Page 69 - STRATEGY Magazine (G)

How Guatemala and comparator economies rank on ease of getting credit
95
90
85 85
80 80
95 90 85 85 80 80 85 50
DISTANCE TO FRONTIER SCORE
0______________________ 100
85
50
Source: World Bank
Guatemala continues to make business easier to transact. Just in the last year, it has approved electronic submissions of most documents required for imports and has lowered the corporate tax rate.
These steps represent some of the more strategic improvements by Guatemala’s government to assist those who wish to start a new business.
BUILDING BLOCKS
Guatemala’s ranking on dealing with con- struction permits is 106th in the ranking of 189 economies, a spot that ranks only 18th in the Latin America & Caribbean region. Currently, the process consists
of 11 procedures for the end result to be realized. The estimated cost is likely to absorb 7.2 percent of a company’s ware- house value.
Because of the excessive costs in time and money, many builders choose to opt out of potential construction opportuni- ties. Others have bribed those responsible for the passing of inspections, or have simply built illegally, creating hazardous construction zones that put workers and the public at risk. The Guatemalan gov- ernment sees the need for improvement in this area, however, and has implement- ed many reforms to make the process not only faster and less expensive, but also easier. The nation created a new land management plan with zoning that allows for these improvements to be realized.
A risk-based approval process has also been instituted, as well as new stream-
lined procedures for forming agreements between institutions and agencies during the permitting process. The fee for obtaining a certificate of land ownership is currently set at Q50.00, takes approx- imately eight days to obtain, and is good for three months once it is obtained.
It is estimated by Doing Business that it takes 158 days to deal with construction permits. There is a small fee of Q50 for obtaining a certificate of land ownership, a process that takes a proximately eight days to complete. A professional, whether an engineer or an architect, must be hired to provide an assessment of minimum impact for the construction of the facility.
CREDIT WORTHY
When creating a business anywhere in the world, the ease of obtaining credit is a crucial step. Though other LAC countries such as Colombia and Mexico are ranked higher on the Getting Credit scale, Guatemala is tied with El Salvador as the seventh-easiest country from which to obtain credit for the creation of a busi- ness. Guatemala now guarantees borrow- ers’ rights to obtain and review their own credit and has created a moveable asset registry that helps to secure the transac- tions of moveable assets for creditors and debtors.
Getting credit is simpler in Guatemala because the country has created a clear legal framework for these secured trans- actions. A business can secure a move- able asset without providing a detailed description of the collateral and is only required to give a general description of debts and obligations in collateral agree- ments. A new collateral registry has been created for incorporated and non-incorpo- rated businesses as well.
Foreign investors will be interested to know that Guatemala has a written and consistently applied Commercial Code. Among other things, this code provides that contracts may be legally enforced through a lawsuit demanding either rec- ognition of the infringed right or compen- sation for damages.
Though Guatemala does not have spe- cialized courts to hear intellectual prop- erty rights (IPR) claims, it does employ a dedicated IPR prosecutor.
It is evident that Guatemala is making strides to become a country with which investors desire to do business. With new regulations and faster procedures recently put into place, Guatemala understands its need for outside investors and is striving to become the leader for those looking to create and operate a business within the LAC region.
SPECIAL REPORT
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COLOMBIA (RANK 2)
MEXICO (RANK 5)
HONDURAS (RANK 7)
COSTA RICA (RANK 7)
GUATEMALA (RANK 15)
EL SALVADOR (RANK 15)
PANAMA (RANK 17)
LAC REGION (RANK 87)