45808 Country Profile for Hong Kong, China © 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 Hong Kong, China. 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 Hong Kong, China is ranked 4 out of 181 economies. Singapore is the top ranked economy in the Ease of Doing Business. Hong Kong, China - Compared to global good practice economy as well as selected economies: Hong Kong, China's ranking in Doing Business 2009 Rank Doing Business 2009 Ease of Doing Business 4 Starting a Business 15 Dealing with Construction Permits 20 Employing Workers 20 Registering Property 74 Getting Credit 2 Protecting Investors 3 Paying Taxes 3 Trading Across Borders 2 Enforcing Contracts 1 2 Closing a Business 13 Summary of Indicators - Hong Kong, China Starting a Business Procedures (number) 5 Duration (days) 11 Cost (% GNI per capita) 2.0 Paid in Min. Capital (% of GNI per capita) 0.0 Dealing with Construction Permits Procedures (number) 15 Duration (days) 119 Cost (% of income per capita) 18.7 Employing Workers Difficulty of Hiring Index 0 Rigidity of Hours Index 0 Difficulty of Firing Index 0 Rigidity of Employment Index 0 Firing costs (weeks of salary) 62 Registering Property Procedures (number) 5 Duration (days) 54 Cost (% of property value) 5.0 Getting Credit Legal Rights Index 10 Credit Information Index 5 Public registry coverage (% adults) 0.0 Private bureau coverage (% adults) 69.9 Protecting Investors Disclosure Index 10 3 Protecting Investors Director Liability Index 8 Shareholder Suits Index 9 Investor Protection Index 9.0 Paying Taxes Payments (number) 4 Time (hours) 80 Profit tax (%) 18.6 Labor tax and contributions (%) 5.3 Other taxes (%) 0.3 Total tax rate (% profit) 24.2 Trading Across Borders Documents for export (number) 4 Time for export (days) 6 Cost to export (US$ per container) 625 Documents for import (number) 4 Time for import (days) 5 Cost to import (US$ per container) 633 Enforcing Contracts Procedures (number) 24 Duration (days) 211 Cost (% of claim) 14.5 Closing a Business Time (years) 1.1 Cost (% of estate) 9 Recovery rate (cents on the dollar) 79.8 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 Hong Kong, China Starting a Business data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 13 15 Procedures (number) 5 5 5 Duration (days) 11 11 11 Cost (% GNI per capita) 3.3 3.1 2.0 Paid in Min. Capital (% of GNI per capita) 0.0 0.0 0.0 2. The following graphs illustrates the Starting a Business indicators in Hong Kong, China over the past 3 years: 6 3. Steps to Starting a Business in Hong Kong, China It requires 5 procedures, takes 11 days, and costs 1.98 % GNI per capita to start a business in Hong Kong, China. List of Procedures: 1. Choose a company name; apply for a certificate of incorporation at the Companies Registry 2. Obtain a business registration certificate (Inland Revenue Department) 3. File notifications regarding company details with the Companies Registry 4. Sign up Employee Compensation Insurance and Mandatory Provident Fund (MPF) Schemes with a private company or a bank 5. Make a corporate seal and company rubber stamp More detail is included in the appendix. 7 4. Benchmarking Starting a Business Regulations: Hong Kong, China is ranked 15 overall for Starting a Business. Ranking of Hong Kong, China in Starting a Business - Compared to good practice and selected economies: 8 The following table shows Starting a Business data for Hong Kong, China 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 Hong Kong, China 5 11 2.0 0.0 Comparator Economies China 14 40 8.4 158.1 Japan 8 23 7.5 0.0 Korea 10 17 16.9 53.8 Malaysia 9 13 14.7 0.0 Taiwan, China 8 42 4.1 177.4 * 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 Hong Kong, China Dealing with Construction Permits data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 61 20 Procedures (number) 23 23 15 Duration (days) 155 155 119 Cost (% of income per capita) 23.6 21.3 18.7 2. The following graphs illustrates the Dealing with Construction Permits indicators in Hong Kong, China over the past 3 years: 11 3. Steps to Building a Warehouse in Hong Kong, China It requires 15 procedures, takes 119 days, and costs 18.71 % GNI per capita to build a warehouse in Hong Kong, China. List of Procedures: 1. Obtain building plans approval 10. Obtain certificate of completion of building works (Form BA 13) 2. Apply and pay for technical audit of water supply connection works (Form HBP1) 11. Obtain certificate of compliance from lands department 3. Apply and pay for technical audit of drainage services 12. Obtain fire certificate for fire