Egypt COMP
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Egypt
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A copublication of the World Bank and the International Finance Corporation
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Copies of Doing Business 2008. Doing Business 2007: How to Reform, Doing Business in 2006:
Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth, and Doing Business in
2004: Understanding Regulation may be purchased at www.doingbusiness.org. Doing Business in
Egypt 2008 and other subnational and regional studies can be downloaded at no charge at www.
SubnationalDoingbusiness.org.
Contents
Doing Business in Egypt 2008 is the first subnational Overview 1
Doing Business report in the Middle East and North
Africa. The report covers three cities and governorates Starting a business 5
(administrative regions)--Cairo, Alexandria and As-
siut--that are compared with each other, and with 178 Dealing with licenses 8
countries around the world. Comparisons with other Registering property 12
cities, regions and countries are based on the indicators Reforms in other Doing Business topics 15
in Doing Business 2008.
Doing Business in Egypt 2008 measures the ways in Data notes 20
which government regulations enhance business activity
or restrain it at the subnational level. The report studies City tables 32
three Doing Business topics: starting a business, dealing List of procedures
with licenses and registering property. These indicators Starting a business 34
cover areas of governorate or district jurisdiction. Doing Dealing with licenses 37
Business in Egypt 2008 also provides information on re-
form efforts undertaken by the Egyptian government in Registering property 42
recent years that affect other Doing Business topics--get-
ting credit, protecting investors, paying taxes and trad- Acknowledgments 44
ing across borders.
The report aims to provide a tool for Egyptian cit-
ies to become globally competitive. By identifying good
practices and bottlenecks, it fosters peer-learning and
competition to reform across governorates. The indica-
tors are used to analyze the economic outcomes of the ied directly by Doing Business. To make the data compa-
regulations and to identify what reforms have worked, rable across countries, the indicators refer to a specific
where and why. type of business--generally a limited liability company.
The methodology has limitations. Other areas im- Doing Business in Egypt 2008 is the result of a re-
portant to business--such as proximity to major mar- quest from the Egyptian Ministry of Investment to FIAS,
kets, the quality of infrastructure services (other than a multi-donor investment climate advisory service of the
those related to trading across borders), the security World Bank Group. The report was produced with the
of property from theft and looting, the transparency of assistance of the General Authority for Investments and
government procurement, macroeconomic conditions Free Zones and the financial support of the United States
or the underlying strength of institutions--are not stud- Agency for International Development and the IFC.
Overview
If you opened a business in Assiut two years ago, you similar approach is needed to implement other reforms,
would probably have ended up traveling to Cairo to such as in dealing with licenses.
submit the needed paperwork. In addition to the travel Doing Business in Egypt 2008 covers three Doing
expenses, the trip would take many hours and require Business topics at the subnational level: starting a busi-
overnight stay at a hotel or with relatives. Why not take ness, dealing with licenses and registering property.
care of it in Assiut directly? Because every single permit, These indicators have been selected because they cover
document and authorization had to be approved in areas of local jurisdiction and practice. The governor-
Cairo. Today, you can save time and money--opening a ates benchmarked are: Cairo, the nation's capital; Assiut,
business at the one-stop shop in Assiut or Alexandria is representing Upper Egypt; and Alexandria, the gate to
as easy and almost as fast as it is in the capital. Soon, it the Mediterranean in the north.1 The results are pre-
will be even easier. sented here. Overall, doing business is easiest in Assiut,
This example illustrates two points. First, decen- most difficult in Alexandria, with Cairo in between. This
tralization works. In Egypt, reforms are initiated by the ranking may in part reflect the lower demand for busi-
central government and tend to be implemented first ness services in the more rural administrative regions.
in Cairo. Once the reforms demonstrate their utility, Egypt, as measured by Cairo, is the Doing Busi-
they can be adopted in the governorates all over the ness 2008 top reformer across 178 economies (table
country. In the case of business start-up, the General 1.1). Egypt made the single fastest climb in the overall
Authority for Investments and Free Zones (GAFI) cre- ranking--jumping 26 places in one year. Its reforms cut
ated a one-stop shop in Cairo that now also processes deep--with reforms in 5 of the 10 areas that are studied
tax registration and chamber of commerce membership. as indicators of the ease of doing business. This is the
The reforms reduced 10 procedures to 7 and cut start-up second time in 5 years that Egypt is among the 10 most
costs and time by more than half. Following the success reformist countries in the world.
in Cairo, the reforms were expanded across the country. Egypt is not the only large emerging economy to
The chairman of GAFI delegated the authority to process reform. China, Colombia, India, Indonesia, Nigeria,
business registration to the regional one-stop shops. As Turkey and Vietnam all improved the ease of doing
a result, entrepreneurs no longer have to travel to Cairo business. Other countries are reforming too. Two hun-
to start their business. dred reforms were introduced in 98 economies between
Second, inter-agency cooperation bridges adminis- April 2006 and June 2007. Reformers simplified busi-
trative gaps. Business start-up reforms proved success- ness regulations, strengthened property rights, eased tax
ful, because the different agencies delegated approval au- burdens, improved access to credit and facilitated trade
thority to the officials assigned to the one-stop shops. A across borders.
Doing Business in egYPT 2008
Table 1.1
The top 10 reformers in 2006/07
Starting Dealingwith Employing Registering Getting Protecting Paying Tradingacross Enforcing Closinga
Economy abusiness licenses workers property credit investors taxes borders contracts business
Egypt 3 3 3 3 3
Croatia 3 3 3 3
Ghana 3 3 3 3 3
Macedonia,FYR 3 3 3
Georgia 3 3 3 3 3 3
Colombia 3 3 3
SaudiArabia 3 3 3
Kenya 3 3 3 3
China 3 3 3
Bulgaria 3 3 3
Note: economies are ranked on the number and impact of reforms. First, Doing Business selects the economies that reformed in 3 or more of the Doing Business topics. second, it ranks these economies on
the increase in rank on the ease of doing business from the previous year. The larger the improvement, the higher the ranking as a reformer.
Source: Doing Business database.
With an average rank of 96 out of 178, countries in Throughout the country, builders face bureaucracy
the Middle East and North Africa are not globally com- in getting construction permits. In Assiut, construction
petitive. Doing business became easier in the majority permit-related activities require 19 procedures and 109
of Middle Eastern and North African countries between days; in Cairo, 28 procedures and 249 days; and in Alex-
April 2006 and June 2007. The region saw 25 reforms-- andria 30 procedures and 207 days. This is because cit-
including three changes for the worse--in 11 of its ies can impose additional inspections and pre-construc-
economies. Still, the Middle East and North Africa ranks tion procedures. Yet, the experience of other countries
only fourth in the world on the pace of reform--behind shows that more inspections do not necessarily mean
Eastern Europe and Central Asia, South Asia, and the safer buildings.
OECD high-income countries (figure 1.1). Property registries are operated by the governor-
ates, but procedures and costs are set centrally. This is in
Comparing business regulations in Assiut, contrast to a federal country like Mexico, where states
Alexandria and Cairo regulate as well as operate property registries, resulting
in different procedures, time and costs across locations.2
The requirements to start a business across districts and What differs in Egypt is the time it takes to meet all the
governorates in Egypt are similar, unlike in federal coun- legal requirements to register a property--33 days in
tries such as India or Brazil. All governorates share the Assiut but 159 days on the outskirts of Alexandria. The
same legal and regulatory framework--the company law process is most time-consuming in Cairo, where entre-
159 of 1981 and law 8 of 1997--which guides business preneurs have to wait more than 6 months.
start-up procedures. Once GAFI streamlined the start- In the last two years, doing business in Egypt has
up process in Cairo, all it took was a political decision become more affordable--the minimum capital re-
to delegate decision-making authority to the one-stop quired to start a business and the costs of registering
shops in the governorates for them to implement the property and dealing with licenses have been slashed.
same easy process. Today, Assiut and Alexandria have The costs are very similar across cities for the three
only one procedure not found in Cairo, because the indicators measured at the subnational level. But from
regional one-stop shops do not have access to check an international perspective, the cost remains relatively
the company name directly. In addition, there is a 5- high. Egyptian cities rank 102 of 178 economies in the
day delay in Alexandria and Assiut because tax cards cost of starting a business, and 119 in the cost of dealing
are still centrally issued in Cairo. Soon this will change. with licenses. Egypt fares better in the cost to register
Then, opening a business will take the same time in all property. Assiut, where the cost is 0.7% of the property
3 cities. value, would rank 20 globally.
oVeRVieW
FIGURE 1.1
Reforms in the Middle East and North Africa--too slow based on the Doing Business methodology, but mea-
suring business regulations in governorates other than
Countries that made at least one positive reform in 2006/07 (%) Cairo, would be done. Third, GAFI would convene a
Eastern Europe working group of approximately 50 professionals from
& Central Asia 79
all government agencies to periodically assess the regu-
South Asia 63 latory environment.
