65289 Economy Profile: Ecuador © 2012 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 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. 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ISBN: 978-0-8213-8833-4 E-ISBN: 978-0-8213-8834-1 DOI: 10.1596/978-0-8213-8833-4 ISSN: 1729-2638 Printed in the United States Doing Business 2012 Ecuador 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 5 Starting a business ..................................................................................................................... 14 Dealing with construction permits ........................................................................................... 25 Getting electricity ....................................................................................................................... 37 Registering property .................................................................................................................. 44 Getting credit .............................................................................................................................. 54 Protecting investors ................................................................................................................... 61 Paying taxes ................................................................................................................................ 71 Trading across borders .............................................................................................................. 79 Enforcing contracts .................................................................................................................... 88 Resolving insolvency .................................................................................................................. 95 Data notes ................................................................................................................................. 101 Resources on the Doing Business website ............................................................................ 106 Doing Business 2012 Ecuador 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is the paying taxes indicators, which cover the period for a local entrepreneur to open and run a small to January–December 2010). 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 10 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, trading across borders and getting electricity), the getting credit, protecting investors, paying taxes, security of property from theft and looting, the trading across borders, enforcing contracts and transparency of government procurement, resolving insolvency. macroeconomic conditions or the underlying strength In a series of annual reports Doing Business presents of institutions—are not directly studied by Doing quantitative indicators on business regulations and the Business. The indicators refer to a specific type of protection of property rights that can be compared business, generally a local limited liability company across 183 economies, from Afghanistan to Zimbabwe, operating in the largest business city. Because over time. The data set covers 46 economies in Sub- standard assumptions are used in the data collection, Saharan Africa, 32 in Latin America and the Caribbean, comparisons and benchmarks are valid across 24 in East Asia and the Pacific, 24 in Eastern Europe economies. The data not only highlight the extent of and Central Asia, 18 in the Middle East and North obstacles to doing business; they also help identify the Africa and 8 in South Asia, as well as 31 OECD high- source of those obstacles, supporting policy makers in income economies. The indicators are used to analyze designing regulatory reform. economic outcomes and identify what reforms have More information is available in the full report. Doing worked, where and why. Business 2012 presents the indicators, analyzes their This economy profile presents the Doing Business relationship with economic outcomes and indicators for Ecuador. To allow useful comparison, it recommends regulatory reforms. The data, along with also provides data for other selected economies information on ordering Doing Business 2012, are (comparator economies) for each indicator. The data in available on the Doing Business website at this report are current as of June 1, 2011 (except for http://www.doingbusiness.org. Doing Business 2012 Ecuador 5 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to ECONOMY OVERVIEW start 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 Region: Latin America & Caribbean business based on indicator sets that measure and benchmark regulations applying to domestic small to Income category: Upper middle income medium-size businesses through their life cycle. Economies are ranked from 1 to 183 by the ease of Population: 13,774,909 doing business index. For each economy the index is calculated as the ranking on the simple average of its GNI per capita (US$): 4,510.00 percentile rankings on each of the 10 topics included in the index in Doing Business 2012: starting a business, DB2012 rank: 130 dealing with construction permits, getting electricity, registering property, getting credit, protecting DB2011 rank: 131 investors, paying taxes, trading across borders, Change in rank: 1 enforcing contracts and resolving insolvency. The ranking on each topic is the simple average of the percentile rankings on its component indicators (see Note: See the data notes for sources and the data notes for more details). 1 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. 1 Except for the ease of getting credit, for which the percentile rankings on its component indicators are weighted, the depth of credit information index at 37.5% and the strength of legal rights index at 62.5%. Doing Business 2012 Ecuador 6 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 2012 Ecuador 7 THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy the regional average (figure 1.2). The economy’s stands in the aggregate ranking on the ease of doing rankings on the topics included in the ease of doing business is useful. Also useful is to know how it ranks business index provide another perspective (figure compared with other economies and compared with 1.3). Figure 1.2 How Ecuador and comparator economies rank on the ease of doing business Source: Doing Business database. Doing Business 2012 Ecuador 8 THE BUSINESS ENVIRONMENT Figure 1.3 How Ecuador ranks on Doing Business topics Source: Doing Business database. Doing Business 2012 Ecuador 9 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing This measure shows the distance of each economy to business tells only part of the story, so do changes in the ―frontier,‖ a synthetic measure based on the most that ranking. Yearly movements in rankings can efficient practice or highest score observed for each provide some indication of changes in an economy’s Doing Business indicator across all economies and regulatory environment for firms, but they are always years included in the Doing Business sample since relative. An economy’s ranking might change because 2005. Nine areas of business regulation are covered. of developments in other economies. An economy that Comparing the measure for an economy at 2 points in implemented business regulation reforms may fail to time allows users to assess how much the economy’s rise in the rankings (or may even drop) if it is passed regulatory environment as measured by Doing by others whose business regulation reforms had a Business has changed over time—how far it has moved more significant impact as measured by Doing toward (or away from) the most efficient practices and Business. strongest regulations in areas covered by Doing Moreover, year-to-year changes in the overall rankings Business (figure 1.4). The results may show that the do not reflect how the business regulatory pace of change varies widely across the areas environment in an economy has changed over time— measured. They also may show that an economy is or how it has changed in different areas. To aid in relatively close to the frontier in some areas and assessing such changes, Doing Business 2012 relatively far from it in others. introduces the distance to frontier measure. Figure 1.4 How far has Ecuador come in the areas measured by Doing Business? Distance to frontier, 2005 and 2011 Note: For economies added to the Doing Business sample after 2005, the starting point is the year in which they were added: 2006 for Montenegro; 2007 for Brunei Darussalam, Liberia and Luxembourg; 2008 for The Bahamas, Bahrain and Qatar; and 2009 for Cyprus and Kosovo. See the data notes for more details on the distance to frontier measure. Source: Doing Business database. Doing Business 2012 Ecuador 10 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part business regulation—such as a regulatory process that of the story (table 1.1). The indicators, on their own or can be completed with a small number of procedures in comparison with the indicators of a good practice in a few days and at a low cost. Comparison of the economy or those of comparator economies in the economy’s indicators today with those in the previous region, may reveal bottlenecks reflected in large year may show where substantial bottlenecks persist— numbers of procedures, long delays or high costs. Or and where they are diminishing. they may reveal unexpected strengths in an area of Table 1.1 Summary of Doing Business indicators for Ecuador Best performer globally Venezuela, RB DB2012 Argentina DB2012 Ecuador DB2012 Ecuador DB2011 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Chile DB2012 DB2012 Starting a Business 164 160 146 169 120 27 75 147 New Zealand (1) (rank) Procedures (number) 13 13 14 15 13 7 6 17 Canada (1)* Time (days) 56 56 26 50 119 7 9 141 New Zealand (1) Cost (% of income per 28.8 32.6 11.9 90.4 5.4 5.1 11.2 26.1 Denmark (0.0)* capita) Paid-in Min. Capital (% 4.3 4.9 2.2 2.3 0.0 0.0 8.4 0.0 82 Economies (0.0)* of income per capita) Dealing with Hong Kong SAR, Construction Permits 91 84 169 107 127 90 43 109 China (1) (rank) Procedures (number) 16 16 25 14 17 17 10 10 Denmark (5) Time (days) 128 128 365 249 469 155 81 381 Singapore (26)* Cost (% of income per 184.0 210.6 107.7 77.5 40.2 79.0 333.1 161.9 Qatar (1.1) capita) Doing Business 2012 Ecuador 11 Best performer globally Venezuela, RB DB2012 Argentina DB2012 Ecuador DB2012 Ecuador DB2011 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Chile DB2012 DB2012 Getting Electricity (rank) 128 126 58 124 51 41 142 155 Iceland (1) Procedures (number) 6 6 6 8 6 6 7 6 Germany (3)* Time (days) 89 89 67 42 34 31 114 125 Germany (17) Cost (% of income per 785.3 899.4 20.4 1181.2 130.3 77.6 395.5 1341.1 Japan (0.0) capita) Registering Property 75 75 139 138 114 53 140 91 New Zealand (3) (rank) Procedures (number) 9 9 7 7 13 6 7 8 Portugal (1)* Time (days) 16 16 53 92 39 31 74 38 Portugal (1) Cost (% of property 2.1 2.2 7.0 4.8 2.3 1.3 5.3 2.5 Slovak Republic (0.0) value) Getting Credit (rank) 78 75 67 126 98 48 40 182 United Kingdom (1)* Strength of legal rights 3 3 4 1 3 6 6 1 New Zealand (10)* index (0-10) Depth of credit 6 6 6 6 5 5 6 0 Japan (6)* information index (0-6) Public registry coverage 0.0 36.5 35.9 11.8 36.1 35.6 0.0 0.0 Portugal (86.2) (% of adults) Private bureau coverage 57.9 45.0 100.0 35.9 61.5 25.8 98.1 0.0 New Zealand (100.0)* (% of adults) Protecting Investors 133 131 111 133 79 29 46 179 New Zealand (1) (rank) Extent of disclosure 1 1 6 1 6 8 8 3 France (10)* index (0-10) Doing Business 2012 Ecuador 12 Best performer globally Venezuela, RB DB2012 Argentina DB2012 Ecuador DB2012 Ecuador DB2011 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Chile DB2012 DB2012 Extent of director 5 5 2 5 7 6 5 2 Singapore (9)* liability index (0-10) Ease of shareholder suits 6 6 6 6 3 5 5 2 New Zealand (10)* index (0-10) Strength of investor 4.0 4.0 4.7 4.0 5.3 6.3 6.0 2.3 New Zealand (9.7) protection index (0-10) Paying Taxes (rank) 88 88 144 179 150 45 109 183 Canada (8) Payments (number per 8 8 9 42 9 9 6 70 Norway (4) year) Time (hours per year) 654 654 415 1080 2600 316 347 864 Luxembourg (59) Trading Across Borders 123 126 102 126 121 62 59 166 Singapore (1) (rank) Documents to export 8 8 7 8 7 6 5 8 France (2) (number) Hong Kong SAR, Time to export (days) 20 20 13 19 13 21 12 49 China (5)* Cost to export (US$ per 1455 1455 1480 1425 2215 795 1450 2590 Malaysia (450) container) Documents to import 7 7 7 7 8 6 4 9 France (2) (number) Time to import (days) 25 29 16 23 17 20 12 71 Singapore (4) Cost to import (US$ per 1432 1402 1810 1747 2275 795 1780 2868 Malaysia (435) container) Enforcing Contracts 100 101 45 135 118 67 81 77 Luxembourg (1) (rank) Doing Business 2012 Ecuador 13 Best performer globally Venezuela, RB DB2012 Argentina DB2012 Ecuador DB2012 Ecuador DB2011 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Chile DB2012 DB2012 Time (days) 588 588 590 591 731 480 415 510 Singapore (150) Cost (% of claim) 27.2 27.2 16.5 33.2 16.5 28.6 32.0 43.7 Bhutan (0.1) Procedures (number) 39 39 36 40 45 36 38 30 Ireland (21)* Resolving Insolvency 139 138 85 65 136 110 24 161 Japan (1) (rank) Time (years) 5.3 5.3 2.8 1.8 4.0 4.5 1.8 4.0 Ireland (0.4) Cost (% of estate) 18 18 12 15 12 15 18 38 Singapore (1)* Recovery rate (cents on 17.2 17.0 32.9 39.3 17.9 25.5 67.1 6.2 Japan (92.7) the dollar) Note: The methodology for the paying taxes indicators changed in Doing Business 2012; see the data notes for details. For these indicators, the best performer globally is the economy that has implemented the most efficient practices in its tax system and is not necessarily the one with the highest ranking. For more information on “no practice� marks, see the data notes for details. * 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 2012 Ecuador 14 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 Preregistration (for example, name well as to new markets. And their employees can verification or reservation, notarization) benefit from protections provided by the law. An additional benefit comes with limited liability Registration in the economy’s largest companies. These limit the financial liability of business city company owners to their investments, so personal Postregistration (for example, social security assets of the owners are not put at risk. Where registration, company seal) governments make registration easy, more entrepreneurs start businesses in the formal sector, Time required to complete each procedure creating more good jobs and generating more (calendar days) revenue for the government. Does not include time spent gathering What do the indicators cover? information Doing Business measures the ease of starting a Each procedure starts on a separate day business in an economy by recording all Procedure completed once final document is procedures that are officially required or commonly received done in practice by an entrepreneur to start up and formally operate an industrial or commercial No prior contact with officials business—as well as the time and cost required to Cost required to complete each procedure complete these procedures. It also records the (% of income per capita) paid-in minimum capital that companies must deposit before registration (or within 3 months). Official costs only, no bribes The ranking on the ease of starting a business is No professional fees unless services required the simple average of the percentile rankings on by law the 4 component indicators: procedures, time, cost and paid-in minimum capital requirement. Paid-in minimum capital (% of income per capita) To make the data comparable across economies, Doing Business uses several assumptions about the Deposited in a bank or with a notary before business and the procedures. It assumes that all registration (or within 3 months) information is readily available to the entrepreneur  Has a start-up capital of 10 times income per and that there has been no prior contact with capita. officials. It also assumes that all government and nongovernment entities involved in the process  Has a turnover of at least 100 times income per capita. function without corruption. And it assumes that the business:  Does not qualify for any special benefits.  Is a limited liability company, located in the  Does not own real estate. largest business city.  Is 100% domestically owned.  Conducts general commercial or industrial activities. Doing Business 2012 Ecuador 15 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Ecuador? costs 28.8% of income per capita and requires paid-in According to data collected by Doing Business, starting minimum capital of 4.3% of income per capita (figure a business there requires 13 procedures, takes 56 days, 2.1). Figure 2.1 What it takes to start a business in Ecuador Paid-in minimum capital (% of income per capita): 4.3 Note: For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2012 Ecuador 16 STARTING A BUSINESS Globally, Ecuador stands at 164 in the ranking of 183 regional average ranking provide other useful economies on the ease of starting a business (figure information for assessing how easy it is for an 2.2). The rankings for comparator economies and the entrepreneur in Ecuador to start a business. Figure 2.2 How Ecuador and comparator economies rank on the ease of starting a business Source: Doing Business database. Doing Business 2012 Ecuador 17 STARTING A BUSINESS What are the changes over time? While the most recent Doing Business data reflect how process have changed—and which have not (table 2.1). easy (or difficult) it is to start a business in Ecuador That can help identify where the potential for today, data over time show which aspects of the improvement is greatest. Table 2.1 The ease of starting a business in Ecuador over time By Doing Business report year Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. .. .. 