Doing Business 2017 Kuwait Economy Profile 2017 Kuwait Doing Business 2017 Kuwait 2 © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 19 18 17 16 This work is a product of the staff of The World Bank with external contributions. 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. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: World Bank. 2017. Doing Business 2017: Equal Opportunity for All. Washington, DC: World Bank. DOI: 10.1596/978-1-4648-0948-4. License: Creative Commons Attribution CC BY 3.0 IGO Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. . Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. ISBN (paper): 978-1-4648-0948-4 ISBN (electronic): 978-1-4648-0984-2 DOI: 10.1596/978-1-4648-0948-4 ISSN: 1729-2638 COVER DESIGN: CORPORATE VISIONS, INC. Doing Business 2017 Kuwait 3 CONTENTS Introduction .................................................................................................................................. 4 Starting a business ..................................................................................................................... 17 Dealing with conustruction permits ........................................................................................ 26 Getting electricity ....................................................................................................................... 39 Registering property .................................................................................................................. 49 Getting credit .............................................................................................................................. 61 Protecting minority investors ................................................................................................... 66 Paying taxes ................................................................................................................................ 74 Trading across borders .............................................................................................................. 78 Enforcing contracts .................................................................................................................... 85 Resolving insolvency .................................................................................................................. 92 Labor market regulation ........................................................................................................... 96 Distance to frontier and ease of doing business ranking .................................................... 103 Resources on the Doing Business website ............................................................................ 106 Doing Business 2017 Kuwait 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is provides data for other selected economies (comparator for a local entrepreneur to open and run a small to economies) for each indicator. The data in this report are medium-size business when complying with relevant current as of June 1, 2016 (except for the paying taxes regulations. It measures and tracks changes in indicators, which cover the period January–December regulations affecting 11 areas in the life cycle of a 2015). business: starting a business, dealing with construction The Doing Business methodology has limitations. Other permits, getting electricity, registering property, getting areas important to business—such as an economy’s credit, protecting minority investors, paying taxes, proximity to large markets, the quality of its trading across borders, enforcing contracts, resolving infrastructure services (other than those related to insolvency and labor market regulation. Doing Business trading across borders and getting electricity), the 2017 presents the data for the labor market regulation security of property from theft and looting, the indicators in an annex. The report does not present transparency of government procurement, rankings of economies on labor market regulation macroeconomic conditions or the underlying strength of indicators or include the topic in the aggregate distance institutions—are not directly studied by Doing Business. to frontier score or ranking on the ease of doing The indicators refer to a specific type of business, business. generally a local limited liability company operating in In a series of annual reports Doing Business presents the largest business city. Because standard assumptions quantitative indicators on business regulations and the are used in the data collection, comparisons and protection of property rights that can be compared benchmarks are valid across economies. The data not across 190 economies, from Afghanistan to Zimbabwe, only highlight the extent of obstacles to doing business; over time. The data set covers 48 economies in Sub- they also help identify the source of those obstacles, Saharan Africa, 32 in Latin America and the Caribbean, 25 supporting policy makers in designing regulatory reform. in East Asia and the Pacific, 25 in Eastern Europe and More information is available in the full report. Doing Central Asia, 20 in the Middle East and North Africa and Business 2017 presents the indicators, analyzes their 8 in South Asia, as well as 32 OECD high-income relationship with economic outcomes and presents economies. The indicators are used to analyze economic business regulatory reforms. The data, along with outcomes and identify what reforms have worked, where information on ordering Doing Business 2017, are and why. available on the Doing Business website at This economy profile presents the Doing Business http://www.doingbusiness.org. indicators for Kuwait. To allow useful comparison, it also Doing Business 2017 Kuwait 5 CHANGES IN DOING BUSINESS 2017 As part of a three-year update in methodology, Doing having equal evidentiary weight of women’s testimony in Business 2017 expands further by adding postfiling court. processes to the paying taxes indicator, including a Also for the first time this year Doing Business collects gender component in three of the indicators and data on Somalia, bringing the total number of developing a new pilot indicator on selling to the economies covered to 190. government. Also, for the first time this year Doing Business collects data on Somalia, bringing the total For more details on the changes, see the “”Old and new number of economies covered to 190. factors covered in Doing Business” section in the The paying taxes indicator is expanded this year to Overview chapter starting on page 1 of the Doing include postfiling processes – those processes that occur Business 2017 report. For more details on the data and after a firm complies with its regular tax obligations. methodology, please see the “Data Notes” chapter These include tax refunds, tax audits and tax appeals. In starting on page 114 of the Doing Business 2017 report. particular, Doing Business measures the time it takes to For more details on the distance to frontier metric, get a value added tax (VAT) refund, deal with a simple please see the “Distance to frontier and ease of doing mistake on a corporate tax return that can potentially business ranking” chapter in this profile. trigger an audit and good practices with administrative appeals process. This year’s Doing Business report presents a gender dimension in four of the indicator sets: starting a business, registering property, enforcing contracts and labor market regulation. Three of these areas are included in the distance to frontier score and in the ease of doing business ranking, while the fourth —labor market regulation—is not. Doing Business has traditionally assumed that the entrepreneurs or workers discussed in the case studies were men. This was incomplete by not reflecting correctly the Doing Business processes as applied to women—which in some economies may be different from the processes applied to men. Starting this year, Doing Business measures the starting a business process for two case scenarios: one where all entrepreneurs are men and one where all entrepreneurs are women. In economies where the processes are more onerous if the entrepreneur is a woman, Doing Business now counts the extra procedures applied to roughly half of the population that is female (for example, obtaining a husband’s consent or gender-specific requirements for opening a personal bank account when starting a business). Within the registering property indicators, a gender component has been added to the quality of land administration index. This component measures women’s ability to use, own, and transfer property according to the law. Finally, within the enforcing contracts indicator set, economies will be scored on Doing Business 2017 Kuwait 6 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to start ECONOMY OVERVIEW 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 business Region: Middle East & North Africa based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size Income category: High income businesses through their life cycle. Economies are ranked from 1 to 190 by the ease of doing business ranking. Population: 3,892,115 Doing Business presents results for 2 aggregate measures: the distance to frontier score and the ease of doing GNI per capita (US$): 40,930 business ranking. The ranking of economies is determined by sorting the aggregate distance to frontier scores, DB2017 rank: 102 rounded to two decimals. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where DB2016 rank: 98* 0 represents the worst performance and 100 the frontier. Change in rank: -4 (See the chapter on the distance to frontier and ease of doing business). DB 2017 DTF: 59.55 The ease of doing business ranking compares economies with one another; the distance to frontier score DB 2016 DTF: 60.12 benchmarks economies with respect to regulatory best practice, showing the absolute distance to the best Change in DTF: -0.57 performance on each Doing Business indicator. When compared across years, the distance to frontier score * DB2016 ranking shown is not last year’s published shows how much the regulatory environment for local ranking but a comparable ranking for DB2016 that entrepreneurs in an economy has changed over time in captures the effects of such factors as data revisions absolute terms, while the ease of doing business ranking and the changes in methodology. See the data notes can show only how much the regulatory environment has starting on page 114 of the Doing Business 2017 changed relative to that in other economies. report for sources and definitions. The 10 topics included in the ranking in Doing Business 2017: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The labor market regulation indicators are not included in this year’s aggregate ease of doing business ranking, but the data are presented in the economy profile. Doing Business 2017 Kuwait 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 2017 Kuwait THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy regional average (figure 1.2). The economy’s rankings stands in the aggregate ranking on the ease of doing (figure 1.3) and distance to frontier scores (figure 1.4) business is useful. Also useful is to know how it ranks on the topics included in the ease of doing business relative to comparator economies and relative to the ranking provide another perspective. Figure 1.2 How Kuwait and comparator economies rank on the ease of doing business Note: The rankings are benchmarked to June 2016 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. Doing Business 2017 Kuwait 9 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Kuwait (Scale: Rank 190 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - Kuwait (Scale: Score 0 center, Score 100 outer edge) Source: Doing Business database. Note: The rankings are benchmarked to June 2016 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Doing Business 2017 Kuwait 10 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business Doing Business introduced the distance to frontier score. tells only part of the story, so do changes in that ranking. This measure shows how far on average an economy is Yearly movements in rankings can provide some indication from the best performance achieved by any economy on of changes in an economy’s regulatory environment for each Doing Business indicator. firms, but they are always relative. Comparing the measure for an economy at 2 points in time Moreover, year-to-year changes in the overall rankings do allows users to assess how much the economy’s regulatory not reflect how the business regulatory environment in an environment as measured by Doing Business has changed economy has changed over time—or how it has changed over time—how far it has moved toward (or away from) in different areas. To aid in assessing such changes, the most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.5). Figure 1.5 How far has Kuwait come in the areas measured by Doing Business? Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator. Starting a business is comparable to 2010. Getting credit, protecting minority investors, paying taxes and resolving insolvency had methodology changes in 2014 and thus are only comparable to 2013. Dealing with construction permits, registering property, trading across borders, enforcing contracts and getting electricity had methodology changes in 2015 and thus are only comparable to 2014. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing Business 2017 report for more details on the distance to frontier score. Source: Doing Business database. Doing Business 2017 Kuwait 11 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part of regulation—such as a regulatory process that can be the story (table 1.1). The indicators, on their own or in completed with a small number of procedures in a few comparison with the indicators of a good practice days and at a low cost. Comparison of the economy’s economy or those of comparator economies in the indicators today with those in the previous year may region, may reveal bottlenecks reflected in large numbers show where substantial bottlenecks persist—and where of procedures, long delays or high costs. Or they may they are diminishing. reveal unexpected strengths in an area of business Table 1.1 Summary of Doing Business indicators for Kuwait Best performer globally Saudi Arabia DB2017 Bahrain DB2017 Kuwait DB2017 Kuwait DB2016 Jordan DB2017 Indicator Oman DB2017 Qatar DB2017 Iraq DB2017 DB2017 Starting a Business 173 149 73 164 106 32 91 147 1 (New Zealand) (Rank) Starting a Business (DTF 66.77 74.51 87.82 71.32 84.62 92.85 86.06 77.09 99.96 (New Zealand) Score) Procedure – Men 12.0 12.0 7.0 9.0 7.0 4.0 8.0 12.0 1.0 (New Zealand) (number) Time – Men (days) 61.0 31.0 9.0 34.0 12.0 6.0 8.5 15.0 0.5 (New Zealand) Cost – Men (% of 2.8 2.3 1.2 51.9 22.4 4.0 6.2 4.1 0.0 (Slovenia) income per capita) Procedure – Women 13.0 13.0 8.0 10.0 8.0 5.0 9.0 15.0 1.0 (New Zealand) (number) Time – Women (days) 62.0 32.0 10.0 35.0 13.0 7.0 9.5 18.0 0.5 (New Zealand) Cost – Women (% of 2.8 2.3 1.2 51.9 22.4 4.0 6.2 4.1 0.0 (Slovenia) income per capita) Paid-in min. capital (% 10.2 8.2 3.4 18.6 0.1 0.0 0.0 0.0 0.0 (127 Economies*) of income per capita) Dealing with 144 141 19 104 109 52 21 15 1 (New Zealand) Construction Permits Doing Business 2017 Kuwait 12 Best performer globally Saudi Arabia DB2017 Bahrain DB2017 Kuwait DB2017 Kuwait DB2016 Jordan DB2017 Indicator Oman DB2017 Qatar DB2017 Iraq DB2017 DB2017 (Rank) Dealing with Construction Permits 60.72 60.82 79.56 67.66 67.19 74.64 79.16 80.66 87.40 (New Zealand) (DTF Score) Procedures (number) 23.0 23.0 9.0 11.0 16.0 12.0 16.0 13.0 7.0 (4 Economies*) Time (days) 216.0 216.0 146.0 167.0 63.0 157.0 58.0 106.0 28.0 (Korea, Rep.) Cost (% of warehouse 0.1 (Trinidad and 0.7 0.7 2.2 0.3 10.0 1.1 2.0 0.5 value) Tobago) Building quality control 11.0 11.0 12.0 5.5 11.0 10.5 12.0 12.0 15.0 (Luxembourg*) index (0-15) Getting Electricity 115 113 72 133 48 69 44 28 1 (Korea, Rep.) (Rank) Getting Electricity (DTF 61.47 61.51 74.80 57.51 80.93 76.22 81.72 84.81 99.88 (Korea, Rep.) Score) Procedures (number) 8.0 8.0 5.0 6.0 5.0 6.0 4.0 4.0 3.0 (15 Economies*) Time (days) 64.0 64.0 85.0 56.0 50.0 62.0 90.0 61.0 18.0 (Korea, Rep.*) Cost (% of income per 64.6 52.2 66.8 279.2 325.3 80.7 10.8 31.4 0.0 (Japan) capita) Reliability of supply and transparency of tariff 4.0 4.0 5.0 0.0 6.0 6.0 6.0 6.0 8.0 (26 Economies*) index (0-8) Registering Property 67 66 25 115 96 35 26 32 1 (New Zealand) (Rank) Registering Property 68.37 68.38 81.07 56.28 62.18 76.95 81.06 78.51 94.46 (New Zealand) (DTF Score) Procedures (number) 8.0 8.0 2.0 5.0 7.0 2.0 7.0 3.0 1.0 (4 Economies*) Doing Business 2017 Kuwait 13 Best performer globally Saudi Arabia DB2017 Bahrain DB2017 Kuwait DB2017 Kuwait DB2016 Jordan DB2017 Indicator Oman DB2017 Qatar DB2017 Iraq DB2017 DB2017 Time (days) 49.0 49.0 31.0 51.0 21.0 16.0 13.0 3.0 1.0 (3 Economies*) Cost (% of property 0.5 0.5 1.7 7.9 9.0 3.0 0.3 0.0 0.0 (Saudi Arabia) value) Quality of the land administration index (0- 17.5 17.5 17.5 10.5 20.5 13.0 24.5 9.5 29.0 (Singapore) 30) Getting Credit (Rank) 118 109 101 181 185 133 139 82 1 (New Zealand) Getting Credit (DTF 40.00 40.00 45.00 5.00 0.00 35.00 30.00 50.00 100.00 (New Zealand) Score) Strength of legal rights 2.0 2.0 1.0 1.0 0.0 1.0 1.0 2.0 12.0 (3 Economies*) index (0-12) Depth of credit 6.0 6.0 8.0 0.0 0.0 6.0 5.0 8.0 8.0 (30 Economies*) information index (0-8) Credit registry coverage 14.5 15.3 0.0 0.0 2.5 22.7 30.5 0.0 100.0 (3 Economies*) (% of adults) Credit bureau coverage 31.0 34.2 25.7 0.0 0.0 0.0 0.0 48.3 100.0 (23 Economies*) (% of adults) Protecting Minority 81 78 106 123 165 118 183 63 1 (New Zealand*) Investors (Rank) Protecting Minority 55.00 55.00 50.00 45.00 35.00 46.67 26.67 58.33 83.33 (New Zealand*) Investors (DTF Score) Strength of minority investor protection 5.5 5.5 5.0 4.5 3.5 4.7 2.7 5.8 8.3 (New Zealand) index (0-10) Extent of conflict of interest regulation 5.7 5.7 5.3 4.7 3.3 5.3 2.0 6.7 9.3 (New Zealand) index (0-10) Extent of shareholder 5.3 5.3 4.7 4.3 3.7 4.0 3.3 5.0 8.3 (Norway) governance index (0- Doing Business 2017 Kuwait 14 Best performer globally Saudi Arabia DB2017 Bahrain DB2017 Kuwait DB2017 Kuwait DB2016 Jordan DB2017 Indicator Oman DB2017 Qatar DB2017 Iraq DB2017 DB2017 10) 1 (United Arab Paying Taxes (Rank) 6 6 4 52 79 12 1 69 Emirates) Paying Taxes (DTF 99.44 (United Arab 92.48 92.48 94.44 80.86 73.94 90.6 99.44 77.04 Score) Emirates) Payments (number per 3.0 (Hong Kong SAR, 12.0 12.0 13.0 14.0 25.0 15.0 4.0 3.0 year) China*) Time (hours per year) 98.0 98.0 27.0 312.0 145.0 68.0 41.0 67.0 55.0 (Luxembourg) Total tax rate (% of 13.0 13.0 13.5 27.8 27.6 23.9 11.3 15.7 26.1 (32 Economies*) profit) Postfiling index (0-100) 84.9 49.3 85.3 10.9 98.5 (Estonia) Trading across Borders 157 159 82 179 50 67 128 158 1 (10 Economies*) (Rank) Trading across Borders 100.00 (10 50.57 48.90 72.50 23.51 86.39 80.17 61.41 49.62 (DTF Score) Economies*) Time to export: Border 72 74 71 69 38 52 30 69 0 (18 Economies*) compliance (hours) Cost to export: Border 602 602 47 1018 131 223 382 264 0 (18 Economies*) compliance (USD) Time to export: Documentary 32 32 24 504 2 22 10 90 1 (25 Economies*) compliance (hours) Cost to export: Documentary 191 191 211 1800 16 107 150 105 0 (19 Economies*) compliance (USD) Time to import: Border 215 215 54 131 75 70 88 228 0 (25 Economies*) compliance (hours) Doing Business 2017 Kuwait 15 Best performer globally Saudi Arabia DB2017 Bahrain DB2017 Kuwait DB2017 Kuwait DB2016 Jordan DB2017 Indicator Oman DB2017 Qatar DB2017 Iraq DB2017 DB2017 Cost to import: Border 646 646 397 644 181 354 754 779 0 (28 Economies*) compliance (USD) Time to import: Documentary 120 148 84 176 55 23 72 131 1 (29 Economies*) compliance (hours) Cost to import: Documentary 332 332 130 900 30 20 617 390 0 (30 Economies*) compliance (USD) Enforcing Contracts 66 65 110 138 124 60 120 105 1 (Korea, Rep.) (Rank) Enforcing Contracts 60.51 60.51 54.53 48.94 52.42 61.55 52.79 55.07 84.15 (Korea, Rep.) (DTF Score) Time (days) 566.0 566.0 635.0 520.0 689.0 598.0 570.0 575.0 164.0 (Singapore) Cost (% of claim) 18.6 18.6 14.7 28.1 31.2 13.5 21.6 27.5 9.0 (Iceland) Quality of judicial 7.0 7.0 4.0 2.0 7.0 7.0 3.5 6.0 15.5 (Australia) processes index (0-18) Resolving Insolvency 108 108 88 169 142 94 116 169 1 (Finland) (Rank) Resolving Insolvency 39.58 39.08 44.66 0.00 30.38 42.65 38.23 0.00 93.89 (Finland) (DTF Score) Recovery rate (cents on 32.9 32.0 42.3 0.0 27.4 38.6 30.4 0.0 92.9 (Norway) the dollar) no no Time (years) 4.2 4.2 2.5 3.0 4.0 2.8 0.4 (22 Economies*) practice practice no no Cost (% of estate) 10.0 10.0 9.5 20.0 3.5 22.0 1.0 (22 Economies*) practice practice Strength of insolvency 7.0 7.0 7.0 0.0 5.0 7.0 7.0 0.0 15.0 (6 Economies*) framework index (0-16) Source: Doing Business database. Doing Business 2017 Kuwait 16 Note: DB2016 rankings shown are not last year’s published rankings but comparable rankings for DB2016 that capture the effects of such factors as data revisions and changes to the methodology. The global best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2017 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. * 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). Doing Business 2017 Kuwait 17 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 well Preregistration (for example, name as to new markets. And their employees can benefit verification or reservation, notarization) from protections provided by the law. An additional benefit comes with limited liability companies. These Registration in the economy’s largest limit the financial liability of company owners to their business city1 investments, so personal assets of the owners are not Postregistration (for example, social security put at risk. Where governments make registration registration, company seal) easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and Obtaining approval from spouse to start a generating more revenue for the government. business, to leave the home to register the company or open a bank account. What do the indicators cover? Obtaining any gender specific document for Doing Business records all procedures officially company registration and operation, national required, or commonly done in practice, for an identification card or opening a bank entrepreneur to start up and formally operate an account. industrial or commercial business, as well as the time and cost to complete these procedures and the paid- Time required to complete each procedure in minimum capital requirement. These procedures (calendar days) include obtaining all necessary licenses and permits Does not include time spent gathering and completing any required notifications, information verifications or inscriptions for the company and employees with relevant authorities. The ranking of Each procedure starts on a separate day (2 economies on the ease of starting a business is procedures cannot start on the same day). determined by sorting their distance to frontier Procedures that can be fully completed scores for starting a business. These scores are the online are recorded as ½ day. simple average of the distance to frontier scores for Procedure completed once final document is each of the component indicators. received To make the data comparable across economies, No prior contact with officials several assumptions about the business and the procedures are used. It is assumed that any required Cost required to complete each procedure information is readily available and that the (% of income per capita) entrepreneur will pay no bribes. Assumptions about Official costs only, no bribes the business: No professional fees unless services required  Is a limited liability company (or its legal by law or commonly used in practice equivalent). If there is more than one type of limited liability company in the economy, the Paid-in minimum capital (% of income limited liability form most common among per capita) domestic firms is chosen. Information on the Deposited in a bank or with a notary before most common form is obtained from registration (or within 3 months) incorporation lawyers or the statistical office.  