58485 Eritrea © 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. 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ISBN: 978-0-8213-7960-8 E-ISBN: 978-0-8213-8630-9 DOI: 10.1596/978-0-8213-7960-8 ISSN: 1729-2638 Library of Congress Cataloging-in-Publication data has been applied for. Printed in the United States Current features News on the Doing Business project http://www.doingbusiness.org Rankings How economies rank-from 1 to 183 http://www.doingbusiness.org/rankings/ Contents Reformers Short summaries of DB2011 reforms, lists of reformers since DB2004 Introduction and a ranking simulation tool and Aggregate Rankings http://www.doingbusiness.org/reforms/ 5 - Year Measure of Historical data Cumulative Change Customized data sets since DB2004 http://www.doingbusiness.org/custom-query/ Starting a Business Methodology and research Dealing with The methodologies and research papers underlying Doing Business Construction Permits http://www.doingbusiness.org/Methodology/ Registering Property Download reports Access to Doing Business reports as well as subnational and regional Getting Credit reports, reform case studies and customized country and regional profiles Protecting Investors http://www.doingbusiness.org/reports/ Paying Taxes Subnational and regional projects Differences in business regulations at the subnational and regional Trading Across Borders level http://www.doingbusiness.org/subnational-reports/ Enforcing Contracts Law Library Closing a Business Online collection of business laws and regulations relating to business and gender issues Doing Business 2011 http://www.doingbusiness.org/law-library/ Business Reforms http://wbl.worldbank.org/ Local partners More than 8,200 specialists in 183 economies who participate in Doing Business http://www.doingbusiness.org/Local-Partners/Doing-Business/ Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Doing Business 2011 : Making a Difference for Entrepreneurs is the eighth in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. A set of regulations affecting 9 stages of a business's life are measured: starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business. Data in Doing Business 2011 are current as of June 1, 2010*. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The Doing Business methodology has limitations. Other areas important to business such as an economy 's proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions, are not studied directly by Doing Business. To make the data comparable across economies, the indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policymakers in designing reform. The data set covers 183 economies: 46 in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in Eastern Europe and Central Asia, 24 in East Asia and Pacific, 18 in the Middle East and North Africa and 8 in South Asia, as well as 30 OECD high-income economies. The following pages present the summary Doing Business indicators for Eritrea. The data used for this economy profile come from the Doing Business database and are summarized in graphs. These graphs allow a comparison of the economies in each region not only with one another but also with the "good practice" economy for each indicator. The good-practice economies are identified by their position in each indicator as well as their overall ranking and by their capacity to provide good examples of business regulation to other countries. These good -practice economies do not necessarily rank number 1 in the topic or indicator, but they are in the top 10. More information is available in the full report. Doing Business 2011 : Making a Difference for Entrepreneurs presents the indicators, analyzes their relationship with economic outcomes and recommends reforms. The data, along with information on ordering the report, are available on the Doing Business website (www.doingbusiness.org). * Except for the Paying Taxes indicator that refers to the period January to December of 2009. Note: 2008-2010 Doing Business data and rankings have been recalculated to reflect changes to the methodology and the addition of new economies (in the case of the rankings). 1 Economy Rankings - Ease of Doing Business Eritrea is ranked 180 out of 183 economies. Singapore is the top ranked economy in the Ease of Doing Business. Eritrea - Compared to global good practice economy as well as selected economies: Eritrea's ranking in Doing Business 2011 Rank Doing Business 2011 Ease of Doing Business 180 Starting a Business 180 Dealing with Construction Permits 183 Registering Property 178 Getting Credit 176 Protecting Investors 109 Paying Taxes 113 Trading Across Borders 165 Enforcing Contracts 48 Closing a Business 183 2 Summary of Indicators - Eritrea Starting a Business Procedures (number) 13 Time (days) 84 Cost (% of income per capita) 69.2 Min. capital (% of income per capita) 268.4 Dealing with Construction Permits Procedures (number) no practice Time (days) no practice Cost (% of income per capita) no practice Registering Property Procedures (number) 11 Time (days) 78 Cost (% of property value) 9.1 Getting Credit Strength of legal rights index (0-10) 2 Depth of credit information index (0-6) 0 Public registry coverage (% of adults) 0.0 Private bureau coverage (% of adults) 0.0 Protecting Investors Extent of disclosure index (0-10) 4 Extent of director liability index (0-10) 5 Ease of shareholder suits index (0-10) 5 Strength of investor protection index (0-10) 