service installation (Form department FSI/501) 4. Apply, pay and receive road excavation work 13. Request and obtain water connection permission from Highway Department 14. Request and obtain electricity conneciton 5. Notify and obtain approval from traffic police 15. Request and obtain telephone line 6. Obtain Building consent from Building department (Form BA8) 7. Request and receive inspection of foundation strata 8. Notify Drainage Services Department of construction completion and receive transfer inspection and issuance of water supply certificate 9. Notify Water Services Department of construction completion and receive transfer inspection 12 More detail is included in the appendix. 4. Benchmarking Dealing with Construction Permits Regulations: Hong Kong, China is ranked 20 overall for Dealing with Construction Permits. Ranking of Hong Kong, China 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 Hong Kong, China 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 Hong Kong, China 15 119 18.7 Comparator Economies China 37 336 698.4 Japan 15 187 19.1 Korea 13 34 154.6 Malaysia 25 261 7.9 Taiwan, China 29 193 123.6 * 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 Hong Kong, China Employing Workers data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 20 20 Rigidity of Employment Index 0 0 0 Firing costs (weeks of salary) 62 62 62 2. The following graphs illustrates the Employing Workers indicators in Hong Kong, China over the past 3 years: 16 3. Benchmarking Employing Workers Regulations: Hong Kong, China is ranked 20 overall for Employing Workers. Ranking of Hong Kong, China 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 Hong Kong, China 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 Hong Kong, China 0 62 Comparator Economies China 27 91 Japan 17 4 Korea 45 91 Malaysia 10 75 Taiwan, China 53 91 * 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 Hong Kong, China Registering Property data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 67 74 Procedures (number) 5 5 5 Duration (days) 54 54 54 Cost (% of property value) 5.0 5.0 5.0 2. The following graphs illustrates the Registering Property indicators in Hong Kong, China over the past 3 years: 20 3. Steps to Registering Property in Hong Kong, China It requires 5 procedures, takes 54 days, and costs 5.01 % of property value to register the property in Hong Kong, China. List of Procedures: 1. Purchaser's solicitor does a land search at the Land Registry 2. Purchaser's solicitor registers the executed Agreement of Sale and Purchase (ASP) at his office 3. Property Assignment is prepared by the Purchaser's solicitor, signed by both parties, and filed at the Stamp Duty Office 4. Stamp office returns original stamped Assignment to the Purchaser's solicitor 5. Purchaser's solicitor registers the Property Assignment at the Land Registry More detail is included in the appendix. 21 4. Benchmarking Registering Property Regulations: Hong Kong, China is ranked 74 overall for Registering Property. Ranking of Hong Kong, China 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 Hong Kong, China 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 Hong Kong, China 5 54 5.0 Comparator Economies China 4 29 3.2 Japan 6 14 5.0 Korea 7 11 5.1 Malaysia 5 144 2.5 Taiwan, China 3 5 6.2 * 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 Hong Kong, China Getting Credit data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 2 2 Legal Rights Index 10 10 10 Credit Information Index 5 5 5 Public registry coverage (% adults) 0.0 0.0 0.0 Private bureau coverage (% adults) 64.5 64.7 69.9 2. The following graphs illustrates the Getting Credit indicators in Hong Kong, China over the past 3 years: 25 3. Benchmarking Getting Credit Regulations: Hong Kong, China is ranked 2 overall for Getting Credit. Ranking of Hong Kong, China in Getting Credit - Compared to good practice and selected economies: 26 The following table shows Getting Credit data for Hong Kong, China 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 Hong Kong, China 10 5 0.0 69.9 Comparator Economies China 6 4 58.8 0.0 Japan 7 6 0.0 76.2 Korea 7 6 0.0 90.4 Malaysia 10 6 52.9 not available Taiwan, China 4 5 0.0 62.7 * 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 Hong Kong, China Protecting Investors data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 3 3 Investor Protection Index 9.0 9.0 9.0 2. The following graph illustrates the Protecting Investors index in Hong Kong, China compared to best practice and selected Economies: 7.9 0.9 7.8 0.7 3.5 3.5 0.5 d g, sia a w Zealan Kon lay a Japan wan, Ma Korea a Tai Chin Ne Hong Chin Chin Note: The higher the score, the greater the investor protection. 