45980 Country Profile for Suriname © 2008 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org e-mail feedback@worldbank.org All rights reserved. 1 2 3 4 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 Group 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. 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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 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: 978-0-8213-7609-6 E-ISBN: 978-0-8213-7610-2 DOI: 10.1596/978-0-8213-7609-6 Current features News on the Doing Business project www.doingbusiness.org Rankings How economies rank-from 1 to 181 www.doingbusiness.org/economyrankings Reformers Contents Short summaries of DB2009 reforms, lists of reformers since DB2004 and a ranking simulation tool www.doingbusiness.org/reformers Introduction 1 and Aggregate Rankings Data time series Customized data sets since DB2004 Starting a Business 5 www.doingbusiness.org/customquery Dealing with 10 Methodology and research Construction Permits The methodologies and research papers underlying Doing Business www.doingbusiness.org/MethodologySurveys Employing Workers 15 Blog Registering Property 19 Online journal focusing on business regulation reform http://blog.doingbusiness.org Getting Credit 24 Downloads Doing Business reports as well as subnational, country and regional Protecting Investors 28 reports and case studies www.doingbusiness.org/downloads Paying Taxes 32 Subnational projects Trading across Borders 36 Differences in business regulations at the subnational level www.doingbusiness.org/subnational Enforcing Contracts 40 Law library Closing a Business 44 Online collection of business laws and regulations www.doingbusiness.org/lawlibrary DB2009 Reforms 48 Local partners More than 6,700 specialists in 181 economies who participate www.doingbusiness.org/LocalPartners Reformers' Club Celebrating the top 10 Doing Business reformers www.reformersclub.org Business Planet Interactive map on the ease of doing business http://www.doingbusiness.org/map Doing Business 2009 is the sixth 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 181 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 10 stages of a business's life are measured : starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2009 are current as of June 1, 2008*. 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 181 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, 19 in the Middle East and North Africa and 8 in South Asia, as well as 27 OECD high-income economies as benchmarks. The following pages present the summary Doing Business indicators for Suriname. The data used for this country 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 2009 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 2007. 1 Economy Rankings - Ease of Doing Business Suriname is ranked 146 out of 181 economies. Singapore is the top ranked economy in the Ease of Doing Business. Suriname - Compared to global good practice economy as well as selected economies: Suriname's ranking in Doing Business 2009 Rank Doing Business 2009 Ease of Doing Business 146 Starting a Business 170 Dealing with Construction Permits 95 Employing Workers 53 Registering Property 136 Getting Credit 131 Protecting Investors 178 Paying Taxes 26 Trading Across Borders 98 Enforcing Contracts 177 2 Closing a Business 147 Summary of Indicators - Suriname Starting a Business Procedures (number) 13 Duration (days) 694 Cost (% GNI per capita) 125.2 Paid in Min. Capital (% of GNI per capita) 0.8 Dealing with Construction Permits Procedures (number) 14 Duration (days) 431 Cost (% of income per capita) 105.7 Employing Workers Difficulty of Hiring Index 0 Rigidity of Hours Index 20 Difficulty of Firing Index 50 Rigidity of Employment Index 23 Firing costs (weeks of salary) 26 Registering Property Procedures (number) 4 Duration (days) 193 Cost (% of property value) 13.9 Getting Credit Legal Rights Index 5 Credit Information Index 0 Public registry coverage (% adults) 0.0 Private bureau coverage (% adults) 0.0 Protecting Investors Disclosure Index 1 3 Protecting Investors Director Liability Index 0 Shareholder Suits Index 5 Investor Protection Index 2.0 Paying Taxes Payments (number) 17 Time (hours) 199 Profit tax (%) 27.9 Labor tax and contributions (%) 0.0 Other taxes (%) 0.0 Total tax rate (% profit) 27.9 Trading Across Borders Documents for export (number) 8 Time for export (days) 25 Cost to export (US$ per container) 975 Documents for import (number) 7 Time for import (days) 25 Cost to import (US$ per container) 885 Enforcing Contracts Procedures (number) 44 Duration (days) 1715 Cost (% of claim) 37.1 Closing a Business Time (years) 5.0 Cost (% of estate) 30 Recovery rate (cents on the dollar) 8.1 When entrepreneurs draw up a business plan and try to get under way, the first hurdles they face are the procedures required to incorporate and register the new firm before they can legally operate. Economies differ greatly in how they regulate the entry of new businesses. In some the process is straightforward and affordable. In others the procedures are so burdensome that entrepreneurs may have to bribe officials to speed the process or may decide to run their business informally. The data on starting a business is based on a survey and research investigating the procedures that a standard small to medium-size company needs to complete to start operations legally. These include obtaining all necessary permits and licenses and completing all required inscriptions, verifications and notifications with authorities to enable the company to formally operate. The time and cost required to complete each procedure under normal circumstances are calculated, as well as the minimum capital that must be paid in. It is assumed that all information is readily available to the entrepreneur, that there has been no prior contact with officials and that all government and nongovernment entities involved in the process function without corruption. To make the data comparable across economies, detailed assumptions about the type of business are used. Among these assumptions are the following: the business is a limited liability company conducting general commercial activities in the largest business city; it is 100% domestically owned, with a start-up capital of 10 times income per capita, a turnover of at least 100 times income per capita and between 10 and 50 employees; and it does not qualify for any special benefits, nor does it own real estate. Procedures are recorded only where interaction is required with an external party. It is assumed that the founders complete all procedures themselves unless professional services (such as by a notary or lawyer) are required by law. Voluntary procedures are not counted, nor are industry-specific requirements and utility hook-ups. Lawful shortcuts are counted. Cumbersome entry procedures are associated with more corruption, particularly in developing economies. Each procedure is a point of contact, a potential opportunity to extract a bribe. Analysis shows that burdensome entry regulations do not increase the quality of products, make work safer or reduce pollution. Instead, they constrain private investment; push more people into the informal economy; increase consumer prices and fuel corruption. 5 1. Historical data: Starting a Business in Suriname Starting a Business data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 165 170 Procedures (number) 13 13 13 Duration (days) 694 694 694 Cost (% GNI per capita) 153.8 141.8 125.2 Paid in Min. Capital (% of GNI per capita) 1.4 1.1 0.8 2. The following graphs illustrates the Starting a Business indicators in Suriname over the past 3 years: 6 3. Steps to Starting a Business in Suriname It requires 13 procedures, takes 694 days, and costs 125.21 % GNI per capita to start a business in Suriname. List of Procedures: 1. Deposit paid-in minimum capital 11. Register company for taxes at the tax office of the Ministry of Finance 2. Verify uniqueness of company name 12. Buy insurance for the company 3. Obtain extract and nationality declaration from the Civil Registry of each founder 13. Obtain trade license 4. Pay fee at the Accountancy and Finance Department of the Ministry of Justice and Police 5. Pay fee at the Districts Commissioner 6. Draft and notarize company articles of association 7. Apply for company registration at the Trade Register in the Chamber of Commerce 8. Obtain approval of the act by the President 9. Publish statement of no objection in Official Gazette 10. Register copy of approved act with the Trade Register of the Chamber of Commerce and Industry 7 More detail is included in the appendix. 4. Benchmarking Starting a Business Regulations: Suriname is ranked 170 overall for Starting a Business. Ranking of Suriname in Starting a Business - Compared to good practice and selected economies: 8 The following table shows Starting a Business data for Suriname compared to good practice and comparator economies: Good Practice Procedures Duration Cost (% GNI Paid in Min. Economies (number) (days) per capita) Capital (% of GNI per capita) Denmark 0.0 New Zealand* 1 1 0.0 Selected Economy Suriname 13 694 125.2 0.8 Comparator Economies Dominican Republic 8 19 19.4 0.0 Guyana 8 40 68.4 0.0 Haiti 13 195 159.6 26.6 Jamaica 6 8 7.9 0.0 Puerto Rico 7 7 0.8 0.0 * The following economies are also good practice economies for : Procedures (number): Canada 9 Once entrepreneurs have registered a business, what regulations do they face in operating it? To measure such regulation, Doing Business focuses on the construction sector. Construction companies are under constant pressure; from government to comply with inspections and with licensing and safety regulations and from customers to be quick and cost-effective. These conflicting pressures point to the tradeoff in building regulation; the tradeoff between protecting people (construction workers, tenants, passersby) and keeping the cost of building affordable. Striking the right balance is a challenge when it comes to construction regulations. Good regulations ensure safety standards that protect the public while making the permitting process efficient, transparent and affordable for both building authorities and the private professionals who use it. If procedures are overly complicated or costly, builders build without a permit, leading to hazardous construction. The indicators on dealing