59182 Solomon Islands © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470; Internet www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher,The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail pubrights@worldbank.org. Additional copies of Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business 2010: Reforming through Difficult Times, Doing Business 2009, Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Business in 2004:Understanding Regulations may be purchased at www.doingbusiness.org. ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Solomon Islands. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Solomon Islands is ranked 96 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Solomon Islands - Compared to global good practice economy as well as selected economies: Solomon Islands's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 96 Starting a Business 112 Dealing with Construction Permits 46 Registering Property 173 Getting Credit 89 Protecting Investors 59 Paying Taxes 51 Trading Across Borders 86 Enforcing Contracts 108 Closing a Business 110 2 Summary of Indicators - Solomon Islands Starting a Business Procedures (number) 7 Time (days) 57 Cost (% of income per capita) 68.1 Min. capital (% of income per capita) 0.0 Dealing with Construction Permits Procedures (number) 12 Time (days) 62 Cost (% of income per capita) 665.4 Registering Property Procedures (number) 10 Time (days) 297 Cost (% of property value) 4.9 Getting Credit Strength of legal rights index (0-10) 8 Depth of credit information index (0-6) 0 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 0.0 Protecting Investors Extent of disclosure index (0-10) 3 Extent of director liability index (0-10) 7 Ease of shareholder suits index (0-10) 7 Strength of investor protection index (0-10) 5.7 Paying Taxes Payments (number per year) 33 Time (hours per year) 80 Profit tax (%) 25.8 Labor tax and contributions (%) 8.5 Other taxes (%) 2.2 Total tax rate (% profit) 36.4 Trading Across Borders Documents to export (number) 7 Time to export (days) 24 Cost to export (US$ per container) 1023 Documents to import (number) 4 Time to import (days) 21 Cost to import (US$ per container) 1237 3 Enforcing Contracts Procedures (number) 37 Time (days) 455 Cost (% of claim) 78.9 Closing a Business Recovery rate (cents on the dollar) 23.4 Time (years) 1.0 Cost (% of estate) 38 The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.06 0.05 Doing 0.04 business has become easier (DB 0.03 change score) 0.02 0.01 Doing business has 0.00 become more difficult or more -0.01 Solomon Micronesia, Marshall Samoa Kiribati Palau costly Islands Fed. Sts. Islands 6 1. Benchmarking Starting a Business Regulations: Solomon Islands is ranked 112 overall for Starting a Business. Ranking of Solomon Islands in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Solomon Islands compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Solomon Islands 7 57 68.1 0.0 Comparator Economies Kiribati 6 21 40.2 21.7 Marshall Islands 5 17 17.3 0.0 Micronesia, Fed. Sts. 7 16 150.5 0.0 Palau 8 28 4.2 11.2 Samoa 5 9 9.8 0.0 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Solomon Islands Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 111 112 Procedures (number) 7 7 7 7 Time (days) 57 57 57 57 Cost (% of income per capita) 68.9 63.6 52.7 68.1 Min. capital (% of income per capita) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Starting a Business sub indicators in Solomon Islands over the past 4 years: 9 Starting a Business Summary - Solomon Islands This table summarizes the procedures and costs associated with setting up a business in Solomon Islands. STANDARDIZED COMPANY Legal Form: Limited Liability Company City: Honiara Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain approval of the company name from the Ministry of Commerce 17 SBD 100 2 Pay stamp duty at the Ministry of Finance 1 SBD 1,716 3 Register the company with the Registrar of Companies 32 SBD 1,700 4 Register for income tax, goods tax, and sales tax 1 no charge 5 Register as an employer with the National Provident Fund 1 no charge 6 Make a company seal 4 SBD 500 7 Pay a business licence fee at the Honiara Council 1 SBD 1,000 10 Starting a Business Details - Solomon Islands Procedure 1 Obtain approval of the company name from the Ministry of Commerce Time to complete: 17 Cost to complete: SBD 100 Comment: On 1 February 2008 single access points (VEM) began to operate for Limited Liability Companies. This reform is aimed at lowering of costs for establishment of LLC companies and at simplification of administrative procedures. Founders may establish a LLC at the VEM point under two conditions: (1) all the contributions have to be paid in cash and prior to the registration of the company and (2) the articles of association have to be drafted in a special form (only mandatory and most common provisions can be incorporated in this form). In order to found a LLC, founders have to visit the VEM entry point in person, as the authorized person has to carry out their identification. VEM points will allow procedures