1

Executive summary

Ten years after the firstDoing Business report The reform process began by focusing on DOING BUSINESS IN 2013 started analyzing business regulations a reduction in transaction burden and cost. MAIN FINDINGS across the world, one of its main conclusions Until 2008, the Government focused mainly • Between 2009 and 2012, all the is that the quality of business regulations on driving the expansion and improvement cities improved in at least one of the contributes to the economic development of of one-stop shop systems for starting a measured areas. countries.1 Starting in 2005 and with greater business, registering property and trading emphasis from 2007 on, the Colombian across borders. To support the operation • As a result of their continuous government has improved its regulatory of these one-stop shops and promote reform effort, Manizales and Ibagué environment by strengthening its policies simplified procedures, electronic data remain at the top of the ranking. and institutions with the aim of increasing interchange systems were developed, such • For the first time, large cities showed productivity, accelerating economic growth, as the electronic system for filing and paying the greatest improvements— and promoting competitiveness. Today, national taxes and duties (Modelo Único de Medellín, Bucaramanga, Cartagena, these efforts are evident. As a result of the Ingresos, Servicio y Control Automatizado or and Bogotá made the most progress implementation of 25 business regulatory MUISCA) and the integrated system for on the ease of doing business. reforms over the last eight years2 and the paying social security contributions (Planilla • A total of 62 regulatory reforms participation of the executive, legislative, Integrada de Liquidación de Aportes or PILA). making starting a business, and judicial powers as well as the private As these reforms continue to progress, the dealing with construction permits, sector, Colombia is the Latin American strengthening of entrepreneurial innovation registering property, and paying economy that has been most successful and the reduction of business informal- taxes easier were implemented. in narrowing the gap in its efforts to attain ity levels became priorities for the new the most efficient regulations in the areas Government. According to some estimates, • Reforms mainly consisted in measured by Doing Business.3 These reforms informality in Colombia represents close to local implementation of national were further enhanced with the develop- one half of the country’s economic activ- regulations—but local government ment of information technologies aimed ity.7 Under the guidelines of the 2010-2014 initiatives were also carried out, at making transactions more efficient and National Development Plan (Plan Nacional mainly in the starting a business and reducing their associated costs. As a con- de Desarrollo), the Government enacted paying taxes indicators. sequence, Colombia today ranks 43 among a formalization and job creation law (Ley • As a result of the progress made 190 countries and second after Chile in Latin de Formalización y Generación de Empleo)8 by the 23 Colombian cities towards America in the E-Government Development with the purpose of promoting the entry of best global practices, the country Index published by the United Nations.4 small and medium-size enterprises9 and job ranks today between the average The country’s favorable macroeconomic creation, especially among the young and performance of high-income OECD environment over the last few years,5 which more vulnerable population. More recently, countries and Latin America. has led it to be considered a new emerging in 2012, the Government passed economy,6 and persistence in efforts to a new tax reform that will reduce even more improve its business climate will enable it to the burden faced by entrepreneurs by low- take advantage of the market opportunities ering the costs of hiring workers.10 Other that are expected from the enactment of the reforms included the passage of a law that free trade agreement with the United States regulates the general royalty system (Sistema as well as other agreements currently being General de Regalías),11 aimed at strengthening negotiated. This will additionally enable the development of regions and investment Colombia to fulfill its aspiration to become projects, including projects to modernize a member of the Organisation for Economic infrastructure across the country—also a Co-operation and Development (OECD). priority area for the Government. In order 2 DOING BUSINESS IN COLOMBIA 2013

