Economy Profile 2015 Doing Business 2015
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Doing Business 2015 Bhutan
Economy Profile 2015
Bhutan
Doing Business 2015 Bhutan 2
© 2014 The International Bank for Reconstruction and Development /
The World Bank
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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 Bhutan 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 6 Starting a business ..................................................................................................................... 16 Dealing with construction permits ........................................................................................... 24 Getting electricity ....................................................................................................................... 32 Registering property .................................................................................................................. 37 Getting credit .............................................................................................................................. 42 Protecting minority investors ................................................................................................... 49 Paying taxes ................................................................................................................................ 59 Trading across borders .............................................................................................................. 62 Enforcing contracts .................................................................................................................... 66 Resolving insolvency .................................................................................................................. 73 Labor market regulation ........................................................................................................... 74 Distance to frontier and ease of doing business ranking ...................................................... 82 Resources on the Doing Business website .............................................................................. 85
Doing Business 2015 Bhutan 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 Bhutan. To allow useful comparison, it also information on ordering Doing Business 2015, are
provides data for other selected economies (comparator available on the Doing Business website at
economies) for each indicator. The data in this report are http://www.doingbusiness.org.
current as of JuneDoing Business 2015 Bhutan 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 Bhutan 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: South Asia
based on indicator sets that measure and benchmark
regulations applying to domestic small to medium-size Income category: Lower middle income
businesses through their life cycle. Economies are ranked
from 1 to 189 by the ease of doing business ranking. This Population: 753,947
year's report presents results for 2 aggregate measures:
the distance to frontier score and the ease of doing GNI per capita (US$): 2,460
business ranking. The ranking of economies is determined
by sorting the aggregate distance to frontier (DTF) scores. DB2015 rank: 125
The distance to frontier score benchmarks economies
with respect to regulatory practice, showing the absolute DB2014 rank: 122*
distance to the best performance in each Doing Business
Change in rank: -3
indicator. An economy’s distance to frontier score is
indicated on a scale from 0 to 100, where 0 represents the
DB 2015 DTF: 57.47
worst performance and 100 the frontier. (See the chapter
on the distance to frontier and ease of doing business). DB 2014 DTF: 57.53
The 10 topics included in the ranking in Doing Business
2015: starting a business, dealing with construction Change in DTF: -0.06
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 Bhutan