160 164 Procedures (number) 14 14 14 14 14 14 13 13 13 Time (days) 92 92 69 65 65 65 64 56 56 Cost (% of income per 51.6 47.4 38.1 31.8 29.2 35.3 35.1 32.6 28.8 capita) Paid-in Min. Capital (% 11.3 10.4 9.2 7.7 7.0 6.3 5.3 4.9 4.3 of income per capita) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. Source: Doing Business database. Doing Business 2012 Ecuador 18 STARTING A BUSINESS Equally helpful may be the benchmarks provided by Ecuador on ways to improve the ease of starting a the economies that today have the best performance business. And changes in regional averages can show regionally or globally on the procedures, time, cost or where Ecuador is keeping up—and where it is falling paid-in minimum capital required to start a business behind. (figure 2.3). These economies may provide a model for Figure 2.3 Has starting a business become easier over time? Procedures (number) Time (days) Doing Business 2012 Ecuador 19 STARTING A BUSINESS Cost (% of income per capita) Paid-in minimum capital (% of income per capita) Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an indicator. In the case of paid-in minimum capital, 82 economies globally and 21 economies in Latin America & Caribbean have no paid-in minimum capital. Source: Doing Business database. Doing Business 2012 Ecuador 20 STARTING A BUSINESS Economies around the world have taken steps making greater firm satisfaction and savings and more it easier to start a business—streamlining procedures registered businesses, financial resources and job by setting up a one-stop shop, making procedures opportunities. simpler or faster by introducing technology and What business registration reforms has Doing Business reducing or eliminating minimum capital requirements. recorded in Ecuador (table 2.2)? Many have undertaken business registration reforms in stages—and they often are part of a larger regulatory reform program. Among the benefits have been Table 2.2 How has Ecuador made starting a business easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. Ecuador made starting a business easier by introducing an DB2011 online registration system for social security. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 21 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for STANDARDIZED COMPANY Ecuador is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new City: Quito firm. These are identified by Doing Business through collaboration with relevant local Legal Form: Compañía Limitada professionals and the study of laws, regulations and Start-up capital: 10 times GNI per capita publicly available information on business entry in that economy. Following is a detailed summary of Paid-in minimum capital (% of income per those procedures, along with the associated time capita): 4.3 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). Summary of procedures for starting a business in Ecuador—and the time and cost Time to No. Procedure Cost to complete complete Reservation of the company name at the Superintendent of Companies 1 1 day no charge The certificate is valid for 30 days according the Resolution No. 06-Q-IJ- 002 dated on 24-07-2006 issued by the Superintendence of Companies. Hire a lawyer to prepare the minutes of incorporation The minutes include the constituting contract, the articles of incorporation, the bylaws of the company, and the formation of capital. 1 day USD 780-1000 2 A lawyer must prepare and sign the minutes on the contract for the company incorporation. Moreover, a notary public must notarize these documents; the lawyer cannot do so. The cost includes all the operating expenses and legal fees. Deposit 50% of paid-in capital in a special account of “completion of capital� (Integración de Capital ) in the name of the company being formed 1 day no charge 3 The minimum deposit for opening the completion-of-capital account is 50% of share capital. Proof of the approved company name is required. USD 245 for the first USD 25,000 of the Notarize the charter of incorporation and bylaws start up capital + 4 2 days 0.2% of capital for notary fees for the rest of the start up capital Doing Business 2012 Ecuador 22 Time to No. Procedure Cost to complete complete The lawyer presents the documents (attached with three certified copies of charter and bylaws) to the Superintendent of Companies for the approval of the constitution of the company The registration fee is paid annually to the Superintendent of 5 Companies. The cost of contribution is 1% of total assets. 5 days no charge The Superintendent of Companies cut the time for processing company applications, by eliminating internal processes, increasing staff, and upgrading the computer system. The company founders can now verify the status of the registration procedure online. Publish an abstract of the charter in a daily newspaper that circulates in the area in which the company operates 2 days USD 75 6 The general stockholder's meeting inscribes the charter and resolutions in the Mercantile Registry; register the names of the legal representatives in the Mercantile Registry 7 5 days USD 80 The Mercantile Registry (―Registro Mercantil‖) provides a registration number ―Numero de codigo‖, with the date the company starts its legal existence. Apply for the Registro Unico de Contribuyentes (RUC) The Registro Unico de Contribuyentes (RUC) must be obtained (a) once the constitution procedure is completed; and (b) after the company has appointed its legal representatives and registered those appointments in the Register of Commerce. The application procedure is done at the 4 days USD 5 per form 8 Servicio de Rentas Internas (SRI) and takes 48 hours after the submission of all required documents (the registered deed, the registered appointments, and the certification of publication). Because the VAT (Impuesto al Valor Agregado) goes by the same identification number, it does not require a separate registration. The RUC is obtained immediately, but a paper receipt is sent by mail in the following 3 days. Print invoices and VAT forms at an authorized printing shop With the RUC, companies must buy invoices from SRI-authorized 1 day USD 40 9 companies and state monthly VAT declarations on special forms. The cost to print a 100-page book of invoices (one original and two copies) is about USD 40. Sign up online for Instituto Ecuatoriano de Seguridad Social (IESS, social security institute) and obtain password to operate the online system The company must present a petition for an employer identification 2 days no charge 10 number (cédula patronal). Obligatory for employers, social security payments cover health, pension, and accident and work-related illness. An employer can register with the Social Security online through the webpage of Ecuador’s Social Security Institute. After completing the Doing Business 2012 Ecuador 23 Time to No. Procedure Cost to complete complete registration online, the employer needs to obtain a password which will allow the employer to operate the system online. The system will allow the employer to register all employee’s movements (entries of new employees and termination of employees, contributions, etc.). The following day the employer can present the documents/information to the Social Security and obtain the password to operate the online system. Inscribe all employee contracts with the Ministry of Labor (Inspectoria de Trabajo) The department responsible for registering labor contracts is the 2 days no charge 11 National Technical Secretariat of Human Resources Development and Public Sector Remuneration SENRES (Secretaría Nacional Técnica de Desarrollo de Recursos Humanos y de Remuneraciones del Sector Público) this office is part of the Ministry of Labor. Inspection from the municipality 12 29 days no charge Obtain “tasa de habilitacion� and pay commercial patent at the competent municipality The Law of Municipal Regime, which regulates the operation of Municipalities that run each city, contemplates the possibility of the Municipalities collecting certain fees or ―tasas‖, which are a form of a tax which is paid as a compensation for a service which is provided to whoever pays the fee. The Law of Municipal Regime provides for the Municipalities being able to collect a fee or ―tasa‖ for the ―habilitación y control de establecimientos comerciales e industriales‖ or the ―approval of the ability to operate and the control of commercial and industrial establishments‖. Although the tasa de habilitación was phased out on December 31, 2004 for all companies, the payment of the "tasa" is still required in practice for some companies. The fee varies depending on the type of company and on the type, location, and size of the facilities in which the company will operate 1 day USD 50 13 Before any commercial or industrial business starts operating, the Municipality will inspect the building/offices/shop where the business is going to operate to make sure that such place complies with all of the City’s requirements for the operation of such business, including that the specific location where the business is going to operate is in an area where such types of business are permited to operate. Once the inspection has been made, and the operation of the business has been approved, the Municipality declares such business as able to operate, and grants the ―tasa de habilitacion‖ as evidence of such ability to operate. The average time to obtain the permit is a month. The entrepreuner is also required to pay the Commercial Patent - a tax that every person or company engaged in commercial or industrial activities has to pay to the Municipality of the City where such activites are being executed. The Commercial Patent has to be paid each year. Doing Business 2012 Ecuador 24 Time to No. Procedure Cost to complete complete Companies should pay the Commercial Patent Tax within 30 days following the last day of the month when the company started operating. * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2012 Ecuador 25 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 PERMITS INDICATORS MEASURE excessive constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in Procedures to legally build a warehouse time and money, many builders opt out. They may (number) pay bribes to pass inspections or simply build Submitting all relevant documents and illegally, leading to hazardous construction that obtaining all necessary clearances, licenses, puts public safety at risk. Where compliance is permits and certificates simple, straightforward and inexpensive, everyone Completing all required notifications and is better off. receiving all necessary inspections What do the indicators cover? Obtaining utility connections for water, Doing Business records the procedures, time and sewerage and a fixed telephone line cost for a business to obtain all the necessary Registering the warehouse after its approvals to build a simple commercial warehouse completion (if required for use as collateral or in the economy’s largest business city, connect it to for transfer of the warehouse) basic utilities and register the property so that it Time required to complete each procedure can be used as collateral or transferred to another (calendar days) entity. Does not include time spent gathering The ranking on the ease of dealing with information construction permits is the simple average of the Each procedure starts on a separate day percentile rankings on its component indicators: procedures, time and cost. Procedure completed once final document is received To make the data comparable across economies, Doing Business uses several assumptions about the No prior contact with officials business and the warehouse, including the utility Cost required to complete each procedure (% connections. of income per capita) The business: Official costs only, no bribes  Is a limited liability company operating in  Will be connected to water, sewerage the construction business and located in (sewage system, septic tank or their the largest business city. equivalent) and a fixed telephone line. The  Is domestically owned and operated. connection to each utility network will be 10 meters (32 feet, 10 inches) long.  Has 60 builders and other employees.  Will be used for general storage, such as of The warehouse: books or stationery (not for goods requiring  Is a new construction (there was no special conditions). previous construction on the land).  Will take 30 weeks to construct (excluding all  Has complete architectural and technical delays due to administrative and regulatory plans prepared by a licensed architect. requirements). Doing Business 2012 Ecuador 26 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to permits there requires 16 procedures, takes 128 days build a warehouse in Ecuador? According to data and costs 184.0% of income per capita (figure 3.1). collected by Doing Business, dealing with construction Figure 3.1 What it takes to comply with formalities to build a warehouse in Ecuador Note: For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2012 Ecuador 27 DEALING WITH CONSTRUCTION PERMITS Globally, Ecuador stands at 91 in the ranking of 183 other useful information for assessing how easy it is for economies on the ease of dealing with construction an entrepreneur in Ecuador to legally build a permits (figure 3.2). The rankings for comparator warehouse. economies and the regional average ranking provide Figure 3.2 How Ecuador and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database. Doing Business 2012 Ecuador 28 DEALING WITH CONSTRUCTION PERMITS What are the changes over time? While the most recent Doing Business data reflect how of the process have changed—and which have not easy (or difficult) it is to deal with construction permits (table 3.1). That can help identify where the potential in Ecuador today, data over time show which aspects for improvement is greatest. Table 3.1 The ease of dealing with construction permits in Ecuador over time By Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. 84 91 Procedures (number) 16 16 16 16 16 16 16 Time (days) 128 128 128 128 128 128 128 Cost (% of income per 774.1 315.5 292.2 269.4 227.8 210.6 184.0 capita) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. For more information on “no practice� marks, see the data notes for details. Source: Doing Business database. Doing Business 2012 Ecuador 29 DEALING WITH CONSTRUCTION PERMITS Equally helpful may be the benchmarks provided by ways to improve the ease of dealing with construction the economies that today have the best performance permits. And changes in regional averages can show regionally or globally on the procedures, time or cost where Ecuador is keeping up—and where it is falling required to deal with construction permits (figure 3.3). behind. These economies may provide a model for Ecuador on Figure 3.3 Has dealing with construction permits become easier over time? Procedures (number) Time (days) Doing Business 2012 Ecuador 30 DEALING WITH CONSTRUCTION PERMITS Cost (% of income per capita) Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an indicator. In cases where no data are displayed above for the economy, this indicates that the economy has received a “no practice� mark; see the data notes for details. Source: Doing Business database. Doing Business 2012 Ecuador 31 DEALING WITH CONSTRUCTION PERMITS Smart regulation ensures that standards are met while building safety while keeping compliance costs making compliance easy and accessible to all. reasonable, governments around the world have Coherent and transparent rules, efficient processes and worked on consolidating permitting requirements. adequate allocation of resources are especially What construction permitting reforms has Doing important in sectors where safety is at stake. Business recorded in Ecuador (table 3.2)? Construction is one of them. In an effort to ensure Table 3.2 How has Ecuador made dealing with construction permits easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 32 DEALING WITH CONSTRUCTION PERMITS What are the details? The indicators reported here for Ecuador 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 City : Quito information collected from experts in construction licensing, including architects, construction Estimated lawyers, construction firms, utility service providers USD 429,000 Warehouse Value : and public officials who deal with building regulations. These procedures are those that apply The procedures, along with the associated time and to a company and structure matching the standard cost, are summarized below. assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Summary of procedures for dealing with construction permits in Ecuador —and the time and cost Time to No. Procedure Cost to complete complete Obtain Urban Regulation Report (Informe de Regulación Urbana - IRM) The Urban Regulation Report (Informe de Regulacion Urbana, IRM) is required for most procedures before the District Municipality, such as purchasing, selling, dividing, and building a property, as well as determining if the site is affected by road construction design. Valid for 2 years, this report provides the parameters to subdivide or urbanize the following: - Area available to construct the ground floor. - Maximum building area. - Maximum building height permitted. - Maximum number of dwelling units. - Building separation distances. 