Operates in the economy’s largest business city.  The size of the entire office space is For 11 economies the data are also collected for the second largest business city. approximately 929 square meters (10,000 square feet). Doing Business 2017 Kuwait 18  Is 100% domestically owned and has five owners,  Does not qualify for investment incentives or none of whom is a legal entity. any special benefits.  Has start-up capital of 10 times income per  Has at least 10 and up to 50 employees one capita month after the commencement of operations, all of them domestic nationals.  Performs general industrial or commercial activities, such as the production or sale to the  Has a turnover of at least 100 times income per public of products or services. The business does capita. not perform foreign trade activities and does not  Has a company deed 10 pages long handle products subject to a special tax regime, for example, liquor or tobacco. It is not using The owners: heavily polluting production processes.  Have reached the legal age of majority and are  Leases the commercial plant or offices and is not capable of making decisions as an adult. If a proprietor of real estate. there is no legal age of majority, they are assumed to be 30 years old.  The amount of the annual lease for the office space is equivalent to 1 times income per capita.  Are sane, competent, in good health and have no criminal record.  Are married, the marriage is monogamous and registered with the authorities.  Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Doing Business 2017 Kuwait 19 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Kuwait? 2.1) is legally mandatory for both men and women. Most According to data collected by Doing Business, starting a indicator sets refer to a case scenario in the largest business there requires 12.0 procedures , takes 61.0 days, business city of an economy, except for 11 economies for costs 2.8% of income per capita for men, and requires which the data are a population-weighted average of the 13.0 procedures , takes 62.0 days, costs 2.8% of income 2 largest business cities. See the chapter on distance to per capita for women. A requirement of paid-in frontier and ease of doing business ranking at the end of minimum capital of 10.2% of income per capita (figure this profile for more details. Figure 2.1 What it takes to start a business in Kuwait Paid-in minimum capital (% of income per capita): 10.2 Source: Doing Business database. 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. Procedures in light blue for married women only. Doing Business 2017 Kuwait 20 STARTING A BUSINESS Globally, Kuwait stands at 173 in the ranking of 190 average ranking provide other useful information for economies on the ease of starting a business (figure 2.2). assessing how easy it is for an entrepreneur in Kuwait to The rankings for comparator economies and the regional start a business. Figure 2.2 How Kuwait and comparator economies rank on the ease of starting a business Source: Doing Business database. Doing Business 2017 Kuwait 21 STARTING A BUSINESS Economies around the world have taken steps making it they often are part of a larger regulatory reform easier to start a business—streamlining procedures by program. Among the benefits have been greater firm setting up a one-stop shop, making procedures simpler satisfaction and savings and more registered businesses, or faster by introducing technology and reducing or financial resources and job opportunities. eliminating minimum capital requirements. Many have What business registration reforms has Doing Business undertaken business registration reforms in stages—and recorded in Kuwait (table 2.1)? Table 2.1 How has Kuwait made starting a business easier—or not? By Doing Business report year from DB2011 to DB2017 DB year Reform Kuwait made starting a business more difficult by increasing DB2014 the minimum capital requirement. Kuwait made starting a business more difficult by increasing DB2015 the commercial license fee. Kuwait made starting a business easier by reducing the DB2016 minimum capital requirement. Kuwait made starting a business more difficult by increasing DB2017 the time required to register by requiring companies to submit the original documents online and in person. Source: Doing Business database. 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. Doing Business 2017 Kuwait 22 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for STANDARDIZED COMPANY Kuwait is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new Legal form: Limited Liability company (WLL) firm. These are identified by Doing Business through collaboration with relevant local professionals and Paid-in minimum capital requirement: KWD the study of laws, regulations and publicly available 1,000 information on business entry in that economy. City: Kuwait City Following is a detailed summary of those procedures, along with the associated time and cost. These Start-up Capital: 10 times GNI per capita 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). Table 2.2 Summary of time, cost and procedures for starting a business in Kuwait Time to No. Procedure Cost to complete complete Obtain permission to leave the home Article 89 of the Personal Status Law, 1984 stipulates that a wife leaving her home for a legitimate reason shall not be considered insubordinate if she does so for a logically permitted purpose, provided it is not ♀1 detrimental to the 1 day no charge welfare of the family. Agency: Home Register at the Department of Companies of the Ministry of Commerce and Industry (MOCI) To register, the entrepreneur must submit a completed standard application form to the Department of Companies of the Ministry of Commerce and Industry (MOCI), accompanied by the following documents: 1. Copy of the entrepreneur's identity card (ID) 1 day + 10 days 2. Certificate issued by the Social Security Authority attesting that the wait for the 2 Kuwaiti partners are not civil servants no charge appointment to go 3. Lease contract, a receipt of rent payment, and a certificate from the in person to MOCI Public Authority for Civil Information (PACI) confirming that the premises are registered with PACI The completed application must include the names of the founding partners and their respective shares; the capital, scope and objective of the company; and the name of the manager. The applicant submits the paperwork online and then schedules a time to visit the MOCI in person to submit the official documents Doing Business 2017 Kuwait 23 Time to No. Procedure Cost to complete complete Once the application is approved, it is stamped and signed by the Department of Companies, and allocated a reference number. The MOCI electronically sends an inspection request to the Municipality to proceed with the inspection of the company premises at the relevant point of incorporation process. The MOCI also sends a request to the Ministry of Interior to run background checks verifying that the founding partners do not have a criminal record. Agency: Department of Companies Reserve a unique company name The entrepreneur submits a company name reservation application to the Commercial Registry. The Commercial Registry searches the computer database to ensure that the proposed company name(s) does not already exist or resemble other reserved names. The Commercial Registry has certain guidelines to follow with respect to the company 1 day no charge 3 name selection, such as: the chosen name must not be in breach of "public morals." Once approved, the Commercial Registry issues a letter confirming the proposed name and reserves it for 3 months. Agency: Commercial Register Retrieve the letter addressed to the bank from the Department of Companies The entrepreneur must return to the Department of Companies to retrieve the necessary letter addressed to the commercial bank of choice where the paid-in capital of the company will be deposited. The Department of Companies may further issue additional letters addressed to different government authorities depending on the scope 4 and activity of the company in order to obtain their approval of the 1 day no charge company formation. For example, for restaurants and food establishments, a letter addressed to the Ministry of Health is issued; for the oil industry, a letter addressed to the Ministry of Oil and Energy is issued, and so forth. Agency: Department of Companies Deposit the capital at the bank and obtain proof thereof In deference to the Department of Companies' letter, the bank open an account in the name of the company with the term "under formation" annexed to the account. The deposited capital remains frozen until the 5 bank receives the notarized deed of incorporation and the commercial 1 day no charge license of the company, following which the term "under formation" is removed and the account is activated. The bank issues a deposit certificate in the name of the company addressed to the Ministry of Commerce and Industry, detailing the amount deposited by each partner against his/her share in the company. Doing Business 2017 Kuwait 24 Time to No. Procedure Cost to complete complete Agency: Bank Receive inspection of the company premises by the Municipality Once the municipality receives the request for inspection of the company premises from the Ministry of Commerce and Industry, it contacts the entrepreneur to schedule an inspection date in order to verify that the premises comply with municipal health and safety regulations. This includes an inspection by the Fire Department to check for compliance with fire regulations. If the company premises 5 days on average no charge 6 successfully pass inspection, the municipality issues a certificate of no objection in the name of the company, allowing the use of the indicated premises as the company location. This process usually takes 5 to 14 days. Agency: Municipality Obtain the approval of the memorandum of association from the Department of Companies The applicant submits the paperwork online and then schedules a time to visit the MOCI in person to submit the official documents. The entrepreneur proceeds to the Department of Companies to submit the draft memorandum of association. If the entrepreneur does not use the standard form of the memorandum of association, the amendments 1 day + 10 days or additions to the standard memorandum must be accepted by the wait for the 7 no charge MOCI before it approves the company incorporation. appointment to go Once the final draft is signed, the Department of Companies issues a in person to MOCI letter addressed to the Ministry of Justice (MOJ) requesting the authentication of the company incorporation, accompanied by the draft memorandum of association. Agency: Department of Companies Notarize the memorandum of association before a public notary The entrepreneur submits the draft memorandum of association along with Department of Companies' letter and the bank capital deposit certificate to the Notary Public Department at the Ministry of Justice. KWD 2 for the first The officer verifies that the required documents are complete and page of the 8 schedules an appointment for signing before the notary public at the 1 day Memorandum and Company Formation Department of the Ministry of Justice, during KWD 1 for every which the memorandum of association is signed by the founding subsequent page partners and notarized on the set date in 3 originals: one for the company, one for the Ministry of Justice, and one to be field with the Ministry of Commerce and Industry. Doing Business 2017 Kuwait 25 Time to No. Procedure Cost to complete complete Agency: Notary Register with the Commercial Registry The entrepreneur files a signed and notarized copy of the memorandum of association at the Department of Companies of the Ministry of Commerce and Industry. The applicant submits the paperwork online and then schedules a time to visit the MOCI in person 1 day + 10 days to submit the official documents A copy thereof is then submitted to wait for the 9 KWD 7 the Commercial Registry and a certificate of registration is obtained. appointment to go The certificate of registration includes the company's full name and in person to MOCI commercial registration number. Agency: Commercial Registry Obtain the commercial license from the Department of Companies Once the commercial registration certificate is issued, the entrepreneur obtains the commercial license from the Department of Companies. 1-2 days KWD 150 10 Agency: Department of Companies Register with the Kuwait Chamber of Commerce and Industry The company must apply for membership at the Chamber of Commerce and Industry by submitting copies of its commercial license and memorandum of association, and filling out a specimen signature KWD 82 for form signed by the company's authorized signatories. The membership registration and 11 1 day is a pre-requisite to dealing with other government authorities, banks KWD 55 for annual and participation in public tenders. renewal Agency: Chamber of Commerce Register with Public Authority for Civil Information (PACI) The company must register with the Public Authority for Civil Information (PACI) in order to obtain a civil number, which is required in 12 dealing with other governmental bodies. 15 days KWD 1 Agency: Public Authority for Civil Information (PACI) Doing Business 2017 Kuwait 26 Time to No. Procedure Cost to complete complete Register at the Ministry of Labor and Social Affairs The Ministry of Labor may inspect the premises to determine whether the size of the company premises and its business scope are 15 days * 13 commensurate with the number of employees declared at the Ministry. (simultaneous with KWD 25 procedure 11) Agency: Ministry of Labor and Social Affairs * Takes place simultaneously with another procedure. Source: Doing Business database. Note: Online procedures account for 0.5 days in the total time calculation. Procedures in light blue for married women only. Doing Business 2017 Kuwait 27 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 excessive PERMITS INDICATORS MEASURE constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in time and money, Procedures to legally build a warehouse many builders opt out. They may pay bribes to pass (number) inspections or simply build illegally, leading to Submitting all relevant documents and hazardous construction that puts public safety at risk. obtaining all necessary clearances, licenses, Where compliance is simple, straightforward and permits and certificates inexpensive, everyone is better off. Submitting all required notifications and What do the indicators cover? receiving all necessary inspections Doing Business records all procedures required for a Obtaining utility connections for water and business in the construction industry to build a sewerage warehouse along with the time and cost to complete Registering and selling the warehouse after its each procedure. In addition, the building quality completion control index evaluates the quality of building Time required to complete each procedure regulations, the strength of quality control and safety (calendar days) mechanisms, liability and insurance regimes, and professional certification requirements. Does not include time spent gathering information The ranking of economies on the ease of dealing with construction permits is determined by sorting their Each procedure starts on a separate day— though procedures that can be fully distance to frontier scores for dealing with completed online are an exception to this rule construction permits. These scores are the simple average of the distance to frontier scores for each of Procedure considered completed once final the component indicators. document is received To make the data comparable across economies, No prior contact with officials several assumptions about the construction Cost required to complete each procedure (% company, the warehouse project and the utility of warehouse value) connections are used. Official costs only, no bribes Assumptions about the construction company Building quality control index (0-15) The construction company (BuildCo): Sum of the scores of six component indices:  Is a limited liability company (or its legal Quality of building regulations (0-2) equivalent). Quality control before construction (0-1)  Operates in the economy’s largest business city. For 11 economies the data are also collected for Quality control during construction (0-3) the second largest business city. Quality control after construction (0-3)  Is 100% domestically and privately owned. Liability and insurance regimes (0-2)  Has five owners, none of whom is a legal entity. Professional certifications (0-4)  Is fully licensed and insured to carry out construction projects, such as building warehouses.  Has 60 builders and other employees, all of them nationals with the technical expertise and Doing Business 2017 Kuwait 28 professional experience necessary to obtain  Is valued at 50 times income per capita. construction permits and approvals.  Will be a new construction (there was no previous  Has a licensed architect and a licensed engineer, construction on the land), with no trees, natural both registered with the local association of water sources, natural reserves or historical architects or engineers. BuildCo is not assumed monuments of any kind on the plot. to have any other employees who are technical  Will have complete architectural and technical plans or licensed experts, such as geological or prepared by a licensed architect. If preparation of topographical experts. the plans requires such steps as obtaining further  Has paid all taxes and taken out all necessary documentation or getting prior approvals from insurance applicable to its general business external agencies, these are counted as procedures. activity (for example, accidental insurance for  Will include all technical equipment required to be construction workers and third-person liability). fully operational.  