OECD
high income 63 The result was a reform focus that went beyond the
Middle East topics measured by Doing Business to encompass the
& North Africa 59 entire business environment. Over a period of 4 months,
Sub-Saharan
Africa 52 the working group--or specialized sub-groups--held
East Asia 15 meetings. Participants discussed the 10 Doing Busi-
& Paci c 46
Latin America ness indicators in detail, identified specific reforms and
& Caribbean 36 searched for methods of implementing and monitoring
them. Steadily, public officials started to see themselves
Source: Doing Business database. as facilitators rather than regulators.
Egypt's turnaround was the result of strong resolve
What gets measured, gets done and hard work. Egypt's Doing Business global rank-
ing improved markedly in 5 of the 10 areas measured
Publishing comparable data on the ease of doing busi- by Doing Business. Some of the reforms involved legal
ness inspires governments to act. In September 2006, changes and administrative streamlining of require-
Doing Business ranked Egypt 152 out of 175 economies ments and processes. It has become easier, faster and,
on the ease of doing business--last in the Middle East.3 especially, less expensive to do business in Egypt. This
To address this unfavorable ranking, GAFI formed a task pace of reform needs to be maintained for Egypt to catch
force with representatives from 10 different government up with the best-performing countries.
agencies to study the rankings. The group's first reaction
was to criticize the report's methodology, use of private Comparisons among cities--strong driver of reform
sector respondents and narrow focus. Despite these con-
cerns, it concluded that the report reflected a fundamen- Comparisons among cities within a country are strong
tal reality: regulatory `red tape' was indeed a challenge drivers of reform. That was the case in Mexico, where a
and likely discouraged new business in Egypt. subnational Doing Business study covering 12 states was
The Ministry of Investment took note. Doing Busi- first published in 2005. The study created competition
ness is the world's most widely quoted report of its kind to reform, as governors and mayors found it difficult to
and a better ranking would attract positive international explain why it cost more to comply with administrative
attention. Because the report identified specific areas procedures in their state or city as compared to their
in need of reform, it enabled the ministry to mobilize neighbors--despite sharing identical federal laws and
efforts across government agencies to work toward im- regulations. The second benchmarking in 2006 showed
proving performance in Doing Business indicators. This that 9 of the 12 states measured one year earlier had
cooperation, in turn, had the potential to improve the reformed in at least one of the areas benchmarked by
investment climate even in areas not covered by the 10 Doing Business. Governors realized that simple ad-
indicators. It was time to act. ministrative reforms could make their states and cities
A process of self-questioning began: What do we nationally and globally competitive. Most importantly,
need to do to accelerate the pace of reform? How can states could adopt best practices from their reforming
Egypt become more competitive? To seek clarity on neighbors.
these questions and develop a reform strategy, Minister In Egypt, officials in governorates and districts can
Mahmoud Mohieldin and GAFI's (then) chairman Dr. learn from each other by adopting good regulations and
Ziad Bahaa El-Din conferred with the Doing Business practices that already exist elsewhere in the country. This
authors. As a result, three decisions were taken: First, is especially true when it comes to the time it takes to
the Doing Business methodology would be explained in register property or deal with licenses. If Cairo were to
detail to the agencies undertaking reform at a workshop adopt Assiut's speedy property registration processes, for
in Cairo. Second, a special in-depth subnational study example, the time to register property would drop from
Doing Business in egYPT 2008
Table 1.2 Global FIGURE 1.3
Best practices in Egypt compared internationally ranking Shareholders bene t from reform
(178economies) 3-year shareholder return (%)
Procedures to open a business
Cairo(7procedures) 80 Egypt
Negative reforms Positive reforms
Days to open a business
Cairo(9days) 16 60
Cost to open a business
Alexandria,Assiut,Cairo(8.60%ofincomepercapita) 10
40
Procedures to build a warehouse
Assiut(19procedures) 10
Days to build a warehouse 20
Assiut(109days) 5
Cost to build a warehouse 0
AlexandriaandCairo(7.9%ofincomepercapita) 119 �4 �2 0 2 4 6 8 10
Procedures to register property Number of reforms, 2003�06
Alexandria,AssiutandCairo(7procedures) 105 Source: Doing Business database, Morgan Stanley Capital International data.
Days to register property
Assiut(days) 58
Cost to register property far for ideas on how to communicate their efforts to a
Assiut(0.7%ofpropertyvalue) 0 national audience. They can learn from the successful
Source: Doing Business database media campaign launched by the Ministry of Finance to
advertise the tax reforms of 2005/06.
Payoffs from reform can be large. Higher rankings
193 to 33 days, just slightly longer than Austria or Chile. on the ease of doing business are associated with more
Cutting the time to deal with licenses to the level of Assiut growth, more jobs and a smaller share of the economy
would make builders in other Egyptian cities competitive in the informal sector.4 Georgia, last year's top reformer,
with builders in Singapore. Just adopting good practices now has 15 registered businesses per 100 people--the
of other governorates, without having to change any laws same as Malaysia.5 Egypt is an example of how simplified
or regulations can make Egypt more competitive. Cur- regulations encourage entrepreneurs to start their own
rently, even the best Egyptian cities are not internation- business (figure 1.2).
ally competitive on some indicators (table 1.2). It is the upside potential of a country that creates ex-
Sometimes reforms are implemented in Cairo with- pectations and attracts investors. They find it in econo-
out well a articulated communication strategy. The mies that are reforming--regardless of the starting point.
result is that, for example, certain fees may be charged Indeed, equity returns are highest in countries that are
in the administrative regions even after they have been reforming the most (figure 1.3). With emerging markets
abolished by law. Egyptian reformers need not travel aggressively improving their business regulations, there
has hardly been a better time to invest.
FIGURE 1.2
More entry after reform
Notes
Increase in business entry after reform (%) Saudi
Arabia
81
Egypt 1. Cairo and Alexandria are urban governorates, that is, the
72 city and governorate are contiguous. Assiut is a city in a
demographically mixed (urban and rural) governorate of
Mauritius the same name. Governorates are divided into districts.
52 2. World Bank. 2006. Doing Business in Mexico 2007: Com-
paring Regulation in the 31 states and Mexico City. Wash-
ington, D.C.: World Bank Group.
After
reform Madagascar
Finland Guatemala Jordan 26 3. This ranking reflects corrections to the ease of doing
22 23 24 business index.
4. Djankov, Simeon, Caralee McLiesh and Rita Ramalho.
2006. "Regulation and Growth." Economics Letters 92(3):
Before
reform 395-401.
Source: Doing Business database. 5. World Bank. 2007. Doing Business 2008. Washington,
D.C.: World Bank Group.
5
Starting a business
Rasha wants to sell her scarves in a store instead of a stall the same can be done with only 7 procedures, 9 days and
at the marketplace in Alexandria. Though her business is costs of 28.6% of income per capita. The minimum capi-
good, she cannot expand it. The good news for Rasha is tal requirement is now 12.9% of income per capita.
that starting a formal business is simpler, faster and more The boldest reform in 2006/07 was to cut the mini-
affordable than ever before. She can now register her mum capital requirement. Last year, new firms had to
business in a new office in Alexandria rather than go to put aside 50,000 Egyptian pounds. A ministerial decree
Cairo. Once her business is legal, she can formally employ amended article 57 of the Executive Regulation of the
someone to help her--and she can get a business loan. Company Law, cutting the minimum capital requirement
Simpler start-up procedures are associated with new to 1,000 Egyptian pounds or 12.9% of income per capita.
formal businesses. In countries where the procedures Entrepreneurs now have an extra 49,000 Egyptian pounds
are cumbersome and costly, entrepreneurs like Rasha to invest in their businesses. In the future, Egypt could
may have no choice but to remain in the informal sector. follow the example of Saudi Arabia, which scrapped the
Without access to courts and credit, and in constant fear requirement entirely last year. It would join the 65 coun-
of harassment by public officials, informal businesses tries that have no minimum capital requirement.
remain small and have low productivity. When reforms Improvements continued at the GAFI one-stop shop
make it easier to legalize their operations, the informal in Cairo. The number of procedures fell from 10 to 7.
businesses are the first to register.1 Furthermore, the
FIGURE 2.1
reforms to ease the entry of new firms are relatively easy Top 10 reformers in business start-up
and not too costly to implement.2 Often they do not re-
quire major legislative changes. Average improvement
Reforms to ease the entry of new firms are popular. 2006 Top
reformers
Egypt is one of the 39 countries that made business Saudi Arabia
start-up simpler, faster or cheaper in 2006/07 and one 30% Egypt
2007
of the 18 that reformed for the second year in a row. In 37% Georgia
45%
this area, Egypt was the second biggest reformer in the Madagascar
56% Paraguay
world, surpassed only by Saudi Arabia (figure 2.1). Estonia
Egypt simplified procedures, cut costs and sharply Belarus
reduced the minimum capital requirement. In 2004, Macedonia, FYR
Belgium
opening a business in Egypt, represented by Cairo, re- Mauritius
quired 13 procedures, 43 days and cost 63% of income Procedures Time Cost Paid-in
per capita. The minimum capital requirement--the put- minimum
capital
aside-capital--was 815.6% of income per capita.3 Today, Source: Doing Business database.