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 Bhutan 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 Bhutan 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 Bhutan 9 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Bhutan (Scale: Rank 189 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - Bhutan (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 Bhutan 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 Bhutan 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 Bhutan 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 Bhutan
Best performer globally
Maldives DB2015
Thailand DB2015
Pakistan DB2015
Bhutan DB2015
Bhutan DB2014
Indicator
Nepal DB2015
China DB2015
India DB2015
DB2015
Starting a Business
92 106 128 158 50 104 116 75 New Zealand (1)
(rank)
Starting a Business (DTF
85.01 81.16 77.43 68.42 91.07 83.01 80.92 87.98 New Zealand (99.96)
Score)
Procedures (number) 8.0 8.0 11.0 11.9 5.0 7.0 10.0 4.0 New Zealand (1.0)*
Time (days) 17.0 32.0 31.4 28.4 9.0 17.0 19.0 27.5 New Zealand (0.5)
Cost (% of income per
4.4 5.0 0.9 12.2 6.2 32.2 9.6 6.6 Slovenia (0.0)
capita)
Paid-in min. capital (%
0.0 0.0 0.0 111.2 2.3 0.0 0.0 0.0 112 Economies (0.0)*
of income per capita)
Dealing with
Hong Kong SAR,
Construction Permits 131 131 179 184 24 91 125 6
China (1)
(rank)
Dealing with
Hong Kong SAR,
Construction Permits 64.51 64.18 43.75 30.89 83.45 71.83 66.07 88.77
China (95.53)
(DTF Score)Doing Business 2015 Bhutan 12
Best performer globally
Maldives DB2015
Thailand DB2015
Pakistan DB2015
Bhutan DB2015
Bhutan DB2014
Indicator
Nepal DB2015
China DB2015
India DB2015
DB2015
Hong Kong SAR,
Procedures (number) 21.0 21.0 22.0 25.4 9.0 10.0 10.0 7.0
China (5.0)
Time (days) 150.0 150.0 244.3 185.9 140.0 86.0 249.4 113.0 Singapore (26.0)
Cost (% of warehouse
1.3 1.5 7.6 28.2 0.2 9.4 3.5 0.1 Qatar (0.0)*
value)
Getting Electricity
72 71 124 137 108 85 146 12 Korea, Rep. (1)
(rank)
Getting Electricity (DTF
78.28 76.76 66.35 63.06 71.14 76.07 60.10 91.71 Korea, Rep. (99.83)
Score)
Procedures (number) 5.0 5.0 5.5 7.0 6.0 5.0 5.0 4.0 12 Economies (3.0)*
Time (days) 74.0 82.0 143.2 105.7 91.0 70.0 178.3 35.0 Korea, Rep. (18.0)*
Cost (% of income per
606.5 693.1 459.4 487.7 391.5 1,284.9 1,353.3 66.1 Japan (0.0)
capita)
Registering Property
86 86 37 121 169 27 114 28 Georgia (1)
(rank)
Registering Property
68.82 68.82 80.67 60.40 43.85 83.08 61.48 83.04 Georgia (99.88)
(DTF Score)
Procedures (number) 3.0 3.0 4.0 7.0 6.0 3.0 6.0 2.0 4 Economies (1.0)*
Time (days) 92.0 92.0 19.4 47.0 57.0 5.0 50.0 2.0 3 Economies (1.0)*
Cost (% of property
5.0 5.0 3.6 7.0 16.2 4.8 7.6 6.3 4 Economies (0.0)*
value)
Getting Credit (rank) 71 67 71 36 116 116 131 89 New Zealand (1)
Getting Credit (DTF
50.00 50.00 50.00 65.00 35.00 35.00 30.00 45.00 New Zealand (100)
Score)
Strength of legal rights
4 4 4 6 2 7 3 3 3 Economies (12)*
index (0-12)Doing Business 2015 Bhutan 13
Best performer globally
Maldives DB2015
Thailand DB2015
Pakistan DB2015
Bhutan DB2015
Bhutan DB2014
Indicator
Nepal DB2015
China DB2015
India DB2015
DB2015
Depth of credit
6 6 6 7 5 0 3 6 23 Economies (8)*
information index (0-8)
Credit registry coverage
0.0 15.6 33.2 0.0 17.3 0.0 7.3 0.0 Portugal (100.0)
(% of adults)
Credit bureau coverage
18.0 0.0 0.0 22.4 0.0 1.0 4.5 52.7 23 Economies (100.0)*
(% of adults)
Protecting Minority
104 100 132 7 135 71 21 25 New Zealand (1)
Investors (rank)
Protecting Minority
50.00 50.00 45.00 72.50 44.17 56.67 66.67 65.83 New Zealand (81.67)
Investors (DTF Score)
Extent of conflict of
interest regulation 4.0 4.0 5.0 6.7 5.3 5.3 6.0 7.7 Singapore (9.3)*
index (0-10)
Extent of shareholder
governance index (0- 6.0 6.0 4.0 7.8 3.5 6.0 7.3 5.5 France (7.8)*
10)
Strength of minority
investor protection 5.0 5.0 4.5 7.3 4.4 5.7 6.7 6.6 New Zealand (8.2)
index (0-10)
United Arab Emirates
Paying Taxes (rank) 86 83 120 156 134 126 172 62
(1)*
Paying Taxes (DTF United Arab Emirates
73.55 73.55 67.44 55.53 63.76 66.52 44.46 77.99
Score) (99.44)*
Payments (number per Hong Kong SAR,
19.0 19.0 7.0 33.0 30.0 34.0 47.0 22.0
year) China (3.0)*
Time (hours per year) 274.0 274.0 261.0 243.0 413.0 334.0 594.0 264.0 Luxembourg (55.0)
Trading Across Borders
165 166 98 126 132 171 108 36 Singapore (1)
(rank)