4.7 Paying Taxes Payments (number per year) 18 Time (hours per year) 216 Profit tax (%) 8.8 Labor tax and contributions (%) 0.0 Other taxes (%) 75.8 Total tax rate (% profit) 84.5 Trading Across Borders Documents to export (number) 9 Time to export (days) 50 Cost to export (US$ per container) 1431 Documents to import (number) 13 Time to import (days) 59 Cost to import (US$ per container) 1581 3 Enforcing Contracts Procedures (number) 39 Time (days) 405 Cost (% of claim) 22.6 Closing a Business Recovery rate (cents on the dollar) 0.0 Time (years) no practice Cost (% of estate) no practice The 5 year measure of cumulative change illustrates how the business regulatory environment has changed in 174 economies from Doing Business 2006 to Doing Business 2011. Instead of highlighting which countries currently have the most business friendly environment, this new approach shows the extent to which an economy's regulatory environment for business has changed compared with 5 years ago. This snapshot reflects all cumulative changes in an economy's business regulation as measured by the Doing Business indicators-such as a reduction in the time to start a business thanks to a one-stop shop or an increase in the strength of investor protection index thanks to new stock exchange rules that tighten disclosure requirements for related -party transactions. This figure shows the distribution of cumulative change across the 9 indicators and time between Doing Business 2006 and Doing Business 2011 0.45 0.40 0.35 Doing business has 0.30 become easier (DB 0.25 change score) 0.20 0.15 0.10 0.05 0.00 Rwanda Ethiopia Tanzania Kenya Eritrea 6 1. Benchmarking Starting a Business Regulations: Eritrea is ranked 180 overall for Starting a Business. Ranking of Eritrea in Starting a Business - Compared to good practice and selected economies: 7 The following table shows Starting a Business data for Eritrea compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of Min. capital (number) income per (% of income Economies capita) per capita) Denmark* 0.0 New Zealand* 1 1 0.0 Selected Economy Eritrea 13 84 69.2 268.4 Comparator Economies Ethiopia 5 9 14.1 367.7 Kenya 11 33 38.3 0.0 Rwanda 2 3 8.8 0.0 Tanzania 12 29 30.9 0.0 * The following economies are also good practice economies for : Procedures (number): Canada Cost (% of income per capita): Slovenia 8 2. Historical data: Starting a Business in Eritrea Starting a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 181 180 Procedures (number) 13 13 13 13 Time (days) 84 84 84 84 Cost (% of income per capita) 125.8 102.2 76.5 69.2 Min. capital (% of income per capita) 488.0 396.7 297.0 268.4 3. The following graphs illustrate the Starting a Business sub indicators in Eritrea over the past 4 years: 9 Starting a Business Summary - Eritrea This table summarizes the procedures and costs associated with setting up a business in Eritrea. STANDARDIZED COMPANY Legal Form: Private Limited Liability Company City: Asmara Registration Requirements: No: Procedure Time to complete Cost to complete 1 Deposit initial capital in bank account 1 no charge 2 Search for company name 2 no charge 3 Notarize company statutes 3 ERN 715 4 Register with the Commercial Registry 7 no charge 5 Incorporation notice published in official journal 33 ERN 800 6 Apply for tax identification number at the Inland Revenue Department 7 ERN 450 7 Obtain tax clearance from Inland Revenue Department 1 no charge 8 Apply for business license at Ministry of Trade and Industry 14 ERN 500 10 9 * Receive business license inspection from Ministry of Trade and 7 ERN 500 Industry 10 Obtain approval from local municipality 2 ERN 300 11 Notify Ministry of Labor and Human Welfare 1 no charge 12 Make a company seal 3 ERN 400 13 Apply for tax receipts from the Inland Revenue Department 10 ERN 200 * Takes place simultaneously with another procedure. 11 Starting a Business Details - Eritrea Procedure 1 Deposit initial capital in bank account Time to complete: 1 Cost to complete: no charge Comment: The minimum capital requirement is ERN 15,000 for a private limited liability company and ERN 50,000 for a share company. Procedure 2 Search for company name Time to complete: 2 Cost to complete: no charge Comment: The search is conducted at the Commercial Registry. Procedure 3 Notarize company statutes Time to complete: 3 Cost to complete: ERN 715 Comment: At this point, the memorandum and articles of association will have been signed by the shareholders, and a stamp duty will have been paid. Procedure 4 Register with the Commercial Registry Time to complete: 7 Cost to complete: no charge Comment: To Register with the Commercial Registry, five or six copies of the memorandum and articles of association must be submitted at the License Department of the Ministry of Trade and Industry. Procedure 5 Incorporation notice published in official journal Time to complete: 33 Cost to complete: ERN 800 Comment: An incorporation notice is published (in both Arabic and English) in the official journal, Hadas Eritrea, announcing the company incorporation. Protestors have 30 days to contest the company's incorporation and name. Procedure 6 Apply for tax identification number at the Inland Revenue Department Time to complete: 7 Cost to complete: ERN 450 12 Comment: Once the company registers at the Inland Revenue Department for the taxpayer identification number, it is recognized as a VAT taxpayer. Procedure 7 Obtain tax