58873 Moldova © 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. 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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 Moldova. 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 Moldova is ranked 90 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Moldova - Compared to global good practice economy as well as selected economies: Moldova's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 90 Starting a Business 94 Dealing with Construction Permits 159 Registering Property 18 Getting Credit 89 Protecting Investors 109 Paying Taxes 106 Trading Across Borders 141 Enforcing Contracts 20 Closing a Business 92 2 Summary of Indicators - Moldova Starting a Business Procedures (number) 8 Time (days) 10 Cost (% of income per capita) 10.9 Min. capital (% of income per capita) 11.9 Dealing with Construction Permits Procedures (number) 30 Time (days) 292 Cost (% of income per capita) 120.9 Registering Property Procedures (number) 5 Time (days) 5 Cost (% of property value) 0.9 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) 7 Extent of director liability index (0-10) 1 Ease of shareholder suits index (0-10) 6 Strength of investor protection index (0-10) 4.7 Paying Taxes Payments (number per year) 48 Time (hours per year) 228 Profit tax (%) 0.0 Labor tax and contributions (%) 30.2 Other taxes (%) 0.7 Total tax rate (% profit) 30.9 Trading Across Borders Documents to export (number) 6 Time to export (days) 32 Cost to export (US$ per container) 1765 Documents to import (number) 7 Time to import (days) 35 Cost to import (US$ per container) 1960 3 Enforcing Contracts Procedures (number) 31 Time (days) 365 Cost (% of claim) 20.9 Closing a Business Recovery rate (cents on the dollar) 28.2 Time (years) 2.8 Cost (% of estate) 9 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 0.18 0.16 Doing 0.14 business has become easier (DB 0.12 change score) 0.10 0.08 0.06 0.04 Czech Poland Slovak Bulgaria Moldova Hungary Republic Republic 6 1. Benchmarking Starting a Business Regulations: Moldova is ranked 94 overall for Starting a Business. Ranking of Moldova in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Moldova 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 Moldova 8 10 10.9 11.9 Comparator Economies Bulgaria 4 18 1.6 0.0 Czech Republic 9 20 9.3 30.9 Hungary 4 4 8.2 10.2 Poland 6 32 17.5 14.7 Slovak Republic 6 16 1.9 22.2 * 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 Moldova Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 78 94 Procedures (number) 9 9 8 8 Time (days) 23 15 10 10 Cost (% of income per capita) 11.5 8.9 7.0 10.9 Min. capital (% of income per capita) 14.6 13.4 11.4 11.9 3. The following graphs illustrate the Starting a Business sub indicators in Moldova over the past 4 years: 9 Starting a Business Summary - Moldova This table summarizes the procedures and costs associated with setting up a business in Moldova. STANDARDIZED COMPANY Legal Form: Limited Liability Company City: Chisinau Registration Requirements: No: Procedure Time to complete Cost to complete 1 File all the documents with the State Registration Chamber for the 1 MDL 1,981 registration of the company; obtain IDNO number 2 * Open a temporary bank account and deposit at least 40% of the 1 no charge registered capital of the company; pay the registration fee 3 * Obtain the registration certificate and constitutive act; obtain an 1 no charge official stamp from the Department of Information Technologies (Ministry of Information Development) 4 Register with the local Tax Inspectorate of the Ministry of Finance 2 no charge 5 Register the company with the Statistics Department of Republic of 1 no charge Moldova (National Bureau of Statistics) 6 Convert the company's temporary bank account to a permanent one 1 no charge 7 Register the company with the Social Security Fund 1 no charge 10 8 Register the company with the National Medical Insurance Company 2 no charge * Takes place simultaneously with another procedure. 11 Starting a Business Details - Moldova Procedure 1 File all the documents with the State Registration Chamber for the registration of the company; obtain IDNO number Time to complete: 1 Cost to complete: MDL 1,981 Comment: Under the Law on the state registration of the legal entities and individual entrepreneurs (No. 220 of 19.10.2007, in force from 30.05.2008) the term for registration of the company is 5 working days. However, an expedited option is available in which company registration can be completed within 24 hours. Fee schedule for registering companies with the State Registration Chamber under the expeditied procedure: -State registration: MDL 1000 for expeditied (4 hour) registration; -Incorporation document preparation (editing) expeditied: MDL 432; -Name verification: MDL 39; -Certification of signatures by the State Registrar: MDL 10; -Publication: MDL 54; -Extract (for permanent bank account) - expedited - 4 hours: MDL 252; -Official company stamp: MDL 150; -License fee (authorization for stamp manufacturing): MDL 9; -Company name approval: MDL 20; -Approval of stamp text: MDL 15 In accordance with the Law, the following documents must be submitted to the State Registration Chamber (SRC) in order to register a limited liability company: a) Filled application form (template provided by the SRC); b) Decision on incorporation of the company approved by founder/s; c) Incorporation documents; d) Document confirming payment of share capital; e) Document confirming payment of applicable registration fees. In practice the SRC also requests submittal of documents confirming the legal address of the company. Also as a matter of practice, the SRC drafts the incorporation documents and a founder decision in a special form that is supplementary to the decision provided by the founder. An unique state identification number is attributed to each legal entity at the date of its registration. It is inserted in the Registration Certificate and in the constitutive act. Procedure 2 Open a temporary bank account and deposit at least 40% of the registered capital of the company; pay the registration fee Time to complete: 1 Cost