by law, regulation or (if applicable) does not present rankings of economies on the collective bargaining agreement. employing workers indicators nor include the topic in the aggregate ranking on the ease of doing business. Detailed data collected on labor regulations and the Doing Business 2014 Fiji 97 EMPLOYING WORKERS What do some of the data show? One of the employing workers indicators is the worker in his or her first job. Doing Business data show difficulty of hiring index. This measure assesses, among the trend in the minimum wage applied by Fiji (figure other things, the minimum wage for a 19-year-old 12.1). Figure 12.1 Has the minimum wage for a 19-year-old worker or an apprentice increased over time? Minimum wage (US$ per month) Note: A horizontal line along the x-axis of the figure indicates that the economy has no minimum wage. Source: Doing Business database. Doing Business 2014 Fiji 98 EMPLOYING WORKERS Employment laws are needed to protect workers from past 5 years did so in ways that increased labor market arbitrary or unfair treatment and to ensure efficient flexibility. What changes did Fiji adopt that affected contracting between employers and workers. Many the Doing Business indicators on employing workers economies that changed their labor regulations in the (table 12.1)? Table 12.1 What changes did Fiji make in employing workers in 2013? DB year Reform Fiji introduced a requirement to notify third parties in cases of DB2009 redundancy dismissals and implemented a severance payment obligation. DB2010 No reform as measured by Doing Business. DB2011 No reform as measured by Doing Business. DB2012 No reform as measured by Doing Business. DB2013 No reform as measured by Doing Business. DB2014 No reform as measured by Doing Business. Source: Doing Business database. Doing Business 2014 Fiji 99 EMPLOYING WORKERS What are the details? The data on employing workers reported here for Fiji public officials. Employment laws and regulations as are based on a detailed survey of employment well as secondary sources are reviewed to ensure regulations that is completed by local lawyers and accuracy. Rigidity of employment index The rigidity of employment index measures 3 areas of labor regulation: difficulty of hiring, rigidity of hours and difficulty of redundancy. Difficulty of hiring index The difficulty of hiring index measures whether fixed- worker. (The average value added per worker is the term contracts are prohibited for permanent tasks; the ratio of an economy’s gross national income per capita maximum cumulative duration of fixed-term contracts; to the working-age population as a percentage of the and the ratio of the minimum wage for a trainee or total population.) first-time employee to the average value added per Difficulty of hiring index Data Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) N/A - No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage for a 19-year old worker or an apprentice (US$/month) 334.6 Ratio of minimum wage to value added per worker 0.63 Source: Doing Business database. Doing Business 2014 Fiji 100 EMPLOYING WORKERS Rigidity of hours index The rigidity of hours index has 5 components: whether respond to a seasonal increase in production; and there are restrictions on night work; whether there are whether the average paid annual leave for a worker restrictions on weekly holiday work; whether the with 1 year of tenure, a worker with 5 years and a workweek can consist of 5.5 days or is more than 6 worker with 10 years is more than 26 working days or days; whether the workweek can extend to 50 hours or fewer than 15 working days. more (including overtime) for 2 months a year to Rigidity of hours index Data 8 hours for a 6 day workweek or 9 hours for a 5 day workweek (Reg 50, Standard workday in manufacturing (hours) Employment (Administration) Regulations 2008), (s.72, ERP and r.5 of the relevant WRO) 50-hour workweek allowed for 2 months a year in case of a seasonal Yes increase in production? Maximum working days per week 6.0 Premium for night work (% of hourly pay) in case of continuous 4% operations Premium for work on weekly rest day (% of hourly pay) in case of 100% continuous operations Major restrictions on night work in case of continuous operations? No Major restrictions on weekly holiday in case of continuous operations? No Paid annual leave for a worker with 1 year of tenure (in working days) 10.0 Paid annual leave for a worker with 5 years of tenure (in working days) 10.0 Paid annual leave for a worker with 10 years of tenure (in working days) 10.