Country Notes
Country Notes provide a customized snapshot of a country’s business environment relative to other economies surveyed in its geographic region. They include both analysis and policy recommendations. These 5-6 page documents highlight important differences in the investment climate between various firm subgroups such as exporters vs. non-exporters, business sectors, and different geographic locations within a country.
Abstract: New data from Enterprise Surveys indicate that in Armenia, financing of investment by owners; contributions by issuing equity increased to 28 percent, making Armenia the country with the highest equity financing of investment in all of Eastern Europe and Central Asia (ECA). The value of collateral as a percentage of the loan amount is only 96 percent on average, which is the third lowest percentage in ECA. Regarding difficulties in the business environment for firms, when asked to choose the biggest obstacle facing the establishment among 15 obstacles presented, more than one in five business owners and managers chose practices of the informal sector as their biggest constraint.
Abstract: New data from Enterprise Surveys indicate improvements in Azerbaijan's business environment, particularly in terms of increasing access to finance and also reductions in tax payment-related bribery. Firms interviewed in 2005 and 2009 report increasing use of credit-financed investments and increasing sales sold on credit. Nevertheless, firms face many severe constraints, including corruption and a business environment that is not conducive to international trade. For example, 52 percent of the firms in Azerbaijan report unofficial payments to public officials to get things done compared with 23 percent in all of Eastern Europe and Central Asia (ECA) countries. Female participation in ownership is the lowest in the whole region. Firms in Azerbaijan are less likely to export their products, use their own Web site, or use e-mail to communicate with their clients than firms in the rest of ECA region.
Abstract: New data from Enterprise Surveys indicate that tax reforms undertaken by the government of Belarus are positively impacting the private sector. Firms interviewed in 2005 and 2008 report significantly fewer required meetings with tax officials and lower incidence of tax-related bribes. Nevertheless, firms continue to report high tax rates as the biggest obstacle to their establishment. This is not surprising, given Belarus’s bottom ranking for Doing Business paying taxes index. In addition, adhering to government regulations is time consuming in Belarus. Relative to Eastern Europe and Central Asia (ECA) countries, Belarussian firms indicate that a large percentage of senior management time is spent dealing with the requirements of government regulations. Belarus leads ECA countries in female participation in both employment and ownership, ranking third in both measures. Belarus also stands out in the region as having the largest percentage of government or state ownership in firms with mixed ownership.
Running a Business in Brazil (2011)
Abstract: Brazilian firms are more integrated into their country's financial system than other firms in the rest of the Latin American region—Brazil has the highest proportion of firms who finance investment using banks and the highest proportion of firms with savings and checking accounts. Compared to the region, Brazilian firms highly utilize their own web sites and have the second highest prevalence of internationally recognized quality certification in the region. However, Brazilian firms face a greater burden of regulation than firms in most other countries of the region and this burden has increased over the last few years. Crime is also a major binding constraint for Brazilian firms and firms are less open to international trade than the average for Latin America.
Running a Business in Georgia (2011)
New data from the Enterprise Surveys indicate that senior managers in Georgian firms devote only 2 percent of their time to dealing with the requirements of government regulation. This is the lowest figure in all of Eastern Europe and Central Asia (ECA). For the subset of firms interviewed in both the current and previous rounds of the survey, the average number of visits or required meetings with tax officials fell significantly from 7.3 in 2005 to only 0.5 in 2008 after the implementation of new tax legislation. Despite this improvement, several other areas of concern remain in Georgia: business loans require extremely high levels of collateral, and both capacity utilization and exports are low by regional standards. In fact, capacity utilization among Georgian manufacturing firms is the lowest in the ECA region and has decreased since 2005.
Running a Business in Indonesia (2011)
Abstract: Recently obtained Enterprise Surveys data indicate that senior managers in Indonesia spend the least amount of time dealing with the requirements of government regulations when compared to countries in the same income and size groups. However, Indonesian firms perform poorly in international trade and in the use of technology. Only 4 percent of firms are exporters. This is lower than the average in countries with similar income levels—11 percent—and population sizes—17 percent. Similarly, Indonesian firms report a lower share of sales exported and fewer firms use imported materials and goods. This finding could be the result of firm composition in the country – 77% of firms have less than 10 employees and these firms are much less likely to engage in foreign trade. Indonesian firms are also much less likely than their international peers to use their own Web site or to use e-mail. Across the firms in Indonesia, exporting and foreign-owned firms have more visits or meetings with tax officials, and the managers of these firms spend a larger share of their time dealing with government regulations.
Abstract: New Enterprise Surveys data indicate that firms in Kazakhstan are more likely to face corruption and are less integrated in global trade when compared to the rest of the countries in the Eastern Europe and Central Asia region (ECA). The duration of power outages is high relative to the ECA region, and Kazakhstan businesses report large losses due to crime. However, the amount of senior management time spent dealing with government regulations is notably low compared to other ECA countries, and the share of financing by banks in firm investment has risen over time.
Running a Business in Kyrgyz Republic (2011)
Abstract: New data from Enterprise Surveys indicate that business regulation reforms in the Kyrgyz Republic, such as simplifying tax payment procedures, are positively impacting the private sector. Firms interviewed in 2005 and 2009 report significantly lower incidences of taxrelated bribes when required to meet with tax officials. Nevertheless, firms continue to face obstacles such as corruption, inadequate provision of electricity, and limited access to finance. Small firms in particular are more credit-constrained compared to larger firms. The Kyrgyz Republic lags far behind the region regarding technology innovation measures. The Kyrgyz Republic is second to bottom in capacity utilization (58 percent); only Georgia is lower (50 percent). The percentage of firms using e-mail to communicate with clients and suppliers and the percentage of firms using their own Web site are some of the smallest in the Eastern Europe and Central Asia (ECA) region. Finally, the Kyrgyz Republic leads ECA countries in female participation in ownership.