6 Doing Business in egYPT 2008
Table 2.1 register employees with the national authority of social
Where is it easy to start a business--and where not? insurance in Alexandria. The time to open a business in
Paid-in
Cost minimum capital Egypt compares well with 11 days in Tunisia, 12 days
Procedures Time (%ofincome (%ofincomeper
City in Morocco and 15 days in Saudi Arabia, and is much
(number) (days) percapita) capita)
Alexandria 8 15 8.6 1.89 shorter than the 35 days in Kuwait (figure 2.3).
Assiut 8 1 8.6 1.89 The cost of starting a business is the same across
Cairo 7 9 8.6 1.89 the three cities--28.6% of income per capita. It dropped
Source: Doing Business database by more than half last year after the fees to publish the
company's notice in the Investment Gazette fell from
Fees dropped too. The entrepreneur can now register for 2,000 to 150 Egyptian pounds. Start-up costs in Egypt
taxes at the chamber of commerce directly through the compare well with 32.3% of income per capita in Saudi
one-stop shop. As a result of the reforms, the start-up Arabia and 36.9% of income per capita in the United
time and costs were cut by more than half. Furthermore, Arab Emirates. Nevertheless, starting a business is
following the model in Cairo, one-stop shops are now cheaper in Kuwait (1.6%), Tunisia (8.3%) and Morocco
operating in three other cities--Alexandria, Assiut and (11.5%). In the 10 best-performing countries globally,
Ismailia. Local entrepreneurs do not need to go to Cairo the entrepreneurs pay less than 1% of income per capita
to open their businesses. to start a business.
Business start-up takes 7 procedures in Cairo and Evidence shows that reform efforts pay off. Reducing
one additional procedure in both Alexandria and Assiut the minimum capital requirement from 50,000 Egyptian
(table 2.1). In both cities, the GAFI one-stop shops need pounds to 1,000 allows more companies to register. From
to send a fax to the central commercial registry in Cairo February to June 2007, following the issuance of the re-
to check that the company name is not already being lated decree, more than 200 such companies registered.
used by another company. By reducing procedures to 7 This represents 33.4% of new limited liability companies
or 8, the three Egyptian cities are approaching the OECD registered during the period.4 Overall, the number of
average of 6 procedures. companies registered in the 3 cities studied during the
It takes 9 days to establish a business in Cairo. The 6 months after the reform grew by 72% compared with
same process takes 14 days in Assiut and 15 days in 2006 (figure 2.4). Since the reform of the GAFI one-stop
Alexandria (figure 2.2). The process is longer outside of shop in 2004, the total number of companies registered
Cairo because only temporary tax cards can be issued in Cairo has more than doubled: 5,700 were registered in
in Assiut and Alexandria. The tax authority in Cairo 2005 compared with 2,660 in 2003.5
processes the final tax card, which the business owner New business registrations in Assiut and Alexandria
receives in the mail. A computerization project is under- remain relatively low. The impact of reforms in cities
way so that one-stop shops outside Cairo can issue the outside of Cairo may be lagging because the reforms were
tax registration card locally. It also takes 1 day longer to not communicated sufficiently. It could also be that long-
FIGURE 2.2 FIGURE 2.3
Starting a business in Alexandria Starting a business in Egypt--quick but costly
Time to start a business Cost to start a business Time Cost 70 Middle East
(days) (% of GNI (days) United Arab (% of income & North Africa
region
Time per capita) 60 Emirates per capita)
15 30 60
Cost
45 50
Register for taxes
10 20 Middle East 40 United Arab
& North Africa Kuwait Emirates
region 30 30 Saudi
Arabia
Egypt
5 10 Saudi 20
OECD: Arabia
high-income 15 Morocco
Tunisia 10 Morocco
Egypt Tunisia
high-income
OECD:
0 1 Procedures 8 0
0 0 Kuwait
Source: Doing Business database. Source: Doing Business database.
sTARTing A Business 7
FIGURE 2.4
New registrations--before and after reform starting the computerization of the commercial registry
at the GAFI one-stop shop. This will make it possible
Companies registered in Alexandria, Assiut and Cairo to certify without delay that the company name is not
150 already in use. The next step is to allow entrepreneurs to
search for the company name online. The internet can
2007 also provide them with other information such as details
100 After
reform on procedures, fee schedules and working hours of the
relevant agencies. With some simple legislation to allow
electronic signatures, the internet can be used to file
50 2006 business registrations, as in Australia, Belgium, Canada,
Before
reform Singapore and the United States, as well as in Moldova
and Vietnam. Almost half of the countries benchmarked
0
January February March April May June by Doing Business have such laws, and a dozen others
have draft laws in parliament. Making registration elec-
Source: Doing Business database. tronic cuts time--by more than 50% on average. Paper
registration remains available for those without Internet
entrenched habits take time to change. Finally, lower access.
registration numbers may mean that more decentraliza-
tion is necessary. While basic business registration can be Lower start-up fees
completed at any of the one-stop shops, some additional Egypt cut start-up fees by half last year by reducing
administrative procedures must still be completed in publication fees. Still, lowering other fees could make
Cairo. For example, manufacturing firms need to obtain the cost of starting a business in Egypt comparable to
operating licenses from the Industrial Development Au- Tunisia and Morocco. To start, several fees--notary fees,
thority in the capital. But this is changing: an ongoing legal fees, chamber of commerce fees, service charges
project with the IFC will allow entrepreneurs in Alexan- and establishment fees--are charged as a percentage of
dria to obtain their licenses at the GAFI one-stop shop. company capital. When combined, they amount to 1.1%
of the capital. Yet, the services required are the same re-
What to reform? gardless of the size of the capital. Countries with the most
efficient registration systems, such as Canada and Aus-
Establish one-stop shops in more governorates tralia, charge fixed fees. Egypt could adopt this practice,
The GAFI one-stop shops work. Other Egyptian cit- establishing fixed fees based on the service rendered.
ies could benefit too. One-stop shops can show results
quickly when their officials have decision making power. Notes
Since 2003, one-stop shops cut on average 5 procedures
and more than halved delays in 24 countries.6 1. World Bank. 2007. Doing Business 2008. Washington
D.C.: World Bank Group.
Communicate reforms to the public 2. The introduction of a fast-track system to start a business
in Portugal cut the time by 46 days in 2006. The reform
Most reformers are bad marketers. Advertising the was implemented in five months and cost US$ 350,000.
changes can ensure that entrepreneurs know how much World Bank. 2005. Doing Business in 2006: Creating Jobs.
easier registration has become. Egypt's successful mar- Washington D.C.: World Bank Group.
keting campaign after the tax reform is a good example 3. World Bank. 2004. Doing Business in 2005: Removing Ob-
to follow. Another example is El Salvador, where the stacles to Growth. Washington D.C.: World Bank Group.
president himself inaugurated the improved one-stop 4. Data on new businesses provided by GAFI.
shop--widespread media coverage made sure that ev- 5. Stone, Andrew. 2006. "Establishing a Successful One Stop
eryone knew about the new system. Shop: The Case of Egypt." Paper presented at the IMF/
AMF High-Level Seminar on Institutions and Economic
Make registration electronic Reform in Arab Countries. Abu Dhabi, December 19-20,
2006.
Technology can create a unified database of business 6. World Bank. 2007. Doing Business 2008. Washington
information to be shared across districts, governorates D.C.: World Bank Group.
and government agencies. Egypt took the first step by
8
Dealing with licenses
"The first time I applied for a building permit, I felt like The good news is that dealing with licenses is easier
I had dropped my carefully prepared files into a black in other Egyptian cities than in Cairo (table 3.1). In fact,
hole. It took me several months to understand how the ranked against other regions around the world, Assiut
process worked. I'm not even sure I completely under- outperforms the average country in Latin America and
stand it now," comments Hashim, a young Egyptian the Caribbean, the Middle East and North Africa, South
engineer. Magdy, a seasoned architect, still has trouble Asia, Sub-Saharan Africa and Eastern Europe and Cen-
explaining the rules and regulations for obtaining a tral Asia. Alexandria and Cairo lag behind these regions
building permit after two decades in the business. "I (figure 3.1). Still, Assiut can do more to facilitate the
guess it's all about whom you know in the district and licensing process. Cutting down on pre-approval proce-
how often you've been through the process. I rely on my dures and reducing the permit processing time could put
contacts to work out the details for me." The lesson here? Assiut on par with OECD countries.