with construction permits record all procedures officially required for an entrepreneur in the construction industry to build a warehouse. These include submitting project documents (building plans, site maps) to the authorities, obtaining all necessary licenses and permits, completing all required notifications and receiving all necessary inspections. They also include procedures for obtaining utility connections, such as electricity, telephone, water and sewerage. The time and cost to complete each procedure under normal circumstances are calculated. All official fees associated with legally completing the procedures are included (bribes not included). Time is recorded in calendar days. The survey assumes that the entrepreneur is aware of all existing regulations and does not use an intermediary to complete the procedures unless required to do so by law. To make the data comparable across economies, several assumptions about the business and its operations are used. The business is a small to medium-size limited liability company, located in the most populous city, domestically owned and operated, in the construction business, with 60 qualified employees. The warehouse to be built: · Is a new construction (there was no previous construction on the land). · Has 2 stories, both above ground, with a total surface of approximately 1,300.6 square meters (14,000 square feet). Each floor is 3 meters (9 feet, 10 inches) high · Has complete architectural and technical plans prepared by a licensed architect. · Will be connected to electricity, water, sewerage (sewage system, septic tank or their equivalent) and one land phone line. The connection to each utility network will be 32 feet, 10 inches (10 meters) long. · Will be used for general storage, such as of books or stationery. The warehouse will not be used for any goods requiring special conditions, such as food, chemicals or pharmaceuticals. · Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). Where the regulatory burden is large, entrepreneurs move their activity into the informal economy. There they operate with less concern for safety, leaving everyone worse off. 10 1. Historical data: Dealing with Construction Permits in Suriname Dealing with Construction Permits data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 98 95 Procedures (number) 14 14 14 Duration (days) 431 431 431 Cost (% of income per capita) 196.3 158.0 105.7 2. The following graphs illustrates the Dealing with Construction Permits indicators in Suriname over the past 3 years: 11 3. Steps to Building a Warehouse in Suriname It requires 14 procedures, takes 431 days, and costs 105.66 % GNI per capita to build a warehouse in Suriname. List of Procedures: 1. Obtain a site map from a legally approved surveyor 12. Receive inspection from SWM 2. Obtain building permit from Ministry of Public Works 13. Obtain a fixed telephone line 3. Receive inspection by fire department 14. Obtain inspection certificate from fire department 4. Receive inspection by Ministry of Public Works 5. Receive inspection by Ministry of Public Works 6. Receive inspection by Ministry of Public Works 7. Obtain approval from the Electriciteits Bedrijf Suriname (EBS) power company 8. Receive site inspection from EBS prior to installation 9. Obtain approval from the Suriname Water Company (SWM) water supply company 10. Obtain electricity connection 11. Obtain water and sewage connection 12 More detail is included in the appendix. 4. Benchmarking Dealing with Construction Permits Regulations: Suriname is ranked 95 overall for Dealing with Construction Permits. Ranking of Suriname in Dealing with Construction Permits - Compared to good practice and selected economies: * The following economies are also good practice economies for Building a Warehouse: Belize, New Zealand, St. Vincent and the Grenadines 13 The following table shows Dealing with Construction Permits data for Suriname compared to good practice and comparator economies: Good Practice Procedures Duration Cost (% of Economies (number) (days) income per capita) Denmark 6 Korea 34 Malaysia* 7.9 Selected Economy Suriname 14 431 105.7 Comparator Economies Dominican Republic 17 214 93.2 Guyana 11 133 255.8 Haiti 11 1179 675.2 Jamaica 10 156 396.3 Puerto Rico 22 209 550.8 * The following economies are also good practice economies for : Cost (% of income per capita): Brunei, Palau, Qatar, St. Kitts and Nevis, Trinidad and Tobago, United Arab Emirates 14 Economies worldwide have established a system of laws and institutions intended to protect workers and guarantee a minimum standard of living for its population. This system generally encompasses four bodies of law: employment, industrial relations, social security and occupational health and safety laws. Doing Business examines government regulation in the area of employment. Two measures are presented: a rigidity of employment index and a firing cost measure. The rigidity of employment index is the average of three subindices: difficulty of hiring, rigidity of hours and difficulty of firing. Each index takes values between 0 and 100, with higher values indicating more rigid regulation. The difficulty of hiring index measures the flexibility of contracts and the ratio of the minimum wage to the value added per worker. The rigidity of hours index covers restrictions on weekend and night work, requirements relating to working time and the workweek, and mandated days of annual leave with pay. The difficulty of firing index covers workers' legal protections against dismissal, including the grounds permitted for dismissal and procedures for dismissal (individual and collective): notification and approval requirements, retraining or reassignment obligations and priority rules for dismissals and reemployment. The firing cost indicator measures the cost of advance notice requirements, severance payments and penalties due when terminating a redundant worker, expressed in weeks of salary. To make the data comparable across economies, a range of assumptions about the worker and the company are used. The company is assumed to be a limited liability manufacturing corporation that operates in the economy's most populous city, is 100% domestically owned and has 201 employees. The company is also assumed to be subject to collective bargaining agreements in economies where such agreements cover more than half the manufacturing sector and apply even to firms not party to them. Employment regulations are needed to allow efficient contracting between employers and workers and to protect workers from discriminatory or unfair treatment by employers. In its indicators on employing workers, Doing Business measures flexibility in the regulation of hiring, working hours and dismissal in a manner consistent with the conventions of the International Labour Organization (ILO). An economy can have the most flexible labor regulations as measured by Doing Business while ratifying and complying with all conventions directly relevant to the factors measured by Doing Business and with the ILO core labor standards. No economy can achieve a better score by failing to comply with these conventions. Governments all over the world face the challenge of finding the right balance between worker protection and labor market flexibility. But in developing countries especially, regulators often err to one extreme, pushing employers and workers into the informal sector. Analysis across economies shows that while employment regulation generally increases the tenure and wages of incumbent workers, overly rigid regulations may have undesirable side effects. These include less job creation, smaller company size, less investment in research and development, and longer spells of unemployment and thus the obsolescence of skills, all of which may reduce productivity growth. When economies err on the side of excessive rigidity, it is to the detriment of businesses and workers alike. 15 1. Historical data: Employing Workers in Suriname Employing Workers data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 53 53 Rigidity of Employment Index 23 23 23 Firing costs (weeks of salary) 26 26 26 2. The following graphs illustrates the Employing Workers indicators in Suriname over the past 3 years: 16 3. Benchmarking Employing Workers Regulations: Suriname is ranked 53 overall for Employing Workers. Ranking of Suriname in Employing Workers - Compared to good practice and selected economies: * The following economies are also good practice economies for Employing Workers: Marshall Islands, Singapore 17 The following table shows Employing Workers data for Suriname compared to good practice and comparator economies: Good Practice Rigidity of Firing costs Economies Employment (weeks of Index salary) Hong Kong, China* 0 New Zealand* 0 Selected Economy Suriname 23 26 Comparator Economies Dominican Republic 28 88 Guyana 21 56 Haiti 21 17 Jamaica 4 62 Puerto Rico 25 0 * The following economies are also good practice economies for : Rigidity of Employment Index: Maldives, Marshall Islands, Singapore, United States Firing costs (weeks of salary): Afghanistan, Denmark, Iraq, Marshall Islands, Micronesia, Palau, Puerto Rico, Tonga, United States 18 Formal property titles help promote the transfer of land, encourage investment and give entrepreneurs access to formal credit markets. But a large share of property in developing economies is not formally registered. Informal titles cannot be used as security in obtaining loans, which limits financing opportunities for businesses. Many governments have recognized this and started extensive property titling programs. But bringing assets into the formal sector is only part of the story. The more difficult and costly it is to formally transfer property, the greater the chances that formalized titles will quickly become informal again. Eliminating unnecessary obstacles to registering and transferring property is therefore important for economic development. Doing Business records the full sequence of procedures necessary for a business (buyer) to purchase a property from another business (seller) and to transfer the property title to the buyer's name. The property of land and building will be transferred in its entirety. The transaction is considered complete when the buyer can use the property as collateral for a bank loan. Local property lawyers and officials in property registries provide information on required