Doing Business 2019 Palau
Economy Profile
Palau
Page 1
Doing Business 2019 Palau
Economy Profile of Palau
Doing Business 2019 Indicators
(in order of appearance in the document)
Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company
Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality
control and safety mechanisms in the construction permitting system
Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the
electricity supply and the transparency of tariffs
Registering property Procedures, time and cost to transfer a property and the quality of the land administration
system
Getting credit Movable collateral laws and credit information systems
Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance
Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as
well as post-filing processes
Trading across borders Time and cost to export the product of comparative advantage and import auto parts
Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes
Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the
legal framework for insolvency
Labor market regulation Flexibility in employment regulation and aspects of job quality
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Doing Business 2019 Palau
About Doing Business
The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected
cities at the subnational and regional level.
The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying
to them through their life cycle.
Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative
indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit,
protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also
measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market
regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does
present the data for these indicators.
By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time,
Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves
as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy.
In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and
regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve
performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region
and with the 190 economies that Doing Business has ranked.
The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets
and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that
have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the
Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these
11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from
governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving
the regulatory environment for business around the world.
More about Doing Business (PDF, 5MB)
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Doing Business 2019 Palau
Ease of Doing Business in DB 2019 Rank
Region East Asia & Pacific
190 1
Palau
Income Category High income 133
DB 2019 Ease of doing business score
Population 21,729
0 100
City Covered Koror 55.59
DB 2019 Ease of Doing Business Score
0 100
63.77: Samoa (Rank: 90)
63.41: Regional Average (East Asia & Pacific)
55.59: Palau (Rank: 133)
51.62: Marshall Islands (Rank: 150)
49.07: Kiribati (Rank: 158)
48.99: Micronesia, Fed. Sts. (Rank: 160)
Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies
in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100
represents the best performance. The ease of doing business ranking ranges from 1 to 190.
Rankings on Doing Business topics - Palau
1
28
43
55
82
Rank
95 99
106
109
129 126
137
136
149
166
163
180
190
Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving
a with Electricity Property Credit Minority Taxes across Contracts Insolvency
Business Construction Investors Borders
Permits
Ease of Doing Business Score on Doing Business topics - Palau
100
81.95
80 75.16
68.38 69.04
60.98
Score
60 54.83
50.00 52.21
40
26.67
20 16.68
0
Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving
a with Electricity Property Credit Minority Taxes across Contracts Insolvency
Business Construction Investors Borders
Permits
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Doing Business 2019 Palau
Starting a Business
This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited
liability company to start up and formally operate in each economy’s largest business city.
To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has
start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10
and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two
types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the
other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a
business. These scores are the simple average of the scores for each of the component indicators.
The most recent round of data collection for the project was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the
a company (number) business and the procedures are used. It is assumed that any required information is
readily available and that the entrepreneur will pay no bribes.
• Preregistration (for example, name verification or
reservation, notarization)
The business:
• Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type
city
of limited liability company in the economy, the most common among domestic firms
• Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation
registration, company seal) lawyers or the statistical office.
- Operates in the economy’s largest business city. For 11 economies the data are
• Obtaining approval from spouse to start a
business or to leave the home to register the also collected for the second largest business city.
company - The entire office space is approximately 929 square meters (10,000 square feet).
- Is 100% domestically owned and has five owners, none of whom is a legal entity;
• Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least
company registration and operation or national 100 times income per capita.
identification card
- Performs general industrial or commercial activities, such as the production or sale
of goods or services to the public. The business does not perform foreign trade
Time required to complete each procedure
activities and does not handle products subject to a special tax regime, for example,
(calendar days)
liquor or tobacco. It does not use heavily polluting production processes.
• Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the
information amount of the annual lease for the office space is equivalent to the income per
capita.
• Each procedure starts on a separate day (2
procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits.
- Has at least 10 and up to 50 employees one month after the commencement of
• Procedures fully completed online are recorded operations, all of whom are domestic nationals.
as ½ day - Has a company deed that is 10 pages long.
• Procedure is considered completed once final
document is received The owners:
• No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are
assumed to be 30 years old.
Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record.
income per capita) - Are married and the marriage is monogamous and registered with the authorities.
- Where the answer differs according to the legal system applicable to the woman or
• Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the
• No professional fees unless services required by answer used will be the one that applies to the majority of the population.
law or commonly used in practice
Paid-in minimum capital (% of income per
capita)
• Funds deposited in a bank or with third party
before registration or up to 3 months after
incorporation
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Doing Business 2019 Palau
Starting a Business - Palau
Standardized Company
Legal form Private Limited Liability Company
Paid-in minimum capital requirement USD 1,000
City Covered Koror
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Procedure – Men (number) 8 6.8 4.9 1 (New Zealand)
Time – Men (days) 28 25.9 9.3 0.5 (New Zealand)
Cost – Men (% of income per capita) 2.9 17.8 3.1 0.0 (Slovenia)
Procedure – Women (number) 8 6.9 4.9 1 (New Zealand)
Time – Women (days) 28 26.0 9.3 0.5 (New Zealand)
Cost – Women (% of income per capita) 2.9 17.8 3.1 0.0 (Slovenia)
Paid-in min. capital (% of income per capita) 7.8 4.0 8.6 0.0 (117 Economies)
Figure – Starting a Business in Palau and comparator economies – Ranking and Score
DB 2019 Starting a Business Score
0 100
92.56: Samoa (Rank: 41)
88.64: Marshall Islands (Rank: 75)
83.29: Regional Average (East Asia & Pacific)
81.95: Palau (Rank: 129)
78.20: Kiribati (Rank: 149)
69.56: Micronesia, Fed. Sts. (Rank: 170)
Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores
are the simple average of the scores for each of the component indicators.
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Doing Business 2019 Palau
Figure – Starting a Business in Palau – Procedure, Time and Cost
Time (days) Cost (% of income per capita)
2.5
25
Cost (% of income per capita)
2
20
Time (days)
1.5
15
1
10
0.5
5
0 0
1 2 3 4 5 6 7 8
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
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Doing Business 2019 Palau
Details – Starting a Business in Palau – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Deposit the legally required capital in a bank and obtain deposit evidence 1 day no charge
Agency : Commercial Bank
Under the Money Laundering and Proceeds of Crime Act of 2001, a corporate
bank account cannot be opened until incorporation documents are issued.
Accordingly, the incorporator must first either open an account in his name or
deposit the initial capital in the trust account of his attorney for the corporation.
Incorporators must obtain proof of payment in the form of a bank statement,
receipt, or other documentation of the amount paid into the company as paid-in
capital.
2 Check the uniqueness of the proposed company name and reserve a name 1 day no charge
Agency : Corporate Registrar
The uniqueness of the proposed company name can be checked over the phone.
The Corporate Registrar at the Office of the Attorney General searches the name
index. In practice, few incorporators search for a company name before
incorporating. Because Palau has no trademark statute, there are limited
avenues for enforcement.
3 Notarize the company deeds 1 day USD 10
Agency : Notary
Section 2.1 of the Corporations Regulations for the Republic of Palau requires
that “any number of persons not less than three desiring to form a corporation
shall execute articles of incorporation and acknowledge the same before a Clerk
of the Supreme Court of the Republic or a notary public.” Attorneys generally
prepare the incorporation documents. If professional services are used, this adds
USD 1,000 to the process.
The articles of incorporation must contain (a) the company name; (b) place; (c)
purpose; (d) shares; (e) directors; (f) duration; (g) incorporators; (h) voting; (i)
disposition; (j) liquidation; (k) amendments; (l) ownership, and (m) foreign
ownership.
A shareholder affidavit must be notarized and set forth the following: (a) the
number of authorized shares of each class; (b) the par value of the shares; (c)
the names of subscribers for shares of each class; (d) the number of shares of
each class subscribed to by each subscriber; and (e) the subscription price or
prices for the shares of each class subscribed.
4 Pay the registration fee at the National Treasury 1 day USD 250
Agency : National Treasury
Payment of the registration fee is done at the National Treasury.
5 Register the company with the Corporate Registrar at the Office of the 14 days included in previous
Attorney General; obtain a certificate of incorporation procedure
Agency : Corporate Registrar
The time between when the company submits the documents to the Corporate
Registrar to when the Office of the President issues the charter is about 2 weeks.
This time varies, however, depending on (a) how long charter issuance takes
once the OCR approves the documents; (b) if there are errors in the corporate
documents; and if so, (c) the time required to correct any errors.
6 Register employees for social security and obtain an employer 1 day USD 15
identification number (EIN)
Agency : Social Security Administration
Companies must register with the Office of Social Security for payment of social
security tax withheld from employees. All employers or self-employed persons
doing business in Palau must apply for an employer identification number (EIN)
from the Social Security Administration. The applicant completes the Application
for Employer Number form and pays the applicable fee (USD 15 for first-time
employers, USD 10 for renewing employers). The Palau Social Security
Administration will assign the applicant an employer identification number (EIN),
which must be entered on the employer's quarterly tax returns. The EIN is
required to apply for a business license from the Division of Revenue and
Taxation.
7 Apply for a business license from the relevant licensing authority 5 days USD 50
Agency : Division for Revenue and Taxation
Before a person or a firm engages in business, they must apply for a business
license from the Division of Revenue and Taxation, State Government.