If you're a first-time applicant for a building permit in It takes 26 procedures on average to get a construc-
Egypt, you're out of luck. tion license in Egypt. However, there are wide variations
Doing Business studies the construction industry as in the number of procedures necessary across gover-
an example of licensing regulations that businesses face. norates and districts. In Alexandria, for example, the
It measures the procedures, time and cost to build a municipal licensing office requires two additional pre-
commercial warehouse; hook it up to basic utilities; and
FIGURE 3.1
formally register it. In Cairo, the process consists of 28 How Egyptian cities rank globally on dealing with licenses
procedures that take 249 days and cost 474.9% of income Global rank
per capita. By contrast, in OECD countries it takes an (178 economies) Highest
average of 14 procedures, 153 days and 62.2% of income OECD:
per capita. In the Middle East and North Africa, only high-income 30
East Asia &
Iran scores lower than Egypt. the Paci c 60
Latin America
& the Caribbean 74 Assiut
Table 3.1 Middle East 90
Where is it easy to deal with licenses--and where not? & North Africa
Sub-Saharan 120
City Procedures Time Cost Africa
(number) (days) (%ofincomepercapita)
Eastern Europe
Alexandria 0 07 7.9 & Central Asia 150 147 Alexandria
Assiut 19 109 75. 164 Cairo
Cairo 8 9 7.9 178 (lowest)
Source: Doing Business database Source: Doing Business database.
DeALing WiTH LiCenses 9
FIGURE 3.2
Fewer construction procedures in Assiut this put Egypt on par with France or Spain, countries
that introduced a 30-day statutory time limit for issu-
Number of procedures
5 Utilities ing building permits in 2006? Definitely not. In Egypt,
5 a builder submits the application for a building permit
4 After at the municipal licensing office and then requests pre-
4 construction
approval project clearances from various government
5 agencies such as the water authority, the electricity au-
10 During
10 construction thority, the tax authority and civil defense. However, the
4 municipality does not start counting the 30 days until all
1 pre-approval procedures are completed. Moreover, mu-
9 9 11 Before nicipal officials can indefinitely delay the issuance of the
construction building permit beyond the statutory limit. As a result,
it takes an average of 90 days to obtain a building permit
Assiut Cairo Alexandria in each of the three cities from the submission of the ap-
Source: Doing Business database. plication to the issuance of the permit. Experiences from
around the world show that statutory time limits are
construction procedures (figure 3.2). First, Alexandrians more effective when coupled with "silence is consent"
have to obtain a location permit--in addition to the rules. The latter keep bureaucrats on track and lessen
cadastral extract required in all cities--before submit- the chances of lost or neglected permit applications and
ting their permit applications. This is because the zoning endless delay tactics.
maps are outdated and there is no master plan. This per- Pre-approval clearances are another cause of delay
mit alone adds 5 days to the total time to get a license. in Egyptian cities. For example, obtaining a clearance
The second procedure unique to Alexandria is the from civil defense typically takes 60 days in Cairo, 45
requirement for project clearance from the Ministry days in Assiut and 30 days in Alexandria. Only a handful
of Agriculture. White ants infest significant portions of countries in the world even require an approval from
of land in the city. Rather than exterminating the pest the civil defense agency or local police to obtain a build-
themselves, the ministry officials in Alexandria inspect ing permit. Lebanon, Mauritania, Russia, Tunisia and
construction sites before excavation begins to make sure Turkey are in this group. None of them belongs to the
that builders have dealt with the ant problem. Ants end top 25 countries on the ease of dealing with licenses.
up being a costly and time-consuming factor every time The cost of dealing with licenses is the same in Cairo
a business decides to start a construction project. and Alexandria--474.9% of income per capita. Costs are
In Assiut there are only two inspections from the only slightly higher in Assiut--475.4% of income per
municipality--one after laying the foundations and one capita, where municipal authorities charge a small fee of
after construction is completed. Compare this to Cairo 20 Egyptian pounds for every inspection.
and Alexandria, where inspectors sometimes visit a Two reforms in 2 years significantly cut construc-
construction site every week--11 times on average--for tion-related licensing costs for builders. First, building
a 30-week construction project. When asked about the permit fees dropped from 1% to 0.2% of the building
inspections in his district of Cairo, one municipal admin- value in early 2006. Second, Law 83 of 2006 amended
istrator admits: "The process is random. An inspector can Law 70 of 1964 governing notarization and registration
decide to visit a site on his way home from work as often costs at the real estate registry. Previously, registering
as every week." Random inspections waste municipal re- a newly constructed building cost 3% of the building
sources and offer opportunities for bribes. The authorities value. Law 83 introduced a low flat fee of 2,000 Egyptian
lose out because they cannot systematically monitor the pounds (US$ 348) to register a property or building.
structural soundness of their buildings and businesses Combined, the reforms have led to cost reductions of
lose time and money every time they have to stop con- almost 700% of income per capita (figure 3.3).
struction to pay off an inspector. There are other initiatives underway in various cities
The construction regulations themselves are one of to reform the licensing process. In Cairo, three districts
the main causes of the delays. Law 106 of 1976 and Law launched pilot one-stop shops in 2006. These one-stop
101 of 1997 stipulate a 30-day statutory time limit for shops are examples of how Egypt's cumbersome per-
municipal authorities to issue a building permit. Does mitting process could be improved. Applicants enter
10 Doing Business en M�XiCo 2007
FIGURE 3.3
Reforms made registering property in Egypt cheaper from the central agencies. Meanwhile, ministries are re-
luctant to shift their employees to the municipalities on
Cost to obtain licenses
(% of income per capita) a permanent basis. One solution would be to work out a
part-time system, whereby representatives from the dif-
1,169% ferent agencies work at the one-stop shop a few times a
983% week. GAFI set up such an agreement with the Ministry
Cost of Defense, and now a ministry representative is avail-
able at the one-stop shop twice a week.
475% Make the permitting process transparent
The licensing one-stop shop facility in the Maadi district
Reform of Cairo prominently displays billboards featuring the
building permit requirements. The billboards allow busi-
2005 2006 2007 ness owners to access the information they need after
Source: Doing Business database. working hours. But builders need more than a checklist
of required documents. They need to understand how
the district of Maadi's one-stop shop and almost forget the process works. In 2001, the municipal authorities
that they are in a government office. Inside the air-con- in Riga (Latvia) created a step-by-step guide with a list
ditioned and organized room, applicants encounter a of required documents and flowcharts showing which
modern client attention center, including LCD panels offices to visit and their addresses and working hours.
displaying registration numbers and flashing tips for ap- This manual helped cut 2 months off of what used to be
plicants. More disarming, however, are the friendly faces a 2-year process. Following the Latvian example would
behind the glass windows--Egyptian officials offering give builders in Egypt confidence and trust in the con-
fast service with a smile. "After 6 months of computer struction permit process and empower them to demand
and customer service training, I'm ready to start work the enforcement of statutory time limits.
and do my best to facilitate the process for citizens,"
comments Rawya, a newly trained employee at the one- Computerize licensing applications and processing
stop shop. Applicants submit their applications at one The governorate of Assiut and the Ministry of Housing,
window. Then they make their payments and receive a Utilities and Urban Communities list the requirements
registration number to track their application. To cite to obtain a building permit on their respective web sites.
the district head, "This system removes the possibility This is not the case in Alexandria. Information about the
of `wasta' (connections)--it will no longer matter whom procedures and process for obtaining a building permit
you know in the licensing office." helps businesses with their project planning. In Oman
and Singapore, free downloadable application forms and
What to reform? online documentation processing save builders time and
Create one-stop shops for licenses and permits money. In Egypt, having forms online can save busi-
nesses at least one trip to the municipality--that can
There is no need to re-invent the wheel: one-stop shops mean a whole afternoon not wasted in traffic.
work. Governorates and the Ministry of Housing, Utili-
ties and Urban Communities can find inspiration in Introduce risk-based inspections
GAFI one-stop shops for business start-ups. The reduc- Countries with a system of risk-based inspections have
tion in procedures, time and cost are proof that the fewer inspections than countries with random inspec-
single window principle is especially effective in Egypt, tions. Countries with risk-based inspections do not
where a complex system of approvals permeates most compromise the general safety of their citizens. Instead
facets of doing business. of visiting the site at whim, inspectors stick to a schedule
The challenge is convincing the various agencies like based on the completion of each construction phase.
