ECONOMY

Still a lot to do for ‘Doing Business’

Greece remains a laggard among developed nations as regards its business environment, said the World Bank’s relevant annual report which was released this week. In general, according to the report, developed countries further improved their good institutional business provisions. The study, titled «Doing Business in 2005» and appearing for the second year in a row, explores seven areas in the business environment: setting up shop; flexibility in hirings and layoffs; protection and transfer of property; the legal framework regarding borrowing; the protection of investors (corporate governance); the implementation of contracts and the winding up of a business (bankruptcy). The study covers 145 economies – almost all countries with a population of more than 1.5 million. Greece belongs to the group of the 22 most wealthy nations and its performance is compared within this group. In Greece, setting up a business takes 38 days and 15 different procedures, when in Australia, Canada, Denmark and the US only two to five days are required. However, the situation is much worse in Spain (108 days), Portugal (78) and Germany (45). Employment Regarding employment, Greece, France and Spain appear to have the most inflexible regulations (ranking in the 66-69 bracket of the relevant index which also takes into account work hour arrangements); while Hong Kong, the US, Canada and New Zealand rank in the 0-7 bracket. The cost of dismissing an employee with 20 years of service in Greece equals the wages of 133 weeks and is the highest among the 22 developed economies and the ninth highest in the world. It is also high in Portugal, South Korea, Germany and Spain, while in New Zealand it is zero. In the US and Belgium, it equals the wages of eight weeks. The transfer of property takes 23 days in Greece and costs 13.7 percent of the value of the real estate unit. In Norway, Sweden and New Zealand it takes just one to two days, but in France 193, in Belgium 132 and in Portugal 83. The cost in Greece is highest, approached only by Belgium (12.8 percent) and Portugal (10.3 percent). In most countries, it is between 4 percent and 7 percent, but in several it falls below 3 percent. In Saudi Arabia, it is zero and is negligible in New Zealand, the US and Denmark (0.2-0.6 percent). Low creditor protection Greece ranks very low as regards creditor protection, graded with 1 out of 10 in a composite index of 10 parameters. Britain ranks top, with a 10 grade, followed by New Zealand, the Netherlands and Australia with 9. Greece is graded with 4 out of 6 on the index regarding access to credit information, and 5 out of 7 in corporate governance. It is in about mid-rank as regards the time required for implementation of a contract (for instance, resolution of a dispute between supplier and client), with 151 days between the filing of a suit and the court ruling or payment of the disputed amount, compared with 1,390 days in Italy, 374 in Austria, 346 in Canada and 320 in Portugal. Tunisia appears to be the fastest on this criterion, with just 27 days required, which is 10 times faster than in the UK and the US. Greece is also in mid-rank as regards the legal costs involved in the resolution of business disputes. Finally, bankruptcy procedures last about two years in Greece, three in the US, 3.4 years in Denmark and 4.6 in Switzerland. In Greece, creditors and other claimants receive on average 45.6 percent of their claims. Solutions in removing obstacles to business are often simple and cost little, according to the World Bank report. Small changes in the institutional framework can make a big difference in the business environment and economic growth, it argues. These include electronic property registers, the restriction of appeal rights in disputes, public access to shareholders’ registers and the financial data of enterprises and specialized judicial staff, which have proved particularly effective in some countries, the report notes.