29 3. Benchmarking Protecting Investors Regulations: Hong Kong, China is ranked 3 overall for Protecting Investors. Ranking of Hong Kong, China in Protecting Investors - Compared to good practice and selected economies: 30 The following table shows Protecting Investors data for Hong Kong, China compared to good practice and comparator economies: Good Practice Investor Economies Protection Index New Zealand 9.7 Selected Economy Hong Kong, China 9.0 Comparator Economies China 5.0 Japan 7.0 Korea 5.3 Malaysia 8.7 Taiwan, China 5.3 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 Hong Kong, China Paying Taxes data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 5 3 Time (hours) 80 80 80 Total tax rate (% profit) 24.4 24.4 24.2 Payments (number) 4 4 4 2. The following graphs illustrates the Paying Taxes indicators in Hong Kong, China over the past 3 years: 33 3. Benchmarking Paying Taxes Regulations: Hong Kong, China is ranked 3 overall for Paying Taxes. Ranking of Hong Kong, China 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 Hong Kong, China 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 Hong Kong, China 4 80 24.2 Comparator Economies China 9 504 79.9 Japan 13 355 55.4 Korea 14 250 33.7 Malaysia 12 145 34.5 Taiwan, China 23 340 40.4 * 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 Hong Kong, China Trading Across Borders data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 3 2 Documents for export (number) 4 4 4 Time for export (days) 6 6 6 Cost to export (US$ per container) 525 525 625 Documents for import (number) 4 4 4 Time for import (days) 6 5 5 Cost to import (US$ per container) 525 525 633 2. The following graphs illustrates the Trading Across Borders indicators in Hong Kong, China over the past 3 years: 37 3. Benchmarking Trading Across Borders Regulations: Hong Kong, China is ranked 2 overall for Trading Across Borders. Ranking of Hong Kong, China in Trading Across Borders - Compared to good practice and selected economies: 38 The following table shows Trading Across Borders data for Hong Kong, China 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 Hong Kong, China 4 6 625 4 5 633 Comparator Economies China 7 21 460 6 24 545 Japan 4 10 989 5 11 1047 Korea 4 8 767 6 8 747 Malaysia 7 18 450 7 14 450 Taiwan, China 7 13 757 7 12 769 * 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 Hong Kong, China Enforcing Contracts data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 1 1 Procedures (number) 24 24 24 Duration (days) 211 211 211 Cost (% of claim) 14.5 14.5 14.5 2. The following graphs illustrates the Enforcing Contracts indicators in Hong Kong, China over the past 3 years: 41 3. Benchmarking Enforcing Contracts Regulations: Hong Kong, China is ranked 1 overall for Enforcing Contracts. Ranking of Hong Kong, China in Enforcing Contracts - Compared to good practice and selected economies: 42 The following table shows Enforcing Contracts data for Hong Kong, China 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 Hong Kong, China 24 211 14.5 Comparator Economies China 34 406 11.1 Japan 30 316 22.7 Korea 35 230 10.3 Malaysia 30 600 27.5 Taiwan, China 47 510 17.7 * 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 Hong Kong, China Closing a Business data Doing Business 2007 Doing Business 2008 Doing Business 2009 Rank 15 13 Time (years) 1.1 1.1 1.1 Cost (% of estate) 9 9 9 Recovery rate (cents on the dollar) 79.0 79.0 79.8 2. The following graphs illustrates the Closing Business indicators in Hong Kong, China over the past 3 years: 45 3. Benchmarking Closing Business Regulations: Hong Kong, China is ranked 13 overall for Closing a Business. Ranking of Hong Kong, China in Closing Business - Compared to good practice and selected economies: 46 The following table shows Closing Business data for Hong Kong, China 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 Hong Kong, China 79.8 1.1 9 Comparator Economies China 35.3 1.7 22 Japan 92.5 0.6 4 Korea 80.5 1.5 4 Malaysia 38.6 2.3 15 Taiwan, China 80.9 1.9 4 * 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 Hong Kong, China 2 Japan Korea 1 Taiwan, China 1 Malaysia 2 China 3 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 China China made getting credit easier by expanding the range of assets that can be used as collateral through a new property law in October 2007. Accounts receivable and a combination of assets can now be used to secure a loan. China also tightened the rules on enforcement of judgments, making it harder for debtors to prevent enforcement. And it eased the tax burden on businesses by reducing the corporate income tax rate from 33.3 percent to 25 percent and unifying the criteria and accounting methods for tax deductions. A new labor contract law has had a mixed impact. The new law empowers workers and recognizes their right to paid annual leave. But it also makes firing workers more difficult by introducing priority rules for redundancy dismissals and increasing dismissal costs. The flexibility of working hours was also reduced. 