Civil Defense, the Tax Authority and utility authorities In countries as diverse as Finland and Nigeria, certi-
to send a representative to a centralized location. The fied testing companies conduct testing only after major
current system does not allow governors to request staff stages of the construction project are completed. In
DeALing WiTH LiCenses 11
Singapore, engineers and technical experts are trained to
become "qualified experts." These experts are employed
by private companies, but have a professional duty to the
state to inspect construction sites and report any safety
breaches they find.
Digitize zoning maps
Governorates should digitalize zoning maps and cadas-
tral records and update them regularly so that businesses
do not need to obtain zoning permits and cadastral
extracts prior to applying for a building license. No Eu-
ropean Union country requires a zoning permit or a ca-
dastral extract to submit a building permit application.
1
Registering property
"My house is mine and not mine. It is mine because I in- While the same 7 procedures are required to register
herited it from my father. It is not mine because it is not property nationwide, the time and cost to register prop-
registered in my name. I cannot spend 6 months without erty vary across governorates due to different local prac-
work in order to go through the property registration tices. Registering property is easiest in Assiut--with 33
process. My mother works at home. I often worry that days at a cost of 0.7% of property value. An entrepreneur
people will seize my house when I'm away." So says Hani, in Alexandria spends 5 months to do the same. In Cairo,
who sells newspapers in the streets of Cairo. registering property is the most challenging--it takes
Countries that make property registration simple, 193 days and costs 1.0% of property value (table 4.1).
fast and reasonably priced have more properties regis- The example of well-performing Assiut shows that
tered formally. That leads to greater access to finance districts and governorates can look for good practices
and greater opportunities to invest.1 Country experience within Egypt--not just internationally. If other locations
shows the benefits of formalizing titles. According to were to adopt Assiut's time and cost to register prop-
a recent study in Peru, property titling increases total erty, Egypt would climb 50 places in the global ranking
labor force working hours by reallocating work hours regarding timely and inexpensive property registration,
from inside the home to the formal labor market.2 An- comparable to Germany.
other study, in Argentina, found up to 47% higher in- In Alexandria and Cairo, the longest procedure is
vestment rates when properties are formally registered.3 the drafting and approval of the purchase and sales con-
Similar research in Peru showed a 60% increase.4 tract by the lawyers syndicate. The entrepreneur has to
New Zealand is the world's best performer in prop- wait 1-and-a-half months in Alexandria and more than
erty registration: the entire process can be completed 2 months in Cairo. Then it takes another month in both
with 2 online procedures at a cost of 0.1% of the property cities for the contract to be signed at the real estate reg-
value. Lawyers certify land transfer documents on behalf istry. Compare that with Assiut where both procedures
of their clients and submit them electronically for regis- can be completed in 12 days (figure 4.1). Having the site
tration. Confirmation is returned within minutes. But
this efficiency is not limited to OECD countries--some Table 4.1
of the countries in the Middle East and North Africa are Where is it easy to register property--and where not?
not far behind. In Oman it takes 2 procedures and 16 City Procedures Time Cost
days to transfer a property from one domestic private (number) (days) (%propertyvalue)
company to another. In contrast, Egypt, as represented Alexandria 7 159 1.0
by Cairo in the global Doing Business report, ranks low Assiut 7 0.7
Cairo 7 19 1.0
on the ease of registering property in the world--101 out
of 178 countries. Source: Doing Business database
RegisTeRing PRoPeRTY 1
FIGURE 4.1 FIGURE 4.2
Registering property in Alexandria and Assiut Cutting fees increased revenue in Egypt
Time to register property Cost to register property Six months'revenue
(days) Alexandria (% of property value) from property registration
159 days 5.9 (Egyptian pounds, 201
150 Seller and buyer sign the contract millions)
at the real estate registry
120 Registration
fee 3.0 145
Final contract is drafted and
90 approved by the lawyers' syndicate
60 Payment and issuance
of the inspection report Assiut Other
33 days fees 2.9
30 1.0
0 Before After Before After
1 Procedures 7 reform reform reform reform
Source: Doing Business database. Source: Doing Business database, Egyptian Ministry of State for Administrative Development.
inspected and obtaining the inspection report are other How did this happen? A property registration reform
sources of delay--it takes the measurement department working group was created to look at how fees could be
one month to do the inspection in Cairo and additional lowered. With the stroke of a pen, they converted the
42 days to issue the inspection report. In Alexandria, the registration fee paid by the buyer to obtain the contract
two procedures take a little over 2 months. The causes from the real estate registry from 3% of the property
of the delay in Alexandria and Cairo include lack of value to a low fixed fee schedule capped at 2,000 Egyp-
qualified personnel and outdated or inadequate equip- tian pounds. Other fees were abolished too--such as the
ment. In Assiut, the longest delay is at the real estate fee charged when submitting the request for registration
registry--almost half of the total time needed to register to the real estate registry, the 500 Egyptian pounds to get
property. the property inspected by the measurement department
It is also cheaper to complete all registration pro- and the 10,000 Egyptian pounds to obtain the inspection
cedures in Assiut--0.7% of property value as compared report. As a result, the total cost to register dropped from
to 1% in both Alexandria and Cairo. One of the reasons 5.9% to 1%. This reform made Egypt the top reformer in
are lower legal costs in Assiut. Theoretically, drafting the the Middle East and North Africa. The reform paid off:
final sales contract at the lawyers syndicate costs 0.5% of property registration increased in both urban and rural
property value (capped at 5,000 Egyptian pounds) in any areas in the 5 months after the reform (figure 4.3)
Egyptian city. In practice, the lawyers syndicate in Assiut
accepts a lower rate, 500 Egyptian pounds on average.
The increase in revenue from new registrations can
FIGURE 4.3
make up for the reduction in fees to register property, as More registration after reform--especially in rural areas
the recent reform in Egypt shows. One year ago, regis-
tering a property in Cairo cost 5.9% of property value. Deeds registered
(% increase after reform) 18.8%
Ninety percent of properties were either not registered
or registered at below market values.5 Then the govern-
ment decided to lower the rate. Today, it costs 1% of After reform 8.5%
(Jan�May 2007)
property value--one-fifth of the cost in Casablanca. As a
result, revenues from title registrations rose by 39% be-
tween the 6 months before the reform and the 6 months Before reform
(Jan�May 2006)
after (figure 4.2).
Urban Rural
Source: Doing Business database, Egyptian Ministry of State for Administrative Development.
1 Doing Business in egYPT 2008
What to reform? Notes
Simplify and combine procedures 1. Baharoglu, Deniz. 2002. "World Bank Experience in Land
Management and the Debate on Tenure Security." World
Each procedure can cause corruption and delays. Global Bank Housing Research Background � Land Manage-
ment Paper, July 2002. Binswanger, Hans, Klaus Deninger
data show that there is no need to have 7 separate pro- and Feder Gershon. 1995. "Power, Distortions, Revolt,
cedures to register a property. The procedures related to and Reform in Agricultural Land Relations." Handbook of
obtaining the contract from the real estate registry, sign- Development Economics Volume IIIB, Amsterdam: Else-
ing it, and picking up the new title could easily be com- vier.
bined. Egyptian cities could look to Armenia, Croatia, 2. Field, Erica. Forthcoming. "Entitled to Work: Urban
Ghana and the Dominican Republic as recent examples Property Rights and Labor Supply in Peru." Quarterly
Journal of Economics.
of successful reforms. 3. Galiani, Sebastian, and Ernesto Schargrodsky. 2006.
Publicize reforms "Property Rights for the Poor: Effects of Land Titling."
Working Paper. Buenos Aires: Universidad de San An-
Entrepreneurs in Assiut continue to pay property reg- dres and Universidad Torcuato Di Tella.
istration fees that have been officially abolished with 4. Field, Erica. 2005. "Property Rights and Investment in
the reforms in 2006. For example, an entrepreneur in Urban Slums." Journal of the European Economic Associa-
Assiut is charged 3 Egyptian pounds for submitting tion 3 (2�3): 279�90.
the registration request to the real estate registry, 250 5. Overseas Private Investment Corporation. 2005. "Egypt:
Egyptian pounds for getting the property inspected by Overview of the Housing Sector." Office of Economic De-
the measurement department, and 30 Egyptian pounds velopment, Issues Paper 1, July.
for signing the contract at the real estate registry. This
is because she is not aware of the reforms. Effectively
communicating central reforms to governorates and
districts and keeping local personnel informed should
be a priority.
Keep registry records updated and continue to
digitize records
Keeping records updated would cut the need for a new
valuation and site inspection by the measurement de-
partment each time a property is transferred. Countries
that transfer records from paper to electronic form
benefit from shorter processing times. Going electronic
makes it easier to identify errors and overlapping titles,
improving title security. Electronic records would solve
the numbering and filing problems in Assiut and pro-
vide a better organizational framework for Alexandria.