to be dealt on line such as : -Limited Liability companies can go directly to the VEM, the deed is sent to point VEM or to the registration body through electronic channels, it must be signed by means of a safe electronic signature with qualified certificate (The qualified certificate is the special digital certificate for identity check and electronic operation at the VEM point services) -Standarts Articles of Association : help the founders to draft the articles of association, verify their signatures where necessary and draft the corresponding preposition for registration of the company at the court register. However it is still the common practise to have the statutes and the articles of assocations prepared and certified by the notary. -Publication : Even if this requirement is not mandatory anymore, E-VEM allows for the company information to be available online. This information is so automatically published, which helped to shorten the time for starting a business in Slovenia. -Register with the Statistical Office of Slovenia : the court register automatically forwards all the required information to AJPES. The information is then entered in the Business Register and published online. Court register and business register are technically united in one information base and are now both run by AJPES. - Register with the tax administration- the tax information is trasmitted through E-VEM and data is entered automatically when it is received from E-VEM. Procedure 2 Pay stamp duty at the Ministry of Finance Time to complete: 1 Cost to complete: SBD 1,716 Comment: On 1 February 2008 single access points (VEM) began to operate for Limited Liability Companies. This reform is aimed at lowering of costs for establishment of LLC companies and at simplification of administrative procedures. Founders may establish a LLC at the VEM point under two conditions: (1) all the contributions have to be paid in cash and prior to the registration of the company and (2) the articles of association have to be drafted in a special form (only mandatory and most common provisions can be incorporated in this form). In order to found a LLC, founders have to visit the VEM entry point in person, as the authorized person has to carry out their identification. VEM points will allow procedures to be dealt on line such as : -Limited Liability companies can go directly to the VEM, the deed is sent to point VEM or to the registration body through electronic channels, it must be signed by means of a safe electronic signature with qualified certificate (The qualified certificate is the special digital certificate for identity check and electronic operation at the VEM point services) -Standarts Articles of Association : help the founders to draft the articles of association, verify their 11 signatures where necessary and draft the corresponding preposition for registration of the company at the court register. However it is still the common practise to have the statutes and the articles of assocations prepared and certified by the notary. -Publication : Even if this requirement is not mandatory anymore, E-VEM allows for the company information to be available online. This information is so automatically published, which helped to shorten the time for starting a business in Slovenia. -Register with the Statistical Office of Slovenia : the court register automatically forwards all the required information to AJPES. The information is then entered in the Business Register and published online. Court register and business register are technically united in one information base and are now both run by AJPES. - Register with the tax administration- the tax information is trasmitted through E-VEM and data is entered automatically when it is received from E-VEM. Procedure 3 Register the company with the Registrar of Companies Time to complete: 32 Cost to complete: SBD 1,700 Comment: On 1 February 2008 single access points (VEM) began to operate for Limited Liability Companies. This reform is aimed at lowering of costs for establishment of LLC companies and at simplification of administrative procedures. Founders may establish a LLC at the VEM point under two conditions: (1) all the contributions have to be paid in cash and prior to the registration of the company and (2) the articles of association have to be drafted in a special form (only mandatory and most common provisions can be incorporated in this form). In order to found a LLC, founders have to visit the VEM entry point in person, as the authorized person has to carry out their identification. VEM points will allow procedures to be dealt on line such as : -Limited Liability companies can go directly to the VEM, the deed is sent to point VEM or to the registration body through electronic channels, it must be signed by means of a safe electronic signature with qualified certificate (The qualified certificate is the special digital certificate for identity check and electronic operation at the VEM point services) -Standarts Articles of Association : help the founders to draft the articles of association, verify their