to complete: no charge Comment: At registration, at least 40% of each founder's declared contribution to company capital should be paid in. The other 60% must be paid in within 6 months of registration. Procedure 3 Obtain the registration certificate and constitutive act; obtain an official stamp from the Department of Information Technologies (Ministry of Information Development) 12 Time to complete: 1 Cost to complete: no charge Comment: The company files the bank certificate with the Registrar, confirming the founders' transfer of their capital contributions into the temporary bank account. While submitting the registration documents, the company submits the company stamp order. After registering the company, the Registrar will issue the stamp along with the registration certificate and other documents. Procedure 4 Register with the local Tax Inspectorate of the Ministry of Finance Time to complete: 2 Cost to complete: no charge Comment: Newly registered companies should register with the Tax Inspectorate. Only companies that intend to sell VAT-taxable goods and services for an amount exceeding MDL 300,000 during 12 consecutive months must obtain a VAT code by registering with the local fiscal inspectorate. Procedure 5 Register the company with the Statistics Department of Republic of Moldova (National Bureau of Statistics) Time to complete: 1 Cost to complete: no charge Comment: After the registration is completed, the company must register with the Statistics Department of the Republic of Moldova, which will assign the company a statistics code. This code will be assigned according to the activities established in the company's constitutive act and according to the company's territorial location. Procedure 6 Convert the company's temporary bank account to a permanent one Time to complete: 1 Cost to complete: no charge Comment: To convert the company's temporary bank account to a permanent account, the founder must present to the bank (a) the notary-certified copies of the certificate of registration; (b) the incorporation documents; (c) the excerpt for the bank, confirming the name and address of the director; (d) the notarized signature cards; and (e) the company seal. Fee schedule for notary certification: Set of documents: MDL 180 (based on MDL 6 per page). Procedure 7 Register the company with the Social Security Fund Time to complete: 1 Cost to complete: no charge Comment: Every company should receive an individual social security number for each employee. The Law of the Republic of Moldova No. 383-XV (of November 11, 2004), "On the State Social Security Budget 2005," states that the company must complete a questionnaire for each employee and to present it, along with the copy of the employee's passport, to the National Social Security Fund within 10 days of registration or the signing of the labor contract. Later, the company should present the report every 3 months to the National Social Security Fund. Procedure 8 Register the company with the National Medical Insurance Company Time to complete: 2 13 Cost to complete: no charge Comment: After registering with the State Registration Chamber, the company must register with the local office of National Medical Insurance Company in 10 days. The medical insurance agreement must be concluded. The company must present, every 3 months, 10 days before the end of the current month, the report on the calculation and the transfer of compulsory insurance payments. 14 15 1. Benchmarking Dealing with Construction Permits Regulations: Moldova is ranked 159 overall for Dealing with Construction Permits. Ranking of Moldova in Dealing with Construction Permits - Compared to good practice and selected economies: 16 The following table shows Dealing with Construction Permits data for Moldova 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 Moldova 30 292 120.9 Comparator Economies Bulgaria 24 139 442.3 Czech Republic 36 150 16.4 Hungary 31 189 9.8 Poland 32 311 121.8 Slovak Republic 13 287 12.7 17 2. Historical data: Dealing with Construction Permits in Moldova Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 163 159 Procedures (number) 30 30 30 30 Time (days) 292 292 292 292 Cost (% of income per capita) 154.2 142.2 120.5 120.9 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Moldova over the past 4 years: 18 Dealing with Construction Permits in Moldova The table below summarizes the procedures, time, and costs to build a warehouse in Moldova. BUILDING A WAREHOUSE City: Chisinau Registration Requirements: No: Procedure Time to complete Cost to complete 1 Request and obtain project according to city planning documentation from 1 day MDL 1,500 the Design Institute of Moldova on Engineering and Research Works 2 * Request and obtain location clearance from the Fire Department 7 days MDL 250 3 * Request and obtain location clearance from the Health Department 30 days MDL 500 4 * Request and obtain location clearance from the Environmental Protection 14 days MDL 500 Agency 5 * Request and obtain technical conditions for electricity connection from 30 days no charge Union Fenosa 6 * Request and obtain technical conditions for electricity connection from 30 days MDL 300 street lighting service provider Lumteh (public lighting provider) 7 * Request and obtain technical conditions for water and industrial sewage 14 days MDL 343 system from Apa Canal 19 8 * Request and obtain technical conditions for sewage system from Exdrupo 7 days MDL 200 9 * Request and obtain technical conditions for telephone connection from 7 days MDL 136 MoldTelecom 10 * Request and obtain technical conditions for heating services from 14 days MDL 832 Termokom 11 * Request and obtain clearance from the zoning and road construction 18 days MDL 600 division of the municipality (Directia General Cai de Transport si Comunicatii) 12 * Request and obtain expertise clearance from the Fire Department 8 days no charge 13 * Request and obtain expertise clearance from the Health Department 21 days MDL 300 14 * Request and obtain expertise clearance from the Environmental Protection 30 days MDL 250 Agency 15 Request and obtain a city planning certificate 45 days MDL 23 16 