Owns the land on which the warehouse will be  Will take 30 weeks to construct (excluding all delays built and will sell the warehouse upon its due to administrative and regulatory requirements). completion. Assumptions about the warehouse Assumptions about the utility connections The warehouse: The water and sewerage connections:  Will be used for general storage activities, such as storage of books or stationery. The warehouse  Will be 150 meters (492 feet) from the existing will not be used for any goods requiring special water source and sewer tap. If there is no water conditions, such as food, chemicals or delivery infrastructure in the economy, a borehole pharmaceuticals. will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be  Will have two stories, both above ground, with a installed or built. total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor  Will not require water for fire protection reasons; a will be 3 meters (9 feet, 10 inches) high. fire extinguishing system (dry system) will be used instead. If a wet fire protection system is required  Will have road access and be located in the by law, it is assumed that the water demand periurban area of the economy’s largest business specified below also covers the water needed for city (that is, on the fringes of the city but still fire protection. within its official limits). For 11 economies the data are also collected for the second largest  Will have an average water use of 662 liters (175 business city. gallons) a day and an average wastewater flow of 568 liters (150 gallons) a day. Will have a peak  Will not be located in a special economic or water use of 1,325 liters (350 gallons) a day and a industrial zone. peak wastewater flow of 1,136 liters (300 gallons) a  Will be located on a land plot of approximately day. 929 square meters (10,000 square feet) that is  Will have a constant level of water demand and 100% owned by BuildCo and is accurately wastewater flow throughout the year. registered in the cadastre and land registry.  Will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Doing Business 2017 Kuwait 29 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to build an economy, except for 11 economies for which the data a warehouse in Kuwait? According to data collected by are a population-weighted average of the 2 largest Doing Business, dealing with construction permits there business cities. See the chapter on distance to frontier requires 23.0 procedures, takes 216.0 days and costs and ease of doing business ranking at the end of this 0.7% of the warehouse value (figure 3.1). Most indicator profile for more details. sets refer to a case scenario in the largest business city of Figure 3.1 What it takes to comply with formalities to build a warehouse in Kuwait Source: Doing Business database. 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. . Doing Business 2017 Kuwait 30 DEALING WITH CONSTRUCTION PERMITS Globally, Kuwait stands at 144 in the ranking of 190 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 Kuwait to legally build a warehouse. Figure 3.2 How Kuwait and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database. Doing Business 2017 Kuwait 31 DEALING WITH CONSTRUCTION PERMITS What are the details? The indicators reported here for Kuwait are based on BUILDING A WAREHOUSE a set of specific procedures—the steps that a company must complete to legally build a warehouse—identified by Doing Business through Estimated value of information collected from experts in construction KWD 489,052 warehouse : licensing, including architects, civil engineers, construction lawyers, construction firms, utility City : Kuwait City service providers and public officials who deal with building regulations. These procedures are those that apply to a company and structure matching the The procedures, along with the associated time and cost, standard assumptions used by Doing Business in are summarized below. collecting the data (see the section in this chapter on what the indicators cover). Table 3.2 Summary of time, cost and procedures for dealing with construction permits in Kuwait Time to No. Procedure Cost to complete complete Submit drawings and receive certificate from the Public Authority for Industry (PAI) Since the warehouse will be used for storage, BuildCo must submit the project drawings to the Public Authority for Industry (PAI). PAI will then review the drawings and issue an approval 1 certificate. Submission of drawings to PAI is required for any 30 days no charge construction that will be used for storage or industrial activities. A copy of the government’s lease agreement is needed. Agency: Public Authority for Industry (PAI) Hire an external firm/engineer to supervise construction *2 1 day KWD 1,594 Agency: Private Firm Obtain lot plan with site map from the Municipal Authority BuildCo must request a lot plan physically at the municipality. 3 3 days KWD 5 Agency: Municipality of Kuwait Obtain zoning approval from the Municipal Authority BuildCo must request a zoning approval physically at the Municipality. Pursuant to Law 5 of 2005, the Municipality is 4 mandated with the authority to plan the use of land in Kuwait. 12 days KWD 20 This involves designating permitted uses of land based on mapped zones which separate one set of land uses from another (e.g. residential, industrial, recreational, etc). Doing Business 2017 Kuwait 32 Time to No. Procedure Cost to complete complete Once an area has been “zoned” (e.g. for industrial use), the location of an actual project / industry within the zone has to be approved by the Municipality. Agency: Municipality of Kuwait Request electricity and water plans approval from Ministry of Electricity and Water According to No. 30/2012 issued by Kuwait Municipality on August 2012, the building permit will not be granted unless the Ministry of Electricity and Water (MEW) gives its approval on the electric supply. A site inspection must be conducted before the approval can be issued. 1 day no charge *5 MEW is understaffed and therefore, it can take anywhere from 1 week to 1 month for the site inspection to happen. Approval of the plans can take 1-2 months after the inspection takes place. Agency: Ministry of Electricity and Water Receive electricity and water inspection from Ministry of Electricity and Water 6 1 day no charge Agency: Ministry of Electricity and Water Obtain electricity and water plans approval from Ministry of Electricity and Water 7 60 days no charge Agency: Ministry of Electricity and Water Obtain approval of plans from Kuwait Fire Services Directorate *8 30 days KWD 200 Agency: Kuwait Fire Services Directorate Request sewage plans approval (sanitary certificate) from Ministry of Public Works BuildCo must request approval of sewage plans from the 1 day no charge *9 Ministry of Public Works. Upon approval, the Ministry will issue a sanitary certificate. A site inspection must be conducted which takes about 10 days on average from the time of application. It then takes another 2 weeks to issue the certificate. Doing Business 2017 Kuwait 33 Time to No. Procedure Cost to complete complete Agency: Ministry of Public Works Receive sewage inspection from Ministry of Public Works 10 1 day no charge Agency: Ministry of Public Works Obtain sewage plans approval from Ministry of Public Works 11 24 days no charge Agency: Ministry of Public Works Conduct soil test with private laboratory BuildCo must conduct a soil test with a private laboratory that is certified by the Municipality of Kuwait. The soil test report must be submitted to the Municipality as part of the building permit 3 days KWD 75 * 12 application. Agency: Private Laboratory Request and obtain building permit BuildCo must submit Application Form 1 for a building license and attach the following documents (including the documents described in the procedures above): • A copy of the deed of title to the land, allocation decree, or lease agreement. In the case of an allocation decree or lease agreement, a recent rent receipt must be submitted. • A copy of the architectural contract between BuildCo and an accredited engineering firm responsible for the architecture of the building • Original letter of the zoning approval • Third-party liability insurance policy (covering 2 or 3 years, 30 days KWD 200 13 depending on the time required to complete the building) • Original copies of plans or blueprints of the building from the engineering firm, including all details of the external facade, internal design, internal and external diameters, calculation of building area and space area around the building • Original soil test report • Approval from the Safety Department • Approval from the Roads Department, if underground parking is included (which does not apply to the warehouse project) • Form 2, Undertaking of compliance of the plans with the buildings codes and cadastres, which should be signed and submitted (by an engineering firm) • Form 3, Undertaking of compliance with the construction plans, Doing Business 2017 Kuwait 34 Time to No. Procedure Cost to complete complete which should be signed and submitted (by an engineering firm) • Undertaking to provide specific plans (done by an engineering firm) that meet the requirements of: 1. The Ministry of Electricity and Energy for the electric supply. 2. The Ministry of Public Works for the sewerage system. 3. The Public Authority for Civil Aviation for the height of the warehouse. 4. The Ministry of Communications for the telephone lines. While the application can be submitted online, BuildCo must follow up with hard copies of the supporting documents in order to have them stamped by the Municipality. Agency: Municipality of Kuwait Obtain site take-over letter (supervision commitment license) BuildCo must submit an application for the site take-over letter and attach the following documents: • A copy of the construction license • An undertaking from BuildCo that it shall carry out the construction work on the warehouse or, alternatively, that it has a construction contract with a contractor. In case of a construction contract with a contractor, a copy of the 14 performance bond should be submitted. 20 days KWD 10 • An undertaking from an accredited supervising engineer to supervise the construction approved by the municipality. The Municipality will then issue a site take-over letter, which essentially allows BuildCo (or the contractor) to take over the site and begin construction. Agency: Municipality of Kuwait Submit final report and the file of cadastral measure of the structure to the Municipality for approval BuildCo prepares the end of supervision commitment report with the supervising engineer's signature and the file of cadastral measure of the structure and submits them to Kuwait Municipality. The file will be reviewed by the Engineering Supervisor (an employee of the Kuwait Municipality) to ensure it contains all the required documentation and information. 15 1 day KWD 10 Kuwait Municipality will then conduct a final inspection to ensure that the construction has been carried out to the necessary specifications (as per the building plans submitted and approved) and complies with the relevant constructions regulations entirely. Once the Kuwait Municipality is satisfied with the information and documentation concerning the building’s specifications and construction works, it will grant the necessary approvals. Doing Business 2017 Kuwait 35 Time to No. Procedure Cost to complete complete Agency: Municipality of Kuwait Receive final inspection from the Municipality The municipality inspects the buildings to ensure compliance with the drawings. 1 day no charge 16 Agency: Municipality of Kuwait Receive final approval certificate from Municipality Once the final inspection is carried out, BuildCo typically receives the final approval certificate from the Municipality within a week. The Municipality then forwards the certificate of no objection to 17 the Ministry of Electricity and Water, the Kuwait Fire Services 18 days no charge Directorate and the Ministry of Public Works. Agency: Municipality of Kuwait Obtain commercial license from Ministry of Commerce BuildCo must obtain a commercial license from the Ministry of Commerce certifying that building is for commercial use. 18 Without this license, the warehouse cannot become operational. 7 days no charge Agency: Ministry of Commerce Obtain water connection * 19 7 days KWD 750 Agency: Ministry of Electricity and Water Obtain sewage connection * 20 7 days KWD 750 Agency: Ministry of Public Works Receive inspection from the Kuwait Fire Services Directorate Upon conducting a final inspection, the Kuwait Fire Services Directorate will issue a certificate of fire and panic safety. 1 day KWD 5 * 21 Agency: Kuwait Fire Services Directorate Doing Business 2017 Kuwait 36 Time to No. Procedure Cost to complete complete Obtain certificate of fire and panic safety from the Kuwait Fire Services Directorate 22 5 days no charge Agency: Kuwait Fire Services Directorate Register building with the Real Estate Registry 23 1 day KWD 10 Agency: Real Estate Registry * Takes place simultaneously with another procedure. Source: Doing Business database. Note: Online procedures account for 0.5 days in the total time calculation. Doing Business 2017 Kuwait 37 DEALING WITH CONSTRUCTION PERMITS Building Quality Control Index The building quality control index is the sum of the The index ranges from 0 to 15, with higher values scores on the quality of building regulations, quality indicating better quality control and safety mechanisms in control before construction, quality control during the construction permitting system. construction, quality control after construction, The indicator is based on the same case study liability and insurance regimes, and professional assumptions as the measures of efficiency. certifications indices. Table 3.3 Summary of quality control and safety mechanisms in Kuwait Answer Score Building quality control index (0-15) 11.0 Which third-party entities are required by law to verify that the Licensed architect; building plans are in compliance with existing building Licensed engineer. regulations? (0-1) Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your Available online; Free of 1.0 economy? (0-1) charge. List of required Which requirements for obtaining a building permit are clearly documents; Fees to be specified in the building regulations or on any accessible website, 1.0 paid; Required brochure or pamphlet? (0-1) preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the Licensed architect; building plans are in compliance with existing building 1.0 Licensed engineer. regulations? (0-1) Quality control during construction index (0-3) 2.0 Inspections by external What types of inspections (if any) are required by law to be engineer or firm; 1.0 carried out during construction? (0-2) Inspections at various phases. Mandatory inspections are always done in practice; Inspections Do legally mandated inspections occur in practice during are not mandated by 1.0 construction? (0-1) law but commonly occur in practice during construction. Quality control after construction index (0-3) 3.0 Yes, final inspection is done by government Is there a final inspection required by law to verify that the agency; Yes, in-house building was built in accordance with the approved plans and engineer submits 2.0 regulations? (0-2) report for final inspection; Final inspection is not Doing Business 2017 Kuwait 38 Answer Score required by law. Final inspection always Do legally mandated final inspections occur in practice? (0-1) 1.0 occurs in practice. Liability and insurance regimes index (0-2) 1.0 Architect or engineer; Which parties (if any) are held liable by law for structural flaws or Professional in charge problems in the building once it is in use (Latent Defect Liability 1.0 of the supervision; or Decennial Liability)? (0-1) Construction company. Which parties (if any) are required by law to obtain an insurance No party is required by policy to cover possible structural flaws or problems in the law to obtain insurance 0.0 building once it is in use (Latent Defect Liability Insurance or . Decennial Insurance)? (0-1) Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional University degree in responsible for verifying that the architectural plans or drawings architecture or 0.0 are in compliance with existing building regulations? (0-2) engineering. Minimum number of years of experience; University degree in engineering, What are the qualification requirements for the professional who construction or 2.0 supervises the construction on the ground? (0-2) construction management; Being a registered architect or engineer; Passing a certification exam. Source: Doing Business database. Doing Business 2017 Kuwait 39 GETTING ELECTRICITY Access to reliable and affordable electricity is vital for WHAT THE GETTING ELECTRICITY businesses. To counter weak electricity supply, many firms in developing economies have to rely on self- INDICATORS MEASURE supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the first step for Procedures to obtain an electricity connection a customer is always to gain access by obtaining a (number) connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for a Completing all required notifications and local business to obtain a permanent electricity receiving all necessary inspections connection and supply for a standardized warehouse, Obtaining external installation works and as well as the time and cost to complete them. These possibly purchasing material for these works procedures include applications and contracts with Concluding any necessary supply contract and electricity utilities, clearances from other agencies obtaining final supply and the external and final connection works. In addition, Doing Business also measures the reliability Time required to complete each procedure of supply and transparency of tariffs index (included (calendar days) in the aggregate distance to frontier score and Is at least 1 calendar day ranking on the ease of doing business) and the price Each procedure starts on a separate day of electricity (omitted from these aggregate measures). The ranking of economies on the ease of Does not include time spent gathering getting electricity is determined by sorting their information distance to frontier scores for getting electricity. Reflects the time spent in practice, with little These scores are the simple average of the distance follow-up and no prior contact with officials to frontier scores for each of the component Cost required to complete each procedure (% indicators. To make the data comparable across of income per capita) economies, several assumptions are used. Official costs only, no bribes Assumptions about the warehouse Excludes value added tax The warehouse: The reliability of supply and transparency of  Is owned by a local entrepreneur. tariffs index  Is located in the economy’s largest business city. Sum of the scores of six component indices: For 11 economies the data are also collected for Duration and frequency of outages the second largest business city. Tools to monitor power outages  Is located in an area where similar warehouses Tools to restore power supply are typically located. In this area a new electricity connection is not eligible for a special investment Regulatory monitoring of utilities’ performance promotion regime (offering special subsidization Financial deterrents aimed at limiting outages or faster service, for example). Transparency and accessibility of tariffs  Is located in an area with no physical constraints. Price of electricity (cents per kilowatt-hour)* For example, the property is not near a railway. Price based on monthly bill for commercial  Is a new construction and is being connected to warehouse in case study electricity for the first time. *Price of electricity is not included in the calculation of distance to frontier nor ease of doing business ranking Doing Business 2017 Kuwait 40 The warehouse (continued): Assumptions about the monthly consumption  Has two stories, both above ground, with a total  It is assumed that the warehouse operates 30 days surface area of approximately 1,300.6 square a month from 9:00 a.m. to 5:00 p.m. (8 hours a day), meters (14,000 square feet). The plot of land on with equipment utilized at 80% of capacity on which it is built is 929 square meters (10,000 average and that there are no electricity cuts square feet). (assumed for simplicity reasons).  Is used for storage of goods.  The monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 Assumptions about the electricity connection kWh. The electricity connection:  If multiple electricity suppliers exist, the warehouse  Is a permanent one. is served by the cheapest supplier.  Is a three-phase, four-wire Y connection with a  Tariffs effective in March of the current year are subscribed capacity of 140-kilo-volt-ampere used for calculation of the price of electricity for the (kVA) with a power factor of 1, when 1 kVA = 1 warehouse. Although March has 31 days, for kilowatt (kW). calculation purposes only 30 days are used.  Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more common in the area where the warehouse is located  Requires works that involve the crossing of a 10- meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road.  Includes only a negligible length in the customer’s private domain.  Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service panel or switchboard and the meter base. Doing Business 2017 Kuwait 41 GETTING ELECTRICITY Where does the economy stand today? What does it take to obtain a new electricity connection Most indicator sets refer to a case scenario in the largest in Kuwait? According to data collected by Doing business city of an economy, except for 11 economies for Business, getting electricity there requires 8.0 procedures, which the data are a population-weighted average of the takes 64.0 days and costs 64.6% of income per capita 2 largest business cities. See the chapter on distance to (figure 4.1). frontier and ease of doing business ranking at the end of this profile for more details. Figure 4.1 What it takes to obtain an electricity connection in Kuwait Source: Doing Business database. 