to focus on higher procedure efficiency, WHAT DO RESULTS SHOW? TABLE 1.1 Where is it easier to do business the Government enacted a new red tape Two conclusions be drawn from the in Colombia? reducing decree (Decreto Antitrámites)12 results. The first is that cities that consis- Ranking designed to streamline procedures at public tently implement reforms remain among the 1 Manizales 13 Tunja administration offices, the new statute for top performers in the ranking. After three 2 Ibagué 14 Bucaramanga notaries and registry (Estatuto de Registro years, Manizales and Ibagué continue to be 3 Bogotá D.C. 15 Popayán de Instrumentos Públicos), and regulations the Colombian cities where doing business 4 Armenia 16 Sincelejo governing the issuance of urban develop- is easier. The second is that the size of the 5 Pereira 17 Villavicencio ment licenses. cities—measured by their population—is not 6 Santa Marta 18 Cartagena necessarily associated with a higher or lower The strategy to improve the business cli- 7 Dosquebradas 19 Pasto classification in the indicators. Colombian mate in the country has expanded to the 8 20 Cúcuta cities that are large business centers and regions. National reforms have benefited 9 Neiva 21 Cali where the demand for entrepreneurial all Colombian cities included in this study 10 Montería 22 services is higher demonstrated that they and continue encouraging departmental can make doing business easier and improve 11 Medellín 23 Palmira and municipal governments to strengthen in the ranking. Bogotá moved up 4 places 12 Riohacha their own reform initiatives. and became the third city in the country Note: Ranking of cities as of December 31, 2012. where it is easiest to do business. Medellín, Source: Doing Business database. WHAT DOES DOING BUSINESS IN Cartagena, and Bucaramanga, three of the COLOMBIA 2013 MEASURE? five largest cities after Bogotá17, were the up 8 places. It was closely followed by Doing Business studies business regulations ones that most improved in the overall rank- Bucaramanga and Cartagena, which moved from the perspective of domestic small and ing. The first was Medellín, which moved up 6 and 5 places, respectively (table 1.1). medium-size enterprises. This approach is particularly relevant in Colombia, where micro, small, and medium-size enterprises FIGURE 1.1 Distance to frontier in Colombia: between 2009 and 2012 all cities except Sincelejo made progress (MIPYMES) represent­ 94% of the business Best national practices sector and encompass one third of the employed population.13 Bogotá represents Colombia in the Doing Business annual report, 80 2012 which compares 185 economies across the — 2009 world. However, entrepreneurs face different — local regulations and practices depending on 70 — — — the city or region. Doing Business in Colombia — — 2008 was the first report to go beyond the — — capital, Bogotá, to reflect these differences 60 — — — — — in other Colombian cities. This third edition — — — — — of the Doing Business in Colombia series has — — — been produced under the framework of the — 2010-2014 National Development Plan as 50 — a strategy to identify improvements in the — business environment in the regions and disseminate good practices.14 Doing Business 40 in Colombia 2013 updates the results of the 0 2009 assessment in 23 cities, including for CALI NEIVA PASTO TUNJA IBAGUÉ PEREIRA the first time the cities of Dosquebradas CÚCUTA PALMIRA POPAYÁN ARMENIA SINCELEJO RIOHACHA MONTERÍA

15 MEDELLÍN VALLEDUPAR BOGOTÁ D.C. BOGOTÁ and Palmira, and establishes a benchmark MANIZALES CARTAGENA SANTA MARTA SANTA VILLAVICENCIO BARRANQUILLA comparison among them in 4 business DOSQUEBRADAS BUCARAMANGA regulation areas: Starting a business, Dealing PROMEDIO COLOMBIA with construction permits, Registering Note: The indicator “distance to frontier” captures the difference between an economy’s performance and the best performance property, and Paying taxes. In addition, observed (the frontier) in each one of the 4 analyzed indicators (Starting a business, Dealing with construction permits, Registering property, and Paying taxes). For example, the global frontier for Starting a business is determined by New Zealand for Trading across borders is analyzed for the time (1 day), Canada and New Zealand for the number of procedures (1), and Denmark and Slovenia for cost (0%). Similarly, the Colombian frontier for this indicator is determined by Armenia and Neiva for time (10 days), 7 cities for number of procedures (9), 4 main ports: Barranquilla, Buenaventura, and Armenia for cost (6.7% of income per capita), and so on for the rest of the indicators.. 16 Cartagena, and Santa Marta. Source: Doing Business database. EXECUTIVE SUMMARY 3