21 days USD 25 1 - Permitted and unauthorized land use. - Basic service availability. - Manufacturing line (línea de fábrica) reference. To obtain the report, BuildCo must do the following: - Purchase the IRM form, whose value is equivalent to 5% of the effective unified basic wage (salario básico unificado vigente), at the respective Subdivision Administration (Administración Zonal). - Register the property's data and enclose a copy of the property tax payment receipt. - Submit copies of the citizenship identification and of the updated voting voucher or owner's exemption certificate. - Enclose a cartographic sheet of the Geographical Military Institute (scale, 1:5,000 or 1:25,000), showing the exact property location and the respective public deeds registered at the Property Registry. Doing Business 2012 Ecuador 33 Time to No. Procedure Cost to complete complete = Enclose a copy of the public writ of the estate (a request signed by the owner to guarantee the payment of water, electricity, or telephone service). Obtain proof of compliance with 1/1000 contribution to Professional Association of Architects 2 1 day USD 429 The proof of payment for the construction contribution is one of the documents required for the approval of the layout plans and the building permit application. The cost is 0.1% of the warehouse value. Request and obtain permit from the Fire Department 3 Apart from the aforementioned uses, the fire department report is also 5 days USD 200 required for buildings hosting more than 25 persons or with more than four stories. Request approval for the plans To request approval for the plans, the following documents must be submitted to the Subdivision Administration (Administración Zonal): - Plan approval form for buildings, with data record and stamps. - Metropolitan Regulation Report (Informe de Regulación Metropolitana, IRM), updated. - Two sets of architectural drawings (scale, 1:100 to 1:50), with an area map, plotted on the first sheet of the project. The drawings must contain the plot area, (COS) percentage; (CUS) percentage; construction area at ground level; total building floor area; and total gross construction area, including housing area, business store and office area, parking area, community area, number of dwelling units, and number of parking lots. - If the construction is financed with a mortgage loan, three additional sets must be attached. - Proof of payment of 1 x 1,000 to professional associations - Proof of payment of property tax (impuesto predial) corresponding to 4 the current year (simple copy of receipt). 20 days USD 6,435 - Real estate deed or purchase option agreement duly notarized and registered at the Property Registry - Copies of the municipal registration and professional registration identification cards. - Copy of the citizenship card and updated voting voucher or owner’s exemption certificate (Los Chillos deemed unnecessary). - Certificates granted by the Metropolitan Water and Sewage Utility Company (EMAAP), stating utility service provision (potable water and sewage) (Los Chillos Administration). The company may request the approval of the draft project (for consultation before final plan approval). The plans also must be approved by the fire department and the professional associations for architects and engineers. The approval of the draft project is valid for 2 years and is informative in nature. 1.5 x 1,000 of total project cost. Cost/sq. m.. = ca. USD 180 (USD 120 - 250). 5 Verify structure plan with Professional Association of Engineers 10 days USD 429 Doing Business 2012 Ecuador 34 Time to No. Procedure Cost to complete complete Obtain construction guarantee and deposit it afterwards with the Municipality Proof of the guarantee deposit is a required document for the building permit application. Once the land plans have been registered for zoning and before their approval, the municipality notifies the applicant the amount to be guaranteed (fondo de garantia). The applicant can deposit the guarantee in cash or certified check or in the form of an insurance policy. The insurance policy is purchased in 2 days from a local insurance company. The fee to purchase the guarantee depends on the value to be guaranteed. After construction is finalized, the 2 days USD 9 6 municipality will return the guarantee upon inspecting the construction. The guarantee will be returned in full only if the actual construction conforms to the plans approved by the municipality. The transaction fee for the guarantee amounts to 0.05% of the guarantee itself. The guarantee amount is determined by the municipality and depends on the type of construction, the size, the sector, and the relevant zone. For construction under 600 sq. m., the guarantee will range between 1.5% and 3% of the warehouse value. For construction over 600 sq. m., the guarantee with be about 4% of the warehouse value. As a reference, the municipality would assume a warehouse value of USD 200 per square meter. Obtain the final building permit The documents required to obtain the construction work execution clearance are the following: - Building permit application form, with stamps and data record. - Architectural drawing approval report (original or certified copy). - Set of approved architectural drawings (original or certified copy). - Sets (two) of structural maps, with the professional signature registration. - Sets (two) of electrical and hydro sanitary installation plans, with the professional signature registration. - Proof of payment for building work to professional associations. - Proof of the guarantee fund deposit. - Proof of payment for plan and drawing approval. 7 - Proof of payment to the Metropolitan Water and Sewage Utility 16 days USD 595 Company (EMAAP) for service installation. - Construction statistical sheet. - Copy of municipal and professional registration cards for the builder and designer (Los Chillos). - Copy of the citizenship card and updated voting voucher or owner’s exemption certificate. - For four stories or more, survey report for soil and subsoil of more than 2.5 mh and structural calculation report. - Proof of payment received of the corresponding property tax for the current year (La Delicia). This procedure does not entail any charges. However, the scanner services fee is 20% of the current minimum wage for each sheet, and a form must be purchased with the required stamps. The form fee is USD Doing Business 2012 Ecuador 35 Time to No. Procedure Cost to complete complete 0.40, which is the same as the cost of the stamps. These fees are on a per-filing basis, and more than one filing is normally necessary. Request and obtain foundation inspection 8 1 day no charge Request and obtain structure inspection 9 1 day no charge Request and obtain telephone connection Not all areas are covered by a phone network. The telephone 20 days USD 77 10 connection is not a prerequisite for the occupancy permit. Hence, the occupancy permit can be requested in parallel with the telephone connection. Request potable water and drainage hook-up 11 The proof of payment for service installation is one of the documents 1 day no charge required for the approval of the layout plans and the building permit application. Receive water and sewage inspection Depending on whether a meter is already available, an inspection may be conducted before BuildCo obtains its water connection. Given that 1 day no charge 12 the project considered here is a new construction, it is assumed that BuildCo must obtain the meter with the new electricity connection. Hence, an inspection also takes place to evaluate the cost of new service. Obtain potable water and drainage hook-up 13 1 day no charge Request and obtain final inspection 14 1 day no charge Obtain habitability permit and guarantee retrieval The habitability permit authorizes BuildCo to bring the building into service and enables retrieval of the guarantee fund. To this end, BuildCo must present the following documents at the respective Subdivision Administration (Administración Zonal): - Inhabitability permit application form, with stamps and data record. - Approved architectural drawings (one copy). 20 days no charge 15 - Plan and drawing approval report. - Building permit. - Original proof of guarantee fund receipt. - Citizenship card and updated voting voucher or owner exemption certificate (copy). - For guarantee fund retrieval in cash, an application form must be filed with the General Financial Department (Dirección General Financiera), with the respective stamps. Register the building at the Property Registry 7 days USD 100 16 Doing Business 2012 Ecuador 36 Time to No. Procedure Cost to complete complete The following fees apply for the payment of the property registration fee for the qualification and registration of acts implying the incorporation, amendment, title transfer, awards, and extinction of real or personal title over movable or immovable property, as well as for tax assessments or title restrictions, and any similar act. Initial value Final value Total registration fee 1 01 1.60 1.40 2 1.61 3.00 1.80 3 3.01 4.00 2.25 4 4.01 6.00 2.80 5 6.01 10.00 3.75 6 10.01 14.00 4.50 7 14.01 20.00 5.25 8 20.01 30.00 6.50 9 30.01 40.00 8.20 10 40.01 80.00 11.25 11 80.01 120.00 12.50 12 120.01 200.00 17.25 13 200.01 280.00 22.30 14 280.01 400.00 26.00 15 400.01 600.00 33.70 16 600.01 800.00 37.00 17 800.01 1200.00 44.25 18 1200.01 1600.00 58.90 19 1600.01 2000.00 74.55 20 2000.01 2400.00 80.00 21 2400.01 2800.00 85.00 22 2800.01 3200.00 90.00 23 3200.01 3600.00 95.00 24 3600.01 10000.00 100.00 If the value of the property exceeds the amount specified in row 24, the builder will pay a flat fee of USD 100 (plus VAT) for property registration. * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2012 Ecuador 37 GETTING ELECTRICITY Access to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITY for businesses. To counter weak electricity supply, many firms in developing economies have to rely INDICATORS MEASURE on self-supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the Procedures to obtain an electricity first step for a customer is always to gain access by connection (number) obtaining a connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for Completing all required notifications and a 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 Obtaining external installation works and complete them. These procedures include possibly purchasing material for these works applications and contracts with electricity utilities, Concluding any necessary supply contract and clearances from other agencies and the external obtaining final supply and final connection works. The ranking on the ease of getting electricity is the simple average of Time required to complete each procedure the percentile rankings on its component (calendar days) indicators: procedures, time and cost. To make the Is at least 1 calendar day data comparable across economies, several assumptions are used. Each procedure starts on a separate day The warehouse: Does not include time spent gathering information  Is located in the economy’s largest business city, in an area where other Reflects the time spent in practice, with little warehouses are located. follow-up and no prior contact with officials  Is not in a special economic zone where Cost required to complete each procedure the connection would be eligible for (% of income per capita) subsidization or faster service. Official costs only, no bribes  Has road access. The connection works Excludes value added tax involve the crossing of a road or roads but are carried out on public land.  Is 150 meters long.  Is a new construction being connected to  Is to either the low-voltage or the medium- electricity for the first time. voltage distribution network and either overhead  Has 2 stories, both above ground, with a or underground, whichever is more common in total surface of about 1,300.6 square the economy and in the area where the meters (14,000 square feet), and is built on warehouse is located. The length of any a plot of 929 square meters (10,000 square connection in the customer’s private domain is feet). negligible. The electricity connection:  Involves installing one electricity meter. The monthly electricity consumption will be 0.07  Is a 3-phase, 4-wire Y, 140-kilovolt-ampere gigawatt-hour (GWh). The internal electrical (kVA) (subscribed capacity) connection. wiring has been completed. Doing Business 2012 Ecuador 38 GETTING ELECTRICITY Where does the economy stand today? What does it take to obtain a new electricity procedures, takes 89 days and costs 785.3% of income connection in Ecuador? According to data collected by per capita (figure 4.1). Doing Business, getting electricity there requires 6 Figure 4.1 What it takes to obtain an electricity connection in Ecuador Note: For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2012 Ecuador 39 GETTING ELECTRICITY Globally, Ecuador stands at 128 in the ranking of 183 regional average ranking provide another perspective economies on the ease of getting electricity (figure in assessing how easy it is for an entrepreneur in 4.2). The rankings for comparator economies and the Ecuador to connect a warehouse to electricity. Figure 4.2 How Ecuador and comparator economies rank on the ease of getting electricity Source: Doing Business database. Doing Business 2012 Ecuador 40 GETTING ELECTRICITY Even more helpful than rankings for other economies economies, the practices of their utilities may provide a may be the indicators underlying those rankings (table model for Ecuador on ways to improve the ease of 4.1). If obtaining a new electricity connection requires getting electricity. Regional and global averages on fewer procedures, less time or less cost in other these indicators may provide useful benchmarks. Table 4.1 The ease of getting electricity in Ecuador and comparator economies Latin America & Global average Venezuela, RB Caribbean Argentina Ecuador average Mexico Bolivia Brazil Chile Indicator Rank 128 58 124 51 41 142 155 72 .. Procedures (number) 6 6 8 6 6 7 6 5 5 Time (days) 89 67 42 34 31 114 125 65 111 Cost (% of income per capita) 785.3 20.4 1181.2 130.3 77.6 395.5 1341.1 593.7 1,942.3 Source: Doing Business database. Doing Business 2012 Ecuador 41 GETTING ELECTRICITY What are the details? The indicators reported here for Ecuador are based on OBTAINING AN ELECTRICITY CONNECTION a set of specific procedures—the steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution City: Quito utility—identified by Doing Business. Data are collected from the distribution utility, then completed and Name of Utility: Empresa Electrica Quito verified by electricity regulatory agencies and independent professionals such as electrical engineers, The procedures are those that apply to a warehouse electrical contractors and construction companies. The and electricity connection matching the standard electricity distribution utility surveyed is the one assumptions used by Doing Business in collecting the serving the area (or areas) in which warehouses are data (see the section in this chapter on what the located. If there is a choice of distribution utilities, the indicators cover). The procedures, along with the one serving the largest number of customers is associated time and cost, are summarized below. selected. Summary of procedures for getting electricity in Ecuador—and the time and cost Time to No. Procedure Cost to complete complete The client hires an electrical engineer listed within the list of Companies or qualified by the Empresa Eléctrica Quito S.A. The customer must hire an electrical engineer listed with Empresa 1 calendar day USD 5,000.0 1 Eléctrica Quito S.A. (EEQ). He will send the feasibility request to EEQ on behalf of the client. He will also prepare the design to perform the external connection and will also carry out the works of the external connection. The electrical engineer presents the connection request to Empresa Eléctrica Quito S.A. and awaits the feasibility report The service request must be made by a private electrical engineer, who is listed in the listing of Companies or Electrical Engineers qualified by Empresa Eléctrica Quito SA (EEQ). The applicant must provide the Service Feasibility Form, attaching the required documents. The service feasibility is required for projects with a demand greater than 125 kVA. EEQ will determine the possibility of meeting the requested demand in the area in question and will establish the conditions needed to optimize the use 9 calendar days USD 1,020.5 2 of the network. The applicant should approach with the following documents: • Letter of authorization from the owner. • Copy of identity card of the owner. • Sketch of location in AutoCAD; | standards | established by the EEQ SA (to provided in hand writing) • Estimate of the installed load, peak demand and capacity required with the signature of liability by the qualified Private Engineer EEQ SA (Excel) * • Service Feasibility Form. Doing Business 2012 Ecuador 42 Time to No. Procedure Cost to complete complete * Empresa Eléctrica Quito S.A. conducts an inspection on site to prepare the feasibility study Taking as reference the sketch of the location, a electrical engineer of the Empresa Eléctrica Quito SA (EEQ) performs the inspection of the site, 3 verifies the technical data of the project and prepares the technical 1 calendar day no charge feasibility report. The Head of the Research Department of Engineering reviews the technical report for subsequent approval by the Head of the Engineering Division of Distribution. Finally the customer can pick up the approved report at the Secretariat of the Research Department of Engineering. The contracted engineer prepares the design, submits it for approval by Empresa Eléctrica Quito S.A. and carries out the external connection according to the standards set by Empresa Eléctrica Quito S.A. Before starting with the external connection works, the private electrical engineer must submit the final designs to Empresa Eléctrica Quito S.A. (EEQ). For the approval of the project it is necessary to revise the design, verifying that it is within the rules of the company. The Secretaría del Departamento de Estudios de Distribución receives