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. Doing Business 2017 Kuwait 42 GETTING ELECTRICITY Globally, Kuwait stands at 115 in the ranking of 190 average ranking provide another perspective in assessing economies on the ease of getting electricity (figure 4.2). how easy it is for an entrepreneur in Kuwait to connect a The rankings for comparator economies and the regional warehouse to electricity. Figure 4.2 How Kuwait and comparator economies rank on the ease of getting electricity Source: Doing Business database. Doing Business 2017 Kuwait 43 GETTING ELECTRICITY What are the details? The indicators reported here for Kuwait are based on a OBTAINING AN ELECTRICITY CONNECTION* set of specific procedures—the steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution utility— Ministry of Electricity and Name of utility: identified by Doing Business. Data are collected from the Water (MEW) distribution utility, then completed and verified by electricity regulatory agencies and independent Price of electricity professionals such as electrical engineers, electrical (US cents per kWh): 0.8 contractors and construction companies. The electricity distribution utility surveyed is the one serving the area City: Kuwait City (or areas) in which warehouses are located. If there is a *Price is calculated as a monthly consumption of 26,880 kWh choice of distribution utilities, the one serving the largest for business customers, based on a standardized case study number of customers is selected. adopted by the getting electricity methodology. Doing Business measures the price of electricity but does not include these The procedures are those that apply to a warehouse and data when calculating the distance to frontier score for getting electricity connection matching the standard electricity or the ranking on the ease of getting electricity. assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). The procedures, along with the associated time and cost, are summarized below. Table 4.2 Summary of time, cost and procedures for getting electricity in Kuwait Time to No. Procedure Cost to complete complete Hire licensed electrical engineer to prepare study of electrical load and power requirement The client hires an engineering consulting firm that is approved by the union of engineers and that has a Supervision Engineer licensed by MEW. The consulting firm (i.e. contractor), will then study and estimate the electrical load and power requirement of the project so as to obtain 1 MEW's approval/authorization for availability of electricity supply (see 2 calendar days KWD 1,250 procedure below). The fees vary depending on the prices set by the contractor. Agency: Electrical engineer licensed by the Ministry of Electricity and Water (MEW) Submit application to Ministry of Electricity and Water and await estimate The client submits an application to the Distribution department of MEW 17 calendar days KWD 0 2 to get the approval/authorization of electricity supply. The client needs to submit: - The study and estimate done by the consulting firm in Procedure 1. - 3 copies to the concerned governorate engineer of the electrical Doing Business 2017 Kuwait 44 Time to No. Procedure Cost to complete complete distribution network (EDN) department requesting approval/authorization for the electricity supply - Copy of the application after necessary approval duly signed and stamped by the governorate engineer - Licenses of construction Agency: Ministry of Electricity and Water (MEW) Receive site inspection by Ministry of Electricity and Water The client obtains a site inspection from the Ministry of Electricity and Water (MEW) and awaits the estimate of connection fees. After the inspection is done, MEW hands the client a stamped approval and 1 calendar day KWD 0 *3 authorization Agency: Ministry of Electricity and Water (MEW) Obtain "no objection" letter from municipality After completing the building works and obtaining the approval of the municipality, the applicant will need to apply for a no-objection letter from the municipality. The municipality will then send the letter by mail 4 to the Ministry of Electricity and Water (MEW) so the latter can install the 22 calendar days KWD 0 meter and turn on supply of electricity to the project. Agency: Municipality Submit application for electrical installation The client submits an application to the Installation Department of MEW for electrical installation. The client needs to submit the stamped approval and authorization obtained after the inspection. *5 This procedure can be done online. However, the online system is not 13 calendar days KWD 0 widely adopted yet. Agency: Ministry of Electricity and Water (MEW) Submit final electrical drawings for approval and obtain inspection of internal wiring *6 16 calendar days KWD 0 During or after execution of the internal wiring the client’s licensed engineer will need to submit the final electrical drawings related to the internal wiring for approval to the Electrical Installation Department of Doing Business 2017 Kuwait 45 Time to No. Procedure Cost to complete complete the Ministry. These drawings include air-conditioning, lighting and all other electrical equipment, electrical mains, switches, cable sizes, circuit breakers and fuses. The client will also need to submit a load form in order to obtain inspection of internal wiring and final connection. The load form will then be handed over to the applicant themselves. If the applicant is a company, the form will be handed over to an authorized staff of the company. The approval itself is granted after a couple of weeks, but is obtained in parallel with the external works. The inspection however, happens only after the Ministry of Electricity and Water (MEW) has obtained the letter of no-objection from the municipality. If the drawings meet the Ministry’s specifications, then inspectors from the Electrical Installation Department of the Ministry will inspect the internal installation (size of cables, type of fuses, cable connection process and installation of main panels and sub-panels inside and outside the warehouse). The engineer also needs to submit approvals from the Municipality and the Kuwait Fire Department. The Municipality will also check that plans are actually corresponding to latest drawings. Agency: Ministry of Electricity and Water (MEW) Obtain external works from Electrical Installation Department Once the drawings are approved, the client needs to pay the fees of the project to Ministry of Electricity & Water (MEW) for the power supply connection. This cost is for the equipment supplied by the ministry. The payment is done at the estimation department of MEW. The estimation department then gives the green light to the Electrical Distribution Networks Department so that external works can be started. External works are designed and carried out by the Electrical Distribution Networks Department of MEW. A 140-kVA load can be supplied from an existing distribution sub-station in the area, if capacity is available. 21 calendar days KWD 0 7 In the absence of the infrastructure facilities, the holder of the license can allocate a space on the plot not exceeding 5x5 m2 for the MEW to install an electrical transformer to provide additional power to the plot. Having the transformer installed will not result in additional cost to the customer. The former scenario is however, the more likely one for the assumed case. Agency: Ministry of Electricity and Water (MEW) Obtain meter installation and final turn-on of supply The client needs to show a receipt of payment to one of the nearest emergency departments of the Ministry of Electricity and Water to 2 calendar days KWD 5,070.24 8 obtain final supply. The meter is handed over to the client directly by the Consumer Affairs Department, and the installation is carried out by the Electrical Installation Department. Doing Business 2017 Kuwait 46 Time to No. Procedure Cost to complete complete Agency: Ministry of Electricity and Water (MEW) * Takes place simultaneously with previous procedure. Source: Doing Business database. Doing Business 2017 Kuwait 47 GETTING ELECTRICITY Reliability of supply and transparency of tariffs index The reliability of supply and transparency of tariffs Doing Business uses the system average interruption index encompasses quantitative data on the duration duration index (SAIDI) and the system average and frequency of power outages as well as interruption frequency index (SAIFI) to measure the qualitative information on the mechanisms put in duration and frequency of power outages in the largest place by the utility for monitoring power outages business city of each economy (for 11 economies the data and restoring power supply, the reporting are also collected for the second largest business city). relationship between the utility and the regulator for SAIDI is the average total duration of outages over the power outages, the transparency and accessibility of course of a year for each customer served, while SAIFI is tariffs and whether the utility faces a financial the average number of service interruptions experienced deterrent aimed at limiting outages (such as a by a customer in a year. Annual data (covering the requirement to compensate customers or pay fines calendar year) are collected from distribution utility when outages exceed a certain cap). companies and national regulators on SAIDI and SAIFI. Both SAIDI and SAIFI estimates include load shedding. The index ranges from 0 to 8, with higher values indicating greater reliability of electricity supply and greater transparency of tariffs. Table 4.3 Reliability of Supply and Transparency of Tariff Index in Kuwait Answer Score Reliability of supply and transparency of tariff index (0-8) 4.0 Total duration and frequency of outages per customer a year (0-3) 3.0 System average interruption duration index (SAIDI) 0.12 System average interruption frequency index (SAIFI) 0.3 Mechanisms for monitoring outages (0-1) 0.0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0.0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 0.0 Does a regulator—that is, an entity separate from the utility—monitor No the utility’s performance on reliability of supply? Financial deterrents aimed at limiting outages (0-1) 0.0 Does the utility either pay compensation to customers or face fines by No the regulator (or both) if outages exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1.0 Are effective tariffs available online? Yes Link to the website, if available online http://www.mew. Doing Business 2017 Kuwait 48 Answer Score gov.kw/?com=co ntent&act=view& id=92 Are customers notified of a change in tariff ahead of the billing cycle? Yes Price of electricity (US cents per kWh) 0.8 Source: Doing Business database. Note: If data on power outages is not collected or if the SAIFI index or SAIDI index are above the threshold of 100, the economy is not eligible to obtain a score in the Reliability of Supply and Transparency of Tariff Index. If SAIDI and SAIFI are 12 (equivalent to an outage of one hour each month) or below, a score of 1 is assigned. If SAIDI and SAIFI are 4 (equivalent to an outage of one hour each quarter) or below, 1 additional point is assigned. Finally, if SAIDI and SAIFI are 1 (equivalent to an outage of one hour per year) or below, 1 more point is assigned. Doing Business measures the price of electricity but does not include these data when calculating the distance to frontier score for getting electricity or the ranking on the ease of getting electricity. The price of electricity is measured in cents per kilowatt-hour. On the basis of the assumptions about monthly consumption, a monthly bill for a commercial warehouse in the largest business city of the economy is computed for the month of March. As noted, the warehouse uses electricity 30 days a month, from 9:00 a.m. to 5:00 p.m., so different tariff schedules may apply if a time-of-use tariff is available. Doing Business 2017 Kuwait 49 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 accepted immovable property (number) as collateral for loans—limiting access to finance. Preregistration (for example, checking for liens, notarizing sales agreement, paying property What do the indicators cover? transfer taxes) Doing Business records the full sequence of Registration in the economy’s largest business procedures necessary for a business to purchase city property from another business and transfer the property title to the buyer’s name. The transaction is Postregistration (for example, filing title with the municipality) considered complete when it is opposable to third parties and when the buyer can use the property, Time required to complete each procedure use it as collateral for a bank loan or resell it. In (calendar days) addition, Doing Business also measures quality of Does not include time spent gathering the land administration system in each economy. information The ranking of economies on the ease of registering property is determined by sorting their distance to Each procedure starts on a separate day— frontier scores for registering property. These scores though procedures that can be fully completed online are an exception to this rule are the simple average of the distance to frontier scores for each of the component indicators. To Procedure considered completed once final make the data comparable across economies, document is received several assumptions about the parties to the No prior contact with officials transaction, the property and the procedures are used. Cost required to complete each procedure (% of property value) The parties (buyer and seller): Official costs only, no bribes  Are limited liability companies, 100% domestically and privately owned and perform No value added or capital gains taxes included general commercial activities in the economy’s Quality of land administration index (0-30) largest business city.  Have 50 employees each, all of whom are  Has no mortgages attached, has been under the nationals. same ownership for the past 10 years. The property (fully owned by the seller):  Consists of 557.4 square meters (6,000 square feet)  Has a value of 50 times income per capita. The of land and a 10-year-old, 2-story warehouse of 929 sale price equals the value and entire property square meters (10,000 square feet). The warehouse is will be transferred. in good condition and complies with all safety  Is registered in the land registry or cadastre, or standards, building codes and legal requirements. both, and is free of title disputes. There is no heating system.  Is located in a periurban commercial zone, and no rezoning is required. Doing Business 2017 Kuwait 50 REGISTERING PROPERTY Where does the economy stand today? What does it take to complete a property transfer in Most indicator sets refer to a case scenario in the largest Kuwait? According to data collected by Doing Business, business city of an economy, except for 11 economies for registering property there requires 8.0 procedures, takes which the data are a population-weighted average of the 49.0 days and costs 0.5% of the property value (figure 2 largest business cities. See the chapter on distance to 5.1). The score on the quality of land administration frontier and ease of doing business ranking at the end of index is 17.5 this profile for more details. Figure 5.1 What it takes to register property in Kuwait Source: Doing Business database. 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. Doing Business 2017 Kuwait 51 REGISTERING PROPERTY Globally, Kuwait stands at 67 in the ranking of 190 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 Kuwait to transfer property. Figure 5.2 How Kuwait and comparator economies rank on the ease of registering property Source: Doing Business database. Doing Business 2017 Kuwait 52 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 lawyers, Property value: KWD 489,052 notaries and property registries. These procedures are those that apply to a transaction matching the City: Kuwait City standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). The procedures, along with the associated time and cost, are summarized below. Table 5.2 Summary of time, cost and procedures for registering property in Kuwait Time to No. Procedure Cost to complete complete Apply for the Cadastral Description Certificate (Shahadat Al-Awsaf) from the Municipality The seller must request a Cadastral Description Certificate from the Municipality providing the details of the property in question (i.e. its size, the developments on it, the zoning, etc) and confirming that the property is in compliance with all the Municipality regulations. This document is prepared following an inspection of the property by an architect of the Municipality. The warehouse is likely to be in one of the following areas; Shuwaikh, Sulaibiya, Sabhan, Al Rai, Anghara and Ardiya. This is however not an exclusive list. The Kuwait Municipality, which is the authority responsible for zoning, may authorize the construction of a warehouse in an area that is not ordinarily used for warehousing. The documentation shall include: Application from the seller on the selling company's letterhead Copy of the deed of title of the property provided 1 day KWD 5 1 by the seller Documents proving the authority of the person submitting the application on behalf of the seller The Cadastral Description Certificate will also include among other things; any violations that the property has incurred (e.g. non-maintenance of the property, or encroachment of the property borders on neighboring plots), any violations of the structure (e.g. if the building does not meet the fire regulations), usage of the plot (e.g. for commercial or residential purpose). Any licenses granted to the plot (e.g. license to have machinery brought onto the property to be used on the plot) and drawings of the plot and structures approved from the Municipality showing the areas and utilization of the plot. Agency: Municipality Doing Business 2017 Kuwait 53 Time to No. Procedure Cost to complete complete Inspection of the property by an architect representing the Municipality The Municipality will send out an inspector/architect to inspect the property in question and collect the relevant information; after which the Municipality will issue the Cadastral Description Certificate and transfer the same along with a letter of no objection to the transfer to the Ministry of Justice to continue the process of the property transfer. It ordinarily takes between 7 – 12 days for the inspection of the property that is located within the Capital Province by an architect/engineer representing the Municipality. For properties located in the other provinces, the process may be shorter or longer depending on the work load of the Municipality officials. The process is typically as follows: the seller will go to the Municipality (with jurisdiction over the location of the warehouse to be sold) to submit an application for an allocation letter (specifying the size of the plot and the buildings on it if any) and a description certificate 7-12 days (description of the existing buildings if any on the plot and size/use of (simultaneous 2 KWD 150 such building). The fee to be paid for these documents is KD150 (for a with Procedures commercial property). The seller concurrently delivers the warehouse's 3, 4, and 5) title deed to the Municipality against a receipt thereof. The engineer/architect responsible for the area then fixes a date to meet with the seller at the warehouse to carry out the inspection, or may alternatively carry out the inspection on his own. Meanwhile, the seller should obtain clearance from the utility authorities (i.e. electricity, water and telephone). When the Municipality engineer completes the inspection and the Municipality has issued the descriptions certificate and the allocation letter for the property, the seller will be issued with a receipt with a reference number from the Municipality with which the seller will receive the original title deed, the allocation letter and the descriptions certificate from the Real Estate Registry Division at the Ministry of Justice. Agency: Municipality Obtain clearance from the Ministry of Communications The Seller must obtain a clearance from the Ministry of Communications (necessary for all types of properties both commercial and residential). 