FIGURE 1.2 How are Colombian cities TABLE 1.2 National and local reforms implemented in all cities progressing towards best global practices? Local implementation of national reforms/local reforms Starting Dealing with Registering Paying The frontier: best practices across the world a business construction permits property taxes 100 Armenia 3 3 3 2012 Barranquilla ♦ 3 3 90 — — 2009 Bogotá D.C. 3 3 3 Bucaramanga 3 3 3 80 — Cali 3 3 7 3 — — Cartagena 3 3 3 70 — — — — Cúcuta ♦ 3 — Dosquebradas 3 3 7 3 60 Ibagué 3 3 3 Manizales ♦ 3 3 3 50 Medellín 3 3 3 Montería 3 3 3 40 Neiva ♦ 7 3 Palmira ♦ 3 Pasto 3 3 3 3 0 Pereira 3 3 7 3 Popayán 3 3 3 MEDELLÍN

SINGAPORE Riohacha 3 3 MANIZALES CARTAGENA BOGOTÁ D.C. BOGOTÁ LATIN AMERICA LATIN Santa Marta 3 3 3 BUCARAMANGA BUCARAMANGA MEDIA COLOMBIA HIGH INCOME OECD Sincelejo 3 7 7 ♦ 3 3 3 Source: Doing Business database. Tunja Valledupar 3 3 3 3 ♦ 3 3 3 WHAT HAS IMPROVED? Villavicencio 3 Reforms making it easier to do business. 7 Reform making it more difficult to do business. In addition to the results obtained by ♦ Reforms making it easier and others making it more difficult to do business. Colombian cities on the ease of Doing Note: The reforms were implemented between 2009 and December 2012. All the cities improved in the Starting a business Business ranking, another way of determin- indicator thanks to the Law 1429 of 2010. However, all the cities were also affected by the new requirements introduced by the ing how much they have improved is by Decree 2645 of 2011 issued by the Ministry of Finance and Public Credit. These regulations, in addition to other local reforms, had a combined impact on the cities. In 17, this resulted in a substantial process improvement, while in the 5 remaining cities, the comparing the individual results of each city impact was lower. Concerning the Paying taxes indicator, all the cities reduced by 7 the number of payments through a mandatory requirement for online filing of the income tax and the VAT, which was introduced by the Resolution 1336 of 2010 issued by the tax over time. In 2012 Doing Business published and customs department (DIAN). However, in Sincelejo, ICA and urban delineation tax rates were increased, and an environmental a new measure denominated “distance to surcharge was introduced, thereby offsetting the positive effect of the resolution. frontier” to determine each economy’s Source: Doing Business database. individual progress towards the achievement Doing Business in Colombia 2010 identified de Registro or VUR), and implementation of of more efficient regulations. This indicator good practices, showed existing bottlenecks, electronic systems improved tax payment in measures the improvement in the regula- and provided reform recommendations. all cities. However, other national and local tory environment for entrepreneurs, both in Three years on, a total of 62 reforms that initiatives added procedures and increased absolute terms and over time, by showing make doing business easier were recorded costs (table 1.2).20 each economy the existing distance between in 4 areas measured. Seventeen cities im- itself and the “frontier”.18 The application of proved in the Starting a business indicator, At the national level, the most significant this measure to Colombian cities between as a result of the regulations implemented progress made over the last 3 years in pro- 2009 and 2012 shows that all the cities, by the formalization law and the red tape moting business start-up was the enactment except Sincelejo,19 have improved their busi- reducing decree, among other reasons. of Law 1429 of 2010, which reduced the cost ness climate (figure 1.1). When considering Dealing with construction permits is easier of starting a business by more than 40% the progress of the 23 Colombian cities in 17 cities thanks to the procedures estab- on average. While in 2009 an entrepreneur towards the best global practices, their lished by Decree 1469 of 2010. Registering paid, on average, 15.6% of income per capita average performance presently places the property is progressing in 5 cities, partly to start a business, today the cost is only country halfway between the average of high thanks to the expansion of the single window 8.8%. On the other hand, all the cities were income OECD countries and Latin America for property registration (Ventanilla Única also affected by an additional procedure (figure 1.2). required for the formalization of the Unified 4 DOING BUSINESS IN COLOMBIA 2013

