International Trade in Services.pdf - DSpace at Khazar University

196 International Trade in Services
reasons related to special rules and an emphasis on impact assessments. However,
a more streamlined and investment-friendly administration would benefit everyone
in the process, except perhaps potential bureaucrats or facilitators and middlemen
who enrich themselves in lethargic systems. Corruption is particularly
prevalent in the construction sector (see elsewhere below), and policy makers can
reduce prospective instances of public sector corruption by removing unnecessary
licenses, reducing the number of registrations required at various government
agencies, and providing more transparency and clear rules associated with inspections.
In general, the fewer interfaces between investors and various agencies, the
better. A transparent and streamlined application process will not only reduce the
risk of corruption, but also speed up the start of the construction work. In addition,
any governments that generate revenue from the permits may reap more by
taxing the investors at a later stage when the investment is generating income.
For example, no good reason seems to exist for making the average investor in
Moscow wait 19 months longer than an average investor in Tbilisi, Georgia, and
pay 129 times the fee as measured in income per capita. The same comparison can
be made between China and Mexico. The average investor in Mexico obtains a
construction permit more than six months faster and at less than a fifth the cost.
Thereisconsiderablescopeforcuttingredtapeandcostssoastostimulatemore
investment in construction projects. The biggest beneficiaries would be those
small and medium-size enterprises that are usually most affected by strenuous
administrative hurdles. Box 6.3 examines a number of initiatives successfully
implemented to facilitate the administration of building permits in countries
around the world.
Ensuring a fair and transparent government procurement process
Policy makers have to be particularly delicate in designing tendering criteria in
government procurement. On the one hand, weak minimum criteria relating to
bidding companies in terms of solvency, proven expertise, and in-house capacity
can delay projects because weak suppliers fail to deliver services on time or at the
specified quality. On the other hand, standards that are too strict exclude many of
the small and medium-size enterprises that dominate the market for construction
services in developing countries. In an expert meeting on construction services
organized by the United Nations Conference on Trade and Development in 2000,
specialists from around the world debated the impact of minimum performance
indicators (UNCTAD 2000b). Several of these specialists emphasized the experience
of their countries with foreign multinationals that took the larger and
more advanced contracts and left the smaller and less advanced contracts to local
businesses. Local companies are eliminated already at the prequalification stage in