the application for approval with the conditions required. The assigned engineer will review the technical documentation of the project on site, for verification of the information presented. Any discrepancies between the design and the standards will be discussed with the private engineer responsible for the project. Once all comments have been addressed, the Engineer Reviewer assigned will proceed to prepare the Technical Report. The Jefatura del Departamento de Estudios de Distribución will review the technical report for their approval. The Secretaría del Departamento de Estudios de Distribución reports and deliver the 68 calendar days USD 28,750.0 4 Project Approval Letter to the Private Engineer responsible of the project. The private electrical engineer can now perform the connection works. During the external connection, EEQ performs a review of the work done by the electrical engineer (Work inspection). The purpose of the inspections is to ensure that facilities are constructed as established in the project, that specific materials are used, that the installation is a reliable and safe. In order to solicit the final inspection of the construction the engineer has to submit the following documents: • Project Approval Letter issued by the Company. • Design Documentation Project Approved (folder). • Order Form for inspection of the work. The Private Engineer presents the request for Project Approval attaching the requirements needed for this procedure at the Div. Ejecución y Recepción de Obras assigns an inspector to review the work on the site and to coordinate the scheduled job with the area of Operación y Mantenimiento. Finally the auditing Engineer prepares the Notice of Charge for services provided on site. Doing Business 2012 Ecuador 43 Time to No. Procedure Cost to complete complete * The client obtains an excavation permit for the laying of the underground cable from the relevant department at the Municipality (La Empresa Metropolitana de Movilidad y Obras 5 Públicas de Quito (EMMOP-Q)) 16 calendar days USD 180.0 The client has to submit the electrical project approved by EEQ with the application for the excavation permit. The client pays the guarantee deposit and Empresa Eléctrica Quito S.A. provides the power for the project The engineer in charge of the project requests the powering of the Work at the Secretaría del Departamento de Fiscalización de Redes. The applicant should approach with the following documents: • Receipt of payment of work undertaken by the company on site. • Reentry form of materials to the warehouse. • Payment Receipt to the College of Engineering (CIEEPI). This receipt is no longer required • Receipt of equipment and materials. • updated map with the requested changes. • Powering request. 6 The Auditing Engineer is assigned to coordinate the powering of the 11 calendar days USD 500.0 work with the Departamento de Operación y Mantenimiento Urbano/Rural. The powering works are done by the Department of Operación y Mantenimiento Urbano/Rural , the department will report any updates or the successful implementation. The guarantee deposit is a deposit equivalent to one month's consumption, calculated at current rates, by type of consumer. In the case of new customers, the value of the guarantee is calculated based on estimated monthly consumption according to the installed load. The guarantee deposit is equivalent to one month's consumption. The security deposit is returned without interest when the consumer stops using the service, and is current with payments. It is not possible to pay with a bank guarantee. * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2012 Ecuador 44 REGISTERING PROPERTY Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY Effective administration of land is part of that. If INDICATORS MEASURE formal property transfer is too costly or complicated, formal titles might go informal again. And where property is informal or poorly Procedures to legally transfer title on administered, it has little chance of being immovable property (number) accepted as collateral for loans—limiting access to Preregistration (for example, checking for liens, finance. notarizing sales agreement, paying property transfer taxes) What do the indicators cover? Registration in the economy’s largest business Doing Business records the full sequence of city procedures necessary for a business to purchase property from another business and transfer the Postregistration (for example, filing title with the municipality) property title to the buyer’s name. The transaction is considered complete when it is opposable to Time required to complete each procedure third parties and when the buyer can use the (calendar days) property, use it as collateral for a bank loan or Does not include time spent gathering resell it. The ranking on the ease of registering information property is the simple average of the percentile rankings on its component indicators: procedures, Each procedure starts on a separate day time and cost. Procedure completed once final document is received To make the data comparable across economies, several assumptions about the parties to the No prior contact with officials transaction, the property and the procedures are Cost required to complete each procedure used. (% of property value) The parties (buyer and seller): Official costs only, no bribes  Are limited liability companies, 100% No value added or capital gains taxes included domestically and privately owned.  Are located in the periurban area of the economy’s largest business city.  Has no mortgages attached and has been under the same ownership for the past 10  Have 50 employees each, all of whom are years. nationals.  Consists of 557.4 square meters (6,000 square  Perform general commercial activities. feet) of land and a 10-year-old, 2-story The property (fully owned by the seller): warehouse of 929 square meters (10,000  Has a value of 50 times income per capita. square feet). The warehouse is in good The sale price equals the value. condition and complies with all safety standards, building codes and legal  Is registered in the land registry or requirements. The property will be transferred cadastre, or both, and is free of title in its entirety. disputes.  Is located in a periurban commercial zone, and no rezoning is required. Doing Business 2012 Ecuador 45 REGISTERING PROPERTY Where does the economy stand today? What does it take to complete a property transfer in procedures, takes 16 days and costs 2.1% of the Ecuador? According to data collected by Doing property value (figure 5.1). Business, registering property there requires 9 Figure 5.1 What it takes to register property in Ecuador Note: For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2012 Ecuador 46 REGISTERING PROPERTY Globally, Ecuador stands at 75 in the ranking of 183 regional average ranking provide other useful economies on the ease of registering property (figure information for assessing how easy it is for an 5.2). The rankings for comparator economies and the entrepreneur in Ecuador to transfer property. Figure 5.2 How Ecuador and comparator economies rank on the ease of registering property Source: Doing Business database. Doing Business 2012 Ecuador 47 REGISTERING PROPERTY What are the changes over time? While the most recent Doing Business data reflect how process have changed—and which have not (table 5.1). easy (or difficult) it is to register property in Ecuador That can help identify where the potential for today, data over time show which aspects of the improvement is greatest. Table 5.1 The ease of registering property in Ecuador over time By Doing Business report year Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. .. 75 75 Procedures (number) 11 9 9 9 9 9 9 9 Time (days) 22 20 19 16 16 16 16 16 Cost (% of property value) 7.7 6.5 3.5 3.0 2.2 2.1 2.2 2.1 Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. For more information on “no practice� marks, see the data notes for details. Source: Doing Business database. Doing Business 2012 Ecuador 48 REGISTERING PROPERTY Equally helpful may be the benchmarks provided by These economies may provide a model for Ecuador on the economies that today have the best performance ways to improve the ease of registering property. And regionally or globally on the procedures, time or cost changes in regional averages can show where Ecuador required to complete a property transfer (figure 5.3). is keeping up—and where it is falling behind. Figure 5.3 Has registering property become easier over time? Procedures (number) Time (days) Doing Business 2012 Ecuador 49 REGISTERING PROPERTY Cost (% of property value) Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an indicator. In cases where no data are displayed above for the economy, this indicates that the economy has received a “no practice� mark; see the data notes for details. Source: Doing Business database. Doing Business 2012 Ecuador 50 REGISTERING PROPERTY Economies worldwide have been making it easier for have cut the time required substantially—enabling entrepreneurs to register and transfer property—such buyers to use or mortgage their property earlier. What as by computerizing land registries, introducing time property registration reforms has Doing Business limits for procedures and setting low fixed fees. Many recorded in Ecuador (table 5.2)? Table 5.2 How has Ecuador made registering property easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 51 REGISTERING PROPERTY What are the details? The indicators reported here are based on a set of STANDARD PROPERTY TRANSFER specific procedures—the steps that a buyer and seller must complete to transfer the property to the buyer’s name—identified by Doing Business City: Quito through information collected from local property Property Value: 233,012.4 lawyers, notaries and property registries. These procedures are those that apply to a transaction The procedures, along with the associated time and matching the standard assumptions used by Doing cost, are summarized below. Business in collecting the data (see the section in this chapter on what the indicators cover). Summary of procedures for registering property in Ecuador—and the time and cost Time to No. Procedure Cost to complete complete Lawyer prepares the contract A rough copy of the contract -―Minuta‖ is prepared by a lawyer. 1 It is mandatory to hire a lawyer to register property in Ecuador, 1-2 days $1,000 according to the ―Ley de federación de Abogados" of March 7th 1974. Lawyer’s fees are calculated on the market price of the property. Obtain a non-encumbrance certificate (“Certificado de gravamenes�) from the Property Registry A certificate of real estate encumbrances ("Certificado de Gravámenes") 2 must be obtained at the Real Estate Public Registry. 3 days $7.84 The certificate remains valid for 45 days (with the certificate dated with the request date, and not the date the document is issued). If the registration has not been demanded by then, a new certificate would have to be requested. * Pay various taxes at the Municipality These taxes are paid based on the official or on the market value of the property. The Municipality calculates the taxes according to the highest value of the two. The Property Appreciation tax (a capital gains tax) is also paid at this stage and is calculated on the difference between the sale-price and 2-3 days 1% of property price acquisition-price of the property. In addition, the amount of the tax is (simultaneous with (Transfer tax, or 3 reduced taking into account the economic benefits added to the procedures 4 and 5) "Alcabala") property by the seller and the antiquity of the property. The tax is 10% of the difference. The tax was cut to 0.5% only for the first transfer of any real estate delivered after January 1st, 2006, with a discount of 5% of that for every year old that the property/building is. The registration tax (1% of the official value) was eliminated. After payment of the taxes, the Municipality will issue a municipal permit-letter and register the property in the cadastre. Doing Business 2012 Ecuador 52 Time to No. Procedure Cost to complete complete The documentation shall include: a) Notarized public deed b) Previous property titles c) Contracting parties identification documents d) Encumbrance certificate (obtained in Procedure 2) e) Copy of the municipal permit for commercial activities for companies for the year in which the transfer is performed (patente municipal); f) Copy of the Unique Contributors Number (RUC); g) Copy of the 1.5 x 1000 municipal tax of the companies; h) Property Appreciation Tax form duly signed by the Seller; i) Letter of appointment of the legal representatives of both companies; j) Minutes of the meeting of the Board of Shareholder of both companies in which the board authorizes the legal representative to buy and/or sell the property of the company; Copy of the voting certificate of the legal representatives which appear in the contract; k) Certificate of payment of the municipal annual tax of the property (impuesto predial) * Pay additional taxes at the Province Council (Consejo Provincial) Some additional taxes must be paid at the Consejo Provincial de 0.11% of property Pichincha (Provincial Council). These taxes were lowered in 2006 in Quito 1day (simultaneous value (Provincial 4 to 0.1% ("Adicional de registro") + 0.01% ("Adicional de alcabala"), and with procedures 3 transfer tax) + $1.80 $1.80 administrative fee for each tax (total charge $3.60). The value used and 5) administrative fee is to calculate the fees is the highest value between the cadastral value and for each tax the contract value. The cadastre was updated in 2005 and the values are reasonably close to reality. * Pick-up the municipal permit-letter at the Municipality At the time of payment of the taxes at the Municipality in Procedure 3, a 1 day (simultaneous 5 municipal permit-letter is obtained and must be picked-up at the with procedures 3 $11.20 Municipality. and 4) By this time the property is registered in the cadastre. Notary notarizes the public deed The public deed is notarized by a public notary. Notary's fees were changed according to regulations passed on September 26th 2007. The fees for property transfer over 60,000 US$ are 2 per thousand of the property value up until US$ 1,000. Notaries can also add other general expenses to the fees that cannot exceed USD 0.2% (notary fees) + 4,000. 0.1% (notary's 6 1 day The receipts of previous payments are attached to the public deed by general expenses) of the notary. the property value Article 1 of the Official Register No. 178 published on 26-09-2007 by ¨ Consejo Nacional De La Judicatura ¨(Administrative Organism of the Judicial Branch) establishes official Notary Fees according to the contract value: contract value notary fee Doing Business 2012 Ecuador 53 Time to No. Procedure Cost to complete complete 1.00 to 1,000.00 USD 20 1,001.00 to 5,000.00 USD 35 5,001.00 to 10,000.00 USD 50 10,001.00 to 30,000.00 USD 75 30,001.00 t0 60,000.00 USD 100 + 60,001.00 USD 2x1,000 of the total amount (the top rate is 1,000.00) Conduct a general check at the Property Registry The Municipal permit-letter obtained in Procedure 5 must be taken to the Real Estate Public Registry together with the notarized public deed. 7 The Registry does a general check of the documents and the history of 2 days No additional cost the property. The documentation shall include: Public deed (notarized in Procedure 6) Receipts of tax payments obtained in Procedures 3-4 Pay registration fee at the Property Registry $100 + 0.5% of the After the revision, the amount of the registration fee to be paid is value of the property obtained from the Registry. The fee is paid according to the sliding scale exceding $10,000, 8 "Tabla de aranceles de registro de la propiedad" (Resolución del Consejo 1 day according to Nacional de la Judicatura, Registro Oficial 44, 20 de Marzo de 2003), but cadastral value of using cadastral values from 2005. The fee is paid in the same building 2005. Max total and office where the documentation is submitted at the property value $500. registry. Obtain notice of registration from the Property Registry 9 4 days no cost After payment of the registration fee, the Real Estate Public Registry issues a notice of registration. * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2012 Ecuador 54 GETTING CREDIT Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS credit and improve its allocation: credit information MEASURE systems and the legal rights of borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable lenders to view a Strength of legal rights index (0–10) potential borrower’s financial history (positive or Protection of rights of borrowers and lenders negative)—valuable information to consider when through collateral laws assessing risk. And they permit borrowers to Protection of secured creditors’ rights through establish a good credit history that will allow easier bankruptcy laws access to credit. Sound collateral laws enable businesses to use their assets, especially movable Depth of credit information index (0–6) property, as security to generate capital—while Scope and accessibility of credit information strong creditors’ rights have been associated with distributed by public credit registries and higher ratios of private sector credit to GDP. private credit bureaus What do the indicators cover? Public credit registry coverage (% of adults) Doing Business assesses the sharing of credit Number of individuals and firms listed in information and the legal rights of borrowers and public credit registry as percentage of adult lenders with respect to secured transactions population through 2 sets of indicators. The depth of credit Private credit bureau coverage (% of adults) information index measures rules and practices Number of individuals and firms listed in affecting the coverage, scope and accessibility of largest private credit bureau as percentage of credit information available through a public credit adult population registry or a private credit bureau. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. Doing Business uses case scenarios to determine  Has 100 employees. the scope of the secured transactions system,  Is 100% domestically owned, as is the lender. involving a secured borrower and a secured lender and examining legal restrictions on the use of The ranking on the ease of getting credit is based on movable collateral. These scenarios assume that the the percentile rankings on its component indicators: borrower: the depth of credit information index (weighted at 37.5%) and the strength of legal rights index  Is a private, limited liability company. (weighted at 62.5%).  Has its headquarters and only base of operations in the largest business city. Doing Business 2012 Ecuador 55 GETTING CREDIT Where does the economy stand today? How well do the credit information system and Globally, Ecuador stands at 78 in the ranking of 183 collateral and bankruptcy laws in Ecuador facilitate economies on the ease of getting credit (figure 6.1). access to credit? The economy has a score of 6 on the The rankings for comparator economies and the depth of credit information index and a score of 3 on regional average ranking provide other useful the strength of legal rights index (see the summary of information for assessing how well regulations and scoring at the end of this chapter for details). Higher institutions in Ecuador support lending and borrowing. scores indicate more credit information and stronger legal rights for borrowers and lenders. Figure 6.1 How Ecuador and comparator economies rank on the ease of getting credit Source: Doing Business database. Doing Business 2012 Ecuador 56 GETTING CREDIT What are the changes over time? While the most recent Doing Business data reflect how institutions and regulations have been strengthened— well the credit information system and collateral and and where they have not (table 6.1). That can help bankruptcy laws in Ecuador support lending and identify where the potential for improvement is borrowing today, data over time can help show where greatest. Table 6.1 The ease of getting credit in Ecuador over time By Doing Business report year Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. .. 75 78 Strength of legal rights 3 3 3 3 3 3 3 3 index (0-10) Depth of credit 4 4 5 5 5 6 6 6 information index (0-6) Public registry coverage 12.4 13.6 15.2 37.9 37.7 37.2 36.5 0.0 (% of adults) Private bureau 0.0 0.0 43.7 44.1 46.8 46.0 45.0 57.9 coverage (% of adults) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. Source: Doing Business database. Doing Business 2012 Ecuador 57 GETTING CREDIT One way to put an economy’s getting credit indicators index for Ecuador in 2011 and shows the number of into context is to see where the economy stands in the other economies having the same score in 2011. distribution of scores across other economies. Figure Figure 6.3 shows the same thing for the depth of credit 6.2 highlights the score on the strength of legal rights information index. Figure 6.2 Have legal rights for borrowers and lenders Figure 6.3 Have the coverage and accessibility of credit become stronger? information grown? Number of economies with each score on strength of legal Number of economies with each score on depth of credit rights index (0–10), 2011 information index (0–6), 2011 Source: Doing Business database. Source: Doing Business database. Doing Business 2012 Ecuador 58 GETTING CREDIT When economies strengthen the legal rights of lenders credit information, they can increase entrepreneurs’ and borrowers under collateral and bankruptcy laws, access to credit. What credit reforms has Doing and increase the scope, coverage and accessibility of Business recorded in Ecuador (table 6.2)? Table 6.2 How has Ecuador made getting credit easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 59 GETTING CREDIT What are the details? The getting credit indicators reported here for Ecuador The data on the legal rights of borrowers and lenders are based on detailed information collected in that are gathered through a survey of financial lawyers and economy. The data on credit information sharing are verified through analysis of laws and regulations as collected through a survey of a public credit registry or well as public sources of information on collateral and private credit bureau (if one exists). To construct the bankruptcy laws. For the strength of legal rights index, depth of credit information index, a score of 1 is a score of 1 is assigned for each of 8 aspects related to assigned for each of 6 features of the public credit legal rights in collateral law and 2 aspects in registry or private credit bureau (see summary of bankruptcy law. scoring below). Summary of scoring for the getting credit indicators in Ecuador Latin America & Indicator Ecuador OECD high income Caribbean Strength of legal rights index (0-10) 3 6 7 Depth of credit information index (0-6) 6 3 5 Public registry coverage (% of adults) 0.0 10.1 9.5 Private bureau coverage (% of adults) 57.9 34.2 63.9 Strength of legal rights index (0–10) Index score: 3 Can any business use movable assets as collateral while keeping possession of the assets; Yes and any financial institution accept such assets as collateral ? Does the law allow businesses to grant a non possessory security right in a single category of No movable assets, without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of No its assets, without requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend Yes automatically to the products, proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement Yes include a maximum amount for which the assets are encumbered? Is a collateral registry in operation, that is unified geographically and by asset type, with an No electronic database indexed by debtor's names? Are secured creditors paid first (i.e. before general tax claims and employee claims) when a No debtor defaults outside an insolvency procedure? Doing Business 2012 Ecuador 60 Strength of legal rights index (0–10) Index score: 3 Are secured creditors paid first (i.e. before general tax claims and employee claims) when a No business is liquidated? Are secured creditors either not subject to an automatic stay or moratorium on enforcement procedures when a debtor enters a court-supervised reorganization procedure, or the law No provides secured creditors with grounds for relief from an automatic stay or Does the law allow parties to agree in a collateral agreement that the lender may enforce its No security right out of court, at the time a security interest is created? Private credit Public credit Depth of credit information index (0–6) Index score: 6 bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative data distributed? Yes No 1 Does the registry distribute credit information from retailers, trade creditors or utility companies as well as Yes No 1 financial institutions? Are more than 2 years of historical credit information Yes No 1 distributed? Is data on all loans below 1% of income per capita Yes No 1 distributed? Is it guaranteed by law that borrowers can inspect Yes No 1 their data in the largest credit registry? Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry. Coverage Private credit bureau Public credit registry Number of firms .. 0 Number of individuals .. 0 Source: Doing Business database. Doing Business 2012 Ecuador 61 PROTECTING INVESTORS Investor protections matter for the ability of WHAT THE PROTECTING INVESTORS companies to raise the capital they need to grow, INDICATORS MEASURE innovate, diversify and compete. If the laws do not provide such protections, investors may be reluctant to invest unless they become the controlling Extent of disclosure index (0–10) shareholders. Strong regulations clearly define Who can approve related-party transactions related-party transactions, promote clear and efficient Disclosure requirements in case of related- disclosure requirements, require shareholder party transactions participation in major decisions of the company and set clear standards of accountability for company Extent of director liability index (0–10) insiders. Ability of shareholders to hold interested What do the indicators cover? parties and members of the approving body liable in case of related-party transactions Doing Business measures the strength of minority Available legal remedies (damages, repayment shareholder protections against directors’ use of of profits, fines, imprisonment and rescission corporate assets for personal gain—or self-dealing. of the transaction) The indicators distinguish 3 dimensions of investor protections: transparency of related-party Ability of shareholders to sue directly or transactions (extent of disclosure index), liability for derivatively self-dealing (extent of director liability index) and Ease of shareholder suits index (0–10) shareholders’ ability to sue officers and directors for Access to internal corporate documents misconduct (ease of shareholder suits index). The (directly or through a government inspector) ranking on the strength of investor protection index is the simple average of the percentile rankings on Documents and information available during these 3 indices. To make the data comparable across trial economies, a case study uses several assumptions Strength of investor protection index (0–10) about the business and the transaction. Simple average of the extent of disclosure, The business (Buyer): extent of director liability and ease of shareholder suits indices  Is a publicly traded corporation listed on the economy’s most important stock exchange (or at least a large private company with multiple the company purchase used trucks from another shareholders). company he owns.  Has a board of directors and a chief executive  The price is higher than the going price for used officer (CEO) who may legally act on behalf of trucks, but the transaction goes forward. Buyer where permitted, even if this is not specifically required by law.  All required approvals are obtained, and all required disclosures made, though the transaction The transaction involves the following details: is prejudicial to Buyer.  Mr. James, a director and the majority  Shareholders sue the interested parties and the shareholder of the company, proposes that members of the board of directors. Doing Business 2012 Ecuador 62 PROTECTING INVESTORS Where does the economy stand today? How strong are investor protections in Ecuador? The index (figure 7.1). While the indicator does not economy has a score of 4.0 on the strength of investor measure all aspects related to the protection of protection index, with a higher score indicating minority investors, a higher ranking does indicate that stronger protections (see the summary of scoring at an economy’s regulations offer stronger investor the end of this chapter for details). protections against self-dealing in the areas measured. Globally, Ecuador stands at 133 in the ranking of 183 economies on the strength of investor protection Figure 7.1 How Ecuador and comparator economies rank on the strength of investor protection index Source: Doing Business database. Doing Business 2012 Ecuador 63 PROTECTING INVESTORS What are the changes over time? While the most recent Doing Business data reflect how ranking on the strength of investor protection index well regulations in Ecuador protect minority investors over time shows whether the economy is slipping today, data over time show whether the protections behind other economies in investor protections—or have been strengthened (table 7.1). And the global surpassing them. Table 7.1 The strength of investor protections in Ecuador over time By Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. 131 133 Extent of disclosure 1 1 1 1 1 1 1 index (0-10) Extent of director 5 5 5 5 5 5 5 liability index (0-10) Ease of shareholder 6 6 6 6 6 6 6 suits index (0-10) Strength of investor 4.0 4.0 4.0 4.0 4.0 4.0 4.0 protection index (0-10) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. Source: Doing Business database. Doing Business 2012 Ecuador 64 PROTECTING INVESTORS But the overall ranking on the strength of investor and ease of shareholder suits indices may also be protection index tells only part of the story. Economies revealing (figure 7.2). Equally interesting may be the may offer strong protections in some areas but not changes over time in the regional average scores for others. So the scores recorded over time for Ecuador those indices. on the extent of disclosure, extent of director liability Figure 7.2 Have investor protections become stronger? Strength of investor protection index (0-10) Extent of disclosure index (0-10) Doing Business 2012 Ecuador 65 PROTECTING INVESTORS Extent of director liability index (0-10) Ease of shareholder suits index (0-10) Note: The higher the score, the stronger the investor protections. The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an indicator. Source: Doing Business database. Doing Business 2012 Ecuador 66 PROTECTING INVESTORS Economies with the strongest protections of minority time. So reforms to strengthen investor protections investors from self-dealing require more disclosure may move ahead on different fronts—such as through and define clear duties for directors. They also have new or amended company laws or civil procedure well-functioning courts and up-to-date procedural rules. What investor protection reforms has Doing rules that give minority investors the means to prove Business recorded in Ecuador (table 7.2)? their case and obtain a judgment within a reasonable Table 7.2 How has Ecuador strengthened investor protections—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 67 PROTECTING INVESTORS What are the details? The protecting investors indicators reported here for shareholder suits indices, a score is assigned for each Ecuador are based on detailed information collected of a range of conditions relating to disclosure, director through a survey of corporate and securities lawyers liability and shareholder suits in a standard case study and are based on securities regulations, company laws transaction (see the notes at the end of this chapter). and court rules of evidence. To construct the extent of The summary below shows the details underlying the disclosure, extent of director liability and ease of scores for Ecuador. Summary of scoring for the protecting investors indicators in Ecuador Latin America & Indicator Ecuador OECD high income Caribbean Extent of disclosure index (0-10) 1 4 6 Extent of director liability index (0-10) 5 5 5 Ease of shareholder suits index (0-10) 6 6 7 Strength of investor protection index (0-10) 4.0 5.1 6.0 Score Extent of disclosure index (0-10) 1 What corporate body provides legally sufficient approval for the transaction? 0 Whether disclosure of the conflict of interest by Mr. James to the board of directors is 0 required? Whether immediate disclosure of the transaction to the public and/or shareholders is 0 required? Whether disclosure of the transaction in published periodic filings (annual reports) is 1 required? Whether an external body must review the terms of the transaction before it takes place? 0 Extent of director liability index (0-10) 5 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller 1 transaction causes to the company? Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller 1 transaction causes to the company? Whether shareholders can hold members of the approving body liable for the damage that 1 the Buyer-Seller transaction causes to the company? Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 0 Doing Business 2012 Ecuador 68 Score Whether Mr. James pays damages for the harm caused to the company upon a successful 1 claim by the shareholder plaintiff? Whether Mr. James repays profits made from the transaction upon a successful claim by the 0 shareholder plaintiff? Whether fines and imprisonment can be applied against Mr. James? 1 Ease of shareholder suits index (0-10) 6 Whether shareholders owning 10% or less of Buyer's shares can inspect transaction 0 documents before filing suit? Whether shareholders owning 10% or less of Buyer's shares can request an inspector to 1 investigate the transaction? Whether the plaintiff can obtain any documents from the defendant and witnesses during 4 trial? Whether the plaintiff can request categories of documents from the defendant without 0 identifying specific ones? Whether the plaintiff can directly question the defendant and witnesses during trial? 1 Whether the level of proof required for civil suits is lower than that of criminal cases? 