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 10.0 working days) Source: Doing Business database. Doing Business 2014 Fiji 101 EMPLOYING WORKERS Difficulty of redundancy index The difficulty of redundancy index has 8 components: worker; whether the employer needs approval from a whether redundancy is disallowed as a basis for third party to terminate a group of 9 redundant terminating workers; whether the employer needs to workers; whether the law requires the employer to notify a third party (such as a government agency) to reassign or retrain a worker before making the worker terminate 1 redundant worker; whether the employer redundant; whether priority rules apply for needs to notify a third party to terminate a group of 9 redundancies; and whether priority rules apply for redundant workers; whether the employer needs reemployment. approval from a third party to terminate 1 redundant Difficulty of redundancy index Data Dismissal due to redundancy allowed by law? Yes Third-party notification if 1 worker is dismissed? Yes Third-party approval if 1 worker is dismissed? No Third-party notification if 9 workers are dismissed? Yes Third-party approval if 9 workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Source: Doing Business database. Doing Business 2014 Fiji 102 EMPLOYING WORKERS Redundancy cost The redundancy cost indicator measures the cost of notice requirements and severance payments advance notice requirements, severance payments and applicable to a worker with 1 year of tenure, a worker penalties due when terminating a redundant worker, with 5 years and a worker with 10 years is used to expressed in weeks of salary. The average value of assign the score. Redundancy cost indicator Data Notice period for redundancy dismissal (for a worker with 1 year of tenure, in salary 4.3 weeks) Notice period for redundancy dismissal (for a worker with 5 years of tenure, in 4.3 salary weeks) Notice period for redundancy dismissal (for a worker with 10 years of tenure, in 4.3 salary weeks) Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 4.3 of tenure, in salary weeks) Severance pay for redundancy dismissal (for a worker with 1 year of tenure, in 1.0 salary weeks) Severance pay for redundancy dismissal (for a worker with 5 years of tenure, in 5.0 salary weeks) Severance pay for redundancy dismissal (for a worker with 10 years of tenure, in 10.0 salary weeks) Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 5.3 of tenure, in salary weeks) Source: Doing Business database. Doing Business 2014 Fiji 103 DATA NOTES The indicators presented and analyzed in Doing rounds of verification, leading to revisions or Business measure business regulation and the expansions of the information collected. protection of property rights—and their effect on businesses, especially small and medium-size domestic firms. First, the indicators document the complexity of ECONOMY CHARACTERISTICS regulation, such as the number of procedures to start a business or to register and transfer commercial property. Second, they gauge the time and cost to Gross national income per capita achieve a regulatory goal or comply with regulation, such as the time and cost to enforce a contract, go Doing Business 2014 reports 2012 income per capita through bankruptcy or trade across borders. Third, as published in the World Bank’s World Development they measure the extent of legal protections of Indicators 2013. Income is calculated using the Atlas property, for example, the protections of investors method (current U.S. dollars). For cost indicators against looting by company directors or the range of expressed as a percentage of income per capita, assets that can be used as collateral according to 2012 gross national income (GNI) in U.S. dollars is secured transactions laws. Fourth, a set of indicators used as the denominator. GNI data were not documents the tax burden on businesses. Finally, a set available from the World Bank for Afghanistan, The of data covers different aspects of employment Bahamas, Bahrain, Barbados, Brunei Darussalam, regulation. The 11 sets of indicators measured in Djibouti, the Islamic Republic of Iran, Kuwait, Libya, Doing Business were added over time, and the sample Myanmar, New Zealand, Oman, San Marino, the of economies expanded. Syrian Arab Republic, West Bank and Gaza, and the Republic of Yemen. In these cases GDP or GNP per The data for all sets of indicators in Doing Business 2 capita data and growth rates from other sources, 2014 are for June 2013. such as the International Monetary Fund’s World Economic Outlook database and the Economist Intelligence Unit, were used. Methodology Region and income group The Doing Business data are collected in a standardized way. To start, the Doing Business team, Doing Business uses the World Bank regional and with academic advisers, designs a questionnaire. The income group classifications, available at questionnaire uses a simple business case to ensure http://data.worldbank.org/about/country- classifications. The World Bank does not assign comparability across economies and over time—with regional classifications to high-income economies. assumptions about the legal form of the business, its For the purpose of the Doing Business report, high- size, its location and the nature of its operations. income OECD economies are assigned the “regional” Questionnaires are administered to more than 10,200 classification OECD high income. Figures and tables local experts, including lawyers, business consultants, presenting regional averages include economies accountants, freight forwarders, government officials from all income groups (low, lower middle, upper and other professionals