procedures as well as the time and cost to complete each one. For most economies the data are based on responses from both. Based on the responses, three indicators are constructed. · Number of procedures to register property. · Time to register property (in calendar days). · Official costs to register property (as a percentage of the property value). Many titling programs in Africa were futile because people bought and sold property informally, neglecting to update the title records in the property registry. Why? Doing Business shows that completing a simple formal property transfer in the largest business city of an African economy cost 10% of the value of the property and takes on average 90 days. Worse, the property registries are so poorly organized that they provide little security of ownership. Efficient property registration reduces transaction costs and helps to formalize property titles. Simple procedures to register property are also associated with greater perceived security of property rights and less corruption. That benefits all entrepreneurs, especially women, the young and the poor. The rich have few problems protecting their property rights. They can afford to invest in security systems and other measures to defend their property. But small entrepreneurs cannot. Reform can change this. Twenty-four economies made it easier to register property in 2007/08. The most popular reform: lowering the cost of registration by reducing the property transfer tax, registration fees or stamp duty. 19 1. Historical data: Registering Property in Suriname Registering Property data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 135 136 Procedures (number) 4 4 4 Duration (days) 193 193 193 Cost (% of property value) 10.2 13.7 13.9 2. The following graphs illustrates the Registering Property indicators in Suriname over the past 3 years: 20 3. Steps to Registering Property in Suriname It requires 4 procedures, takes 193 days, and costs 13.85 % of property value to register the property in Suriname. List of Procedures: 1. Conduct title search at Lands Office 2. Execute and notarize final sale purchase agreement 3. Notary registers final sale purchase agreement at the Lands Office 4. Buyer receives original deed proving ownership More detail is included in the appendix. 21 4. Benchmarking Registering Property Regulations: Suriname is ranked 136 overall for Registering Property. Ranking of Suriname in Registering Property - Compared to good practice and selected economies: * The following economies are also good practice economies for Registering Property: Georgia, Saudi Arabia 22 The following table shows Registering Property data for Suriname compared to good practice and comparator economies: Good Practice Procedures Duration Cost (% of Economies (number) (days) property value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Suriname 4 193 13.9 Comparator Economies Dominican Republic 7 60 3.8 Guyana 6 34 4.5 Haiti 5 405 6.4 Jamaica 5 54 11.0 Puerto Rico 8 194 1.5 * The following economies are also good practice economies for : Procedures (number): Sweden Duration (days): Saudi Arabia, Sweden, Thailand 23 Firms consistently rate access to credit as among the greatest barriers to their operation and growth. Doing Business constructs two sets of indicators of how well credit markets function: one on credit registries and the other on legal rights of borrowers and lenders. Credit registries, institutions that collect and distribute credit information on borrowers, can greatly expand access to credit. By sharing credit information, they help lenders assess risk and allocate credit more efficiently. And they free entrepreneurs from having to rely on personal connections alone when trying to obtain credit. Three indicators are constructed to measure the sharing of credit information: · Depth of credit information index, which measures the extent to which the rules of a credit information system facilitate lending based on the scope of information distributed, the ease of access to information and the quality of information. · Public registry coverage, which reports the number of individuals and firms covered by a public credit registry as a percentage of the adult population. · Private bureau coverage, which reports the number of individuals and firms, covered by a private credit bureau as a percentage of the adult population. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. This year, three main changes were made; first, a standardized case scenario with specific assumptions was introduced to bring this indicator into line with other Doing Business indicators. Second, the indicator now focuses not on tangible movable collateral, such as equipment, but on revolving movable collateral, such as accounts receivable and inventory. Third, the indicator no longer considers whether management remains in place during a reorganization procedure, better accommodating economies that adopt reorganization procedures. The strength of legal rights index includes 8 aspects related to legal rights in collateral law and 2 aspects in bankruptcy law: · Any business may use movable assets as collateral while keeping possession of the assets, and any financial institution may accept such assets as collateral. · The law allows a business to grant a non possessory security right in a single category of revolving movable assets, without requiring a specific description of the secured assets. · The law allows a business to grant a non possessory security right in substantially all of its assets, without requiring a specific description of the secured assets. · A security right may extend to future or after-acquired assets and may extend automatically to the products, proceeds or replacements of the original assets. · General description of debts and obligations is permitted in collateral agreements and in registration documents, so that all types of obligations and debts can be secured by stating a maximum rather than a specific amount between the parties. · A collateral registry is in operation that is unified geographically and by asset type and that is indexed by the name of the grantor of a security right. · Secured creditors are paid first when a debtor defaults outside an insolvency procedure or when a business is liquidated. · Secured creditors are not subject to an automatic stay or moratorium on enforcement procedures when a debtor enters a court-supervised reorganization procedure. · The law allows parties to agree in a collateral agreement that the lender may enforce its security right out of court. 24 1. Historical data: Getting Credit in Suriname Getting Credit data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 126 131 Legal Rights Index 5 5 5 Credit Information Index 0 0 0 Public registry coverage (% adults) 0.0 0.0 0.0 Private bureau coverage (% adults) 0.0 0.0 0.0 2. The following graphs illustrates the Getting Credit indicators in Suriname over the past 3 years: 25 3. Benchmarking Getting Credit Regulations: Suriname is ranked 131 overall for Getting Credit. Ranking of Suriname in Getting Credit - Compared to good practice and selected economies: 26 The following table shows Getting Credit data for Suriname compared to good practice and comparator economies: Good Practice Legal Rights Credit Public Private Economies Index Information registry bureau Index coverage (% coverage (% adults) adults) Malaysia* 10 New Zealand* 100.0 Portugal 76.4 United Kingdom 6 Selected Economy Suriname 5 0 0.0 0.0 Comparator Economies Dominican Republic 3 6 33.9 35.0 Guyana 4 0 0.0 0.0 Haiti 2 2 0.7 0.0 Jamaica 8 0 0.0 0.0 Puerto Rico 8 5 0.0 61.4 * The following economies are also good practice economies for : Legal Rights Index: Hong Kong, China, Kenya, Singapore Private bureau coverage (% adults): Argentina, Australia, Canada, Iceland, Ireland, Nicaragua, Norway, Sweden, United Kingdom, United States 24 countries have the highest credit information index. 27 Companies grow by raising capital, either through a bank loan or by attracting equity investors. Selling shares allows companies to expand without the need to provide collateral and repay bank loans. But investors worry about their money, and look for laws that protect them. A study finds that the presence of legal and regulatory protections for investors explains up to 73% of the decision to invest. In contrast, company characteristics explain only between 4% and 22%*. Good protections for minority shareholders are associated with larger and more active stock markets. Thus both governments and businesses have an interest in reforms strengthening investor protections. To document some of the protections investors have, Doing Business measures how economies regulate a standard case of self-dealing, use of corporate assets for personal gain. The case facts are straightforward. Mr. James, a director and the majority shareholder of a public company, proposes that the company purchase used trucks from another company he owns. The price is higher than the going price for used trucks. The transaction goes forward. All required approvals are obtained, and all required disclosures made, though the transaction is prejudicial to the purchasing company. Shareholders sue the interested parties and the members of the board of directors. Several questions arise. Who approves the transaction? What information must be disclosed? What company documents can investors access? What do minority shareholders have to prove to get the transaction stopped or to receive compensation from Mr. James? Three indices of investor protection are constructed based on the answers to these and other questions. All indices range from 0 to 10, with higher values indicating more protections or greater disclosure. · The extent of disclosure index covers approval procedures, requirements for immediate disclosure to the public and shareholders of proposed transactions, requirements for disclosure in periodic filings and reports and the availability of external review of transactions before they take place. · The extent of director liability index covers the ability of investors to hold Mr. James and the board of directors liable for damages, the ability to rescind the transaction, the availability of fines and jail time associated with self-dealing, the availability of direct or derivative suits and the ability to require Mr. James to pay back his personal profits from the transaction. · The ease of shareholder suits index covers the availability of documents that can be used during trial, the ability of the investor to examine the defendant and other witnesses, shareholders' access to internal documents of the company, the appointment of an inspector to investigate the transaction and the standard of proof applicable to a civil suit against the directors. These three indices are averaged to create the strength of investor protection index. This index ranges from 0 to 10, with higher values indicating better investor protection. *Doidge, Kardyi and Stulz (2007) 28 1. Historical data: Protecting Investors in Suriname Protecting Investors data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 177 178 Investor Protection Index 2.0 2.0 2.0 2. The following graph illustrates the Protecting Investors index in Suriname compared to best practice and selected Economies: 7.9 0.7 3.5 3.5 0.4 0.3 0.2 d na n w Zealan Rico Jamaica Guya ic Haiti Puerto Dominica publ Suriname Ne Re Note: The higher the score, the greater the investor protection. 