0 Strength of investor protection index (0-10) 4.0 Source: Doing Business database. Notes: Extent of disclosure index (0–10) Scoring for the extent of disclosure index is based on 5 components: Which corporate body can provide legally sufficient approval for the transaction 0 = CEO or managing director alone; 1 = shareholders or board of directors vote and Mr. James can vote; 2 = board of directors votes and Mr. James cannot vote; 3 = shareholders vote and Mr. James cannot vote. Whether disclosure of the conflict of interest by Mr. James to the board of directors is required 0 = no disclosure; 1 = disclosure of the existence of a conflict without any specifics; 2 = full disclosure of all material facts. Whether immediate disclosure of the transaction to the public, the regulator or the shareholders is required 0 = no disclosure; 1 = disclosure on the transaction only; 2 = disclosure on the transaction and Mr. James’s conflict of interest. Whether disclosure of the transaction in the annual report is required 0 = no disclosure; 1 = disclosure on the transaction only; 2 = disclosure on the transaction and Mr. James’s conflict of interest. Doing Business 2012 Ecuador 69 Whether it is required that an external body (for example, an external auditor) review the transaction before it takes place 0 = no; 1 = yes. Extent of director liability index (0–10) Scoring for the extent of director liability index is based on 7 components: Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to the company 0 = suits are unavailable or available only for shareholders holding more than 10% of the company’s share capital; 1 = direct or derivative suits available for shareholders holding 10% of share capital or less. Whether shareholders can hold Mr. James liable for the damage that the transaction causes to the company 0 = Mr. James is not liable or is liable only if he acted fraudulently or in bad faith; 1 = Mr. James is liable if he influenced the approval or was negligent; 2 = Mr. James is liable if the transaction is unfair or prejudicial to the other shareholders. Whether shareholders can hold the approving body (the CEO or members of the board of directors) liable for the damage that the transaction causes to the company 0 = members of the approving body are either not liable or liable only if they acted fraudulently or in bad faith; 1 = liable for negligence in the approval of the transaction; 2 = liable if the transaction is unfair or prejudicial to the other shareholders. Whether a court can void the transaction upon a successful claim by a shareholder plaintiff 0 = rescission is unavailable or available only in case of Seller’s fraud or bad faith; 1 = rescission is available when the transaction is oppressive or prejudicial to the other shareholders; 2 = rescission is available when the transaction is unfair or entails a conflict of interest. Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholder plaintiff 0 = no; 1 = yes. Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff 0 = no; 1 = yes. Whether both fines and imprisonment can be applied against Mr. James 0 = no; 1 = yes. Ease of shareholder suits index (0–10) Scoring for the ease of shareholder suits index is based on 6 components: What range of documents is available to the plaintiff from the defendant and witnesses during trial Score of 1 for each of the following: information that the defendant has indicated he intends to rely on for his defense; information that directly proves specific facts in the plaintiff’s claim; any information relevant to the subject matter of the claim; and any information that may lead to the discovery of relevant information. Doing Business 2012 Ecuador 70 Whether the plaintiff can directly examine the defendant and witnesses during trial 0 = no; 1 = yes, with prior approval by the court of the questions posed; 2 = yes, without prior approval. Whether the plaintiff can obtain categories of relevant documents from the defendant without identifying each document specifically 0 = no; 1 = yes. Whether shareholders owning 10% or less of the company’s share capital can request that a government inspector investigate the transaction without filing suit in court 0 = no; 1 = yes. Whether shareholders owning 10% or less of the company’s share capital have the right to inspect the transaction documents before filing suit 0 = no; 1 = yes. Whether the standard of proof for civil suits is lower than that for a criminal case 0 = no; 1 = yes. Strength of investor protection index (0–10) Simple average of the extent of disclosure, extent of director liability and ease of shareholder suits indices. Doing Business 2012 Ecuador 71 PAYING TAXES Taxes are essential. They fund the public amenities, WHAT THE PAYING TAXES INDICATORS infrastructure and services that are crucial for a MEASURE properly functioning economy. But the level of tax rates needs to be carefully chosen—and needless complexity in tax rules avoided. According to Tax payments for a manufacturing company Doing Business data, in economies where it is more in 2010 (number per year adjusted for difficult and costly to pay taxes, larger shares of electronic or joint filing and payment) economic activity end up in the informal sector— Total number of taxes and contributions paid, where businesses pay no taxes at all. including consumption taxes (value added tax, sales tax or goods and service tax) What do the indicators cover? Method and frequency of filing and payment Using a case scenario, Doing Business measures the taxes and mandatory contributions that a Time required to comply with 3 major taxes medium-size company must pay in a given year as (hours per year) well as the administrative burden of paying taxes Collecting information and computing the tax and contributions. This case scenario uses a set of payable financial statements and assumptions about Completing tax return forms, filing with transactions made over the year. Information is proper agencies also compiled on the frequency of filing and payments as well as time taken to comply with tax Arranging payment or withholding laws. The ranking on the ease of paying taxes is Preparing separate tax accounting books, if the simple average of the percentile rankings on required its component indicators: number of annual Total tax rate (% of profit before all taxes) payments, time and total tax rate, with a threshold 2 being applied to the total tax rate. To make the Profit or corporate income tax data comparable across economies, several Social contributions and labor taxes paid by assumptions about the business and the taxes and the employer contributions are used. Property and property transfer taxes  TaxpayerCo is a medium-size business that Dividend, capital gains and financial started operations on January 1, 2009. transactions taxes  The business starts from the same financial Waste collection, vehicle, road and other taxes position in each economy. All the taxes and mandatory contributions paid during the second year of operation are recorded.  Taxes and mandatory contributions include  Taxes and mandatory contributions are corporate income tax, turnover tax and all measured at all levels of government. labor taxes and contributions paid by the company.  A range of standard deductions and exemptions are also recorded. 2 The threshold is defined as the highest total tax rate among the top 30% of economies in the ranking on the total tax rate. It will be calculated and adjusted on a yearly basis. The threshold is not based on any underlying theory. Instead, it is intended to mitigate the effect of very low tax rates on the ranking on the ease of paying taxes. Doing Business 2012 Ecuador 72 PAYING TAXES Where does the economy stand today? What is the administrative burden of complying with Globally, Ecuador stands at 88 in the ranking of 183 taxes in Ecuador—and how much do firms pay in economies on the ease of paying taxes (figure 8.1). The taxes? On average, firms make 8 tax payments a year, rankings for comparator economies and the regional spend 654 hours a year filing, preparing and paying average ranking provide other useful information for taxes and pay total taxes amounting to 18.4% of profit assessing the tax compliance burden for businesses in (see the summary at the end of this chapter for Ecuador. details). Figure 8.1 How Ecuador and comparator economies rank on the ease of paying taxes Note: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database. Doing Business 2012 Ecuador 73 PAYING TAXES What are the changes over time? While the most recent Doing Business data reflect how the process have changed — and which have not easy (or difficult) it is to comply with tax rules in (table 8.1). That can help identify where the potential Ecuador today, data over time show which aspects of for easing tax compliance is greatest. Table 8.1 The ease of paying taxes in Ecuador over time By Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. 88 88 Payments (number per 8 8 8 8 8 8 8 year) Time (hours per year) 600 600 600 600 600 654 654 Total tax rate (% profit) 35.3 35.3 35.3 34.9 34.9 35.3 35.3 Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the rank on the ease of paying taxes. Source: Doing Business database. Doing Business 2012 Ecuador 74 PAYING TAXES Equally helpful may be the benchmarks provided by ways to ease the administrative burden of tax the economies that today have the best performance compliance. And changes in regional averages can regionally or globally on the number of payments or show where Ecuador is keeping up—and where it is the time required to prepare and file taxes (figure 8.2). falling behind. These economies may provide a model for Ecuador on Figure 8.2 Has paying taxes become easier over time? Payments (number per year) Time (hours per year) Doing Business 2012 Ecuador 75 PAYING TAXES Total tax rate (% of profit) Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. The best performer globally on an indicator has implemented the most efficient practices in its tax system but is not necessarily the one with the highest ranking on the indicator. In some cases 2 or more economies share the top regional ranking on an indicator. DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database. Doing Business 2012 Ecuador 76 PAYING TAXES Economies around the world have made paying taxes concrete results. Some economies simplifying tax faster and easier for businesses—such as by payment and reducing rates have seen tax revenue consolidating filings, reducing the frequency of rise. What tax reforms has Doing Business recorded in payments or offering electronic filing and payment. Ecuador (table 8.2)? Many have lowered tax rates. Changes have brought Table 8.2 How has Ecuador made paying taxes easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 77 PAYING TAXES What are the details? The indicators reported here for Ecuador are based on completed during the year. Respondents are asked a standard set of taxes and contributions that would how much in taxes and mandatory contributions the be paid by the case study company used by Doing business must pay and what the process is for doing Business in collecting the data (see the section in this so. The taxes and contributions paid are listed in the chapter on what the indicators cover). Tax practitioners summary below, along with the associated number of are asked to review standard financial statements as payments, time and tax rate. well as a standard list of transactions that the company Summary of tax rates and administrative burden in Ecuador Latin America & Indicator Ecuador OECD high income Caribbean Payments (number per year) 8 32 13 Time (hours per year) 654 382 186 Profit tax (%) 18.4 19.9 15.4 Labor tax and contributions (%) 14.2 14.6 24.0 Other taxes (%) 2.7 13.2 3.2 Total tax rate (% profit) 35.3 47.7 42.7 Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate taxable Corporate income tax 1 online filing 108 25.0% 17.9 profits Social security gross 1 online filing 306 12.15% 13.7 contributions salaries Patent tax 1 0 fixed fee 2.1 gain in Capital gains tax (property 1 0 10.00% property 0.5 transfer tax) sale Contribution to 1 0 0%-0.85% total assets 0.5 superintendence Municipal assets tax 1 0 0.15% total assets 0.4 vehicle Vehicle tax 1 0 2.5% 0.2 value Doing Business 2012 Ecuador 78 Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate Value added tax (VAT) 1 online filing 240 12.00% value added 0 not included Totals 8 654 35.3 Note: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database. Doing Business 2012 Ecuador 79 TRADING ACROSS BORDERS In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS economies easier is increasingly important for INDICATORS MEASURE business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to Documents required to export and import extra costs and delays for exporters and importers, (number) stifling trade potential. Research shows that Bank documents exporters in developing countries gain more from Customs clearance documents a 10% drop in their trading costs than from a similar reduction in the tariffs applied to their Port and terminal handling documents products in global markets. Transport documents What do the indicators cover? Time required to export and import (days) Doing Business measures the time and cost Obtaining all the documents (excluding tariffs) associated with exporting and Inland transport and handling importing a standard shipment of goods by ocean transport, and the number of documents necessary Customs clearance and inspections to complete the transaction. The indicators cover Port and terminal handling procedural requirements such as documentation requirements and procedures at customs and other Does not include ocean transport time regulatory agencies as well as at the port. They also Cost required to export and import (US$ per cover trade logistics, including the time and cost of container) inland transport to the largest business city. The All documentation ranking on the ease of trading across borders is the simple average of the percentile rankings on its Inland transport and handling component indicators: documents, time and cost Customs clearance and inspections to export and import. Port and terminal handling To make the data comparable across economies, Official costs only, no bribes Doing Business uses several assumptions about the business and the traded goods. The business:  Is of medium size and employs 60 people.  Do not require refrigeration or any other  Is located in the periurban area of the special environment. economy’s largest business city.  Do not require any special phytosanitary or  Is a private, limited liability company, environmental safety standards other than domestically owned, formally registered accepted international standards. and operating under commercial laws and regulations of the economy.  Are one of the economy’s leading export or import products. The traded goods:  Are transported in a dry-cargo, 20-foot full  Are not hazardous nor do they include container load. military items. Doing Business 2012 Ecuador 80 TRADING ACROSS BORDERS Where does the economy stand today? What does it take to export or import in Ecuador? Globally, Ecuador stands at 123 in the ranking of 183 According to data collected by Doing Business, economies on the ease of trading across borders exporting a standard container of goods requires 8 (figure 9.1). The rankings for comparator economies documents, takes 20 days and costs $1455. Importing and the regional average ranking provide other useful the same container of goods requires 7 documents, information for assessing how easy it is for a business takes 25 days and costs $1432 (see the summary of in Ecuador to export and import goods. procedures and documents at the end of this chapter for details). Figure 9.1 How Ecuador and comparator economies rank on the ease of trading across borders Source: Doing Business database. Doing Business 2012 Ecuador 81 TRADING ACROSS BORDERS What are the changes over time? While the most recent Doing Business data reflect how process have changed—and which have not (table 9.1). easy (or difficult) it is to export or import in Ecuador That can help identify where the potential for today, data over time show which aspects of the improvement is greatest. Table 9.1 The ease of trading across borders in Ecuador over time By Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. 126 123 Documents to export 9 9 9 8 8 8 8 (number) Time to export (days) 22 22 22 20 20 20 20 Cost to export (US$ per 1,200 1,200 1,200 1,455 1,455 1,455 1,455 container) Documents to import 8 8 8 7 7 7 7 (number) Time to import (days) 44 44 44 29 29 29 25 Cost to import (US$ per 1,160 1,160 1,160 1,402 1,402 1,402 1,432 container) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. Source: Doing Business database. Equally helpful may be the benchmarks provided by economies may provide a model for Ecuador on ways the economies that today have the best performance to improve the ease of trading across borders. And regionally or globally on the documents, time or cost changes in regional averages can show where Ecuador required to export or import (figure 9.2). These is keeping up—and where it is falling behind. Doing Business 2012 Ecuador 82 TRADING ACROSS BORDERS Figure 9.2 Has trading across borders become easier over time? Documents to export (number) Time to export (days) Doing Business 2012 Ecuador 83 TRADING ACROSS BORDERS Cost to export (US$ per container) Documents to import (number) Doing Business 2012 Ecuador 84 TRADING ACROSS BORDERS Time to import (days) Cost to import (US$ per container) Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an indicator. Source: Doing Business database. Doing Business 2012 Ecuador 85 TRADING ACROSS BORDERS In economies around the world, trading across borders systems. These changes help improve the trading as measured by Doing Business has become faster and environment and boost firms’ international easier over the years. Governments have introduced competitiveness. What trade reforms has Doing tools to facilitate trade—including single windows, Business recorded in Ecuador (table 9.2)? risk-based inspections and electronic data interchange Table 9.2 How has Ecuador made trading across borders easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. The trade process was streamlined through improvements in port infrastructure and banking services and a reduction in DB2009 the number of documents required. The changes reduced the time to import and export. 