Tax Registration (Registro Único Tributario were eliminated and replaced with internal (ICA), Bogotá and Medellín reduced the or RUT) at the national tax and customs consultations between entities thanks to number of payments from 6 to 1 and from authority (Dirección de Impuestos y Aduanas agreements between the Curadurías urbanas, 13 to 1, respectively. Cali was the only city Nacionales or DIAN).21 Chambers of Commerce, and Municipal in Colombia that reformed its tax legislation Governments (Alcaldías). The Municipal by issuing a new tax statute that integrated Cartagena was the city that most im- Planning OfficeSecretaría ( de Planeación) of the disperse legislation, an effort that had proved business start-up. As a result of an Ibagué reduced from 60 to 15 days the re- not been undertaken in the city for more international technical assistance package sponse time for issuing technical certificates than three decades. and a combined effort by the Chamber that must be obtained prior to a construction of Commerce and the city’s Municipal permit. In Medellín, the building acceptance With the enactment of the free trade Government, the land use certificate was certificate is no longer a requirement for agreement with the United States, agree- replaced with a virtual consultation. The connection to public utilities saving builders ments with the European Union and South departmental stamp duty in favor of culture 45 days out of the total amount required to Korea, and negotiations currently underway was eliminated, and the response time at start operating a warehouse. with the countries comprising the Pacific the Chamber of Commerce was expedited Alliance23 and others, Colombian ports are, thanks to an improvement strategy on client The Superintendence of Notaries and more than ever before, a key scenario for the service. As a result, Cartagena moved up 16 Registry continued the expansion of the country to take advantage of international places to the number 6 in the ranking for this single window for property registration trade benefits. The development and imple- indicator. The Municipality of Cali also made (VUR) to 10 cities in addition to Bogotá, mentation of electronic data interchange starting a business easier by promoting the thereby making property registration easi- through the MUISCA system and the purchase of company books at the Chamber er.22 However, implementation in these cities single window for foreign trade (VUCE) of Commerce and eliminating requirements has not progressed at the same pace, since have largely paved the way, especially to such as the need to previously obtain the it depends on collaboration between local make the preparation of trade documents forms for company registration and pay governments and the national authority. more efficient. In all, the time required for stamp duties. Thanks to these reforms, The Municipal Government of Barranquilla document preparation, customs clearance Cali climbed 7 places in the ease of starting merged the two procedures required to ob- and technical control, as well as port and a business and reduced associated costs tain the certificate of property tax payment. terminal handling is competitive as com- by more than a third. Other cities, such as In Manizales, where streamlining of consul- pared to other Latin American countries Riohacha and Sincelejo improved as a result tations and services at the VUR is in a more and close to high-income OECD economies. of the opening of new one-stop shops for advanced stage than in other cities, notaries At present, the main challenge is reducing business registration (Centros de Atención not only obtain basic data and information export and import costs, which are still high Empresarial or CAEs) at their Chambers of on the status of property tax payments, but and non-competitive—more than twice the Commerce. also file and pay the departmental registra- average for high-income OECD countries. tion tax at the VUR. Notary offices in both As a result of the National Government’s Dealing with construction permits improved Manizales and Valledupar improved their investment plans for increasing port capacity in 17 cities, mainly as a result of the ap- service by reducing the procedures and costs and improving transport infrastructure, the plication at the local level of the provisions faced by entrepreneurs for hiring private recent creation of a national infrastructure contained in Decree 1469 of 2010, which professionals to prepare sales agreements. agency (Agencia Nacional de Infraestructura) compiled and updated the regulation on Although VURs are still to be implemented and the enactment of Law 1508 of 2012, urban development licenses. The require- in Pasto and Villavicencio, administrative which promotes the involvement of the ment to obtain a certificate of property tax improvements and new electronic consulta- private sector in infrastructure projects,24 payment (certificado de paz y salvo de pago tion systems have led to the elimination there is a favorable scenario for the country de impuestos) was eliminated in 17 cities, or consolidation of procedures to obtain to successfully meet this challenge. reducing at least 1 and up to 3 procedures property tax payment certificates. for builders. Bucaramanga, Cali, Ibagué, Manizales, Medellín, and Pereira went The number of