Introduce fast-track procedures
An important percentage of the property registration
time is spent in the real estate registry. Fast-track proce-
dures help prioritize the work of the registry and allow
entrepreneurs to focus on their business. Another ap-
proach to expedite registration is to set time limits at the
registry. This works best when registrars are evaluated
in their staff evaluation on whether they meet agreed
targets.
15
Reforms in other
Doing Business topics
With improvements in 5 of the 10 topics studied by and distribute credit information on borrowers. The
Doing Business, Egypt became the top reformer for information-sharing role of credit registries helps lend-
2006/07. Three of these topics are studied in more de- ers assess risk and allocate credit more efficiently, which
tail at the subnational level in previous chapters. This means that entrepreneurs do not need to rely on per-
chapter describes reforms in other Doing Business areas sonal relations when trying to obtain credit. Lenders can
undertaken by the central government in recent years. look at a borrower's credit history in deciding whether
Egypt made access to credit easier by establishing a to extend credit and what interest to charge--for banks,
private credit bureau. It promoted corporate governance past payment behavior is the best indicator of future
by becoming the first country in the Middle East to draft payment behavior.
a voluntary corporate governance code for companies Where credit registries and effective collateral laws
listed on the stock exchange. It made it easier for busi- are lacking--as they are in most poor countries--banks
nesses to pay taxes by reducing tax rates, simplifying tax make fewer loans.2 Credit to the private sector averages
compliance, reforming tax inspections and adopting the 8% of GDP in the 10 economies ranking at the bottom
presumption that tax payers are honest. The Egyptian on how well credit registries and collateral laws facilitate
government also worked hard to encourage trading credit markets. In the top 10 economies, it exceeds 130%
across borders by reforming customs and increasing of GDP.3
port efficiency.
FIGURE 5.1
Credit information reform--faster in the Middle East
Getting credit
Number of positive reforms
2005/06 2006/07
"The greatest obstacle to starting a business in Egypt is Middle East
getting the money for it," comments Ziad, a young en- & North Africa 2 5
trepreneur attempting to start his own business. "There Eastern Europe
& Central Asia 5 4
are thousands of gaps in the Egyptian market waiting Latin America 6 2
for entrepreneurs to fill, but getting the financing is im- & Caribbean
possible."1 One of the reasons is that banks do not have Sub-Saharan
Africa 1 2
enough information on the credit history of potential South Asia 2
clients--they cannot distinguish between low-risk and East Asia
high-risk borrowers. They end up rationing credit or & Paci c 2 1
charging high interest rates. OECD
high income 1
Access to credit may be expanded significantly with
the help of credit registries--institutions that collect Source: Doing Business database.
16 Doing Business in egYPT 2008
Expanding the set of information collected in credit Protecting investors
registries was the most popular credit-related reform
in 2006/07. The Middle East and North Africa imple- A good way for companies to get the cash they need to
mented the most reforms in this area--with 5 countries expand is to sell company stock to equity investors. This
launching credit bureaus or improving existing ones requires good corporate governance so that investors
(figure 5.1). Egypt is a good example. can provide financing without needing to oversee daily
The Egyptian banking federation has long pushed business operations. But minority shareholder protec-
for the creation of a private credit bureau. Initially, the tions continue to be weak in the Middle East and North
idea was to create the credit bureau within the Central Africa and local entrepreneurs face major challenges to
Bank. However, a change in the Central Bank's leader- get equity capital. For example, on one measure of inves-
ship changed the course of the reform. The new chair- tor protections, the ease of shareholder suits, Iran scores
man, Farouk El Okdah, decided that Egypt would follow zero out of 10, Morocco scores 1 and the United Arab
the global trend and outsource the credit bureau to the Emirates 2. Egypt does better--it scores 5.
private sector. This would allow the Central Bank to The "protecting investors" index measured by Doing
focus on supervision and regulation. In January 2006, Business takes a common case of self-dealing--the use
the board of directors of the Central Bank issued rules of corporate assets for personal gain. Three indices
and regulations for private credit bureaus, granting the of investor protection are constructed based on three
new credit bureau--named "I-score"--a license to oper- groups of questions: Do minority shareholders learn
ate. The company was legally established in late 2005. about the related-party transaction4 and the conflict of
The Social Fund for Development and 25 banks are all interest? If they are harmed, what can they do about
equal shareholders in the bureau. it? And finally, if they were to sue, how would they go
The credit bureau uses the data-sharing mecha- about proving their case? All three indices--the extent
nism already established between commercial banks of disclosure index, the extent of director liability index
and the Central Bank. This approach avoids duplicating and the ease of shareholder suits index--vary from 0 to
investments in data transmission technology. To jump- 10, with higher values indicating more protections or
start operations, the bureau initially concentrated on higher disclosure.
obtaining credit information from the 9 main banks, Rather than making legal changes, the Egyptian au-
representing around 70% of the credit market. "I-score" thorities have focused their efforts on raising awareness
then turned to consumer associations, which agreed to about the rights that investors have under existing laws.
guarantee borrowers access to their credit records. Most The laws do offer some strong protections, for example,
recently, telecommunication firms agreed to supply the rights of minorities to request that the company
information too. Throughout the process, the bureau open its books to investor scrutiny. This helps inves-
focused on building a strong network with the most ac- tors know what stakes directors have in proposed deals,
curate data possible. so that they can stop potentially harmful activities or
Almost 2 years after the decision was taken to launch sue for damages. Sharing information with investors is
a private credit bureau, "I-score" is starting to show signs one of the key building blocks to help protect minority
of life. According to the bureau's managing director, Mo- shareholder. But disclosure alone is not enough. Equally
hamed Refaat, "the biggest lesson we take away from this important is to make sure that looting by corporate in-
experience is the importance of doing things in parallel siders is punished.
rather than sequentially. It was important for us to work Egypt relies more on public regulators than private
on several different fronts at the same time." The results lawsuits to enforce investor rights. The securities regula-
of this approach have been impressive, but more remains tor--Capital Market Authority--functions as a special
to be done. Data quality issues have slowed down the is- court for shareholder disputes. Shareholders with 5% of
suance of credit reports and a targeted public awareness share capital can file a complaint. The Authority has the
campaign is yet to be launched. Nevertheless, Egypt's power to suspend shareholder resolutions that unfairly
first credit bureau has the potential to become a power- favor a group of shareholders.5 Since 1995, shareholders
ful tool to improve access to credit in Egypt. submitted 50 complaints to the Authority and its board
ruled in favor of the petitioning shareholders 29 times.6
Relying on public regulators does not replace the
courts. It is important for unhappy investors to be
ReFoRMs in oTHeR Doing Business ToPiCs 17
FIGURE 5.2
Better investor protection--higher market capitalization and more listed rms
Market capitalization to GDP Number of listed rms
Higher Higher
Lower Lower
Lowest Highest Lowest Highest
Countries ranked by strength of investor protection index, quintiles Countries ranked by strength of investor protection index, quintiles
Note: Relationships are signi cant at the 5% level and remain signi cant when controlling for income per capita. Higher values on the strength of investor protection index indicate greater protection.
See Data notes for details.
Source: Doing Business database.
Paying taxes
able to sue managers directly for misdeeds--including
improper personal gains, oppression of minority share- When it comes to taxes, there is always something to
holder interests and negligence in running the company. complain about. But taxes are essential. Without them
In Egypt, the existing legal framework needs upgrading. there would be no money to build schools, hospitals,
Only then will investors feel they can rely on the strength courts, roads, airports or other infrastructure that help
of the law to bring suit before a court and win. business to be more productive and society to be bet-
Protecting investors against self-dealing is just one ter off. Despite the fact that tax reforms attract intense
corporate governance issue, albeit an important one. political debate, they are widespread. The second most
Other investor protections--the election of directors, popular reform reported by Doing Business 2008 is in the
disclosure of remuneration or rules on takeover bids-- area of paying taxes. Compared globally, business taxes
are also important. Minority shareholders are not pro- are lowest in the Middle East and North Africa. Still,
tected in takeover transactions involving 66%-76% of some countries are better at collecting taxes than others.
shares, for example, because the buyer is not required to Egypt ranks 150 out of 178 economies around the world
make a mandatory tender offer to all shareholders. on the ease of paying taxes. Yet, it is also accomplishing
Some years ago, Egypt became the first country in much reform in little time.