Previously, companies were licensed by entity, but starting in 2007, companies
must obtain a license for each establishment (store).
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Doing Business 2019 Palau
8 Apply for a business license from the state government 4 days on average USD 50, depending
Agency : State government on numbers and
The Koror state government requires a state business license. The following types of licenses
license fees apply:
- USD 50: For each retail store (Class A), movie theater, building contractor,
furniture manufacturer, and boat building and repair shop association or
corporation.
- USD 40: For each scrap-metal-collecting business.
- USD 30: For each retail store (Class B) and each non-associated or non-
incorporated boat building and repair shop.
Other classes and their respective fees apply to other businesses
Takes place simultaneously with previous procedure.
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Doing Business 2019 Palau
Dealing with Construction Permits
This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all
required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with
Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of
quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of
data collection was completed in May 2018. See the methodology for more information
What the indicators measure Case study assumptions
Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the
(number) construction company, the warehouse project and the utility connections are used.
• Submitting all relevant documents and obtaining The construction company (BuildCo):
all necessary clearances, licenses, permits and
certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s
largest business city. For 11 economies the data are also collected for the second
• Submitting all required notifications and receiving largest business city.
all necessary inspections
- Is 100% domestically and privately owned; has five owners, none of whom is a
• Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with
sewerage the local association of architects or engineers. BuildCo is not assumed to have any
other employees who are technical or licensed experts, such as geological or
• Registering and selling the warehouse after its
completion topographical experts.
- Owns the land on which the warehouse will be built and will sell the warehouse
Time required to complete each procedure upon its completion.
(calendar days)
The warehouse:
• Does not include time spent gathering
information - Will be used for general storage activities, such as storage of books or stationery.
- Will have two stories, both above ground, with a total constructed area of
• Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3
though procedures that can be fully completed
meters (9 feet, 10 inches) high and will be located on a land plot of approximately
online are an exception to this rule
929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the
• Procedure is considered completed once final warehouse is valued at 50 times income per capita.
document is received - Will have complete architectural and technical plans prepared by a licensed
architect. If preparation of the plans requires such steps as obtaining further
• No prior contact with officials
documentation or getting prior approvals from external agencies, these are counted
Cost required to complete each procedure (% of as procedures.
income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and
regulatory requirements).
• Official costs only, no bribes
The water and sewerage connections:
Building quality control index (0-15)
- Will be 150 meters (492 feet) from the existing water source and sewer tap. If there
• Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is
• Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be
installed or built.
• Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average
• Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of
1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300
• Liability and insurance regimes (0-2) gallons) a day.
• Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the
year; will be 1 inch in diameter for the water connection and 4 inches in diameter for
the sewerage connection.
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Doing Business 2019 Palau
Dealing with Construction Permits - Palau
Standardized Warehouse
Estimated value of warehouse USD 643,817.90
City Covered Koror
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Procedures (number) 19 15.1 12.7 None in 2017/18
Time (days) 72 133.5 153.1 None in 2017/18
Cost (% of warehouse value) 0.8 1.9 1.5 None in 2017/18
Building quality control index (0-15) 7.0 9.1 11.5 15.0 (3 Economies)
Figure – Dealing with Construction Permits in Palau and comparator economies – Ranking and Score
DB 2019 Dealing with Construction Permits Score
0 100
71.23: Marshall Islands (Rank: 73)
70.71: Regional Average (East Asia & Pacific)
68.70: Samoa (Rank: 90)
68.38: Palau (Rank: 95)
65.73: Kiribati (Rank: 117)
61.05: Micronesia, Fed. Sts. (Rank: 137)
Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with
construction permits. These scores are the simple average of the scores for each of the component indicators.
Figure – Dealing with Construction Permits in Palau – Procedure, Time and Cost
Time (days) Cost (% of warehouse value)
0.8
70
0.7
60
Cost (% of warehouse value)
0.6
50
Time (days)
0.5
40
0.4
30
0.3
20
0.2
10 0.1
0 0
1 2 *3 4 *5 6 *7 *8 9 * 10 11 12 13 14 15 16 17 18 19
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
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Doing Business 2019 Palau
Figure – Dealing with Construction Permits in Palau and comparator economies – Measure of Quality
15
Index score
10 9.1
7.0
6.0 6.0
5
1.0
0.0
0
Palau Kiribati Marshall Islands Micronesia, Fed. Sts. Samoa East Asia & Pacific
Details – Dealing with Construction Permits in Palau – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Obtain an application form for a building and zoning permit 1 day no charge
Agency : Koror State Planning Commission
The application form has two pages: the first one contains information about the
building, while the second indicates the clearances to be signed by the following
agencies:
• National Bureau of Land and Survey
• Bureau of Arts and Culture
• Environmental Quality Preservation Board (EQPB)
• Public Works (for utilities)
2 Request a clearance from the National Bureau of Land and Survey 7 days no charge
Agency : National Bureau of Land and Survey
Public land should be cleared by the Koror State Public Land Authority. Private
land should be cleared by the National Bureau of Land and Survey. The authority
will inspect the land to confirm ownership and to verify the boundaries.
3 Receive inspection and obtain clearance from the National Bureau of Land 1 day no charge
and Survey
Agency : National Bureau of Land and Survey
4 Request historical clearance from the Bureau of Arts and Culture 14 days no charge
Agency : Bureau of Arts and Culture
All projects involving earthmoving and/or alteration or demolition of any property
require a clearance. This includes signposts, house construction or renovation,
and road paving. The permit application must be submitted to the Bureau of Arts
and Culture (BAC) before any work begins.
A complete application includes:
• Completed application form
• Location map, identifying the exact location and nearby landmarks
• Project plan, showing footprint of project (floor plan, road plan, etc.)
• Lot map showing lot number
BAC staff will check that the application is complete and will schedule a site visit
and make an assessment. If it is determined that there will be no adverse affect
on any historical sites, the permit is issued.
If the assessment reveals there will be an adverse affect, further information may
be requested, including a consultation to decide if a more detailed archaeological
survey or preparation of a Memorandum of Agreement (MOA) is needed to
ensure the historical sites are protected as well as possible. The applicant will be
informed of any additional requirements.
BAC has up to 90 days to review and comment on permits. However, a historical
clearance permit typically takes around two weeks to process. If there are no
objections to the work, the clearance is approved by the office and BuildCo is
notified when it is ready for pick up. If additional information is requested, or if the
application is incomplete, the process can take longer. In order to ensure that
there is no delay to starting the project, it is recommended that applicants apply
for their permit at least 90 days prior to the anticipated start date.
5 Receive inspection and clearance from the Bureau of Arts and Culture 1 day no charge
Agency : Bureau of Arts and Culture
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Doing Business 2019 Palau
6 Request a clearance from the Environmental Quality Preservation Board 21 days USD 100
(EQPB)
Agency : Environmental Quality Preservation Board (EQPB)
Any construction project that involves earthmoving requires an approval from the
Environmental Quality Preservation Board (EQPB), which will inspect the building
site. In some instances, according to EQPB Regulation No. 240161, an
environmental assessment or an environmental impact statement should be
obtained. An environmental assessment can be completed in months; an
environmental impact statement could take 1 year or more. Finally, projects must
be discussed at an EQPB board meeting, which is held every other Thursday.
7 Receive inspection from the Environmental Quality Preservation Board 1 day no charge
(EQPB)
Agency : Environmental Quality Preservation Board (EQPB)
8 Obtain clearance from the Environmental Quality Preservation Board 1 day no charge
(EQPB)
Agency : Environmental Quality Preservation Board (EQPB)
9 Request clearance on utilities from the Public Works Authority 7 days no charge
Agency : Public Works Authority
The Public Works Authority checks the plumbing system and the distance
between the building and the public line.
Receive inspection and clearance from the Public Works Authority 1 day no charge
10 Agency : Public Works Authority
11 Request and obtain the building permit from the Koror State Planning 14 days USD 4,857
Commission
Agency : Koror State Planning Commission
The board meets on the last Wednesday of every month. The officials inspect the
site to verify the submitted information. It takes at least 10 days for the authority
to confirm whether the file is complete. The building permit is valid for 2 years.
Time varies from a week to 2 months; for commercial development, it is 15 -- 30
days.
12 Receive pre-construction inspection by State Planning Commission 1 day no charge
Agency : Koror State Planning Commission
According to the State Planning Commission, at least four inspections are
normally carried out before construction starts and during construction:
inspections of the foundation, inspections of the surroundings and structure of
the building, and a final inspection.
13 Receive foundation inspection 1 day no charge
Agency : Koror State Planning Commission
14 Receive inspection on surroundings 1 day no charge
Agency : Koror State Planning Commission
15 Receive inspection on structure 1 day no charge
Agency : Koror State Planning Commission
16 Request an occupancy permit 1 day no charge
Agency : Koror State Planning Commission
17 Receive final inspection 1 day no charge
Agency : Koror State Planning Commission
18 Obtain occupancy permit 1 day no charge
Agency : Koror State Planning Commission
19 Request and connect to water and sewage services 1 day USD 30
Agency : National Public Works Department, Water Unit, Ministry of Resources
The agency in charge is the National Public Works Department's Water Unit at
the Ministry of Resources.