Request and obtain expertise of project documents at the State Service for 14 days MDL 3,000 Verification and Expertise of Projects in Construction 17 Request and obtain building permit from the local City Planning Services 45 days MDL 6,000 Agency (Municipality) 18 Notify construction authorities of the start of construction 1 day no charge 19 Receive inspection on foundation works by the State Construction 1 day no charge Inspectorate (1) 20 Receive inspection on structure works by the State Construction 1 day no charge Inspectorate (2) 21 Receive inspection of roofing by the State Construction Inspectorate (3) 1 day no charge 22 Request and connect to water and sewage services 22 days MDL 1,056 23 * Request power connection services and sign contract 1 day MDL 4,620 24 * Receive inspection 10 days no charge 25 * Connect to power services 11 days no charge 26 * Request and connect to telephone services 30 days MDL 900 20 27 Receive final inspection by the State Construction Inspectorate and sign 1 day no charge the Act of Completion of Construction 28 Request and obtain the act of completion of construction from the 30 days no charge Working Commission 29 Request and receive the act of completion of construction from the State 60 days MDL 330 Commission 30 Register the building at the Bureau of Technical Inventory (BTI) 18 days MDL 250 * Takes place simultaneously with another procedure. 21 Dealing with Construction Permits Details - Moldova Procedure 1 Request and obtain project according to city planning documentation from the Design Institute of Moldova on Engineering and Research Works Time to complete: 1 day Cost to complete: MDL 1,500 Agency: Design Institute of Moldova on Engineer and Research Works Comment: BuildCo hires a licensed design institute to prepare a complete, relevant set of city planning documents. It should obtain technical conditions from many agencies (the price is negotiable), then submit them to the design institute for incorporation into the design documents. Procedure 2 Request and obtain location clearance from the Fire Department Time to complete: 7 days Cost to complete: MDL 250 Agency: Fire Authorities Comment: BuildCo must receive approval from the Fire Department, which is then considered by the design institute in developing the city planning documentation. This procedure is the first in a series of initial procedures that could run in parallel. Although Cabinet Decision No. 920, dated August 30, 2005, states that this process is free of charge, in practice, a cost is incurred. Procedure 3 Request and obtain location clearance from the Health Department Time to complete: 30 days Cost to complete: MDL 500 Agency: Sanitary Authorities Comment: BuildCo must receive approval from the sanitary authorities, which is then considered by the design institute in developing the city planning documentation. Officially, this procedure should take no more than 10 days. However, in practice, it takes on average 30 days. The cost is not provided by any law or cabinet decision. In practice, the authorities charge internal fees. The Law on Basic Principles for Entrepreneurial Activity, which took effect on July 11, 2007 officially eliminated this charge. The law states that all payments should be stated in a law. Procedure 4 Request and obtain location clearance from the Environmental Protection Agency Time to complete: 14 days Cost to complete: MDL 500 22 Agency: Ecological Services Comment: BuildCo must receive approval from the Ecological Services, which is then considered by the design institute in developing the city planning documentation. Although Cabinet Decision No. 920, dated August 30, 2005, stipulates a statutory time limit of 10 days, in practice, the process takes 14 days. Procedure 5 Request and obtain technical conditions for electricity connection from Union Fenosa Time to complete: 30 days Cost to complete: no charge Agency: Union Fenosa Comment: At this stage, BuildCo requests technical conditions. Due to a backlog at Union Fenosa caused by a massive number of small projects, the average time required to obtain the clearance is 30 days. Payment is made when concluding the agreement on electricity supply. Procedure 6 Request and obtain technical conditions for electricity connection from street lighting service provider Lumteh (public lighting provider) Time to complete: 30 days Cost to complete: MDL 300 Agency: Lumteh Comment: Lumteh sometimes imposes additional costs for designing a public utility lighting network in the nearby area. The costs of this procedure could amount to up to 30% of the total design costs of a project. This procedure applies to both private and public projects. Procedure 7 Request and obtain technical conditions for water and industrial sewage system from Apa Canal Time to complete: 14 days Cost to complete: MDL 343 Agency: Apa Canal Comment: After the application is submitted, it takes a week for it to be considered and another week for BuildCo to receive an answer. Technical conditions for water and sewerage are obtained at this stage. Procedure 8 Request and obtain technical conditions for sewage system from Exdrupo Time to complete: 7 days Cost to complete: MDL 200 Agency: Exdrupo Comment: A separate specification is obtained from Exdrupo (the urban roads and bridges management authority) on rainwater drainage. Procedure 9 Request and obtain technical conditions for telephone connection from MoldTelecom 23 Time to complete: 7 days Cost to complete: MDL 136 Agency: MoldTelecom Comment: This procedure takes 7­30 days depending on the district where the plot is located. The technical conditions are valid for a year. Since 2006, MoldTelecom has started installing wireless telephone service under CDMA 2000. Many companies opt for this because of the low cost and speed of obtaining service. Procedure 10 Request and obtain technical conditions for heating services from Termokom Time to complete: 14 days Cost to complete: MDL 832 Agency: Termokom Comment: The Department of Verification and Expertise will not issue its approval of the project without obtaining the conditions from Termokom. This procedure is linked to fire