Iran’s Ease of Doing Business Score Improves: World Bank's Latest Report Shows

EghtesadOnline: Iran’s ease of doing business score has seen an improvement of 2.34 percentage point, though its ranking among 190 economies in the World Bank’s Ease of Doing Business Report 2019 fell by four places to 128th.

News ID: ۷۴۶۱۸۰

03 November 2018

The country’s overall distance to frontier score is 56.98, compared to last year’s 54.64. An economy’s distance to frontier is indicated on a scale of 0 to 100, where 0 represents the lowest performance and 100 the frontier, the World Bank reported on Wednesday.

New Zealand tops the list of 190 countries in ease of doing business, followed by Singapore, Denmark and Hong Kong, while Somalia was in last place, exactly as in 2018.

According to Financial Tribune, following is an overview of Iran’s rankings and scores in all 10 indexes in the report:

Starting a Business

This indicator records the number of procedures, time, cost and paid-in minimum capital required to start a limited liability company.

Iran is ranked 173rd among 190 economies, with a score of 67.79 on ease of starting a business, indicating a 0.02 percentage point improvement compared with last year’s report. It takes 10.5 procedures, 72.5 days and 1.2% of per capita income to start a business in Iran, according to WB’s flagship report.

Dealing With Construction Permits

This area pertains to the procedures, time and cost required to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system.

Iran’s ranking on ease of dealing with construction permits stands at 86th with a score of 69.11, indicating a 0.52 percentage point improvement compared to last year’s report.

According to data collected by Doing Business, dealing with construction permits in Iran requires 16 procedures, takes 130 days and costs 6.6% of the warehouse value.

Getting Electricity

The Doing Business report records all procedures, time and cost required for a local business to obtain a permanent electricity connection to the electrical grid and the reliability of the electricity supply and the transparency of tariffs.

According to data, getting electricity in Iran requires six procedures, takes 77 days and costs 923.1% of income per capita, placing the country at 108th position in the global ranking. The country sores 68.86 in getting electricity, which shows an improvement of 0.43 percentage point compared to last year.

Registering Property

This indicator records the full sequence of procedures, time and cost necessary for a business to purchase property from another business and transfer the property title to the buyer’s name as well as the quality of land administration system.

Iran ranks 90th on the ease of registering property with a score of 63.98 compared to last year’s 63.97. The report suggests that registering a property in Iran requires six procedures, takes 31 days and costs 5.7% of the property value.

Getting Credit

This area assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions. Credit information systems enable lenders’ rights to view a potential borrower’s financial history as well as permit borrowers to establish a good credit history that will allow easier access to credit.

Iran ranks 99th on the ease of getting credit with a score of 50, indicating no change compared to last year.

Protecting Minority Investors

Protecting minority investors matters for the ability of companies to raise the capital they need to grow, innovate, diversify and compete.

The report measures the protection of minority shareholders’ rights in related-party transactions and in corporate governance through one set of indicators and shareholders’ rights in corporate governance through another.

Globally, Iran ranks 173rd on the strength of minority investor protection index with a score of 33.33, which shows no change over last year.

Paying Taxes

Using a case scenario, the Doing Business report measures the taxes and mandatory contributions that a medium-size company must pay in a given year as well as the administrative burden of paying taxes and contributions.

On average, firms in Iran make 20 tax payments a year, spend 216 hours a year filing, preparing and paying taxes and pay total taxes amounting to 44.7% of their profit, placing the country in the 149th global ranking among 190 nations.

Iran's score in this area was 56.78, registering an improvement of 4.17 percentage point compared to 2018.

The World Bank said Iran made paying taxes easier by introducing an online system for filing social security contributions, allowing the possibility of filing value added tax refund claims online, amending corporate income tax returns online and making payment of additional tax liability at the bank.

Trading Across Borders

This indicator measures the time and cost for documentary and border compliance, including the time and cost for obtaining documents (such as time spent to get the document issued and stamped); preparing documents (such as time spent gathering information to complete the customs declaration or certificate of origin); processing documents (such as time spent waiting for the relevant authority to issue a phytosanitary certificate); presenting documents (such as time spent showing a port terminal receipt to port authorities); and submitting documents (such as time spent submitting a customs declaration to the customs agency in person or electronically).

According to data collected by Doing Business, documentary compliance for export takes 33 hours and $60. Border compliance for exports takes 101 hours and costs $415.

Documentary compliance for import takes 40 hours and costs $90. Border compliance for import takes 141 hours and costs $660.

Globally, Iran stands at the 121st spot in the ranking of economies on the ease of trading across borders, with a score of 66.2, posting an improvement of 18.32 percentage points; the most significant improvement affecting one of 10 areas of the life of a business in Iran measured between June 2017 and May 2018.

Iran made exporting and importing easier by enhancing the national trade single window, the report said.

“The Islamic Republic of Iran has invested in training customs officials, setting up ‘expert pools’ of customs officials with existing technical training who are responsible for electronic goods clearance, as assigned by the national single window,” it read.

Enforcing Contracts

The World Bank report measures the efficiency of the judicial system in resolving a commercial dispute and the quality of judicial processes.

Iran ranks 89th with a score of 58.21, which indicates no change over last year.

Contract enforcements in Iran take 505 days, costing 19.3% of the value of the claim.

Resolving Insolvency

A robust bankruptcy system functions as a filter, ensuring the survival of economically efficient companies and reallocating the resources of inefficient ones.

Fast and cheap insolvency proceedings result in the speedy return of businesses to normal operation and increase returns to creditors. This area studies the time, cost, outcome and recovery rate for commercial insolvency and the strength of legal framework for insolvency.

Iran ranks 131st in the ease of resolving insolvency ranking, with resolving insolvencies taking 1.5 years on average and costing 15% of the debtor’s estate.

No change in Iran’s resolving insolvency score has been reported.