Economy Profile 2015 Doing Business 2015
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Doing Business 2015 Madagascar 2 © 2014 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 17 16 15 14 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: World Bank. 2014. Doing Business 2015: Going Beyond Efficiency. Washington, DC: World Bank Group. DOI: 10.1596/978-1-4648-0351-2. License: Creative Commons Attribution CC BY 3.0 IGO Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party- owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures or images. All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: firstname.lastname@example.org. ISBN (paper): 978-1-4648-0351-2 ISBN (electronic): 978-1-4648-0352-9 DOI: 10.1596/978-1-4648-0351-2 ISSN: 1729-2638 Cover design: Corporate Visions, Inc.
Doing Business 2015 Madagascar 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 6 Starting a business ..................................................................................................................... 16 Dealing with construction permits ........................................................................................... 23 Getting electricity ....................................................................................................................... 31 Registering property .................................................................................................................. 37 Getting credit .............................................................................................................................. 44 Protecting minority investors ................................................................................................... 51 Paying taxes ................................................................................................................................ 61 Trading across borders .............................................................................................................. 66 Enforcing contracts .................................................................................................................... 71 Resolving insolvency .................................................................................................................. 78 Labor market regulation ........................................................................................................... 81 Distance to frontier and ease of doing business ranking ...................................................... 88 Resources on the Doing Business website .............................................................................. 91
Doing Business 2015 Madagascar 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is 1, 2014 (except for the paying taxes indicators, which for a local entrepreneur to open and run a small to cover the period January–December 2013). medium-size business when complying with relevant The Doing Business methodology has limitations. Other regulations. It measures and tracks changes in areas important to business—such as an economy’s regulations affecting 11 areas in the life cycle of a proximity to large markets, the quality of its business: starting a business, dealing with construction infrastructure services (other than those related to permits, getting electricity, registering property, getting trading across borders and getting electricity), the credit, protecting minority investors, paying taxes, security of property from theft and looting, the trading across borders, enforcing contracts, resolving transparency of government procurement, insolvency and labor market regulation. macroeconomic conditions or the underlying strength of In a series of annual reports Doing Business presents institutions—are not directly studied by Doing Business. quantitative indicators on business regulations and the The indicators refer to a specific type of business, protection of property rights that can be compared generally a local limited liability company operating in across 189 economies, from Afghanistan to Zimbabwe, the largest business city. Because standard assumptions over time. The data set covers 47 economies in Sub- are used in the data collection, comparisons and Saharan Africa, 32 in Latin America and the Caribbean, 25 benchmarks are valid across economies. The data not in East Asia and the Pacific, 26 in Eastern Europe and only highlight the extent of obstacles to doing business; Central Asia, 20 in the Middle East and North Africa and they also help identify the source of those obstacles, 8 in South Asia, as well as 31 OECD high-income supporting policy makers in designing regulatory reform. economies. The indicators are used to analyze economic More information is available in the full report. Doing outcomes and identify what reforms have worked, where Business 2015 presents the indicators, analyzes their and why. relationship with economic outcomes and presents This economy profile presents the Doing Business business regulatory reforms. The data, along with indicators for Madagascar. To allow useful comparison, it information on ordering Doing Business 2015, are also provides data for other selected economies available on the Doing Business website at (comparator economies) for each indicator. The data in http://www.doingbusiness.org. this report are current as of June
Doing Business 2015 Madagascar 5 CHANGES IN DOING BUSINESS 2015 As part of a 2-year update in methodology, Doing Finally, the name of the employing workers indicator set Business 2015 incorporates 7 important changes. First, has been changed to labor market regulation, and the the ease of doing business ranking as well as all topic- scope of this indicator set has also been changed. The level rankings are now computed on the basis of indicators now focus on labor market regulation distance to frontier scores (see the chapter on the applying to the retail sector rather than the distance to frontier and ease of doing business ranking). manufacturing sector, and their coverage has been Second, for the 11 economies with a population of more expanded to include regulations on labor disputes and than 100 million, data for a second city have been added on benefits provided to workers. The labor market to the data set and the ranking calculation. These regulation indicators continue to be excluded from the economies are Bangladesh, Brazil, China, India, aggregate distance to frontier score and ranking on the Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian ease of doing business. Federation and the United States. Third, for getting Beyond these changes there are 3 other updates in credit, the methodology has been revised for both the methodology. For paying taxes, the financial statement strength of legal rights index and the depth of credit variables have been updated to be proportional to 2012 information index. The number of points has been income per capita; previously they were proportional to increased in both indices, from 10 to 12 for the strength 2005 income per capita. For enforcing contracts, the of legal rights index and from 6 to 8 for the depth of value of the claim is now set at twice the income per credit information index. In addition, only credit bureaus capita or $5,000, whichever is greater. For dealing with and registries that cover at least 5% of the adult construction permits, the cost of construction is now set population can receive a score on the depth of credit at 50 times income per capita (before, the cost was information index. assessed by the Doing Business respondents). In addition, Fourth, the name of the protecting investors indicator set this indicator set no longer includes the procedures for has been changed to protecting minority investors to obtaining a landline telephone connection. better reflect its scope—and the scope of the indicator For more details on the changes, see the “What is set has been expanded to include shareholders’ rights in changing in Doing Business?” chapter starting on page corporate governance beyond related-party transactions. 24 of the Doing Business 2015 report. For more details Fifth, the resolving insolvency indicator set has been on the data and methodology, please see the “Data expanded to include an index measuring the strength of Notes” chapter starting on page 114 of the Doing the legal framework for insolvency. Sixth, the calculation Business 2015 report. For more details on the distance to of the distance to frontier score for paying taxes has frontier metric, please see the “Distance to frontier and been changed. The total tax rate component now enters ease of doing business ranking” chapter in this profile. the score in a nonlinear fashion, in an approach different from that used for all other indicators (see the chapter on the distance to frontier and ease of doing business ranking).