The documents needed to apply for water connection include a map and land
location. The application fee is USD 15.00 for residential establishments and
USD 30.00 for commercial establishments. A specialized meter fee must also be
determined.
Takes place simultaneously with previous procedure.
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Doing Business 2019 Palau
Details – Dealing with Construction Permits in Palau – Measure of Quality
Answer Score
Building quality control index (0-15) 7.0
Quality of building regulations index (0-2) 2.0
How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0
Free of charge.
Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0
regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees
to be paid;
Required
preapprovals.
Quality control before construction index (0-1) 0.0
Which third-party entities are required by law to verify that the building plans are in By law, there is 0.0
compliance with existing building regulations? (0-1) no need to verify
plans
compliance; Civil
servant reviews
plans.
Quality control during construction index (0-3) 2.0
What types of inspections (if any) are required by law to be carried out during construction? Unscheduled 1.0
(0-2) inspections;
Inspections at
various phases.
Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0
inspections are
always done in
practice.
Quality control after construction index (0-3) 3.0
Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0
with the approved plans and regulations? (0-2) inspection is
done by
government
agency.
Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0
always occurs in
practice.
Liability and insurance regimes index (0-2) 0.0
Which parties (if any) are held liable by law for structural flaws or problems in the building No party is held 0.0
once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) liable under the
law.
Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0
structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law
or Decennial Insurance)? (0-1) to obtain
insurance .
Professional certifications index (0-4) 0.0
What are the qualification requirements for the professional responsible for verifying that the University degree 0.0
architectural plans or drawings are in compliance with existing building regulations? (0-2) in architecture or
engineering.
What are the qualification requirements for the professional who supervises the construction University degree 0.0
on the ground? (0-2) in engineering,
construction or
construction
management.
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Doing Business 2019 Palau
Getting Electricity
This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly
constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of
tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology
for more information.
What the indicators measure Case study assumptions
Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the
(number) warehouse, the electricity connection and the monthly consumption are used.
• Submitting all relevant documents and obtaining The warehouse:
all necessary clearances and permits
- Is owned by a local entrepreneur and is used for storage of goods.
• Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are
receiving all necessary inspections
also collected for the second largest business city.
• Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an
purchasing material for these works area with no physical constraints. For example, the property is not near a railway.
- Is a new construction and is being connected to electricity for the first time.
• Concluding any necessary supply contract and
obtaining final supply - Has two stories with a total surface area of approximately 1,300.6 square meters
(14,000 square feet). The plot of land on which it is built is 929 square meters
Time required to complete each procedure (10,000 square feet).
(calendar days)
The electricity connection:
• Is at least 1 calendar day
- Is a permanent one with a three-phase, four-wire Y connection with a subscribed
• Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1
• Does not include time spent gathering kilowatt (kW).
information - Has a length of 150 meters. The connection is to either the low- or medium-voltage
distribution network and is either overhead or underground, whichever is more
• Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve
follow-up and no prior contact with officials
the crossing of a 10-meter road (such as by excavation or overhead lines) but are all
Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property
income per capita) because the warehouse has access to a road.
- Does not require work to install the internal wiring of the warehouse. This has
• Official costs only, no bribes already been completed up to and including the customer’s service panel or
• Value added tax excluded switchboard and the meter base.
The reliability of supply and transparency of The monthly consumption:
tariffs index (0-8)
- It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00
• Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that
• Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy
consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh.
• Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest
• Regulatory monitoring of utilities’ performance supplier.
(0–1) - Tariffs effective in January of the current year are used for calculation of the price of
electricity for the warehouse. Although January has 31 days, for calculation
• Financial deterrents limiting outages (0–1) purposes only 30 days are used.
• Transparency and accessibility of tariffs (0–1)
Price of electricity (cents per kilowatt-hour)*
• Price based on monthly bill for commercial
warehouse in case study
*Note: Doing Business measures the price of
electricity, but it is not included in the ease of doing
business score nor the ranking on the ease of
getting electricity.
Page 15
Doing Business 2019 Palau
Getting Electricity - Palau
Standardized Connection
Price of electricity (US cents per kWh) 31.1
Name of utility Palau Public Utilities Corporation
City Covered Koror
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Procedures (number) 5 4.3 4.5 3 (25 Economies)
Time (days) 125 65.0 77.2 18 (3 Economies)
Cost (% of income per capita) 66.5 625.1 64.2 0.0 (3 Economies)
Reliability of supply and transparency of tariff 0 4.0 7.5 8.0 (27 Economies)
index (0-8)
Figure – Getting Electricity in Palau and comparator economies – Ranking and Score
DB 2019 Getting Electricity Score
0 100
79.70: Samoa (Rank: 65)
75.06: Regional Average (East Asia & Pacific)
64.49: Micronesia, Fed. Sts. (Rank: 117)
59.47: Marshall Islands (Rank: 132)
54.83: Palau (Rank: 149)
44.05: Kiribati (Rank: 170)
Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are
the simple average of the scores for all the component indicators except the price of electricity.
Page 16
Doing Business 2019 Palau
Figure – Getting Electricity in Palau – Procedure, Time and Cost
Time (days) Cost (% of income per capita)
60
120
Cost (% of income per capita)
50
100
40
80
Time (days)
60 30
40 20
20 10
0 0
1 2 3 4 5
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
Figure – Getting Electricity in Palau and comparator economies – Measure of Quality
8
7
6
Index score
5
4 4.0
4
3
2
1
0 0 0 0
0
Palau Kiribati Marshall Islands Micronesia, Fed. Sts. Samoa East Asia & Pacific
Page 17
Doing Business 2019 Palau
Details – Getting Electricity in Palau – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Submit application to Palau Public Utilities Corporation (PPUC) and await 7 calendar days USD 1,563.93
site inspection
Agency : PPUC
The application for an electricity connection is submitted by the same electrician
who completed the internal wiring. The following documents should be submitted:
service request and if required an easement form for the land/property which
should to be notarized before submission and map of the proposed site. The
applicant must fill the load calculation form listing down all the appliances and
their respective consumption of energy (in Watts).
The supply contract is signed at the application stage together with the
agreement for connection. Since the application is for a commercial
establishment, the customer would have to pay for all materials and labor.
The connection fees are regulated by the following law: PPUC RPPL 4-13
After the surveyor completes the inspection (see procedure below), the invoice
for the connection will be issued, customer service will inform a customer to pay,
and a hook-up will be scheduled. There is a legal time limit of 30 days for the
utility to issue the invoice.
2 Receive site inspection by PPUC and await estimate 7 calendar days USD 0
Agency : PPUC
There is an external inspection of the site. Customer’s representative has to be
present at the site.
Customer must have his or her electrician wire and connect all the required lines
before a PPUC surveyor or inspector does her part. During the inspection the
surveyor also inspects the wires and makes sure that there is a correct # of wires
and they are safely connected to the meter base. However, he doesn’t check the
wiring inside the warehouse. There are no electrical wiring regulations.
3 Obtain excavation permit from municipality 3 calendar days USD 0
Agency : State office
The excavation permit is obtained by the customer at the state office where the
warehouse is located.
4 Await completion of connection works by PPUC 101 calendar days USD 7,000
Agency : PPUC
Installation of a transformer will be required.
PPUC will complete all the works.
5 Await and receive meter installation and electricity flow 7 calendar days USD 0
Agency : PPUC
The final connection is completed by the distribution department and a meter is
installed by a metering department.
Takes place simultaneously with previous procedure.
Page 18
Doing Business 2019 Palau
Details – Getting Electricity in Palau – Measure of Quality
Answer
Reliability of supply and transparency of tariff index (0-8) 0
Total duration and frequency of outages per customer a year (0-3) 0
System average interruption duration index (SAIDI) 951.3
System average interruption frequency index (SAIFI) 23.0
What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 30.0
Mechanisms for monitoring outages (0-1) 1
Does the distribution utility use automated tools to monitor outages? Yes
Mechanisms for restoring service (0-1) 1
Does the distribution utility use automated tools to restore service? Yes
Regulatory monitoring (0-1) 0
Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of No
supply?
Financial deterrents aimed at limiting outages (0-1) 0
Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No
exceed a certain cap?
Communication of tariffs and tariff changes (0-1) 0
Are effective tariffs available online? No
Link to the website, if available online n.a
Are customers notified of a change in tariff ahead of the billing cycle? Yes
Note:
If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff
index.
If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.
If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.
Page 19
Doing Business 2019 Palau
Registering Property
This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to
purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land
administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency
of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for
the project was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the
immovable property (number) parties to the transaction, the property and the procedures are used.
• Preregistration procedures (for example, The parties (buyer and seller):
checking for liens, notarizing sales agreement,
paying property transfer taxes) - Are limited liability companies (or the legal equivalent).
- Are located in the periurban area of the economy’s largest business city. For 11
• Registration procedures in the economy's largest economies the data are also collected for the second largest business city.
business city.
- Are 100% domestically and privately owned.
• Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals.
title with municipality) - Perform general commercial activities.
Time required to complete each procedure The property (fully owned by the seller):
(calendar days)
- Has a value of 50 times income per capita, which equals the sale price.