safety regulations in effect during winter. Procedure 11 Request and obtain clearance from the zoning and road construction division of the municipality (Directia General Cai de Transport si Comunicatii) Time to complete: 18 days Cost to complete: MDL 600 Agency: Municipality (Directia General Cai de Transport si Comunicatii) Comment: BuildCo must contact the State Road Inspectorate if the building is less than 10 meters from an existing road. This authority has discretionary power and often requires other documents in addition to the ones publicly listed. Procedure 12 Request and obtain expertise clearance from the Fire Department Time to complete: 8 days Cost to complete: no charge Agency: Fire Department Comment: The Fire Department must approve the completed set of designs and drawings after the conditions have been assigned. The company must visit the Fire Department to obtain the expertise consultation rather than go through the Department of Verification and Expertise. Procedure 13 Request and obtain expertise clearance from the Health Department Time to complete: 21 days Cost to complete: MDL 300 Agency: Health Department 24 Comment: The Health Department must approve the completed set of designs and drawings after the conditions have been assigned. The company must visit the Health Department to obtain the expertise consultation rather than go through the Department of Verification and Expertise. Procedure 14 Request and obtain expertise clearance from the Environmental Protection Agency Time to complete: 30 days Cost to complete: MDL 250 Agency: Environmental Protection Agency (EPA) Comment: The Environmental Protection Agency will not issue any clearance unless the Health and Fire Departments have previously issue their clearances. By law, this takes 30 days. Procedure 15 Request and obtain a city planning certificate Time to complete: 45 days Cost to complete: MDL 23 Agency: General Direction on Architecture, Urbanism and Land Relations (Municipal Counsel ) Comment: Under Government Resolution No. 360 (changes of 2006), to obtain the city planning certificate, the applicant must pay a fee for a standard form at the local municipality and submit it to the local registrar along with a confirmation of payment. The local architectural authorities define the amount to be paid, based on the size of the plot declared by the applicant. In the case considered here, the cost is MDL 10 + MDL 0.01 per square meter, which is a total of MDL 23. The City Planning certificate is filled out in accordance with all necessary requirements agreed upon with the chief architect of the city and district, and taking into consideration the following: - The application is properly addressed to the relevant authority, - The form is properly filled out. - The information on the plot is sufficient and comprehensive. If there are discrepancies or mistakes on the form, the application is returned to the applicant within 10 days from the registration date. The fees are not reimbursed. The time limit, as specified by Cabinet Decision No. 360, dated April 18, 1997, is 30 days. However, this takes on average 2 to 3 months. The certificate is valid for a period extending from 3 to 24 months, depending on the planning zones of the city. At the applicant's request, it can be extended for another maximum term of 12 months. It is expected that, as of the end of 2007, according to the draft Law on Authorizing Execution of Works in Construction, the certificate will be issued within 15 days at a cost of MDL 10 plus MDL 0.01 for each square meter. Procedure 16 Request and obtain expertise of project documents at the State Service for Verification and Expertise of Projects in Construction Time to complete: 14 days Cost to complete: MDL 3,000 Agency: State Service for Verification and Expertise of Projects in Constructions 25 Comment: The State Service for Verification and Expertise of Projects in Construction was reformed in September 2006, giving it responsibility for undertaking an internal verification of technical conditions with all the utilities authorities. Procedure 17 Request and obtain building permit from the local City Planning Services Agency (Municipality) Time to complete: 45 days Cost to complete: MDL 6,000 Agency: City Planning Services Agency (Municipality) Comment: The applicant, under Government Resolution on Construction Certificates and Permits No. 360 (changes of 2006), submits the following documents to the local authority: - An application for issuance of the building permit. - A standard form obtained for a fee at the local government (one copy if the permit is issued by Pimeria, the local district level). - Documents requesting a permit (two copies), consisting of a city planning certificate, proof of land ownership, a construction permit ( ()), a technical expertise consultation performed by the relevant authorities, a project of execution of works ( (); this can be done internally), relevant clearances specified by the city planning certificate. - Proof of payment; . - A construction management plan ( ()) that contains all the works required by the project (within its limits and outside), including the areas that are occupied temporarily (all on a scale defined by a professional). This documentation is required for all types of projects. The construction management plan can be prepared by BuildCo. For small projects, it is combined with the situation layout; for large projects, it is submitted on a separate sheet. If a construction management plan is not submitted, a separate request/application is submitted to obtain a building permit. The building permit is valid for 12 months from the date it is issued. If construction does not begin during that time, the permit ceases to be valid. The permit may be extended once, for another year at the most. The permit is issued either directly to the applicant or sent via regular mail within 30 days from the date it is registered internally. This time line is not respected in practice, however, and often averages 45 days. The building permit is signed in the following order by: 1. The chairperson/secretary of the local region, chief architect for investment. 