29 3. Benchmarking Protecting Investors Regulations: Suriname is ranked 178 overall for Protecting Investors. Ranking of Suriname in Protecting Investors - Compared to good practice and selected economies: 30 The following table shows Protecting Investors data for Suriname compared to good practice and comparator economies: Good Practice Investor Economies Protection Index New Zealand 9.7 Selected Economy Suriname 2.0 Comparator Economies Dominican Republic 4.0 Guyana 5.3 Haiti 3.0 Jamaica 5.3 Puerto Rico 7.0 31 Taxes are essential. Without them there would be no money to provide public amenities, infrastructure and services which are crucial for a properly functioning economy. But particularly for small and medium size companies, they may opt out and choose to operate in the informal sector. One way to enhance tax compliance is to ease and simplify the process of paying taxes for such businesses. The Doing Business tax survey records the effective tax that a small and medium company must pay and the administrative costs of doing so. Imagine a medium-size business, TaxpayerCo, that started operations last year. Doing Business asks tax practitioners in 181 economies to review TaxpayerCo's financial statements and a standard list of transactions that the company completed during the year. Respondents are asked how much in taxes and mandatory contributions the business must pay and what the process is for doing so. The business starts from the same financial position in each economy. All the taxes and mandatory contributions paid during the second year of operation are recorded. Taxes and mandatory contributions are measured at all levels of government and include corporate income tax, turnover tax, all labor taxes and contributions paid by the company (including mandatory contributions paid to private pension or insurance funds), property tax, property transfer tax, dividend tax, capital gains tax, financial transactions tax, vehicle tax, sales tax and other small taxes (such as fuel tax, stamp duty and local taxes). A range of standard deductions and exemptions are also recorded. Three indicators are constructed: · Number of tax payments, which takes into account the method of payment, the frequency of payments and the number of agencies involved in our standardized case study. · Time, which measures the number of hours per year necessary to prepare and file tax returns and to pay the corporate income tax, value added tax, sales tax or goods and service tax and labor taxes and mandatory contributions. · Total tax rate, which measures the amount of taxes and mandatory contributions payable by the company during the second year of operation. This amount, expressed as a percentage of commercial profit, is the sum of all the different taxes payable after accounting for various deductions and exemptions. Businesses care about what they get for their taxes and contributions, such as the quality of infrastructure and social services. Efficient tax systems tend to have less complex tax arrangements, comprising of straightforward compliance procedures and clear laws. Taxpayers in such economies often get more from their taxes. Simple, moderate taxes and fast, cheap administration mean less hassle for businesses, and also more revenue collected and better public services. More burdensome tax regimes create an incentive to evade taxes. 32 1. Historical data: Paying Taxes in Suriname Paying Taxes data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 24 26 Time (hours) 199 199 199 Total tax rate (% profit) 27.9 27.9 27.9 Payments (number) 17 17 17 2. The following graphs illustrates the Paying Taxes indicators in Suriname over the past 3 years: 33 3. Benchmarking Paying Taxes Regulations: Suriname is ranked 26 overall for Paying Taxes. Ranking of Suriname in Paying Taxes - Compared to good practice and selected economies: * The following economies are also good practice economies for Paying Taxes: Maldives, Qatar 34 The following table shows Paying Taxes data for Suriname compared to good practice and comparator economies: Good Practice Payments Time (hours) Total tax rate Economies (number) (% profit) Luxembourg* 59 Sweden* 2 Vanuatu 8.4 Selected Economy Suriname 17 199 27.9 Comparator Economies Dominican Republic 9 480 35.7 Guyana 34 288 39.4 Haiti 42 160 40.1 Jamaica 72 414 51.3 Puerto Rico 16 218 64.7 * The following economies are also good practice economies for : Payments (number): Maldives, Qatar Time (hours): Bahamas, Bahrain, Maldives, Qatar, United Arab Emirates 35 The benefits of trade are well documented; as are the obstacles to trade. Tariffs, quotas and distance from large markets greatly increase the cost of goods or prevent trading altogether. But with bigger ships and faster planes, the world is shrinking. Global and regional trade agreements have reduced trade barriers. Yet Africa's share of global trade is smaller today than it was 25 years ago. So is the Middle East's, excluding oil exports. Many entrepreneurs face numerous hurdles to exporting or importing goods, including delays at the border. They often give up. Others never try. In fact, the potential gains from trade facilitation may be greater than those arising from only tariff reductions. Doing Business compiles procedural requirements for trading a standard shipment of goods by ocean transport. Every procedure and the associated documents, time and cost, for importing and exporting the goods is recorded, starting with the contractual agreement between the two parties and ending with delivery of the goods. For importing the goods, the procedures measured range from the vessel's arrival at the port of entry to the shipment's delivery at the importer's warehouse. For exporting the goods, the procedures measured range from the packing of the goods at the factory to their departure from the port of exit. Payment is by letter of credit and the time and cost for issuing or securing a letter of credit is taken into account. To make the data comparable across countries, several assumptions about the business and the traded goods are used. The business is of medium size, employs 60 people, and is located in the periurban area of the economy's most populous city. It is a private, limited liability company, domestically owned, formally registered and operating under commercial laws and regulations of the economy. The traded goods are ordinary, legally manufactured products transported in a dry-cargo, 20-foot FCL (full container load) container. Documents recorded include port filing documents, customs declaration and clearance documents, as well as official documents exchanged between the parties to the transaction. Time is recorded in calendar days, from the beginning to the end of each procedure. Cost includes the fees levied on a 20-foot container in U.S. dollars. All the fees associated with completing the procedures to export or import the goods are included, such as costs for documents, administrative fees for customs clearance and technical control, terminal handling charges and inland transport. The cost measure does not include tariffs or duties. Economies that have efficient customs, good transport networks and fewer document requirements, making compliance with export and import procedures faster and cheaper, are more competitive globally. That can lead to more exports; and exports are associated with faster growth and more jobs. Conversely, a need to file many documents is associated with more corruption in customs. Faced with long delays and frequent demands for bribes, many traders may avoid customs altogether. Instead, they smuggle goods across the border. This defeats the very purpose in having border control of trade to levy taxes and ensure high quality of goods. 36 1. Historical data: Trading Across Borders in Suriname Trading Across Borders data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 92 98 Documents for export (number) 8 8 8 Time for export (days) 25 25 25 Cost to export (US$ per container) 905 905 975 Documents for import (number) 7 7 7 Time for import (days) 25 25 25 Cost to import (US$ per container) 815 815 885 2. The following graphs illustrates the Trading Across Borders indicators in Suriname over the past 3 years: 37 3. Benchmarking Trading Across Borders Regulations: Suriname is ranked 98 overall for Trading Across Borders. Ranking of Suriname in Trading Across Borders - Compared to good practice and selected economies: 38 The following table shows Trading Across Borders data for Suriname compared to good practice and comparator economies: Good Practice Documents Time for Cost to Documents Time for Cost to Economies for export export (days) export (US$ for import import (days) import (US$ (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 3 439 Selected Economy Suriname 8 25 975 7 25 885 Comparator Economies Dominican Republic 6 9 916 7 10 1150 Guyana 7 30 1050 8 35 1056 Haiti 8 43 1020 10 37 1560 Jamaica 6 21 1750 6 22 1420 Puerto Rico 7 15 1250 10 16 1250 * The following economies are also good practice economies for : Time for export (days): Estonia, Singapore 39 Where contract enforcement is efficient, businesses are more likely to engage with new borrowers or customers. Doing Business tracks the efficiency of the judicial system in resolving a commercial dispute, following the step-by-step evolution of a commercial