Doing Business 2015 Madagascar 6 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to start ECONOMY OVERVIEW is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing business Region: Sub-Saharan Africa based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size Income category: Low income businesses through their life cycle. Economies are ranked from 1 to 189 by the ease of doing business ranking. This Population: 22,924,851 year's report presents results for 2 aggregate measures: the distance to frontier score and the ease of doing GNI per capita (US$): 440 business ranking. The ranking of economies is determined by sorting the aggregate distance to frontier (DTF) scores. DB2015 rank: 163 The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute DB2014 rank: 157* distance to the best performance in each Doing Business Change in rank: -6 indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the DB 2015 DTF: 49.25 worst performance and 100 the frontier. (See the chapter on the distance to frontier and ease of doing business). DB 2014 DTF: 48.91 The 10 topics included in the ranking in Doing Business 2015: starting a business, dealing with construction Change in DTF: 0.34 permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading * DB2014 ranking shown is not last year’s published across borders, enforcing contracts and resolving ranking but a comparable ranking for DB2014 that insolvency. The labor market regulation indicators captures the effects of such factors as data (formerly employing workers) are not included in this corrections and the changes in methodology. See year’s aggregate ease of doing business ranking, but the the data notes starting on page 114 of the Doing data are presented in this year’s economy profile. Business 2015 report for sources and definitions. The aggregate ranking on the ease of doing business benchmarks each economy’s performance on the indicators against that of all other economies in the Doing Business sample (figure 1.1). While this ranking tells much about the business environment in an economy, it does not tell the whole story. The ranking on the ease of doing business, and the underlying indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business.
Doing Business 2015 Madagascar THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database.
Doing Business 2015 Madagascar THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy regional average (figure 1.2). The economy’s rankings stands in the aggregate ranking on the ease of doing (figure 1.3) and distance to frontier scores (figure 1.4) business is useful. Also useful is to know how it ranks on the topics included in the ease of doing business relative to comparator economies and relative to the ranking provide another perspective. Figure 1.2 How Madagascar and comparator economies rank on the ease of doing business Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database.
Doing Business 2015 Madagascar 9 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Madagascar (Scale: Rank 189 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - Madagascar (Scale: Score 0 center, Score 100 outer edge) Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database.
Doing Business 2015 Madagascar 10 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business tells Doing Business introduced the distance to frontier score. This only part of the story, so do changes in that ranking. Yearly measure shows how far on average an economy is from the movements in rankings can provide some indication of best performance achieved by any economy on each Doing changes in an economy’s regulatory environment for firms, Business indicator. but they are always relative. Comparing the measure for an economy at 2 points in time Moreover, year-to-year changes in the overall rankings do allows users to assess how much the economy’s regulatory not reflect how the business regulatory environment in an environment as measured by Doing Business has changed economy has changed over time—or how it has changed in over time—how far it has moved toward (or away from) the different areas. To aid in assessing such changes, most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.5). Figure 1.5 How far has Madagascar come in the areas measured by Doing Business? Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2010, except for getting credit, paying taxes, protecting minority investors and resolving insolvency which had methodology changes in 2014 and thus are only comparable to 2013. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing Business 2015 report for more details on the distance to frontier score. Source: Doing Business database.
