Cutting Red Tape

In Asia’s youngest nation, Timor-Leste, people are still reeling from years of conflict, and job creation hinges on a business environment that welcomes both small and large businesses.

For years, Timor-Leste entrepreneurs had to wait for as long as 103 days to register a business. But with the help of IFC, the government simplified the procedure and cut the wait to a mere 13 days.

“If we make it easier to start a business, then there will be more businesses established in Timor-Lesté, creating opportunities and jobs,” says Julio Alfaro, president of Timor-Lesté Chamber of Commerce and Industry.

Soon, the government will be opening a “one-top shop” where business owners can obtain a commercial registration certificate, license, and tax identification number from a single counter. 

In many developing East Asia and Pacific countries, foreign and domestic enterprises have to navigate red tape and wait for months to open a business. Many small businesses end up operating in the informal sector, and some prospective foreign investors move to friendlier markets.

IFC’s Investment Climate program works with governments to make doing business easier, from cutting red tape in business registration, reforming tax and land-acquisition regulations, to keeping governments honest by measuring improvements in the ease of doing business over time through our Doing Business reports. 

In Indonesia, IFC worked with the Jakarta government to establish provincial- and municipal-level one-stop shops, where businesses can submit application and obtain 19 business licenses and permits through a single office. Together with other simplification initiatives implemented by both the national and Jakarta governments over the past eight years, the reforms helped reduce the time of starting a business to 45 days from 151 days.

“Since the one-stop shop has been established, the procedure is much faster and easier. I could obtain the license on the same day. The official at the one-stop shop clearly explained to me all of the documents required and the paperwork I submitted was in order,” said Lilis, a local entrepreneur and linen craftswoman who was trying to renew her operating license. It was a huge improvement from when she first started her business in 1996: It took her more than two weeks to obtain a license then.

In Vietnam, the government, with support from IFC, developed and implemented its comprehensive Master Plan for Administrative Procedure Simplification between 2007 and 2010. The reforms abolished many unnecessary procedures and saved about $4 million for approximately 80,000 businesses in 2010.

Together with IFC, economies in East Asia and the Pacific are looking at more reforms to further improve the business environment, enabling entrepreneurs – large or small – to create opportunities for others.