Independent Evaluation of
CIC/FIAS 2008-2011 Strategy and
Program
Volume II – Case Studies
FINAL
25 May 2012
Submitted to:
International Finance Corporation
2121 Pennsylvania Avenue, NW
Washington, DC 20433
Submitted by:
Nexus Associates, Inc.
5 Water Street, Suite 1A
Arlington, MA 02476
1 (781) 646-9900
[email protected]
Contract #7156930
Acronyms and Abbreviations
AAK Architectural Association of Kenya
ACAPR Advisory Council for Administrative Procedures Reform ADR Alternative dispute resolution
ANALDEX National Association for Foreign Trade AS Advisory Services
ASOP Advisory Services Operational Portal BEE Business enabling environment BPM Business Process Management BRRU Business Regulatory Reform Unit CAE Centro de Atencion Empresaria CAMACOL Colombian Chamber of Construction CCN City Council of Nairobi
CCS Compliance cost savings CIA IFC Infrastructure Advisory CIC Investment Climate Department
CIEM Central Institute of Economic Management CIT Corporate Income Tax
CONFECAMARAS Confederation of Colombian Chambers of Commerce CPC Private Competitiveness Council
DB Doing Business
DBRA Doing Business Reform Advisory DE Development effectiveness
DFID UK Department for International Development DFO Donor-funded operation
DIAN National Tax and Customs Administration (Direccion de Impuestos y Aduanas Nacionales) DNP National Department of Planning
DOC Department of Construction
DONRE Department of Natural Resources and Environment DPI Department of Planning and Investment EPZ Export Processing Zones
ETC Extended-term consultant
EU-VPSSP EU Vietnam Private Sector Support Program FDI Foreign direct investment
FMTAAS Funding Mechanism for Technical Assistance and Advisory Services FPD Financial and Private Sector Development Unit
FTA Free Trade Agreement FTE Full-time equivalent
FY Fiscal year
GDT General Department of Taxation GIA Global Indicators and Analysis GOC Government of Colombia IADB Inter-American Development Bank
IBRD International Bank for Reconstruction and Development IC Investment climate
ICAP Investment Climate Action Plan IDA International Development Association IEG Independent Evaluation Group IFC International Finance Corporation IMCO Mexican Institute of Competitiveness IPA Investment promotion agency
IZ Industrial Zone
KEPSA Kenya Private Sector Alliance KICP Kenya Investment Climate Program
KIPPRA Kenya Institute for Public Policy Research and Analysis KLRC Kenya Law Reform Commission
KM Knowledge management LATF Local Authority Transfer Fund LLC Limited Liability Company LMIs Land Market Intermediaries
LOL Law on Land
LTSU Long Term and Stable Use LURCs Land Use Rights Certificates M&E Monitoring and evaluation
MTIT/MCIT Ministry of Trade, Industry and Tourism/Ministerio de Comercio, Industria and Turismo MIGA Multilateral Investment Guarantee Agency
MOF Ministry of Finance
MONRE Ministry of Natural Resources and Environment MOTI Ministry of Trade and Industry
MOU Memorandum of Understanding
MPDF Mekong Private-Sector Development Facility MSME Micro, Small and Medium Enterprises NDP National Development Plan NLIS National Land Information System NRD Norway Registers Development Ltd. OoG Office of the Government OPM Officer of the Prime Minister PCR Project Completion Report PIT Personal Income tax PPC Provincial People’s Committee PPD Public-private dialogue PPP Public-Private Partnership
PREM Poverty Reduction and Economic Management Network PSD Private sector development
PSDS Private Sector Development Strategy PSR Project Supervision Report
PTO Provincial Tax Office PWC PriceWaterhouseCoopers RBA Risk-Based Auditing RBLL Regional business line leader RFP Request for proposals RIA Regulatory impact analysis RMU Results Measurement Unit RRC Regulatory Reform Committee RRI Rapid Results Initiative SBP Single Business Permit SCM Standard Cost Model SEZ Special Economic Zone SME Small and Medium Enterprises
SNC National Competitiveness Administrative System SNDB Sub-National Doing Business
STC Short-term consultant STF Special Task Force
TAMP Tax Administration Modernization Project TOR Terms of reference
TTL Task team leader UniAndes Universidad de los Andes
USAID US Agency for International Development VAT Value Added Tax
VBF Vietnam Business Forum
VCCI Vietnam Chamber of Commerce and Industry
VUCE Ventanilla Unica Comercio Exterior - Foreign Trade Single Window
WB World Bank
WBG World Bank Group
Table of Contents
I. Colombia Sub-National Doing Business ... 4
II. Colombia Trade Logistics Advisory Program ... 34
III. Kenya Investment Climate Program ... 60
IV. Vietnam Land Projects ... 95
I. Colombia Sub-National Doing Business
Overview
1. The Colombia – Subnational Doing Business project (553565) was approved on 14 March 2007. The project centered on carrying out two rounds of benchmarking using the Doing Business methodology developed by the World Bank. The first round covered 13 cities (including Bogota1) and five topics: starting a business, registering property, paying taxes, trading across borders, and enforcing contracts. The second round covered 21 cities, includingthe original 13 and added one additional topic – dealing with construction permits. It was envisioned that the results of the benchmarking exercise would foster a competitive reform environment, leading municipalities to enact reforms to reduce administrative barriers to private sector development. The project ended in December 2010. At that time, roughly US$661,000 had been spent by IFC, excluding in-kind and parallel support provided by the Government of Colombia (GOC) and the US Agency for International Development (USAID)
.
Background
The Government of Colombia has taken steps to restore security in the country and promote national and regional competitiveness.
2. Alvaro Uribe Vélez was elected president in May 2002 based on a platform that focused on restoring security in the country after decades of violence. Among his promises was to continue to pursue the broad goals outlined in Plan Colombia – a US-backed anti-narcotic initiative – within the framework of a long-term strategy. Designed to weaken paramilitary and guerilla organizations, the “Democratic Security Policy” called for the consolidation of state control throughout the country, protection of the population, elimination of the illegal drug trade, maintenance of a deterrent capability, and improved government operations. Over the next few years, the government established a presence in all 1,098 municipalities, negotiated the
demobilization of illegally armed groups, and continued to mount military operations against FARC and other organizations. After the reelection of Uribe in 2006, the government announced a new strategy to
consolidate security gains and broaden efforts to stem the narcotics trade and end the cycle of violence. The National Consolidation Plan (Plan Nacional de Consolidacion) aimed to align military, political, social, and economic activities in support of the government’s agenda.