routinely administering or middle and high income). advising on legal and regulatory requirements (table Population 21.2). These experts have several rounds of interaction with the Doing Business team, involving conference Doing Business 2014 reports midyear 2012 calls, written correspondence and visits by the team. population statistics as published in World For Doing Business 2014 team members visited 33 Development Indicators 2013. economies to verify data and recruit respondents. The data from questionnaires are subjected to numerous The Doing Business methodology offers several advantages. It is transparent, using factual information about what laws and regulations say and allowing 2 The data for paying taxes refer to January – December 2012. multiple interactions with local respondents to clarify Doing Business 2014 Fiji 104 potential misinterpretations of questions. Having entrepreneurs reported in the World Bank Enterprise representative samples of respondents is not an issue; Surveys or other perception surveys. Doing Business is not a statistical survey, and the texts This year Doing Business completed subnational of the relevant laws and regulations are collected and studies in Colombia, Italy and the city of Hargeisa answers checked for accuracy. The methodology is (Somaliland) and is currently updating indicators in inexpensive and easily replicable, so data can be Egypt, Mexico and Nigeria. Doing Business also collected in a large sample of economies. Because published regional studies for the g7+ and the East standard assumptions are used in the data collection, African Community. The g7+ group is a country- comparisons and benchmarks are valid across owned and country-led global mechanism established economies. Finally, the data not only highlight the in April 2010 to monitor, report and draw attention to extent of specific regulatory obstacles to business but the unique challenges faced by fragile states. The also identify their source and point to what might be member countries included in the report are reformed. Information on the methodology for each Afghanistan, Burundi, the Central African Republic, Doing Business topic can be found on the Doing Chad, the Comoros, the Democratic Republic of Business website at Congo, Côte d’Ivoire, Guinea, Guinea-Bissau, Haiti, http://www.doingbusiness.org/methodology. Liberia, Papua New Guinea, Sierra Leone, the Solomon Islands, South Sudan, Timor-Leste and Togo. Limits to what is measured The subnational studies point to differences in business regulation and its implementation —as well as The Doing Business methodology has 5 limitations that in the pace of regulatory reform—across cities in the should be considered when interpreting the data. First, same economy. For several economies subnational the collected data refer to businesses in the economy’s studies are now periodically updated to measure largest business city (which in some economies differs change over time or to expand geographic coverage from the capital) and may not be representative of to additional cities. This year that is the case for all the regulation in other parts of the economy. To address subnational studies published. this limitation, subnational Doing Business indicators were created (box 21.1). Second, the data often focus on a specific business form—generally a limited liability company (or its legal equivalent) of a specified Changes in what is measured size—and may not be representative of the regulation The methodology for 2 indicator sets—trading across on other businesses, for example, sole proprietorships. borders and paying taxes—was updated this year. For Third, transactions described in a standardized case trading across borders, documents that are required scenario refer to a specific set of issues and may not purely for purposes of preferential treatment are no represent the full set of issues a business encounters. longer included in the list of documents (for example, Fourth, the measures of time involve an element of a certificate of origin if the use is only to qualify for a judgment by the expert respondents. When sources preferential tariff rate under trade agreements). For indicate different estimates, the time indicators paying taxes, the value of fuel taxes is no longer reported in Doing Business represent the median included in the total tax rate because of the difficulty values of several responses given under the of computing these taxes in a consistent way across all assumptions of the standardized case. economies covered. The fuel tax amounts are in most cases very small, and measuring these amounts is Finally, the methodology assumes that a business has often complicated because they depend on fuel full information on what is required and does not consumption. Fuel taxes continue to be counted in the waste time when completing procedures. In practice, number of payments. completing a procedure may take longer if the business lacks information or is unable to follow up In a change involving several indicator sets, the rule promptly. Alternatively, the business may choose to establishing that each