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IBC SWAZILAND - Business Licensing in Mauritius 30052012

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    Improving the BusinessClimate in Swaziland

    Senior Expert ARCA ConsortiumSenior Expert ARCA Consortium

    [email protected]@gmail.com

    Session 4:Business Licensing: How to Overcome the Obstacle Race

    Business LicensingThe Case of Mauritius

    Wednesday 30 May 2012

    Royal Swazi, Swaziland

    mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]
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    2

    FIAS Investment climate survey in2005

    Manager interviews in 285 firms (2005)

    Worker interviews with 927 individuals (2005)

    Complemented by Investment Climate data from 31 other countries, DoingBusinessindicators, World Development Report, Mauritius CSO

    SizeSmall 42%

    Medium 22%

    Large 35%

    Constraints to Business

    Year operationsbegan in Mauritius

    1994-2004 23%

    1984-1995 34%

    1974-1985 15%

    1964-1984 12%

    Before 1964 11%

    EPZYes 20%

    No 59%

    Ownership

    Foreign 11%

    Domestic 85%

    Exporter

    Yes 37%

    No 40%

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    3

    Managers ranked top constraints

    Source: Investment Climate survey, 2005

    0% 10% 20% 30% 40% 50%

    TelecommunicationsCertifications (e.g. ISO) & Int'l Standards

    Sanitary, Hygiene, Security, Fire regulationsEnvironmental Regulations

    ElectricityTransportation

    Foreign Exchange regulationsTax administration

    Access to landCustoms and trade regulations

    Legal framework/conflict resolutionRegulatory policy uncertainty

    Crime, theft and disorderPrice controls & inflations

    Tax ratesLabor regulationsAccess to Finance

    CorruptionAnti-competitive or informal practices

    Macroeconomic instabilitySkills and education of available workersProcedures to start a new business

    Business licensing and operating permitsCost of financing

    Percent of managers ranking each a constraint

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    4

    Firm perspective of most importantconstraints

    Top 5 perceivedconstraints:

    Finance

    Red tape

    Worker skills

    Macro

    Corruption

    0% 10% 20% 30% 40% 50%

    Access to finance

    Corruption

    Informal practices

    Macro instability

    ills and education of workers

    rocedures to start a business

    siness licensing and permits

    Cost of finance

    Percent of firms ranking each item a constraint

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    Step 1Listing all existing businesslicenses

    Step 2Mapping each business licenseprocess

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    Business Licensing @ 2005 inMauritius, before the reforms

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    License to Kill (business)

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    P ub l i c I n f ra s t ru c t ur e ,

    L a n d T r a n s p o r t &S hi p p i n g , 7

    T ou r i s m , L e i s u r e a n d

    E xt er n a l

    C o m m u n i c a t io n s , 4 5

    L ab o u r, I ,

    P MO , 1 1 W o m e n s R i g h t s, 4

    I T &

    T e le c o m m u n i c a t io n ,

    1 0 0

    H e a l t h a n d Q u a l i t yo f

    L i f e, 3 8

    H ou s i n g a n d L a n d s , 2

    I n d u s t ry , 1 1

    F o r e i g n A f f ai r s , ,

    3

    F in a n c e a n d E co n o m i c

    D e v e l o p m e n t ,9 0

    E nv i r o n m e n t a n d

    N a t io n a l D e v e l o p m e n

    U n i t ,7 9

    A r t s & C u l t ur e , 4

    A g r o In d u s t ry &

    F i sh er i es , 49

    E du c a t io n a n d H u m a n

    R es o u r ce s , 2 4

    P ub l i c U t il i t ie s , 6

    L o c a l G o v e r n m e n t ,3

    S oc i a l S ec u r i t y, , 5

    RegulatoryBodies: 65

    - 487 licences

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    Step 3Setting the business licensingreform principles and agenda

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    Business Climate Reforms in MauritiusFundamental Principles

