Page 68 - STRATEGY Magazine (G)

Doing Business:
A Potential Player among Giants
Guatemala has taken steps to make it easier to open a new business within its borders, including the elimina- tion of formerly mandatory costs and the streamlining of some of the more arduous administrative processes. The country’s reforms have been recognized internationally as among the most active in the world.
The establishment of a new business in any region is certain to meet challenges. With developing regions such as Latin Amer- ica and the Caribbean (LAC), the challenges often reach into areas such as political unrest and dysfunctional government. Guatemala, however, is working to denounce this stereotype, improving in many areas that are synonymous with entrepre- neurship.
EBB AND FLOW
In the Doing Business 2016 report from the World Bank Group, Guatemala ranked 81st out of 189 economies. Of the 10 categories that comprise the Ease of Doing Business rank- ing, Guatemala has improved in some of the most vital areas to opening and maintaining a business. The nation moved
up four spots in Paying Taxes and three in trading across borders, significant in a year when it has focused on opening borders with its neighbors. Though some areas dropped, no decline was so drastic as to become a deterrent for operating a business. Most are consistent with the rest of the LAC region, such as Dealing with Construction Permits, where Guatemala dropped two spots, and Enforcing Contracts, where it did not change. Guatemala also dropped three spots in Getting Credit, yet this still remains the nation’s best category, with a ranking of 15th in the world.
EFFICIENT ESTABLISHMENT
It is estimated by Doing Business that it takes 18.5 days to start a business in Guatemala. It is also estimated that it will cost 25 percent of income per capita, and a minimum capital
of 18.1 percent of income per capita is required. The nation has taken many steps recently to help further streamline this process. In 2014, Guatemala began allowing simultaneous registration of a new company with other governments as an online procedure, which is certain to save time and money. In 2015, it went one step further to speed up this process by elim- inating many of the registration fees and reducing publishing times for notices of incorporation.
Six steps are required to complete the task of starting a new business, and though each step has its own set of procedures, many of them can be completed in very little time. Once it has been determined that a company name is available on the Mer- cantile Registry of Guatemala website, a letter from a notary public indicating the exact address for the new company is issued, which allows for the opening of a new temporary bank account. This letter takes only one day to obtain. Depositing the minimum required capital of Q5,000 and obtaining a re- ceipt thereof also takes one day, as does the drawing of a deed of construction, which is one of the new online procedures.
A top mover in the Doing Business report, Guatemala was among the most- improved economies on the planet in 2013, according to the World Bank.
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