Trading Across Borders 43.10 40.77 71.68 65.47 63.63 36.08 69.05 83.57 Singapore (96.47)Doing Business 2015 Bhutan 14
Best performer globally
Maldives DB2015
Thailand DB2015
Pakistan DB2015
Bhutan DB2015
Bhutan DB2014
Indicator
Nepal DB2015
China DB2015
India DB2015
DB2015
(DTF Score)
Documents to export
9 9 8 7 7 11 8 5 Ireland (2)*
(number)
Time to export (days) 38.0 38.0 21.0 17.1 21.0 40.0 20.7 14.0 5 Economies (6.0)*
Cost to export (US$ per
2,230.0 2,230.0 823.0 1,332.0 1,625.0 2,545.0 765.0 595.0 Timor-Leste (410.0)
container)
Cost to export (deflated
2,230.0 2,577.0 823.0 1,332.0 1,625.0 2,545.0 765.0 595.0
US$ per container)
Documents to import
11 11 5 10 9 11 8 5 Ireland (2)*
(number)
Time to import (days) 37.0 37.0 24.0 21.1 22.0 39.0 18.4 13.0 Singapore (4.0)
Cost to import (US$ per
2,330.0 2,330.0 800.0 1,462.0 1,610.0 2,650.0 1,005.0 760.0 Singapore (440.0)
container)
Cost to import (deflated
2,330.0 2,692.6 800.0 1,462.0 1,610.0 2,650.0 1,005.0 760.0
US$ per container)
Enforcing Contracts
74 25 35 186 91 134 161 25 Singapore (1)
(rank)
Enforcing Contracts
61.42 70.05 68.21 25.81 58.13 49.65 41.53 70.05 Singapore (89.54)
(DTF Score)
Time (days) 225.0 225.0 452.8 1,420.0 665.0 910.0 993.1 440.0 Singapore (150.0)
Cost (% of claim) 23.1 0.1 16.2 39.6 16.5 26.8 23.0 15.0 Iceland (9.0)
Procedures (number) 47.0 47.0 37.0 46.0 41.0 39.0 46.0 36.0 Singapore (21.0)*
Resolving Insolvency
189 189 53 137 135 82 78 45 Finland (1)
(rank)
Resolving Insolvency
0.00 0.00 55.31 32.60 33.12 45.41 46.18 58.73 Finland (93.85)
(DTF Score)Doing Business 2015 Bhutan 15
Best performer globally
Maldives DB2015
Thailand DB2015
Pakistan DB2015
Bhutan DB2015
Bhutan DB2014
Indicator
Nepal DB2015
China DB2015
India DB2015
DB2015
no no
Time (years) 1.7 4.3 1.5 2.0 2.7 2.7 Ireland (0.4)
practice practice
no no
Cost (% of estate) 22.0 9.0 4.0 9.0 5.6 36.0 Norway (1.0)
practice practice
Outcome (0 as
no no
piecemeal sale and 1 as 0 0 0 0 0 1
practice practice
going concern)
Recovery rate (cents on
0.0 0.0 36.0 25.7 49.9 43.7 39.4 42.3 Japan (92.9)
the dollar)
Strength of insolvency no no
11.5 6.0 2.0 7.0 8.0 11.5 5 Economies (15.0)*
framework index (0-16) practice 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 Bhutan 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 Bhutan 17 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Bhutan? 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 8.0 procedures, takes 17.0 days, average of the 2 largest business cities. See the chapter costs 4.4% 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 Bhutan 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 Bhutan 18 STARTING A BUSINESS Globally, Bhutan stands at 92 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 Bhutan to The rankings for comparator economies and the regional start a business. Figure 2.2 How Bhutan and comparator economies rank on the ease of starting a business Source: Doing Business database.
Doing Business 2015 Bhutan 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 Bhutan (table 2.1)?
Table 2.1 How has Bhutan made starting a business easier—or not?
By Doing Business report year from DB2010 to DB2015
DB year Reform
Bhutan eased the process of starting a business by making its
DB2012 criminal records search electronic and making the rubber
company stamps available on the local market.
Bhutan made starting a business easier by reducing the time
DB2014
required to obtain the security clearance certificate.
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 Bhutan 20
STARTING A BUSINESS
What are the details?
Underlying the indicators shown in this chapter for
STANDARDIZED COMPANY
Bhutan is a set of specific procedures—the
bureaucratic and legal steps that an entrepreneur
must complete to incorporate and register a new Legal form: Limited Liability Company
firm. These are identified by Doing Business through
collaboration with relevant local professionals and Paid in minimum capital requirement: BTN 0
the study of laws, regulations and publicly available City: Thimphu
information on business entry in that economy.