3. While striving to advance security, President Uribe also took steps to boost the overall competitiveness of the country and promote greater private investment. The National Development Plan (2002-2006)2 outlined four overarching objectives: address the security needs of the population; support sustainable growth and employment-generating activities; alleviate income inequalities; and increase the transparency and efficiency of the government. The NDP established the reduction of “red tape” as a key element of the strategy to improve the business environment and foster growth. In June2004, the National Council for Economic and Social Policy (Consejo Nacional de Politica Economica y Social) formulated a strategy to streamline
administrative procedures through greater inter-agency coordination, revisions to the legal framework, rationalization of existing procedures, and improvements in information systems.3 By December 2004,
1
Project activities and expenses associated with Bogota are covered under the Global Doing Business program. 2
The NDP was enacted through Law 812 of 2003. 3
roughly 150 procedures had been simplified and 18 eliminated through administrative decrees.4 Eight months later the legislature passed a new law, which further streamlined administrative requirements, allowed for submission of electronic documents, and provided for the review of all new procedures prior to their enactment.5
4. Efforts to simplify the business registration process in Colombia began in 2000.6 In this regard, the National Planning Department and the Confederation of Chambers of Commerce (CONFECAMARAS) have worked with local chambers of commerce to establish one-stop shops (Centro de Atencion Empresaria – CAE) in selected cities across the country. CAEs were opened in six cities – Barranquilla, Bogotá, Bucaramanga, Cali,
Cartagena, and Medellín – in May 2003 with support provided by the InterAmerican Development Bank (IDB). The program was expanded in 2006 to include fifteen additional cities with support provided by the
Government of the Netherlands. CAEs collect and process information required by national and local agencies involved in business registration and licensing.7
5. The National Competitiveness Administrative System (SNC) was created 2006 under the coordination of the National Competitiveness Commission. The system includes Regional Competitiveness Commissions that were established in 2006-07 by the National Department of Planning (Departmento Nacional de Planeación – DNP).8 The regional commissions are comprised of regional and local authorities as well as representatives of the private sector.9 The commissions are charged with producing Regional Competitiveness Plans (Planes de Regionales de Competitividad).10
The Sub-national Doing Business project builds on prior work conducted by the World Bank Group in Colombia
6. Colombia has been included in Doing Business since the inception of the initiative in 2003. In keeping with the design of the global program, Doing Business is based on the performance of Bogota – the largest city in the country with more than 6.8 million inhabitants. The Doing Business 2007 report ranked Colombia 79th out of 175 countries. Government officials interviewed as part of this evaluation noted that the President Uribe was concerned about Colombia’s rankings in Doing Business (several people interviewed during the preparation of the case study used the word “obsessed”) and issued a directive to all ministries to identify actions needed to improve performance.11 The President saw Doing Business as a means for boosting investor confidence in the country, building on its relatively strong performance in certain areas covered by the report. Responsibility for coordinating the government response was assigned to the Ministry of Trade, Industry and Tourism (Ministerio de Comercio, Industria and Tourismo - MCIT).
4
Colombia Program to Support the National Logistics Policy, (Co-L1090), Loan Proposal, Inter-American Development Bank, undated.
5
Law No 962 of 2005 (8 July) 6
Interview with Julio Cesar Silva, Executive Vice President, Confederation of Colombian Chambers of Commerce (CONFECARAS), 6 July 2011.
7
15 of the 21 cities (including Bogota) that were included in the sub-national Doing Business reports had CAEs. 8
Interview with Carolina Renteria, 28 June 2011. 9
Written comments from IFC, 15 June 2011. 10
Ibid. 11
Interview with Liliana Maria Rojas, Director of Productivity and Competitiveness, Ministry of Trade, Industry and Tourism, 7 July 2011.
7. Prior to the approval of the Sub-National Doing Business (SNDB) project, IFC LAC had worked with
CONFECAMARAS to establish an online system for business registration (Portal Colombia – 535911).12 It had also worked with local authorities to streamline inspection procedures in Bogota.13 (Neither of these projects drew on funding from FIAS.) In 2006, IFC LAC and the GOC were involved in discussions to initiate a project to simplify construction permitting and inspection procedures in major cities.14,15
The MOF submitted a formal request for assistance to implement the Subnational Doing Business project, with DNP assigned as the principal government counterpart.
8. On 13 June 2006, the Minister of Finance submitted a letter of request for assistance from FIAS. Specifically, the letter asked FIAS “to help design policy and institutional solutions to improve Colombia’s investment climate. As a first step, this would consist in stimulating internal competition among administrative subdivisions by creating Doing Business indicators at the subnational level in selected cities and states.”16
Project Design and Implementation
Chronology
9. The table below presents a project chronology.
12 Approved in July 2005. 13 Approved in December 2005. 14 PDS Approval, V1, 14 March 2007. 15
This project (National Plan Colombia - 563628) was approved in March 2009. It involves reengineering processes within relevant agencies and establishing needed software systems.
16
Letter from Alberto Carrasquilla Barrrera, Minister of Finance and Public Credit, to Mierta Capaul, Regional Program Coordinator, FIAS, World Bank Group, 13 June 2006.
Table 1. Project Chronology Date Event/Milestone
13 June 2006 Letter of Request submitted by Minister of Finance and Public Credit 1 July 2006 Project start date (a)
13-15 Sept 2006 CIC/FIAS and GoC hold preliminary project meetings in Bogota
24-29 Jan 2007 Follow-up meetings in Bogota to discuss the project with the government counterpart (National Planning Department - DNP)
14 Mar 2007 AS – PDS Approval Version 1.0 19-30 March
2007
Presentation of project concept to local governments in 12 cities
Aug 2007 Preliminary first round results presented to local governments and a right of reply period 30 Jan 2008 Official public presentation of the first report, Doing Business in Colombia 2008
27 Feb 2008 Letter of Request submitted by High Advisor on Competitiveness and Productivity
11-14 Mar 2008 “Conference to discuss working plan on Doing Business and launch regional competitiveness plans” 9 Feb 2009 AS – PDS Approval Version 2.0 (details second round activities and increases budget)
2-4 march 2009 Training local partner Universidad de los Andes and Private Council on Competitiveness Mar 2009 Second round of benchmarking begins
19 May 2009 Presentation detailing the second round of the project in Bogota, held in conjunction with a meeting of the Regional Competitiveness Commissions
July 2009 Coding training with local partner
13-16 Oct 2009 Preliminary second round results presented to local governments and a right of reply period 16 Feb 2010 Official public presentation of the second report, Doing Business in Colombia 2010
May 2010 Project staff present the 2010 results at a peer-to-peer learning workshop in Manizales Jul 2010 Training session held to teach four consultants hired by DNP the Doing Business methodology 31 Dec 2010 Project completion date
Notes (a) The project implementation date was originally presented as 20 February 2007 in PDS Version 1.0 (14 March 2007), however, the date was revised in PDS Version 2.0 (9 February 2009). No explanation for the change is given in the document However, CIC/FIAS subsequently noted, ”Project dates were modified to reflect the implementation of phase II. At that point, the pre-implementation phase was modified to span from July 2006 to Nov 2008, which included Phase I of benchmarking.” (Written comments from CIC/FIAS 23 April 2012.)
Source: Nexus Associates based on project documents and written comments from CIC/FIAS 23 April 2012
Project design
The project aimed to create a sustainable benchmarking process that would motivate reforms leading to lower costs.
10. As articulated in the original PDS Approval document, the goal of the project is to “lower administrative barriers at the subnational level and to reduce transaction costs -i.e. time/cost/procedures to open a business, register property, enforce contracts, pay taxes and trade across borders.”17 The document also identified four sub-objectives:
Create competition to reform at the subnational level by combining the media appeal of the Doing Business indicators and policy dialogue with public officials and the private sector.
Motivate reformers by showing that with the adoption and efficient implementation of simple reforms, specific locations can become more competitive nationally and internationally.
Measure progress over time by repeating the benchmarking to capture improved performance spurred by the competition created by the initial benchmarking.