• Does not include time spent gathering - Is fully owned by the seller.
information - Has no mortgages attached and has been under the same ownership for the past
• Each procedure starts on a separate day - 10 years.
though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes.
online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required.
- Consists of land and a building. The land area is 557.4 square meters (6,000
• Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is
document is received
located on the land. The warehouse is 10 years old, is in good condition, has no
• No prior contact with officials heating system and complies with all safety standards, building codes and legal
requirements. The property, consisting of land and building, will be transferred in its
Cost required to complete each procedure (% of entirety.
property value) - Will not be subject to renovations or additional construction following the purchase.
• Official costs only (such as administrative fees, - Has no trees, natural water sources, natural reserves or historical monuments of
duties and taxes). any kind.
- Will not be used for special purposes, and no special permits, such as for
• Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural
payments are excluded activities, are required.
- Has no occupants, and no other party holds a legal interest in it.
Quality of land administration index (0-30)
• Reliability of infrastructure index (0-8)
• Transparency of information index (0–6)
• Geographic coverage index (0–8)
• Land dispute resolution index (0–8)
• Equal access to property rights index (-2–0)
Page 20
Doing Business 2019 Palau
Registering Property - Palau
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Procedures (number) 5 5.4 4.7 1 (4 Economies)
Time (days) 14 72.6 20.1 1 (New Zealand)
Cost (% of property value) 0.2 4.5 4.2 0.0 (Saudi Arabia)
Quality of the land administration index (0-30) 12.5 16.3 23.0 None in 2017/18
Figure – Registering Property in Palau and comparator economies – Ranking and Score
DB 2019 Registering Property Score
0 100
75.16: Palau (Rank: 43)
69.51: Samoa (Rank: 65)
57.56: Regional Average (East Asia & Pacific)
49.13: Kiribati (Rank: 149)
0.00: Micronesia, Fed. Sts. (Rank: 187)
0.00: Marshall Islands (Rank: 187)
Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These
scores are the simple average of the scores for each of the component indicators.
Figure – Registering Property in Palau – Procedure, Time and Cost
Time (days) Cost (% of property value)
14 0.18
0.16
12
Cost (% of property value)
0.14
10
0.12
Time (days)
8 0.1
6 0.08
0.06
4
0.04
2
0.02
0 0
1 2 3 4 5
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
Page 21
Doing Business 2019 Palau
Figure – Registering Property in Palau and comparator economies – Measure of Quality
30
25
Index score
20
16.3
15 12.5 13.0
10 9.0
5
0
No Practice No Practice
Palau Kiribati Marshall Islands Micronesia, Fed. Sts. Samoa East Asia & Pacific
Details – Registering Property in Palau – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 An attorney investigates the land title 7 days USD 1,125
Agency : Land Court and Clerk of Courts
Even if the title search is not mandatory, the procedure is highly recommended.
Land disputes are widespread, and only less than a half of the land is surveyed
with a certificate of title issued. Land title records are kept on paper, and not
sorted by parcel number. As a result, the officials at the Land Court have to go
through thousands of pages to track transactions on a particular piece of land.
Attorneys are usually willing to provide due diligence after a week but will
stipulate in their contract with clients that the search doesn't guarantee that are
no disputes or liens attached to the title.
2 An attorney prepares a lease 1 day USD 300
Agency : Land Court and Clerk of Courts
It's standard practice for an attorney to draft land leases. It's uncommon for
companies to buy or sell ownership of land and building as the records are so
unreliable. In most cases, such as this one, companies would prefer to transfer a
lease.
3 Notarize the document at the Clerk of Courts 1 day USD 12; ($3 per
Agency : Clerk of Courts signature (x 4 for
The document is notarized at the Clerk of Courts. parties and their
representatives))
4 Record the lease with the Land Court 1 day USD 5
Agency : Land Court
The lease is recorded at the Land Court
5 Register the new title at the Land Court 4 days no charge
Agency : Central Land Registry Section
In case of change of ownership, the parties turn in the “warranty deed” an old title
and obtain a new title.
Takes place simultaneously with previous procedure.
Page 22
Doing Business 2019 Palau
Details – Registering Property in Palau – Measure of Quality
Answer Score
Reliability of infrastructure index (0-8) 3.0
What is the institution in charge of immovable property registration? Land Court
In what format are the majority of title or deed records kept in the largest business city—in a Computer/Scann 1.0
paper format or in a computerized format (scanned or fully digital)? ed
Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0
and the like)?
Institution in charge of the plans showing legal boundaries in the largest business city: Bureau of Lands
and Survey
In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Scann 1.0
paper format or in a computerized format (scanned or fully digital)? ed
Is there an electronic database for recording boundaries, checking plans and providing No 0.0
cadastral information (geographic information system)?
Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0
or mapping agency kept in a single database, in different but linked databases or in separate databases
databases?
Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0
same identification number for properties?
Transparency of information index (0–6) 2.5
Who is able to obtain information on land ownership at the agency in charge of immovable Freely accessible 1.0
property registration in the largest business city? by anyone
Is the list of documents that are required to complete any type of property transaction made Yes, in person 0.0
publicly available–and if so, how?
Link for online access:
Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5
immovable property registration in the largest business city made publicly available–and if
so, how?
Link for online access: http://www.palaus
upremecourt.net/i
ndex.cshtml
Does the agency in charge of immovable property registration commit to delivering a legally No 0.0
binding document that proves property ownership within a specific time frame–and if so, how
does it communicate the service standard?
Link for online access:
Is there a specific and separate mechanism for filing complaints about a problem that No 0.0
occurred at the agency in charge of immovable property registration?
Contact information:
Are there publicly available official statistics tracking the number of transactions at the Yes 0.5
immovable property registration agency?
Number of property transfers in the largest business city in 2017: 198.0
Who is able to consult maps of land plots in the largest business city? Anyone who 0.5
pays the official
fee
Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, in person 0.0
and if so, how?
Link for online access:
Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0
specific time frame—and if so, how does it communicate the service standard?
Link for online access:
Page 23
Doing Business 2019 Palau
Is there a specific and separate mechanism for filing complaints about a problem that No 0.0
occurred at the cadastral or mapping agency?
Contact information:
Geographic coverage index (0–8) 2.0
Are all privately held land plots in the economy formally registered at the immovable property No 0.0
registry?
Are all privately held land plots in the largest business city formally registered at the Yes 2.0
immovable property registry?
Are all privately held land plots in the economy mapped? No 0.0
Are all privately held land plots in the largest business city mapped? No 0.0
Land dispute resolution index (0–8) 5.0
Does the law require that all property sale transactions be registered at the immovable Yes 1.5
property registry to make them opposable to third parties?
Is the system of immovable property registration subject to a state or private guarantee? No 0.0
Is there a specific compensation mechanism to cover for losses incurred by parties who No 0.0
engaged in good faith in a property transaction based on erroneous information certified by
the immovable property registry?
Does the legal system require a control of legality of the documents necessary for a property Yes 0.5
transaction (e.g., checking the compliance of contracts with requirements of the law)?
If yes, who is responsible for checking the legality of the documents? Registrar;
Lawyer;
Does the legal system require verification of the identity of the parties to a property Yes 0.5
transaction?
If yes, who is responsible for verifying the identity of the parties? Registrar;
Lawyer;
Is there a national database to verify the accuracy of identity documents? No 0.0
For a standard land dispute between two local businesses over tenure rights of a property Supreme Court
worth 50 times gross national income (GNI) per capita and located in the largest business Trial Division
city, what court would be in charge of the case in the first instance?
How long does it take on average to obtain a decision from the first-instance court for such a Between 1 and 2 2.0
case (without appeal)? years
Are there any statistics on the number of land disputes in the first instance? Yes 0.5
Number of land disputes in the largest business city in 2017: 15.0
Equal access to property rights index (-2–0) 0.0
Do unmarried men and unmarried women have equal ownership rights to property? Yes
Do married men and married women have equal ownership rights to property? Yes 0.0
Page 24
Doing Business 2019 Palau
Getting Credit
This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in
facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more
information.
What the indicators measure Case study assumptions
Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of
borrowers and lenders with respect to secured transactions through 2 sets of
• Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices
collateral laws (0-10)
affecting the coverage, scope and accessibility of credit information available
• Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index
bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of
borrowers and lenders and thus facilitate lending. For each economy it is first
Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case
• Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security
distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis
(0-8) is given to how the collateral registry operates (if registration of security interests is
possible). The case scenarios involve a secured borrower, company ABC, and a
Credit bureau coverage (% of adults) secured lender, BizBank.
• Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case
credit bureau as a percentage of adult population
A or case B (not both) to apply. Both cases examine the same set of legal provisions
Credit registry coverage (% of adults) relating to the use of movable collateral.
• Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank)
registry as a percentage of adult population are used:
- ABC is a domestic limited liability company (or its legal equivalent).
- ABC has up to 50 employees.
- ABC has its headquarters and only base of operations in the economy’s largest
business city. For 11 economies the data are also collected for the second largest
business city.
- Both ABC and BizBank are 100% domestically owned.