2. The secretary, chief architect of the municipality for investment. 3. The secretary, responsible people of the prefecture. The signed permit must be registered internally at the State Inspectorate of Construction. The company also receives the technical passport along with the building permit. The cost is MDL 6,000, according to a formula established by the Government Resolution on City Planning Certificate and Construction Permit No. 1245, dated October 30, 2006. Procedure 18 Notify construction authorities of the start of construction Time to complete: 1 day Cost to complete: no charge Agency: Construction Authorities and State Inspectorate 26 Comment: At least 5 days before starting construction \, the company must notify the authority (the State Inspectorate of Construction) in writing. The written notification is submitted in person and must be also filed with the State Inspectorate of Construction no less than 30 days prior to the start of construction. If construction begins without prior written notification, certain sanctions would be applied against the company. The construction period begins the day the permit is issued. Relevant authorities and ministries may require the company to provide valid proof of the legality of the start of construction work. Procedure 19 Receive inspection on foundation works by the State Construction Inspectorate (1) Time to complete: 1 day Cost to complete: no charge Agency: State Construction Inspectorate Comment: Procedure 20 Receive inspection on structure works by the State Construction Inspectorate (2) Time to complete: 1 day Cost to complete: no charge Agency: State Construction Inspectorate Comment: Procedure 21 Receive inspection of roofing by the State Construction Inspectorate (3) Time to complete: 1 day Cost to complete: no charge Agency: State Construction Inspectorate Comment: Procedure 22 Request and connect to water and sewage services Time to complete: 22 days Cost to complete: MDL 1,056 Agency: Apa Canal Comment: BuildCo requests a connection from the utilities. BuildCo must extend the pipelines to the connection points (10 meters). The inspector visits the site, approves the connection by sealing it, and opens the water shafts. Procedure 23 Request power connection services and sign contract 27 Time to complete: 1 day Cost to complete: MDL 4,620 Agency: Union Fenosa Comment: BuildCo must sign a contract with the electricity provider, which then conducts an inspection. Procedure 24 Receive inspection Time to complete: 10 days Cost to complete: no charge Agency: Commission (local authority, health department, fire department, and environmental department) Comment: The final inspection is carried out by a commission, including the local authority, the Health Department, the Fire Department, and the Environmental Protection Department. Procedure 25 Connect to power services Time to complete: 11 days Cost to complete: no charge Agency: Union Fenosa Comment: Procedure 26 Request and connect to telephone services Time to complete: 30 days Cost to complete: MDL 900 Agency: MoldTelecom Comment: Telephone service installation could take as long as 6 months if the company wants an E1 connection, which consists of 32 lines. This delay happens because the incumbent operator. Small companies in remote areas, where MoldTelecom has no wires, would actually have to pay the cost of installing a minimum of 10 lines, even if they need only one. Procedure 27 Receive final inspection by the State Construction Inspectorate and sign the Act of Completion of Construction Time to complete: 1 day Cost to complete: no charge Agency: State Construction Inspectorate Comment: 28 Procedure 28 Request and obtain the act of completion of construction from the Working Commission Time to complete: 30 days Cost to complete: no charge Agency: Working Commission (water and sewage authority, sanitary services, power services, and fire safety) Comment: After the completion of construction, the company convenes the Working Commission, consisting of representatives from the water and sewage authority, the sanitary services, power services, and fire safety. The final approval is made by the chair of commission, according to Cabinet Decision No. 285, dated May 23, 1996; the investor's representative; and the local authority's representative (in the case of the municipality of Chisinau, the representative of the LPA is the chair of the commission). According to the same cabinet decision, the commission is to be created within 15 days. However, that time limit is not respected in practice. Procedure 29 Request and receive the act of completion of construction from the State Commission Time to complete: 60 days Cost to complete: MDL 330 Agency: Ministry of Construction and other agencies Comment: The main authority in charge of issuing the occupancy permit is the Ministry of Construction; the chief architect has the definitive word on the decision. The other authorities that must sign the occupancy permit are the sanitary services, the Bureau of Technical Inventory (BTI), and the fire safety services, among others . As a rule, the commission does not meet. Instead, the company must request the signatures on an individual basis. The agencies that issue technical conditions must also give their approval. According to Cabinet Decision No. 285, final approval is completed within 15 days of the guaranteed term provided in the contract, which could be 5 days or 60. On average, it takes 60 days to obtain the occupancy permit. Procedure 30 Register the building at the Bureau of Technical Inventory (BTI) Time to complete: 18 days Cost to complete: MDL 250 Agency: Bureau of Technical Inventory (BTI) Comment: Seals are put on six copies of the blueprints; the company is given one copy. 29 30 1. Benchmarking Registering Property Regulations: Moldova is ranked 18 overall for Registering Property. Ranking of Moldova in Registering Property - Compared to good practice and selected economies: 31 The following table shows Registering Property data for Moldova 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 Moldova 5 5 0.9 Comparator Economies Bulgaria 8 15 3.0 