Following is a detailed summary of those procedures, Start-up Capital: 10 times GNI per capita
along with the associated time and cost. These
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 Bhutan
Time to
No. Procedure Cost to complete
complete
Obtain a Security Clearance Certificate (SCC) from the Royal
Bhutan Police
In June 2011, The Ministry of Home and Cultural Affairs launched the
Security Clearance Service: an online system to issue Security Clearance
Certificates (SCC). The system was developed in coordination with the
Department of Information Technology and Telecom at the Ministry of 3 days no charge
1
Industry and Commerce in response to the directives issued by the
Bhutan Cabinet on March 27, 2009. The security clearance certificate is
valid for one year.
Agency: Royal Bhutan Police
Submit project proposal to the Regional Trade and Industry Office
An application form along with the project proposal is submitted to the
Industrial Department Division (IDD) of the Ministry of Economic Affairs.
In the case of small and cottage-scale companies with startup capital of
up to BTN 10 million, the Regional Trade & Industry Office of the
Department of Cottage and Small Industries reviews the project 4 days
2 proposal. Approval is required to verify that the proposed industrial BTN 600
project is in line with industrial development plans of the country, and
for issuance of the industrial license.
If sector clearance is required, the Department of Industry sends a letter
to the relevant sectors requesting such clearance for the proposed
project. However, for a list of 17 ""delegated"" activities, medium and
large scale industries receive environmental clearance from theDoing Business 2015 Bhutan 21
Time to
No. Procedure Cost to complete
complete
Environmental Unit under the Department of Industry, while small and
cottage scale industries receive environmental clearance from the
Regional Trade & Industry Offices. Otherwise, environmental clearance
shall be obtained from the National Environment Commission (NEC)
Secretariat. Similarly, there are 42 industrial activities that do not require
location clearance; otherwise, location clearance must be obtained from
the concerned Dzongkhag/Thromde if the activity is not in the location
clearance exempted list.
Agency: Regional Trade and Industry Office
Register at the Office of the Registrar
Company registration is subject to the Companies Act of the Kingdom
of Bhutan 2000. Upon applying for registration, the entrepreneur must
present his/her original citizenship identity card and submit the
following documents to the Companies Registry Division, Department
of Industry:
1. Articles of Incorporation
2. Company name clearance form
3. Consent to act as Directors of the company form
4. Declaration of compliance form signed by the company directors
5. Sectoral clearance from the concerned sectors if applicable
6. Name and Address of the first Chief Executive Officer of the company
7. Security Clearance Certificates of company directors
The company receives its certificate of incorporation. Once the 3 days BTN 1500
3
documents are processed, the Registrar of Companies issues the
certificate of registration. The registered company may choose to
publish a notice in the Kuensel weekly newspaper announcing its
registration.
According to Schedule 4 of the Companies Act of the Kingdom of
Bhutan, registration fees are as follows:
- For an authorized share capital up to BTN 1 million: BTN 1,000
- For an authorized share capital between BTN 1 million and BTN 2
million: BTN 1,500
- For authorized share capital above BTN 2 million: BTN 2,000
Agency: Company Registry Division - Ministry of Economic Affairs
Obtain a business license from the Regional Trade and Industry
Office of the Ministry of Economic Affairs
To apply for the license, the following documents must be submitted:
4 1- Application Form for Industrial License (Form III) 2 days BTN 3,100
2- Citizenship ID Card
3- Sector Clearance (depending on activity)
4- Location Clearance obtained from the Thimphu City Corporation
(Dzongkhag or Thromde)Doing Business 2015 Bhutan 22
Time to
No. Procedure Cost to complete
complete
5- Valid Security Clearance Certificate
6- Two recent passport size photographs
7- Project Approval from the Department of Cottage & Small Industry
for cottage and small industries and from the Department of industry
for medium and large scale industries.
License fees are as follows:
- For cottage scale industries: BTN 1,600
- For small scale industries: BTN 3,100
- For medium scale industries: BTN 6,100
- For large scale industries: BTN 12,100
Since July 1, 2005, applications forms for trade and industrial licenses
can be downloaded from the Ministry of Trade and Industry’s website
(www.moea.gov.bt). Photocopies of application forms are accepted.
Agency: Regional Trade and Industry Office
Register for taxes and obtain the Business Identifier Code (BIC)
Number
Every company must register for corporate income tax. A Business
Identification Code (BIC) is then assigned to the company. This BIC 2 days on average no charge
5
number must be presented to participate in public tenders and works.