signatures where necessary and draft the corresponding preposition for registration of the company at the court register. However it is still the common practise to have the statutes and the articles of assocations prepared and certified by the notary. -Publication : Even if this requirement is not mandatory anymore, E-VEM allows for the company information to be available online. This information is so automatically published, which helped to shorten the time for starting a business in Slovenia. -Register with the Statistical Office of Slovenia : the court register automatically forwards all the required information to AJPES. The information is then entered in the Business Register and published online. Court register and business register are technically united in one information base and are now both run by AJPES. - Register with the tax administration- the tax information is trasmitted through E-VEM and data is entered automatically when it is received from E-VEM. Procedure 4 Register for income tax, goods tax, and sales tax Time to complete: 1 Cost to complete: no charge Comment: On 1 February 2008 single access points (VEM) began to operate for Limited Liability Companies. This reform is aimed at lowering of costs for establishment of LLC companies and at simplification of administrative procedures. Founders may establish a LLC at the VEM point under two conditions: (1) all the contributions have to be paid in cash and prior to the registration of the company and (2) the articles of association have to be drafted in a special form (only mandatory and most common provisions can be incorporated in this form). In order to found a LLC, founders have to visit the VEM entry point in person, as the authorized person has to carry out their identification. VEM points will allow procedures to be dealt on line such as : -Limited Liability companies can go directly to the VEM, the deed is sent to point VEM or to the registration body through electronic channels, it must be signed by means of a safe electronic 12 signature with qualified certificate (The qualified certificate is the special digital certificate for identity check and electronic operation at the VEM point services) -Standarts Articles of Association : help the founders to draft the articles of association, verify their signatures where necessary and draft the corresponding preposition for registration of the company at the court register. However it is still the common practise to have the statutes and the articles of assocations prepared and certified by the notary. -Publication : Even if this requirement is not mandatory anymore, E-VEM allows for the company information to be available online. This information is so automatically published, which helped to shorten the time for starting a business in Slovenia. -Register with the Statistical Office of Slovenia : the court register automatically forwards all the required information to AJPES. The information is then entered in the Business Register and published online. Court register and business register are technically united in one information base and are now both run by AJPES. - Register with the tax administration- the tax information is trasmitted through E-VEM and data is entered automatically when it is received from E-VEM. Procedure 5 Register as an employer with the National Provident Fund Time to complete: 1 Cost to complete: no charge Comment: Forms must be filled out on paper. Procedure 6 Make a company seal Time to complete: 4 Cost to complete: SBD 500 Comment: Procedure 7 Pay a business licence fee at the Honiara Council Time to complete: 1 Cost to complete: SBD 1,000 Comment: 13 14 1. Benchmarking Dealing with Construction Permits Regulations: Solomon Islands is ranked 46 overall for Dealing with Construction Permits. Ranking of Solomon Islands in Dealing with Construction Permits - Compared to good practice and selected economies: 15 The following table shows Dealing with Construction Permits data for Solomon Islands compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Solomon Islands 12 62 665.4 Comparator Economies Kiribati 14 160 446.5 Marshall Islands 10 55 36.0 Micronesia, Fed. Sts. 14 73 19.2 Palau 25 118 5.1 Samoa 18 88 78.7 16 2. Historical data: Dealing with Construction Permits in Solomon Islands Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 39 46 Procedures (number) 12 12 12 12 Time (days) 62 62 62 62 Cost (% of income per capita) 518.0 471.1 504.1 665.4 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Solomon Islands over the past 4 years: 17 Dealing with Construction Permits in Solomon Islands The table below summarizes the procedures, time, and costs to build a warehouse in Solomon Islands. BUILDING A WAREHOUSE City: Honiara Registration Requirements: No: Procedure Time to complete Cost to complete 1 Request and obtain approval from Town and Country Planning Board 31 days SBD 27,100 2 Request and receive Excavation Inspection 1 day no charge 3 Receive and receive Foundation Inspection 1 day no charge 4 Request electricity connection 1 day no charge 5 * Receive electricity inspection 1 day no charge 6 * Connect to electricity 27 days SBD 20,000 7 * Request water connection 1 day no charge 8 * Receive water inspection 1 day no charge 18 9 * Connect to water 23 days SBD 1,600 10 * Request telephone connection 1 day no charge 11 * Receive telephone inspection 1 day no charge 12 * Connect to fixed telephone line 9 days SBD 345 * Takes place simultaneously with another procedure. 