payments required to comply COMPARING REGULATIONS even further in improving the process. with the value added tax and the income AND THEIR ENFORCEMENT In Bucaramanga and Manizales, the of- tax was reduced in all cities from 6 to 1 ACROSS COLOMBIAN CITIES fices in charge of reviewing and approving and from 2 to 1, respectively, thanks to the Starting a Business construction permits (Curadurías urbanas) widespread implementation of the MUISCA While the business start-up process may reduced by 25% and 40%, respectively, online tax return filing and payment system. be completed through 9 procedures in 7 the time required for issuing a construction Reforms at the municipal level in seven cities cities,25 in Tunja and Valledupar, entre- permit by applying the existing rules for simplified tax payment even more. Thanks preneurs must complete 17 procedures. categorizing building projects based on risk. to the implementation of online payment Of the 9 minimum procedures required, In Cali, Manizales, and Pereira, certificates systems for the industry and commerce tax 8 may be completed in one day in the EXECUTIVE SUMMARY 5

cities having the best practices and 6 of FIGURE 1.3 For several cities, uneven performance between areas reveals improvement opportunities them are aimed at complying with social Best national practices CALI Indicator with the highest ranking: security requirements. The greater number Ranks 4 on Starting a Business indicator 1 Doing Business en Colombia 2013 overall ranking: of procedures in some cities is mainly due to Ranks 21 Indicator with the lowest ranking: the absence of CAEs and the need to obtain Ranks 23 on Paying Taxes indicator technical certificates such as the land use 5 certificate. This is why in Dosquebradas an entrepreneur requires a total of 40 days to start a business, while in Armenia and Neiva this can be done in 10 days. Business 10 start-up costs range from 6.7% of income per capita—COP 836,495 (USD 410)—in Armenia to more than 20%—COP 2,816,315 15 (USD 1,380)—in Neiva, a city where four departmental stamp duties, adding up to 15% of income per capita, must be paid. 20 Dealing with Construction Permits 23 The number of procedures ranges from 8 in CALI NEIVA PASTO 26 TUNJA IBAGUÉ PEREIRA 7 cities to 13 in Neiva and Sincelejo where CÚCUTA PALMIRA POPAYÁN ARMENIA MEDELLÍN SINCELEJO RIOHACHA MONTERÍA MANIZALES CARTAGENA VALLEDUPAR it is necessary to obtain several certificates D.C. BOGOTÁ SANTA MARTA SANTA VILLAVICENCIO BARRANQUILLA BUCARAMANGA prior to the application for a construction DOSQUEBRADAS permit. The variation in time is even greater. Source: Doing Business database. While in Manizales the overall process takes 39 days, builders in Ibagué must wait 3 and reviewing property titles, and having attor- Bogotá. Other municipal taxes, such as a half times longer. In 4 cities, Ibagué, Pasto, neys prepare the deeds) and the time taken the property tax, also contribute to the Valledupar, and Villavicencio obtaining by the Registry OfficesOficinas ( de Registro differences across cities, though in a lesser the construction permit may take up to de Instrumentos Públicos) to formally register proportion. Rates for industrial properties 2 months. In Barranquilla and Valledupar, property. The cost ranges from 1.9% of the range from 6.5 per thousand in Villavicencio issuance of certificates by the Municipal property value—close to COP 12 million to 15.5 per thousand27 in Medellín. Planning Department before the approval (USD 5,800)—in 6 cities, Ibagué, Manizales, of a construction permit takes 1 month. In Pasto, Riohacha, Tunja, and Valledupar, to LEARNING FROM EACH OTHER Medellín and Bucaramanga, builders must 4% in Barranquilla—COP 25 million (USD Although regulations are the same spend more than half of the total time to 12,200). Cost differences are mainly due throughout the country, the degree of obtain a construction permit in obtaining the to stamp duties. In Barranquilla, 2% of the implementation is not the same across cities connection to water and sewerage services. property value must be paid for stamp du- and departments. The areas where depart- In terms of costs, the fees and methods ties which go to finance public hospitals ments or municipalities have regulatory for calculating the municipal tax on urban and the development of the Department competence accentuate these differences. delineation are the main sources of the varia- of Atlántico. From a public policy point of view, these tion. The tax cost ranges from approximately differences reveal opportunities to continue Paying Taxes COP 820,000 in Bucaramanga (USD 400) reforming at the local level (figure 1.3). In to COP 27 million in Bogotá (USD 13,000). Different tax withholding rates and systems addition to the efforts to improve the busi- and