procedure must take at least 1 disregard some burdensome procedures. For both day was removed for procedures that can be fully reasons the time delays reported in Doing Business completed online in just a few hours. This change 2014 would differ from the recollection of affects the time indicator for starting a business, Doing Business 2014 Fiji 105 dealing with construction permits and registering with one another, while the distance to frontier property. For procedures that can be fully completed measure benchmarks economies to the frontier in 3 online, the duration is now set at half a day rather than regulatory practice, measuring the absolute distance to a full day. the best performance on each indicator. Both measures can be used for comparisons over time. The threshold for the total tax rate introduced in 2011 When compared across years, the distance to frontier for the purpose of calculating the ranking on the ease measure shows how much the regulatory environment of paying taxes was updated. All economies with a for local entrepreneurs in each economy has changed total tax rate below the threshold (which is calculated over time in absolute terms, while the ease of doing and adjusted on a yearly basis) receive the same business ranking can show only relative change. ranking on the total tax rate indicator. The threshold is not based on any economic theory of an “optimal tax Ease of doing business rate” that minimizes distortions or maximizes efficiency The ease of doing business index ranks economies in the tax system of an economy overall. Instead, it is from 1 to 189. For each economy the ranking is mainly empirical in nature, set at the lower end of the calculated as the simple average of the percentile distribution of tax rates levied on medium-size rankings on each of the 10 topics included in the index enterprises in the manufacturing sector as observed in Doing Business 2014: starting a business, dealing through the paying taxes indicators. This reduces the with construction permits, getting electricity, bias in the indicators toward economies that do not registering property, getting credit, protecting need to levy significant taxes on companies like the investors, paying taxes, trading across borders, Doing Business standardized case study company enforcing contracts, and resolving insolvency. The because they raise public revenue in other ways—for employing workers indicators are not included in this example, through taxes on foreign companies, through year’s aggregate ease of doing business ranking. taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of Construction of the ease of doing business index the methodology). This year the threshold is 25,5%. Here is one example of how the ease of doing business index is constructed. In Denmark it takes 4 procedures, 5.5 days and 0.2% of annual income per capita in fees Data challenges and revisions to open a business. The minimum capital requirement Most laws and regulations underlying the Doing is 24% of annual income per capita. On these 4 Business data are available on the Doing Business indicators Denmark ranks in the 12th, 11th, 1st and website at http://www.doingbusiness.org. All the 79th percentiles. So on average Denmark ranks in the sample questionnaires and the details underlying the 25th percentile on the ease of starting a business. It indicators are also published on the website. Questions ranks in the 21st percentile on getting credit, 19th on the methodology and challenges to data can be percentile on paying taxes, 27th percentile on submitted through the website’s “Ask a Question” enforcing contracts, 5th percentile on resolving function at http://www.doingbusiness.org. insolvency and so on. Higher rankings indicate simpler regulation and stronger protection of property rights. Ease of doing business and distance to The simple average of Denmark’s percentile rankings frontier on all topics is 17th. When all economies are ordered Doing Business 2014 presents results for 2 aggregate by their average percentile rankings, Denmark stands measures: the aggregate ranking on the ease of doing at 5 in the aggregate ranking on the ease of doing business and the distance to frontier measure. The business. ease of doing business ranking compares economies More complex aggregation methods—such as 3 For getting electricity the rule that each procedure must take a principal components and unobserved components— minimum of 1 day still applies because in practice there are no yield a ranking nearly identical to the simple average cases in which procedures can be fully completed online in less than a day. For example, even though in some cases it is possible to apply for an electricity connection online, additional requirements mean that the process cannot be completed in less than 1 day. Doing Business 2014 Fiji 106 4 used by Doing Business. Thus, Doing Business uses 58 on enforcing contracts, 116 on dealing with the simplest method: weighting all topics equally and, construction permits and 145 on getting electricity. within each topic, giving equal weight to each of the Variation in performance