19 Dealing with Construction Permits Details - Solomon Islands Procedure 1 Request and obtain approval from Town and Country Planning Board Time to complete: 31 days Cost to complete: SBD 27,100 Agency: Town and Country Planning Board of the Planning and Building Department Comment: BuildCo files an application for approval, with plans included, with the Town and Country Planning Board of the Planning and Building Department, which will review it for structure, environment, health, sewer, and fire regulations. The formula for the cost was updated in 2009 (0.5% of construction cost + SBD 250 (Planning Fee) + SBD 150 (Site Inspection)+ SBD 500( Excavation permit ) + SBD 200 ( Issue of permit )). Procedure 2 Request and receive Excavation Inspection Time to complete: 1 day Cost to complete: no charge Agency: Town and Country Planning Board of the Planning and Building Department Comment: Procedure 3 Receive and receive Foundation Inspection Time to complete: 1 day Cost to complete: no charge Agency: Town and Country Planning Board of the Planning and Building Department Comment: Procedure 4 Request electricity connection Time to complete: 1 day Cost to complete: no charge Agency: Solomon Islands Electricity Authority (SIEA) Comment: BuildCo applies for electrical connection with the Solomon Island Electrical Authorities. Two days after the application is submitted, the authorities send out an inspector. The associated cost is SBD 20,000. Procedure 5 Receive electricity inspection Time to complete: 1 day Cost to complete: no charge 20 Agency: Solomon Islands Electricity Authority (SIEA) Comment: Procedure 6 Connect to electricity Time to complete: 27 days Cost to complete: SBD 20,000 Agency: Solomon Islands Electricity Authority (SIEA) Comment: BuildCo applies for electrical connection with the Solomon Island Electrical Authorities. Two days after the application is submitted, the authorities send out an inspector. The associated cost is SBD 20,000. Procedure 7 Request water connection Time to complete: 1 day Cost to complete: no charge Agency: Solomon Island Water Authority (SIWA) Comment: Procedure 8 Receive water inspection Time to complete: 1 day Cost to complete: no charge Agency: Solomon Island Water Authority (SIWA) Comment: Two days after the application is submitted, the Solomon Island Water Authority sends out an inspector. Procedure 9 Connect to water Time to complete: 23 days Cost to complete: SBD 1,600 Agency: Solomon Island Water Authority (SIWA) Comment: Procedure 10 Request telephone connection Time to complete: 1 day Cost to complete: no charge 21 Agency: Solomon Telekom Company Limited Comment: Procedure 11 Receive telephone inspection Time to complete: 1 day Cost to complete: no charge Agency: Solomon Telekom Company Limited Comment: Two days after the application is submitted, the Solomon Island Water Authority sends out an inspector. Procedure 12 Connect to fixed telephone line Time to complete: 9 days Cost to complete: SBD 345 Agency: Solomon Telekom Company Limited Comment: 22 23 1. Benchmarking Registering Property Regulations: Solomon Islands is ranked 173 overall for Registering Property. Ranking of Solomon Islands in Registering Property - Compared to good practice and selected economies: 24 The following table shows Registering Property data for Solomon Islands compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Solomon Islands 10 297 4.9 Comparator Economies Kiribati 5 513 0.0 Marshall Islands no practice no practice no practice Micronesia, Fed. Sts. no practice no practice no practice Palau 5 14 0.3 Samoa 5 27 1.6 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 25 2. Historical data: Registering Property in Solomon Islands Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 171 173 Procedures (number) 10 10 10 10 Time (days) 297 297 297 297 Cost (% of property value) 5.1 5.1 4.8 4.9 3. The following graphs illustrate the Registering Property sub indicators in Solomon Islands over the past 4 years: 26 Registering Property in Solomon Islands This topic examines the steps, time, and cost involved in registering property in Solomon Islands. STANDARDIZED PROPERTY Property Value: 368,513.01 City: Honiara Registration Requirements: No: Procedure Time to complete Cost to complete 1 Check the parcel number with the Registrar 1 - 2 days SBD 30 2 Obtain tax and encumbrances clearance 1 day SBD 10 3 Confirm boundary maps of the property 4 days no cost 4 Contract a surveyor to survey the land 20 days SBD 1000 5 Get consent to transfer from the Commissioner of 25 days SBD 300 Lands 6 * Prepare and sign transfer contract 1 day (simultaneous 0.5% of the value of the with procedure 7) transaction (legal fees) 7 * Verify registration of the vendor company 1 day (simultaneous SBD 30 with procedure 6) 27 8 Notarize the transfer contract 1 day SBD 10 ­ 50 9 Pay Stamp Duty at Inland Revenue 1 - 3 days Stamp duty according to the following scale when the consideration or amount exceeds: SBD 10,0002% of consideration or amount. SBD 25,000 but does not exceed 50,0003% of the consideration or amount. SBD 50,0004% of consideration or amount 10 Register the transfer 240 days SBD 100 * Takes place simultaneously with another procedure. 