Doing Business 2015 Madagascar 11 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part of regulation—such as a regulatory process that can be the story (table 1.1). The indicators, on their own or in completed with a small number of procedures in a few comparison with the indicators of a good practice days and at a low cost. Comparison of the economy’s economy or those of comparator economies in the indicators today with those in the previous year may region, may reveal bottlenecks reflected in large numbers show where substantial bottlenecks persist—and where of procedures, long delays or high costs. Or they may they are diminishing. reveal unexpected strengths in an area of business Table 1.1 Summary of Doing Business indicators for Madagascar Best performer globally Mozambique DB2015 South Africa DB2015 Madagascar DB2015 Madagascar DB2014 Mauritius DB2015 Comoros DB2015 Rwanda DB2015 Indicator Kenya DB2015 DB2015 Starting a Business 37 33 173 143 29 107 112 61 New Zealand (1) (rank) Starting a Business (DTF 92.02 92.10 57.65 74.02 92.47 82.96 81.66 89.43 New Zealand (99.96) Score) Procedures (number) 4.0 4.0 8.0 10.0 5.0 9.0 8.0 5.0 New Zealand (1.0)* Time (days) 8.0 8.0 15.0 30.0 6.0 13.0 6.5 19.0 New Zealand (0.5) Cost (% of income per 13.5 12.9 114.0 42.7 2.1 17.1 52.3 0.3 Slovenia (0.0) capita) Paid-in min. capital (% 0.0 0.0 226.7 0.0 0.0 0.0 0.0 0.0 112 Economies (0.0)* of income per capita) Dealing with Hong Kong SAR, Construction Permits 177 175 31 95 117 84 34 32 China (1) (rank) Dealing with Hong Kong SAR, Construction Permits 46.68 44.37 81.92 71.02 67.17 73.29 81.55 81.65 China (95.53) (DTF Score)
Doing Business 2015 Madagascar 12 Best performer globally Mozambique DB2015 South Africa DB2015 Madagascar DB2015 Madagascar DB2014 Mauritius DB2015 Comoros DB2015 Rwanda DB2015 Indicator Kenya DB2015 DB2015 Hong Kong SAR, Procedures (number) 13.0 12.0 11.0 8.0 13.0 11.0 10.0 16.0 China (5.0) Time (days) 123.0 161.0 113.0 125.0 245.0 144.0 77.0 48.0 Singapore (26.0) Cost (% of warehouse 20.8 21.9 1.0 9.3 0.7 4.4 4.1 0.9 Qatar (0.0)* value) Getting Electricity 189 188 81 151 41 164 62 158 Korea, Rep. (1) (rank) Getting Electricity (DTF 16.67 16.67 76.46 58.85 83.74 54.65 79.48 55.74 Korea, Rep. (99.83) Score) Procedures (number) 6.0 6.0 3.0 6.0 4.0 7.0 4.0 5.0 12 Economies (3.0)* Time (days) 450.0 450.0 120.0 158.0 84.0 107.0 34.0 226.0 Korea, Rep. (18.0)* Cost (% of income per 8,583.3 9,050.2 2,127.9 1,020.2 277.0 2,484.8 3,073.9 729.5 Japan (0.0) capita) Registering Property 153 152 105 136 98 101 15 97 Georgia (1) (rank) Registering Property 51.72 51.63 63.83 56.88 66.00 64.51 89.20 66.02 Georgia (99.88) (DTF Score) Procedures (number) 6.0 6.0 4.0 9.0 4.0 6.0 3.0 7.0 4 Economies (1.0)* Time (days) 74.0 74.0 30.0 72.0 14.0 40.0 32.0 23.0 3 Economies (1.0)* Cost (% of property 10.2 10.3 10.4 4.3 10.6 6.9 0.1 6.2 4 Economies (0.0)* value) Getting Credit (rank) 180 178 131 116 36 131 4 52 New Zealand (1) Getting Credit (DTF 5.00 5.00 30.00 35.00 65.00 30.00 90.00 60.00 New Zealand (100) Score) Strength of legal rights 1 1 6 7 6 1 11 5 3 Economies (12)* index (0-12)
Doing Business 2015 Madagascar 13 Best performer globally Mozambique DB2015 South Africa DB2015 Madagascar DB2015 Madagascar DB2014 Mauritius DB2015 Comoros DB2015 Rwanda DB2015 Indicator Kenya DB2015 DB2015 Depth of credit 0 0 0 0 7 5 7 7 23 Economies (8)* information index (0-8) Credit registry coverage 0.2 0.2 0.0 0.0 71.9 5.7 2.4 0.0 Portugal (100.0) (% of adults) Credit bureau coverage 0.0 0.0 0.0 4.9 0.0 0.0 15.7 55.4 23 Economies (100.0)* (% of adults) Protecting Minority 87 84 122 122 28 94 117 17 New Zealand (1) Investors (rank) Protecting Minority 53.33 53.33 45.83 45.83 65.00 51.67 46.67 67.50 New Zealand (81.67) Investors (DTF Score) Extent of conflict of interest regulation 5.7 5.7 4.7 4.7 7.3 6.3 6.3 8.0 Singapore (9.3)* index (0-10) Extent of shareholder governance index (0- 5.0 5.0 4.5 4.5 5.7 4.0 3.0 5.5 France (7.8)* 10) Strength of minority investor protection 5.3 5.3 4.6 4.6 6.5 5.2 4.7 6.8 New Zealand (8.2) index (0-10) United Arab Emirates Paying Taxes (rank) 65 60 167 102 13 123 27 19 (1)* Paying Taxes (DTF United Arab Emirates 77.78 77.46 47.37 71.49 91.92 66.85 85.79 88.73 Score) (99.44)* Payments (number per Hong Kong SAR, 23.0 23.0 33.0 30.0 8.0 37.0 17.0 7.0 year) China (3.0)* Time (hours per year) 183.0 183.0 100.0 201.5 152.0 230.0 107.0 200.0 Luxembourg (55.0) Trading Across Borders 109 110 144 153 17 129 164 100 Singapore (1) (rank) Trading Across Borders 68.98 68.17 59.33 54.49 87.74 64.76 44.67 71.05 Singapore (96.47)