Agency: Department of Revenue and Customs, Ministry of Finance
Make a company seal
Companies must have a seal within 1 year of incorporation. This is
verified by the Registrar during the annual inspection. Between BTN 500
6 1 day
and BTN 1,200
Agency: Seal maker
* Open a bank account
Under the Company Act 2000, a company bank account must be 1 day
opened within a month of incorporation. (simultaneously
7 no charge
with previous
Agency: Bank procedure)
* File proof of opening a company bank account at the Office of
the Registrar
1 day
All business founders must file proof of opening a company bank (simultaneously
8 no charge
account at the Office of the Registrar. with previous
procedure)
Agency: Company Registry Division - Ministry of Economic AffairsDoing Business 2015 Bhutan 23
Time to
No. Procedure Cost to complete
complete
* 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 Bhutan 24
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 Bhutan 25 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to build an economy, except for 11 economies for which the data a warehouse in Bhutan? According to data collected by are a population-weighted average of the 2 largest Doing Business, dealing with construction permits there business cities. See the chapter on distance to frontier requires 21.0 procedures, takes 150.0 days and costs and ease of doing business ranking at the end of this 1.3% of the warehouse value (figure 3.1). Most indicator profile for more details. sets refer to a case scenario in the largest business city of Figure 3.1 What it takes to comply with formalities to build a warehouse in Bhutan 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 Bhutan 26 DEALING WITH CONSTRUCTION PERMITS Globally, Bhutan stands at 131 in the ranking of 189 economies and the regional average ranking provide economies on the ease of dealing with construction other useful information for assessing how easy it is for permits (figure 3.2). The rankings for comparator an entrepreneur in Bhutan to legally build a warehouse. Figure 3.2 How Bhutan and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database.
Doing Business 2015 Bhutan 27
DEALING WITH CONSTRUCTION PERMITS
What are the details?
The indicators reported here for Bhutan are based on
BUILDING A WAREHOUSE
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 BTN 6,886,123
construction :
licensing, including architects, civil engineers,
construction lawyers, construction firms, utility
City : Thimphu
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 Bhutan
Time to
No. Procedure Cost to complete
complete
Request and obtain an official site plan
After a fee is paid, the official site plan is obtained from the survey
section of the City Corporation. 5 days BTN 100
1
Agency: Thimphu Thromde
Purchase building construction application form
BuildCo must purchase the building construction application form from
the revenue section of the City Corporation.
Fee schedule for building construction application:
2 • Application form: BTN 100.00 1 day BTN 600
• Legal service fee (if required): BTN 500.00
Agency: Thimphu Thromde
Submit form to the City Corporation - Architecture Section
During stage 1 of the approval process, the company must submit a
duly completed form to the architecture section of the Thimphu
Thromde (City Corporation), along with the drawing(s), the ownership
certificate, and an official site plan.
3 During stage 2 the architecture section will undergo a planning check 90 days no charge
with the structural, electrical, sewerage, and water supply sections.
Although this is an internal process carried out by the City Corporation,
not the company, BuildCo must follow up to ensure progress.
During stage 3, the architecture section submits the proposal to the
Executive Secretary of the Thimphu Thromde with recommendations
and findings for final approval. As with stage 2, BuildCo must follow upDoing Business 2015 Bhutan 28
Time to
No. Procedure Cost to complete
complete
on the progress of this internal process.
Agency: Thimphu Thromde (Architecture Section)
Obtain construction permit and request pre-construction
inspection from the City Corporation
BuildCo must pick up its construction permit. A preconstruction site
inspection must be requested in writing.
The fee schedule for the preconstruction inspection is as follows:
• Amenities fee:
1. Residential and institutional building: BTN 30.00 per sq. m. 1 day BTN 86,022
4
2. Commercial and industrial building: BTN 50.00 per sq. m.
• Scrutiny fee: BTN 3,000.00 or BTN 16.14 per sq. m. (the greater of).
Upon starting construction, the company notifies the City Corporation
in writing.
Agency: Thimphu Thromde
Receive pre-construction inspection
Upon BuildCo’s request to the City Corporation’s building section, the
building inspector conducts a site inspection. Afterwards, routine
inspections occur every 3 weeks. If the work is not conducted according
to plan, the City Corporation issues a notice to rectify the process. If the
company does not comply with the first notice, the utility company 1 day no charge
5
disconnects service. If the company does not comply with the third
notice, the structure will be demolished (in the presence of a building
inspector, engineer, architect, surveyor, and police personnel).