Ensure sustainability by being involved over a period of approximately 2 years and identify local partners to transfer methodology from year 2 onwards.
17
11. The objective statement was modified after the initial project approval. The new wording focused on the adoption of reforms: “The objective is to promote reforms that reduce the number of procedures, time and cost of doing business in Colombian cities through repeated benchmarking (every 2 years) using the Doing Business indicators.” It went on to add, that it was expected that at least half of the 12 cities that were benchmarked in 2008 would institute reforms by 2010 and these cities in aggregate would implement at least ten reforms in the following areas: starting a business, registering property, trading across borders, paying taxes and enforcing contracts.18
The project was designed according to the standard Doing Business approach.
12. As originally approved, the project would focus on measuring five Doing Business topics – starting a business, registering property, paying taxes, enforcing contracts, and trading across borders— in 12 Colombian cities (13 including Bogota). Two benchmarking rounds were planned. The first report was expected to be completed in November 2007 with the second report completed 12 months later in November 2008.19 The project would end with the release of the second report.20
13. Following a standard approach, each round would consist of the following activities: roadshow to present the project to the participating cities; data collection and preparation of indicators; confidential consultations with local authorities on preliminary results; production of report in both English and Spanish; dissemination conference; and follow up discussions with governments and donors regarding implementation.
14. Additionally, the project would include identifying and training a local institution to assist in the preparation of the Doing Business report with the aim of transferring the methodology upon completion of the project. Given the status of Colombia as a middle-income country with a history of being a strong reformer, the SNDB project managers believed that this would provide a means for ensuring the sustainability of the initiative.21 15. As discussed in more detail below, the project design was modified following the completion of the first
round. The second round would cover an additional eight cities and one additional indicator – dealing with construction permits.22
The total budget for the project was roughly US$1 million.
16. At the time of the original project approval, the budget was set at US$375,000 and only included the cost of the first round of benchmarking. As shown in Table 2, the budget was increased in February 2009 to US$996,000 to cover the full cost of the two rounds. The budget was increased further over time to roughly US$1,057,000 without any significant change in the scope of work. Approximately 65 percent of the budget (US$682,000) was from IFC-managed funds, including US$67,000 from CONFECAMARAS. The remaining 35 percent (US$375,000) was to be in the form of in-kind and parallel support from GOC and USAID.
18
PDS Approval Version 5 (30 Jun 2010). The objectives are consistent with the results matrix approved in PDS Version 2. (9 February 2009).
19
PDS Approval, Version 1.0, op. cit. 20
Ibid. 21
Interview with Zenaida Henandez Uriz and Mierta Capaul, 17 June 2011. 22
Table 2. Approved Project Budget (US$) PDS V1 (3/07) PDS V2 (2/09) PDS V4 (11/09) PDS V5 (6/10) PDS V7 (12/10) Funds managed by IFC
DFO Funding 1 FIAS 150,000
USAID 50,000 50,000 67,772 67,772 67,772
USAID – DB 109,000
(b)
109,000 114,000
SECO 200,000 200,000 200,000 200,000
Pooled Trust Fund 250,000 233,135 233,135 233,135
Client Fees (Cash) 67,000 67,000 67,000 67,000
Sub-total 200,000 567,000 676,907 676,907 681,907
Additional contributions Govt. of Colombia – In-kind contributions
60,000 160,000 160,000 190,000 190,000 Govt. of Colombia – Parallel Support 54,000 70,000
(c)
70,000 70,000 USAID Colombia – Parallel Support 115,000 215,000 (a) 115,000 115,000 115,000
Sub-total 175,000 429,000 345,000 375,000 375,000
Total Budget 375,000 996,000 1,021,907 (d)
1,051,907 1,056,907 Note: (a) This figure includes a USAID/MIDAS contribution of US$100,000 (from a fund earmarked for DNP) in addition to the USAID Colombia contribution presented in PDS Version 1.0 (US$115,000). (b) PDS V4 notes that a US$100,000 USAID contribution is “being channeled through CICRA’s USAID TF” and that this contribution was included as parallel support in previous PDS approval documents. (c) This figure includes a US$50,000 from DNP and US$20,000 from the Ministry of Trade, Industry and Tourism. Previous budgets were based solely on a DNP contribution of US$54,000. (d) According to PDS V4, the budget was revised to reflect changes in funding sources of funding, but did “not imply a change in the scope or overall cost of the project.”
Source: Nexus Associates based on information in PDS Approval documents
Project implementation
The principal government counterpart for the project was the National Department of Planning (Departmento Nacional de Planeación – DNP).
17. DNP is an administrative department within the executive branch reporting directly to the Office of the President. It is responsible for monitoring economic performance, coordinating development policy, preparing the national plan, and managing the investment budget.23 In this capacity, DNP has a “lot of political clout” and can bring different parties to the table to discuss needed reforms.24
18. As noted above, DNP oversees the functions of the regional competitiveness councils, which have responsibility for regional planning. It was expected that information from the SNDB would flow into the regional competitiveness plans.
Participating cities and Doing Business indicators were selected in concert with the DNP.
19. The SNDB team carried out missions to Colombia in September 2006 and January 2007 to meet with government officials and other stakeholders in preparation for the initial benchmarking exercise. Twelve
23
Interview with Orlando Garcia, former Director of Enterprise Development, National Planning Department, 6 July 2011. 24
cities were selected for the first round, taking into account population size, economic activity and political diversity.25 As noted above, an additional eight cities were chosen for the second round based on the same criteria. The participating cities are listed in Table 3. The size of the cities varies dramatically from less than 200,000 inhabitants to more than 2 million, or 6.8 million with the inclusion of Bogota.26
Table 3. Participating Cities
City, Department Population in 2005(a) Round
Bogota, Distrito Capital 6,778,691 1, 2
Medellin, Antioquia 2,219,861 1, 2
Cali, Valle del Cauca 2,075,380 1, 2
Barranquilla, Atlantico 1,112,889 1, 2
Cartagena, Bolivar 895,400 1, 2
Cúcuta, Norte de Santander (b) 585,542 1, 2
Bucaramanga, Santander 509,918 1, 2
Ibaque, Tolima 495,246 1, 2
Pereira, Risaralda 428,397 1, 2
Santa Marta, Magdalena (b) 414,387 1, 2
Villavicencio, Meta 384,131 1, 2 Pasto, Nariño(b) 383,846 2 Monteria, Córdoba (b) 381,284 2 Manizales, Caldas 368,433 1, 2 Valledupar, Cesar 348,990 2 Neiva, Huila 315,332 1, 2 Armenia, Quindio 272,574 1, 2 Popayán, Cauca (b) 258,653 1, 2 Sincelejo, Sucre (b) 236,780 2 Riohacha, Guajira 169,311 2 Tunja, Boyaca 152,419 2
Notes (a) 2005 census data. Departamento Administrativo Nacional de Estadistica, Republica de Columbia (dane.gov.co). The total population of Colombia in 2005 was 41,468,384. (b) The city is located in a frontier region according to IFC.
Source: Nexus Associates.
20. As noted above, five topics were selected for inclusion in the study in consultation with DNP – starting a business, registering property, paying taxes, enforcing contracts, and trading across borders.27 It was felt that these topics were relevant to regional competitiveness and that the analysis would demonstrate differences among the cities.