The case scenarios also involve assumptions. In case A, as collateral for the loan,
ABC grants BizBank a nonpossessory security interest in one category of movable
assets, for example, its machinery or its inventory. ABC wants to keep both
possession and ownership of the collateral. In economies where the law does not
allow nonpossessory security interests in movable property, ABC and BizBank use a
fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory
security interests).
In case B, ABC grants BizBank a business charge, enterprise charge, floating
charge or any charge that gives BizBank a security interest over ABC’s combined
movable assets (or as much of ABC’s movable assets as possible). ABC keeps
ownership and possession of the assets.
Page 25
Doing Business 2019 Palau
Getting Credit - Palau
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Strength of legal rights index (0-12) 10 7.1 6.1 12 (5 Economies)
Depth of credit information index (0-8) 0 4.2 6.7 8 (42 Economies)
Credit registry coverage (% of adults) 0 16.9 21.8 100.0 (4 Economies)
Credit bureau coverage (% of adults) 0 23.0 65.3 100.0 (25 Economies)
Figure – Getting Credit in Palau and comparator economies – Ranking and Score
DB 2019 Getting Credit Score
0 100
56.40: Regional Average (East Asia & Pacific)
50.00: Micronesia, Fed. Sts. (Rank: 99)
50.00: Marshall Islands (Rank: 99)
50.00: Palau (Rank: 99)
45.00: Samoa (Rank: 112)
20.00: Kiribati (Rank: 172)
Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the
sum of the scores for the strength of legal rights index and the depth of credit information index.
Figure – Legal Rights in Palau and comparator economies
10 10 10 9
8
7.1
7
6
Index Score
5
4
4
3
2
1
0
Palau Kiribati Marshall Islands Micronesia, Fed. Sts. Samoa East Asia & Pacific
Page 26
Doing Business 2019 Palau
Details – Legal Rights in Palau
Strength of legal rights index (0-12) 10
Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and Yes
enforcement of functional equivalents to security interests in movable assets exist in the economy?
Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes
requiring a specific description of collateral?
Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes
specific description of collateral?
May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes
replacements of the original assets?
Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes
secured between parties; and can the collateral agreement include a maximum amount for which the assets are
encumbered?
Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by Yes
asset type, with an electronic database indexed by debtor's name?
Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes
Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed Yes
online by any interested third party?
Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes
procedure?
Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No
Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No
procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time
limit for it?
Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes
the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep
the asset in satisfaction of the debt?
Figure – Credit Information in Palau and comparator economies
8
7
6
Index Score
5
4.2
4
3
2
1
0 0 0 0 0
0
Palau Kiribati Marshall Islands Micronesia, Fed. Sts. Samoa East Asia & Pacific
Page 27
Doing Business 2019 Palau
Details – Credit Information in Palau
Depth of credit information index (0-8) Credit Credit Score
bureau registry
Are data on both firms and individuals distributed? No No 0
Are both positive and negative credit data distributed? No No 0
Are data from retailers or utility companies - in addition to data from banks and No No 0
financial institutions - distributed?
Are at least 2 years of historical data distributed? (Credit bureaus and registries No No 0
that distribute more than 10 years of negative data or erase data on defaults as
soon as they are repaid obtain a score of 0 for this component.)
Are data on loan amounts below 1% of income per capita distributed? No No 0
By law, do borrowers have the right to access their data in the credit bureau or No No 0
credit registry?
Can banks and financial institutions access borrowers’ credit information online No No 0
(for example, through an online platform, a system-to-system connection or
both)?
Are bureau or registry credit scores offered as a value-added service to help No No 0
banks and financial institutions assess the creditworthiness of borrowers?
Total Score ("yes" to either public bureau or private registry) 0
Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or
covers less than 5% of the adult population, the total score on the depth of credit information index is 0.
Coverage Credit bureau Credit registry
Number of individuals 0 0
Number of firms 0 0
Total 0 0
Percentage of adult population 0 0
Page 28
Doing Business 2019 Palau
Protecting Minority Investors
This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain
as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most
recent round of data collection for the project was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
• Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several
approval requirements for related-party
assumptions about the business and the transaction.
transactions; Disclosure requirements for related-
party transactions
The business (Buyer):
• Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock
of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock
interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with
party transactions; Available legal remedies multiple shareholders.
(damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on
imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law.
• Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr.
Access to internal corporate documents; James appointed 60% of the shareholder-elected members.
Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum
legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that
are not mandatory.
• Extent of conflict of interest regulation index
- Is a manufacturing company with its own distribution network.
(0–10): Simple average of the extent of
disclosure, extent of director liability and ease of
The transaction involves the following details:
shareholder indices
- Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two
• Extent of shareholder rights index (0-10): directors to Buyer’s five-member board.
Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail
decisions hardware stores. Seller recently closed a large number of its stores.
• Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand
Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price
from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value.
- The proposed transaction is part of the company’s principal activity and is not
• Extent of corporate transparency index (0-10): outside the authority of the company.
Corporate transparency on ownership stakes,
- Buyer enters into the transaction. All required approvals are obtained, and all
compensation, audits and financial prospects
required disclosures made—that is, the transaction was not entered into fraudulently.
• Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the
10): Simple average of the extent of shareholders executives and directors that approved the transaction.
rights, extent of ownership and control and extent
of corporate transparency indices
• Strength of minority investor protection index
(0–10): Simple average of the extent of conflict of
interest regulation and extent of shareholder
governance indices
Page 29
Doing Business 2019 Palau
Protecting Minority Investors - Palau
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Extent of disclosure index (0-10) 0.0 5.6 6.5 10 (13 Economies)
Extent of director liability index (0-10) 0.0 4.9 5.3 10 (Cambodia)
Ease of shareholder suits index (0-10) 7.0 6.7 7.3 10 (Djibouti)
Extent of shareholder rights index (0-10) 5.0 5.6 6.4 10 (Kazakhstan)
Extent of ownership and control index (0-10) 2.0 4.0 5.4 None in 2017/18
Extent of corporate transparency index (0-10) 2.0 5.3 7.6 10 (6 Economies)
Figure – Protecting Minority Investors in Palau and comparator economies – Ranking and Score
DB 2019 Protecting Minority Investors Score
0 100
56.67: Samoa (Rank: 83)
53.33: Regional Average (East Asia & Pacific)
46.67: Kiribati (Rank: 125)
26.67: Marshall Islands (Rank: 180)
26.67: Palau (Rank: 180)
25.00: Micronesia, Fed. Sts. (Rank: 185)
Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority
investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of
shareholder governance index.
Figure – Protecting Minority Investors in Palau and comparator economies – Measure of Quality
Palau 2 0 2 5 7
Kiribati 2 5 6 2 5 8
Marshall Islands 2 0 2 1 3 8
Micronesia, Fed. Sts. 0 2 5 8
Samoa 3 6 5 3 8 9
OECD high income 7.4 5.5 6.5 5.2 6.3 7.4
East Asia & Pacific 5.7 4.6 6.2 4.2 5.8 6.2
0 5 10 15 20 25 30 35 40
Sub-Indicator Score
Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10)
Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10)
Page 30
Doing Business 2019 Palau
Details – Protecting Minority Investors in Palau – Measure of Quality
Answer Score
Extent of conflict of interest regulation index (0-10) 2.3
Extent of disclosure index (0-10) 0.0
Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) CEO alone 0.0
Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0
Must Mr. James disclose his conflict of interest to the board of directors? (0-2) No disclosure 0.0
obligation
Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) No disclosure 0.0
obligation
Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0
obligation
Extent of director liability index (0-10) 0.0
Can shareholders representing 10% of Buyer's share capital sue for the damage the No 0.0
transaction caused to Buyer? (0-1)
Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Not liable 0.0
2)
Can shareholders hold the other directors liable for the damage the transaction caused to Not liable 0.0
Buyer (0-2)
Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by No 0.0
shareholders? (0-1)
Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0
shareholders? (0-1)
Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0
Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0
fraud or bad faith
Ease of shareholder suits index (0-10) 7.0
Before suing, can shareholders representing 10% of Buyer's share capital inspect the No 0.0
transaction documents? (0-1)
Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0
document
Can the plaintiff request categories of documents from the defendant without identifying Yes 1.0
specific ones? (0-1)
Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0
Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0
Can shareholder plaintiffs recover their legal expenses from the company? (0-2) At the discretion 0.0
of the court
Extent of shareholder governance index (0-10) 3.0
Extent of shareholder rights index (0-10) 5.0
Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0
Can shareholders representing 10% of Buyer's share capital call for a meeting of No 0.0
shareholders?
Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0
Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0
shares?
Must shareholders approve the election and dismissal of the external auditor? No 0.0
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Doing Business 2019 Palau
Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0
shares approve?
Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0
member approval?
Assuming that Buyer is a limited company, can members representing 10% call for a No 0.0
meeting of members?
Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0
new member?
Assuming that Buyer is a limited company, must a member first offer to sell their interest to No 0.0
the existing members before they can sell to non-members?
Extent of ownership and control index (0-10) 2.0
Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0
directors?
Must the board of directors include independent and nonexecutive board members? No 0.0
Can shareholders remove members of the board of directors without cause before the end Yes 1.0
of their term?
Must the board of directors include a separate audit committee exclusively comprising board No 0.0
members?
Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of No 0.0
Buyer?
Must Buyer pay declared dividends within a maximum period set by law? No 0.0
Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0
Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0
disagreements among members?
Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0
all shareholders upon acquiring 50% of Buyer?
Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0
period set by law?
Extent of corporate transparency index (0-10) 2.0
Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0
Must Buyer disclose information about board members’ primary employment and No 0.0
directorships in other companies?
Must Buyer disclose the compensation of individual managers? No 0.0
Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0
Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0
agenda?
Must Buyer's annual financial statements be audited by an external auditor? No 0.0
Must Buyer disclose its audit reports to the public? No 0.0
Assuming that Buyer is a limited company, must members meet at least once a year? No 0.0
Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0
meeting agenda?
Assuming that Buyer is a limited company, must Buyer's annual financial statements be No 0.0
audited by an external auditor?
Page 32
Doing Business 2019 Palau
Paying Taxes
This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the
administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent
round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1,
2017 – December 31, 2017). See the methodology for more information.
What the indicators measure Case study assumptions
Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a
2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden
and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is
also compiled on frequency of filing and payments, time taken to comply with tax
• Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time
withheld, including consumption taxes (value
waiting.
added tax, sales tax or goods and service tax)
• Method and frequency of filing and payment To make data comparable across economies, several assumptions are used:
- TaxpayerCo is a medium-size business that started operations on January 1, 2016.
Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions
(hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and
• Collecting information, computing tax payable mandatory contributions are measured at all levels of government.
• Preparing separate tax accounting books, if The VAT refund process:
required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the
• Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per
month (1,050 times income per capita divided by 12) and cost of goods sold are
• Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The
Total tax and contribution rate (% of commercial machinery seller is registered for VAT and excess input VAT incurred in June will be
fully recovered after four consecutive months if the VAT rate is the same for inputs,
profits)
sales and the machine and the tax reporting period is every month. Input VAT will
• Profit or corporate income tax exceed Output VAT in June 2017.
• Social contributions, labor taxes paid by
The corporate income tax audit process:
employer
- An error in calculation of income tax liability (for example, use of incorrect tax
• Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an
• Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo.
taxes discovered the error and voluntarily notified the tax authority. The value of the
underpaid income tax liability is 5% of the corporate income tax liability
• Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the
annual tax return, but within the tax assessment period.
Postfiling Index
• Time to comply with a VAT refund (hours)
• Time to obtain a VAT refund (weeks)
• Time to comply with a corporate income tax
correction (hours)
• Time to complete a corporate income tax
correction (weeks)
Page 33
Doing Business 2019 Palau
Paying Taxes - Palau
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Payments (number per year) 11 21.2 11.2 3 (Hong Kong SAR,
China)
Time (hours per year) 52 180.9 159.4 49 (Singapore)
Total tax and contribution rate (% of profit) 75.8 33.5 39.8 26.1% (32 Economies)
Postfiling index (0-100) 56.42 84.41 None in 2017/18
Figure – Paying Taxes in Palau and comparator economies – Ranking and Score
DB 2019 Paying Taxes Score
0 100
76.21: Marshall Islands (Rank: 70)
75.71: Samoa (Rank: 74)
72.98: Regional Average (East Asia & Pacific)
71.42: Kiribati (Rank: 96)
69.04: Palau (Rank: 106)
68.78: Micronesia, Fed. Sts. (Rank: 110)
Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the
simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the
component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile
of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a
total tax and contribution rate below this threshold receive the same score as the economy at the threshold.
Figure – Paying Taxes in Palau and comparator economies – Measure of Quality
100
86.55
80
Index score
60 56.42
40
26.68
20
0
Palau Kiribati Marshall Islands Micronesia, Fed. Sts. Samoa East Asia & Pacific
Page 34
Doing Business 2019 Palau
Details – Paying Taxes in Palau
Tax or Payments Notes on Time Statutory Tax base Total tax Notes on
mandatory (number) Payments (hours) tax rate and TTCR
contribution contribution
rate (% of
profit)
Gross 4.0 24.0 4% revenue 65.80
revenue tax minus labor
costs
Employer 4.0 28.0 7% gross salaries 7.05
paid - Social
security
contributions
Employer 0.0 jointly 2.5% gross salaries 2.82
paid - Health
insurance
contributions
Road tax 1.0 $200 to $750 fixed fee 0.13
depending on
weight
Business 1.0 50 fixed fee 0.01
license
Employee 0.0 jointly 2.5% gross salaries 0.00 withheld
paid - Health
insurance
contributions
Employee 0.0 jointly 7% gross salaries 0.00 withheld
paid - Social
security
contributions
Fuel tax 1.0 included into 0.00 small amount
the fuel price
Totals 11 52 75.8
Page 35
Doing Business 2019 Palau
Details – Paying Taxes in Palau – Tax by Type
Taxes by type Answer
Profit tax (% of profit) 65.8
Labor tax and contributions (% of profit) 9.9
Other taxes (% of profit) 0.1
Page 36
Doing Business 2019 Palau
Details – Paying Taxes in Palau – Measure of Quality
Answer Score
Postfiling index (0-100)
VAT refunds
Does VAT exist? No
Does a VAT refund process exist per the case study? N/A
Restrictions on VAT refund process N/A
Percentage of cases exposed to a VAT audit (%) Not applicable
Is there a mandatory carry forward period? Not Applicable
Time to comply with VAT refund (hours) No VAT No VAT
Time to obtain a VAT refund (weeks) No VAT No VAT
Corporate income tax audits
Does corporate income tax exist? No
Percentage of cases exposed to a corporate income tax audit (%) Not applicable
Time to comply with a corporate income tax correction (hours) No corporate No corporate
income tax income tax
Time to complete a corporate income tax correction (weeks) No corporate No corporate
income tax income tax
Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate
income tax in this table.
The hours for VAT include all the VAT and sales taxes applicable.
The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.
The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a
corporate income tax correction and time to complete a corporate income tax correction.
N/A = Not applicable.
Page 37
Doing Business 2019 Palau
Trading across Borders
Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures
the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic
transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project
was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
Documentary compliance To make the data comparable across economies, a few assumptions are made
about the traded goods and the transactions:
• Obtaining, preparing and submitting documents
during transport, clearance, inspections and port
Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are
or border handling in origin economy
recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are
• Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency
required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day.
economies The time for customs clearance would be recorded as 24 hours because the actual
• Covers all documents required by law and in procedure took 24 hours.
practice, including electronic submissions of
Cost: Insurance cost and informal payments for which no receipt is issued are
information
excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors
Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate
prevailing on the day they answer the questionnaire. Contributors are private sector
• Customs clearance and inspections experts in international trade logistics and are informed about exchange rates.
• Inspections by other agencies (if applied to more
than 20% of shipments) Assumptions of the case study:
- For all 190 economies covered by Doing Business, it is assumed a shipment is in a
• Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a
economy’s port or border
warehouse in the largest business city of the importing economy.
- It is assumed each economy imports 15 metric tons of containerized auto parts (HS
Domestic transport
8708) from its natural import partner—the economy from which it imports the largest
• Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the
warehouse or port/border product of its comparative advantage (defined by the largest export value) to its
• Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product.
Shipment value is assumed to be $50,000.
• Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import
shipment is en route product and the trading partner, as is the seaport or land border crossing.
- All electronic information submissions requested by any government agency in
connection with the shipment are considered to be documents obtained, prepared
and submitted during the export or import process.
- A port or border is a place (seaport or land border crossing) where merchandise
can enter or leave an economy.
- Relevant government agencies include customs, port authorities, road police,
border guards, standardization agencies, ministries or departments of agriculture or
industry, national security agencies and any other government authorities.
Page 38
Doing Business 2019 Palau
Trading across Borders - Palau
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Time to export: Border compliance (hours) 102 54.7 12.5 1 (19 Economies)
Cost to export: Border compliance (USD) 505 382.2 139.1 0 (19 Economies)
Time to export: Documentary compliance (hours) 72 57.6 2.4 1 (26 Economies)
Cost to export: Documentary compliance (USD) 100 109.4 35.2 0 (20 Economies)
Time to import: Border compliance (hours) 84 69.2 8.5 0 (25 Economies)
Cost to import: Border compliance (USD) 605 415.8 100.2 0 (28 Economies)
Time to import: Documentary compliance (hours) 96 57.0 3.4 1 (30 Economies)
Cost to import: Documentary compliance (USD) 100 109.5 24.9 0 (30 Economies)
Figure – Trading across Borders in Palau and comparator economies – Ranking and Score
DB 2019 Trading Across Borders Score
0 100
84.00: Micronesia, Fed. Sts. (Rank: 61)
78.86: Marshall Islands (Rank: 75)
71.55: Regional Average (East Asia & Pacific)
62.08: Kiribati (Rank: 131)
60.98: Palau (Rank: 137)
57.81: Samoa (Rank: 151)
Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These
scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.