across the indicator sets is topic components. not at all unusual. It reflects differences in the degree If an economy has no laws or regulations covering a of priority that government authorities give to specific area—for example, insolvency—it receives a particular areas of business regulation reform and the “no practice” mark. Similarly, an economy receives a ability of different government agencies to deliver “no practice” or “not possible” mark if regulation exists tangible results in their area of responsibility. but is never used in practice or if a competing Distance to frontier measure regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the A drawback of the ease of doing business ranking is ranking on the relevant indicator. that it can measure the regulatory performance of economies only relative to the performance of others. The ease of doing business index is limited in scope. It It does not provide information on how the absolute does not account for an economy’s proximity to large quality of the regulatory environment is improving markets, the quality of its infrastructure services (other over time. Nor does it provide information on how than services related to trading across borders and large the gaps are between economies at a single getting electricity), the strength of its financial system, point in time. the security of property from theft and looting, macroeconomic conditions or the strength of The distance to frontier measure is designed to underlying institutions. address both shortcomings, complementing the ease of doing business ranking. This measure illustrates the Variability of economies’ rankings across topics distance of an economy to the “frontier,” and the Each indicator set measures a different aspect of the change in the measure over time shows the extent to business regulatory environment. The rankings of an which the economy has closed this gap. The frontier is economy can vary, sometimes significantly, across a score derived from the most efficient practice or indicator sets. The average correlation coefficient highest score achieved on each of the component between the 10 indicator sets included in the indicators in 10 Doing Business indicator sets aggregate ranking is 0.38, and the coefficients (excluding the employing workers indicators) by any between any 2 sets of indicators range from 0.18 economy. In starting a business, for example, Canada (between getting electricity and getting credit) to 0.58 and New Zealand have achieved the highest (between trading across borders and resolving performance on the number of procedures required (1) insolvency and between trading across borders and and on the time (0.5 days), Denmark and Slovenia on getting electricity). These correlations suggest that the cost (0% of income per capita) and Chile, Zambia economies rarely score universally well or universally and 99 other economies on the paid-in minimum badly on the indicators. capital requirement (0% of income per capita) (table 22.2). Consider the example of Canada. It stands at 19 in the aggregate ranking on the ease of doing business. Its Calculating the distance to frontier for each economy ranking is 2 on starting a business, 4 on protecting involves 2 main steps. First, individual indicator scores investors, and 8 on paying taxes. But its ranking is only are normalized to a common unit: except for the total tax rate, each of the 31 component indicators y is rescaled to (max − y)/(max − min), with the minimum 4 See Simeon Djankov, Darshini Manraj, Caralee McLiesh and Rita Ramalho, “Doing Business Indicators: Why Aggregate, and How to value (min) representing the frontier—the highest Do It” (World Bank, Washington, DC, 2005). Principal components performance on that indicator across all economies and unobserved components methods yield a ranking nearly since 2003 or the first year the indicator was collected. 5 identical to that from the simple average method because both these methods assign roughly equal weights to the topics, since the For the total tax rate, consistent with the calculation of pairwise correlations among indicators do not differ much. An alternative to the simple average method is to give different weights to the topics, depending on which are considered of more or less 5 Even though scores for the distance to frontier are calculated from importance in the context of a specific economy. 2005, data from as early as 2003 are used to define the frontier Doing Business 2014 Fiji 107 the rankings, the frontier is defined as the total tax rate Economies that improved the most across 3 or at the 15th percentile of the overall distribution of more Doing Business topics in 2012/13 total tax rates for all years. Second, for each economy Doing Business 2014 uses a simple method to calculate the scores obtained for individual indicators are which economies improved the most in the ease of aggregated through simple averaging into one doing business. First, it selects the economies that in distance to frontier score, first for each topic and then 2012/13 implemented regulatory reforms making it across all topics. An economy’s distance to frontier is easier to do business in 3 or more of the 10 topics indicated on a scale from 0 to 100, where 0 represents included in this year’s ease of doing business r anking. 