clearance from Inland Revenue Department Time to complete: 1 Cost to complete: no charge Comment: Procedure 8 Apply for business license at Ministry of Trade and Industry Time to complete: 14 Cost to complete: ERN 500 Comment: A business license application requires tax clearance and property title documents. The cost of the business license ranges from ERN 500 to ERN 1,000. Procedure 9 Receive business license inspection from Ministry of Trade and Industry Time to complete: 7 Cost to complete: ERN 500 Comment: The business license inspection, required for zoning purposes, may take only a day, but it also will take a day to set up an appointment. Procedure 10 Obtain approval from local municipality Time to complete: 2 Cost to complete: ERN 300 Comment: Procedure 11 Notify Ministry of Labor and Human Welfare Time to complete: 1 Cost to complete: no charge Comment: All companies must notify the Ministry of Labor and Human Welfare by completing the registration form and submitting it to the Ministry for approval. Procedure 12 Make a company seal Time to complete: 3 Cost to complete: ERN 400 Comment: The practice is not regulated, but the seal will include the tax code for the company. Procedure 13 Apply for tax receipts from the Inland Revenue Department Time to complete: 10 Cost to complete: ERN 200 13 Comment: The company may either print the receipts directly at the Inland Revenue Department or obtain permission to print them itself. 14 15 1. Benchmarking Dealing with Construction Permits Regulations: Eritrea is ranked 183 overall for Dealing with Construction Permits. Ranking of Eritrea in Dealing with Construction Permits - Compared to good practice and selected economies: 16 The following table shows Dealing with Construction Permits data for Eritrea compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) income per Economies capita) Denmark 6 Qatar 0.8 Singapore 25 Selected Economy Eritrea no practice no practice no practice Comparator Economies Ethiopia 12 128 419.6 Kenya 11 120 167.8 Rwanda 14 195 353.6 Tanzania 22 328 2756.3 17 2. Historical data: Dealing with Construction Permits in Eritrea Dealing with Construction Permits data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 183 183 Procedures (number) no practice no practice no practice no practice Time (days) no practice no practice no practice no practice Cost (% of income per capita) no practice no practice no practice no practice 3. The following graphs illustrate the Dealing with Construction Permits sub indicators in Eritrea over the past 4 years: 18 Dealing with Construction Permits in Eritrea The table below summarizes the procedures, time, and costs to build a warehouse in Eritrea. BUILDING A WAREHOUSE City: Asmara Registration Requirements: No: Procedure Time to complete Cost to complete 1 Obtain design approval from municipality 30 days ERN 6,000 2 Obtain approval of electricity designs from the Eritrean Electric Authority 22 days no charge (EEA) 3 Hire consultant/supervisor 5 days ERN 50 4 Obtain phone line from ERITEL 60 days ERN 2,000 5 * Receive inspection by telephone company 7 days no charge 6 * Obtain electricity connection from EEA 30 days ERN 15,000 7 * Receive inspection by EEA 7 days no charge 8 * Obtain water and sewage connection from water and sewage authority 30 days ERN 6,000 19 9 * Receive inspection by water department 7 days no charge 10 Receive inspection from labor office - I 1 day no charge 11 Receive inspection from labor office - II 1 day no charge 12 Receive inspection from labor office - III 1 day no charge 13 Receive inspection from labor office - IV 1 day no charge 14 Receive inspection from labor office - V 1 day no charge 15 Receive inspection from municipal technical office - I 1 day no charge 16 Receive inspection from municipal technical office - II 1 day no charge 17 Receive inspection from municipal technical office - III 1 day no charge 18 Receive inspection from municipal technical office - IV 1 day no charge 19 Receive inspection from municipal technical office - V 1 day no charge 20 Obtain completion certificate from consultant 30 days no charge 21 Receive final inspection 1 day no charge 22 Obtain completion certificate from municipality 30 days ERN 200 * Takes place simultaneously with another procedure. 20 Dealing with Construction Permits Details - Eritrea Procedure 1 Obtain design approval from municipality Time to complete: 30 days Cost to complete: ERN 6,000 Agency: Municipality Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 2 Obtain approval of electricity designs from the Eritrean Electric Authority (EEA) Time to complete: 22 days Cost to complete: no charge Agency: Eritrean Electric Authority (EEA) Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 3 Hire consultant/supervisor Time to complete: 5 days Cost to complete: ERN 50 Agency: ERITEL Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 4 Obtain phone line from ERITEL Time to complete: 60 days Cost to complete: ERN 2,000 Agency: ERITEL Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 5 Receive inspection by telephone company Time to complete: 7 days Cost to complete: no charge Agency: Eritrean Electric Authority (EEA) 21 Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 6 Obtain electricity connection from EEA Time to complete: 30 days Cost to complete: ERN 15,000 Agency: Eritrean Electric Authority (EEA) Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 7 