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. Hong Kong, China Hong Kong (China) granted trustees more power in bankruptcy proceedings, a change expected to make the liquidation procedure more efficient. Under the "Be the Smart Regulator" program, a broad initiative to improve business licensing, the government reduced the time to deal with construction permits by 36 days and eliminated 8 procedures related to inspections and preapprovals. Japan In Japan no major reforms were recorded. Korea The Republic of Korea Customs Service is realizing a U-customs system that is an internet based system customs portal, which provides for an International Single Window. Korea made hiring more difficult by limiting the maximum duration of fixed-term contracts to 24 months. 50 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. Malaysia Malaysia abolished the real property gains tax and reduced the corporate income tax rate to 26 percent (the rate had previously been tiered). A further reduction to 25 percent is planned for next year. The reform also introduced a single-tier tax system, in which profits are taxed only after dividend payments are exempted. Amendments to the Companies Act simplified business registration and reduced the time required by introducing online filing of registration documents. 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. Taiwan, China Taiwan (China) amended its civil code to make secured lending more flexible. Since September 2007 parties to a mortgage or pledge agreement have been allowed to set the loan amount as a maximum line of credit. 51 APPENDICES Starting a Business in Hong Kong, China This table summarizes the procedures and costs associated with setting up a business in Hong Kong, China. STANDARDIZED COMPANY Legal Form: Limited Liability Company Minimum Capital Requirement: City: Hong Kong Registration Requirements: No: Procedure Time to complete Cost to complete 1 Choose a company name; apply for a certificate of incorporation at the 7 days HKD 1,720 Companies Registry application fee + 0.1% of authorized share capital, capped at 30,000 2 Obtain a business registration certificate (Inland Revenue Department) 1 day HKD 450 3 File notifications regarding company details with the Companies 1 day no charge Registry 4 Sign up Employee Compensation Insurance and Mandatory Provident 1 day no charge Fund (MPF) Schemes with a private company or a bank 5 Make a corporate seal and company rubber stamp 1 day HKD 215 52 Procedure 1 Choose a company name; apply for a certificate of incorporation at the Companies Registry Time to complete: 7 days Cost to complete: HKD 1,720 application fee + 0.1% of authorized share capital, capped at 30,000 Comment: A company name can be searched online free of charge at the Companies Registry. Applying for a certificate of incorporation requires that the memorandum and articles of association (unnotarized is acceptable) and a statement of compliance be filed with the Companies Registry. Companies are refunded HKD 1,425 for unsuccessful applications. According to the Companies (Amendment) Ordinance 2003, Hong Kong companies are no longer required to have at least two subscribers, directors, and shareholders. They can now have one each. Moreover, companies are no longer required to file a statutory declaration of compliance with the Companies Registry. Instead, a standard government form (a statement of compliance) must be completed and filed with the Companies Registry. Procedure 2 Obtain a business registration certificate (Inland Revenue Department) Time to complete: 1 day Cost to complete: HKD 450 Comment: A business registration certificate must be obtained within a month of starting operations, by filing an application form (Form 1[b]) and a copy of the certificate of incorporation. Procedure 3 File notifications regarding company details with the Companies Registry Time to complete: 1 day Cost to complete: no charge Comment: Within 14 days of the effective date of incorporation, the