Figure – Trading across Borders in Palau – Time and Cost
Time (hours) Cost (USD)
120 700
102 605
100 96 600
505 84
Time (hours)
500
Cost (USD)
80 72
400
60
300
40
200
100 100
20 100
0 0
Export Export Import Import
- - - -
Border Documentary Border Documentary
Compliance Compliance Compliance Compliance
Page 39
Doing Business 2019 Palau
Details – Trading across Borders in Palau
Characteristics Export Import
Product HS 03 : Fish & crustacean, mollusc & other HS 8708: Parts and accessories of motor
aquatic invertebrate vehicles
Trade partner Japan Japan
Border Koror port Koror port
Distance (km) 4 4
Domestic transport time (hours) 1 1
Domestic transport cost (USD) 250 250
Details – Trading across Borders in Palau – Components of Border Compliance
Time to Complete (hours) Associated Costs (USD)
Export: Clearance and inspections required 29.7 100.0
by customs authorities
Export: Clearance and inspections required 0.0 0.0
by agencies other than customs
Export: Port or border handling 72.0 405.0
Import: Clearance and inspections required 78.9 200.0
by customs authorities
Import: Clearance and inspections required 0.0 0.0
by agencies other than customs
Import: Port or border handling 48.0 405.0
Page 40
Doing Business 2019 Palau
Details – Trading across Borders in Palau – Trade Documents
Export Import
Bill of lading Bill of lading
Customs export declaration Customs import declaration
Packing list Commercial invoice
Commercial invoice Packing list
SOLAS certificate SOLAS certificate
Page 41
Doing Business 2019 Palau
Enforcing Contracts
The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the
quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and
efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more
information.
What the indicators measure Case study assumptions
Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2
courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the
quality of the goods in dispute. This distinguishes the case from simple debt
• Time to file and serve the case enforcement.
• Time for trial and to obtain the judgment
To make the data comparable across economies, Doing Business uses several
• Time to enforce the judgment assumptions about the case:
Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and
courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the
data are also collected for the second largest business city.
• Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are
• Court fees not of adequate quality.
- The value of the dispute is 200% of the income per capita or the equivalent in local
• Enforcement fees currency of USD 5,000, whichever is greater.
- The seller sues the buyer before the court with jurisdiction over commercial cases
Quality of judicial processes index (0-18)
worth 200% of income per capita or $5,000.
• Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to
secure the claim.
• Case management (0-6)
- The dispute on the quality of the goods requires an expert opinion.
• Court automation (0-4) - The judge decides in favor of the seller; there is no appeal.
• Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable
assets.
Page 42
Doing Business 2019 Palau
Enforcing Contracts - Palau
Standardized Case
Claim value USD 26,141
Court name Palau Supreme Court, Trial Division
City Covered Koror
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Time (days) 810 581.1 582.4 None in 2017/18
Cost (% of claim value) 35.3 47.2 21.2 None in 2017/18
Quality of judicial processes index (0-18) 9.5 7.9 11.5 None in 2017/18
Figure – Enforcing Contracts in Palau and comparator economies – Ranking and Score
DB 2019 Enforcing Contracts Score
0 100
58.59: Samoa (Rank: 86)
55.93: Marshall Islands (Rank: 103)
53.39: Kiribati (Rank: 120)
52.75: Regional Average (East Asia & Pacific)
52.21: Palau (Rank: 126)
29.39: Micronesia, Fed. Sts. (Rank: 184)
Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These
scores are the simple average of the scores for each of the component indicators.
Figure – Enforcing Contracts in Palau – Time and Cost
Time (days) Cost (% of claim value)
1000 66.0 70
Cost (% of claim value)
885
810 60
800
47.2 660
Time (days)
616 50
581.1 582.4
600 35.3 40
32.1 455
400 25.8 24.4 30
21.2
20
200
10
0 0
East Kiribati Marshall Micronesia, OECD Palau Samoa
Asia Islands Fed. high
& Sts. income
Pacific
Page 43
Doing Business 2019 Palau
Figure – Enforcing Contracts in Palau and comparator economies – Measure of Quality
Palau 1 1.5 3.5 3.5
Kiribati 1.5 1 0.5 3
Marshall Islands 2.5 2 0.5 3
Micronesia, Fed. Sts. 2 1 0.5 1
Samoa 2.5 0 0.5 2.5
OECD high income 2.5 3.1 2.3 3.6
East Asia & Pacific 2.2 1.9 1.3 3
0 2 4 6 8 10 12 14
Sub-Indicator Score
Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)
Details – Enforcing Contracts in Palau
Indicator
Time (days) 810
Filing and service 45
Trial and judgment 400
Enforcement of judgment 365
Cost (% of claim value) 35.3
Attorney fees 27
Court fees 7.6
Enforcement fees 0.7
Quality of judicial processes index (0-18) 9.5
Court structure and proceedings (-1-5) 3.5
Case management (0-6) 1.5
Court automation (0-4) 3.5
Alternative dispute resolution (0-3) 1.0
Page 44
Doing Business 2019 Palau
Details – Enforcing Contracts in Palau – Measure of Quality
Answer Score
Quality of judicial processes index (0-18) 9.5
Court structure and proceedings (-1-5) 3.5
1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0
2. Small claims court 1.5
2.a. Is there a small claims court or a fast-track procedure for small claims? Yes
2.b. If yes, is self-representation allowed? Yes
3. Is pretrial attachment available? Yes 1.0
4. Are new cases assigned randomly to judges? Yes, automatic 1.0
5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0
Case management (0-6) 1.5
1. Time standards 0.5
1.a. Are there laws setting overall time standards for key court events in a civil Yes
case?
1.b. If yes, are the time standards set for at least three court events? Yes
1.c. Are these time standards respected in more than 50% of cases? No
2. Adjournments 0.0
2.a. Does the law regulate the maximum number of adjournments that can be No
granted?
2.b. Are adjournments limited to unforeseen and exceptional circumstances? No
2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a.
3. Can two of the following four reports be generated about the competent court: (i) time to No 0.0
disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single
case progress report?
4. Is a pretrial conference among the case management techniques used before the Yes 1.0
competent court?
5. Are there any electronic case management tools in place within the competent court for No 0.0
use by judges?
6. Are there any electronic case management tools in place within the competent court for No 0.0
use by lawyers?
Court automation (0-4) 3.5
1. Can the initial complaint be filed electronically through a dedicated platform within the yes 1.0
competent court?
2. Is it possible to carry out service of process electronically for claims filed before the Yes 1.0
competent court?
3. Can court fees be paid electronically within the competent court? Yes 1.0
4. Publication of judgments 0.5
4.a Are judgments rendered in commercial cases at all levels made available to the No
general public through publication in official gazettes, in newspapers or on the
internet or court website?
4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes
court level made available to the general public through publication in official
gazettes, in newspapers or on the internet or court website?
Alternative dispute resolution (0-3) 1.0
1. Arbitration 0.0
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Doing Business 2019 Palau
1.a. Is domestic commercial arbitration governed by a consolidated law or No
consolidated chapter or section of the applicable code of civil procedure
encompassing substantially all its aspects?
1.b. Are there any commercial disputes—aside from those that deal with public n.a.
order or public policy—that cannot be submitted to arbitration?
1.c. Are valid arbitration clauses or agreements usually enforced by the courts? n.a.
2. Mediation/Conciliation 1.0
2.a. Is voluntary mediation or conciliation available? Yes
2.b. Are mediation, conciliation or both governed by a consolidated law or Yes
consolidated chapter or section of the applicable code of civil procedure
encompassing substantially all their aspects?
2.c. Are there financial incentives for parties to attempt mediation or conciliation No
(i.e., if mediation or conciliation is successful, a refund of court filing fees, income
tax credits or the like)?
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Doing Business 2019 Palau
Resolving Insolvency
Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to
calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or
debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing
Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist
Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies,
several assumptions about the business and the case are used:
• Measured in calendar years
• Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers.
The hotel experiences financial difficulties.
Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local
estate) currency of USD 200,000, whichever is greater.
- The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s
• Measured as percentage of estate value
real estate. The hotel cannot pay back the loan, but makes enough money to
• Court fees operate otherwise.
• Fees of insolvency administrators
In addition, Doing Business evaluates the quality of legal framework applicable to
• Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best
• Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered.
• Other related fees
Outcome
• Whether business continues operating as a going
concern or business assets are sold piecemeal
Recovery rate for creditors
• Measures the cents on the dollar recovered by
secured creditors
• Outcome for the business (survival or not)
determines the maximum value that can be
recovered
• Official costs of the insolvency proceedings are
deducted
• Depreciation of furniture is taken into account
• Present value of debt recovered
Strength of insolvency framework index (0- 16)
• Sum of the scores of four component indices:
• Commencement of proceedings index (0-3)
• Management of debtor’s assets index (0-6)
• Reorganization proceedings index (0-3)
• Creditor participation index (0-4)
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Doing Business 2019 Palau
Resolving Insolvency - Palau
Indicator Palau East Asia & OECD high Best Regulatory
Pacific income Performance
Recovery rate (cents on the dollar) 31.0 35.5 70.5 None in 2017/18
Time (years) 2.0 2.6 1.7 0.4 (Ireland)
Cost (% of estate) 22.5 20.6 9.3 1.0 (Norway)
Outcome (0 as piecemeal sale and 1 as going 0 .. .. ..
concern)
Strength of insolvency framework index (0-16) 0.0 6.8 11.9 None in 2017/18
Figure – Resolving Insolvency in Palau and comparator economies – Ranking and Score
DB 2019 Resolving Insolvency Score
0 100
9.19: Marshall Islands (Rank: 167)
40.40: Regional Average (East Asia & Pacific)
37.64: Micronesia, Fed. Sts. (Rank: 123)
33.45: Samoa (Rank: 140)
16.68: Palau (Rank: 166)
0.00: Kiribati (Rank: 168)
Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These
scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.