21. The decision was made to exclude analysis of construction permitting procedures in the first round of the SNDB project even though this process is under the jurisdiction of local government. The original PDS approval document states, “The IFC LAC TA Facility is planning to initiate a Municipal Scorecard project in Colombia covering the procedures to obtain a construction license and inspections ... Those indicators are complementary to the 5 indicators measured through this proposed project.”28 The decision was
reconsidered after the first round and this topic was included in the second round.
25
BTOR: Mission to Colombia, January 2007. This mission also entailed initial interviews with five prospective law firms to carry out the logistic and administrative tasks for the project. The team also held meetings with PriceWaterhouseCoopers, USAID Colombia, National Association of Foreign Trade (ANALDEX), and IFC LAC, during the mission.
26
According to CIC/FIAS, these cities “cover the 21 largest and economically most important cities in Colombia.” (Written comments from CIC/FIAS, 23 April 2012.)
27
BTOR: Mission to Colombia, 13-15 September 2006. The mission was comprised of two CIC/FIAS staff: M. Capaul and Z. Hernandez.
28
The Center for Strategy and Competitiveness at Universidad de los Andes (UniAndes) was tasked with responsibility for two topics.
22. During the second round, the SNDB team worked with a local institution to help ensure the sustainability of the initiative. The Center for Strategy and Competitiveness at Universidad de los Andes (UniAndes) in association with the Private Competitiveness Council (Consejo Privado de Competitividad –CPC), was selected through a competitive process.29 The contract with UniAndes was executed directly with DNP based on a TOR developed by the SNDB team.30 The contract with UniAndes stipulates that the institution, working in concert with CPC, would be responsible for the collection, coding, and analysis of two DB topics– registering property and dealing with construction permits. The TOR expressly states that the World Bank would work with the local institution and gradually transfer the Doing Business methodology to the institution; however, it does not specify the terms or conditions governing Uniandes right to use the methodology after the second round of benchmarking.31 According to the SNDB project managers, the rationale for a gradual transfer of know-how came from the lessons learned during a similar process in Mexico’s SNDB project in 2008, which demonstrated that transferring the DB methodology required a great deal of training and supervision.32 23. The SNDB team provided training to UniAndes/CPC and supervised its work. Specifically, the SNDB team conducted a two-day training session for staff of UniAndes/CPC on 2-3 March 2009, focusing on the DB methodology and logistical arrangements for collecting data.33 Training on data coding and analysis was provided in July 2009. 34 Additional training was provided in the course of carrying out the assignment.
The SNDB team carried out activities as outlined in the project approval documents.
24. The first round of benchmarking activities took place from March 2007 to January 2008, ending with the public presentation of Doing Business in Colombia 2008 at a conference in Bogota.35 Benchmarking activities for the second round began in March 2009, culminating in February 2010 with the public presentation of the Doing Business in Colombia 2010 report, again, in Bogota.36
25. The reports are based on information provided by people in the country deemed knowledgeable about laws, regulations, and procedures particular to each indicator. IFC hired local organizations to identify “experts” in appropriate fields and coordinate data collection. The firms included: Cavelier Abogados – starting a business, registering property, and enforcing contracts; Colombian Chamber of Construction (CAMACOL) – dealing with construction permits; National Association of Foreign Trade (ANALDEX) – trading across borders; and PriceWaterhouseCoopers – paying taxes.
26. Questionnaires were sent to identified experts – lawyers, accountants, business consultants, customs brokers, freight forwarders, architects and property developers – as well as government officials, municipal
29
The SNDB team met with four institutions and received proposals from two – Fedesarrollo and Universidad de los Andes – Centro Estrategia de Competitividad. Written comments from IFC, 15 June 2011.
30
The contract value was in the amount of COP130 million (roughly US$50,000) 31
Local Partner TOR (Estudios Previos Contratacion Servicios Profesionales), DNP, 3 April 2009. 32
The SNDB team in Mexico worked with the Mexican Institute of Competitiveness (IMCO) on a project covering four Doing Business topics – starting a business, dealing with construction permits, registering property, and enforcing contracts. (Written comments from IFC, 15 June 2011).
33
PSR#5, FY09/Q4. (Written comments from IFC, 15 June 2011.) 34
PSR#6, FY10/Q2 35
PSR #3, FY08/Q4 36
judges, and representatives of local chambers of commerce.37 According to data provided by CIC/FIAS, for the Doing Business 2010 report, 282 questionnaires were completed by private sector informants and another 99 were completed by local authorities.38 Table 4 presents a breakdown of the private sector informants by topic and city. In most cases, three informants completed questionnaires for each topic in a particular city. However, in two cities – Popayán and Valledupar – only one private sector informant participated.39 In the case of paying taxes, PriceWaterhouseCoopers is responsible for providing data for this indicator worldwide under an agreement with the World Bank, drawing on information from relevant tax authorities.
Table 4. Number of Private Sector Informants by DB Topic and City City, Department Starting a
Business Paying Taxes Registering Property Enforcing Contracts Dealing with Construction Permits Trading Across Borders Armenia, Quindio 3 1 3 3 3 NA Barranquilla, Atlantico 3 1 3 3 3 5 Buenaventura NA NA NA NA NA 7 Bucaramanga, Santander 3 1 3 3 3 NA
Cali, Valle del Cauca 3 1 3 3 3 NA
Cartagena, Bolivar 4 1 3 3 3 6
Cúcuta, Norte de Santander 3 1 3 3 3 NA
Ibaque, Tolima 3 1 3 3 3 NA Manizales, Caldas 3 1 3 3 3 NA Medellin, Antioquia 3 1 3 3 3 NA Monteria, Córdoba 3 1 3 3 3 NA Neiva, Huila 4 1 4 3 3 NA Pasto, Nariño 3 1 3 3 3 NA Pereira, Risaralda 3 1 3 3 3 NA Popayán, Cauca 3 1 3 3 1 NA Riohacha, Guajira 3 1 3 3 3 NA
Santa Marta, Magdalena 3 1 3 3 3 5
Sincelejo, Sucre 3 1 3 3 3 NA
Tunja, Boyaca 3 1 3 3 3 NA
Valledupar, Cesar 3 1 3 3 1 NA
Villavicencio, Meta 3 1 3 3 3 NA
Source: CIC/FIAS
27. UniAndes coded and analyzed information related to the two indicators for which it had responsibility. CPC provided two analyst to help UniAndes, but then “failed to sustain” its participation in the project.40 It fell to UniAndes to pick up the slack.