1 day The clearance is to confirm that the previous owner/seller has settled all (simultaneous *3 no cost related utility bills. with Procedures 2, 4, and 5) Agency: Ministry of Communications Doing Business 2017 Kuwait 54 Time to No. Procedure Cost to complete complete Obtain clearance from the Ministry of the Electricity regarding outstanding electricity bills 1 day Parties obtain a certificate of Ministry of Electricity and Water that there (simultaneous *4 are no outstanding electricity bills or other dues to the Ministry. no cost with Procedures 2, 3, and 5) Agency: Ministry of Electricity and Water Obtain a certificate from the Minister of Commerce and Industry evidencing the signatory authority of the legal representative of the parties Parties obtain a certificate from the Minister of Commerce and Industry evidencing the signatory authority of the legal representative of the parties who will sign the sale agreement, together with copies of their civil identification cards. They obtain Form I "Undertaking & Acknowledgement" and Form IX "Acknowledgement of the Representative" from the Department of Commercial Companies at the Ministry of Commerce and Industry, that must be submitted for 1 day registration in Procedure 6. Form I shows that the parties exist and have (simultaneous *5 KWD 12 the power to conclude the sale/purchase transaction in accordance with with Procedures their own Article of Association. Form IX confirms the authority of their 2, 3, and 4) representatives who follow up the Procedures with the Department. This procedure takes place because the Buyer and Seller do not usually appear in person at the Ministry of Justice to proceed with the transaction; they send legal representatives instead. This is also to check that the companies are authorized to buy/sell property in their Articles of Association. Agency: Minister of Commerce and Industry File an application requesting a transfer of title with the Contracts Control Department of the Real Estate Registration Office of the Ministry of Justice Once the No Objection letter is received from the Municipality, the parties receive an SMS to come to the Ministry of Justice to complete the transaction. The seller must prepare an application requesting a transfer of title to be filed with the Contracts Control Department of the Real 0.5% of property Estate Registration Office of the Ministry of Justice. The Contracts 15 calendar days 6 value (registration Control Department reviews the application and the attached documents fee) internally (3-7 days). After reviewing the application, the Contracts Control Department will take an extra 17-28 days to check all the documentation and approve the transfer. If approved, the form of the sale agreement is transferred to the notarization department for review. Once approved, the same is printed on the official green papers used by the Ministry and becomes ready for signature. The 0.5% registration fee is paid to the Department of Real Estate Registration & Authentication (Ministry of Justice) upon the completion of the registration Procedures, Doing Business 2017 Kuwait 55 Time to No. Procedure Cost to complete complete who approves the submitted documents before parties sign the notarized sale contract. The documentation shall include: a) Form of the sale agreement (available at the Real Estate Registration Office) b) Form I "Undertaking & Acknowledgement" signed by parties (obtained in Procedure 5) c) Form II "Immediate Sale Form" signed by parties (available at the Real Estate Registration Office) d) Form IX "Acknowledgement of the Representative" signed by parties (obtained in Procedure 5) e) Original deed of title of the property; f) A recent certificate from the Minister of Commerce and Industry evidencing the signatory power of the legal representative of the parties (obtained in Procedure 5). g) Copies of the articles of association of both companies. h) If powers of attorneys are used, copies thereof must be attached Agency: Real Estate Registration Office of the Ministry of Justice Legal representative of the parties must appear in person to sign the sale agreement before the notary public The parties must appear in person or through their attorneys to sign the sale agreement before the notary public. The notary public verifies the contents of the written agreement (a form commonly prescribed by the Ministry of Justice), authenticates the required signatures, and satisfies all other related matters. The notary public is a governmental employee in Kuwait providing public service and is part of the Ministry of Justice. The process may however take a longer (two working weeks at most) or shorter time frame depending on characteristics of the transaction (i.e. if it is a contentious issue) or the work load in the Ministry at the time of application. The duration of the process may also be affected by the identity of the entities or people involved (i.e. the process is relatively shorter and more straight forward for individuals while companies will likely take a longer period of time as more documentation is required – 3 days no cost 7 e.g. board resolutions, minutes of meetings, etc). Furthermore, if the warehouse price reflected in the sale agreement is considered to be below the market value/price, the Ministry in such case may dispatch an expert to carry out a valuation of the warehouse to avoid any loss that may be incurred by the Ministry when it collects the transfer charges that are 0.5% of the property value. The process of the valuation of the warehouses may take approximately 5 - 10 days (one to two working weeks). The parties must either appear in person or send an attorney authorized to act on their behalf (holder of a Power of Attorney). The parties or their legal representatives have their IDs checked and are given an appointment 3 days later to come back for payment and final signing of the deed. Agency: Notary public of Ministry of justice Doing Business 2017 Kuwait 56 Time to No. Procedure Cost to complete complete The sale agreement is recorded under the name of the buyer by the Contracts Control Department The notary public delivers the notarized sale agreement to the Contracts Control Department for it to be recorded under the name of the purchasing company. The sale agreement is used as the deed of title. An original of the sale agreement, proving title, is delivered to the buyer thereafter. The actual registration process when the transaction is allocated a registration number occurs at the time the parties sign the agreement before the notary public who issues a registration number under which the agreement will be registered under the purchaser’s name. The process is initiated when the parties receive the documents from the Real Estate Registry Division at the Ministry of Justice and fill in the application to register the transfer of title based on the sale 20 days no cost 8 agreement (i.e. registration application) and enclose all relevant documentation and submit it before the notary public at the Department for Real Estate and Registration. The notary public automatically delivers a copy of the notarized sale agreement to the Department of Real Estate and Registration. The buyer will receive a registration number on the notarized sale agreement (which is the new title deed for the property) at the time of signing the agreement before the notary public. The notarized sale agreement received on the date of signing the agreement will reflect the registration number under which the agreement has been registered. Agency: Contracts Control Department * Takes place simultaneously with another procedure. Source: Doing Business database. Note: Online procedures account for 0.5 days in the total time calculation. Doing Business 2017 Kuwait 57 REGISTERING PROPERTY Quality of land administration The quality of land administration index is the sum of If private sector entities were unable to register property the scores on the reliability of infrastructure, transfers in an economy between June 2015 and June transparency of information, geographic coverage, 2016, the economy receives a “no practice” mark on the land dispute resolution and equal access to property procedures, time and cost indicators. A “no practice” rights indices. economy receives a score of 0 on the quality of land administration index even if its legal framework includes The index ranges from 0 to 30, with higher values provisions related to land administration. indicating better quality of the land administration system. Table 5.3 Summary of quality of land administration in Kuwait Answer Score Quality of the land administration index (0-30) 17.5 Reliability of infrastructure index (0-8) 4.0 Real Estate What is the institution in charge of immovable property registration? Registry at the Ministry of Justice In what format are the majority of title or deed records kept in the Computer/Scann largest business city—in a paper format or in a computerized format 1.0 ed (scanned or fully digital)? Is there an electronic database for checking for encumbrances (liens, No 0.0 mortgages, restrictions and the like)? In what format are the majority of maps of land plots kept in the Computer/Scann largest business city—in a paper format or in a computerized format 1.0 ed (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information (geographic information No 0.0 system)? Is the information recorded by the immovable property registration Different agency and the cadastral or mapping agency kept in a single database, databases but 1.0 in different but linked databases or in separate databases? linked Do the immovable property registration agency and cadastral or Yes 1.0 mapping agency use the same identification number for properties? Transparency of information index (0–6) 1.0 Only Who is able to obtain information on land ownership at the agency in intermediaries 0.0 charge of immovable property registration in the largest business city? and interested parties Is the list of documents that are required to complete any type of Yes, online 0.5 Doing Business 2017 Kuwait 58 Answer Score property transaction made publicly available–and if so, how? https://www.moj. gov.kw/sites/ar/R Link for online access: ealEstate/Pages/ MOJServices.aspx Is the applicable fee schedule for any property transaction at the agency in charge of immovable property registration in the largest Yes, online 0.5 business city made publicly available–and if so, how? https://www.moj. gov.kw/sites/ar/R Link for online access: ealEstate/Pages/ MOJServices.aspx Does the agency in charge of immovable property registration commit to delivering a legally binding document that proves property No 0.0 ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that occurred at the agency in charge of immovable property No 0.0 registration? Contact information: Are there publicly available official statistics tracking the number of No 0.0 transactions at the immovable property registration agency? Number of property transfers in the largest business city in 2015: Only intermediaries Who is able to consult maps of land plots in the largest business city? 0.0 and interested parties Is the applicable fee schedule for accessing maps of land plots made Yes, in person 0.0 publicly available—and if so, how? Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a specific time frame—and if so, how does it No 0.0 communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about No 0.0 a problem that occurred at the cadastral or mapping agency? Doing Business 2017 Kuwait 59 Answer Score Geographic coverage index (0–8) 8.0 Are all privately held land plots in the economy formally registered at Yes 2.0 the immovable property registry? Are all privately held land plots in the largest business city formally Yes 2.0 registered at the immovable property registry? Are all privately held land plots in the economy mapped? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 4.5 Does the law require that all property sale transactions be registered at the immovable property registry to make them opposable to third Yes 1.5 parties? Is the system of immovable property registration subject to a state or No 0.0 private guarantee? Is there a specific compensation mechanism to cover for losses incurred by parties who engaged in good faith in a property transaction No 0.0 based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., checking the compliance of Yes 0.5 contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary. Does the legal system require verification of the identity of the parties Yes 0.5 to a property transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary. Is there a national database to verify the accuracy of identity No 0.0 documents? For a standard land dispute between two local businesses over tenure rights of a property worth 50 times gross national income (GNI) per Court of First capita and located in the largest business city, what court would be in Instance charge of the case in the first instance? How long does it take on average to obtain a decision from the first- Between 1 and 2 2.0 instance court for such a case (without appeal)? years Are there any statistics on the number of land disputes in the first No 0.0 instance? Number of land disputes in the largest business city in 2015: Equal access to property rights index (-2–0) 0.0 Doing Business 2017 Kuwait 60 Answer Score Do unmarried men and unmarried women have equal ownership rights Yes 0.0 to property? Do married men and married women have equal ownership rights to Yes 0.0 property? Source: Doing Business database. Doing Business 2017 Kuwait 61 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 to view and consider a potential borrower’s Strength of legal rights index (0–12) financial history (positive or negative) when assessing Rights of borrowers and lenders through risk and they allow borrowers to establish a good collateral laws credit history that will facilitate their access to credit. Protection of secured creditors’ rights through Sound collateral laws enable businesses to use their bankruptcy laws assets, especially movable property, as security to generate capital—while strong creditors’ rights have Depth of credit information index (0–8) been associated with higher ratios of private sector Scope and accessibility of credit information credit to GDP. distributed by credit bureaus and credit registries What do the indicators cover? Credit bureau coverage (% of adults) Doing Business assesses the sharing of credit information and the legal rights of borrowers and Number of individuals and firms listed in largest lenders with respect to secured transactions through credit bureau as percentage of adult population 2 sets of indicators. The depth of credit information Credit registry coverage (% of adults) index measures rules and practices affecting the coverage, scope and accessibility of credit Number of individuals and firms listed in credit registry as percentage of adult population information available through a credit registry or a 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 two case scenarios, Case A and Case B, to determine the scope Has up to 50 employees. of the secured transactions system, involving a secured borrower and a secured lender and Is 100% domestically owned, as is the lender. examining legal restrictions on the use of movable The ranking of economies on the ease of getting credit collateral (for more details on each case, see the Data is determined by sorting their distance to frontier scores Notes section of the Doing Business 2017 report). for getting credit. These scores are the distance to These scenarios assume that the borrower: frontier score for the strength of legal rights index and Is a domestic limited liability company. the depth of credit information index. Has its headquarters and only base of operations in the largest business city. For the 11 economies with a population of more than 100 million, data for a second city have been added. Doing Business 2017 Kuwait 62 GETTING CREDIT Where does the economy stand today? How well do the credit information system and collateral Globally, Kuwait stands at 118 in the ranking of 190 and bankruptcy laws in Kuwait facilitate access to credit? economies on the ease of getting credit (figure 6.1). The The economy has a score of 6.0 on the depth of credit rankings for comparator economies provide other useful information index and a score of 2.0 on the strength of information for assessing how well regulations and legal rights index (see the summary of scoring at the end institutions in Kuwait support lending and borrowing. of this chapter for details). Higher scores indicate more credit information and stronger legal rights for borrowers and lenders. Figure 6.1 How Kuwait and comparator economies rank on the ease of getting credit Source: Doing Business database. Doing Business 2017 Kuwait 63 GETTING CREDIT One way to put an economy’s score on the getting credit rights index for Kuwait and shows the scores for indicators into context is to see where the economy comparator economies as well as the regional average stands in the distribution of scores across economies. score. Figure 6.3 shows the same for the depth of credit Figure 6.2 highlights the score on the strength of legal information index. Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared — and lenders? and how widely? Economy scores on strength of legal rights index Economy scores on depth of credit information index Source: Doing Business database. Source: Doing Business database. 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. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Doing Business 2017 Kuwait 64 GETTING CREDIT What are the details? The getting credit indicators reported here for Kuwait are The data on the legal rights of borrowers and lenders are based on detailed information collected in that economy. gathered through a survey of financial lawyers and The data on credit information sharing are collected verified through analysis of laws and regulations as well through a survey of a credit registry and/or credit bureau as public sources of information on collateral and (if one exists). To construct the depth of credit bankruptcy laws. For the strength of legal rights index, a information index, a score of 1 is assigned for each of 8 score of 1 is assigned for each of 10 aspects related to features of the credit registry or credit bureau (see legal rights in collateral law and 2 aspects in bankruptcy summary of scoring below). law. Strength of legal rights index (0–12) Index score: 2.0 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents to security interests in movable 0 assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of 0 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 its 1 assets, without requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to 0 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 include a 1 maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is 0 unified geographically and by asset type, with an electronic database indexed by debtor's name? Can banks and financial institutions access borrowers’ credit information online (for example, 0 through a web interface, a system-to-system connection or both)? Does a modern collateral registry exist in which registrations, amendments, cancellations and 0 searches can be performed online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor 0 defaults outside an insolvency procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is 0 liquidated? Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law protect secured creditors’ rights by 0 providing clear grounds for relief from the stay and/or sets a time limit for it? Doing Business 2017 Kuwait 65 Strength of legal rights index (0–12) Index score: 2.0 Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell the collateral through public auction and 0 private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Depth of credit information index (0–8) Credit bureau Credit registry Index score: 6.0 Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and financial institutions - Yes No 1 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years Yes No 1 of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per Yes No 1 capita distributed? By law, do borrowers have the right to access their data No No 0 in the credit bureau or credit registry? Can banks and financial institutions access borrowers’ credit information online (for example, through an online Yes Yes 1 platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value- added service to help banks and financial institutions No No 0 assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 912,368 411,891 Number of firms 0 16,349 Total 912,368 428,240 Total percentage of adult population 31.0 14.5 Source: Doing Business database. Doing Business 2017 Kuwait 66 PROTECTING MINORITY INVESTORS Protecting minority investors matters for the ability of WHAT THE PROTECTING MINORITY companies to raise the capital they need to grow, innovate, diversify and compete. Effective regulations INVESTORS INDICATORS MEASURE define related-party transactions precisely, promote clear and efficient disclosure requirements, require Extent of disclosure index (0–10) shareholder participation in major decisions of the Review and approval requirements for related-party company and set detailed standards of accountability transactions; Disclosure requirements for related-party for company insiders. transactions What do the indicators cover? Extent of director liability index (0–10) Ability of minority shareholders to sue and hold Doing Business measures the protection of minority interested directors liable for prejudicial related-party investors from conflicts of interest through one set of transactions; Available legal remedies (damages, indicators and shareholders’ rights in corporate disgorgement of profits, fines, imprisonment, rescission governance through another. The ranking of economies of the transaction) on the strength of minority investor protections is Ease of shareholder suits index (0–10) determined by sorting their distance to frontier scores Access to internal corporate documents; Evidence for protecting minority investors. These scores are the obtainable during trial and allocation of legal expenses simple average of the distance to frontier scores for the extent of conflict of interest regulation index and the Extent of conflict of interest regulation index (0– extent of shareholder governance index. To make the 10) data comparable across economies, a case study uses Simple average of the extent of disclosure, extent of several assumptions about the business and the director liability and ease of shareholder indices transaction. Extent of shareholder rights index (0-10) The business (Buyer): Shareholders’ rights and role in major corporate decisions  Is a publicly traded corporation listed on the Extent of ownership and control index (0-10) economy’s most important stock exchange. If the Governance safeguards protecting shareholders from number of publicly traded companies listed on that undue board control and entrenchment exchange is less than 10, or if there is no stock exchange in the economy, it is assumed that Buyer Extent of corporate transparency index (0-10) is a large private company with multiple Corporate transparency on ownership stakes, shareholders. compensation, audits and financial prospects Extent of shareholder governance index (0–10)  Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer Simple average of the extent of shareholders rights, extent of ownership and control and extent of corporate where permitted, even if this is not specifically transparency indices required by law. Strength of minority investor protection index (0–  Has a supervisory board (applicable to economies 10) with a two-tier board system) on which 60% of the Simple average of the extent of conflict of interest shareholder-elected members have been appointed regulation and extent of shareholder governance indices by Mr. James, who is Buyer’s controlling shareholder and a member of Buyer’s board of directors.  