    Eliminate incentive-based investment schemes or special regimes (eg. EPZ) Tax and

    fiscal policies reforms

    Eliminate obsolete or useless permits, licences or other clearances

    Repeal and abolish outdated or inadapted laws and policies

    Relinquish ministerial discretionary powers as far possible: rule-based system

    Immigration policies Work and Residence permits policies

    Property acquisition by non-citizens policies

    Building and Development permits policies

    Environmental Impact permit policies

    Application of the Move data, not people principle Computerisation & Automation

    Application of the ex-post control principle Allow to start and then check for compliance

    Application of the Self-adherence to Guidelines principle Onus on the business operator to

    comply to rules & regulations

    Application of the Silent Agreement principle Onus on public officers to deliver on time

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    Step 4Implement the

    business licensingreform agenda

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    A New Business LicensingEnvironment

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    Work PermitResidence Permit Ministry of LabourPrime Ministers Off Merged into oneOccupation Permit Passport &Immigration Officethru BOI

    Building PermitDevelopment Permit

    Local AuthorityLocal Authority

    Merged into oneBuilding & Land UsePermit

    Local Authority

    Trade License Local Authority Abolished & replacedby a trade fee

    Investment Certificates(23)

    Board of Investment 21 abolished; investment registrationMove from an approval system to a

    registration systemBusiness Visa Immigration From return ticket

    date to std 2 weeksImmigration

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    Board of Investment Investment PromotionAct

    The BOI shall act as the single interface with all investors and liaise with

    relevant authorities for the granting of permits Any registered investor or self-employed person may request the Board

    of Investment to provide assistance, support, coordination andcooperation with public sector agencies to facilitate and implement hisproject or business.

    The Board of Investment

    may give such directions as may be required to expedite the processing of

    applications, to relevant public sector agencies in accordance with relevant

    guidelines;

    shall ensure that any application made for a permit or authorisation isprocessed within the time limit set by the public sector agency;

    may convene committees and meetings with public sector agencies to

    facilitate and coordinate the implementation of projects by registered

    investors

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    Business LicensingBest Practices

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    Business Licensing Good business licensing is a means to fulfill

    legimate regulatory purposes, for example: To safeguard public interest: health and safety

    To protect the environment

    To protect the country: National security To protect limited resources

    Business licensing should not be used to managecompetition in the economy or to generate revenue

    Reduce transparency and increase opportunities for

    corruption

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    Licensing: A balancing act

    A bad licensing regime can be: a serious constraint to business and private sector

    development

    a severe factor undermining a countrys overall

    competitiveness and attractiveness

    The challenge is to strike the right balance inbusiness licensing:

    What to license? Why license?

    How to license?

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    Business Licensing ReformProcess

    List all existing licences, permits, clearances

    For each one: Identify the name of the license or permit

    Determine the licensing agency or authority

    Map the overall licensing process

    Determine the requirements: inputs, frequency, time taken, cost

    Test each license against the following criteria: Is the license legal? What is the corresponding legislation?

    Does it advance an appropriate envvironmental, health or safety

    objective? What is the real purpose of the license? Why does it exist?

    Is this license the most efficient way to achieve the required objective orpurpose?

    Can time limits be imposed for government responses?

    Can the silence is consent rule be applied?

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    Reform approach

    Determine which licenses can be eliminated /cancelled / abolished at the very outset

    For the remaining ones, determine whichlicenses can be amalgamated with other licenses

    Finally for each remaining license: Review,

    Reengineer, Simplify and Computerise (wherepossible) the licensing process

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    Online License Catalogs (E-registries)

    A license catalog is a comprehensive list of all

    licenses in effect. Comprehensive license catalogs include vital

    information on each license, including:

    The law that makes the license legal The activities the license applies to

    The documents one must complete to acquire the license

    The location where one may apply for the license

    Costs associated with the license The maximum number of days for processing of license

    applications.

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    Benefits of Online license catalogs: e-registries Increased regulatory transparency.

    E-registries ensure that entrepreneurs caneasily identify thelicenses they are required to obtain, the documents they must

    submit to obtain them, and the costs they must pay for them.