28. The respective topic leaders from the SNDB team reviewed the information provided by informants and attempted to validate responses. Preliminary results were shared with local authorities to provide an opportunity to correct potential errors. Officials were asked to provide written feedback along with documentation to substantiate suggested changes. SNDB project managers consider this “right of reply” to
37
Private sectors informants are paid a fee to complete the questionnaire; government officials, judges and representatives of chamber of commerce are unpaid. (Written comments from CIC/FIAS, 23 April 2012)
38
PSR#6, FY10/Q2. 39
In Valledupar, the Chamber of Commerce provided information on construction permits. In Popayan, questionnaires were completed by the Municipality (Dept. of Planning) and the Curaduria Urbana – private, but regulated, professionals who receive, review and approve construction permits in Colombia. (Written comments from CIC/FIAS, 23 April 2012) 40
be an important element of the project design as it “motivates local government engagement in discussion around regulatory reforms.”41 Given this feedback, the SNDB team re-contacted private sector informants to reconcile differences.42 In cases where estimates continued to differ, the SNDB team indicated that it took the median value in line with the overall Doing Business methodology.43 (The SNDB team made additional revisions to results presented in the 2008 report after its publication. Twenty-seven corrections were made to the 2008 data, primarily related to paying taxes. These were included in an Excel file provided by CIC/FIAS to Nexus Associates.)44
29. The results of the exercise were published in reports and presented at public meetings held in Bogota. Notable speakers included President Uribe, Minister of MCIT, and the Director of DNP. The meetings were well attended (400 people attended the presentation of Doing Business Colombia 2010) and received substantial media coverage.
The reports demonstrated differences in performance across the participating cities and offered a series of recommendations.
30. As shown in Table 5, while many requirements associated with particular topics are mediated by national laws and regulations, there is still a fair amount of variation across cities in Colombia. For example, the 2010 report shows that the number of procedures to start a business in different cities in Colombia varies from eight to 15. The report attributes this to the fact that some cities require land use certificates as well as other local certificates as part of the process. Differences in costs of starting up a business are attributed to variations in registry tax rates with the range established by national law (0.3 to 0.7) as well as stamp duties levied by municipal and departmental governments. However, there is no variation in the number of procedures required to enforce contract or the number of documents required to import/export goods. These are set entirely by national policy. Moreover, while differences in the number of annual tax payment and tax rates exist across cities, the figure cited for the time required to pay taxes is uniform across all cities; the time estimate is based solely on three national taxes – corporate income tax, value added tax, and labor taxes (including payroll taxes and social contributions).
41
” (Source: AS – Completion Version 1.0, 21 April 2011). 42
Written comments from IFC, 15 June 2011. 43
Interview with SNDB team, 28 June 2011. 44
According to CIC/FIAS, the corrections of the Doing Business Colombia 2008 data were published on the Doing Business website at the same time the Doing Business Colombia 2010 report was launched. (Written comments from CIC/FIAS, 23 April 2012.)
Table 5. Summary Statistics
Min Mean Median Max
Topic Indicator 2008 2010 (a) 2008 2010 (a) 2008 2010 (a) 2008 2010 (a) Starting a Business Procedures 12 8 (8) 14.2 10.4 (9.5) 13.5 9.5 (9) 19 15 (12) Time (days) 32 8 (8) 45.3 19.7 (17.0) 44.5 17.0 (13) 63 43 (38) Cost (% of GNI per capita) 13.1 (15.1) 13.1 21.0 (17.4) 16.4 20.4 (15.6) 15.4 37.6 (29.9) 29.9 Registering Property Procedures 11 8 (10) 12 11 (11) 12 11 (11) 14 13 (13) Time (days) 20 12 (12) 26 22 (22) 25 20.5 (22) 35 38 (33) Cost (% of property value) 2.1 (1.9) 1.9 2.7 (2.5) 2.3 2.5 (2.4) 2.1 4.4 (4.0) 4.0 Paying Taxes Payments (number per
year) 63 15 (16) 71.1 20.4 (21) 69 20 (20) 91 26 (26) Time (hours per year) 268 (208) 208 268 (208) 208 268 (208) 208 268 (208) 208 Total tax rate (% profit) 58.9 (68.4) 66.0 76.7 (71.6) 71.1 78.6 (71.0) 70.1 81.9 (77.3) 78.4 Enforcing Contracts Procedures 34 34 (34) 34 34 (34) 34 34 (34) 34 34 (34) Time (days) 422 (440) 293 844 (925) 808 867 (918) 729 1,352 (1,520) 1,520 Cost (% of claim) 22.6 (21.4) 21.4 28.3 (32.2) 33.5 27.6 (31.6) 32.2 34.5 (44.8) 45.8 Trading Across Borders
Documents to export (number) 6 6 (b) 6 6 (b) 6 6 (b) 6 6 (b) Time to export (days) 19 13
(b) 23.8 14.8 (b) 24 14 (b) 26 18 (b) Cost to export (USD per
container) 643 1,600 (b) 1,067 1,744 (b) 1,194 1,743 (b) 1,440 1,890 (b) Documents to import (number) 8 7
(b) 8 7 (b) 8 7 (b) 8 7 (b) Time to import (days) 16 11
(b) 19.8 14.8 (b) 20 14.5 (b) 22 19 (b) Cost to import (USD per
container) 657 1,562 (b) 1,160 1,750 (b) 1,239 1,725 (b) 1,914 1,990 (b) Dealing with Construction Permits (c) Procedures NA 11 (11) NA 14.1 (14.5) NA 14 (14) NA 19 (19) Time (days) (38) 38 (113.3) 110.5 (114) 98 (181) 217 Cost (% of GNI per capita) (85.5) 79.7 (182.9) 159.8 144.8 (181) (293.7) 293.7 Note: (a) Numbers in parentheses are results for the original 12 cities. (b) The Trading Across Borders topic was modified following the first round to measure trading between Bogota and four -- Barranquilla, Buenaventura, Cartagena, and Santa Marta. Statistics for 2010 are calculated for only these four cities and not the original full-12 city sample. Given the change in methodology a comparison of 2008 and 2010 statistics for Trading Across Borders is invalid. (c) This indicator was not included in 2008.
31. The following table presents the recommendations made by CIC/FIAS and highlights those recommendations from the 2008 report that were reiterated in the 2010 report.
Table 6. SNDB Reform Recommendations
Indicator “What to reform?” 2008 “What to reform?” 2010
Starting a business
Start-up online
Expand the number and efficiency of single access points
Lower the number of requirements Promote standardized incorporation
documents
Promote electronic services
Complete the implementation of CAE Centralize registration
Publicize reforms
Unify the affiliation to social security agencies
Registering Property
Eliminate special certificates, such as Paz y Salvo Predial and Paz y Salvo de
Valorizacion
Keep cadastres updated and link them with the Registry
Improve the implementation of the SIR Introduce fixed fees and allow electronic
payments
Introduce electronic payment of registration tax and registration rights Make the use of notaries optional
Eliminate special certificates (such as Paz y Salvo Predial and Paz y Salvo de Valorizacion) or make them electronically available
Improve the efficiency of registry offices and link them to the cadastre
Improve the implementation of the system for registry information (SIR) and extend the single window for registries (VUR) to other cities
Introduce low, fixed fees and try reducing municipal stamp duties
Combine procedures and allow for electronic payments
Paying Taxes
Ease the tax burden by combining taxes Introduce online filing
Simplify tax administration
Make compliance easier through broad-based reforms
Make systems electronic
Provide more transparent information to facilitate compliance
Enforcing Contracts
Introduce specialized commercial courts Reduce backlog in courts
Expand performance-based incentive model to small claims court
Introduce specialized courts or reassign workloads to special-purpose courts
Implement modern systems for case management and judicial statistics
Rely on small claims courts
Continue to modernize procedural rules
Strengthen mechanisms for the evaluation of judicial staff
Promote one-stop shops Standardize mediation services Dealing with
Construction Permits
Not Applicable
Allow online application for building plan approval and utilities connections
Rationalize taxes and share best local practices Rationalize inspections
Involve stakeholders in the reform process Strengthen the urban curator system Trading
Across Borders
Improve road infrastructure
Improve and expand electronic systems Reduce delays in granting approvals and
clearances
Implement investments to improve inland road infrastructure
Continue to streamline and increase the use of simultaneous inspections
Reduce and streamline documentation requirements Increase container capacity at ports
Reduce and streamline informal inland checkpoints Improve regulation of truck industry
After publication of the SNDB reports, DNP organized workshops to enable participating cities to exchange information on good practices.