Agency: Thimphu Thromde (Building Section)
* Request water connection and inspection
To obtain a water connection, BuildCo must submit an application to
the building section of the City Corporation and pay a connection fee
of BTN 3,200.00 for a 1.5 inch pipe to the revenue section of the water 1 day BTN 3,200
6
company.
Agency: Thimphu Thromde
Receive inspection of water connection
All connections must be verified in advance to check whether they 1 day no charge
7
comply with water and sanitation rules. The wait time is about 7 -- 9
days.Doing Business 2015 Bhutan 29
Time to
No. Procedure Cost to complete
complete
Agency: Thimphu Thromde (Building Section)
Connect to water services
8 10 days no charge
Agency: Thimphu Thromde
Receive excavation work inspection
Excavation work is inspected about 3 weeks after the previous
inspection. Thus, Buildco does not have to request an inspection.
Moreover, BuildCo does not need to stop work during inspection. 1 day no charge
9
However, it must provide the inspector with transportation to the site.
Agency: Thimphu Thromde
Receive foundation work inspection
Foundation work is inspected about 3 weeks after the previous
inspection. Thus, BuildCo does not have to request an inspection.
Moreover, BuildCo does not need to stop work during the inspection. 1 day no charge
10
However, it must provide the inspector with transportation to the site.
Agency: Thimphu Thromde
Receive concrete work inspection
Concrete work is inspected about 3 weeks after the previous inspection.
Thus, BuildCo does not have to request an inspection. Moreover,
BuildCo does not need to stop work during the inspection. However, it 1 day no charge
11
must provide the inspector with transportation to the site.
Agency: Thimphu Thromde
Receive drainage inspection
Drainage work is inspected about 3 weeks after the previous inspection.
Thus, BuildCo does not have to request an inspection. Moreover,
BuildCo Company does not need to stop work during the inspection. 1 day no charge
12
However, it must provide the inspector with transportation to the site.
Agency: Thimphu ThromdeDoing Business 2015 Bhutan 30
Time to
No. Procedure Cost to complete
complete
Receive timber scaffolding inspection
Timber scaffolding is inspected about 3 weeks after the previous
inspection. Thus, BuildCo does not have to request an inspection.
Moreover, BuildCo does not need to stop work during the inspection. 1 day no charge
13
However, it must provide the inspector with transportation to the site.
Agency: Thimphu Thromde
Receive sanitary inspection
Sanitary conditions are inspected about 3 weeks after the previous
inspection. Thus, BuildCo does not have to request an inspection.
Moreover, BuildCo does not need to stop work during the inspection. 1 day no charge
14
However, it must provide the inspector with transportation to the site.
Agency: Thimphu Thromde
Receive fire inspection
Fire conditions are inspected about 3 weeks after the previous
inspection. Thus, BuildCo does not have to request an inspection.
Moreover, BuildCo does not need to stop work during the inspection. 1 day no charge
15
However, it must provide the inspector with transportation to the site.
Agency: Thimphu Thromde
Receive structure inspection
16 1 day no charge
Agency: Thimphu Thromde
Receive inspection of the building surroundings
17 1 day no charge
Agency: Thimphu Thromde
Connect to sewage services
To obtain sewage services, BuildCo submits an application to the
sewerage section of the City Corporation with a copy of the plan and a
18 connection fee of BTN 3,000. The connection is made in about 2 weeks. 15 days BTN 3,000
Agency: Thimphu Thromde (Sewerage Section)Doing Business 2015 Bhutan 31
Time to
No. Procedure Cost to complete
complete
Notify building controller of building completion
A written confirmation, stating that construction is completed, is issued
to the building controller. 1 day no charge
19
Agency: Thimphu Thromde (Building Section)
Receive final inspection
When the construction (including utility connections) is completed,
BuildCo must notify the City Corporation. Subsequently, the site will be
inspected by a team (architect, engineer, surveyor, the Corporation’s
building inspector, and representatives of electrical, plumbing, and
sanitation agencies). The environmental commission and the telephone
company are also informed and asked to join the team, if necessary. If 1 day no charge
20
the team deems that the construction has been completed according
to the agreed standard and plans, it recommends the issuance of an
occupancy certificate. Otherwise, they ask BuildCo to remedy the
deficiencies.
Agency: Thimphu Thromde
Request and obtain occupancy certificate
21 14 days no charge
Agency: Thimphu Thromde
* 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 Bhutan 32
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.You can also read