Doing Business 2015 Madagascar 14 Best performer globally Mozambique DB2015 South Africa DB2015 Madagascar DB2015 Madagascar DB2014 Mauritius DB2015 Comoros DB2015 Rwanda DB2015 Indicator Kenya DB2015 DB2015 (DTF Score) Documents to export 5 5 9 8 4 7 7 5 Ireland (2)* (number) Time to export (days) 22.0 22.0 31.0 26.0 10.0 21.0 26.0 16.0 5 Economies (6.0)* Cost to export (US$ per 1,195.0 1,195.0 1,295.0 2,255.0 675.0 1,100.0 3,245.0 1,830.0 Timor-Leste (410.0) container) Cost to export (deflated 1,195.0 1,303.7 1,295.0 2,255.0 675.0 1,100.0 3,245.0 1,830.0 US$ per container) Documents to import 9 9 8 9 5 9 9 6 Ireland (2)* (number) Time to import (days) 21.0 21.0 24.0 26.0 9.0 25.0 27.0 21.0 Singapore (4.0) Cost to import (US$ per 1,555.0 1,555.0 1,295.0 2,350.0 710.0 1,600.0 4,990.0 2,080.0 Singapore (440.0) container) Cost to import (deflated 1,555.0 1,696.5 1,295.0 2,350.0 710.0 1,600.0 4,990.0 2,080.0 US$ per container) Enforcing Contracts 146 145 177 137 44 164 62 46 Singapore (1) (rank) Enforcing Contracts 45.91 45.91 33.20 48.96 66.22 39.81 63.94 66.14 Singapore (89.54) (DTF Score) Time (days) 871.0 871.0 506.0 465.0 519.0 760.0 230.0 600.0 Singapore (150.0) Cost (% of claim) 42.4 42.4 89.4 47.2 25.0 119.0 82.7 33.2 Iceland (9.0) Procedures (number) 38.0 38.0 43.0 44.0 34.0 30.0 23.0 29.0 Singapore (21.0)* Resolving Insolvency 129 127 189 134 43 107 101 39 Finland (1) (rank) Resolving Insolvency 34.43 34.43 0.00 33.31 62.81 40.75 41.77 64.51 Finland (93.85) (DTF Score)
Doing Business 2015 Madagascar 15 Best performer globally Mozambique DB2015 South Africa DB2015 Madagascar DB2015 Madagascar DB2014 Mauritius DB2015 Comoros DB2015 Rwanda DB2015 Indicator Kenya DB2015 DB2015 no Time (years) 2.0 2.0 4.5 1.7 5.0 2.5 2.0 Ireland (0.4) practice no Cost (% of estate) 30.0 30.0 22.0 14.5 9.0 29.0 18.0 Norway (1.0) practice Outcome (0 as piecemeal sale and 1 as 0 0 0 1 1 0 0 0 going concern) Recovery rate (cents on 11.7 11.7 0.0 27.1 67.4 17.6 19.5 35.7 Japan (92.9) the dollar) Strength of insolvency no 9.0 9.0 6.0 8.5 10.0 10.0 14.5 5 Economies (15.0)* framework index (0-16) practice Note: DB2014 rankings shown are not last year’s published rankings but comparable rankings for DB2014 that capture the effects of such factors as data corrections and changes to the methodology. Trading across borders deflated and non-deflated values are identical in DB2015 because it is defined as the base year for the deflator. The best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2015 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database.
Doing Business 2015 Madagascar 16 STARTING A BUSINESS Formal registration of companies has many WHAT THE STARTING A BUSINESS immediate benefits for the companies and for business owners and employees. Legal entities can INDICATORS MEASURE outlive their founders. Resources are pooled as several shareholders join forces to start a company. Procedures to legally start and operate a Formally registered companies have access to company (number) services and institutions from courts to banks as well Preregistration (for example, name as to new markets. And their employees can benefit verification or reservation, notarization) from protections provided by the law. An additional benefit comes with limited liability companies. These Registration in the economy’s largest limit the financial liability of company owners to their business city1 investments, so personal assets of the owners are not Postregistration (for example, social security put at risk. Where governments make registration registration, company seal) easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and Time required to complete each procedure generating more revenue for the government. (calendar days) What do the indicators cover? Does not include time spent gathering information Doing Business measures the ease of starting a business in an economy by recording all procedures Each procedure starts on a separate day (2 officially required or commonly done in practice by procedures cannot start on the same day). an entrepreneur to start up and formally operate an Procedures that can be fully completed industrial or commercial business—as well as the online are recorded as ½ day. time and cost required to complete these procedures. Procedure completed once final document is It also records the paid-in minimum capital that received companies must deposit before registration (or within 3 months). The ranking of economies on the No prior contact with officials ease of starting a business is determined by sorting Cost required to complete each procedure their distance to frontier scores for starting a (% of income per capita) business. These scores are the simple average of the distance to frontier scores for each of the component Official costs only, no bribes indicators. No professional fees unless services required To make the data comparable across economies, by law Doing Business uses several assumptions about the Paid-in minimum capital (% of income business and the procedures. It assumes that all per capita) information is readily available to the entrepreneur and that there has been no prior contact with Deposited in a bank or with a notary before officials. It also assumes that the entrepreneur will registration (or within 3 months) pay no bribes. And it assumes that the business: Is a limited liability company, located in the Has a start-up capital of 10 times income per largest business city and is 100% domestically capita. owned1. Has a turnover of at least 100 times income per Has between 10 and 50 employees. capita. Conducts general commercial or industrial Does not qualify for any special benefits. activities. Does not own real estate. 1 For the 11 economies with a population of more than 100 million, data for a second city have been added.