32. DNP invited participating cities to attend a “peer-to-peer” workshop after the publication of each report to provide an opportunity for cities to exchange information on good practices. The first event was held in Pereira on 12 March 2008; the second event was held in Manizales on 4 May 2010. Nine of 21 participating cities – Armenia (ranked 7th), Barranquilla (17th), Bogota (12th), Bucaramanga (18th), Cali (20th), Ibague (2nd), Manizales (1st), Neiva (11th), and Pereira (3rd) – sent a delegation to the event in Manizales. In general, delegates came from either the largest or best performing cities. Members of the SNDB team participated in both events.
33. DNP also had separate meetings with Ministry of Justice and the Superior Judicial Council (Consejo Superior de la Judicatura) to discuss potential reforms related to contract enforcement.45
The SNDB team conducted training sessions for independent consultants hired by DNP to provide technical assistance to cities involved in the SNDB project.
34. DNP did not feel that the peer-to-peer workshops were particularly effective; there was insufficient time to delve deep into any of the topics.46 Officials believed that more effort was needed to help cities understand factors contributing to their relative performance and undertake needed reforms. To this end, DNP elected to hire consultants to provide technical assistance to participating cities, focusing on four areas – starting a business, paying taxes, registering property and dealing with construction permits. The SNDB team reviewed the TOR drafted by DNP and the qualifications of candidates of the assignment. According to officials from DNP, it was “very difficult to find qualified individuals.”47 In the end, DNP hired four independent
consultants.
35. Between 26-28 July 2010, the SNDB team conducted a training session for the four consultants on the Doing Business methodology, results presented in the report, and ways to work with cities.48 IFC LAC participated in the training sessions on construction permits.49
36. Following the training, the DNP consultants provided technical assistance to 19 cities on the subjects noted in Table 7.50 Specifically, the consultants convened working groups in each municipality to identify areas of reform and prepare action plans. No further diagnostic work was conducted by the consultants.51 All told, the consultants provided 320 person-days of technical assistance, or roughly eight days per topic per city, over the course of four months (August to November 2010). Beyond the training, the SNDB team did not provide any further assistance either to the consultants or directly to cities.52
45
Interview with Fernando Jose Estupinan Vargas, Ana Paola Gomez Acosta, and Sandra Melana Gomez, DNP, 7 July 2011 46
Ibid. 47
Ibid. 48
Copies of training materials, dated July 2010. 49
Ibid. 50
Medellin did not request or receive technical assistance. 51
Fernando Jose Estupinan Vargas, op. cit. 52
The PCR (21 April 2011) states that 19 out of the 21 cities received technical assistance and notes, “the [SNDB] team continued supporting the implementation of TA by providing inputs and materials for the consultants to conduct diagnostics and provide reform recommendations based on the findings of the SNDB in Colombia 2010 report.”
Table 7. Topics of Technical Assistance Provided by DNP Consultants City, Department (a) Starting a
Business Paying Taxes Registering Property Dealing with Construction Permits Armenia, Quindio Barranquilla, Atlantico Bucaramanga, Santander
Cali, Valle del Cauca
Cartagena, Bolivar
Cúcuta, Norte de Santander
Ibaque, Tolima Manizales, Caldas Monteria, Córdoba Neiva, Huila Pasto, Nariño Pereira, Risaralda Popayán, Cauca Riohacha, Guajira
Santa Marta, Magdalena
Sincelejo, Sucre
Tunja, Boyaca
Valledupar, Cesar
Villavicencio, Meta
Notes: (a) Medellin did not request or receive technical assistance. Source: Nexus Associates based on data provided by DNP
The project met or exceeded output targets.
37. As part of the project approval process, SNDB project managers established a series of output targets for the project. As shown in Table 8, the project met or exceeded all targets, particularly with respect to the number of participants at various events and media coverage.
Table 8. Output Targets and Actual Achievements
Round Output Description Target Actual
1 Entities receiving AS (i.e., the number of participating cities) 12 12
Reports Completed (a) 2 2
Participants in consultative workshops/ seminars/ training (b) 200 300
Media Appearances 25 30
2 Entities receiving AS (i.e., the number of participating cities) 20 20 Subnational Reports Completed in English and Spanish (a) 2 2 Reports (assignments, surveys, manuals) completed (c) 14 19 Participants in consultative workshops/ seminars/ training (d) 125 224 Participants in report dissemination event 200 400
Media appearances 30 169
Notes: (a) The English and Spanish version of Doing Business in Colombia 2008 are counted as separate reports. (b) Actual is based on the number of people that attended the public presentation Doing Business in Colombia 2008 in February 2008. (c) Actual includes: six surveys (one per topic), five TORs (UniAndes, Cavelier, PWC, Camacol, Analdex), one set of training materials for the local partner, one set of training materials for coding, and six “right of reply” materials (one per topic). (d) This figure seems to include the participants from the project kick-off event held at the beginning of the second round (158 persons), attendees at the preliminary presentation of the results (including 58 local officials plus 3 members of the judiciary who participated in the RoR meeting,) and the training event provided to DNP’s hired consultants (5). Source: Nexus Associates based on project approval documents, PSRs, and the PCR.
But the project took longer to complete than originally expected.
38. The original PDS Approval document envisioned that the SNDB reports would be prepared on an annual basis – the first would be completed by November 2007 and the second by November 2008. After the initial approval of the project, IFC made the decision to extend the term of the project to 30 June 2010 to enable the reports to be prepared on a biennial basis. As noted above, the first report was published in January 2008 and the second report was released roughly two years later in February 2010.
39. A one-year extension of the project was approved in June 2010 to allow for training of DNP consultants as well as for discussions with the government regarding the third round of benchmarking. 53 At that time, the third round was expected to begin in March 2011. However, six months after the approval of the extension, IFC made the decision to end the project effective 31 December 2010. Explained the SNDB project manager, “instead of continue extending the current project and updating the PDS approval, it made more sense to include all the activities, budget and objectives of the third round as a separate project.”54 It had become clear by that point that the third round would not be finished by 30 June 2011 given unresolved issues, including funding and the role of UniAndes.
40. According to DNP officials, the decision was made to postpone the third round for two primary reasons.55 First, local elections were scheduled for October 2011 and DNP believed that it would be beneficial to wait until the new administrations took office. Second, the role of different parties was unclear and funding for the third round had not been secured.
Assessment
RelevanceThe project was undertaken in response to a request from the Government of Colombia in order to provide comparable data and stimulate reform in different parts of the country.