Receive inspection by EEA Time to complete: 7 days Cost to complete: no charge Agency: Eritrean Electric Authority (EEA) Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 8 Obtain water and sewage connection from water and sewage authority Time to complete: 30 days Cost to complete: ERN 6,000 Agency: Water and Sewage Authority Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 9 Receive inspection by water department Time to complete: 7 days Cost to complete: no charge Agency: Water and Sewage Authority Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 10 Receive inspection from labor office - I Time to complete: 1 day Cost to complete: no charge Agency: Labor Office 22 Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 11 Receive inspection from labor office - II Time to complete: 1 day Cost to complete: no charge Agency: Labor Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 12 Receive inspection from labor office - III Time to complete: 1 day Cost to complete: no charge Agency: Labor Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 13 Receive inspection from labor office - IV Time to complete: 1 day Cost to complete: no charge Agency: Labor Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 14 Receive inspection from labor office - V Time to complete: 1 day Cost to complete: no charge Agency: Labor Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 15 Receive inspection from municipal technical office - I Time to complete: 1 day Cost to complete: no charge Agency: Municipal Technical Office 23 Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 16 Receive inspection from municipal technical office - II Time to complete: 1 day Cost to complete: no charge Agency: Municipal Technical Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 17 Receive inspection from municipal technical office - III Time to complete: 1 day Cost to complete: no charge Agency: Municipal Technical Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 18 Receive inspection from municipal technical office - IV Time to complete: 1 day Cost to complete: no charge Agency: Municipal Technical Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 19 Receive inspection from municipal technical office - V Time to complete: 1 day Cost to complete: no charge Agency: Municipal Technical Office Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 20 Obtain completion certificate from consultant Time to complete: 30 days Cost to complete: no charge Agency: Consultant 24 Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 21 Receive final inspection Time to complete: 1 day Cost to complete: no charge Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. Procedure 22 Obtain completion certificate from municipality Time to complete: 30 days Cost to complete: ERN 200 Agency: Municipality Comment: No practice in 2005­2009. No commercial building permits issued to the private sector. 25 26 1. Benchmarking Registering Property Regulations: Eritrea is ranked 178 overall for Registering Property. Ranking of Eritrea in Registering Property - Compared to good practice and selected economies: 27 The following table shows Registering Property data for Eritrea compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) property Economies value) New Zealand* 2 Norway* 1 Saudi Arabia 0.0 Selected Economy Eritrea 11 78 9.1 Comparator Economies Ethiopia 10 41 2.1 Kenya 8 64 4.2 Rwanda 4 55 0.4 Tanzania 9 73 4.4 * The following economies are also good practice economies for : Procedures (number): United Arab Emirates Time (days): Saudi Arabia, Thailand, United Arab Emirates 28 2. Historical data: Registering Property in Eritrea Registering Property data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 176 178 Procedures (number) 11 11 11 11 Time (days) 78 78 78 78 Cost (% of property value) 9.2 9.2 9.1 9.1 3. The following graphs illustrate the Registering Property sub indicators in Eritrea over the past 4 years: 29 Registering Property in Eritrea This topic examines the steps, time, and cost involved in registering property in Eritrea. STANDARDIZED PROPERTY Property Value: 279,431.46 City: Asmara Registration Requirements: No: Procedure Time to complete Cost to complete 1 * Obtain tax clearance from Inland Revenue 7 days (simultaneous 15 ERN with proc. 2,3,4 & 5) 2 * Tax clearance from the bank 1 day (simultaneous 50 ERN with proc. 1,3,4 & 5) 3 * Tax clearance from the bank for unpaid loans from 1 day (simultaneous 20 ERN housing and commercial bank with proc. 1,2,4 & 5) 4 * Tax clearance from Municipality 1 day (simultaneous 25 ERN (1-5 days); 50 ERN with proc. 1,2,3 & 5) (express 1 day) 5 * Obtain mortgage clearance from Cadastral Office 1 day (simultaneous 15 ERN with proc. 1,2, 3 & 4) 6 Submit all registration documents and clearances to 1 day no cost the Notary Public and define tax to be paid 7 Creates a map of land 2 months no cost 30 8 Buyer pays tax at Municipality 1 day 5% for Municipality 9 Buyer pays tax at Inland Revenue 1 day 4% of property value as valuated by committee 10 The Public Notary approved the contract in front of 1 day included in the 9% of the parties and two witnesses property value 11 Submit registration of title at the Cadastre 1 week 150 ERN * Takes place simultaneously with another procedure. 