Doing Business in Egypt 2014 Comparing Business Regulations for Domestic Firms in 15 Locations and 5 Ports with 188 other Economies Doing Business in Egypt 2014 Understanding Regulations for Small and Medium-Size Enterprises Comparing Business Regulations for Domestic Firms in 15 Locations and 5 Ports with 188 other Economies © 2013 International Bank for Reconstruction and Development/The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 15 14 13 12 A copublication of The World Bank and the International Finance Corporation. This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties. 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Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution —Please cite the work as follows: World Bank. 2013 Doing Business in Egypt 2014, Washington, DC: World Bank Group. Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. Contents Doing Business in Egypt 2014 is a new subnational report of the Doing Business series. It measures business regulations and their enforcement across 4 indicators in 15 Egyptian locations and governorates: Alexandria (Alexandria), Assuit (Assuit), 1 Executive summary Aswan (Aswan), Cairo (Cairo), Damietta (Damietta), Fay- oum (Fayoum), Giza (Giza), Ismailia (Ismailia), Kharga (New 8 About Doing Business and Valley), Mansoura (Dakahlia), Port Said (Port Said), Sohag Doing Business in Egypt 2014 (Sohag), Suez (Suez), Tanta (Gharbia), and Zagazig (Sharqia) and the indicator trading across borders in 5 ports: Alexandria 16 Starting a business (Alexandria), Damietta (Damietta), Port Said East (Port Said), Port Said West (Port Said), and Sokhna (Suez). The locations 23 Dealing with construction permits were selected in collaboration with the General Authority for Investment and Free Zones (GAFI) of the Ministry of In- 30 Registering property vestment and the Ministry of State for Local Development. They can be compared against each other, and with other 188 35 Enforcing contracts economies worldwide. 40 Trading across borders Comparisons with other economies are based on the indi- cators in Doing Business 2014, Understanding Regulations for 46 Data notes Small and Medium-Size Enterprises, the eleventh in a series of annual reports published by the World Bank and the Interna- 57 City tables tional Finance Corporation. The indicators in Doing Business in 60 Indicator tables Egypt 2014 are also comparable with 355 cities from 55 econ- omies benchmarked in other subnational Doing Business stud- 62 List of procedures ies. All data and reports are available at www.doingbusiness. 63 Starting a business org/subnational. 81 Dealing with construction permits Doing Business investigates the regulations that enhance 100 Registering property business activity and those that constrain it. Regulations af- 109 Indicator details fecting 5 stages of the life of a business are measured at the subnational level in Egypt: starting a business, dealing with 112 Acknowledgments construction permits, registering property, trading across bor- ders and enforcing contracts. These indicators were selected 116 Annex: Trade Facilitation in Egypt and the because they cover areas of local jurisdiction or practice. The Development of the Suez Canal Corridor Project indicators are used to analyze economic outcomes and iden- tify what reforms have worked, where and why. The data in Doing Business in Egypt 2014 are current as of June 1st, 2013. This project is the result of collaboration between the Global Indicators Group, Development Economics and the IFC In- vestment Climate Advisory Services MENA. It was produced with the assistance of the General Authority for Investment and Free Zones (GAFI) of the Ministry of Investment and the Ministry of State for Local Development. THE DOING BUSINESS WEBSITE Doing Business in Egypt 2014 report Download reports http://www.doingbusiness.org/egypt Access to Doing Business reports as well as Current features subnational and regional reports, reform case News on the Doing Business project studies and customized economy and regional http://www.doingbusiness.org profiles http://www.doingbusiness.org/Reports Doing Business reforms Short reform summaries Subnational and regional projects http://www.doingbusiness.org/Reforms Differences in business regulations at the subnational and regional level Methodology and research http://www.doingbusiness.org/Subnational- The methodology and research papers Reports underlying Doing Business http://www.doingbusiness.org/Methodology Law library http://www.doingbusiness.org/Research Online collection of laws and regulations relating to business and gender issues http://www.doingbusiness.org/Law-library http://wbl.worldbank.org Business Planet Interactive map on the ease of doing business http://rru.worldbank.org/businessplanet Executive summary Since the January 25th revolution in 2011, consider the licenses and permits neces- the Arab Republic of Egypt has been sary for formal operation to be a major undergoing a major political and social constraint.1 Similarly, in a 2012 study car- transition. At the same time, substantial ried out by the Alexandria Business As- economic disruptions have adversely af- sociation in 5 governorates, 46% of firms fected tourism, retail, trade and banking. say the requirements to obtain a business More than two years after the revolution, license and operate formally are too com- many Egyptians—especially young peo- plex. One of two entrepreneurs perceives ple, women and the population living in them as too time-consuming and be- lagging and underserved geographical lieves that formalization will mostly result areas—are still waiting to gain broader in more taxes and inspections. 2 access to the economic opportunities of a new era, with its promise of inclusive Moreover, there is a general lack of gov- growth and employment. ernance and trust. According to Rapid Egypt still faces structural challenges that Assessment surveys conducted by the impede private sector activity. A history World Bank Group in 2011 and 2012, of government intervention traditionally business managers rank informal gifts created limited opportunities for entre- or payments, anticompetitive practices preneurship. According to the World and regulatory policy uncertainty high on Bank Investment Climate Rapid Survey their list of constraints.3 At the same time, conducted in 2011, over one-fourth (27%) public officials perceive the private sector of the firms operating in Lower Egypt as untrustworthy.4 FIGURE 1.1 Greater access to regulatory information is associated with greater trust in regulatory quality Regulatory quality High 1.5 High access 1.0 0.5 No access 0 -0.5 Low -1.0 Economies by accessibility of regulatory information Note: The 176 economies in the sample are divided into 5 groups based on the accessibility of information index, and averages are taken for the economies in each group on the Regulatory Quality Index ranking of the Worldwide Governance Indicators for 2009. The Regulatory Quality Index, ranging from -2.5 (weak) to 2.5 (strong), measures public perception of government’s ability to formulate and implement sound policies. Relationships are significant at the 5% level after controlling for income per capita. Source: World Bank, Worldwide Governance Indicators; Doing Business database. 2 DOING BUSINESS IN EGYPT 2014 While there have been efforts to reform sector—predominately in micro, small is thus perhaps even more urgent than in the business environment for local en- and medium-size enterprises—employed other countries. trepreneurs in the past, their impact has almost three-quarters of the labor force, been diluted by a lack of sustained com- accounting for 63% of the country’s GDP.5 Cairo does not tell the whole