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 2012 Ecuador 86 TRADING ACROSS BORDERS What are the details? The indicators reported here for Ecuador are based on freight forwarders, shipping lines, customs brokers, a set of specific procedural requirements for trading a port officials and banks. The procedural requirements, standard shipment of goods by ocean transport (see and the associated time and cost, for exporting and the section in this chapter on what the indicators importing a standard shipment of goods are listed in cover). Information on the procedures as well as the the summary below, along with the required required documents and the time and cost to documents. complete each procedure is collected from local Summary of procedures and documents for trading across borders in Ecuador Latin America & Indicator Ecuador OECD high income Caribbean Documents to export (number) 8 6 4 Time to export (days) 20 18 10 Cost to export (US$ per container) 1455 1,257 1,032 Documents to import (number) 7 7 5 Time to import (days) 25 20 11 Cost to import (US$ per container) 1432 1,546 1,085 Procedures to export Time (days) Cost (US$) Documents preparation 10 375 Customs clearance and technical control 4 170 Ports and terminal handling 2 360 Inland transportation and handling 4 550 Totals 20 1455 Procedures to import Time (days) Cost (US$) Documents preparation 15 362 Customs clearance and technical control 4 200 Ports and terminal handling 4 320 Inland transportation and handling 2 550 Totals 25 1432 Doing Business 2012 Ecuador 87 TRADING ACROSS BORDERS Documents to export Documents to import Bill of lading Bill of lading Customs export declaration Cargo release order Commercial invoice Certificate of origin Certificate of origin Commercial invoice Equipment interchange receipt Customs import declaration Insurance certificate Packing list Packing list Terminal handling receipts Technical standard/health certificate Doing Business 2012 Ecuador 88 ENFORCING CONTRACTS Well-functioning courts help businesses expand WHAT THE ENFORCING CONTRACTS their network and markets. Without effective INDICATORS MEASURE contract enforcement, people might well do business only with family, friends and others with whom they have established relationships. Where Procedures to enforce a contract through contract enforcement is efficient, firms are more the courts (number) likely to engage with new borrowers or customers, Any interaction between the parties in a and they have greater access to credit. commercial dispute, or between them and the judge or court officer What do the indicators cover? Steps to file and serve the case Doing Business measures the efficiency of the judicial system in resolving a commercial dispute Steps for trial and judgment before local courts. Following the step-by-step Steps to enforce the judgment evolution of a standardized case study, it collects data relating to the time, cost and procedural Time required to complete procedures complexity of resolving a commercial lawsuit. The (calendar days) ranking on the ease of enforcing contracts is the Time to file and serve the case simple average of the percentile rankings on its Time for trial and obtaining judgment component indicators: procedures, time and cost. Time to enforce the judgment The dispute in the case study involves the breach of a sales contract between 2 domestic businesses. Cost required to complete procedures (% of The case study assumes that the court hears an claim) expert on the quality of the goods in dispute. This No bribes distinguishes the case from simple debt Average attorney fees enforcement. To make the data comparable across economies, Doing Business uses several Court costs, including expert fees assumptions about the case: Enforcement costs  The seller and buyer are located in the economy’s largest business city.  The buyer orders custom-made goods,  The dispute on the quality of the goods then fails to pay. requires an expert opinion.  The seller sues the buyer before a  The judge decides in favor of the seller; there competent court. is no appeal.  The value of the claim is 200% of income  The seller enforces the judgment through a per capita. public sale of the buyer’s movable assets.  The seller requests a pretrial attachment to secure the claim. Doing Business 2012 Ecuador 89 ENFORCING CONTRACTS Where does the economy stand today? How efficient is the process of resolving a commercial Globally, Ecuador stands at 100 in the ranking of 183 dispute through the courts in Ecuador? According to economies on the ease of enforcing contracts (figure data collected by Doing Business, enforcing a contract 10.1). The rankings for comparator economies and the requires 39 procedures, takes 588 days and costs regional average ranking provide other useful 27.2% of the value of the claim (see the summary at benchmarks for assessing the efficiency of contract the end of this chapter for details). enforcement in Ecuador. Figure 10.1 How Ecuador and comparator economies rank on the ease of enforcing contracts Source: Doing Business database. Doing Business 2012 Ecuador 90 ENFORCING CONTRACTS What are the changes over time? While the most recent Doing Business data reflect how identify which areas have changed and where the easy (or difficult) it is to enforce a contract in Ecuador potential for improvement is greatest (table 10.1). today, data on the underlying indicators over time help Table 10.1 The ease of enforcing contracts in Ecuador over time By Doing Business report year Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. .. .. 101 100 Time (days) 588 588 588 588 588 588 588 588 588 Cost (% of claim) 27.2 27.2 27.2 27.2 27.2 27.2 27.2 27.2 27.2 Procedures (number) 39 39 39 39 39 39 39 39 39 Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. Source: Doing Business database. Doing Business 2012 Ecuador 91 ENFORCING CONTRACTS Equally helpful may be the benchmarks provided by for Ecuador on ways to improve the efficiency of the economies that today have the best performance contract enforcement. And changes in regional regionally or globally on the number of steps, time or averages can show where Ecuador is keeping up—and cost required to enforce a contract through the courts where it is falling behind. (figure 10.2). These economies may provide a model Figure 10.2 Has enforcing contracts become easier over time? Procedures (number) Time (days) Doing Business 2012 Ecuador 92 ENFORCING CONTRACTS Cost (% of claim) Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an indicator. Source: Doing Business database. Doing Business 2012 Ecuador 93 ENFORCING CONTRACTS Economies in all regions have improved contract often work on reducing backlogs by introducing enforcement in recent years. A judiciary can be periodic reviews to clear inactive cases from the docket improved in different ways. Higher-income economies and by making procedures faster. What reforms tend to look for ways to enhance efficiency by making it easier (or more difficult) to enforce contracts introducing new technology. Lower-income economies has Doing Business recorded in Ecuador (table 10.2)? Table 10.2 How has Ecuador made enforcing contracts easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 94 ENFORCING CONTRACTS What are the details? The indicators reported here for Ecuador are based on codes of civil procedure and other court regulations, as a set of specific procedural steps required to resolve a well as through surveys completed by local litigation standardized commercial dispute through the courts lawyers (and, in a quarter of the economies covered by (see the section in this chapter on what the indicators Doing Business, by judges as well). The procedures for cover). These procedures, and the time and cost of resolving a commercial lawsuit, and the associated completing them, are identified through study of the time and cost, are listed in the summary below. Summary of procedures for enforcing a contract in Ecuador—and the time and cost Latin America & Indicator Ecuador OECD high income Caribbean Time (days) 588 707.78 518.03 Filing and service 38 Trial and judgment 455 Enforcement of judgment 95 Cost (% of claim) 27.2 31.21 19.71 Attorney cost (% of claim) 15 Court cost (% of claim) 5 Enforcement Cost (% of claim) 7.2 Procedures (number) 39 40.03 31.42 Source: Doing Business database. Doing Business 2012 Ecuador 95 RESOLVING INSOLVENCY A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY ensuring the survival of economically efficient companies and reallocating the resources of INDICATORS MEASURE inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of Time required to recover debt (years) businesses to normal operation and increase Measured in calendar years returns to creditors. By improving the expectations of creditors and debtors about the outcome of Appeals and requests for extension are insolvency proceedings, well-functioning included insolvency systems can facilitate access to finance, Cost required to recover debt (% of debtor’s save more viable businesses and thereby improve estate) growth and sustainability in the economy overall. Measured as percentage of estate value What do the indicators cover? Court fees Doing Business studies the time, cost and outcome Fees of insolvency administrators of insolvency proceedings involving domestic entities. It does not measure insolvency Lawyers’ fees proceedings of individuals and financial Assessors’ and auctioneers’ fees institutions. The data are derived from survey Other related fees responses by local insolvency practitioners and verified through a study of laws and regulations as Recovery rate for creditors (cents on the well as public information on bankruptcy systems. dollar) The ranking on the ease of resolving insolvency is Measures the cents on the dollar recovered based on the recovery rate, which is recorded as by creditors cents on the dollar recouped by creditors through Present value of debt recovered reorganization, liquidation or debt enforcement (foreclosure) proceedings. The recovery rate is a Official costs of the insolvency proceedings are deducted function of time, cost and other factors, such as lending rate and the likelihood of the company Depreciation of furniture is taken into continuing to operate. account To make the data comparable across economies, Outcome for the business (survival or not) Doing Business uses several assumptions about the affects the maximum value that can be business and the case. It assumes that the recovered company:  Is a domestically owned, limited liability company operating a hotel.  Has 201 employees, 1 main secured creditor  Operates in the economy’s largest business and 50 unsecured creditors. city.  Has a higher value as a going concern—and the efficient outcome is either reorganization or sale as a going concern, not piecemeal liquidation. Doing Business 2012 Ecuador 96 RESOLVING INSOLVENCY Where does the economy stand today? Speed, low costs and continuation of viable businesses Globally, Ecuador stands at 139 in the ranking of 183 characterize the top-performing economies. How economies on the ease of resolving insolvency (figure efficient are insolvency proceedings in Ecuador? 11.1). The rankings for comparator economies and the According to data collected by Doing Business, regional average ranking provide other useful resolving insolvency takes 5.3 years on average and benchmarks for assessing the efficiency of insolvency costs 18% of the debtor’s estate. The average recovery proceedings in Ecuador. rate is 17.2 cents on the dollar. Figure 11.1 How Ecuador and comparator economies rank on the ease of resolving insolvency Source: Doing Business database. Doing Business 2012 Ecuador 97 RESOLVING INSOLVENCY What are the changes over time? While the most recent Doing Business data reflect the changed—and where it has not (table 11.1). That can efficiency of insolvency proceedings in Ecuador today, help identify where the potential for improvement is data over time show where the efficiency has greatest. Table 11.1 The ease of resolving insolvency in Ecuador over time By Doing Business report year Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012 Rank .. .. .. .. .. .. .. 138 139 Time (years) 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 Cost (% of estate) 18 18 18 18 18 18 18 18 18 Recovery rate (cents on 12.5 14.2 16.6 16.5 16.9 16.1 16.1 17.0 17.2 the dollar) Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to the methodology. ―No practice‖ indicates that in each of the previous 5 years the economy had no cases involving a judicial reorganization, judicial liquidation or debt enforcement procedure (foreclosure). This means that creditors are unlikely to recover their money through a formal legal process (in or out of court). The recovery rate for ―no practice‖ economies is 0. Source: Doing Business database. Doing Business 2012 Ecuador 98 RESOLVING INSOLVENCY Equally helpful may be the benchmarks provided by ways to improve the efficiency of insolvency the economies that today have the best performance proceedings. And changes in regional averages can regionally or globally on the time or cost of insolvency show where Ecuador is keeping up—and where it is proceedings or on the recovery rate (figure 11.2). falling behind. These economies may provide a model for Ecuador on Figure 11.2 Has resolving insolvency become easier over time? Time (years) Cost (% of estate) Doing Business 2012 Ecuador 99 RESOLVING INSOLVENCY Recovery rate (cents on the dollar) Note: The economy with the best performance regionally on each indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on an indicator. In cases where no data are displayed above for the economy, this indicates that the economy has received a “no practice� mark; see the data notes for details. Source: Doing Business database. Doing Business 2012 Ecuador 100 RESOLVING INSOLVENCY A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have companies that are financially distressed but been aimed at helping more of the viable businesses economically viable from inefficient companies that survive. What insolvency reforms has Doing Business should be liquidated. But in some insolvency systems recorded in Ecuador (table 11.2)? even viable businesses are liquidated. This is starting to Table 11.2 How has Ecuador made resolving insolvency easier—or not? By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform. 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 2012 Ecuador 101 DATA NOTES The indicators presented and analyzed in Doing Business measure business regulation and the ECONOMY CHARACTERISTICS protection of property rights—and their effect on businesses, especially small and medium-size domestic firms. First, the indicators document the complexity of Gross national income (GNI) per capita regulation, such as the number of procedures to start a business or to register and transfer commercial Doing Business 2012 reports 2010 income per capita property. Second, they gauge the time and cost of as published in the World Bank’s World Development achieving a regulatory goal or complying with Indicators 2011. Income is calculated using the Atlas method (current US$). For cost indicators expressed regulation, such as the time and cost to enforce a as a percentage of income per capita, 2010 GNI in contract, go through bankruptcy or trade across U.S. dollars is used as the denominator. Data were borders. Third, they measure the extent of legal not available from the World Bank for Afghanistan; protections of property, for example, the protections Australia; The Bahamas; Bahrain; Brunei Darussalam; of investors against looting by company directors or Canada; Cyprus; Djibouti; the Islamic Republic of the range of assets that can be used as collateral Iran; Kuwait; New Zealand; Oman; Puerto Rico according to secured transactions laws. Fourth, a set of (territory of the United States); Qatar; Saudi Arabia; indicators documents the tax burden on businesses. Suriname; Taiwan, China; the United Arab Emirates; Finally, a set of data covers different aspects of West Bank and Gaza; and the Republic of Yemen. In employment regulation. these cases GDP or GNP per capita data and growth rates from the International Monetary Fund’s World The data for all sets of indicators in Doing Business Economic Outlook database and the Economist 3 2012 are for June 2011. Intelligence Unit were used. Region and income group Methodology Doing Business uses the World Bank regional and income group classifications, available at The Doing Business data are collected in a http://www.worldbank.org/data/countryclass. The standardized way. To start, the Doing Business team, World Bank does not assign regional classifications with academic advisers, designs a questionnaire. The to high-income economies. For the purpose of the questionnaire uses a simple business case to ensure Doing Business report, high-income OECD comparability across economies and over time—with economies are assigned the ―regional‖ classification assumptions about the legal form of the business, its OECD high income. Figures and tables presenting size, its location and the nature of its operations. regional averages include economies from all Questionnaires are administered through more than income groups (low, lower middle, upper middle 9,028 local experts, including lawyers, business and high income). consultants, accountants, freight forwarders, Population government officials and other professionals routinely administering or advising on legal and regulatory Doing Business 2012 reports midyear 2010 population statistics as published in World requirements. These experts have several rounds of Development Indicators 2011. interaction with the Doing Business team, involving conference calls, written correspondence and visits by the team. For Doing Business 2012 team members The Doing Business methodology offers several visited 40 economies to verify data and recruit advantages. It is transparent, using factual information respondents. The data from questionnaires are about what