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REGISTERING PROPERTY 39 Others are doing the same. Ireland recently digitized its registry records, allowed for electronic processing by the registry and provided online information to customers. Electronic conveyancing has been introduced in the Netherlands and New Zealand—2 of the most efficient countries for registering property. In Italy time to register has been cut in half after electronic filing and release of data were introduced. But it is not only rich countries. Middle income countries like Colombia, Hungary, Latvia, and Slovakia, and even Madagascar and some states in India are making at least some aspects of the registry and cadastre electronic. The benefits are apparent. Countries with more use of technology often have more efficient property registration, even after controlling for income per capita. But technology is not a panacea. Many of the reformers already had fairly efficient property registration systems, which helped them to be among the first to go electronic. In many other countries, particularly poor ones, electronic registration is probably not sustainable yet. If paper records are inaccurate, putting them in a computer won’t help. There, the focus needs to be on improving the efficiency of current services and coverage and accuracy of the registry. Thailand, one of the most efficient registration systems in the world, is a good example. The registry there is still manual. But there is a direct link between the registry and cadastral maps, land records storage is continually improving, decentralized registration is possible and there is a nationwide system for personal identification. Why reform? Few would disagree that property rights are needed to encourage investment, productivity and growth. Many studies show this. 17 The question is how to protect those rights. Some would argue that more regulation and a formalized property registration process ensure more due diligence, enhancing property rights. But complexity breeds uncertainty, increases transactions costs and offers opportunities for fraud. And more bureaucracy produces more mistakes about who owns what. Longer and more expensive property registration is associated with weaker perceived security of property rights, even controlling for income per capita (figure 5.7). Firms report more problems in accessing land in countries with costly and cumbersome registration procedures. 18 No surprise then, countries that make registration easy also have fewer property title disputes. 19 In Thailand, where it takes 2 procedures, 2 days and costs 6% of the value, an estimated 0.1% of registered parcels are in dispute. In the Philippines the estimated dispute rate is 15% and in Honduras 10%. Faced with bureaucratic property registration, many entrepreneurs choose to keep their assets informal. Investment in expensive titling programs is ill-advised in such countries, without reforms of property registries and laws. Registry officials and property lawyers report a significantly lower proportion of formally registered titles in countries with complex, lengthy and expensive registration. They also report more bribes (figure 5.7). In many countries firms also rate property registries as the most corrupt public organizations. 20 FIGURE 5.7 Easy property registration—more secure property rights, less informality, less corruption Perceived security of property rights Informal sector share of GDP Perceived corruption More secure Greater share More corrupt Less secure Lesser share Less corrupt Least Most Countries ranked by steps to register property, quintiles Note: Analysis controls for income per capita. Relationships are significant at the 5% level. Source: Doing Business database, Heritage Foundation (2004), Kaufmann and others (2003). Least Most Countries ranked by steps to register property, quintiles Least Most Countries ranked by steps to register property, quintiles
40 DOING BUSINESS IN 2005 FIGURE 5.8 Easy property registration, more credit, more investment Private credit as a percentage of GDP 8 Private investment as a percentage of GDP 20 6 4 15 2 0 Most difficult Least difficult Countries ranked by ease of property registration, quintiles Most difficult Least difficult Countries ranked by ease of property registration, quintiles Note: Relationships with private credit remain significant at the 1% level when controlling for income, contract enforcement, and GDP growth, at the 10% level for investment when controlling for income. Source: Doing Business database, World Bank (2004). 10 With fewer assets in the formal sector, more entrepreneurs are excluded from using property as collateral, and less credit is allocated (figure 5.8). The possibility of getting loans is the only reason to take on the daunting task of registering in some countries. Banks in Rwanda will even assign staff to assist in the registration process so that they can take property as collateral. But when it is too difficult, few bother. Entrepreneurs will invest less if their property rights are less secure. Inefficient registration is associated with lower rates of private investment (figure 5.8). And it leads to lower productivity, since it is harder for property to be transferred from less to more productive uses. The result is slower growth. One study estimates that restrictive land market regulations cost 1.3% of annual economic growth in India. 21 Notes 1. UNRCC (2004). 2. Ibbotson, Siegal and Love (1985). This chapter focuses on registering real property. See chapter 5 on registering movable property as collateral. 3. More effective collateral laws would encourage greater use of movable assets as collateral, as discussed in the next chapter. 4. World Bank Group Investment Climate Assessments (various). Available at: http://www.worldbank.org/privatesector/ic/ic_ country_report.htm 5. See Deininger (2003) for a summary. 6. World Bank Group Investment Climate Assessments (various). Available at: http://www.worldbank.org/privatesector/ic/ic_ country_report.htm 7. Deininger (2003). 8. Durand-Lasserve and Royston (2002). 9. Fields (2002). 10. Based on analysis of the Doing Business indicators with firm level data on the perceived security of property rights, as reported in Batra and others (2003). 11. World Bank (2002). 12. Land Equity International (2003). 13. In Moldova and Ukraine the expedited procedure does not cut total time because they are performed simultaneously with procedures that take a longer time. 14. Anderson-Saito and Dhar (2004). 15. Ellis (2004). 16. Fafchamps and Quisumbing (2002), Katz and Chamorro (2002). 17. Knack and Keefer (1995), Besley (1995), Claessens and Laeven (2003), see Deininger (2003) for a summary and analysis of relevant studies. 18. Based on analysis of 15,561 firms in 41 countries as reported in World Bank Investment Climate Assessments. 19. Based on estimated dispute rates provided by property registries and lawyers as a part of the Doing Business survey. 20. World Bank Group Investment Climate Assessments (various). Available at: http://www.worldbank.org/privatesector/ic/ic_ country_report.htm 21. McKinsey and Company (2001).