the Middle East to draft a voluntary corporate gover- Egypt started to reform its tax system in 2004, with
nance code for companies listed on the stock exchange. the aim of attracting new taxpayers into the system. This
In 2006, a code of corporate governance for public enter- was to be achieved by lowering tax rates, eliminating ex-
prises was also issued. emptions, simplifying compliance, reducing the discre-
The government has also created an Institute of tionary power of tax inspectors and trusting the taxpayer
Directors, sponsored by the Ministry of Investment, to to act lawfully, but imposing harsh penalties otherwise.
train directors and raise awareness. Global experience All this was done in just 1 year (figure 5.3).
suggests that government ownership can undermine the In 2005, the Egyptian parliament approved Law
private sector culture that can best reach the intended 91/2005. It decreed that companies across the board
audience--corporate directors and business owners. would pay 20% tax on profit. Tax holidays and exemp-
The disclosure and approval of related-party trans- tions were eliminated. The withholding tax on interest
actions as well as the private rights of action for minority and royalties was reduced to a 20% flat rate. The personal
shareholders are important for developing strong equity income tax was changed in the same law. In addition
markets. Countries that provide both protections have to lower tax rates, tax administration was made easier
larger and more active stock markets, smaller block pre- and more transparent. Under the old law, the taxpayer
miums and more new listings (figure 5.2).7 In addition, was considered guilty until proven innocent. Now, it
reforms that counter self-dealing are associated with is the other way around. The system places trust in the
higher equity returns. Investors look for upside poten- taxpayer, but noncompliance can mean the payment of
tial, and they find it in reforming markets (figure 1.3). harsh fines or even jail time.
18 Doing Business in egYPT 2008
FIGURE 5.3
How Egypt added a million taxpayers
MAY '04 JAN '05 JAN '06
New reform-minded cabinet takes o ce Cabinet sets customs and tax reform as the major priorities
Draft of income tax law is prepared
Government announces intention to change tax code Media campaign informs the public about new law
Cabinet approves new law
Government sends law to parliament Little opposition, except from bene ciaries of tax breaks under old system
Private sector review and public discusion of new law
Executive regulations prepared
New law takes e ect,
Parliament approves new law retroactive for all of 2005
Law e ective for corporate income Tax o cials trained on new audit and record system
Source: Doing Business database.
Changing from administrative assessment to self- tion compared to the 25-page tax return they filled out
assessment meant a whole new way of doing business for in 2005. "The new corporate tax return is larger and
the tax authority. The major challenge was implement- more complex than the previous one," complained one
ing the reform. There was a perceived loss of control, accountant in Alexandria.
and mid-level management had to be convinced that
the changes were positive. Taxpayers also encountered Trading across borders
problems. They were used to being told what to pay.
Now they had to compute the tax obligation themselves. Easing trade across borders can diversify exports and
Some found it difficult to complete the tax forms. Mis- boost employment.9 Much is lost from delays in trad-
takes were common. Several sections of the form were ing. Each day that an export product is delayed reduces
left blank, because the taxpayers did not know how to exports by more than 1%. For time-sensitive agricultural
complete them and many tax officers were unable to products, reducing delays by 10% increases exports by
explain the changes. more than 30%.10 Complicated trading procedures also
To address these challenges, the Ministry of Finance inhibit investment: in a survey of large European mul-
launched one of the most comprehensive and widespread tinational corporations, 65% indicated that they would
public awareness campaigns in Egyptian history. In the add new investments in Africa and the Middle East if
meantime, the tax authority extended the filing period, trade was easier.11 For now, many multinationals opt to
so that people could correct their mistakes without hav- locate closer to home, in Eastern Europe. One example:
ing to pay fines. The pay-off was immediate: more than in 2005 Tunisia lost a bid for a new factory for a German
2.5 million taxpayers submitted their tax returns, up car manufacturer--and the 1,700 jobs it would have cre-
from 1.7 million in 2005. Tax revenues increased from ated. Romania was chosen instead.12
7% of GDP to 9%.8 Egyptian government agencies and traders used to
In 2006, the Ministry of Finance continued its ef- blame each other for the excessive time goods spent in
forts to reduce the tax burden by abolishing the tax port. Traders claimed that customs inspections by the
on check transactions. It also passed a stamp duty law General Organization on Export and Import Control
and a new VAT law. As a result, the stamp duty rate on and other port procedures were at fault. Government
advertising decreased from 36% to 15%, the number of agencies accused traders for not understanding the rules
tax payments decreased by 5 and the total tax rate on a or failing to comply with their requirements. The reality
medium-size limited company decreased by 2.5 percent- was that goods sat in the ports for weeks undergoing
age points. multiple requirements and paperwork--some 45 dif-
One unintended consequence of the reforms was an ferent procedures and 24 signatures were required to
increase in the time that taxpayers spent preparing their release goods from Egyptian customs in 2003.
tax forms. Taxpayers now fill out 42 pages of informa- In November 2004, the Ministry of Trade and In-
ReFoRMs in oTHeR Doing Business ToPiCs 19
dustry appointed a new customs commissioner and gave FIGURE 5.4
Reforms make exporting faster in Egypt
more autonomy to the customs reform unit to imple-
ment changes. Immediate reforms reduced and simpli- Time to export
(days)
fied tariffs, eliminated service fees and surcharges and 27
reduced the number of signatures required for customs
clearance. The new commissioner also started to engage 20
the private sector--brokers, shippers, small importers,
freight forwarders, business associations--in planning 15
and sequencing longer-term reforms.
First, customs and the General Organization on
Export and Import Control streamlined their regula-
tions into a single set of executive regulations enacted Reform
in 2006. The Ministry of Trade and Industry revamped
Egypt's export and import regulations. Second, customs 2005 2006 2007
underwent an internal reorganization to become more Source: Doing Business database.
efficient. The reform made it possible to obtain the pro-
visional customs release order even before the goods are now being trained systematically, cutting customs
arrived. Third, risk management--basing the decision administration time for export by 1 day.
to inspect on a series of risk factors--started to become The Egyptian government has worked hard to
part of the clearance process, reducing physical customs shorten the time goods spend at the border. The results
inspections. Fourth, a new system created for the 500 are starting to show. Of the 10 indicators measured by
largest importers transferred the risk analysis for these Doing Business, Egypt performs best on the ease of trad-
importers from "transaction by transaction" to "com- ing across borders--ranking 26 out of 178 countries.
pany by company." Three years ago, exporting a container from the port of
Reform efforts continued in 2006/07, as new logistic Alexandria would have required on average 8 documents,
areas acting as one-stop shops were launched for trad- 27 days and US$ 1,014. Today, exporting the same con-
ers at the ports. Further, the selective cargo inspection tainer requires on average 6 documents, 15 days and US$
regime was broadened, the port facilities at Domiatta 714 (figure 5.4). Egypt has made remarkable strides, but
and Alexandria were enhanced and electronic tracking it must remember not to be complacent--25 spots still
systems were installed at the ports. Customs officials remain to get to the level of Singapore, the global best.
Notes
1. Clark, Killian. August 25, 2007. "Although business en- 8. Ramalho, Rita. 2007. "Adding a Million Taxpayers."
vironment improves, mindset is still a constraint." Daily World Bank. 2007. Celebrating Reform. Washington,
News Egypt. D.C.: World Bank Group and U.S. Agency for Interna-
2. Sorge, Marco, and Chendi Zhang. 2007. "Credit Informa- tional Development.
tion Quality and Corporate Debt Maturity: Theory and 9. Dennis, Allen and Ben Shepherd. 2007. "Trade Costs,
Evidence." Sheffield, England: University of Sheffield, De- Barriers to Entry, and Export Diversification in Develop-
partment of Economics. ing Countries." Washington, D.C.: World Bank Group.
3. World Bank. 2007. Doing Business 2008. Washington, 10. Djankov, Simeon, Caroline Freund and Cong Pham.
D.C.: World Bank Group. 2007. "Trading on Time." Policy Research Working Paper
4. A related-party transaction is a transaction between a di- 3909. Washington, D.C.: World Bank Group.
rector or controlling shareholder and the company, such 11. ERT (European Roundtable of Industrialists). 2005. ERT
as the example considered by Doing Business. Survey on Trade Facilitation. Brussels. http://www.ert.be
5. Article 10, Capital Market Law # 95 of 1992. 12. Muller-Jentsch, Daniel. 2005. Deeper Integration and
6. Alaa Amer, Capital Markets Authority, July 2007. Trade in Services in the Euro-Mediterranean Region:
7. See Djankov, Simeon, Rafael La Porta, Florencio L�pez- Southern Dimensions of the European Neighborhood
de-Silanes and Andrei Shleifer. Forthcoming. "The Law Policy. Washington D.C: World Bank Group.
and Economics of Self-Dealing." Journal of Financial
Economics.