Doing Business 2015 Madagascar 17 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Madagascar? largest business city of an economy, except for 11 According to data collected by Doing Business, starting a economies for which the data are a population-weighted business there requires 4.0 procedures, takes 8.0 days, average of the 2 largest business cities. See the chapter costs 13.5% of income per capita and requires paid-in on distance to frontier and ease of doing business minimum capital of 0.0% of income per capita (figure ranking at the end of this profile for more details. 2.1). Most indicator sets refer to a case scenario in the Figure 2.1 What it takes to start a business in Madagascar Paid-in minimum capital (% of income per capita): 0.0 Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
Doing Business 2015 Madagascar 18 STARTING A BUSINESS Globally, Madagascar stands at 37 in the ranking of 189 average ranking provide other useful information for economies on the ease of starting a business (figure 2.2). assessing how easy it is for an entrepreneur in The rankings for comparator economies and the regional Madagascar to start a business. Figure 2.2 How Madagascar and comparator economies rank on the ease of starting a business Source: Doing Business database.
Doing Business 2015 Madagascar 19 STARTING A BUSINESS Economies around the world have taken steps making it they often are part of a larger regulatory reform easier to start a business—streamlining procedures by program. Among the benefits have been greater firm setting up a one-stop shop, making procedures simpler satisfaction and savings and more registered businesses, or faster by introducing technology and reducing or financial resources and job opportunities. eliminating minimum capital requirements. Many have What business registration reforms has Doing Business undertaken business registration reforms in stages—and recorded in Madagascar (table 2.1)? Table 2.1 How has Madagascar made starting a business easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Madagascar made starting a business easier by streamlining DB2010 procedures at the one-stop shop and eliminating the stamp duty and the minimum capital requirement. Madagascar eased the process of starting a business by eliminating the minimum capital requirement, but also made it DB2012 more difficult by introducing the requirement of obtaining a tax identification number. Madagascar made starting a business easier by allowing the DB2013 one-stop shop to deal with the publication of the notice of incorporation. Madagascar made starting a business more difficult by DB2014 increasing the cost to register with the National Center for Statistics. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database.
Doing Business 2015 Madagascar 20 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for STANDARDIZED COMPANY Madagascar is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new Legal form: Socièté a Responsabilité Limitée firm. These are identified by Doing Business through (SARL) collaboration with relevant local professionals and the study of laws, regulations and publicly available Paid in minimum capital requirement: MGA 0 information on business entry in that economy. City: Antananarivo Following is a detailed summary of those procedures, along with the associated time and cost. These Start-up Capital: 10 times GNI per capita procedures are those that apply to a company matching the standard assumptions (the “standardized company”) used by Doing Business in collecting the data (see the section in this chapter on what the indicators measure). Table 2.2 Summary of time, cost and procedures for starting a business in Madagascar Time to No. Procedure Cost to complete complete Obtain a provisional fiscal identification number Prior to registration of the company, the entrepreneur has to obtain a provisional fiscal identification number. In order to do so, the entrepreneur has to apply online and then submit the registration form 1 together with other documents to the EDBM fiscal. 1 day no charge Agency: Tax registration - NIFONLINE Deposit registered statutes, apply for license (carte professionnelle), obtain a final fiscal identification number, and obtain statistical identifications The k-bis, statistical card, tax registration confirmation, commercial registration number, and professional card (carte professionelle) can be obtained in about 2 days. Owing to reforms, a notice of publication is no longer needed to obtain the k-bis. Since 2007, the one stop-shop (Guichet Unique, GUIDE) sends the company the certificate for the 4 days see comment 2 deposit of statutes (certificat de dépôt d'actes). When filing all documents needed to obtain the k-bis, the company must provide GUIDE with a stamped envelope. The company can continue with subsequent procedures in the meantime. The firm's management also needs to file forms for each employee with the National Social Security Fund (Caisse Nationale de Prevoyance Sociale). The required forms, the registration application (demande d'immatriculation) and the application for workers affiliation (demande 'affiliation travailleur) must be filed along with the corporate
Doing Business 2015 Madagascar 21 Time to No. Procedure Cost to complete complete registration certificate and notarized copies of each employee’s passport and birth certificate, if under age 18. To file for health insurance, the company promoters must file two copies of an application form (bulletin d'adhesion nouveau membre) along with a list of names of all employees and their identity cards. According to ""Nouvelles N°1534 du 21 mars 2009"" it is possible to register at the one stop shop (at the EDBM) for the Caisse Nationale de Prevoyance Sociale and the Organization Sanitaire Tananarivienne InterEntreprise. It takes on average 4 to 8 days to get registered with the EDBM. Then it takes about 2 days to publish the notice of constitution. Fee schedule: • Commercial registration fee: MGA 15,500. • Deed registration costs: MGA 2,000. • K•bis: MGA 2,000. • Institut National de la Statistique Malgache (INSTAT) (see Decree 2005-380, dated June 22, 2005): MGA 40,000. • Registration fees: 0.5% of the share capital. • Fee to publish a notice of constitution in a daily newspaper: approximately MGA 23,500. In addition, the following fees need to be paid: • 0.2% of the lease • Payment of the income tax (accompte de l' impot sur le revenu): MGA 320,000 Agency: EDBM File a notice of constitution to be published in a French newspaper Entrepreneurs must publish a legal notice of constitution in a newspaper which can be completed within 2 days. The published extract is also submitted together with the company’s application for 2 days no charge 3 registration at the one-stop shop (EDBM). Agency: EDBM Register employees with Social Security The company must register its employees with the National Social Security Fund (Caisse Nationale de Prevoyance Sociale), and file two copies of an application form (bulletin d'adhesion nouveau membre) 4 along with a list of names of all employees and their identity cards to 1 day no charge enroll for health insurance. Agency: EDBM * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database.