laws and regulations say and allowing subjected to numerous rounds of verification, leading multiple interactions with local respondents to clarify to revisions or expansions of the information collected. potential misinterpretations of questions. Having representative samples of respondents is not an issue; 3 The data for paying taxes refer to January – December 2010. Doing Business 2012 Ecuador 102 Doing Business is not a statistical survey, and the texts entrepreneurs reported in the World Bank Enterprise of the relevant laws and regulations are collected and Surveys or other perception surveys. answers checked for accuracy. The methodology is inexpensive and easily replicable, so data can be collected in a large sample of economies. Because Subnational Doing Business indicators standard assumptions are used in the data collection, This year Doing Business published a subnational study comparisons and benchmarks are valid across for the Philippines and a regional report for Southeast economies. Finally, the data not only highlight the Europe covering 7 economies (Albania, Bosnia and extent of specific regulatory obstacles to business but Herzegovina, Kosovo, the former Yugoslav Republic of also identify their source and point to what might be Macedonia, Moldova, Montenegro and Serbia) and 22 reformed. cities. It also published a city profile for Juba, in the Information on the methodology for each Doing Republic of South Sudan. Business topic can be found on the Doing Business The subnational studies point to differences in website at http://www.doingbusiness.org/methodology/. business regulation and its implementation—as well as in the pace of regulatory reform—across cities in the same economy. For several economies subnational Limits to what is measured studies are now periodically updated to measure The Doing Business methodology has 5 limitations that change over time or to expand geographic coverage should be considered when interpreting the data. First, to additional cities. This year that is the case for the the collected data refer to businesses in the economy’s subnational studies in the Philippines; the regional largest business city and may not be representative of report in Southeast Europe; the ongoing studies in regulation in other parts of the economy. To address Italy, Kenya and the United Arab Emirates; and the this limitation, subnational Doing Business indicators projects implemented jointly with local think tanks in were created (see the section on subnational Doing Indonesia, Mexico and the Russian Federation. Business indicators). Second, the data often focus on a Besides the subnational Doing Business indicators, specific business form—generally a limited liability Doing Business conducted a pilot study this year on company (or its legal equivalent) of a specified size— the second largest city in 3 large economies to assess and may not be representative of the regulation on within-country variations. The study collected data for other businesses, for example, sole proprietorships. Rio de Janeiro in addition to São Paulo in Brazil, for Third, transactions described in a standardized case Beijing in addition to Shanghai in China and for St. scenario refer to a specific set of issues and may not Petersburg in addition to Moscow in Russia. represent the full set of issues a business encounters. Fourth, the measures of time involve an element of judgment by the expert respondents. When sources Changes in what is measured indicate different estimates, the time indicators reported in Doing Business represent the median The methodology for 3 of the Doing Business topics values of several responses given under the was updated this year—getting credit, dealing with assumptions of the standardized case. construction permits and paying taxes. Finally, the methodology assumes that a business has First, for getting credit, the scoring of one of the 10 full information on what is required and does not components of the strength of legal rights index was waste time when completing procedures. In practice, amended to recognize additional protections of completing a procedure may take longer if the secured creditors and borrowers. Previously the business lacks information or is unable to follow up highest score of 1 was assigned if secured creditors promptly. Alternatively, the business may choose to were not subject to an automatic stay or moratorium disregard some burdensome procedures. For both on enforcement procedures when a debtor entered a reasons the time delays reported in Doing Business court-supervised reorganization procedure. Now the 2012 would differ from the recollection of highest score of 1 is also assigned if the law provides secured creditors with grounds for relief from an Doing Business 2012 Ecuador 103 automatic stay or moratorium (for example, if the regulatory environment for local entrepreneurs in each movable property is in danger) or sets a time limit for economy has changed over time. the automatic stay. Ease of doing business Second, because the ease of doing business index now The ease of doing business index ranks economies includes the getting electricity indicators, procedures, from 1 to 183. For each economy the ranking is time and cost related to obtaining an electricity calculated as the simple average of the percentile connection were removed from the dealing with rankings on each of the 10 topics included in the index construction permits indicators. in Doing Business 2012: starting a business, dealing Third, a threshold has been introduced for the total tax with construction permits, registering property, getting rate for the purpose of calculating the ranking on the credit, protecting investors, paying taxes, trading ease of paying taxes. All economies with a total tax across borders, enforcing contracts, resolving rate below the threshold (which will be calculated and insolvency and, new this year, getting electricity. The adjusted on a yearly basis) will now receive the same employing workers indicators are not included in this ranking on the total tax rate indicator. The threshold is year’s aggregate ease of doing business ranking. In not based on any underlying theory. Instead, it is addition to this year’s ranking, Doing Business presents meant to emphasize the purpose of the indicator: to a comparable ranking for the previous year, adjusted highlight economies where the tax burden on business for any changes in methodology as well as additions of 4 is high relative to the tax burden in other economies. economies or topics. Giving the same ranking to all economies whose total Construction of the ease of doing business index tax rate is below the threshold avoids awarding economies in the scoring for having an unusually low Here is one example of how the ease of doing business total tax rate, often for reasons unrelated to index is constructed. In the Republic of Korea it takes 5 government policies toward enterprises. For example, procedures, 7 days and 14.6% of annual income per economies that are very small or that are rich in capita in fees to open a business. There is no minimum natural resources do not need to levy broad-based capital required. On these 4 indicators Korea ranks in th th rd taxes. the 18 , 14 , 53 and 0 percentiles. So on average st Korea ranks in the 21 percentile on the ease of th starting a business. It ranks in the 12 percentile on Data challenges and revisions th getting credit, 25 percentile on paying taxes, 8 th th percentile on enforcing contracts, 7 percentile on Most laws and regulations underlying the Doing resolving insolvency and so on. Higher rankings Business data are available on the Doing Business indicate simpler regulation and stronger protection of website at http://www.doingbusiness.org. All the property rights. The simple average of Korea’s sample questionnaires and the details underlying the st percentile rankings on all topics is 21 . When all indicators are also published on the website. Questions economies are ordered by their average percentile on the methodology and challenges to data can be rankings, Korea stands at 8 in the aggregate ranking submitted through the website’s ―Ask a Question‖ on the ease of doing business. function at http://www.doingbusiness.org. More complex aggregation methods—such as principal components and unobserved components— Ease of doing business and distance to frontier 4 In case of revisions to the methodology or corrections to the underlying data, the data are back-calculated to provide a This year’s report presents results for 2 aggregate comparable time series since the year the relevant economy or topic measures: the aggregate ranking on the ease of doing was first included in the data set. The time series is available on the business and a new measure, the ―distance to frontier.‖ Doing Business website (http://www.doingbusiness.org). The Doing While the ease of doing business ranking compares Business report publishes yearly rankings for the year of publication as well as the previous year to shed light on year-to-year economies with one another at a point in time, the developments. Six topics and more than 50 economies have been distance to frontier measure shows how much the added since the inception of the project. Earlier rankings on the ease of doing business are therefore not comparable. Doing Business 2012 Ecuador 104 yield a ranking nearly identical to the simple average Consider the example of Canada. It stands at 12 in the 5 used by Doing Business. Thus, Doing Business uses aggregate ranking on the ease of doing business. Its the simplest method: weighting all topics equally and, ranking is 3 on both starting a business and resolving within each topic, giving equal weight to each of the insolvency, and 5 on protecting investors. But its 6 topic components. ranking is only 59 on enforcing contracts, 42 on trading across borders and 156 on getting electricity. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a Variation in performance across the indicator sets is ―no practice‖ mark. Similarly, an economy receives a not at all unusual. It reflects differences in the degree ―no practice‖ or ―not possible‖ mark if regulation exists of priority that government authorities give to but is never used in practice or if a competing particular areas of business regulation reform and the regulation prohibits such practice. Either way, a ―no ability of different government agencies to deliver practice‖ mark puts the economy at the bottom of the tangible results in their area of responsibility. ranking on the relevant indicator. Economies that improved the most across 3 or more The ease of doing business index is limited in scope. It Doing Business topics in 2010/11 does not account for an economy’s proximity to large Doing Business 2012 uses a simple method to calculate markets, the quality of its infrastructure services (other which economies improved the most in the ease of than services related to trading across borders and doing business. First, it selects the economies that in getting electricity), the strength of its financial system, 2010/11 implemented regulatory reforms making it the security of property from theft and looting, its easier to do business in 3 or more of the 10 topics macroeconomic conditions or the strength of 7 included in this year’s ease of doing business ranking. underlying institutions. Thirty economies meet this criterion: Armenia, Burkina Variability of economies’ rankings across topics Faso, Burundi, Cape Verde, the Central African Republic, Chile, Colombia, the Democratic Republic of Each indicator set measures a different aspect of the Congo, Côte d'Ivoire, The Gambia, Georgia, Korea, business regulatory environment. The rankings of an Latvia, Liberia, FYR Macedonia, Mexico, Moldova, economy can vary, sometimes significantly, across Montenegro, Morocco, Nicaragua, Oman, Peru, Russia, indicator sets. The average correlation coefficient São Tomé and Príncipe, Senegal, Sierra Leone, between the 10 indicator sets included in the Slovenia, the Solomon Islands, South Africa and aggregate ranking is 0.36, and the coefficients Ukraine. Second, Doing Business ranks these between any 2 sets of indicators range from 0.17 economies on the increase in their ranking on the ease (between protecting investors and getting electricity) of doing business from the previous year using to 0.57 (between starting a business and protecting comparable rankings. investors). These correlations suggest that economies rarely score universally well or universally badly on the Selecting the economies that implemented regulatory indicators. reforms in at least 3 topics and improved the most in the aggregate ranking is intended to highlight economies with ongoing, broad-based reform programs. 5 See Simeon Djankov, Darshini Manraj, Caralee McLiesh and Rita Ramalho, ―Doing Business Indicators: Why Aggregate, and How to Distance to frontier measure Do It‖ (World Bank, Washington, DC, 2005). Principal components This year’s report introduces a new measure to and unobserved components methods yield a ranking nearly identical to that from the simple average method because both illustrate how the regulatory environment for local these methods assign roughly equal weights to the topics, since the businesses in each economy has changed over time. pairwise correlations among indicators do not differ much. An The distance to frontier measure illustrates the alternative to the simple average method is to give different weights distance of an economy to the ―frontier‖ and shows to the topics, depending on which are considered of more or less importance in the context of a specific economy. 6 7 A technical note on the different aggregation and weighting Doing Business reforms making it more difficult to do business are methods is available on the Doing Business website subtracted from the total number of those making it easier to do (http://www.doingbusiness.org). business. Doing Business 2012 Ecuador 105 the extent to which the economy has closed this gap The difference between an economy’s distance to over time. The frontier is a score derived from the most frontier score in 2005 and its score in 2011 illustrates efficient practice or highest score achieved on each of the extent to which the economy has closed the gap to the component indicators in 9 Doing Business indicator the frontier over time. sets (excluding the employing workers and getting The maximum (max) and minimum (min) observed electricity indicators) by any economy since 2005. In values are computed for the 174 economies included starting a business, for example, New Zealand has in the Doing Business sample since 2005 and for all achieved the highest performance on the time (1 day), years (from 2005 to 2011). The year 2005 was chosen Canada and New Zealand on the number of as the baseline for the economy sample because it was procedures required (1), Denmark and Slovenia on the the first year in which data were available for the cost (0% of income per capita) and Australia on the majority of economies (a total of 174) and for all 9 paid-in minimum capital requirement (0% of income indicator sets included in the measure. To mitigate the per capita). effects of extreme outliers in the distributions of the Calculating the distance to frontier for each economy rescaled data (very few economies need 694 days to involves 2 main steps. First, individual indicator scores complete the procedures to start a business, but many th are normalized to a common unit. To do so, each of need 9 days), the maximum (max) is defined as the 95 the 32 component indicators y is rescaled to (y − percentile of the pooled data for all economies and all min)/(max − min), with the minimum value (min) years for each indicator. representing the frontier—the highest performance on Take Colombia, which has a score of 0.21 on the that indicator across all economies since 2005. Second, distance to frontier measure for 2011. This score for each economy the scores obtained for individual indicates that the economy is 21 percentage points indicators are aggregated through simple averaging away from the frontier constructed from the best into one distance to frontier score. An economy’s performances across all economies and all years. distance to the frontier is indicated on a scale from 0 Colombia was further from the frontier in 2005, with a to 100, where 0 represents the frontier and 100 the score of 0.43. The difference between the scores shows lowest performance. an improvement over time. Doing Business 2012 Ecuador 106 RESOURCES ON THE DOING BUSINESS WEBSITE Current features Doing Business reforms News on the Doing Business project Short summaries of DB2012 business regulation http://www.doingbusiness.org reforms, lists of reforms since DB2008 and a ranking simulation tool Rankings http://www.doingbusiness.org/reforms/ How economies rank—from 1 to 183 http://www.doingbusiness.org/rankings/ Historical data Customized data sets since DB2004 Reports http://www.doingbusiness.org/custom-query/ Access to Doing Business reports as well as subnational and regional reports, reform case Law library studies and customized economy and regional Online collection of business laws and profiles regulations relating to business and gender http://www.doingbusiness.org/reports/ issues http://www.doingbusiness.org/law-library/ Methodology http://wbl.worldbank.org/ The methodologies and research papers underlying Doing Business Contributors http://www.doingbusiness.org/methodology/ More than 9,000 specialists in 183 economies who participate in Doing Business Research http://www.doingbusiness.org/contributors/doing- Abstracts of papers on Doing Business topics business/ and related policy issues http://www.doingbusiness.org/research/ Doing Business 2012 Ecuador 107