6 the lowest performance and 100 the frontier. Twenty-nine economies meet this criterion: Azerbaijan, The maximum (max) and minimum (min) observed Belarus, Burundi, Côte d’Ivoire, Croatia, Djibouti, values are computed for all economies included in the Gabon, Guatemala, Guinea, Italy, Kosovo, Latvia, the Doing Business sample since 2003 and for all years former Yugoslav Republic of Macedonia, Malaysia, (from 2003 to 2013). To mitigate the effects of extreme Mauritius, Mexico, Moldova, Mongolia, Morocco, outliers in the distributions of the rescaled data (very Panama, the Philippines, the Republic of Congo, few economies need 694 days to complete the Romania, the Russian Federation, Rwanda, Sri Lanka, procedures to start a business, but many need 9 days), Ukraine, Uzbekistan and the United Arab Emirates. th the maximum (max) is defined as the 95 percentile of Second, Doing Business sorts these economies on the the pooled data for all economies and all years for increase in their distance to frontier measure from the each indicator. The exceptions are the getting credit, previous year using comparable data. protecting investors and resolving insolvency Selecting the economies that implemented regulatory indicators, whose construction precludes outliers. In reforms in at least 3 topics and improved the most in addition, the cost to export and cost to import for each the distance to frontier measure is intended to year are divided by the GDP deflator, so as to take the highlight economies with ongoing, broadbased reform general price level into account when benchmarking programs. The criterion for identifying the top these absolute-cost indicators across economies with improvers was changed from last year. The different inflation trends. The base year for the deflator improvement in ease of doing business ranking is no is 2013 for all economies. longer used. The improvement in the distance to The difference between an economy’s distance to frontier measure is used instead because under this frontier score in any previous year and its score in measure economies are sorted according to their abs- 2013 illustrates the extent to which the economy has olute improvement instead of relative improvement. closed the gap to the frontier over time. And in any given year the score measures how far an economy is from the highest performance at that time. Take Colombia, which has a score of 70.5 on the distance to frontier measure for 2014. This score indicates that the economy is 29.5 percentage points away from the frontier constructed from the best performances across all economies and all years. Colombia was further from the frontier in 2009, with a score of 66.2. The difference between the scores shows an improvement over time. The distance to frontier measure can also be used for comparisons across economies in the same year, complementing the ease of doing business ranking. For example, Colombia stands at 63 this year in the ease of doing business ranking, while Peru, which is 6 Doing Business reforms making it more difficult to do business are 29.3 percentage points from the frontier, stands at 42. subtracted from the total number of those making it easier to do business. Doing Business 2014 Fiji 109 RESOURCES ON THE DOING BUSINESS WEBSITE Current features Doing Business reforms News on the Doing Business project Short summaries of DB2014 business regulation http://www.doingbusiness.org reforms, lists of reforms since DB2008 and a ranking simulation tool Rankings http://www.doingbusiness.org/reforms/ How economies rank—from 1 to 189 http://www.doingbusiness.org/rankings/ Historical data Customized data sets since DB2004 Data http://www.doingbusiness.org/custom-query/ All the data for 189 economies—topic rankings, indicator values, lists of regulatory procedures and Law library details underlying indicators Online collection of business laws and regulations http://www.doingbusiness.org/data/ relating to business and gender issues http://www.doingbusiness.org/law-library/ Reports http://wbl.worldbank.org/ Access to Doing Business reports as well as subnational and regional reports, reform case Contributors studies and customized economy and regional More than 10,200 specialists in 189 economies profiles who participate in Doing Business http://www.doingbusiness.org/reports/ http://www.doingbusiness.org/contributors/doing- business/ Methodology The methodologies and research papers Entrepreneurship data underlying Doing Business Data on business density for 139 economies http://www.doingbusiness.org/methodology/ http://www.doingbusiness.org/data/exploretopics/e ntrepreneurship Research Abstracts of papers on Doing Business topics and Doing Business iPhone App related policy issues Doing Business at a Glance App presents the full http://www.doingbusiness.org/research/ report, rankings and highlights http://www.doingbusiness.org/specialfeatures/ iphone Doing Business 2014 Fiji 110