Has not adopted any bylaws or articles of association that differ from default minimum standards and does not follow any nonmandatory codes, principles, recommendations or guidelines Doing Business 2017 Kuwait 67 relating to corporate governance.  Is a manufacturing company with its own distribution network. The transaction involves the following details:  Mr. James owns 60% of Buyer and elected two directors to Buyer’s five-member board.  Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores.  Mr. James proposes that Buyer pur chase Seller’s unused fleet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of Buyer’s assets and is higher than the market value.  The proposed transaction is part of the company’s ordinary course of business and is not outside the authority of the company.  Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made (that is, the transaction is not fraudulent).  The transaction causes damages to Buyer. Shareholders sue Mr. James and the other parties that approved the transaction. Doing Business 2017 Kuwait 68 PROTECTING MINORITY INVESTORS Where does the economy stand today? How strong are minority investor protections against protection index (figure 7.1). While the indicator does self-dealing in Kuwait? The economy has a score of 5.5 not measure all aspects related to the protection of on the strength of minority investor protection index, minority investors, a higher ranking does indicate that an with a higher score indicating stronger protections. economy’s regulations offer stronger minority investor protections against self-dealing in the areas measured. Globally, Kuwait stands at 81 in the ranking of 190 economies on the strength of minority investor Figure 7.1 How Kuwait and comparator economies perform on the strength of minority investor protection index Source: Doing Business database. Doing Business 2017 Kuwait 69 PROTECTING MINORITY INVESTORS One way to put an economy’s scores on the A summary of scoring for the protecting minority investors protecting minority investors indicators into context indicators at the end of this chapter provides details on is to see where the economy stands in the how the indices were calculated. distribution of scores across comparator economies. Figure 7.2 highlights the scores on the various minority investor protection indices for Kuwait. Figure 7.2 Summary of the various minority investor protection indices for Kuwait and comparator economies. Source: Doing Business database. Doing Business 2017 Kuwait 70 PROTECTING MINORITY INVESTORS Economies with the strongest protections of minority result, reforms to strengthen minority investor investors from self-dealing require detailed disclosure protections may move ahead on different fronts—such and define clear duties for directors. They also have well- as through new or amended company laws, securities functioning courts and up-to-date procedural rules that regulations or civil procedure rules. What minority give minority shareholders the means to prove their case investor protection reforms has Doing Business recorded and obtain a judgment within a reasonable time. As a in Kuwait (table 7.1)? Table 7.1 How has Kuwait strengthened minority investor protections—or not? By Doing Business report year from DB2011 to DB2017 DB year Reform Kuwait strengthened investor protections by making it DB2014 possible for minority shareholders to request the appointment of an auditor to review the company’s activities. Source: Doing Business database. 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. Doing Business 2017 Kuwait 71 PROTECTING MINORITY INVESTORS What are the details? The protecting minority investors indicators reported to disclosure, director liability, shareholder suits, here for Kuwait are based on detailed information shareholder rights, ownership and control and corporate collected through a survey of corporate and securities transparency in a standard case study (for more details, lawyers about securities regulations, company laws and see the Data Notes section of the Doing Business 2017 court rules of evidence and procedure. To construct the report). The summary below shows the details underlying six indicators on minority investor protection, scores are the scores for Kuwait. assigned to each based on a range of conditions relating Table 7.2 Summary of scoring for the protecting minority investors indicators in Kuwait Answer Score Strength of minority investor protection index (0-10) 5.5 Extent of conflict of interest regulation index (0-10) 5.7 Extent of disclosure index (0-10) 4.0 Which corporate body is legally sufficient to approve the Shareholders excluding interested 3.0 Buyer-Seller transaction? (0-3) parties Must Mr. James disclose his conflict of interest to the board No disclosure obligation 0.0 of directors? (0-2) Must Buyer disclose the transaction in published periodic Disclosure on the transaction only 1.0 filings (annual reports)? (0-2) Must Buyer immediately disclose the transaction to the No disclosure obligation 0.0 public and/or shareholders? (0-2) Must an external body review the terms of the transaction No 0.0 before it takes place? (0-1) Extent of director liability index (0-10) 9.0 Can shareholders representing 10% of Buyer's share capital sue directly or derivatively for the damage the transaction Yes 1.0 caused to Buyer? (0-1) Can shareholders hold the interested director liable for the Liable if unfair or prejudicial 2.0 damage the transaction caused to Buyer? (0-2) Can shareholders hold the other directors liable for the Liable if unfair or prejudicial 2.0 damage the transaction caused to Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer Yes 1.0 upon a successful claim by shareholders? (0-1) Must Mr. James repay profits made from the transaction No 0.0 upon a successful claim by shareholders? (0-1) Is Mr. James disqualifed or fined and imprisoned upon a Yes 1.0 successful claim by shareholders? (0-1) Can a court void the transaction upon a successful claim by Voidable if unfair or prejudicial 2.0 shareholders? (0-2) Ease of shareholder suits index (0-10) 4.0 Before suing can shareholders representing 10% of Buyer's Yes 1.0 share capital inspect the transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant Documents that the defendant 1.0 and witnesses at trial? (0-3) relied on Can the plaintiff request categories of documents from the No 0.0 Doing Business 2017 Kuwait 72 defendant without identifying specific ones? (0-1) Can the plaintiff directly question the defendant and No 0.0 witnesses at trial? (0-2) Is the level of proof required for civil suits lower than that of Yes 1.0 criminal cases? (0-1) Can shareholder plaintiffs recover their legal expenses from Yes if successful 1.0 the company? (0-2) Extent of shareholder governance index (0-10) 5.3 Extent of shareholder rights index (0-10) 3.0 Does the sale of 51% of Buyer's assets require shareholder No 0.0 approval? Can shareholders representing 10% of Buyer's share capital No 0.0 call for an extraordinary meeting of shareholders? Must Buyer obtain its shareholders’ approval every time it No 0.0 issues new shares? Do shareholders automatically receive preemption rights No 0.0 every time Buyer issues new shares? Must shareholders approve the election and dismissal of the Yes 1.0 external auditor? Are changes to the rights of a class of shares only possible if Yes 1.0 the holders of the affected shares approve? Assuming that Buyer is a limited company, does the sale of No 0.0 51% of its assets require member approval? Assuming that Buyer is a limited company, can members representing 10% call for an extraordinary meeting of No 0.0 members? Assuming that Buyer is a limited company, must all No 0.0 members consent to add a new member? Assuming that Buyer is a limited company, must a member first offer to sell his interest to the existing members before Yes 1.0 selling to a non-member? Extent of ownership and control index (0-10) 5.0 Is it forbidden to appoint the same individual as CEO and Yes 1.0 chair of the board of directors? Must the board of directors include independent and Yes 1.0 nonexecutive board members? Can shareholders remove members of the board of Yes 1.0 directors without cause before the end of their term? Must the board of directors include a separate audit Yes 1.0 committee exclusively comprising board members? Must a potential acquirer make a tender offer to all Yes 1.0 shareholders upon acquiring 50% of Buyer? Must Buyer pay dividends within a maximum period set by No 0.0 law after the declaration date? Is a subsidiary prohibited from acquiring shares issued by its No 0.0 parent company? Assuming that Buyer is a limited company, is there a No 0.0 management deadlock breaking mechanism? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to all shareholders upon No 0.0 acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer No 0.0 Doing Business 2017 Kuwait 73 distribute profits within a maximum period set by law after the declaration date? Extent of corporate transparency index (0-10) 8.0 Must Buyer disclose direct and indirect beneficial ownership Yes 1.0 stakes representing 5%? Must Buyer disclose information about board members’ other directorships as well as basic information on their Yes 1.0 primary employment? Must Buyer disclose the compensation of individual Yes 1.0 managers? Must a detailed notice of general meeting be sent 21 days No 0.0 before the meeting? Can shareholders representing 5% of Buyer’s share capital Yes 1.0 put items on the agenda for the general meeting? Must Buyer's annual financial statements be audited by an Yes 1.0 external auditor? Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members Yes 1.0 meet at least once a year? Assuming that Buyer is a limited company, can members No 0.0 representing 5% put items on the meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be audited by an external Yes 1.0 auditor? Source: Doing Business database. Doing Business 2017 Kuwait 74 PAYING TAXES Taxes are essential. The level of tax rates needs to be WHAT THE PAYING TAXES INDICATORS carefully chosen—and needless complexity in tax rules avoided. Firms in economies that rank better MEASURE on the ease of paying taxes in the Doing Business study tend to perceive both tax rates and tax Tax payments for a manufacturing company administration as less of an obstacle to business in 2014 (number per year adjusted for according to the World Bank Enterprise Survey electronic and joint filing and payment) research. Total number of taxes and contributions paid, What do the indicators cover? including consumption taxes (value added tax, sales tax or goods and service tax) Using a case scenario, Doing Business records the taxes and mandatory contributions that a medium- Method and frequency of filing and payment size company must pay in a given year as well as Time required to comply with 3 major taxes measures of the administrative burden of paying (hours per year) taxes and contributions and dealing with postfiling processes. This case scenario uses a set of financial Collecting information and computing the tax payable statements and assumptions about transactions made over the year. Information is also compiled on Completing tax return forms, filing with the frequency of filing and payments, time taken to proper agencies comply with tax laws, time taken to comply with the Arranging payment or withholding requirements of postfiling processes and time waiting for these processes to be completed. The Preparing separate tax accounting books, if required ranking of economies on the ease of paying taxes is determined by sorting their distance to frontier Total tax rate (% of profit before all taxes) scores on the ease of paying taxes. These scores are Profit or corporate income tax the simple average of the distance to frontier scores for each of the four component indicators – number Social contributions and labor taxes paid by of tax payments. time, total tax rate and postfiling the employer index – with a threshold and a nonlinear Property and property transfer taxes transformation applied to one of the component Dividend, capital gains and financial indicators, the total tax rate1. If both VAT (or GST) transactions taxes and corporate income tax apply, the postfiling index is the simple average of the distance to frontier Waste collection, vehicle, road and other taxes scores for each of the four components: the time to Postfiling Index comply with a VAT or GST refund, the time to obtain The time to comply with a VAT or GST refund a VAT or GST refund, the time to comply with a corporate income tax audit and the time to complete The time to receive a VAT or GST refund a corporate income tax audit. If only VAT (or GST) or The time to comply with a corporate income corporate income tax If onapplies, the postfiling tax audit index is the simple average of the scores for only the The time to complete a corporate income tax two components pertaining to the applicable tax. If audit neither VAT (or GST) nor corporate income tax 1 The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. The threshold is defined as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same score as the economy at the threshold. Doing Business 2017 Kuwait 75 applies, the postfiling index is not included in the ranking of the ease of paying taxes. Assumptions about the corporate income tax audit process: Taxes and mandatory contributions include corporate income tax, turnover tax and all labor  An error in the calculation of the income tax taxes and contributions paid by the company. A liability (for example, use of incorrect tax range of standard deductions and exemptions are depreciation rates, or incorrectly treating an also recorded. expense as tax deductible) leads to an incorrect All financial statement variables are proportional to income tax return and consequently an 2012 income per capita. To make the data underpayment of corporate income tax. comparable across economies, several assumptions  TaxpayerCo. discovered the error and are used. voluntarily notified the tax authority of the error TaxpayerCo is a medium-size business that started in the corporate income tax return. operations on January 1, 2014. The business starts from the same financial position in each economy. All the taxes and mandatory contributions paid during the second year of operation are recorded. Taxes and mandatory contributions are measured at all levels of government. Assumptions about the VAT refund process:  In June 2015, TaxpayerCo. makes a large capital purchase: one additional machine for manufacturing pots.  The value of the machine is 65 times income per capita of the economy.  Sales are equally spread per month (that is, 1,050 times income per capita divided by 12).  Cost of goods sold are equally expensed per month (that is, 875 times income per capita divided by 12).  The seller of the machinery is registered for VAT or general sales tax (GST).  Excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT or GST rate is the same for inputs, sales and the machine and the tax reporting period is every month. Doing Business 2017 Kuwait 76 PAYING TAXES Where does the economy stand today? What is the administrative burden of complying with tax 8.3 the end of this chapter for details). Most indicator obligations and postfiling processes in Kuwait—and how sets refer to a case scenario in the largest business city of much do firms pay in taxes? Globally, Kuwait stands at 6 an economy, except for 11 economies for which the data in the ranking of 190 economies on the ease of paying are a population-weighted average of the 2 largest taxes (figure 8.1). The rankings for comparator business cities. See the chapter on distance to frontier economies and the regional average ranking provide and ease of doing business ranking at the end of this other useful information for assessing the tax compliance profile for more details. burden for businesses in Kuwait (see table 8.2 and table . Figure 8.1 How Kuwait and comparator economies rank on the ease of paying taxes Source: Doing Business database. Doing Business 2017 Kuwait 77 PAYING TAXES What are the details? The indicators reported here for Kuwait are based on LOCATION OF STANDARDIZED COMPANY the taxes and contributions that would be paid by a standardized case study company used by Doing Business in collecting the data (see the section in this City: Kuwait City chapter on what the indicators cover). Tax practitioners are asked to review a set of financial statements as well as a standardized list of assumptions and transactions that the company The taxes and contributions paid are listed in table 8.2, completed during its 2nd year of operation. along with the associated number of payments, time Respondents are asked how much taxes and and tax rate. mandatory contributions the business must pay, how these taxes are filed and paid, how much time The postfiling index is based on four components—the taxpayers spend preparing, filing and paying three time to comply with a VAT or GST refund, the time to major taxes (profit taxes, labor taxes including obtain a VAT or GST refund, the time to comply with a mandatory contributions and consumption taxes) and corporate income tax audit and the time to complete a how much time taxpayers spend complying with corporate income tax audit. These components are postfiling processes and waiting for these processes based on expanded case study assumptions. If only VAT to be completed. (or GST) or corporate income tax applies for an economy, the postfiling index is the simple average of the scores for only the two components pertaining to the applicable tax. If neither VAT (or GST) nor corporate income tax applies, the postfiling index is not included in the ranking of the ease of paying taxes. Table 8.2 Summary of tax rates and administration 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 Employer paid -Social security gross 12 98 11.5% 12.97 contributions salaries Employee paid - Social security gross not 0 withheld 10.5% 0.00 contributions salaries included Totals 12.0 98.0 13.0 Source: Doing Business database. Doing Business 2017 Kuwait 78 TRADING ACROSS BORDERS In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS economies easier is increasingly important for INDICATORS MEASURE FOR IMPORT & EXPORT business. Excessive use of paper documents, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead Documentary compliance to extra costs and delays for exporters and Obtaining, preparing and submitting documents importers, stifling trade potential. during transport, clearance, inspections and port or border handling in origin economy What do the indicators cover? Obtaining, preparing and submitting documents Doing Business records the time and cost required by destination economy and any transit associated with the logistical process of exporting economies and importing goods. Doing Business measures the Covers all documents required by law and in time and cost (excluding tariffs) associated with practice, including electronic submissions of three sets of procedures—documentary information as well as non-shipment-specific compliance, border compliance and domestic documents necessary to complete the trade transport—within the overall process of exporting Border compliance or importing a shipment of goods. The ranking of economies on the ease of trading across borders is Customs clearance and inspections determined by sorting their distance to frontier Inspections by other agencies (if applied to more scores for trading across borders. These scores are than 10% of shipments) the simple average of the distance to frontier Port or border handling scores for the time and cost for documentary compliance and border compliance to export and Processing of documents during clearance, import (domestic transport is not used for inspections and port or border handling. calculating the ranking). Domestic transport Loading and unloading of shipment at warehouse, To make the data comparable across economies, a dry port or border few assumptions are made about the traded goods and the transactions: Transport by most widely used mode between warehouse and terminal or dry port Time Traffic delays and road police checks while Time is measured in hours, and 1 day is 24 hours shipment is en route (for example, 22 days are recorded as 22 × 24 = 528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, suppose Cost that documents are submitted to a customs Insurance cost and informal payments for which no receipt agency at 8:00 a.m., are processed overnight and is issued are excluded from the costs recorded. Costs are can be picked up at 8:00 a.m. the next day. In this reported in U.S. dollars. Contributors are asked to convert case the time for customs clearance would be local currency into U.S. dollars based on the exchange rate recorded as 24 hours because the actual procedure prevailing on the day they answer the questionnaire. took 24 hours. Doing Business 2017 Kuwait 79 Assumptions of the case study  If government fees are determined by the value of the shipment, the value is assumed to be $50,000.  