Running a Business in Russia Federation (2011)
Abstract: The Russian Federation has, on average, the largest firms in the Eastern Europe and Central Asia (ECA) region. Despite having large numbers of employees, a relatively small percentage of Russian firms are exporters. In addition, the fraction of firms that have an internationally recognized quality certificate, at 12 percent, is lower in the Russian Federation than the ECA average. Senior managers in the Russian Federation spend 20 percent of their time dealing with government regulations. This puts them in the second worst position in the region. Corruption and crime have been another constraining factor for Russian firms. Incidents where informal payments were requested are much higher in the Russian Federation than in ECA. However there have been some improvements regarding the incidence of corruption. The percent of firms expected to give gifts or make informal payments to public officials “to get things done” decreased since 2005.
Running a Business in Tajikistan (2011)
Abstract: New data from Enterprise Surveys indicate that corruption is a major constraint for private businesses in Tajikistan. In the entire Eastern Europe and Central Asia (ECA) region, Tajik firms face the second highest frequency of informal gift requests by government officials when obtaining an operating license. However, there was a reduction between 2005 and 2008 in the percentage of firms expected to pay bribes when meeting with tax officials. Two elements of Tajik infrastructure clearly seem to constrain private firms’ operations: failures in the provision of electricity and customs efficiency. The average duration of a power outage is 9.7 hours and for exporting, it takes on average 20 days to clear exports through customs. In addition, Tajikistan ranks near the bottom in terms of the percentage of firms that use their own Web site.
Running a Business in Turkey (2011)
Abstract: New data from Enterprise Surveys indicate that firms in Turkey operate at least as well as the average EU-10‡ firm in terms of external finance and trade. First, the usage and cost of finance in Turkey are among the most favorable in the Eastern Europe and Central Asia (ECA) region. For instance, the value of collateral required as a percentage of the loan amount is the lowest in the region. Second, 37 percent of firms export part of their sales, which is the fifth highest percentage in the region. However, the data also show that Turkish firms are more constrained regarding regulations than firms in the EU-10. Senior management spends 27 percent of its time in a typical week dealing with government regulations, the largest among ECA countries. This is more than twice the average time spent in ECA countries and almost three times as high as the average in the EU-10. Furthermore, the amount of time spent dealing with government regulations has increased over time.
Running a Business in Ukraine (2011)
Abstract: New data from Enterprise Surveys indicate that firms in Ukraine are among the largest in the Eastern Europe and Central Asia (ECA) region, as measured by the number of permanent, full-time workers. Moreover, Ukraine ranks among the top three countries in the region in the prevalence of firms managed by women and Ukrainian firms have a relatively large proportion of female workers, the fourth largest in the ECA region. Large firms and firms located in Kiev are more likely to engage in international trade and to have better access to technology. However, on average, the percentage of firms exporting and accessing different technologies, such as e-mail, Web sites or technology licensed by foreign companies, is lower in Ukraine than in the rest of the region. Data on the firms with repeated interviews suggest a slight reduction in corruption, particularly for exporting firms: between 2005 and 2008, the percentage of exporting firms that expected to give gifts in meetings with tax inspectors fell. However, the incidence of bribery and corruption is still quite high for Ukrainian businesses compared to firms in other ECA countries.
Running a Business in Uzbekistan (2011)
Abstract: New data from Enterprise Surveys show that corruption is common in Uzbekistan. Fifty-nine percent of firms report that informal payments (bribes) are expected to be paid to officials in order to get things done. This is the highest percentage in Eastern Europe and Central Asia (ECA). Electrical infrastructure is lacking. Uzbekistan is the country with the longest power outages in the region. Among Uzbek firms, external financing is the exception, not the rule. Uzbekistan is the country with both the highest level of internal financing for investments and the lowest level of banking financing in the region. The percentage of exporting firms in Uzbekistan is the lowest in the region. However, there is improvement regarding tax regulations – both the visits from tax inspectors and related informal payments became less frequent between 2005 and 2008.
Running a Business in Vietnam (2011)
Abstract: New data from Enterprise Surveys indicate that Vietnamese firms have several comparative advantages over firms in other similarly populated countries and countries in the same income group. Senior managers report spending only 5 percent of their time dealing with the requirements of government regulation—much lower than Vietnam’s peer countries. In addition, firms experience few power outages, fewer losses due to crime, and firms rank corruption as a relatively minor obstacle. However, one-fourth of Vietnamese firms ranked access to finance as the biggest business environment obstacle when presented with a list of 15 obstacles. Specifically, firms report high collateral requirements—218 percent relative to the loan amount. Among similarly populated countries, only firms in the Philippines report a higher percentage. The Vietnamese economy is well integrated in global trade. Relative to similar economies, a high proportion of firms in Vietnam are exporters, and Vietnamese firms use a comparatively high proportion of foreign inputs as well. Compared to its peer countries, Vietnamese firms are younger, especially in the retail sector. Vietnamese firms are on average larger, and also employ proportionally more women and have more female top managers compared to similarly populated countries in the same income group.