    They also reduce opportunities for corruption, as they clearly

    indicate the fees and documents that authorities may legally ask

    entrepreneurs to submit. Creation of a platform for future licensing reform

    The act of cataloguing licenses and licensing procedures in a single

    registry exposes redundant licenses as well as sources of red tape,

    such as unnecessarily burdensome demands for document

    submissions.

    The e-registry itself may thus serve as a point of departure for

    further reformsand a visible way to chart progress of reforms

    already underway.

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    Legal considerations Is the purpose of the law clearly stated?

    Does the law state who is subject to it (e.g., Businesses, physical

    persons)? Does the law contain all necessary definitions (e.g., definitions of

    license, licensing, licensing bodies, violation, etc.)?

    Does the law state the objectives of licensing (e.g., a limited list oflegitimate regulatory purposes)?

    Does the law provide an exhaustive list of documents required for eachlicense?

    Does the law specify limits for the amount of time agencies may take toprocess applications?

    Does the law establish the silence is consent principle? Does the law clearly indicate the cost of each license?

    What are the rights and duties of the licensing authorities?

    What are the rights and duties of an applicant?

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    Legal Reforms

    Do we need to make legislative changes to achieveour reform purposes, or can we achieve them viaother means? (e.g., changes to administrativeprocedures within the scope of current laws)

    If legal changes are necessary, can we amendcurrent laws or do we need to create new ones?

    If we must amend old laws, what specific

    amendments must we make? If we will write a newlaw, what should its components be?

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    One-Stop Shop A One-Stop-Shop (OSS) is a single location

    physical or virtual where entrepreneurs caneasily complete business formalities.

    Important to consider whether to set up a one-

    stop shop or not If yes, then need to determine:

    the type of OSS which would be more appropriate

    where to set up the OSS

    Whether a specific legal framework (or legal

    amendment) is required to empower the OSS

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    One OSS as Single ApplicationPoint This type of OSS serves as the governments singleapplication point for all licenses or as the single applicationpoint for all business formalities.

    Applicant submits application at OSS

    OSS forwards applications to licensing bodies for review

    Licensing bodies return approvals to OSS (or send directly to applicants)

    OSS returns approvals to applicants.

    The model makes formalities simple for entrepreneurs, but it

    demands high levels of coordination among agencies. This model would be most appropriate for countries where

    agencies have already shown a propensity to cooperate.

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    One OSS: All under one roof This type of OSS will be a physical area where all the relevant

    licensing bodies are present, as well as other agencies dealingwith business formalities

    The applicant can go at one address and have all thenecessary business services under roof

    For this model to be successful, it demands that the officersof the various agencies present at the OSS are fullyempowered to take, process and determine all applicationssubmitted.

    In certain countries, this type of OSS is located on thepremises of the national IPA. This can pose an issue of line ofreporting or of lack of cooperation.

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    OSS Issues Many observers have noted that one-stop shops often work better in

    theory than in practice. They are often plagued by struggles over bureaucratic turf, civil

    servants resistance to change, and poor interagency coordination.

    In such circumstances, the One-Stop Shop simply becomes One MoreStop.

    Careful consideration should be given to whether the circumstances intheir countries favor the use of OSSs.

    Are mechanisms for interagency coordination good, or have agency

    personnel shown a willingness to make them so?

    Who would be likely to oppose OSSs, and how strongly would they opposethem?

    One might determine that OSSs are likely to create more costs thanbenefits in a given countrys circumstances.

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    Conclusion

    Business licensing is a prominent barrier to doingbusiness in many countries.

    The evidence is clear that over-regulation and redtape are associated with lower levels of income,lower levels of productivity, higher levels ofinformality, and higher levels of corruption.

    As licensing is a key potential bottleneck in thebusiness start-up process, the gains from licensingreform stand to be significant.

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    Improving the BusinessClimate in Swaziland

    [email protected]@gmail.com

    THANK YOU

    Business LicensingThe Case of Mauritius

    mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

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