31 Registering Property Details - Eritrea Procedure 1 Obtain tax clearance from Inland Revenue Time to complete: 7 days (simultaneous with proc. 2,3,4 & 5) Cost to complete: 15 ERN Agency: Inland Revenue Comment: There are no costs involved unless there are unpaid taxes for the concerned building and other buildings owned by the owner. Procedure 2 Tax clearance from the bank Time to complete: 1 day (simultaneous with proc. 1,3,4 & 5) Cost to complete: 50 ERN Agency: Commercial Bank of Eritrea Comment: Procedure 3 Tax clearance from the bank for unpaid loans from housing and commercial bank Time to complete: 1 day (simultaneous with proc. 1,2,4 & 5) Cost to complete: 20 ERN Agency: Housing and commercial bank Comment: Procedure 4 Tax clearance from Municipality Time to complete: 1 day (simultaneous with proc. 1,2,3 & 5) Cost to complete: 25 ERN (1-5 days); 50 ERN (express 1 day) Agency: Municipality Comment: Procedure 5 Obtain mortgage clearance from Cadastral Office Time to complete: 1 day (simultaneous with proc. 1,2, 3 & 4) 32 Cost to complete: 15 ERN Agency: Cadastral Office Comment: The clearance secures that the property is free from any mortgage and pledge. Procedure 6 Submit all registration documents and clearances to the Notary Public and define tax to be paid Time to complete: 1 day Cost to complete: no cost Agency: Notary Public Office Comment: The Public Notary examines all the documents thoroughly, with all the clearances and delivers the documents, particularly the previous survey plan, to the Department of Infrastructure for new plan (from the previous owner to the new owner). Procedure 7 Creates a map of land Time to complete: 2 months Cost to complete: no cost Agency: Dept. of Infrastructure Comment: The Department of Infrastructure prepares a map and ensures compliance with all building regulations. The Department of Infrastructure sends the new map to the Public Notary, and the Public Notary, based on the declared price of agreement or on the recorded value in the computer (database), orders the buyer or any beneficiary to pay 9% of property value. Procedure 8 Buyer pays tax at Municipality Time to complete: 1 day Cost to complete: 5% for Municipality Agency: Municipality Comment: The buyer pays the necessary tax at the Municipality. Procedure 9 Buyer pays tax at Inland Revenue Time to complete: 1 day Cost to complete: 4% of property value as valuated by committee Agency: Inland Revenue 33 Comment: The buyer pays the necessary tax at the Inland Revenue. Procedure 10 The Public Notary approved the contract in front of the parties and two witnesses Time to complete: 1 day Cost to complete: included in the 9% of property value Agency: Notary Public Office Comment: The Public Notary reads the content of the contract in front of the parties and witnesses. All parties must give their own free will for the contract to be effective. The Notary duly monitors the documents particularly whether the transfer payment is fully paid or not, and sends all the relevant documents to the Cadastral Office. Procedure 11 Submit registration of title at the Cadastre Time to complete: 1 week Cost to complete: 150 ERN Agency: Cadastral Office Comment: At this point in the process the buyer obtains full possession of the title. They give copies of the title to the Cadastre and the Municipality. 34 35 1. Benchmarking Getting Credit Regulations: Eritrea is ranked 176 overall for Getting Credit. Ranking of Eritrea in Getting Credit - Compared to good practice and selected economies: 36 The following table shows Getting Credit data for Eritrea compared to good practice and comparator economies: Good Practice Strength of Depth of Public Private legal rights credit registry bureau Economies index (0-10) information coverage (% coverage (% index (0-6) of adults) of adults) New Zealand* 100.0 Portugal 67.1 Singapore* 10 United Kingdom 6 Selected Economy Eritrea 2 0 0.0 0.0 Comparator Economies Ethiopia 4 2 0.1 0.0 Kenya 10 4 0.0 3.3 Rwanda 8 4 0.7 0.0 Tanzania 8 0 0.0 0.0 * The following economies are also good practice economies for : Strength of legal rights index (0-10): Hong Kong, China, Kenya, Kyrgyz Republic, Malaysia Private bureau coverage (% of adults): Argentina, Australia, Canada, Iceland, Ireland, Norway, Sweden, United Kingdom, United States 27 countries have the highest credit information index. 37 2. Historical data: Getting Credit in Eritrea Getting Credit data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 176 176 Strength of legal rights index (0-10) 2 2 2 2 Depth of credit information index (0-6) 0 0 0 0 Private bureau coverage (% of adults) 0.0 0.0 0.0 0.0 Public registry coverage (% of adults) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Getting Credit sub indicators in Eritrea over the past 4 years: 38 Getting Credit in Eritrea The following table summarize legal rights of borrowers and lenders, and the availability and legal framework of credit registries in Eritrea. Getting Credit Indicators (2010) Indicator Private credit Public credit Private bureau coverage (% of adults) 0 bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative data distributed? No No 0 Does the registry distribute credit information from retailers, trade No No 0 creditors or utility companies as well as financial institutions? Are more than 2 years of historical credit information distributed? No No 0 Is data on all loans below 1% of income per capita distributed? No No 0 Is it guaranteed by law that borrowers can inspect their data in the No No 0 largest credit registry? Coverage 0.0 0.0 Number of individuals 0 0 Number of firms 0 0 39 Strength of legal rights index (0-10) 2 Can any business use movable assets as collateral while keeping possession of the assets; and any financial Yes institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, No without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without No requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, No 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 No and debts can be secured by stating a maximum amount rather than a specific amount between the parties ? Is a collateral registry in operation, that is unified geographically and by asset type, as well as indexed by the No grantor's name of a security right ? Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? No Do secured creditors have absolute priority to their collateral in bankruptcy procedures? No 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? No 40 41 1. Benchmarking Protecting Investors Regulations: Eritrea is ranked 109 overall for Protecting Investors. Ranking of Eritrea in Protecting Investors - Compared to good practice and selected economies: 42 The following table shows Protecting Investors data for Eritrea compared to good practice and comparator economies: Good Practice Strength of investor Economies protection index (0-10) New Zealand 9.7 Selected Economy Eritrea 4.7 Comparator Economies Ethiopia 4.3 Kenya 5.0 Rwanda 6.3 Tanzania 5.0 43 2. Historical data: Protecting Investors in Eritrea Protecting Investors data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 108 109 Strength of investor protection index (0-10) 4.7 4.7 4.7 4.7 3. The following graph illustrates the Protecting Investors index in Eritrea compared to best practice and selected Economies: 9.7 6.3 5.0 5.0 4.7 4.3 a ya i da an ea nd ia en an op itr nz a K al w hi Ta Er Ze R Et ew N Note: The higher the score, the greater the investor protection. 44 Protecting Investors in Eritrea The table below provides a full breakdown of how the disclosure, director liability, and shareholder suits indexes are calculated in Eritrea. Protecting Investors Data (2010) Indicator Extent of disclosure index (0-10) 4 1 What corporate body provides legally sufficient approval for the transaction? 0 Whether immediate disclosure of the transaction to the public and/or shareholders is required? 1 Whether disclosure of the transaction in published periodic filings (annual reports) is required? 1 Whether disclosure of the conflict of interest by Mr. James to the board of directors is required? 1 Whether an external body must review the terms of the transaction before it takes place? Extent of director liability index (0-10) 5 1 Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller transaction causes to the company? 1 Whether shareholders can hold the approving body (the CEO or board of directors) liable for the damage that the Buyer-Seller transaction causes to the company? 0 Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 1 Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff? 45 1 Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff? 0 Whether fines and imprisonment can be applied against Mr. James? 1 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company? Ease of shareholder suits index (0-10) 5 4 Whether the plaintiff can obtain any documents from the defendant and witnesses during trial? 0 Whether the plaintiff can directly question the defendant and witnesses during trial? 0 Whether the plaintiff can request categories of documents from the defendant without identifying specific ones? 0 Whether shareholders owning 10% or less of Buyer's shares can request an inspector to investigate the transaction? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction documents before filing suit? Strength of investor protection index (0-10) 4.7 46 47 1. Benchmarking Paying Taxes Regulations: Eritrea is ranked 113 overall for Paying Taxes. Ranking of Eritrea in Paying Taxes - Compared to good practice and selected economies: 48 The following table shows Paying Taxes data for Eritrea compared to good practice and comparator economies: Good Practice Payments Time (hours Total tax rate (number per per year) (% profit) Economies year) Maldives* 3 0 Timor-Leste 0.2 Selected Economy Eritrea 18 216 84.5 Comparator Economies Ethiopia 19 198 31.1 Kenya 41 393 49.7 Rwanda 26 148 31.3 Tanzania 48 172 45.2 * The following economies are also good practice economies for : Payments (number per year): Qatar 49 2. Historical data: Paying Taxes in Eritrea Paying Taxes data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 110 113 Total tax rate (% profit) 84.5 84.5 84.5 84.5 Payments (number per year) 18 18 18 18 Time (hours per year) 216 216 216 216 3. The following graphs illustrate the Paying Taxes sub indicators in Eritrea over the past 4 years: 50 Paying Taxes in Eritrea The table below addresses the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year in Eritrea, 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 Personal income tax 96 Vehicle tax 1 fixed fee 0.10 Garbage fee 1 0.4 per building area 0.20 square meter Municipality tax on 1 1.75 per building area 0.80 property square meter Municipality tax on land 1 1.85 per land area 1.00 square meter Municipality tax on 1 4.0% taxable profit 1.00 earnings Corporate income tax 1 24 30.0% taxable profit 7.70 Sales tax 12 96 5.0% purchases 73.70 Totals 18 216 84.5 51 52 1. Benchmarking Trading Across Borders Regulations: Eritrea is