Figure – Resolving Insolvency in Palau – Time and Cost
Time (years) Cost (% of estate)
6 38.0 38.0 38.0 40
5.3
35
Cost (% of estate)
5
30
Time (years)
4
22.5 25
20.6
3 2.6 20
2.0 2.0 2.0 15
2 1.7
9.3
10
1
5
0 0
East No Marshall Micronesia, OECD Palau Samoa
Asia Practice Islands Fed. high
& Kiribati Sts. income
Pacific
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Doing Business 2019 Palau
Figure – Resolving Insolvency in Palau and comparator economies – Measure of Quality
Palau 0
Kiribati 0 2 2 0
Marshall Islands 0
Micronesia, Fed. Sts. 6 2.5 0 3
Samoa 3 2.5 1 1
OECD high income 5.3 2.8 2.2 1.9
East Asia & Pacific 3.6 2.3 1.2 1
0 2 4 6 8 10 12 14
Sub-Indicator Score
Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4)
Reorganization proceedings index (0-3)
Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the
economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”
Figure – Resolving Insolvency in Palau and comparator economies – Recovery Rate
Recovery rate(cents on the dollar)
100
80
60
40 35.5
31.0
17.1 18.6
20
0.0 3.2
0
Palau Kiribati Marshall Islands Micronesia, Fed. Sts. Samoa East Asia & Pacific
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Doing Business 2019 Palau
Details – Resolving Insolvency in Palau
Indicator Answer Score
Proceeding foreclosure As there is no insolvency legal framework in Palau, after Mirage's default on payment, BizBank
would initiate foreclosure to enforce the security interest over the hotel property by filing an
application with the Palau Supreme Court.
Outcome piecemeal sale After court's decision on Mirage's case, BizBank would gain possession of Mirage's assets and
conduct piecemeal sale. The hotel will stop operating.
Time (in years) 2.0 The foreclosure procedure would take approximately 2 years in total until BizBank is repaid some
or all of the money owed to it. The delay is due to the time to process the appeal at the court when
the debtor attempts to stop the foreclosure proceeding.
Cost (% of 22.5 The cost associated with the case would amount to approximately 23% of the value of the debtor's
estate) estate. The main component of the cost is the attorneys' fees.
Recovery rate 31.0
(cents on the
dollar)
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Doing Business 2019 Palau
Details – Resolving Insolvency in Palau – Measure of Quality
Answer Score
Strength of insolvency framework index (0-16) 0.0
Commencement of proceedings index (0-3) 0.0
What procedures are available to a DEBTOR when commencing insolvency proceedings? N/A 0.0
Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? N/A 0.0
What basis for commencement of the insolvency proceedings is allowed under the N/A 0.0
insolvency framework?
Management of debtor's assets index (0-6) 0.0
Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0
and services to the debtor?
Does the insolvency framework allow the rejection by the debtor of overly burdensome No 0.0
contracts?
Does the insolvency framework allow avoidance of preferential transactions? No 0.0
Does the insolvency framework allow avoidance of undervalued transactions? No 0.0
Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0
commencement of insolvency proceedings?
Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0
assigned to post-
commencement
creditors
Reorganization proceedings index (0-3) 0.0
Which creditors vote on the proposed reorganization plan? N/A 0.0
Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0
least as much as what they would obtain in a liquidation?
Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0
does each class vote separately and are creditors in the same class treated equally?
Creditor participation index (0-4) 0.0
Does the insolvency framework require approval by the creditors for selection or No 0.0
appointment of the insolvency representative?
Does the insolvency framework require approval by the creditors for sale of substantial No 0.0
assets of the debtor?
Does the insolvency framework provide that a creditor has the right to request information No 0.0
from the insolvency representative?
Does the insolvency framework provide that a creditor has the right to object to decisions No 0.0
accepting or rejecting creditors' claims?
Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the
economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”
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Doing Business 2019 Palau
Labor Market Regulation
Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website
(http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate
ease of doing business score or ranking on the ease of doing business.
The most recent round of data collection was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
Hiring To make the data comparable across economies, several assumptions about the
(i) whether fixed-term contracts are prohibited for worker and the business are used.
permanent tasks; (ii) maximum cumulative duration
of fixed-term contracts; (iii) length of the The worker:
probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work
experience.
Working hours - Is a full-time employee.
(i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory.
week; (ii) premiums for work: at night, on a weekly
rest day and overtime; (iii) whether there are The business:
restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy).
day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city.
nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city.
same night hours as men; (v) length of paid annual - Has 60 employees.
leave. - Is subject to collective bargaining agreements if such agreements cover more than
50% of the food retail sector and they apply even to firms that are not party to them.
Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than
(i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining
workers; (ii) whether employer needs to notify agreements.
and/or get approval from third party to terminate 1
redundant worker and a group of 9 redundant
workers; (iii) whether law requires employer to
reassign or retrain a worker before making worker
redundant; (iv) whether priority rules apply for
redundancies and reemployment.
Redundancy cost
(i) notice period for redundancy dismissal; (ii)
severance payments due when terminating a
redundant worker.
Job quality
(i) whether law mandates equal remuneration for
work of equal value and nondiscrimination based on
gender in hiring; (ii) whether law mandates paid or
unpaid maternity leave; (iii) length of paid maternity
leave; (iv) whether employees on maternity leave
receive 100% of wages; (v) availability of five fully
paid days of sick leave a year; (vi) eligibility
requirements for unemployment protection.
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Doing Business 2019 Palau
Labor Market Regulation - Palau
Details – Labor Market Regulation in Palau
Answer
Hiring
Fixed-term contracts prohibited for permanent tasks? No
Maximum length of a single fixed-term contract (months) No Limit
Maximum length of fixed-term contracts, including renewals (months) No Limit
Minimum wage applicable to the worker assumed in the case study (US$/month) 708.4
Ratio of minimum wage to value added per worker 0.5
Maximum length of probationary period (months) n.a.
Working hours
Standard workday 8.0
Maximum number of working days per week 7.0
Premium for night work (% of hourly pay) 0.0
Premium for work on weekly rest day (% of hourly pay) 0.0
Premium for overtime work (% of hourly pay) 0.0
Restrictions on night work? No
Whether nonpregnant and nonnursing women can work the same night hours as men Yes
Restrictions on weekly holiday? No
Restrictions on overtime work? No
Paid annual leave for a worker with 1 year of tenure (working days) 0.0
Paid annual leave for a worker with 5 years of tenure (working days) 0.0
Paid annual leave for a worker with 10 years of tenure (working days) 0.0
Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 0.0
Redundancy rules
Dismissal due to redundancy allowed by law? Yes
Third-party notification if one worker is dismissed? No
Third-party approval if one worker is dismissed? No
Third-party notification if nine workers are dismissed? No
Third-party approval if nine workers are dismissed? No
Retraining or reassignment obligation before redundancy? No
Priority rules for redundancies? No
Priority rules for reemployment? No
Redundancy cost
Notice period for redundancy dismissal for a worker with 1 year of tenure 0.0
Notice period for redundancy dismissal for a worker with 5 years of tenure 0.0
Notice period for redundancy dismissal for a worker with 10 years of tenure 0.0
Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 0.0
Severance pay for redundancy dismissal for a worker with 1 year of tenure 0.0
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Doing Business 2019 Palau
Severance pay for redundancy dismissal for a worker with 5 years of tenure 0.0
Severance pay for redundancy dismissal for a worker with 10 years of tenure 0.0
Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 0.0
Job quality
Equal remuneration for work of equal value? No
Gender nondiscrimination in hiring? No
Paid or unpaid maternity leave mandated by law? No
Minimum length of maternity leave (calendar days)? n.a.
Receive 100% of wages on maternity leave? n.a.
Five fully paid days of sick leave a year? No
Unemployment protection after one year of employment? No
Minimum contribution period for unemployment protection (months)? n.a.
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Doing Business 2019 Palau
Business Reforms in Palau
In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies
implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented
by economies in all regions. The following are reforms implemented since Doing Business 2008.
= Doing Business reform making it easier to do business. = Change making it more difficult to do business.
DB2018
Paying Taxes: Palau made paying taxes easier by introducing editable and populated GRT tax forms and a system of barcoded payments.
DB2015
Trading across Borders: Palau made trading across borders easier by improving the system for calculating customs duties and thereby
reducing customs clearance time.
DB2014
Getting Credit: Palau strengthened its secured transactions system through a new law that establishes a centralized collateral registry,
broadens the range of assets that can be used as collateral to include future assets, allows a general description in the security agreement of
debts and obligations as well as assets pledged as collateral, establishes clear priority rules outside bankruptcy for secured creditors and
allows out-of-court enforcement of the collateral.
Enforcing Contracts: Palau made enforcing contracts easier by introducing an electronic filing system for court users.
DB2009
Trading across Borders: Palau reduced the time for importing by automating customs declarations under the Customs Administration
Modernization Project.
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