company is required to file with the Companies Registry notifications on the secretary and director(s), the location of the registered office, and the consent(s) to act as a director. Standard notification forms are available. Procedure 4 Sign up Employee Compensation Insurance and Mandatory Provident Fund (MPF) Schemes with a private company or a bank Time to complete: 1 day Cost to complete: no charge Comment: Under the Employees' Compensation Ordinance, an employer must possess a valid insurance policy to cover its employees (both full- and part-time) who are fatally injured or disabled due to accidents arising out of and during employment. In addition, all employees ages 18­65 and employed for 60 days or more under an employment contract (regardless of the number of work hours) must be covered by the Mandatory Provident Fund (MPF) Schemes Ordinance (except for persons exempted from the scheme) and be enrolled in an MPF scheme. The employer is also required to display the participation certificate issued by the Mandatory Provident Fund Authority at the work premises. The employer can arrange this insurance and the MPF scheme with any insurance company or bank in Hong Kong. Procedure 5 Make a corporate seal and company rubber stamp Time to complete: 1 day 53 Cost to complete: HKD 215 Comment: 54 Dealing with Construction Permits in Hong Kong, China The table below summarizes the procedures, time, and costs to build a warehouse in Hong Kong, China. BUILDING A WAREHOUSE Date as of: January 2,008 Estimated Warehouse Value: City: Hong Kong Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain building plans approval 60 days HKD 30,240 2 Apply and pay for technical audit of water supply connection works (Form 21 days HKD 4,470 HBP1) 3 * Apply and pay for technical audit of drainage services department 13 days HKD 4,800 4 * Apply, pay and receive road excavation work permission from Highway 20 days HKD 1,924 Department 5 * Notify and obtain approval from traffic police 1 day no charge 6 Obtain Building consent from Building department (Form BA8) 21 days no charge 7 Request and receive inspection of foundation strata 1 day no charge 8 Notify Drainage Services Department of construction completion and 1 day no charge receive transfer inspection and issuance of water supply certificate 9 Notify Water Services Department of construction completion and receive 1 day no charge transfer inspection 10 Obtain certificate of completion of buildings works (Form BA 13) 9 days no charge 11 * Obtain certificate of compliance from lands department 30 days no charge 12 * Obtain fire certificate for fire service installation (Form FSI/501) 21 days HKD 3,440 13 * Request and obtain water connection 7 days no charge 14 * Request and obtain electricity conneciton 1 day no charge 55 15 * Request and obtain telephone line 5 days HKD 475 * Takes place simultaneously with another procedure. 56 Procedure 1 Obtain building plans approval Time to complete: 60 days Cost to complete: HKD 30,240 Comment: BuildCo should submit the following documents for approval: - Building plans (Forms BA5, BD24). - General building plans. - Spread footing plans. - Hoarding plans. - Site formation plans. - Fire service installation plan (Form FSI/314). - Drainage plans. These documents should be submitted to the following entities: the Buildings Department, Planning Department, Lands Department, Fire Services Department, Highways Department, Drainage Services Department, Water Supplies Department, and Environmental Protection Department. A centralized processing system for building plans has been adopted so that all the government departments concerned are consulted and their comments on the proposals are collated within the specified time frame. BuildCo simply contacts the Building Department to apply for the building permit. Under the current approval procedure, the Building Department must complete the approval process within 60 days. Procedure 2 Apply and pay for technical audit of water supply connection works (Form HBP1) Time to complete: 21 days Cost to complete: HKD 4,470 Comment: The application for water connection should be submitted at least 3 months in advance of actual connection by the Water Supply Department. Procedure 3 Apply and pay for technical audit of drainage services department Time to complete: 13 days Cost to complete: HKD 4,800 Comment: The company should contact the Drainage Services Department and the Water Supplies Department to obtain the technical audit document. BuildCo must fill out and submit a form, the application for technical