ranked 165 overall for Trading Across Borders. Ranking of Eritrea in Trading Across Borders - Compared to good practice and selected economies: 53 The following table shows Trading Across Borders data for Eritrea compared to good practice and comparator economies: Good Practice Documents to Time to Cost to Documents to Time to Cost to export export (days) export (US$ import import (days) import (US$ Economies (number) per (number) per container) container) Denmark* 5 France 2 2 Malaysia 450 Singapore 4 439 Selected Economy Eritrea 9 50 1431 13 59 1581 Comparator Economies Ethiopia 8 44 1890 8 45 2993 Kenya 8 26 2055 7 24 2190 Rwanda 8 35 3275 8 34 4990 Tanzania 5 24 1262 7 31 1475 * The following economies are also good practice economies for : Time to export (days): Estonia 54 2. Historical data: Trading Across Borders in Eritrea Trading Across Borders data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 164 165 Cost to export (US$ per container) 1331 1431 1431 1431 Cost to import (US$ per container) 1581 1581 1581 1581 Documents to export (number) 9 9 9 9 Documents to import (number) 13 13 13 13 Time to export (days) 59 50 50 50 Time to import (days) 69 60 60 59 3. The following graphs illustrate the Trading Across Borders sub indicators in Eritrea over the past 4 years: 55 56 Trading Across Borders in Eritrea These tables list the procedures necessary to import and export a standardized cargo of goods in Eritrea. The documents required to export and import the goods are also shown. Nature of Export Procedures (2010) Duration (days) US$ Cost Documents preparation 34 270 Customs clearance and technical control 6 400 Ports and terminal handling 8 501 Inland transportation and handling 2 260 Totals 50 1431 Nature of Import Procedures (2010) Duration (days) US$ Cost Documents preparation 43 386 Customs clearance and technical control 6 450 Ports and terminal handling 8 495 Inland transportation and handling 2 250 Totals 59 1581 57 Documents for Export and Import Export Bill of lading Cargo release order Certificate of origin Commercial invoice Customs export declaration Packing list Pre-shipment inspection clean report of findings Tax certificate Technical standard/health certificate Import Bill of lading Cargo release order Certificate of origin Commercial invoice Consular invoice Customs import declaration Terminal handling receipts Foreign exchange authorization Import license Packing list Pre-shipment inspection clean report of findings Tax certificate Technical standard/health certificate 58 59 1. Benchmarking Enforcing Contracts Regulations: Eritrea is ranked 48 overall for Enforcing Contracts. Ranking of Eritrea in Enforcing Contracts - Compared to good practice and selected economies: 60 The following table shows Enforcing Contracts data for Eritrea compared to good practice and comparator economies: Good Practice Procedures Time (days) Cost (% of (number) claim) Economies Bhutan 0.1 Ireland 20 Singapore 150 Selected Economy Eritrea 39 405 22.6 Comparator Economies Ethiopia 37 620 15.2 Kenya 40 465 47.2 Rwanda 24 230 78.7 Tanzania 38 462 14.3 61 2. Historical data: Enforcing Contracts in Eritrea Enforcing Contracts data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 48 48 Procedures (number) 39 39 39 39 Time (days) 405 405 405 405 Cost (% of claim) 22.6 22.6 22.6 22.6 3. The following graphs illustrate the Enforcing Contracts sub indicators in Eritrea over the past 4 years: 62 Enforcing Contracts in Eritrea This topic looks at the efficiency of contract enforcement in Eritrea. Nature of Procedure (2010) Indicator Procedures (number) 39 Time (days) 405 Filing and service 40.0 Trial and judgment 270.0 Enforcement of judgment 95.0 Cost (% of claim)* 22.60 Attorney cost (% of claim) 15.0 Court cost (% of claim) 3.6 Enforcement Cost (% of claim) 4.0 63 Court information: Asmara Regional Court * Claim assumed to be equivalent to 200% of income per capita. 64 65 1. Benchmarking Closing Business Regulations: Eritrea is ranked 183 overall for Closing a Business. Ranking of Eritrea in Closing Business - Compared to good practice and selected economies: 66 The following table shows Closing Business data for Eritrea compared to good practice and comparator economies: Good Practice Recovery rate Time (years) Cost (% of (cents on the estate) Economies dollar) Ireland 0.4 Japan 92.7 Singapore* 1 Selected Economy Eritrea 0.0 no practice no practice Comparator Economies Ethiopia 31.3 3.0 15 Kenya 29.8 4.5 22 Rwanda 0.0 no practice no practice Tanzania 21.9 3.0 22 * The following economies are also good practice economies for : Cost (% of estate): Colombia, Kuwait, Norway 67 2. Historical data: Closing Business in Eritrea Closing a Business data Doing Business Doing Business Doing Business Doing Business 2008 2009 2010 2011 Rank .. .. 183 183 Time (years) no practice no practice no practice no practice Cost (% of estate) no practice no practice no practice no practice Recovery rate (cents on the dollar) 0.0 0.0 0.0 0.0 3. The following graphs illustrate the Closing Business sub indicators in Eritrea over the past 4 years: 68 Since 2004 Doing Business has been tracking reforms aimed at simplifying business regulations, strengthening property rights, opening access to credit and enforcing contracts by measuring their impact on 10 indicator sets . * Nearly 1,000 reforms have had an impact on these indicators. Doing Business 2011, covering June 2009 to June 2010, reports that 117 economies implemented 216 reforms to make it easier to start a business. 