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There are three important variables associated with estab- lishing a business. Two of these, starting a business and dealing with construction permits, address the complexity and efficiency of a country’s regulatory agencies. The third, getting electricity, speaks to the complexity of securing a reliable power supply. The World Bank’s study acknowl- edges that in some developing economies, depending on a company’s needs, it may be necessary to supplement the local supply with self-generated power. The study does not account for such situations.
When starting a business from scratch in the LAC region, count on spending about 30 days completing eight or so different procedures. This varies among the 31 economies, though: Jamaica, the best in this category, requires only two procedures, which can be completed in three days. At the other end of the scale, it takes at least 144 days to complete the 17 different procedures required by Venezuela. In “Dis- tance to Frontier (DTF),” the World Bank’s index of how
a factor rates compared to a demonstrated best practice, Jamaica, Panama, and Puerto Rico rank first, second, and third, respectively, all with scores in the 90s on a scale of 100. Jamaican Finance Minister Peter Phillips noted of Ja- maica’s high ranking, “It is clear evidence that the present positive movement in our competitiveness is associated with our sustained program of comprehensive economic reforms, which we started approximately two years ago.”
Companies that need to build a facility must deal with securing all the necessary construction permits. On average, a company in the LAC region will complete about 14 proce- dures, which will take about 178 days from beginning to end and cost about 2.7 percent of the facility’s value. The three countries with the best DTF scores on getting construction permits are St. Kitts and Nevis (77.31), Colombia (75.99), and the Dominican Republic (75.01).
Guatemala focused on making it easier to start a business when it eliminated some fees and reduced the time for publishing a notice of incorporation. It also made it easier for companies to pay their tax- es by enhancing its electronic system and reducing some tax rates.
Securing a reliable and sufficient supply of electricity is another metric the World Bank measures that is important for companies just establishing a presence in a LAC econ- omy, several of which rank very high. Guatemala boasts a DTF score of 85.76, followed by Brazil (85.5), and Costa Rica (85.01). Still, it takes a little more than two months, on average, to acquire a reliable electrical connection.
Two other metrics, getting credit and registering property, may be of concern both for new businesses and those already established. With DTF scores of 76.77, 79.97, and 72.83, re- spectively, Peru, Costa Rica, and Colombia outperform many high-income countries in the ease of registering property. With respect to getting credit, the LAC region’s DTF score of 47.34 is significantly lower than that of the OECD, which is 61.77, but many LAC economies outperform the OECD, including Colombia, Honduras, Puerto Rico, Guatemala, and Jamaica. 27

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