Brasília, November 13, 2003 (Agência Brasil - ABr) - Ten years are necessary to conclude a bankruptcy process in Brazil, as against two years in Mexico and Peru. On the other hand, the cost of enforcing a contract in Brazil is the smallest in Latin America, equivalent to 2.4% of per capita income. These contradictions are part of the "Doing Business 2004" report, launched on Wednesday (12) by the International Finance Corporation (IFC) and the World Bank (IBRD) at a seminar in the National Confederation of Industry (CNI).
The publication also shows that it costs 11% of per capita income to open a firm in Brazil, while in Bolivia it amounts to nearly 200%. In Hong Kong, New Zealand, and the United Kingdom, the laws give creditors great powers to recover overdue debts. In Brazil and Argentina, creditors have little force, and in Mexico and Colombia, they have no rights at all.
The IFC study, carried out in 133 countries, compares business regulations with a focus on aspects that stimulate or discourage private investment, productivity, and world economic growth.
The vice-president for Private Sector Development of the World Bank and the IFC, Michael Klein, will converse with Brazilian government officials and business leaders about measures to stimulate private sector investments in the country.
Seminars in Brasília and São Paulo, where the report was launched, attempt to identify the areas in which reforms in business regulations are most urgent and discuss measures to improve regulatory performance.
For Klein, "the report provides the formulators of government policy and the general public with quantitative measures on business regulation." The data, according to him, "will make it easier for governments to implant reforms."
The publication presents evaluations of laws and regulations in each country, based on the estimates and findings of local specialists who help entrepreneurs start up and shut down firms, hire and fire workers, and enforce contracts and obtain loans.
At the presentation of the report, Klein called for simplified and flexible regulations in terms of markets. In his opinion, less bureaucracy and more flexibility increase the participation of women and young people in the job market. He pointed out that excessive economic regulation in the poorest countries is detrimental to small firms. "We should regulate but also simplify, because we need an entrepreneurial sector that generates jobs and taxes. Otherwise, we are going to have problems," he said.
Klein defined regulation in Brazil as complex and slow. He cited that 152 days are required to start up a company. He reiterated the need to simplify regulations for the benefit of small firms, and he also criticized the low level of credit intermediation. He believes that certain factors, such as fiscal burdens and interest rates, contribute to the reduction of credit in the country.
Klein emphasized that the report indicates that, the more regulation there is, the more difficult it is to start up new firms, as well as being an incentive to increase informal activity. He added that great rigor and complexity in regulatory guidelines open the door to corruption. He also observed that the report does not show that this situation exists in Brazil.
Klein said that he has no information on the reforms underway in the National Congress, such as social security and tax reform, nor on the bankruptcy law bill. He disclosed that the January, 2004, report will deal with these matters, and their consequences will be assessed. For him, reforms of laws and regulations (labor law, for example) contribute more to the economy. Klein recalled that China and South Korea were successful in their "micro-reforms."
In the opinion of the president of the CNI, Armando Monteiro Neto, "unfortunately, the results of the study are not favorable to Brazil and reveal a worrisome picture." He cites as an example the regulation of the job market, which, in his view, "has still not been properly understood by society and the politicians." He added that the publication will be an important instrument for Brazilian society, "which needs to make progress towards a setting favorable to the development of business."
For the executive secretary of the Ministry of Development, Mário Mugnaini Júnior, the study is pleasing, when it emphasizes the country's advanced technology, and worrisome, because it reveals data that are disappointing in other aspects. But he observes that all countries contain contradictions. He recalled that China, which appears well economically in the report, has workers who earn US$ 30 per month. For him, Brazil must make haste in the next two years for the current Administration to end its mandate with a new distribution of wealth, via employment. (DAS)