audit of drainage/water supply connection works, and must attach a check to the form. Procedure 4 Apply, pay and receive road excavation work permission from Highway Department Time to complete: 20 days Cost to complete: HKD 1,924 Comment: BuildCo must file the work plan and certification of no objection from the public institutions. It takes 14 days for the Highways Department to issue the payment notice and 4 days to 57 issue the approval upon receipt of proof of payment. Procedure 5 Notify and obtain approval from traffic police Time to complete: 1 day Cost to complete: no charge Comment: Once BuildCo receives an excavation permit from the Highways Department, it must notify the regional traffic police and obtain their approval. Procedure 6 Obtain Building consent from Building department (Form BA8) Time to complete: 21 days Cost to complete: no charge Comment: Procedure 7 Request and receive inspection of foundation strata Time to complete: 1 day Cost to complete: no charge Comment: At the approval stage for building foundation plans, the Buildings Department normally imposes some requirements and conditions for the construction of the foundation to ensure that the approved plans and the required standards are complied with. Upon the completion of the foundation, Form BA 14 and as-built foundation records must be submitted to notify the Buildings Department that the foundation work has been completed. The form must be approved by the Buildings Department before the next stage of construction can begin. The construction site is inspected within 7 days of the notification. Procedure 8 Notify Drainage Services Department of construction completion and receive transfer inspection and issuance of water supply certificate Time to complete: 1 day Cost to complete: no charge Comment: Procedure 9 Notify Water Services Department of construction completion and receive transfer inspection Time to complete: 1 day Cost to complete: no charge Comment: Procedure 10 Obtain certificate of completion of buildings works (Form BA 13) 58 Time to complete: 9 days Cost to complete: no charge Comment: BuildCo should request from the building authority a certificate of completion of construction of a new building and apply for an occupancy permit. The Building Department must reply to the applicant within 14 days of receiving the application. Building department staff have no more than 14 days to carry out the site visit. Once the visit is completed, it takes only a couple of days to issue the permit. In certain cases, the time can be reduced by 3 or 4 days. Procedure 11 Obtain certificate of compliance from lands department Time to complete: 30 days Cost to complete: no charge Comment: This certification procedure checks for compliance with land lease conditions and satisfaction of the requirements of all other relevant departments. Procedure 12 Obtain fire certificate for fire service installation (Form FSI/501) Time to complete: 21 days Cost to complete: HKD 3,440 Comment: The initial inspection should begin no more than 14 working days after the receipt of the request for inspection. The inspection should be satisfactorily completed and all documentation processes completed in no more than 7 days. Procedure 13 Request and obtain water connection Time to complete: 7 days Cost to complete: no charge Comment: Procedure 14 Request and obtain electricity conneciton Time to complete: 1 day Cost to complete: no charge Comment: Only a refundable deposit is needed Procedure 15 Request and obtain telephone line Time to complete: 5 days Cost to complete: HKD 475 59 Comment: 60 Employing Workers in Hong Kong, China Employing workers indices are based on responses to survey questions. The table below shows these responses in Hong Kong, China. Employing Workers Indicators (2008) Answer Score Rigidity of Employment Index 0.0 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 0.0 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? No 0 What is the paid annual vacation (in working days) for an employee with 20 years of 14 0 service? Difficulty of Firing Index 0.0 Is the termination of workers due to redundancy legally authorized? Yes 0 Must the employer notify a third party before terminating one redundant worker? No 0 Does the employer need the approval of a third party to terminate one redundant worker? No 0 Must the employer notify a third party before terminating a group of 25 redundant No 0 workers? Does the employer need the approval of a third party to terminate a group of 25 redundant No 0 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 61 Firing costs (weeks of salary) 62.1 What is the notice period for redundancy dismissal after 20 years of continuous 4.3 employment? (weeks of salary) What is the severance pay for redundancy dismissal after 20 years of employment? (weeks of 57.8 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. 