Page 2 and 3: Doing Business in 2005 Removing Obs
Page 4: Contents Doing Business in 2005 is
Page 7 and 8: 2 DOING BUSINESS IN 2005 FIGURE 1.1
Page 9 and 10: 4 DOING BUSINESS IN 2005 FIGURE 1.4
Page 11 and 12: 6 DOING BUSINESS IN 2005 TABLE 1.3
Page 13 and 14: 8 DOING BUSINESS IN 2005 Notes 1. P
Page 15 and 16: 10 DOING BUSINESS IN 2005 eration w
Page 17 and 18: 12 DOING BUSINESS IN 2005 Based on
Page 19 and 20: 14 DOING BUSINESS IN 2005 FIGURE 2.
Page 22 and 23: 17 Starting a business Who is refor
Page 24 and 25: STARTING A BUSINESS 19 BOX 3.1 Who
Page 26 and 27: FIGURE 3.4 “More difficult” can
Page 28 and 29: STARTING A BUSINESS 23 Introduce te
Page 30 and 31: HIRING AND FIRING WORKERS 25 Hiring
Page 32 and 33: HIRING AND FIRING WORKERS 27 TABLE
Page 34 and 35: HIRING AND FIRING WORKERS 29 FIGURE
Page 36 and 37: HIRING AND FIRING WORKERS 31 FIGURE
Page 38 and 39: 33 Registering property Who makes r
Page 40 and 41: REGISTERING PROPERTY 35 BOX 5.1 Who
Page 42 and 43: REGISTERING PROPERTY 37 FIGURE 5.4
Page 46 and 47: 41 Getting credit Who is increasing
Page 48 and 49: GETTING CREDIT 43 TABLE 6.1 Coverag
Page 50 and 51: GETTING CREDIT 45 ment only takes t
Page 52 and 53: GETTING CREDIT 47 losing possession
Page 54 and 55: 49 Protecting investors Who uses eq
Page 56 and 57: PROTECTING INVESTORS 51 FIGURE 7.1
Page 58 and 59: PROTECTING INVESTORS 53 FIGURE 7.4
Page 60 and 61: PROTECTING INVESTORS 55 national in
Page 62: PROTECTING INVESTORS 57 With langui
Page 67 and 68: 62 DOING BUSINESS IN 2005 In Lithua
Page 71 and 72: 66 DOING BUSINESS IN 2005 enforceme
Page 73 and 74: 68 DOING BUSINESS IN 2005 tion and
Page 75 and 76: 70 DOING BUSINESS IN 2005 Japan hav
Page 77 and 78: 72 DOING BUSINESS IN 2005 Provide s
Page 80 and 81: 75 References Acemoglu, Daron. 2003
Page 82 and 83: REFERENCES 77 ———. forthcomin
Page 84 and 85: 79 Data notes Economy characteristi
Page 86 and 87: DATA NOTES 81 Cost measure The text
Page 88 and 89: DATA NOTES 83 Assumptions about the
Page 90 and 91: DATA NOTES 85 such as government or
Page 92: DATA NOTES 87 Assumptions about the
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90 DOING BUSINESS IN 2005 Starting
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92 DOING BUSINESS IN 2005 Registeri
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94 DOING BUSINESS IN 2005 Registeri
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96 DOING BUSINESS IN 2005 Protectin
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98 DOING BUSINESS IN 2005 ALBANIA G
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100 DOING BUSINESS IN 2005 BANGLADE
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102 DOING BUSINESS IN 2005 BRAZIL G
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104 DOING BUSINESS IN 2005 CHAD GNI
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106 DOING BUSINESS IN 2005 CROATIA
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108 DOING BUSINESS IN 2005 ETHIOPIA
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110 DOING BUSINESS IN 2005 GUINEA G
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112 DOING BUSINESS IN 2005 IRELAND
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114 DOING BUSINESS IN 2005 KOREA, R
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116 DOING BUSINESS IN 2005 MACEDONI
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118 DOING BUSINESS IN 2005 MONGOLIA
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120 DOING BUSINESS IN 2005 NIGER GN
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122 DOING BUSINESS IN 2005 PERU GNI
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124 DOING BUSINESS IN 2005 SAUDI AR
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126 DOING BUSINESS IN 2005 SPAIN GN
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128 DOING BUSINESS IN 2005 TOGO GNI
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130 DOING BUSINESS IN 2005 URUGUAY
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ACKNOWLEDGMENTS 133 Acknowledgments
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ACKNOWLEDGMENTS 135 Angela Zaffalon
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ACKNOWLEDGMENTS 137 Nolan Stringfie
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ACKNOWLEDGMENTS 139 Thomas Bang LVP
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ACKNOWLEDGMENTS 141 Günter Schneid
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ACKNOWLEDGMENTS 143 Gavin Doherty E
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ACKNOWLEDGMENTS 145 Indrikis Liepa
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ACKNOWLEDGMENTS 147 Phillip Mwangal
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ACKNOWLEDGMENTS 149 Nestor Espenill
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ACKNOWLEDGMENTS 151 Beng Hong Ong W
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ACKNOWLEDGMENTS 153 Leopold Thomas
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ACKNOWLEDGMENTS 155 Marcela Hughes
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