Doing Business 2015 Madagascar 22
Doing Business 2015 Madagascar 23 DEALING WITH CONSTRUCTION PERMITS Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION public. But it needs to be efficient, to avoid excessive PERMITS INDICATORS MEASURE constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in time and money, Procedures to legally build a warehouse many builders opt out. They may pay bribes to pass (number) inspections or simply build illegally, leading to Submitting all relevant documents and hazardous construction that puts public safety at risk. obtaining all necessary clearances, licenses, Where compliance is simple, straightforward and permits and certificates inexpensive, everyone is better off. Submitting all required notifications and What do the indicators cover? receiving all necessary inspections Doing Business records the procedures, time and cost Obtaining utility connections for water and for a business in the construction industry to obtain sewerage all the necessary approvals to build a warehouse in Registering the warehouse after its the economy’s largest business city, connect it to completion (if required for use as collateral or basic utilities and register the warehouse so that it for transfer of the warehouse) can be used as collateral or transferred to another Time required to complete each procedure entity. (calendar days) The ranking of economies on the ease of dealing with Does not include time spent gathering construction permits is determined by sorting their information distance to frontier scores for dealing with Each procedure starts on a separate day. construction permits. These scores are the simple Procedures that can be fully completed online average of the distance to frontier scores for each of are recorded as ½ day. the component indicators. Procedure considered completed once final To make the data comparable across economies, document is received Doing Business uses several assumptions about the business and the warehouse, including the utility No prior contact with officials connections. Cost required to complete each procedure (% The business: of warehouse value) Official costs only, no bribes Is a limited liability company operating in the construction business and located in Will have complete architectural and the largest business city. For the 11 technical plans prepared by a licensed economies with a population of more than architect or engineer. 100 million, data for a second city have Will be connected to water and sewerage been added. Is domestically owned and (sewage system, septic tank or their operated. equivalent). The connection to each utility Has 60 builders and other employees. network will be 150 meters (492 feet) long. The warehouse: Will be used for general storage, such as of books or stationery (not for goods requiring Is valued at 50 times income per capita. special conditions). Is a new construction (there was no Will take 30 weeks to construct (excluding all previous construction on the land). delays due to administrative and regulatory requirements).
Doing Business 2015 Madagascar 24 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to build business city of an economy, except for 11 economies for a warehouse in Madagascar? According to data collected which the data are a population-weighted average of the by Doing Business, dealing with construction permits 2 largest business cities. See the chapter on distance to there requires 13.0 procedures, takes 123.0 days and frontier and ease of doing business ranking at the end of costs 20.8% of the warehouse value (figure 3.1). Most this profile for more details. indicator sets refer to a case scenario in the largest Figure 3.1 What it takes to comply with formalities to build a warehouse in Madagascar Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
Doing Business 2015 Madagascar 25 DEALING WITH CONSTRUCTION PERMITS Globally, Madagascar stands at 177 in the ranking of 189 other useful information for assessing how easy it is for economies on the ease of dealing with construction an entrepreneur in Madagascar to legally build a permits (figure 3.2). The rankings for comparator warehouse. economies and the regional average ranking provide Figure 3.2 How Madagascar and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database.
Doing Business 2015 Madagascar 26 DEALING WITH CONSTRUCTION PERMITS Smart regulation ensures that standards are met while an effort to ensure building safety while keeping making compliance easy and accessible to all. Coherent compliance costs reasonable, governments around the and transparent rules, efficient processes and adequate world have worked on consolidating permitting allocation of resources are especially important in sectors requirements. What construction permitting reforms has where safety is at stake. Construction is one of them. In Doing Business recorded in Madagascar (table 3.1)? Table 3.1 How has Madagascar made dealing with construction permits easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Madagascar made dealing with construction permits easier by DB2015 reducing the time needed to obtain a building permit. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database.