62 Registering Property in Hong Kong, China This topic examines the steps, time, and cost involved in registering property in Hong Kong, China. STANDARDIZED PROPERTY Property Value: 12,117,428.41 City: Hong Kong Registration Requirements: No: Procedure Time to complete Cost to complete 1 Purchaser's solicitor does a land search at the Land 1 day HK$ 25 Registry 2 Purchaser's solicitor registers the executed (signed and 30 days HK$ 210 stamped) Agreement of Sale and Purchase (ASP) at his office 3 Property Assignment is prepared by the Purchaser's 12 days HK$ 100 +3.75% stamp solicitor, signed by both parties, and filed at the Stamp duty for non-residential Duty Office property 4 Stamp office returns original stamped Assignment to the 10 days HK$ 450 (registration of Purchaser's solicitor Assignment) + between 0.5% and 2% of property value (solicitor's fee, which is not mandatory and it is negotiable). 5 Purchaser's solicitor registers the Property Assignment at 1 day included in previous the Land Registry after the document has been stamped and procedure solicitor is paid for the service 63 Procedure 1 Purchaser's solicitor does a land search at the Land Registry Time to complete: 1 day Cost to complete: HK$ 25 Comment: It is a common procedure that the purchaser's solicitor conducts a land search of the property before execution of the Agreement of Sale and Purchase (ASP) to ensure that previous registration was complete and no other claims are still linked to the property. All land records are available for search by any interested parties upon payment of the prescribed fee of HK$ 25 for the current and historical search (this will take about 1 day). Procedure 2 Purchaser's solicitor registers the executed (signed and stamped) Agreement of Sale and Purchase (ASP) at his office Time to complete: 30 days Cost to complete: HK$ 210 Comment: The purchaser's solicitor registers the executed (signed and stamped) ASP at the private practitioner's office. During this period the purchaser gives a 10% down payment on the property and has time to arrange financing for the remainder owed. In addition, this time allows the purchaser's solicitor to peruse the title deeds and to raise requisitions on title and the vendor's solicitor to answer the title requisitions and to rectify any title problems.
Note: The ASP gives the purchaser beneficial title, not legal possession of the property. Procedure 3 Property Assignment is prepared by the Purchaser's solicitor, signed by both parties, and filed at the Stamp Duty Office Time to complete: 12 days Cost to complete: HK$ 100 +3.75% stamp duty for non-residential property Comment: Depending on encumbrances that might be still associated with the property this process might take a longer time.
Note: The Property Assignment will give the purchaser legal title and possession of the property. Procedure 4 Stamp office returns original stamped Assignment to the Purchaser's solicitor Time to complete: 10 days Cost to complete: HK$ 450 (registration of Assignment) + between 0.5% and 2% of property value (solicitor's fee, which is not mandatory and it is negotiable). Comment: This happens after the Stamp Office receives the original Assignment and payment of Stamp Duty. Procedure 5 Purchaser's solicitor registers the Property Assignment at the Land Registry after the document has been stamped and solicitor is paid for the service Time to complete: 1 day 64 Cost to complete: included in previous procedure Comment: The duly stamped Assignment will then be presented by the solicitors to the Land Registry. The purchaser's solicitor shall register the Assignment at the Land Registry within 30 days from the date of Assignment so as to preserve its priority under the law. After receipt of the original Assignment by the Land Registry, it will take another 28 days to three months (or usually two months) depending on the workload of the Land Registry at that time to complete the registration and return the Assignment to the solicitor's office. However, the title is legally property of the purchaser once the Property Assignment is submitted to the Land Registry on the first day. The remaining days (or months) account for the Registry to document the transfer in microfilm and other media. 