sale dispute before local courts. The data is collected through study of the codes of civil procedure and other court regulations as well as through surveys completed by local litigation lawyers (and, in a quarter of the countries, by judges as well). The dispute concerns a contract for the sale of goods between two businesses (the Seller and the Buyer) both located in the economy's largest business city. The Seller sells and delivers goods, worth 200% of the economy's income per capita, to the Buyer. The Buyer refuses to pay on the grounds that they were not of adequate quality. The Seller sues the Buyer to recover the amount under the sales agreement (200% of the economy's income per capita). The claim is filed before a court in the economy's largest business city with jurisdiction over commercial cases worth 200% of the income per capita and is disputed on the merits. Judgment is 100% in favor of the Seller and is not appealed. Seller enforces the judgment and the money is successfully collected through a public sale of Buyer's assets. Rankings on enforcing contracts are based on 3 sub-indicators: · Number of procedures, which are defined as any interaction between the parties or between them and the judge or court officer. This includes steps to file the case, steps for trial and judgment and steps necessary to enforce the judgment. · Time, which counts the number of calendar days from the moment the Seller files the lawsuit in court until payment is received. This includes both the days on which actions take place and the waiting periods in between. · Cost, which is recorded as a percentage of the claim (assumed to be equivalent to 200% of income per capita). Three types of costs are recorded: court costs (including expert fees), enforcement costs (including costs for a public sale of Buyer's assets) and attorney fees. Justice delayed is often justice denied. And in many economies only the rich can afford to go to court. For the rest, justice is out of reach. In the absence of efficient courts, firms undertake fewer investments or business transactions. And they prefer to involve only a small group of people who know each other from previous dealings. 40 1. Historical data: Enforcing Contracts in Suriname Enforcing Contracts data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 177 177 Procedures (number) 44 44 44 Duration (days) 1715 1715 1715 Cost (% of claim) 37.1 37.1 37.1 2. The following graphs illustrates the Enforcing Contracts indicators in Suriname over the past 3 years: 41 3. Benchmarking Enforcing Contracts Regulations: Suriname is ranked 177 overall for Enforcing Contracts. Ranking of Suriname in Enforcing Contracts - Compared to good practice and selected economies: 42 The following table shows Enforcing Contracts data for Suriname compared to good practice and comparator economies: Good Practice Procedures Duration Cost (% of Economies (number) (days) claim) Iceland* 6.2 Ireland 20 Singapore 150 Selected Economy Suriname 44 1715 37.1 Comparator Economies Dominican Republic 34 460 40.9 Guyana 36 581 25.2 Haiti 35 508 42.6 Jamaica 35 655 45.6 Puerto Rico 39 620 24.3 * The following economies are also good practice economies for : Cost (% of claim): Bhutan 43 The economic crises of the 1990s in emerging markets--from East Asia to Latin America, from Russia to Mexico--raised concerns about the design of bankruptcy systems and the ability of such systems to help reorganize viable companies and close down unviable ones. In countries where bankruptcy is inefficient, unviable businesses linger for years, keeping assets and human capital from being reallocated to more productive uses. The Doing Business indicators identify weaknesses in the bankruptcy law as well as the main procedural and administrative bottlenecks in the bankruptcy process. In many developing countries bankruptcy is so inefficient that the parties hardly ever use it. In countries such as these, reform would best focus on improving contract enforcement outside bankruptcy. The data on closing a business are developed using a standard set of case assumptions to track a company going through the step-by-step procedures of the bankruptcy process. It is assumed that the company is a domestically owned, limited liability corporation operating a hotel in the country's most populous city. The company has 201 employees, 1 main secured creditor and 50 unsecured creditors. Assumptions are also made about the debt structure and future cash flows. The case is designed so that the company has a higher value as a going concern--that is, the efficient outcome is either reorganization or sale as a going concern, not piecemeal liquidation. The data are derived from questionnaires answered by attorneys at private law firms. Three measures are constructed from the survey responses: the time to go through the insolvency process, the cost to go through the process and the recovery rate--how much of the insolvency estate is recovered by stakeholders, taking into account the time, cost, depreciation of assets and the outcome of the insolvency proceeding. Bottlenecks in bankruptcy cut into the amount claimants can recover. In countries where bankruptcy laws are inefficient, this is a strong deterrent to investment. Access to credit shrinks, and nonperforming loans and financial risk grow because creditors cannot recover overdue loans. Conversely, efficient bankruptcy laws can encourage entrepreneurs. The freedom to fail, and to do so through an efficient process, puts people and capital to their most effective use. The result is more productive businesses and more jobs. 44 1. Historical data: Closing Business in Suriname Closing a Business data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 148 147 Time (years) 5.0 5.0 5.0 Cost (% of estate) 30 30 30 Recovery rate (cents on the dollar) 6.9 7.4 8.1 2. The following graphs illustrates the Closing Business indicators in Suriname over the past 3 years: 45 3. Benchmarking Closing Business Regulations: Suriname is ranked 147 overall for Closing a Business. Ranking of Suriname in Closing Business - Compared to good practice and selected economies: 46 The following table shows Closing Business data for Suriname compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of Economies (cents on the estate) dollar) Ireland 0.4 Japan 92.5 Singapore* 1 Selected Economy Suriname 8.1 5.0 30 Comparator Economies Dominican Republic 8.9 3.5 38 Guyana 17.6 3.0 29 Haiti 2.7 5.7 30 Jamaica 64.5 1.1 18 Puerto Rico 55.2 3.8 8 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 47 Number of reforms in Doing Business 2009 Positive Reform Borders Negative Reform Construction Total Businessa Workers Property Investors number with Credit Across Contracts Taxes Businessa of reforms Rank Economy Starting Dealing Permits Employing Registering Getting Protecting Paying Trading Enforcing Closing 1 Azerbaijan 7 2 Albania 4 3 Kyrgyz Republic 3 4 Belarus 6 5 Senegal 3 6 Burkina Faso 4 7 Botswana 3 8 Colombia 5 9 Dominican Republic 4 10 Egypt 6 Suriname Guyana Puerto Rico Haiti 1 Jamaica 2 Note: Economies are ranked on the number and impact of reforms, Doing Business selects the economies that reformed in 3 or more of the Doing Business topics. Second, it ranks these economies on the increase in rank in Ease of Doing Business from the previous year. The larger the improvement, the higher the ranking as a reformer. 48 Albania Albania, a top reformer globally and regionally, established a public credit registry allowing financial institutions to share credit information and covering 8.3 percent of the adult population. This reform allows banks to better evaluate the creditworthiness of potential borrowers, facilitating access to credit for firms and individuals. Albania also strengthened investor protections. A new company law requires that disinterested shareholders approve transactions between interested parties and obligates those parties to disclose all information on the transaction to the public. The law also reinforces directors' duties and requires directors, when found liable, to pay damages and return profits to the company. Starting a business became easier with online publication, reduction of the registration cost, and the consolidation of tax, health insurance, and labor registration into a single application. The corporate income tax rate was reduced from 20 percent to 10 percent effective January 1, 2008. Azerbaijan Azerbaijan, the top reformer globally and regionally, eliminated the minimum threshold for reporting loans to the public credit registry in September 2007. The public registry now records information on all loans made by the financial system, more than doubling the coverage of borrowers with a credit history. Substantial amendments to the labor code in May 2007 made hiring workers easier by allowing employers to use fixed-term contracts for permanent tasks, easing restrictions on night work, and reducing requirements for redundancy dismissals. Azerbaijan created a second commercial court in Baku, increasing the number of judges dealing with commercial cases from five to nine. The average time to enforce a contract through the courts fell from 267 days to 237. A new law strengthens investor protections by requiring that transactions between interested parties be approved by shareholders. Interested parties are allowed to vote on the matter. Other provisions protect investors because directors who are held liable must pay damages and disgorge profits. Azerbaijan introduced a new unified property registry, reducing the number of procedures required to register property from seven to four. In addition, the State Register Service introduced the option of expediting two of the four procedures, making it possible to register property in 11 days. Similarly, the country created a one-stop shop for company registration, cutting the number of procedures from 13 to six and reducing the time required by half. Azerbaijan reduced the tax burden by introducing an online filing and payment system with advanced accounting software for calculating taxes due. This saves more than 500 hours a year on average in dealing with paperwork. Belarus In Belarus, a top reformer globally and regionally, the public credit registry expanded credit information by eliminating the minimum threshold for loans recorded in its database. It also guaranteed the right of borrowers to review their data, improving