the availability or lack of availability ness regulatory environment, another way of Registering Property of online payment systems are the deter- progressing is by replicating good practices Bogotá is the city where the least procedures minants in the performance of each city. and implementing successful reforms that are required to register a property—7—as Differences at the local level are mainly already exist in other parts of the country. compared to 13 in Bucaramanga, Cali, and due to the industry and commerce tax or Peer learning not only promotes reforms, Sincelejo. While property may be registered ICA. The number of payments ranges from but also prevents duplication of efforts.28 in 11 days in Manizales, more than 1 month 10 to 22 across the cities, depending on is required in Pasto. The main differences whether the company is or not an ICA tax Some initiatives aimed at encouraging peer in terms of procedures and time across withholding agent. ICA tax rates also vary learning and good practice sharing were cities are due to requirements concerning for entrepreneurs, from 3.4 per thousand implemented after the publication of Doing document preparation and procedures of sales for the period in Pereira to 11.4 per Business in Colombia 2010. The National prior to notarization (obtaining certificates, thousand—almost three times higher—in Planning Department carried out a peer 6 DOING BUSINESS IN COLOMBIA 2013

FIGURE 1.4 the efficiencyof regulations the 3 cities where fewer procedures were social security contributions paid by the governing business start-up is required to start a business—Barranquilla, company for employees earning less than associated with higher labor 10 minimum wages. Up to now, labor risk Bogotá, and Medellín—was 43% higher than productivity for small and medium- insurance and welfare contributions were size enterprises that of small and medium-size enterprises equivalent to 9% of an employee’s wage located in Cali, where 2 more procedures (4% for the Family Subsidy, 3% for the Labor productivity were required (figure 1.4).29 Colombian Institute for Family Welfare, (annual sales per employee) and 2% for the National Learning Cities with the Service). After the reform, companies 84.3 smallest number NOTES are exempt from paying contributions of procedures to the Colombian Institute for Family to start a business 1. World Bank. 2013. Doing Business 2013: Welfare and the National Learning Smarter Regulations for Small and Medium- Service (3% and 2%, respectively). Size Enterprises. World Bank Group. Companies are also exempt from paying Cities with the Washington, DC. 58.8 largest number health contributions to the social security 2. of procedures To review all the reforms implemented in system (8.5%). Colombia that have been recognized and to start a business 11. The general royalty system or Sistema published by Doing Business please visit General de Regalías is defined under http://www.doingbusiness.org/reforms/ Law 1530 of 2012 as the set of income, overview/economy/colombia allowances, agencies, procedures, and Small and medium-size 3. World Bank. 2013. Note 1, ut supra. regulations for management, execution, enterprises (SMEs) 4. United Nations. 2012. Global control, efficient use, and allocation of E-Government Survey 2012. Government income from the exploitation of non- Note: Relationships are significant at a 1% level after for the People. Department of Economic renewable natural resources. controlling for departmental income per capita. and Social Affairs. United Nations. New 12. Decree 0019 of 2012. Source: Doing Business and Enterprise Surveys database. York, NY. 13. Document MIPYMES: “Realidades y 5. Based on figures published by the Oportunidades”. Medellín Digital – Cultura National Statistics Department (DANE), E. 2013. Available at: http://www. the country has displayed positive gross learning workshop for cities in Manizales, culturaemedellín.gov.co/sites/CulturaE/ domestic product growth rates over the MiEmpresa/Noticias/Paginas which resulted in the publication of a fact last few years (1.7% in 2009, 4% in 2010, 14. 