64% of economies measured by Doing Business have reformed this year, focusing on easing business start-up, lightening the tax burden, simplifying import and export regulations and improving credit information systems. The top 10 most-improved in Doing Business 2011 Dealing with Construction Trading Across Borders Positive Change Registering Property Enforcing Contracts Protecting Investors Starting a Business Closing a Business Negative Change Getting Credit Paying Taxes Permits Economy Kazakhstan Rwanda Peru Vietnam Cape Verde Tajikistan Zambia Hungary Grenada Brunei Darussalam * For Doing Business 2011 the Employing Workers indicator is not included in the aggregate ease of doing business ranking. 69 Summary of changes to business regulation in top 10 most improved economies in Doing Business 2011 and selected comparator economies. Brunei Darussalam Brunei Darussalam made starting a business easier by improving efficiency at the company registrar and implementing an electronic system for name searches. Brunei Darussalam reduced the corporate income tax rate from 23.5% to 22% while also introducing a lower tax rate for small businesses, ranging from 5.5% to 11%. The introduction of an electronic customs system in Brunei Darussalam made trading easier. Cape Verde Cape Verde made start-up easier by eliminating the need for a municipal inspection before a business begins operations and computerizing the system for delivering the municipal license. Cape Verde eased property registration by switching from fees based on a percentage of the property value to lower fixed rates. Cape Verde abolished the stamp duties on sales and checks. Ethiopia Ethiopia made trading easier by addressing internal bureaucratic inefficiencies. Grenada Grenada eased business start-up by transferring responsibility for the commercial registry from the courts to the civil administration. The appointment of a registrar focusing only on property cut the time needed to transfer property in Grenada by almost half. Grenada's customs administration made trading faster by simplifying procedures, reducing inspections, improving staff training and enhancing communication with users. Hungary Hungary implemented a time limit for the issuance of building permits. Hungary reduced the property registration fee by 6% of the property value. Hungary simplified taxes and tax bases. Amendments to Hungary's bankruptcy law encourage insolvent companies to consider reaching agreements with creditors out of court so as to avoid bankruptcy. Kazakhstan Kazakhstan eased business start-up by reducing the minimum capital requirement to 100 tenge ($0.70) and eliminating the need to have the memorandum of association and company charter notarized. Kazakhstan made dealing with construction permits easier by implementing a one-stop shop related to technical conditions for utilities. Kazakhstan strengthened investor protections by requiring greater corporate disclosure in company annual reports. Kazakhstan speeded up trade through efforts to modernize customs, including implementation of a risk management system and improvements in customs automation. Kenya Kenya eased business start-up by reducing the time it takes to get the memorandum and articles of association stamped, merging the tax and value added tax registration procedures and digitizing records at the registrar. Kenya increased the administrative burden of paying taxes by requiring quarterly filing of payroll taxes. Kenya speeded up trade by implementing an electronic cargo tracking system and linking this system to the Kenya Revenue Authority's electronic data interchange system for customs clearance. Peru Peru eased business start-up by simplifying the requirements for operating licenses and creating an online one-stop shop for business registration. Peru streamlined construction permitting by implementing administrative reforms. Peru introduced fast-track procedures at the land registry, cutting by half the time needed to register property. Peru made trading easier by implementing a new web-based electronic data interchange system, risk-based inspections and payment deferrals. Rwanda Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank's public credit registry. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment. Tajikistan Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Tajikistan lowered its corporate income tax rate. 70 Vietnam Vietnam eased company start-up by creating a one-stop shop that combines the processes for obtaining a business license and tax license and by eliminating the need for a seal for company licensing. Vietnam made dealing with construction permits easier by reducing the cost to register newly completed buildings by 50% and transferring the authority to register buildings from local authorities to the Department of National Resources and Environment. Vietnam improved its credit information system by allowing borrowers to examine their own credit report and correct errors. Zambia Zambia eased business start-up by eliminating the minimum capital requirement. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs declarations and introducing scanning machines at border posts. Zambia improved contract enforcement by introducing an electronic case management system in the courts that provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. 71 72