accuracy. Starting a business became easier: a unified registry database was created, a time limit was introduced for registration, and the minimum capital requirement was cut by half. Belarus created a one-stop shop for property registration and introduced a broad administrative simplification program that set strict time limits at the registry and computerized its records. As a result, the time required to register property in Minsk fell from 231 days to 21. The time required for dealing with construction permits fell by 140 days, thanks to new statutory time limits for preapproval clearances and building permits. Belarus eased the tax burden by abolishing the "Chernobyl tax" (3 percent) and unemployment tax (1 percent) and amending the simplified tax system for small businesses. A new customs code and new banking regulations reduced the time to export Botswana Botswana improved its business environment by speeding the start-up process through computerization. A similar effort, which included training customs officers in using an electronic data interchange system, sped the processing of trade documents and reduced the time to export by two days and the time to import by a day. A new Company Act has come into force, requiring that shareholders approve related-party transactions and that directors repay damages and surrender profits if held liable. Finally, since January 2008, companies have been required to pay 0.2 percent of turnover for the training of workers. Burkina Faso Burkina Faso eliminated random inspections during construction. It also introduced a new one-stop shop for construction permits, which reduced approval fees and combined five separate payments into a single one. A new labor code, approved in May 2008, makes hiring workers easier by allowing employers to use fixed-term contracts for permanent tasks, removing the 48-month limit on the duration of such contracts, and easing restrictions on determining the weekly rest day. Requirements for redundancy dismissals were also eased: third-party notification and consent are no longer required for dismissal of a single worker, and priority rules for dismissals were abolished. Burkina Faso made it easier to transfer property by eliminating the requirement for authorization from the municipality, merging two taxes at the Land Registry (Conservation Foncière), and reducing the transfer tax. The changes reduced the time required by 46 days and the cost by 2 percent of the property value. Finally, Burkina Faso reduced the corporate income tax rate from 35 percent to 30 percent (effective January 1, 2008), and the tax on dividends from 15 percent to 12.5 percent. 49 Colombia Colombia, a top global and regional reformer, improved in five of the 10 Doing Business indicators. It reduced the time and cost to start a business by simplifying registration formalities, including speeding up processes at the registry and eliminating the need to obtain a certificate of compliance with zoning regulations. A silence-is-consent principle for building permits is now applied, reducing the total time for dealing with construction permits by 32 days. A new unified application form was introduced. Colombia made electronic social security contributions mandatory for companies with more than 30 employees and created unified electronic forms for filing taxes. Trading across borders was expedited: better banking services and the implementation of e-payments, electronic data interchange, and coordinated inspections in customs reduced the time to export by 10 days and the time to import by five. Authorities also introduced two new insolvency proceedings: a reorganization procedure to restructure insolvent companies and a mandatory liquidation procedure. Its new insolvency law tightens time limits for negotiating reorganization agreements. Before, the term allowed was six months, with a possible extension of eight months. The new law limits the term to four months, and the extension to two. Dominican Republic The Dominican Republic, a top global and regional reformer, sped up formalities in several areas by making them electronic. An online system for filing and paying taxes, piloted in 2006, is now fully operational. And entrepreneurs can complete several start-up formalities online, including name verification, and commercial and tax registration. The Dominican Republic also reduced the corporate income tax rate from 29% to 25%, and abolished several taxes, including the stamp duty. The cost of property registration fell, thanks to a reduction in the transfer tax from 4.3% to 3%. Transferring property now costs 3.8% of the property value, down from 5.1%. In addition, authorities reduced the time to export by three days by improving the online portal for customs documentation and payment. Egypt Egypt was once again among the top 10 global reformers--the third time in 4 years--and top regional reformer this year. Egypt made starting a business easier by reducing the paid-in minimum capital requirement by more than 80%, abolishing bar association fees, and automating tax registration. A new building code introduced in 2008 is aimed at reducing the procedures and time required to deal with construction permits by establishing a single window for processing construction-related approvals. Simplified administrative procedures for registering property and new time limits have reduced the time to transfer property in Cairo from 193 days to 72. The port of Alexandria continued to upgrade its facilities and sped customs clearance, reducing the time to export by 1 day and the time to import by 3. New listing rules for the Cairo Stock Exchange strengthened protections for minority shareholders: now an independent body must assess transactions between interested parties before they are approved. And thanks to new regulations issued by the Central Bank of Egypt, borrowers have the right to inspect their data in the private credit bureau. Guyana In Guyana no major reform was recorded. Haiti Haiti reduced the time to export by a day, by implementing risk-based inspections in customs. Jamaica Jamaica, as part of an initiative to improve administrative efficiency, introduced a statutory time limit for issuing building permits, reducing the time required to build a warehouse by 80 days. It also reduced the property transfer tax from 7.5% to 6%, and the stamp duty from 5.5% to 4.5%, of the property value. That cut the cost to transfer property from 13.5% of the property value to 11%. Kyrgyz Republic The Kyrgyz Republic, a top reformer globally and regionally, strengthened investor protections through legal amendments allowing minority investors to take legal actions as shareholders. The amendments also require an independent assessment of a related-party transaction before it is approved. Moreover, directors can be held liable for negligence if they harm minority shareholders and will be forced to pay damages and disgorge profits. A new one-stop shop made it easier to start a business by streamlining and simplifying business registration processes and eliminating certain requirements such as proof of residence. Obtaining a company seal became optional. Dealing with construction permits also became easier, thanks to a one-stop shop making it possible to obtain a designing permit, construction license, and occupancy permit at a single place. This reform eliminated nine steps, reduced the time required by almost 6 months, and lowered the cost from 759 percent of income per capita to 406 percent. Puerto Rico In Puerto Rico no major reform was recorded. 50 Senegal Senegal's one-stop shop for business start-up became fully operational, merging more than half the procedures and speeding the process as a result. Similarly, the introduction of time limits at the Land Registry and the Directorate of Taxes and Property sped property registration. The top reformer globally in easing trade, Senegal introduced a single window for customs clearance, cutting document requirements in half. It also set up an electronic data interchange system, implemented risk-based inspections, extended the operating hours of customs, and improved port and road infrastructure. Suriname In Suriname no major reform was recorded. 51 APPENDICES Starting a Business in Suriname This table summarizes the procedures and costs associated with setting up a business in Suriname. STANDARDIZED COMPANY Legal Form: Private Limited Liability Company Minimum Capital Requirement: City: Paramaribo Registration Requirements: No: Procedure Time to complete Cost to complete 1 Deposit paid-in minimum capital 1 day no charge 2 Verify uniqueness of company name 1 day SRD 25 3 Obtain extract and nationality declaration from the Civil Registry of 1 day SRD 5 (SRD 1 per each founder founder) 4 Pay fee at the Accountancy and Finance Department of the Ministry of 1 day included in Justice and Police procedure 6 5 Pay fee at the Districts Commissioner 1 day included in procedure 6 6 Draft and notarize company articles of association 3-4 days SRD 14243 7 Apply for company registration at the Trade Register in the Chamber 1-2 days SRD 50 to 100 of Commerce 8 Obtain approval of the act by the President 500 days no charge 9 Publish statement of no objection in Official Gazette 2-3 days SRD 1500 10 * Register copy of approved act with the Trade Register of the Chamber 1 day no charge of Commerce and Industry 11 * Register company for taxes at the tax office of the Ministry of Finance 1 to 2 days no charge 12 * Buy insurance for the company 2 to 3 days SRD 60 per person per year 13 * Obtain trade license 6 months SRD 550 * Takes place simultaneously with another procedure. 52 Procedure 1 Deposit paid-in minimum capital Time to complete: 1 day Cost to complete: no charge Comment: At least 10% of the subscribed capital should be deposited in the bank. Procedure 2 Verify uniqueness of company name Time to complete: 1 day Cost to complete: SRD 25 Comment: The company name search is done at the Chamber of Commerce. Procedure 3 Obtain extract and nationality declaration from the Civil Registry of each founder Time to complete: 1 day Cost to complete: SRD 5 (SRD 1 per founder) Comment: Procedure 4 Pay fee at the Accountancy and Finance Department of the Ministry of Justice and Police Time to complete: 1 day Cost to complete: included in procedure 6 Comment: Procedure 5 Pay fee at the Districts Commissioner Time to complete: 1 day Cost to complete: included in procedure 6 Comment: Procedure 6 Draft and notarize company articles of association Time to complete: 3-4 days Cost to complete: SRD 14243 Comment: Limited liability companies must be founded through a notarized act, written in Dutch. The company must submit draft articles of association and a request to start the company so the notary can provide a declaration. Fee schedule for notarizing articles of association: - SRD 2,100 for the first SRD 1,000 of nominal capital. For the outstanding amount of nominal capital, an extra SRD 85 is added for every SRD 1,000. 