28 Registering Property Details - Solomon Islands Procedure 1 Check the parcel number with the Registrar Time to complete: 1 - 2 days Cost to complete: SBD 30 Agency: Registry of Titles Office Comment: Parties obtain these copies at the Ministry of Lands/Registrar of Titles. Procedure 2 Obtain tax and encumbrances clearance Time to complete: 1 day Cost to complete: SBD 10 Agency: Registry of Titles Office Comment: Parties obtain tax clearance and assurance of no encumbrances or liens on the land from the Commissioner of Lands. Procedure 3 Confirm boundary maps of the property Time to complete: 4 days Cost to complete: no cost Comment: This is not mandatory but it is standard practice to confirm the boundary maps. Limits to the property are marked with cement "pegs", and It is necessary to verify them. Most properties in Honiara have property pegs. Procedure 4 Contract a surveyor to survey the land Time to complete: 20 days Cost to complete: SBD 1000 Agency: Survey Department at the Ministry of Land Comment: One may be able to hire staff from the Survey Department at the Ministry of Land, but there is a shortage of staff there so it is usually necessary to hire a private surveyor. Procedure 5 Get consent to transfer from the Commissioner of Lands Time to complete: 25 days Cost to complete: SBD 300 29 Agency: Commissioner of Lands Comment: The Commissioner of Lands checks the files and authorizes the transfer. He cannot delegate his signature for transfers. Procedure 6 Prepare and sign transfer contract Time to complete: 1 day (simultaneous with procedure 7) Cost to complete: 0.5% of the value of the transaction (legal fees) Comment: Exchange of contracts is in accordance with the law. Lawyers must act for the Company. They will need to have checked consent boundaries and investigate the title. The parties choose the law firm and the lawyers act for the companies. The vendor company agents must ither have the company seal or be authorized to sign on behalf of the company with a power of attorney. In Honiara, the transfer will refer to a leases or a fixed term estate (both last 25-50 years generally). Procedure 7 Verify registration of the vendor company Time to complete: 1 day (simultaneous with procedure 6) Cost to complete: SBD 30 Agency: Registrar of Companies Comment: Lawyers are instructed to ensure completion in accordance with the law and ensure the transfer of title. They conduct this procedure at the Registrar. The evidence of incorporation must be presented in accordance to Evidence of incorporation LN 85/1968 7. An application for registration of a dealing whereby a corporation acquires an interest shall be accompanied by such evidence of incorporation as the Registrar may require. Procedure 8 Notarize the transfer contract Time to complete: 1 day Cost to complete: SBD 10 ­ 50 Agency: Registry of Titles Office Comment: This contract must be witnessed or notarized by either a public notary, a solicitor or civil servant (surveyor above level 5 or land officers). Fees are not regulated and vary between SBD 10 and 50. Procedure 9 Pay Stamp Duty at Inland Revenue Time to complete: 1 - 3 days Cost to complete: Stamp duty according to the following scale when the consideration or amount exceeds: SBD 10,0002% of consideration or amount. SBD 25,000 but does not exceed 50,0003% of the consideration or amount. SBD 50,0004% of consideration or amount 30 Agency: Inland Revenue Comment: Procedure 10 Register the transfer Time to complete: 240 days Cost to complete: SBD 100 Agency: Registry of Titles Office Comment: The time includes the delay in obtaining the final confirmation of registration. Due to the backlog, one may wait up to 2 years for this confirmation. The registrar of titles covers all the country. It uses a Torrens system and records on paper the information related to a title (ownership, encumbrances ...) Titles are scanned as a backup. A computer system records all the transactions requested about a parcel (encumbrances checking, title transfer request ...). However, this computer system does not record ownership or encumbrances; it just records that someone registered a transfer. The owner is informed that the transaction is registered by the "Advice of registration of a dealing" sent by post. 31 32 1. Benchmarking Getting Credit Regulations: Solomon Islands is ranked 89 overall for Getting Credit. Ranking of Solomon Islands in Getting Credit - Compared to good practice and selected economies: 33 The following table shows Getting Credit data for Solomon Islands compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Solomon Islands 8 0 0.0 0.0 Comparator Economies Kiribati 5 0 0.0 0.0 Marshall Islands 8 0 0.0 0.0 Micronesia, Fed. Sts. 7 0 0.0 0.0 Palau 0 0 0.0 0.0 Samoa 6 0 0.0 0.0 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 34 2. Historical data: Getting Credit in Solomon Islands Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 167 89 Strength of legal rights index (0-10) 3 3 3 8 Depth of credit information index (0-6) 0 0 0 0 Private bureau coverage (% of adults) 0.0 0.0 0.0 0.0 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Solomon Islands over the past 4 years: 35 Getting Credit in Solomon Islands The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Solomon Islands. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 0 bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? No No 0 Is data on all loans below 1% of income per capita distributed? No No 0 Is it guaranteed by law that borrowers can inspect their data in the No No 0 largest credit registry? Coverage 0.0 0.0 Number of individuals 0 0 Number of firms 0 0 36 Strength of legal rights index (0-10) 8 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, Yes without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without Yes requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, Yes proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the Yes grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? Yes 37 38 1. Benchmarking Protecting Investors Regulations: Solomon Islands is ranked 59 overall for Protecting Investors. Ranking of Solomon Islands in Protecting Investors - Compared to good practice and selected economies: 39 The following table shows Protecting Investors data for Solomon Islands compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Solomon Islands 5.7 Comparator Economies Kiribati 6.0 Marshall Islands 3.3 Micronesia, Fed. Sts. 2.7 Palau 2.7 Samoa 6.3 40 2. Historical data: Protecting Investors in Solomon Islands Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 57 59 Strength of investor protection index (0-10) 5.7 5.7 5.7 5.7 3. The following graph illustrates the Protecting Investors index in Solomon Islands compared to best practice and selected Economies: 9.7 6.3 6.0 5.7 3.3 2.7 2.7 i at nd on oa nd u nd ll St ia, ib Is lom la sha la m d. es ir a s Pa Sa al K s Fe ron ar s. So Ze la M ic ew Is M N Note: The higher the score, the greater the investor protection. 41 Protecting Investors in Solomon Islands The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Solomon Islands. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 3 1 What corporate body provides legally sufficient approval for the transaction? 0 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 0 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 2 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 0 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 7 2 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 42 1 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 7 3 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 2 Whether the plaintiff can directly question the defendant and witnesses during trial? 1 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 0 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 5.7 43 44 1. Benchmarking Paying Taxes Regulations: Solomon Islands is ranked 51 overall for Paying Taxes. Ranking of Solomon Islands in Paying Taxes - Compared to good practice and selected economies: 45 The following table shows Paying Taxes data for Solomon Islands compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Solomon Islands 33 80 36.4 Comparator Economies Kiribati 7 120 31.8 Marshall Islands 21 128 64.9 Micronesia, Fed. Sts. 21 128 58.7 Palau 19 128 73.0 Samoa 37 224 18.9 * The following economies are also good practice economies for : Payments (number per year): Qatar 46 2. Historical data: Paying Taxes in Solomon Islands Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 49 51 Total tax rate (% profit) 36.3 36.3 36.3 36.4 Payments (number per year) 33 33 33 33 Time (hours per year) 80 80 80 80 3. The following graphs illustrate the Paying Taxes sub indicators in Solomon Islands over the past 4 years: 47 Paying Taxes in Solomon Islands The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Solomon Islands, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Sales tax 12 42 10.0% sales Stamp duty 1 various rates transaction value Tax on check 1 SBD 1 per number of 0.10 transactions check checks Transaction fee on bank 0 paid jointly fixed fee 0.20 transactions (SBD 480) Business license fee 1 various rates 1.00 depending on activity Property tax 1 5.0% assessed 1.90 property value Social security 12 30 7.5% gross salaries 8.50 contributions Corporate income tax 5 8 30.0% taxable profit 24.80 Totals 33 80 36.4 48 49 1. Benchmarking Trading Across Borders Regulations: Solomon Islands is ranked 86 overall for Trading Across Borders. Ranking of Solomon Islands in Trading Across Borders - Compared to good practice and selected economies: 50 The following table shows Trading Across Borders data for Solomon Islands compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Solomon Islands 7 24 1023 4 21 1237 Comparator Economies Kiribati 6 21 1070 7 21 1070 Marshall Islands 5 21 945 5 33 945 Micronesia, Fed. Sts. 3 30 1295 6 30 1295 Palau 6 29 1070 10 33 1022 Samoa 7 27 820 7 31 848 * The following economies are also good practice economies for : Time to export (days): Estonia 51 2. Historical data: Trading Across Borders in Solomon Islands Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 83 86 Cost to export (US$ per container) 1056 1011 1023 1023 Cost to import (US$ per container) 1238 1194 1237 1237 Documents to export (number) 7 7 7 7 Documents to import (number) 4 4 4 4 Time to export (days) 24 24 24 24 Time to import (days) 21 21 21 21 3. The following graphs illustrate the Trading Across Borders sub indicators in Solomon Islands over the past 4 years: 52 53 Trading Across Borders in Solomon Islands These tables list the procedures necessary to import and export a standardized cargo of goods in Solomon Islands. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 6 431 Customs clearance and technical control 4 33 Ports and terminal handling 11 50 Inland transportation and handling 3 509 Totals 24 1023 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 5 371 Customs clearance and technical control 3 16 Ports and terminal handling 10 350 Inland transportation and handling 3 500 Totals 21 1237 54 Documents for Export and Import Export Bill of lading Certificate of origin Commercial invoice Customs export declaration Packing list Technical standard/health certificate Terminal handling receipts Import Bill of lading Commercial invoice Customs duty receipt Customs entry form 55 56 1. Benchmarking Enforcing Contracts Regulations: Solomon Islands is ranked 108 overall for Enforcing Contracts. Ranking of Solomon Islands in Enforcing Contracts - Compared to good practice and selected economies: 57 The following table shows Enforcing Contracts data for Solomon Islands compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Solomon Islands 37 455 78.9 Comparator Economies Kiribati 32 660 25.8 Marshall Islands 36 476 27.4 Micronesia, Fed. Sts. 34 965 66.0 Palau 38 885 35.3 Samoa 44 455 19.7 58 2. Historical data: Enforcing Contracts in Solomon Islands Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 108 108 Procedures (number) 37 37 37 37 Time (days) 455 455 455 455 Cost (% of claim) 78.9 78.9 78.9 78.9 3. The following graphs illustrate the Enforcing Contracts sub indicators in Solomon Islands over the past 4 years: 59 Enforcing Contracts in Solomon Islands This topic looks at the efficiency of contract enforcement in Solomon Islands. Nature of Procedure (2010) Indicator Procedures (number) 37 Time (days) 455 Filing and service 3.0 Trial and judgment 182.0 Enforcement of judgment 270.0 Cost (% of claim)* 78.90 Attorney cost (% of claim) 55.5 Court cost (% of claim) 5.1 Enforcement Cost (% of claim) 18.3 60 Court information: Honiara Magistrates Court * Claim assumed to be equivalent to 200% of income per capita. 61 62 1. Benchmarking Closing Business Regulations: Solomon Islands is ranked 110 overall for Closing a Business. Ranking of Solomon Islands in Closing Business - Compared to good practice and selected economies: 63 The following table shows Closing Business data for Solomon Islands compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Solomon Islands 23.4 1.0 38 Comparator Economies Kiribati 0.0 no practice no practice Marshall Islands 17.9 2.0 38 Micronesia, Fed. Sts. 3.2 5.3 38 Palau 37.9 1.0 23 Samoa 14.6 2.5 38 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 64 2. Historical data: Closing Business in Solomon Islands Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 106 110 Time (years) 1.0 1.0 1.0 1.0 Cost (% of estate) 38 38 38 38 Recovery rate (cents on the dollar) 23.3 23.6 23.6 23.4 3. The following graphs illustrate the Closing Business sub indicators in Solomon Islands over the past 4 years: 65 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 66 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Marshall Islands The Marshall Islands improved access to credit through a new law on secured transactions that establishes a central collateral registry, broadens the range of assets that can be used as collateral, allows a general description of debts and obligations and assets granted as collateral and establishes clear priority rules outside bankruptcy for secured creditors. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Samoa Samoa shifted from a deed system to a title system and fully computerized its land registry, which reduced the time required to register property by 4 months. Solomon Islands The Solomon Islands strengthened access to credit by passing a new secured transactions law that broadens the range of assets that can be used as collateral, allows a general description of debts and obligations secured by collateral, permits out-of-court enforcement and creates a collateral registry. Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. 67 Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 68 69