41. The project came at the request of MOF and was undertaken in close collaboration with DNP. It was conceived as part of a broader initiative to streamline regulations and improve the competiveness of Colombia as well as different regions within the country. The government has taken an active role in raising awareness of the importance of local development and has established institutional structures such as the Regional Competitiveness Commissions to advance reforms. Officials hope that efforts to improve the regulatory environment will lead to greater investment and economic growth throughout the country. 42. Doing Business is seen as a tool that can be used to gain insight into differences among regions. Subnational
Doing Business was seen as an important supplement to the global Doing Business report, which focuses on Bogota.56 Numerous officials referred to Colombia as a “country of regions,” noting important differences in geography, resources, culture, and economic performance. The government wanted to increase awareness that regions compete for investment and need to “differentiate themselves” based, in part, on the strength of the business environment.57 As noted above, DNP expected that information from the SNDB would flow into the regional competitiveness plans, building on efforts undertaken under the rubric of the Interna Agenda. SNDB is seen as an “additional input” into the policymaking process.
53
PDS Version 5.0, 30 June 2010. 54
Written comments from IFC, 15 June 2011. 55
Interview with Fernando Jose Estupinan Vargas, Ana Paola Gomez Acosta, and Sandra Melana Gomez, DNP, 7 July 2011 56
Orlando Garcia, op. cit. 57
43. USAID also sees SNDB as a means for investors to obtain information on the relative merits of particular cities as part of site selection process.58 That said, there is no evidence that investors are using information in the Doing Business reports to choose a location for commercial ventures. According to the Executive Vice President of CONFECAMARAS, “Doing Business is not something that is widely known in the business community... it is not used as a reference by private investors.”59 Moreover, it does not provide information that investors use to select locations such as availability and cost of land or labor, or the reliability and cost of electricity and other utilities.60
The relevance of two indicators selected for the Subnational Doing Business is questionable and one indicator that is subject to local control was omitted from the first round.
44. Subnational Doing Business aims to capture differences in the regulatory environment in different cities within the same country. The intention is to identify ways in which local governments have streamlined procedures and reduced the administrative burden on business. This is intended to lead local governments to undertake reforms. Repeated measurement using the same approach provides a means for tracking the progress of reform efforts over time.
45. While DNP and the SNDB team worked together to select indicators for analysis, the advisability of the final decision is debatable.
Trading across borders. The rationale for inclusion of this indicator stemmed from the pending Free Trade Agreement (FTA) with the United States. DNP wanted to learn how the major ports were operating and steps that could be taken to increase efficiency.61 However, in general, the indicator is not designed to address these questions.
It is important to note that the approaches used in the two rounds differ. The first round examined 12 city-port pairs, i.e., the 12 cities selected for benchmarking coupled with the particular port (Barranquilla, Buenaventura, Cartagena, and Santa Marta) that lies closest to each city. According to the SNDB team, data collection proved problematic in the first round and was expected to pose an even greater challenge during the second round given the increase in the number of cities. 62 There was considerable debate within DNP about the value of including the topic in the second round; some officials recommended dropping it.63 Eventually, the decision was made to limit the second round to four city-port pairs, i.e., Bogota coupled with each of the four ports noted above.64 While three of the ports are located in cities selected for the subnational Doing Business,65 the remaining 17 cities are omitted from the analysis. Accordingly, the trading across borders indicator was not used in the overall ranking of the cities in Doing Business in Colombia 2010. Given differences in the approaches, results from the two reports are not comparable.
58
Interview with Francisco Gonzales, Director, Economic Unit, USAID – Colombia, 6 July 2011. 59
Julio Cesar Silva, op. cit. 60
Ibid. 61
Orlando Garcia, op. cit. 62
PDS Version 2.0, 9 February 2009. 63
Interview with Fernando Jose Estupinan Vargas, Ana Paola Gomez Acosta, and Sandra Melana Gomez, DNP, 7 July 2011 64
Information for Bogota – Cartagena was drawn from the global Doing Business report. (Interview with K. Hornberger, IFC). 65
Barranquilla, Cartagena, and Santa Marta were selected for Subnational Doing Business. Buenaventura – the fourth port – was not included.
The usefulness of the comparison of the four ports is also questionable.66 The documentation required to import/export goods is a matter of national policy; there is no variation among the four ports. The number of calendar days required to import/export goods – including document preparation, ports and terminal handling, customs clearance and technical control, and inland transportation and handling – is virtually the same for three ports. The extra three to four days required for moving goods through Buenaventura to Bogota is attributed solely to the additional time required for inland transportation. Similarly, differences in cost across the four city-port pairs are primarily due to road conditions between the cities. Not surprisingly, the time and cost of in-land transportation between Bogota and
Buenaventura is highest among the four city-port pairs given the poor quality of roads linking the two cities. Additional checkpoints outside the port gates also contribute to time and cost. This information has limited value. Addressing relative transportation costs is not amenable to local government action. Perhaps, more importantly, as the Technical Vice President for ANALDEX – the organization assigned with the task for coordinating data collection for the trading across border indicator – noted, “the ports are not interchangeable.”67 Importers/exporters in Bogota use particular ports given their facilities, shipping schedules, and total shipping costs (including the cost of ocean transport68). For example, Buenaventura is on the Pacific coast; the other three are on the Atlantic. Santa Marta specializes in agricultural commodities with refrigerated warehouses and bulk terminals. In this regard, ANALDEX found it very difficult to find an importer/exporter in Bogota that had experience moving goods through Santa Marta.69 Enforcing contracts. The topic was chosen primarily because of the poor performance of Colombia in the global Doing Business rankings;70 based on Bogota, the country ranked 141 out of 175 countries in 2007. As one official put it, “The results were so bad that we had to research what was going on in the rest of the country.”71 Officials were hopeful that other cities would perform better and that the SNDB report would point to steps to improve performance such as greater use of mediation.72 While the analysis revealed differences among cities, they are not due to the actions of local governments, which have no authority in this area. The legal framework for contract enforcement is the same throughout the country. Commercial procedures are governed by the Commercial Code and the Code of Civil Procedures. The Superior Judicial Council (Consejo Superior de la Judicatura) in Bogota is responsible for the administration of all civil courts throughout the country. Differences in performance across cities relate primarily to available resources, particularly the number of judges, clerks and other judicial staff, relative to the volume of cases brought before the court.73 It also relates to the quality of judges and their willingness to implement reforms that are already allowed by law, e.g., dismissal of inactive cases. Poorly staffed courts take longer to process cases and have a greater backlog. Differences in costs stem largely from
differences in lawyer fees in various parts of the country as well as the time required to resolve cases. Here again, there is little that can be done at the local level to address this issue. The national orientation is reflected in the recommendations offered in the Doing Business report: virtually all deal with reform of the judicial system – establishment of small claims and specialized courts, modernization of procedural
66
As noted in the PCR, the trading across borders topic also was intended to inform the Trade Logistics program in Colombia (564767).
