45808
Country Profile for
Hong Kong, China
© 2008 The International Bank for Reconstruction and Development / The World Bank
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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.
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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
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15 * Request and obtain telephone line 5 days HKD 475
* Takes place simultaneously with another procedure.
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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)
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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
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Comment:
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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
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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
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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
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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)
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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
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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.
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