For each of the 190 economies covered by Doing Business, it is assumed that a shipment  The product is new, not secondhand or used travels from a warehouse in the largest merchandise. business city of the exporting economy to a  The exporting firm is responsible for hiring and paying warehouse in the largest business city of the for a freight forwarder or customs broker (or both) importing economy. For 11 economies the and pays for all costs related to international shipping, data are also collected, under the same case domestic transport, clearance and mandatory study assumptions, for the second largest inspections by customs and other government business city. agencies, port or border handling, documentary  The import and export case studies assume compliance fees and the like for exports. The different traded products. It is assumed that importing firm is responsible for the above costs for each economy imports a standardized imports. shipment of 15 metric tons of containerized  The mode of transport is the one most widely used for auto parts (HS 8708) from its natural import the chosen export or import product and the trading partner—the economy from which it imports partner, as is the seaport, airport or land border the largest value (price times quantity) of auto crossing. parts. It is assumed that each economy exports the product of its comparative advantage  All electronic submissions of information requested by (defined by the largest export value) to its any government agency in connection with the natural export partner—the economy that is shipment are considered to be documents obtained, the largest purchaser of this product. Special prepared and submitted during the export or import products, such as precious metal and gems, process. live animals and pharmaceuticals are excluded  A port or border is defined as a place (seaport, airport from the list of possible export products, or land border crossing) where merchandise can enter however, and the second largest product or leave an economy. category is considered as needed.  Government agencies considered relevant are  A shipment is a unit of trade. Export shipments agencies such as customs, port authorities, road do not necessarily need to be containerized, police, border guards, standardization agencies, while import shipments of auto parts are ministries or departments of agriculture or industry, assumed to be containerized. national security agencies and any other government authorities. Doing Business 2017 Kuwait 80 TRADING ACROSS BORDERS Where does the economy stand today? The Trading across Borders indicator refers to a case Globally, Kuwait stands at 157 in the ranking of 190 study scenario of a warehouse in the largest business city economies on the ease of trading across borders (figure of an economy (except for 11 economies for which the 9.1). data are a population-weighted average of the 2 largest While not included in the distance to frontier or ease of business cities) trading with the main import and export doing business ranking, data on domestic transportation partner through the economy’s main border crossing. is also recorded for all economies and provided in Table 9.3. Figure 9.1 How Kuwait and comparator economies rank on the ease of trading across borders Source: Doing Business database. Doing Business 2017 Kuwait 81 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 Business tools to facilitate trade—including single windows, risk- recorded in Kuwait (table 9.1)? based inspections and electronic data interchange Table 9.1 How has Kuwait made trading across borders easier—or not? By Doing Business report year from DB2011 to DB2017 DB year Reform Kuwait made exporting and importing easier by introducing DB2017 customs e-links and electronic exchange of information among various agencies. Source: Doing Business database. 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. Doing Business 2017 Kuwait 82 TRADING ACROSS BORDERS What are the details? The indicators reported here for Kuwait are based on LOCATION OF STANDARDIZED COMPANY a set of specific predefined procedures for trading a shipment of goods by the most widely used mode of transport (whether sea or land or some combination City: Kuwait City of these). The information on the time and cost to complete export and import is collected from local The details on the predefined set of procedures, and the freight forwarders, customs brokers and traders. associated time and cost, for exporting and importing a shipment of goods are listed in the summary bellow, along with the required documents. Table 9.2 Summary of export and import time and cost for trading across borders in Kuwait Kuwait Middle East & North Africa Time to export: Border compliance (hours) 72 61 Cost to export: Border compliance (USD) 602 437 Time to export: Documentary compliance (hours) 32 74 Cost to export: Documentary compliance (USD) 191 248 Time to import: Border compliance (hours) 215 115 Cost to import: Border compliance (USD) 646 527 Time to import: Documentary compliance (hours) 120 96 Cost to import: Documentary compliance (USD) 332 290 Source: Doing Business database. Table 9.3 Summary of trading details, transport time and documents for trading across borders in Kuwait Export Import HS 8708: Parts and accessories Product HS 29 : Organic chemicals of motor vehicles Trade partner India Japan Border Shuwaikh port Shuwaikh port Distance (km) 10 10 Domestic transport time (hours) 2 2 Domestic transport cost (USD) 153 125 Source: Doing Business database. Note: Although Doing Business collects and publishes data on the time and cost for domestic transport, it does not use these data in calculating the distance to frontier score for trading across borders or the ranking on the ease of trading across borders. Doing Business 2017 Kuwait 83 Documents to export Bill of lading Export license Certificate of origin Packing list Invoice Delivery order Chemical license Customs export declaration EPA certificate Documents to import Trade license Certificate of origin Cargo release order Terminal handling receipt Certificate of conformity Commercial invoice Bayan Bill of lading Packing list Environment Document Source: Doing Business database. Note: Doing Business continues to collect data on the number of documents needed to trade internationally. Unlike in previous years, however, these data are excluded from the calculation of the distance to frontier score and ranking. The time and cost for documentary compliance serve as better measures of the overall cost and complexity of compliance with documentary requirements than does the number of documents required. Doing Business 2017 Kuwait 84 Figure 9.2 Summary of Kuwait on the ease of trading across borders Export Import Source: Doing Business database. Doing Business 2017 Kuwait 85 ENFORCING CONTRACTS WHAT THE ENFORCING CONTRACTS Effective commercial dispute resolution has many benefits. Courts are essential for entrepreneurs INDICATORS MEASURE because they interpret the rules of the market and protect economic rights. Efficient and transparent Time required to enforce a contract through courts encourage new business relationships because the courts (calendar days) businesses know they can rely on the courts if a new customer fails to pay. Speedy trials are essential for Time to file and serve the case small enterprises, which may lack the resources to Time for trial and to obtain the judgment stay in business while awaiting the outcome of a long Time to enforce the judgment court dispute. Cost required to enforce a contract through What do the indicators cover? the courts (% of claim) Doing Business measures the time and cost for Attorney fees resolving a standardized commercial dispute through a local first-instance court. In addition, Doing Court fees Business measures the quality of judicial processes Enforcement fees index, evaluating whether each economy has Quality of judicial processes index (0-18) adopted a series of good practices that promote quality and efficiency in the court system. The Court structure and proceedings (0-5) ranking of economies on the ease of enforcing Case management (0-6) contracts is determined by sorting their distance to frontier scores. These scores are the simple average Court automation (0-4) of the distance to frontier scores for each of the Alternative dispute resolution (0-3) component indicators. The dispute in the case study involves the breach of a sales contract between 2 domestic businesses. The  The seller sues the buyer before the court with case study assumes that the court hears an expert on jurisdiction over commercial cases worth 200% of the quality of the goods in dispute. This distinguishes income per capita or $5,000. the case from simple debt enforcement. To make the  The seller requests a pretrial attachment to secure data comparable across economies, Doing Business the claim. uses several assumptions about the case:  The dispute on the quality of the goods requires an expert opinion.  The dispute concerns a lawful transaction  The judge decides in favor of the seller; there is no between two businesses (Seller and Buyer), both appeal. located in the economy’s largest business city. For 11 economies the data are also collected for  The seller enforces the judgment through a public the second largest business city. sale of the buyer’s movable assets.  The buyer orders custom-made goods, then fails to pay.  The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. Doing Business 2017 Kuwait 86 ENFORCING CONTRACTS Where does the economy stand today? How efficient is the process of resolving a commercial and ease of doing business ranking at the end of this dispute through the courts in Kuwait? According to data profile for more details. collected by Doing Business, contract enforcement takes Globally, Kuwait stands at 66 in the ranking of 190 566.0 days and costs 18.6% of the value of the claim. economies on the ease of enforcing contracts (figure Most indicator sets refer to the largest business city of an 10.1). The rankings for comparator economies and the economy, except for 11 economies for which the data regional average provide other useful benchmarks for are a population-weighted average of the 2 largest assessing the efficiency of contract enforcement in business cities. See the chapter on distance to frontier Kuwait. Figure 10.1 How Kuwait and comparator economies rank on the ease of enforcing contracts Source: Doing Business database. Doing Business 2017 Kuwait 87 ENFORCING CONTRACTS What are the details? The data on time and cost reported here for Kuwait ECONOMY DETAILS are built by following the step-by-step evolution of a commercial sale dispute within the court, under the assumptions about the case described above (figure Claim value: KWD 24,531 10.2). The time and cost of resolving the standardized dispute are identified through study of Kuwait City Court of First the codes of civil procedure and other court Court name: Instance, Commercial regulations, as well as through questionnaires Circuit completed by local litigation lawyers (and, in a quarter of the economies covered by Doing Business, City: Kuwait City by judges as well). Figure 10.2 Time and cost of contract enforcement in Kuwait and comparator economies Source: Doing Business database. Doing Business 2017 Kuwait 88 Table 10.2 Details on time and cost for enforcing contracts in Kuwait Middle East & Indicator Kuwait North Africa average Time (days) 566 653 Filing and service 26 Trial and judgment 420 Enforcement of judgment 120 Cost (% of claim) 18.6 25.0 Attorney fees 15.0 Court fees 2.6 Enforcement fees 1.0 Source: Doing Business database. Doing Business 2017 Kuwait 89 ENFORCING CONTRACTS Quality of judicial processes index The quality of judicial processes index measures The scores reported here show which of these good whether each economy has adopted a series of good practices are available in Kuwait (figure 10.3). practices in its court system in four areas: court This methodology was initially developed by Djankov and structure and proceedings, case management, court others (2003) and is adopted here with several changes. automation and alternative dispute resolution. The The quality of judicial processes index was introduced in score on the quality of judicial processes index is the Doing Business 2016. The good practices tested in this sum of the scores on these 4 sub-components. The index were developed on the basis of internationally index ranges from 0 to 18, with higher values recognized good practices promoting judicial efficiency. indicating more efficient judicial processes. Figure 10.3 Quality of judicial processes index in Kuwait and comparator economies Doing Business 2017 Kuwait 90 Source: Doing Business database. Table 10.3 Details of the quality of judicial processes index in Kuwait Answer Score Quality of judicial processes index (0-18) 7.0 Court structure and proceedings (0-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing Yes 1.5 commercial cases? 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small Yes claims? 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in No -1.0 court as a man's? Case management (0-6) 1.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in Yes a civil case? 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that No can be granted? 2.b. Are adjournments limited to unforeseen and exceptional No circumstances? 2.c. If rules on adjournments exist, are they respected in more than 50% n.a. of cases? 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) clearance rate report; Yes 1.0 (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques No 0.0 used before the competent court? 5. Are there any electronic case management tools in place within the No 0.0 competent court for use by judges? Doing Business 2017 Kuwait 91 Answer Score 6. Are there any electronic case management tools in place within the No 0.0 competent court for use by lawyers? Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated No 0.0 platform within the competent court? 2. Is it possible to carry out service of process electronically for claims No 0.0 filed before the competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public through publication in official gazettes, No in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made available to the general public through No publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or section of the applicable code of civil Yes procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy—that cannot be submitted to No arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the Yes courts? 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or section of the applicable code of civil No procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or conciliation is successful, a refund of Yes court filing fees, income tax credits or the like)? Source: Doing Business database. Doing Business 2017 Kuwait 92 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 businesses Time required to recover debt (years) to normal operation and increase returns to Measured in calendar years creditors. By clarifying the expectations of creditors and debtors about the outcome of insolvency Appeals and requests for extension are proceedings, well-functioning insolvency systems can included facilitate access to finance, save more viable Cost required to recover debt (% of debtor’s businesses and sustainably grow the economy. estate) What do the indicators cover? Measured as percentage of estate value Doing Business studies the time, cost and outcome of Court fees insolvency proceedings involving domestic legal Fees of insolvency administrators entities. These variables are used to calculate the Lawyers’ fees recovery rate, which is recorded as cents on the Assessors’ and auctioneers’ fees dollar recovered by secured creditors through Other related fees reorganization, liquidation or debt enforcement Outcome (foreclosure or receivership) proceedings. To determine the present value of the amount Whether business continues operating as a recovered by creditors, Doing Business uses the going concern or business assets are sold lending rates from the International Monetary Fund, piecemeal supplemented with data from central banks and the Recovery rate for creditors Economist Intelligence Unit. Measures the cents on the dollar recovered To make the data on the time, cost and outcome by secured creditors comparable across economies, several assumptions Outcome for the business (survival or not) about the business and the case are used: determines the maximum value that can be  A hotel located in the largest city (or cities) has recovered 201 employees and 50 suppliers. The hotel Official costs of the insolvency proceedings experiences financial difficulties. are deducted  The value of the hotel is 100% of the income per Depreciation of furniture is taken into capita or the equivalent in local currency of USD account 200,000, whichever is greater. Present value of debt recovered  The hotel has a loan from a domestic bank, Strength of insolvency framework index (0- secured by a mortgage over the hotel’s real 16) estate. The hotel cannot pay back the loan, but makes enough money to operate otherwise. Sum of the scores of four component indices: Commencement of proceedings index (0-3) In addition, Doing Business evaluates the adequacy and integrity of the existing legal framework Management of debtor’s assets index (0-6) applicable to liquidation and reorganization Reorganization proceedings index (0-3) proceedings through the strength of insolvency Creditor participation index (0-4) framework index. The index tests whether economies adopted internationally accepted good practices in management of debtor’s assets, reorganization four areas: commencement of proceedings, proceedings and creditor participation. Doing Business 2017 Kuwait 93 RESOLVING INSOLVENCY Where does the economy stand today? Globally, Kuwait stands at 108 in the ranking of 190 not measure insolvency proceedings of individuals and economies on the ease of resolving insolvency (figure financial institutions. The data are derived from 11.1). The ranking of economies on the ease of resolving questionnaire responses by local insolvency practitioners insolvency is determined by sorting their distance to and verified through a study of laws and regulations as frontier scores for resolving insolvency. These scores are well as public information on bankruptcy systems. the simple average of the distance to frontier scores for the recovery rate and the strength of insolvency framework index. The resolving insolvency indicator does Figure 11.1 How Kuwait and comparator economies rank on the ease of resolving insolvency Source: Doing Business database. Doing Business 2017 Kuwait 94 RESOLVING INSOLVENCY Recovery of debt in insolvency Data on the time, cost and outcome refer to the most average recovery rate is 32.9 cents on the dollar. Most likely in-court insolvency procedure applicable under indicator sets refer to a case scenario in the largest specific case study assumptions. business city of an economy, except for 11 economies for which the data are a population-weighted average of the According to data collected by Doing Business, resolving 2 largest business cities. insolvency takes 4.2 years on average and costs 10.0% of the debtor’s estate, with the most likely outcome being that the company will be sold as piecemeal sale. The Figure 11.2 Efficiency of proceedings - time, cost and recovery rate in Kuwait and comparator economies. Source: Doing Business database. Note: The recovery rate is calculated based on the time, cost and outcome of insolvency proceedings involving domestic legal entities and is recorded as cents on the dollar recovered by secured creditors. The calculation takes into account the outcome: whether the business emerges from the proceedings as a going concern or the assets are sold piecemeal. Then the costs of the proceedings are deducted. Finally, the value lost as a result of the time the money remains tied up in insolvency proceedings is taken into account. The recovery rate is the present value of the remaining proceeds, based on end-2015 lending rates. Doing Business 2017 Kuwait 95 Table 11.1 Details of data on efficiency of insolvency proceedings in Kuwait Indicator Answer Explanation Security documents relating to collateral (Hotel) located in Kuwait would be enforced before the Court of First Instance. After Mirage's default, BizBank would initiate foreclosure by enforcing its security interest over Mirage's assets. Other unsecured creditors will file petition at the Court attempting to Proceeding foreclosure convert the foreclosure proceeding into liquidation which however won't stay BizBank to proceed with actions against the property securing their rights according to Commercial Law Article 597. Foreclosure proceedings may only be initiated in the event the security documents were endorsed by a writ of execution. The hotel will stop operating and Mirage assets will be sold piecemeal in a Outcome piecemeal sale public auction upon the completion of the proceeding. The foreclosure procedure takes approximately 4.2 years until BizBank is repaid some or all of the money owed to it. The delay is largely due to the difficulty in scheduling a court hearing to resolve appeals from relevant parties to Time (in BizBank's foreclosure attempt, as well as the preparation and implementation 4.2 years) of the auction. It takes at least half a year (probably 8 months) for the Court to review BizBank's initial foreclosure request. If appeals arise from unsecured creditors , the Court will hold hearings and make the decision, which can take up to 3 years. The costs associated with the case would amount to approximately 10% of the value of the debtor's estate. Cost incurred during the entire insolvency process Cost (% of 10.0 mainly include court or government agency fees (1%), attorney fees (5%), fees estate) of accountants, assessors, inspectors and other professionals (1%), and fees of auctioneers (1%-5%). Recovery rate: 32.9 Source: Doing Business database. Doing Business 2017 Kuwait 96 LABOR MARKET REGULATION Doing Business studies the flexibility of regulation of food retail sector and they apply even to firms employment, specifically as it relates to the areas of that are not party to them. hiring, working hours and redundancy. Doing Business  Abides by every law and regulation but does not also measures several aspects of job quality such as the grant workers more benefits than those availability of maternity leave, paid sick leave and the mandated by law, regulation or (if applicable) equal treatment of men and women at the workplace. collective bargaining agreements. Doing Business 2017 presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org). The data on labor market regulation are based on a detailed questionnaire on employment regulations that is completed by local lawyers and public officials. Employment laws and regulations as well as secondary sources are reviewed to ensure accuracy. To make the data comparable across economies, several assumptions about the worker and the business are used. The worker:  Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.  