67
Interview with Diego Rengifo Garcia, Technical Vice President, ANALDEX. 68
Ocean transport costs are not included in Doing Business. 69
Julio Cesar Silva, op. cit. 70
Orlando Garcia, op. cit. 71
Orlando Garcia, op. cit. 72
Ibid. 73
rules, implementation of case management system, and improvements of mechanism to evaluate judicial staff – rather than steps that can be taken by local authorities. Two judges on the Superior Judicial Council participated in a right of reply meeting in held on 16 October 2009.74 After a presentation on the Doing Business findings, the judges commented that the type of case used in Doing Business represents five percent of the courts’ total caseload and also noted that roughly half of all cases are inactive.75 The discussion turned to a discussion of “ongoing reforms initiatives” in the judiciary, particularly the role of a new law that allows judges to dismiss inactive cases in order to reduce court congestion.76
While the benchmarking exercise demonstrated differences across cities, it might have been preferable to undertake an analysis of contract enforcement as part of a broader project directly with the judiciary (given its independence), rather than with the executive branch of government. In fact, DNP wanted to drop this indicator after the first round; however, USAID representatives insisted that it be included in the second round because the agency was supporting another project on judicial reform and believed that the information would be useful.77
Dealing with construction permits. The decision was made to exclude this topic from the first round even though this procedure falls within the jurisdiction of local government authorities.78 As a government official who participated in the decision explained, “We were ignorant of the importance of the role local government played in construction permits and IFC did not recommend that we include it [the
indicator+... It was a really silly choice.” At that time (2006), IFC LAC was also planning to establish a “Municipal Scorecard” that would deal with construction permitting and inspection regimes.79 Government officials later regretted the exclusion of this indicator in the SNDB report. While the indicator was added in the second round, its exclusion from the first round wasted an opportunity to obtain data that could have proved useful.
Effectiveness and Sustainability
The Doing Business reports provide information that has stimulated discussion about the need and possibility for reform.
46. Despite caveats, Doing Business has motivated reform. Government officials have used Doing Business as a justification for reforms, although not always those that have been recommended in reform memos. In this regard, officials noted that many of the recommended reforms are quite general, and as one person put it, “Doing Business is a reference point for other initiatives.”80
Outcome targets were surpassed, but reforms cannot necessarily be traced directly to recommendations in the Doing Business reports.
47. As originally conceived, the objective of the project was for six of the 12 cities to implement at least one reform over the two-year period with a total of at least 10 reforms across the different topics measured by Doing Business.81 The target with respect to the total number of reforms was subsequently broken down by
74
CIC/FIAS, Minutes of Meetings of the Right to Reply Mission in Colombia, 13-16 October 2009. 75
Ibid. 76
CIC/FIAS, written comments, 9 May 2012. 77
Fernando Jose Estupinan Vargas, op. cit. 78
It was included as one of four indicators used in the subnational Doing Business reports in Mexico. 79
Orlando Garcia, op. cit. This is also mentioned in PDS Approval, V1, op. cit. 80
Liliana Maria Rojas, op. cit. 81
topic and increased to 20.82,83 As shown in Table 9, all targets have been exceeded: according to the SNDB team all 12 cities had some type of reform and all told there were 40 reforms recorded between the two Doing Business reports.
Table 9. Reforms between Doing Business 2008 and 2010
Output/Outcome Description Target Actual
Cities with at least one reform 6 12
Cities with at least one reform to starting a business 10 12 Cities with at least one reform to registering property 3 10 Cities with at least one reform to paying taxes 3 12 Cities with at least one reform to enforcing contracts 1 2 Cities with at least one reform to trading across borders 3 4
Total number of reforms 20 40
Source: Nexus Associates based on project approval documents, PSRs, and the PCR.
48. Tables 10 to 13 provide more detailed information on the 36 reforms associated with enforcing contracts, paying taxes, registering property, and starting a business. (The other four reforms relate to trading across borders.) For the purpose of SNDB, a reform is counted if there is any improvement in performance for at least one of the three indicators – procedures/time/cost – in a particular topic that can be linked to a specific government action (regardless of the magnitude of the improvement and changes in the other
indicators).84,85 Some of the improvements were quite minor and, in seven instances, reforms were counted even though performance worsened on one of the dimensions measured within a particular topic. In many cases, reforms were due only to the implementation of national laws or regulations.
82
Targets for reforms between the second round (2010) and third round (2012) are as follows:
Output/Outcome Description Targets Cities with at least one reform to starting a business 5 Cities with at least one reform to registering property 3 Cities with at least one reform to dealing with licenses 2 Cities with at least one reform to enforcing contracts 1 Cities with at least one reform to trading across borders 3 Cities with at least one reform to paying taxes 3
83
The project established a target of having at least one “follow-on IFC project that benefitted from the KM project.” According to the SNDB team, there were two follow-on projects: i) the request from the GoC to conduct the second round of
benchmarking and ii) the use of the benchmarking results in National Plan Colombia (563628). 84
Interview with SNDB project managers, op. cit. 85
The global Doing Business methodology adopts a ten percent improvement as a minimum threshold to be counted as a reform.
Table 10. Starting a Business City Counted as Reform Due Only to National Reforms No. of Procedures Time (Calendar Days) Cost (% of GNI per Capita) 2008 2010 Change 2008 2010 Change 2008 2010 Change Barranquilla
14 9 -5 46 17 -29 20.0 15.7 -4.3 Bucaramanga
13 9 -4 43 38 -5 25.2 16.4 -8.8 Cali
14 11 -3 33 13 -20 20.8 15.3 -5.5 Cartagena
13 11 -2 60 27 -33 23.5 20.2 -3.2 Cúcuta
13 9 -4 47 13 -34 17.1 15.6 -1.4 Manizales
14 9 -5 61 10 -51 19.4 15.1 -4.3 Medellín
13 9 -4 48 12 -36 22.1 16.4 -5.7 Neiva
19 8 -11 32 8 -24 37.6 30.0 -7.6 Pereira
12 8 -4 33 11 -22 13.1 15.1 +2.0 Popayán
17 12 -5 63 28 -35 17.7 15.6 -2.1 Santa Marta
16 9 -7 40 10 -30 13.2 15.5 +2.3 Villavicencio
12 10 -2 37 17 -20 22.3 18.4 -3.9 # of cities improving 12 12 20.0 15.7 10# of cities with no change 0 0 0
# of cities worsening 0 0 2
Source: Nexus Associates based on Doing Business reports, data provided by IFC, and Advisory Services Completion report
Table 11. Registering Property City Counted as Reform Due Only to National Reform No. of Procedures Time (Calendar Days) Cost (% of Property Value) 2008 2010 Change 2008 2010 Change 2008 2010 Change Barranquilla 14 13 -1 26 19 -7 4.38 4.02 -0.36 Bucaramanga
13 13 0 21 20 -1 2.46 2.38 -0.08 Cali
12 11 -1 23 24 +1 2.28 2.14 -0.14 Cartagena
13 12 -1 35 33 -2 2.83 2.69 -0.14 Cúcuta 13 13 0 27 24 -3 2.30 2.14 -0.16 Manizales
11 10 -1 20 12 -8 2.19 1.97 -0.22 Medellín
12 10 -2 23 23 0 2.54 2.33 -0.21 Neiva
13 11 -2 24 17 -7 3.71 3.41 -0.30 Pereira
12 11 -1 29 19 -10 2.09 1.94 -0.15 Popayán
12 11 -1 30 28 -2 2.18 2.03 -0.15 Santa Marta
11 11 0 24 17 -7 2.61 2.67 +0.06 Villavicencio
11 11 0 35 29 -6 2.59 2.50 -0.09 # of cities improving 8 10 11# of cities with no change 4 1 0
# of cities worsening 0 1 1