53 The SRD 2,100 includes the SRD 350 for Procedure 4 and the SRD 27 for Procedure 5. In addition, a turnover tax of 8% of the total fee is paid for the notary's service. Procedure 7 Apply for company registration at the Trade Register in the Chamber of Commerce Time to complete: 1-2 days Cost to complete: SRD 50 to 100 Comment: The following documents must be filed with the Trade Register to apply for company registration: - Draft statutes. - Letter from notary on founding of the limited liability company. - Recent passport picture of each founder (one). - Passport or identity card of each founder (copy). - Extract from Civil Registry of each founder (one). The company is registered as a limited liability company "in establishment" before obtaining the approval of the President of Suriname. Upon approval, the notary public converts the draft articles of association into the articles of association and notarizes the company act. The annual registration fee is also referred to as the contribution fee. Procedure 8 Obtain approval of the act by the President Time to complete: 500 days Cost to complete: no charge Comment: The company act must be approved by the President of Suriname with a statement of no objection, published in the Official Gazette. Before a company is officially established, it becomes a limited liability company "in establishment." While in establishment, the company can carry out activities, but the owners are fully liable. The following documents are submitted for the President's approval of the company act: - Request to form a company (two copies). - Draft company statutes (three copies). - Abstract for the Trade Registry (original). - Proof of payment at the Civil Registry. Procedure 9 Publish statement of no objection in Official Gazette Time to complete: 2-3 days Cost to complete: SRD 1500 Comment: The Official Gazette is published every Thursday and Friday, but the company can continue with the other formalities without waiting for the statement to be published. It is only after the publication that company founders cease to be personally liable. Procedure 10 Register copy of approved act with the Trade Register of the Chamber of Commerce and Industry Time to complete: 1 day Cost to complete: no charge Comment: 54 Procedure 11 Register company for taxes at the tax office of the Ministry of Finance Time to complete: 1 to 2 days Cost to complete: no charge Comment: With the registration extract, the founder can obtain the tax number. The registration must be completed in person. Suriname has a self-assessment system for taxes. Limited liability companies pay a fixed tariff. Regardless of the taxable income, the tariff is 36% a year. Turnover tax on taxable services is 8%, and on taxable goods, 10%. The self-assessment forms must be filled out by the company and submitted to the Tax Office. Procedure 12 Buy insurance for the company Time to complete: 2 to 3 days Cost to complete: SRD 60 per person per year Comment: All companies must provide their employees with accident insurance. Other social insurance is not compulsory. Procedure 13 Obtain trade license Time to complete: 6 months Cost to complete: SRD 550 Comment: The trade license fee is SRD 300, but there are many additional fees. A one-stop shop in the Chamber of Commerce centralizes all the steps for the SRD 550 fee. 55 Dealing with Construction Permits in Suriname The table below summarizes the procedures, time, and costs to build a warehouse in Suriname. BUILDING A WAREHOUSE Date as of: January 2,008 Estimated Warehouse Value: City: Paramaribo Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain a site map from a legally approved surveyor 2 days USD 250 2 Obtain building permit from Ministry of Public Works 180 days USD 260 3 Receive inspection by fire department 1 day no charge 4 Receive inspection by Ministry of Public Works 1 day no charge 5 Receive inspection by Ministry of Public Works 1 day no charge 6 Receive inspection by Ministry of Public Works 1 day no charge 7 Obtain approval from the Electriciteits Bedrijf Suriname (EBS) power 30 days no charge company 8 Receive site inspection from EBS prior to installation 14 days no charge 9 * Obtain approval from the Suriname Water Company (SWM) water supply 30 days SRD 56 company 10 Obtain electricity connection 7 days no charge 11 Obtain water and sewage connection 180 days SRD 11,160 12 Receive inspection from SWM 30 days SRD 837 13 Obtain a fixed telephone line 14 days SRD 419 14 Obtain inspection certificate from fire department 21 days no charge * Takes place simultaneously with another procedure. 56 Procedure 1 Obtain a site map from a legally approved surveyor Time to complete: 2 days Cost to complete: USD 250 Comment: Procedure 2 Obtain building permit from Ministry of Public Works Time to complete: 180 days Cost to complete: USD 260 Comment: The building's owner (BuildCo) must obtain a building permit at the Ministry of Public Works. This must be done before the start of construction. The following documents must be submitted: - The application form (a standard form). - Architectural plans. - Construction drawings and structural calculation. - A site map made by a legally approved surveyor. - The professional license of the building's owner (BuildCo). The ministry will consult with the fire department and any other agency (a district commissioner, for example), if required. Procedure 3 Receive inspection by fire department Time to complete: 1 day Cost to complete: no charge Comment: Procedure 4 Receive inspection by Ministry of Public Works Time to complete: 1 day Cost to complete: no charge Comment: Procedure 5 Receive inspection by Ministry of Public Works Time to complete: 1 day Cost to complete: no charge Comment: 57 Procedure 6 Receive inspection by Ministry of Public Works Time to complete: 1 day Cost to complete: no charge Comment: Procedure 7 Obtain approval from the Electriciteits Bedrijf Suriname (EBS) power company Time to complete: 30 days Cost to complete: no charge Comment: Approval from the electricity provider (Electriciteits Bedrijf Suriname, EBS) can be obtained during construction. The items to be submitted are the electrical plans and details. Submissions can be done only by an installation firm approved by the EBS. Procedure 8 Receive site inspection from EBS prior to installation Time to complete: 14 days Cost to complete: no charge Comment: Procedure 9 Obtain approval from the Suriname Water Company (SWM) water supply company Time to complete: 30 days Cost to complete: SRD 56 Comment: Approval from the Suriname Water Company (SWM) can be obtained during construction and requires submissions of a plan of the water supply system. Installations can be done only by a firm approved by the SWM. Procedure 10 Obtain electricity connection Time to complete: 7 days Cost to complete: no charge Comment: Procedure 11 Obtain water and sewage connection Time to complete: 180 days Cost to complete: SRD 11,160 Comment: 58 Procedure 12 Receive inspection from SWM Time to complete: 30 days Cost to complete: SRD 837 Comment: Procedure 13 Obtain a fixed telephone line Time to complete: 14 days Cost to complete: SRD 419 Comment: Procedure 14 Obtain inspection certificate from fire department Time to complete: 21 days Cost to complete: no charge Comment: By law, each construction project should be inspected by the Ministry of Public Works at least two to ten times. In reality, construction projects are never inspected. Other agencies, such as the fire department, power company, and water company, run one check to grant approval. 59 Employing Workers in Suriname Employing workers indices are based on responses to survey questions. The table below shows these responses in Suriname. Employing Workers Indicators (2008) Answer Score Rigidity of Employment Index 23.3 Difficulty of Hiring Index 0.0 Are fixed-term contracts prohibited for permanent tasks? No 0 What is the maximum duration of fixed-term contracts (including renewals)? (in months) No limit 0.0 What is the ratio of mandated minimum wage to the average value added per worker? 0.00 0.00 Rigidity of Hours Index 20.0 Can the workweek extend to 50 hours (including overtime) for 2 months per year to Yes 0 respond to a seasonal increase in production? What is the maximum number of working days per week? 6 0 Are there restrictions on night work? No 0 Are there restrictions on "weekly holiday" work? Yes 1 What is the paid annual vacation (in working days) for an employee with 20 years of 18 0 service? Difficulty of Firing Index 50.0 Is the termination of workers due to redundancy legally authorized? Yes 0 Must the employer notify a third party before terminating one redundant worker? Yes 1 Does the employer need the approval of a third party to terminate one redundant worker? Yes 2 Must the employer notify a third party before terminating a group of 25 redundant Yes 1 workers? Does the employer need the approval of a third party to terminate a group of 25 redundant Yes 1 workers? Is there a retraining or reassignment obligation before an employer can make a worker No 0 redundant? Are there priority rules applying to redundancies? No 0 Are there priority rules applying to re-employment? No 0 60 Firing costs (weeks of salary) 26.0 What is the notice period for redundancy dismissal after 20 years of continuous 0.0 employment? (weeks of salary) What is the severance pay for redundancy dismissal after 20 years of employment? (weeks of 26.0 salary) What is the legally mandated penalty for redundancy dismissal? (weeks of salary) 0.0 Note: The first three indices measure how difficult it is to hire a new worker, how rigid the regulations are on working hours, and how difficult it is to dismiss a redundant worker. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The overall Rigidity of Employment Index is an average of the three indices. 