2010-2014 National Development sheet with the best national practices identi- 6.6% in 2011, and 4% in 2012). Plan, “Prosperidad para Todos”. Chapter fied. Nineteen of the 21 cities participating in 6. The new emerging economies group, III. Available at: http://www.dnp.gov. the study requested technical assistance to CIVETS, comprises Colombia, Indonesia, co/LinkClick.aspx?fileticket=4-J9V- improve their development in the indicators. Vietnam, Egypt, Thailand, and South FE2pI%3d&tabid=1238 Africa. The term CIVET was adopted by 15. Based on population projections for 2012 More recently, the authorities of Montería the Economist Intelligence Unit (EIU) in visited the Chambers of Commerce of by the National Statistics Department 2009. (DANE), the 23 cities considered in the Sincelejo and Pereira to learn about the CAE 7. Cárdenas, Mauricio and Sandra Rozo. study represent 60% of the country’s implementation and operation process in 2007. “Informalidad en Colombia: Nueva urban population. Evidencia”. Working Document No. 35, these cities. Likewise, Tunja’s Chamber of 16. This third assessment does not include Commerce executives visited their peers in Fedesarrollo. If business infor­mality is the Enforcing contracts indicator and measured in terms of the percentage incorporates changes to the Dealing with Pereira during the implementation of their of microenterprises not registered in CAE, which was inaugurated in December construction permits indicator methodol- the Registry of Commerce, the average ogy. Finally, the Trading across borders 2012. For its part, the Chamber of Commerce percentage for the last five years is 55%, indicator has not been considered in the of Armenia has a specialist consulting ser- based on a diagnosis of informality levels overall ranking because it only measures vice for new CAE implementation, which presented in the 2010-2014 National the performance of the 4 port cities. For Development Plan “Prosperidad para further information about indicators and has been used by cities such as Riohacha, Todos” (Prosperity for All). In accordance Tunja, and Valledupar. the methodology, please review the Data with Law 905 of 2004, small enterprises Notes. are those whose assets do not exceed It is important to promote learning 500 current legal minimum monthly 17. In order, Medellín, Cali, Barranquilla, Cartagena, and Bucaramanga based activities across Colombian cities. The wages (SMLMV) and have up to 10 workers. on DANE population projections from adoption of good practices could improve the 2005 Population Survey. Available local business productivity. A World Bank 8. Law 1429 of 2010. at: http://www.dane.gov.co/index. Enterprise Survey analysis carried out 9. Law 1429 of 2010 defines small php?option=com_content&view=article& enterprises as those having less than 50 using 2010 data for the 4 largest cities in id=75&Itemid=72 workers and total assets not exceeding Colombia showed a correlation between 18. For further information about the overall 5,000 current legal minimum monthly ranking and the distance to frontier, the number of procedures to be completed wages. see the chapter on the Ease of Doing by an entrepreneur to start a business and 10. The reform reduces labor risk insurance Business and Distance to Frontier in productivity. The labor productivity of small and welfare contributions (payroll taxes Doing Business 2013. Available at http:// and medium-size enterprises located in or aportes parafiscales) as well as the doingbusiness.org EXECUTIVE SUMMARY 7

19. Sincelejo increased the number of procedures for dealing with construction permits and registering property and increased the total tax rate. 20. Although the cities of Dosquebradas and Palmira are assessed for the first time, in order for their results to be comparable, indicator data was constructed retroac- tively as of July 2009. 21. Decree 2645 of 2011 issued by the Ministry of Finance and Public Credit. See the chapter on Starting a Business for more information. 22. The 10 cities are Armenia, Barranquilla, Bucaramanga, Cartagena, Ibagué, Manizales, Medellín, Pereira, Sincelejo, and Valledupar. 23. Data on Colombia free trade agreements signed and under a negotiation process are available at: http://www.tlc.gov.co 24. Montenegro, Santiago. Colombia’s Infrastructure Challenges. 23, 2013. University of Miami – Center for Hemispheric Policy. 25. Armenia, Bucaramanga, Cali, Cartagena, Neiva, Pereira, and Santa Marta. 26. Bogotá, Cartagena, Dosquebradas, Manizales, Medellín, Pereira, and Santa Marta. 27. Industrial plot with an appraisal value exceeding COP 11million. Fiscal year 2012. 28. Words expressed by the Sectorial Sub-Director of the National Planning Department at the event “Investment Climate Reforms in Latin America and the ”. 2013. Panama City. 29. Labor productivity and enterprise size data was obtained from enterprise surveys carried out from August 2009 to June 2010 in 4 Colombian cities (Barranquilla, Bogotá, Cali, and Medellín). Labor productivity is defined as annual sales for the 2009 fiscal year divided by the number of workers under a perma- nent employment agreement over the same period. Small and medium-size enterprises (PYMES) are those with less than 100 workers. Entities requiring the lowest number of procedures were identi- fied based on the Starting a Business indicator data from Doing Business in Colombia 2010. Methodology details may be reviewed on the website http://www. enterprisesur­veys.org