Czech Republic 4 43 3.0 Hungary 4 17 5.0 Poland 6 152 0.4 Slovak Republic 3 17 0.0 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 32 2. Historical data: Registering Property in Moldova Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 17 18 Procedures (number) 6 6 5 5 Time (days) 48 48 5 5 Cost (% of property value) 0.9 0.8 0.9 0.9 3. The following graphs illustrate the Registering Property sub indicators in Moldova over the past 4 years: 33 Registering Property in Moldova This topic examines the steps, time, and cost involved in registering property in Moldova. STANDARDIZED PROPERTY Property Value: 905,187.51 City: Chisinau Registration Requirements: No: Procedure Time to complete Cost to complete 1 * Obtain a non-encumbrance certificate from the 1 day MDL 51 (regular service) or Cadastre MDL 255 (expedited service) 2 * Obtain a company registration certificate 1 day MDL 130 3 * Obtain a tax clearance certificate from the Tax Office 1 day (simultaneous no cost with procedures 1 and 2) 34 4 Execution of the transfer deed by a public notary 1 day MDL 0.2% land price (state duty) + 0.5% of building price (state tax) + Notary's fees according to the values determined in the following table: Value of propertyNotary's fees Up to MDL 20,0001,3 %, but not less than MDL 180 From MDL 20,001 to 50,0001% From MDL 50,001 to 100,0000.9% From MDL 100,001 to 200,0000.8% From MDL 200,001 to 400,0000.6% From MDL 400,001 to 600,0000.5% From MDL 600,001 to 800,0000.3% From MDL 800,001 to 1,000,0000.2% More than MDL 1,000,0010.1% 5 Submit the application for registration to the Cadastre 7 days (normal MDL 570 (regular option ­ option), 3 days (fast 7 days), 1710 (fast option ­ option) or 1 day 3 days), MDL 2850 (fastest (fastest option) option ­ 1 day) * Takes place simultaneously with another procedure. 35 Registering Property Details - Moldova Procedure 1 Obtain a non-encumbrance certificate from the Cadastre Time to complete: 1 day Cost to complete: MDL 51 (regular service) or MDL 255 (expedited service) Agency: Territorial Cadastral Office Comment: A certificate containing information regarding the encumbrances on the property must be obtained from the Territorial Cadastral Office (an office like this exists in each district of the country). Generally, all services have an expedited option, which generally costs 10 times the usual fee amount to receive the needed document in 1 working day. The notary will also request a certificate at the Territorial Cadastre Office, concerning the value of the property put on sale, according to the Law regarding the Methodology for calculating notary fees adopted in 2000. Procedure 2 Obtain a company registration certificate Time to complete: 1 day Cost to complete: MDL 130 Agency: Company registrar Comment: Notary law lists the documents that need to be submitted to a notary for notarization of the sale-purchase agreement. If this property is part of the social capital of the company the notarized copy of the charter documents is required for the transfer procedure. If this property is not in the charter capital, then only the following documents are needed: · Copy of registration certificate (this document states who is the authorized person to act on company's behalf) ­ it is valid for 3 months, doesn't have to be renewed routinely. · Non-encumbrance certificate · Sale-purchase agreement In cases where property is part of the company's social capital, both parties must produce notarized copies of the company charter. The purchaser will need two copies (for notarization and registration purposes), while the seller will only require one (for notarization). However, if the parties (seller and buyer) notarize a sale purchase agreement, the copy of the charter is then not needed for registration. It is sufficient to produce a copy of the company's registration certificate. The notary fee is MDL 6.50 per certified page (including notary fees). For this, the figure of MDL 130 is provided on the basis of an assumption of a 10-page charter in both cases. Procedure 3 Obtain a tax clearance certificate from the Tax Office Time to complete: 1 day (simultaneous with procedures 1 and 2) Cost to complete: no cost Agency: Tax Office 36 Comment: A tax clearance certificate from the Tax Office should be produced to confirm the existence or absence of unpaid taxes for the real estate involved in the transaction. No fees are charged for this document. Procedure 4 Execution of the transfer deed by a public notary Time to complete: 1 day Cost to complete: MDL 0.2% land price (state duty) + 0.5% of building price (state tax) + Notary's fees according to the values determined in the following table: Value of propertyNotary's fees Up to MDL 20,0001,3 %, but not less than MDL 180 From MDL 20,001 to 50,0001% From MDL 50,001 to 100,0000.9% From MDL 100,001 to 200,0000.8% From MDL 200,001 to 400,0000.6% From MDL 400,001 to 600,0000.5% From MDL 600,001 to 800,0000.3% From MDL 800,001 to 1,000,0000.2% More than MDL 1,000,0010.1% Agency: Public Notary Comment: The public notary will execute the contract in the form required by the law, in three original or notary-certified copies. Previously, under the old Soviet-era Civil Code, the deeds (contracts) for alienation of property on immovable assets were subject to mandatory notary-certification. The new Civil Code does not contain such a requirement. The requirement on notarization of land sale and purchase agreements subsisted in the Law on Normative Price of Land. Other types of land alienation and all types of building alienation transactions do not require notarization. However, the Cadastral Offices are reluctant to register transfer of property rights on immovable assets, based on such contracts, if they are not notary-certified. Still, there are cases when Territorial Cadastre Offices register sale purchase agreements in respect to real estate (other than plots) which are not notary-certified, especially when the parties are assisted by a lawyer. Upon execution of deed at the notary there is a state tax to be paid as well in the following amount: For certification of deed of land sale: a state duty of 0.2% of land value if the