Doing business in Brazil - a World Bank survey - our summary

on

 

Great to review the World Bank sponsored research on doing business in the world. And also specifically doing business in Brazil. 

Aspects of Doing Business in the survey


The reasearch includes aspects like:
Starting a business
Getting construction permits
Getting electricity
Registering a property
Protecting minority investors
Paying taxes
Contracting with the government
Enforcing contracts
Resolving insolvency

What makes doing business easy?


The last report was done in 2020. Doing business report essentially revolves around looking at the ease with which economic parties can do exchanges between them and in which their rights are reserved. Transparency and ease of access for all means doing business generally generates growth in the economy of that country ie. GDP growth. The rules in place much make it fair for all and allow investors to place their money with assurance of their rights. 


Rankings for Doing Business - Brazil


Getting to what is interesting. For us at AA Risk, with regards to doing business in Brazil, we were suprised to find Brazil at position 124! China being at 31 and the USA as a reference point at 6. The lower the number the easier it is to do business in that country. To put that further into perspective Iran as at 127. While we believe its hard to setup locally and there are huge costs to taking the wrong options we dont think that in practise its that hard to do business locally. Especially if you can network with people in the same industry and get some guidance and help from them. 

Generally what improved in Brazil, for both Sao Paulo and Rio de Janeiro specifically, was the time to open a business and the cost of getting the digital certificate necessary to operate. Property registration procedures also improved and better online payment systems became available.  


Best cities to do business in Brazil


We were also suprised to find that Brasilia was considered the easiest city in Brazil to do business and Sao Paulo the economic capital was in position 11. Somehow this aspect of the reasearch, for us that live in Brazil, seems skewed. For what its worth see the list below:


Interesting Aspects about doing business in the survey

The report from the World Bank has 149 pages so quite a lot of fun to be had reading it. Some interesting things that came out of the various aspects, and relevant to doing business in Brazil, were the following:

- Labor Laws


Low and lower middle income based economies tend to regulate employment much more. In essence to protect the worker. What is clear when this is related to economic growth is that making hiring and firing harder stifles growth and in turn employment growth. A reverse effect. 

- Tax and Corruption


It seems that the more taxes there are and the more tax filing is required the more corruption is present in those economies. Lets stay the stick to bribe officials and not pay taxes is bigger. 

- Contracts with the Goverment


There is a lot of data here and some interesting reading. The two main aspects, signing a contract and resolving complaints are quite interesting to look at in terms of time for the goverment to resolve:
Signing a simple contract - In South Korea it takes on average 161 days. In Chile as long as 15 months!
Resolving complaints on a contract - 330 days in Czech Republic and up to 4 years in the Dominican Republic.

You can find the full report below and all credits due to the World Bank:


If you want to talk to us at AA RISK please visit our site below:



Comments

Post a Comment