Doing Business 2015 Madagascar 27 DEALING WITH CONSTRUCTION PERMITS What are the details? The indicators reported here for Madagascar are BUILDING A WAREHOUSE based on a set of specific procedures—the steps that a company must complete to legally build a warehouse—identified by Doing Business through Estimated cost of information collected from experts in construction MGA 49,937,712 construction : licensing, including architects, civil engineers, construction lawyers, construction firms, utility City : Antananarivo service providers and public officials who deal with building regulations. These procedures are those The procedures, along with the associated time and cost, that apply to a company and structure matching the are summarized below. standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Table 3.2 Summary of time, cost and procedures for dealing with construction permits in Madagascar Time to No. Procedure Cost to complete complete Obtain property registration certificates BuildCo must obtain two copies of all the property registration documents. 7 days MGA 4,000 1 Agency: Land Administration Department (Service des Domaines) * Obtain official topographical plan of the plot Five copies of the official topographical plan for the property with coordinates are needed. The cost of each copy is MGA 1,000 5 days MGA 5,000 2 Agency: Topographical Services (Service Topographique) * Request an alignment permit from the Commune of Antananarivo The alignment permit is a mandatory document to obtain a building permit. The request for this permit is made on a standard form and is submitted by the owner, in duplicate, to the City Council (Commune d’Antananarivo), along with proof of ownership. The planning officer will prepare a sketch of alignment and a report 3 (procès verbal) detailing the constraints of alignment with the road 1 day no charge allowances of the Master Plan (delimitation of the unbuildable portion). The file is then sent to the Régional de l’Aménagement du Territoire et de la Ville, which verifies that the file is in conformity with the rules of urban planning and the provisions of the Master Plan of the Commune. The file is then returned to the Town Hall. A receipt showing that the request was made will be given back to BuildCo and at the same time, an appointment date will be provided for the site visit with the owner and 2 inspectors.
Doing Business 2015 Madagascar 28 Time to No. Procedure Cost to complete complete Agency: Commune of Antananarivo Receive inspection from SRAT The inspection is carried out by the Provincial Service of Land (Développement Aménagement du Territoire, SRAT) and the land owner. These inspections are necessary to obtain SRAT’s approval of the building permit. In addition to the first inspection before the start of construction work, SRAT may carry out several other random 5 days no charge 4 inspections. Technical directives for construction work include, among other things, a check of the center line of the street, the street boundaries, blind walls, and openings in walls. Agency: SRAT (Provincial Service of Land) Obtain the alignment permit from the Commune of Antananarivo The Urban Commune checks the design plans and supporting documents to ensure that no documents are missing. 20 days MGA 60,000 5 Agency: Commune of Antananarivo Request and obtain the planning requirements from SRAT Once the alignment permit has been obtained, BuildCo must obtain the planning requirements (presciption d’urbanisme). This planning requirement document is obtained from the Service Regional de l'Amenagement du Territoire (SRAT) in one week. This document is necessary to show that the entrepreneur has the right to build on that land. The required documents are: 6 - Official plan of the land with laborde coordinates (1 copy) 7 days no charge - Certificate of legal status that is less than 3 months old (1 copy) - Duly complete form to request the prescription d'urbanisme obtained at the City Hall Analakely (1 copy) - Alignment authorization (issued by the CUA) - Alignment Sketch (issued by the CUA) Agency: Service Regional de l'Amenagement du Territoire (SRAT) Request and obtain building permit The building permit is now completed in 3 steps: 7 (i) obtain the alignment permit 45 days MGA 7,803,000 (ii) obtain the planning permission certificate Once these two steps are completed, BuildCo may now request the building permit and submit all necessary documents. Only completed
Doing Business 2015 Madagascar 29 Time to No. Procedure Cost to complete complete applications are accepted at the Commune Urbaine d'Antananarivo (CUA- one-stop shop). The cost is calculated based on the volume of the building before SPAT issues its opinion. The cost can vary from MGA 1,000.00 to MGA 2,000.00 per cubic meter. Documents to be provided are: - Alignment permit issued by the CUA - Official survey plan of the land with laborde coordinates obtained from the Topographic Service Anosy (1 copy) - Proof of ownership that is less than 3 months old (1 copy) - Alignment with prescription planning permission (1 copy) Documents for the applicant: - Technical data sheet completed and signed by architect (1 copy) - Certified copy of the ID (carte d’identite nationale) (1 copy) - 2 stamped and addressed envelopes - Pictures of the land and its surroundings - All required plans including the site plan with the septic tank location clearly marked Agency: Commune of Antananarivo Receive final inspection at the end of construction by SRAT The final inspection and approval by SRAT are required to obtain the certificate of occupancy. 1 day no charge 8 Agency: SRAT (Provincial Service of Land) Receive inspection by fire protection service 9 1 day no charge Agency: Fire Service (Pompiers) Obtain occupancy certificate 10 15 days no charge Agency: Commission * Apply for water connection 11 1 day no charge Agency: JIRAMA
Doing Business 2015 Madagascar 30 Time to No. Procedure Cost to complete complete JIRAMA inspects the building to prepare an estimate BuildCo receives the cost estimates 2 weeks after JIRAMA inspects the building and can pay them immediately and acquire the connection 12 one week later. 1 day no charge Agency: JIRAMA Obtain water connection The fee for water connection is around MGA 2.5 million. 13 21 days MGA 2,500,000 Agency: JIRAMA * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database.