65 Getting Credit in Hong Kong, China The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Hong Kong, China. Getting Credit Indicators (2008) Indicator score Private credit Public credit Private bureau coverage (% adults) 5 bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative data distributed? Yes No 1 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? Yes No 1 Is data on all loans below 1% of income per capita distributed? Yes No 1 Is it guaranteed by law that borrowers can inspect their data in the Yes No 1 largest credit registry? Coverage 69.9 0.0 Number of individuals .. .. Number of firms .. .. Legal Rights Index 10 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 Yes 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 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 66 During reorganization, are secured creditors' claims exempt from an automatic stay on enforcement? Yes Does the law authorize parties to agree on out of court enforcement? Yes 67 Protecting Investors in Hong Kong, China The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Hong Kong, China. Protecting Investors Data (2008) Indicator Disclosure Index 10 What corporate body provides legally sufficient approval for the transaction? (0-3; see notes) 3 Immediate disclosure to the public and/or shareholders (0-2; see notes) 2 Disclosures in published periodic filings (0-2; see notes) 2 Disclosures by Mr. James to board of directors (0-2; see notes) 2 Requirement that an external body review the transaction before it takes place (0=no, 1=yes) 1 Director Liability Index 8 Shareholder plaintiff's ability to hold Mr. James liable for damage the Buyer-Seller 2 transaction causes to the company. (0-2; see notes) Shareholder plaintiff's ability to hold the approving body (the CEO or board of directors) 2 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 1 (0-2; see notes) Whether Mr. James pays damages for the harm caused to the company upon a successful 1 claim by the shareholder plaintiff (0=no, 1=yes) Whether Mr. James repays profits made from the transaction upon a successful claim by the 1 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 1 causes to the company (0-1; see notes) Shareholder Suits Index 9 Documents available to the plaintiff from the defendant and witnesses during trial (0-4; see 4 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 0 ones (0=no, 1=yes) Shareholders owning 10% or less of Buyer's shares can request an inspector investigate the 1 transaction (0=no, 1=yes) 68 Level of proof required for civil suits is lower than that for criminal cases (0=no, 1=yes) 1 Shareholders owning 10% or less of Buyer's shares can inspect transaction documents before 1 filing suit (0=no, 1=yes) Investor Protection Index 9.0 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 69 Paying Taxes in Hong Kong, China The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Hong Kong, China, 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 Property tax 1 online 5.0% annual rental 0.16 filing value Fuel tax 1 per liter 0.17 Social security 1 online 30 5.0% gross salaries 5.26 contributions filing Corporate income tax 1 50 17.5% taxable profit 18.64 Totals 4 80 24.2 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. 70 Trading Across Borders in Hong Kong, China These tables list the procedures necessary to import and exports a standardized cargo of goods in Hong Kong, China. The documents required to export and import the goods are also shown. Nature of Export Procedures (2008) Duration (days) US$ Cost Documents preparation 2 120 Customs clearance and technical control 1 40 Ports and terminal handling 2 265 Inland transportation and handling 1 200 Totals 6 625 Nature of Import Procedures (2008) Duration (days) US$ Cost Documents preparation 2 128 Customs clearance and technical control 1 40 Ports and terminal handling 1 265 Inland transportation and handling 1 200 Totals 5 633 Export Bill of lading Cargo release order Commercial invoice Packing list Import Bill of lading Cargo release order Commercial invoice Packing list 71 Enforcing Contracts in Hong Kong, China This topic looks at the efficiency of contract enforcement in Hong Kong, China. Nature of Procedure (2008) Indicator Procedures (number) 24 Duration (days) 211 Filing and service 5.0 Trial and judgment 176.0 Enforcement of judgment 30.0 Cost (% of claim)* 14.50 Attorney cost (% of claim) 12.7 Court cost (% of claim) 1.5 Enforcement Cost (% of claim) 0.3 Court information: Hong Kong District Court * Claim assumed to be equivalent to 200% of income per capita. 72 73 74