Is a full-time employee.  Is not a member of the labor union, unless membership is mandatory. The business:  Is a limited liability company (or the equivalent in the economy).  Operates a supermarket or grocery store in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.  Has 60 employees.  Is subject to collective bargaining agreements if such agreements cover more than 50% of the Doing Business 2017 Kuwait 97 LABOR MARKET REGULATION Employment laws are needed to protect workers from the past 5 years did so in ways that increased labor arbitrary or unfair treatment and to ensure efficient market flexibility. What changes did Kuwait adopt that contracting between employers and workers. Many affected the Doing Business indicators on labor market economies that changed their labor market regulation in regulation (table 12.1)? Table 12.1 What changes did Kuwait make in terms of labor market regulation? DB year Reform Kuwait increased the number of days of paid annual leave and DB2011 increased the notice period applicable in case of redundancy dismissals. Source: Doing Business database. Doing Business 2017 Kuwait 98 LABOR MARKET REGULATION What are the details? The data reported here for Kuwait are based on a Employment laws and regulations as well as secondary detailed survey of labor market regulation that is sources are reviewed to ensure accuracy. completed by local lawyers and public officials. Hiring Data on hiring cover five areas: (i) whether fixed-term minimum wage to the average value added per worker contracts are prohibited for permanent tasks; (ii) the (the ratio of an economy’s GNI per capita to the maximum cumulative duration of fixed-term contracts; working-age population as a percentage of the total (iii) the minimum wage for a cashier, age 19, with one population). year of work experience; and (iv) the ratio of the Hiring Data Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 60 months (Art. 13) Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study 251.1 (US$/month) Ratio of minimum wage to value added per worker 0.1 Source: Doing Business database. Doing Business 2017 Kuwait 99 LABOR MARKET REGULATION Working hours Data on working hours cover nine areas: i) the maximum and nonnursing women can work the same night hours number of working days allowed per week; (ii) the as men*; (vii) whether there are restrictions on weekly premium for night work (as a percentage of hourly pay); holiday work; (viii) whether there are restrictions on (iii) the premium for work on a weekly rest day (as a overtime work; and (ix) the average paid annual leave for percentage of hourly pay); (iv) the premium for overtime workers with 1 year of tenure, 5 years of tenure, and 10 work (as a percentage of hourly pay); (v) whether there years of tenure. are restrictions on night work; (vi) whether nonpregnant Working Hours Data Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 25.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night No hours as men Restrictions on weekly holiday? Yes Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 30.0 Paid annual leave for a worker with 5 years of tenure (working days) 30.0 Paid annual leave for a worker with 10 years of tenure (working days) 30.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 30.0 working days) Source: Doing Business database. Doing Business 2017 Kuwait 100 LABOR MARKET REGULATION Redundancy rules Data on redundancy cover nine areas: (i) the length of whether the employer needs approval from a third party the maximum probationary period (in months) for to terminate one redundant worker; (vi) whether the permanent employees; (ii) whether redundancy is employer needs approval from a third party to terminate allowed as a basis for terminating workers; (iii) whether a group of nine redundant workers; (vii) whether the law the employer needs to notify a third party (such as a requires the employer to reassign or retrain a worker government agency) to terminate one redundant worker; before making the worker redundant; (viii) whether (iv) whether the employer needs to notify a third party to priority rules apply for redundancies; and (ix) whether terminate a group of nine redundant workers; (v) priority rules apply for reemployment. Redundancy rules Data Maximum length of probationary period (months) 3.0 Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine 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 2017 Kuwait 101 LABOR MARKET REGULATION Redundancy cost Redundancy cost measures the cost of advance notice severance payments applicable to a worker with 1 year of requirements and severance payments due when tenure, a worker with 5 years and a worker with 10 years terminating a redundant worker, expressed in weeks of is considered. One month is recorded as 4 and 1/3 salary. The average value of notice requirements and weeks. Redundancy cost indicator (in salary weeks) Data Notice period for redundancy dismissal for a worker with 1 year of tenure 13.0 Notice period for redundancy dismissal for a worker with 5 years of tenure 13.0 Notice period for redundancy dismissal for a worker with 10 years of tenure 13.0 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 13.0 of tenure) Severance pay for redundancy dismissal for a worker with 1 year of tenure 2.1 Severance pay for redundancy dismissal for a worker with 5 years of tenure 10.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 32.5 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 15.1 of tenure) Source: Doing Business database. Doing Business 2017 Kuwait 102 LABOR MARKET REGULATION Job quality Doing Business introduced new data on job quality in leave receive 100% of wages; (vi) the availability of five 2015. Doing Business 2017 covers eight questions on job fully paid days of sick leave a year; (vii) whether a worker quality (i) whether the law mandates equal remuneration is eligible for an unemployment protection scheme after for work of equal value; (ii) whether the law mandates one year of service; and (viii) the minimum duration of nondiscrimination based on gender in hiring; (iii) the contribution period (in months) required for whether the law mandates paid or unpaid maternity unemployment protection. leave; (iv) the minimum length of paid maternity leave (in . calendar days); (v) whether employees on maternity Job Quality Data Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 70.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? n.a. Source: Doing Business database. Doing Business 2017 Kuwait 103 DISTANCE TO FRONTIER AND EASE OF DOING BUSINESS RANKING Doing Business presents results for two aggregate even though it is no longer at the frontier in a measures: the distance to frontier score and the ease of subsequent year. doing business ranking, which is based on the distance For scores such as those on the strength of legal rights to frontier score. The ease of doing business ranking index or the quality of land administration index, the compares economies with one another; the distance to frontier is set at the highest possible value. For the total frontier score benchmarks economies with respect to tax rate, consistent with the use of a threshold in regulatory best practice, showing the absolute distance calculating the rankings on this indicator, the frontier is to the best performance on each Doing Business defined as the total tax rate at the 15th percentile of the indicator. When compared across years, the distance to overall distribution for all years included in the analysis frontier score shows how much the regulatory up to and including Doing Business 2015. For the time to environment for local entrepreneurs in an economy has pay taxes the frontier is defined as the lowest time changed over time in absolute terms, while the ease of recorded among all economies that levy the three major doing business ranking can show only how much the taxes: profit tax, labor taxes and mandatory regulatory environment has changed relative to that in contributions, and value added tax (VAT) or sales tax. For other economies. the different times to trade across borders, the frontier is Distance to Frontier defined as 1 hour even though in many economies the time is less than that. The distance to frontier score captures the gap between an economy’s performance and a measure of best In the same formulation, to mitigate the effects of practice across the entire sample of 41 indicators for 10 extreme outliers in the distributions of the rescaled data Doing Business topics (the labor market regulation for most component indicators (very few economies indicators are excluded). For starting a business, for need 700 days to complete the procedures to start a example, New Zealand has the smallest number of business, but many need 9 days), the worst performance procedures required (1), and New Zealand the shortest is calculated after the removal of outliers. The definition time to fulfill them (0.5 days). Slovenia has the lowest of outliers is based on the distribution for each cost (0.0), and Australia, Colombia and 111 other component indicator. To simplify the process two rules economies have no paid-in minimum capital were defined: the 95th percentile is used for the requirement (table 14.1 in the Doing Business 2017 indicators with the most dispersed distributions report). (including minimum capital, number of payments to pay taxes, and the time and cost indicators), and the 99th Calculation of the distance to frontier score percentile is used for number of procedures. No outlier is Calculating the distance to frontier score for each removed for component indicators bound by definition economy involves two main steps. In the first step or construction, including legal index scores (such as the individual component indicators are normalized to a depth of credit information index, extent of conflict of common unit where each of the 41 component interest regulation index and strength of insolvency indicators y (except for the total tax rate) is rescaled framework index) and the recovery rate (figure 14.1 in using the linear transformation (worst − y)/(worst − the Doing Business 2017 report). frontier). In this formulation the frontier represents the In the second step for calculating the distance to frontier best performance on the indicator across all economies score, the scores obtained for individual indicators for since 2005 or the third year in which data for the each economy are aggregated through simple averaging indicator were collected. Both the best performance and into one distance to frontier score, first for each topic the worst performance are established every five years and then across all 10 topics: starting a business, dealing based on the Doing Business data for the year in which with construction permits, getting electricity, registering they are established, and remain at that level for the five property, getting credit, protecting minority investors, years regardless of any changes in data in interim years. paying taxes, trading across borders, enforcing contracts Thus an economy may set the frontier for an indicator and resolving insolvency. More complex aggregation methods—such as principal components and unobserved components—yield a ranking nearly Doing Business 2017 Kuwait 104 identical to the simple average used by Doing Business2. The nonlinear transformation is not based on any Thus Doing Business uses the simplest method: economic theory of an “optimal tax rate” that minimizes weighting all topics equally and, within each topic, giving distortions or maximizes efficiency in an economy’s equal weight to each of the topic components 3. overall tax system. Instead, it is mainly empirical in nature. The nonlinear transformation along with the An economy’s distance to frontier score is indicated on a threshold reduces the bias in the indicator toward scale from 0 to 100, where 0 represents the worst economies that do not need to levy significant taxes on performance and 100 the frontier. All distance to frontier companies like the Doing Business standardized case calculations are based on a maximum of five decimals. study company because they raise public revenue in However, indicator ranking calculations and the ease of other ways—for example, through taxes on foreign doing business ranking calculations are based on two companies, through taxes on sectors other than decimals. manufacturing or from natural resources (all of which are The difference between an economy’s distance to outside the scope of the methodology). In addition, it frontier score in any previous year and its score in 2017 acknowledges the need of economies to collect taxes illustrates the extent to which the economy has closed from firms. the gap to the regulatory frontier over time. And in any Calculation of scores for economies with 2 cities given year the score measures how far an economy is covered from the best performance at that time. For each of the 11 economies in which Doing Business Treatment of the total tax rate collects data for the second largest business city as well The total tax rate component of the paying taxes as the largest one, the distance to frontier score is indicator set enters the distance to frontier calculation in calculated as the population-weighted average of the a different way than any other indicator. The distance to distance to frontier scores for these two cities (table frontier score obtained for the total tax rate is 13.1). This is done for the aggregate score, the scores for transformed in a nonlinear fashion before it enters the each topic and the scores for all the component distance to frontier score for paying taxes. As a result of indicators for each topic. the nonlinear transformation, an increase in the total tax rate has a smaller impact on the distance to frontier score for the total tax rate—and therefore on the distance to frontier score for paying taxes—for economies with a below-average total tax rate than it would have had before this approach was adopted in Doing Business 2015 (line B is smaller than line A in figure 14.2 of the Doing Business 2017 report). And for economies with an extreme total tax rate (a rate that is very high relative to the average), an increase has a greater impact on both these distance to frontier scores than it would have had before (line D is bigger than line C in figure 14.2 of the Doing Business 2017 report). 2 See Djankov, Manraj and others (2005). Principal components and unobserved components methods yield a ranking nearly identical to that from the simple average method because both these methods assign roughly equal weights to the topics, since the 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 importance in the context of a specific economy. 3 For getting credit, indicators are weighted proportionally, according to their contribution to the total score, with a weight of 60% assigned to the strength of legal rights index and 40% to the depth of credit information index. Indicators for all other topics are assigned equal weights Doing Business 2017 Kuwait 105 Table 13.1 Weights used in calculating the distance to the most. First, it selects the economies that in 2015/16 frontier scores for economies with 2 cities covered implemented regulatory reforms making it easier to do business in 3 or more of the 10 topics included in this Economy City Weight (%) year’s aggregate distance to frontier score. Twenty-nine Dhaka 78 Bangladesh economies meet this criterion: Algeria; Azerbaijan; Chittagong 22 São Paulo 61 Bahrain; Belarus; Brazil; Brunei Darussalam; Burkina Faso; Brazil Rio de Janeiro 39 Côte d’Ivoire; Georgia; India; Indonesia; Kazakhstan; Shanghai 55 Kenya; Madagascar; Mali; Mauritania; Morocco; Niger; China Beijing 45 Pakistan; Poland; Senegal; Serbia; Singapore; Thailand; Mumbai 47 Togo; Uganda; the United Arab Emirates; Uzbekistan and India Delhi 53 Vanuatu. Second, Doing Business sorts these economies Jakarta 78 Indonesia on the increase in their distance to frontier score from Surabaya 22 Tokyo 65 the previous year using comparable data. Japan Osaka 35 Mexico City 83 Selecting the economies that implemented regulatory Mexico Monterrey 17 reforms in at least three topics and had the biggest Lagos 77 improvements in their distance to frontier scores is Nigeria Kano 23 intended to highlight economies with ongoing, broad- Karachi 65 based reform programs. The improvement in the Pakistan Lahore 35 distance to frontier score is used to identify the top Moscow 70 Russian Federation improvers because this allows a focus on the absolute St. Petersburg 30 improvement—in contrast with the relative improvement New York 60 United States Los Angeles 40 shown by a change in rankings—that economies have made in their regulatory environment for business. Source: United Nations, Department of Economic and Social Affairs, Population Division, World Urbanization Prospects, 2014 Revision. http://esa.un.org/unpd/wup/CD- ROM/Default.aspx. Ease of Doing Business ranking The ease of doing business ranking ranges from 1 to 190. Economies that improved the most across 3 or more The ranking of economies is determined by sorting the Doing Business topics in 2015/16 aggregate distance to frontier scores, rounded to 2 Doing Business 2017 uses a simple method to calculate decimals. which economies improved the ease of doing business Doing Business 2017 Kuwait 106 RESOURCES ON THE DOING BUSINESS WEBSITE Current features Law library News on the Doing Business project Online collection of business laws and regulations http://www.doingbusiness.org relating to business http://www.doingbusiness.org/law-library Rankings How economies rank—from 1 to 190 Contributors http://www.doingbusiness.org/rankings More than 12,500 specialists in 190 economies who participate in Doing Business Data http://www.doingbusiness.org/contributors/doing- All the data for 190 economies—topic rankings, business indicator values, lists of regulatory procedures and details underlying indicators Entrepreneurship data http://www.doingbusiness.org/data Data on business density (number of newly registered companies per 1,000 working-age Reports people) for 136 economies Access to Doing Business reports as well as http://www.doingbusiness.org/data/exploretopics/ent subnational and regional reports, case studies and repreneurship customized economy and regional profiles http://www.doingbusiness.org/reports Distance to frontier Data benchmarking 190 economies to the frontier in Methodology regulatory practice and a distance to frontier The methodologies and research papers underlying calculator Doing Business http://www.doingbusiness.org/data/distance-to- http://www.doingbusiness.org/methodology frontier Research Information on good practices Abstracts of papers on Doing Business topics and Showing where the many good practices identified related policy issues by Doing Business have been adopted http://www.doingbusiness.org/research http://www.doingbusiness.org/data/good-practice Doing Business reforms Short summaries of DB2017 business regulation reforms and lists of reforms since DB2008 http://www.doingbusiness.org/reforms Historical data Customized data sets since DB2004 http://www.doingbusiness.org/custom-query Doing Business 2017 Kuwait 107