Doing Business 2015 Madagascar 31 GETTING ELECTRICITY Access to reliable and affordable electricity is vital for WHAT THE GETTING ELECTRICITY businesses. To counter weak electricity supply, many firms in developing economies have to rely on self- INDICATORS MEASURE supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the first step for Procedures to obtain an electricity a customer is always to gain access by obtaining a connection (number) connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for a Completing all required notifications and local business to obtain a permanent electricity receiving all necessary inspections connection and supply for a standardized warehouse, as well as the time and cost to complete them. These Obtaining external installation works and procedures include applications and contracts with possibly purchasing material for these works electricity utilities, clearances from other agencies Concluding any necessary supply contract and and the external and final connection works. The obtaining final supply ranking of economies on the ease of getting electricity is determined by sorting their distance to Time required to complete each procedure frontier scores for getting electricity. These scores are (calendar days) the simple average of the distance to frontier scores Is at least 1 calendar day for each of the component indicators. To make the data comparable across economies, several Each procedure starts on a separate day assumptions are used. Does not include time spent gathering The warehouse: information Is owned by a local entrepreneur, located Reflects the time spent in practice, with little in the economy’s largest business city, in follow-up and no prior contact with officials an area where other warehouses are Cost required to complete each procedure located. For the 11 economies with a (% of income per capita) population of more than 100 million, data Official costs only, no bribes for a second city have been added. Excludes value added tax Is not in a special economic zone where the connection would be eligible for subsidization or faster service. Is to either the low-voltage or the medium- voltage distribution network and either Is located in an area with no physical overhead or underground, whichever is more constraints (ie. property not near a railway). common in the area where the warehouse is Is a new construction being connected to located. Included only negligible length in the electricity for the first time. customer’s private domain. Is 2 stories, both above ground, with a total Requires crossing of a 10-meter road but all surface of about 1,300.6 square meters the works are carried out in a public land, so (14,000 square feet), is built on a plot of there is no crossing into other people's 929 square meters (10,000 square feet), is private property. used for storage of refrigerated goods Involves installing one electricity meter. The The electricity connection: monthly electricity consumption will be 26880 kilowatt hour (kWh). The internal Is 150 meters long and is a 3-phase, 4-wire electrical wiring has been completed. Y, 140-kilovolt-ampere (kVA) (subscribed capacity) connection.
Doing Business 2015 Madagascar 32 GETTING ELECTRICITY Where does the economy stand today? What does it take to obtain a new electricity connection Most indicator sets refer to a case scenario in the largest in Madagascar? According to data collected by Doing business city of an economy, except for 11 economies for Business, getting electricity there requires 6.0 procedures, which the data are a population-weighted average of the takes 450.0 days and costs 8583.3% of income per capita 2 largest business cities. See the chapter on distance to (figure 4.1). frontier and ease of doing business ranking at the end of this profile for more details. Figure 4.1 What it takes to obtain an electricity connection in Madagascar Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
Doing Business 2015 Madagascar 33 GETTING ELECTRICITY Globally, Madagascar stands at 189 in the ranking of 189 average ranking provide another perspective in assessing economies on the ease of getting electricity (figure 4.2). how easy it is for an entrepreneur in Madagascar to The rankings for comparator economies and the regional connect a warehouse to electricity. Figure 4.2 How Madagascar and comparator economies rank on the ease of getting electricity Source: Doing Business database.
Doing Business 2015 Madagascar 34 GETTING ELECTRICITY What are the details? The indicators reported here for Madagascar are based OBTAINING AN ELECTRICITY CONNECTION on a set of specific procedures—the steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution utility— Jiro sy rano malagasy Name of utility: identified by Doing Business. Data are collected from the (JIRAMA) distribution utility, then completed and verified by electricity regulatory agencies and independent City: Antananarivo professionals such as electrical engineers, electrical The procedures are those that apply to a warehouse and contractors and construction companies. The electricity electricity connection matching the standard distribution utility surveyed is the one serving the area assumptions used by Doing Business in collecting the (or areas) in which warehouses are located. If there is a data (see the section in this chapter on what the choice of distribution utilities, the one serving the largest indicators cover). The procedures, along with the number of customers is selected. associated time and cost, are summarized below. Table 4.2 Summary of time, cost and procedures for getting electricity in Madagascar Time to No. Procedure Cost to complete complete The client applies for electricity connection and awaits estimate of connection fees from Jiro sy rano malagasy (JIRAMA) The application can be submitted by mail, letter, or in person at one of the utility’s agencies. The client will need to attach some documents to the application, with the client’s personal and professional details, a 15 calendar days MGA 0 1 description of the works and of the electrical installation, as well as a notarized Signing Authority (“pouvoir de signature”). Agency: Jiro sy rano malagasy (JIRAMA) * The client obtains external inspection by Jiro sy rano malagasy (JIRAMA) When the utility has received the application, it inspects the client’s site to determine the specifics of the connection and prepare an estimate of 1 calendar day MGA 0 2 the connection fees. Agency: Jiro sy rano malagasy (JIRAMA) The client obtains right of way from the local authority (Commune) The customer needs to obtain a right of way from the 'Commune' before paying the estimate so that the utility can carry out the external works of 50 calendar days MGA 60,000 3 expanding the overhead network. Agency: Local authority (Commune)
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