61 Registering Property in Suriname This topic examines the steps, time, and cost involved in registering property in Suriname. STANDARDIZED PROPERTY Property Value: 657,230.89 City: Paramaribo Registration Requirements: No: Procedure Time to complete Cost to complete 1 Conduct title search at Lands Office 2-3 days 750 SRD 2 Execute and notarize final sale purchase agreement 1 day 7% property price (registration fee) + 3% property price (notary fees) + 8% of notary fees (VAT) + 3.5% property price (government levied tax) 3 Notary registers final sale purchase agreement at the Lands 3 ­ 14 days already paid in procedure 2 Office 4 Buyer receives original deed proving ownership 180 days already paid in procedure 2 62 Procedure 1 Conduct title search at Lands Office Time to complete: 2-3 days Cost to complete: 750 SRD Comment: The lawyer (or parties) will conduct a search on the title at the Lands Office to check ownership, encumbrances and the limitations of the property. Procedure 2 Execute and notarize final sale purchase agreement Time to complete: 1 day Cost to complete: 7% property price (registration fee) + 3% property price (notary fees) + 8% of notary fees (VAT) + 3.5% property price (government levied tax) Comment: The parties execute the final sale purchase agreement that the notary then notarizes, as required by law. At this time the parties also pay the registration fee (buyer) and the notary fees (between the parties). The notary will transfer the registration fee to the Lands Office when he submits the final sale purchase agreement for registration. Procedure 3 Notary registers final sale purchase agreement at the Lands Office Time to complete: 3 ­ 14 days Cost to complete: already paid in procedure 2 Comment: The notary brings the final sale purchase agreement to be registered at the Lands Office. After 3 -14 days the Lands Office will send a stamped and registered copy back to the notary. Procedure 4 Buyer receives original deed proving ownership Time to complete: 180 days Cost to complete: already paid in procedure 2 Comment: The notary receives a stamped and registered sale purchase agreement from the Lands Office and delivers it to the buyer. 63 Getting Credit in Suriname The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Suriname. Getting Credit Indicators (2008) Indicator score Private credit Public credit Private bureau coverage (% adults) 0 bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade 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 .. Number of firms 0 .. Legal Rights Index 5 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 revolving movable Yes assets, without requiring a specific description of the secured assets ? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without No requiring a specific description of the secured assets ? 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 georgraphically and by asset type, as well as indexed by the No grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No 64 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 65 Protecting Investors in Suriname The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Suriname. Protecting Investors Data (2008) Indicator Disclosure Index 1 What corporate body provides legally sufficient approval for the transaction? (0-3; see notes) 0 Immediate disclosure to the public and/or shareholders (0-2; see notes) 0 Disclosures in published periodic filings (0-2; see notes) 1 Disclosures by Mr. James to board of directors (0-2; see notes) 0 Requirement that an external body review the transaction before it takes place (0=no, 1=yes) 0 Director Liability Index 0 Shareholder plaintiff's ability to hold Mr. James liable for damage the Buyer-Seller 0 transaction causes to the company. (0-2; see notes) Shareholder plaintiff's ability to hold the approving body (the CEO or board of directors) 0 liable for for damage to the company. (0-2; see notes) Whether a court can void the transaction upon a successful claim by a shareholder plaintiff 0 (0-2; see notes) Whether Mr. James pays damages for the harm caused to the company upon a successful 0 claim by the shareholder plaintiff (0=no, 1=yes) Whether Mr. James repays profits made from the transaction upon a successful claim by the 0 shareholder plaintiff (0=no, 1=yes) Whether fines and imprisonment can be applied against Mr. James (0=no, 1=yes) 0 Shareholder plaintiff's ability to sue directly or derivatively for damage the transaction 0 causes to the company (0-1; see notes) Shareholder Suits Index 5 Documents available to the plaintiff from the defendant and witnesses during trial (0-4; see 2 notes) Ability of plaintiffs to directly question the defendant and witnesses during trial (0-2; see 2 notes) Plaintiff can request categories of documents from the defendant without identifying specific 1 ones (0=no, 1=yes) Shareholders owning 10% or less of Buyer's shares can request an inspector investigate the 0 transaction (0=no, 1=yes) 66 Level of proof required for civil suits is lower than that for criminal cases (0=no, 1=yes) 0 Shareholders owning 10% or less of Buyer's shares can inspect transaction documents before 0 filing suit (0=no, 1=yes) Investor Protection Index 2.0 Notes: Extent of Disclosure Index What corporate body provides legally sufficient approval for the transaction? 0=CEO or managing director alone; 1=shareholders or board of directors vote and Mr. James can vote; 2=board of directors votes and Mr. James cannot vote; 3 = shareholders vote and Mr. James cannot vote Immediate disclosure to the public and/or shareholders 0=none; 1=disclosure on the transaction only; 2=disclosure on the transaction and Mr. James' conflict of interest Disclosures in published periodic filings 0=none; 1=disclosure on the transaction only; 2=disclosure on the transaction and Mr. James' conflict of interest Disclosures by Mr. James to board of directors 0=none; 1=existence of a conflict without any specifics; 2= full disclosure of all material facts Director Liability Index Shareholder plaintiff's ability to hold Mr. James liable for damage the Buyer-Seller transaction causes to the company 0= Mr. James is not liable or liable only if he acted fraudulently or in bad faith; 1= Mr. James is liable if he influenced the approval or was negligent; 2= Mr. James is liable if the transaction was unfair, oppressive or prejudicial to minority shareholders Shareholder plaintiff's ability to hold the approving body (the CEO or board of directors) liable for for damage to the company 0=members of the approving body are either not liable or liable only if they acted fraudulently or in bad faith; 1=liable for negligence in the approval of the transaction; 2=liable if the transaction is unfair, oppressive, or prejudicial to minority shareholders Whether a court can void the transaction upon a successful claim by a shareholder plaintiff 0=rescission is unavailable or available only in case of Seller's fraud or bad faith; 1=available when the transaction is oppressive or prejudicial to minority shareholders; 2=available when the transaction is unfair or entails a conflict of interest Shareholder plaintiffs' ability to sue directly or derivatively for damage the transaction causes to the company 0=not available; 1=direct or derivative suit available for shareholders holding 10% of share capital or less Shareholder Suits Index Documents available to the plaintiff from the defendant and witnesses during trail Score 1 each for (1) information that the defendant has indicated he intends to rely on for his defense; (2) information that directly proves specific facts in the plaintiff's claim; (3) any information that is relevant to the subject matter of the claim; and (4) any information that may lead to the discovery of relevant information. Ability of plaintiffs to directly question the defendant and witnesses during trial 0=no; 1=yes, with prior approval by the court of the questions posed; 2=yes, without prior approval 67 Paying Taxes in Suriname The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Suriname, as well as measures of administrative burden in paying taxes. Tax or mandatory Payments Notes on Time Statutory tax Tax Totaltax rate Notes on contribution (number) Payments (hours) rate base (% profit) TTR Labor taxes 0 withheld 24 4.0% net salary Stamp duty 1 Value added tax (VAT) 12 48 10.0% value added Corporate Income tax 4 126 36.0% taxable profit 27.87 Totals 17 199 27.9 Notes: a) data not collected b) VAT is not included in the total tax rate because it is a tax levied on consumers c) very small amount d) included in other taxes e) Withheld tax f) electronic filling available g) paid jointly with another tax Name of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. When there is more than one statutory tax rate, the one applicable to TaxpayerCo is reported. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. 68 Trading Across Borders in Suriname These tables list the procedures necessary to import and exports a standardized cargo of goods in Suriname. The documents required to export and import the goods are also shown. Nature of Export Procedures (2008) Duration (days) US$ Cost Documents preparation 14 135 Customs clearance and technical control 3 125 Ports and terminal handling 5 165 Inland transportation and handling 3 550 Totals 25 975 Nature of Import Procedures (2008) Duration (days) US$ Cost Documents preparation 14 135 Customs clearance and technical control 5 125 Ports and terminal handling 4 75 Inland transportation and handling 2 550 Totals 25 885 Export Bill of lading Cargo release order Certificate of origin Commercial invoice Customs export declaration Customs inspection report Packing list Terminal handling receipts Import Bill of lading Certificate of origin Chamber of commerce registration number 69 Commercial invoice Customs import declaration Packing list Tax office registration number Enforcing Contracts in Suriname This topic looks at the efficiency of contract enforcement in Suriname. Nature of Procedure (2008) Indicator Procedures (number) 44 Duration (days) 1715 Filing and service 165.0 Trial and judgment 1,095.0 Enforcement of judgment 455.0 Cost (% of claim)* 37.10 Attorney cost (% of claim) 17.7 Court cost (% of claim) 5.3 Enforcement Cost (% of claim) 14.1 Court information: Paramaribo District Court * Claim assumed to be equivalent to 200% of income per capita. 70 71 72