transaction takes place between two private persons. When the state /Government sells land to private individuals a different state duty applies: MDL 5 if the land is outside locality boundaries and MDL 10 if the land plot is within locality boundaries. For certification of deed of sale of buildings: 0.5% from the building price. The state tax may be paid to the notary in cash. The notary will usually request the submission of the non-encumbrance certificate from the cadastre (obtained in Procedure 1). Procedure 5 Submit the application for registration to the Cadastre Time to complete: 7 days (normal option), 3 days (fast option) or 1 day (fastest option) Cost to complete: MDL 570 (regular option ­ 7 days), 1710 (fast option ­ 3 days), MDL 2850 (fastest option ­ 1 day) Agency: Cadastre Comment: The Cadastre Office (http://www.cadastre.md/?lang=en&menu_id=217) will examine the documentation filed and register it in the Immovable Asset Register. The registration of title is conducted by applying a stamp on all originals or notary-certified copies of the title documents. A transfer of property is usually registered within 7 business days (10 calendar days). 37 Registration of transfer of ownership over the property (warehouse and land) with the Registry of Immovable Property, within 7 business days (10 calendar days) costs MDL 0,17% of the land price (but not less than MDL 83 and not more than MDL 415) + 0,06% of the warehouse price (but not less than MDL 267 and not more than MDL 1335). It takes either 3 or 5 times more to get the property registered under the expedited options - within 3, and respectively 1 business day. Territorial Cadastre Office in Chisinau also provides registration services (under the Law) within 3 business days (4 calendar days) in which case it charges a fee of 5 times the regular amount, or 400 MDL. As soon as the sale-purchase transaction is completed the seller must pay VAT which is currently equal to 20% to the state budget. The documentation shall include: Executed transfer deed, confirming the transfer of the right of ownership (obtained in Procedure 3) Where the application is submitted by an agent he must attach power of attorney or other document conforming powers. 38 39 1. Benchmarking Getting Credit Regulations: Moldova is ranked 89 overall for Getting Credit. Ranking of Moldova in Getting Credit - Compared to good practice and selected economies: 40 The following table shows Getting Credit data for Moldova 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 Moldova 8 0 0.0 0.0 Comparator Economies Bulgaria 8 6 37.0 13.1 Czech Republic 6 5 4.9 73.2 Hungary 7 5 0.0 11.4 Poland 9 4 0.0 91.7 Slovak Republic 9 4 2.2 44.5 * 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. 41 2. Historical data: Getting Credit in Moldova Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 87 89 Strength of legal rights index (0-10) 8 8 8 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 Moldova over the past 4 years: 42 Getting Credit in Moldova The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Moldova. 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 43 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, No without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without Yes requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, Yes proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements, so that all types of obligations Yes and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the Yes grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes Do secured creditors have absolute priority to their collateral in bankruptcy procedures? Yes During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? No Does the law authorize parties to agree on out of court enforcement? Yes 44 45 1. Benchmarking Protecting Investors Regulations: Moldova is ranked 109 overall for Protecting Investors. Ranking of Moldova in Protecting Investors - Compared to good practice and selected economies: 46 The following table shows Protecting Investors data for Moldova compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Moldova 4.7 Comparator Economies Bulgaria 6.0 Czech Republic 5.0 Hungary 4.3 Poland 6.0 Slovak Republic 4.7 47 2. Historical data: Protecting Investors in Moldova Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 108 109 Strength of investor protection index (0-10) 4.7 4.7 4.7 4.7 3. The following graph illustrates the Protecting Investors index in Moldova compared to best practice and selected Economies: 9.7 6.0 6.0 5.0 4.7 4.7 4.3 nd ia nd a ry ep ech la ar ep vak ov lic ga Po a lg lic d z al ub un C o ol Bu Ze ub Sl M H ew R R N Note: The higher the score, the greater the investor protection. 48 Protecting Investors in Moldova The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Moldova. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 7 2 What corporate body provides legally sufficient approval for the transaction? 1 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 1 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? 1 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 1 0 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 0 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 49 0 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) 6 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? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 1 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 0 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) 4.7 50 51 1. Benchmarking Paying Taxes Regulations: Moldova is ranked 106 overall for Paying Taxes. Ranking of Moldova in Paying Taxes - Compared to good practice and selected economies: 52 The following table shows Paying Taxes data for Moldova 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 Moldova 48 228 30.9 Comparator Economies Bulgaria 17 616 29.0 Czech Republic 12 557 48.8 Hungary 14 277 53.3 Poland 29 325 42.3 Slovak Republic 31 257 48.7 * The following economies are also good practice economies for : Payments (number per year): Qatar 53 2. Historical data: Paying Taxes in Moldova Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 102 106 Total tax rate (% profit) 42.6 42.1 31.1 30.9 Payments (number per year) 52 52 48 48 Time (hours per year) 234 234 228 228 3. The following graphs illustrate the Paying Taxes sub indicators in Moldova over the past 4 years: 54 Paying Taxes in Moldova The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Moldova, 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 Value added tax (VAT) 12 60 20.0% value added Land tax 1 MDL 30 per property area 0.00 100 square meters Corporate income tax 1 80 0.0% taxable profit 0.00 Tax on immovable 4 0.1% book value of 0.10 property property Road tax 1 fixed fee weight of 0.10 (MDL 360) vehicle Land improvement tax 4 MDL 40 per employee 0.40 Fuel tax 1 MDL 1800 included in 0.50 per ton fuel price Health insurance 12 3.5% gross salaries 3.90 contribution Social security 12 88 23.0% gross salaries 25.90 contributions 55 Totals 48 228 30.9 56 57 1. Benchmarking Trading Across Borders Regulations: Moldova is ranked 141 overall for Trading Across Borders. Ranking of Moldova in Trading Across Borders - Compared to good practice and selected economies: 58 The following table shows Trading Across Borders data for Moldova 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 Moldova 6 32 1765 7 35 1960 Comparator Economies Bulgaria 5 23 1551 7 21 1666 Czech Republic 4 17 1060 7 20 1165 Hungary 5 18 1225 7 17 1215 Poland 5 17 884 5 25 884 Slovak Republic 6 17 1530 8 19 1505 * The following economies are also good practice economies for : Time to export (days): Estonia 59 2. Historical data: Trading Across Borders in Moldova Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 141 141 Cost to export (US$ per container) 1415 1765 1765 1765 Cost to import (US$ per container) 1610 1960 1960 1960 Documents to export (number) 6 6 6 6 Documents to import (number) 7 7 7 7 Time to export (days) 32 32 32 32 Time to import (days) 35 35 35 35 3. The following graphs illustrate the Trading Across Borders sub indicators in Moldova over the past 4 years: 60 61 Trading Across Borders in Moldova These tables list the procedures necessary to import and export a standardized cargo of goods in Moldova. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 20 60 Customs clearance and technical control 3 35 Ports and terminal handling 5 370 Inland transportation and handling 4 1300 Totals 32 1765 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 21 110 Customs clearance and technical control 6 80 Ports and terminal handling 5 370 Inland transportation and handling 3 1400 Totals 35 1960 62 Documents for Export and Import Export Bill of lading Certificate of origin Commercial invoice Customs export declaration Customs transit document Packing list Import Bill of lading Certificate of origin Commercial invoice Customs import declaration Customs transit document Packing list Terminal handling receipts 63 64 1. Benchmarking Enforcing Contracts Regulations: Moldova is ranked 20 overall for Enforcing Contracts. Ranking of Moldova in Enforcing Contracts - Compared to good practice and selected economies: 65 The following table shows Enforcing Contracts data for Moldova 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 Moldova 31 365 20.9 Comparator Economies Bulgaria 39 564 23.8 Czech Republic 27 611 33.0 Hungary 35 395 15.0 Poland 38 830 12.0 Slovak Republic 31 565 30.0 66 2. Historical data: Enforcing Contracts in Moldova Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 20 20 Procedures (number) 31 31 31 31 Time (days) 365 365 365 365 Cost (% of claim) 16.6 16.6 20.9 20.9 3. The following graphs illustrate the Enforcing Contracts sub indicators in Moldova over the past 4 years: 67 Enforcing Contracts in Moldova This topic looks at the efficiency of contract enforcement in Moldova. Nature of Procedure (2010) Indicator Procedures (number) 31 Time (days) 365 Filing and service 42.0 Trial and judgment 180.0 Enforcement of judgment 143.0 Cost (% of claim)* 20.90 Attorney cost (% of claim) 10.6 Court cost (% of claim) 6.0 Enforcement Cost (% of claim) 4.3 68 Court information: Chiinu District Commercial ("Judecatoria Economica de Circumscriptie") Court * Claim assumed to be equivalent to 200% of income per capita. 69 70 1. Benchmarking Closing Business Regulations: Moldova is ranked 92 overall for Closing a Business. Ranking of Moldova in Closing Business - Compared to good practice and selected economies: 71 The following table shows Closing Business data for Moldova 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 Moldova 28.2 2.8 9 Comparator Economies Bulgaria 31.0 3.3 9 Czech Republic 55.9 3.2 17 Hungary 37.9 2.0 15 Poland 31.3 3.0 20 Slovak Republic 55.3 4.0 18 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 72 2. Historical data: Closing Business in Moldova Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 91 92 Time (years) 2.8 2.8 2.8 2.8 Cost (% of estate) 9 9 9 9 Recovery rate (cents on the dollar) 28.8 28.6 28.6 28.2 3. The following graphs illustrate the Closing Business sub indicators in Moldova over the past 4 years: 73 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. 74 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. Bulgaria Bulgaria eased business start-up by reducing the minimum capital requirement from 5,000 leva ($3,250) to 2 leva ($1.30). Bulgaria reduced employer contribution rates for social security. 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. Czech Republic The Czech Republic simplified its labor tax processes and reduced employer contribution rates for social security. The Czech Republic made it easier to deal with insolvency by introducing further legal amendments to restrict setoffs in insolvency cases and suspending for some insolvent debtors the obligation to file for bankruptcy. 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. Moldova Moldova reduced employer contribution rates for social security. 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. Poland Poland eased property registration by computerizing its land registry. 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. 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. 75 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. 76 77