0
Data notes
Starting a business Protecting investors
Dealing with licenses Paying taxes
Registering property Trading across borders
Getting credit
The indicators presented and analyzed in Doing Business in collected and answers checked for accuracy. The methodology
Egypt 2008 measure government regulation and the pro- is inexpensive, so data can be collected in a large sample of
tection of property rights--and their effect on businesses, economies--178 published in the global report Doing Business
especially small and medium-size domestic firms. First, the in 2008 and the 2 cities in Egypt for this report. Because the
indicators document the degree of regulation, such as the same standard assumptions are applied in the data collection,
number of procedures to start a business or register commer- which is transparent and easily replicable, comparisons and
cial property. Second, they gauge regulatory outcomes, such benchmarks are valid across countries and states. And the data
as the time and cost to enforce a contract. Third, they mea- not only highlight the extent of obstacles but also help identify
sure the extent of legal protections of property, for example, their source, supporting policymakers in designing reform.
the scope of assets that can be used as collateral according to
secured transactions laws. The data for all sets of indicators in Limitations to what is measured
Doing Business in Egypt 2008 are for July 2007. In this project, The Doing Business methodology has 5 limitations that should
Doing Business indicators have been created for three of the be considered when interpreting the data. First, the collected
country's governorates: Cairo, Alexandria and Assiut. Doing data refer to businesses in the selected cities and may not
Business in Egypt 2008 also provides information on reform be representative of regulatory practices in other parts of
efforts undertaken by the Egyptian government in recent the state. Second, the data often focus on a specific business
years that affect other Doing Business topics: getting credit, form--a limited liability company of a specified size--and
protecting investors, paying taxes and trading across borders. may not be representative of the regulation on other busi-
The data presented in this report is based on the global report nesses, for example, sole proprietorships. Third, transactions
Doing Business in 2008. described in a standardized case study refer to a specific set of
issues and may not represent the full set of issues a business
encounters. Fourth, the measures of time involve an element
Methodology of judgment by the expert respondents. When sources indi-
cate different estimates, the time indicators reported in Doing
Based on the study of laws and regulations--with input and Business in Egypt 2008 represent the median values of several
verification by more than 70 lawyers, construction experts, responses given under the assumptions of the standardized
accountants, businesspeople and public officials routinely case. Finally, the methodology assumes that the business has
administering or advising on legal and regulatory require- full information on what is required and does not waste time
ments--the Doing Business methodology offers several ad- in completing procedures. In practice, completing a proce-
vantages. It uses factual information about what laws and dure may take longer if the business lacks information or is
regulations say and allows for multiple interactions with local unable to follow up promptly.
respondents to clarify potential misinterpretations of ques-
tions. Having representative samples of respondents is not
an issue, as the texts of the relevant laws and regulations are
DATA noTes 1
Assumptions about the Business
Data corrections The business:
Questions on the methodology and challenges to data may � Is a limited liability company. If there is more than one
be submitted through the "Ask a Question" function on the type of limited liability company in the country, the most
Doing Business website at http://www.doingbusiness.org. Up- popular limited liability form among domestic firms is
dated indicators, as well as any revisions of or corrections to chosen. Information on the most popular form is obtained
the printed data, are posted on the website. from incorporation lawyers or the statistical office.
� Operates in the selected cities.
� Is 100% domestically owned and has 5 owners, none of
Economy characteristics whom is a legal entity.
� Has start-up capital of 10 times the country's income per
capita at the end of 2006, paid in cash.
Exchange rate � Performs general industrial or commercial activities, such
The exchange rate used in this report is 1 USD = 5.75 EGP. as the production or sale of products and/or services to
the public. It does not perform foreign trade activities and
Gross national income (GNI) per capita does not handle products subject to a special tax regime,
Doing Business in Egypt 2008 reports 2006 income per capita for example, liquor or tobacco. The business is not using
heavily polluting production processes.
as published in the World Bank's World Development Indica-
tors 2007. Income is calculated using the Atlas method (cur- � Leases the commercial plant and offices and is not a
proprietor of real estate.
rent USD). For cost indicators expressed as a percentage of
income per capita, 2006 GNI in local currency units is used � Does not qualify for investment incentives or any special
benefits.
as the denominator. � Has at least 10 and up to 50 employees 1 month after the
Population commencement of operations, all of them nationals.
Doing Business in Egypt 2008 reports midyear 2006 population � Has a turnover at least 100 times the state's income per
capita.
statistics as published in World Development Indicators 2007. � Has a company deed 10 pages long.
Procedures
Starting a Business A procedure is defined as any interaction of the company
Doing Business in Egypt 2008 records all generic procedures founder with external parties (for example, government
that are officially required for an entrepreneur to start up agencies, lawyers, auditors or notaries). Interactions between
an industrial or commercial business. These include obtain- company founders or company officers and employees are
ing all necessary licenses and permits and completing any not counted as procedures. Procedures that must be com-
required notifications, verifications or inscriptions with rel- pleted in the same building but in different offices are counted
evant authorities. as separate procedures. If founders have to visit the same
After a study of laws, regulations and publicly available office several times for different sequential procedures, each
information on business entry, a detailed list of procedures, is counted separately. The founders are assumed to complete
time, cost and paid-in minimum capital requirements is all procedures themselves, without middlemen, facilitators,
developed. Subsequently, local incorporation lawyers and accountants or lawyers, unless the use of such a third party is
government officials complete and verify the data on appli- mandated by law. If the services of professionals are required,
cable procedures, the time and cost of complying with each procedures conducted by such professionals on behalf of the
procedure under normal circumstances. company are counted separately. Both pre- and post- incorpo-
Information is also collected on the sequence in which ration procedures that are officially required for an entrepre-
procedures are to be completed and whether procedures may neur to formally operate a business are recorded (table 6.1).
be carried out simultaneously. It is assumed that any required Procedures required for official correspondence or trans-
information is readily available and that all government and actions with public agencies are also included. For example,
non-government agencies involved in the start-up process if a company seal or stamp is required on official documents,
function efficiently and without corruption. If answers by local such as tax declarations, obtaining the seal or stamp is
experts differ, inquiries continue until the data are reconciled. counted. Similarly, if a company must open a bank account
To make the data comparable across countries, several as- before registering for sales tax or value added tax, this trans-
sumptions about the business and the procedures are used. action is included as a procedure. Shortcuts are counted only
if they fulfill 4 criteria: they are legal, they are available to the
general public, they are used by the majority of companies,
and avoiding them causes substantial delays.
Doing Business in egYPT 2008
Table 6.1 estimates of incorporation lawyers are used. If several incor-
What does starting a business measure? poration lawyers provide different estimates, the median re-
Procedures to legally start and operate a company ported value is applied. In all cases the cost excludes bribes.
� Preregistration(nameverification,notarization)
� Registrationintheeconomy'smostpopulouscity Paid-in minimum capital
� Postregistration(socialsecurityregistration,companyseal) Thepaid-inminimumcapitalrequirementreflectstheamount
Time required to complete each procedure that the entrepreneur needs to deposit in a bank or with a
� Doesnotincludetimespentgatheringinformation
� Eachprocedurestartsonaseparateday notary before registration and up to 3 months following in-
� Procedurecompletedoncefinaldocumentisreceived corporation and is recorded as a percentage of the country's
� Nopriorcontactwithofficials income per capita. The amount is typically specified in the
Cost required to complete each procedure commercial code or the company law. Many countries have
� Officialcostsonly,nobribes
� Noprofessionalfeesunlessservicesrequiredbylaw a minimum capital requirement but allow businesses to pay
only a part of it before registration, with the rest to be paid
Paid-in minimum capital
� Depositedinabankorwithanotarybeforeregistrationbegins after the first year of operation. In Germany in June 2007 the
minimum capital requirement for limited liability companies
Source: Doing Business database. was 25,000, of which at least 12,500 was payable before
Only procedures required of all businesses are covered. registration. The paid-in minimum capital recorded for Ger-
Industry-specific procedures are excluded. For example, many is therefore 12,500, or 42.8% of income per capita. In
procedures to comply with environmental regulations are Serbia the minimum capital requirement was 500, of which
included only when they apply to all businesses conducting only half needed to be paid before registration. The paid-in
general commercial or industrial activities. Procedures that minimum capital recorded for Serbia is therefore 250, or 8%
the company undergoes to connect to electricity, water, gas of income per capita.
and waste disposal services are not included. This methodology was developed in Djankov and others (2002)
Time and is adopted here with minor changes.
Time is recorded in calendar days. The measure captures
the median duration that incorporation lawyers indicate is Dealing with licences
necessary to complete a procedure with minimum follow-up
with government agencies and no extra payments. It is as-
sumed that the minimum time required for each procedure Doing Business in Egypt 2008 records all procedures required
is 1 day. Although procedures may take place simultaneously, for a business in the construction industry to build a stan-
they cannot start on the same day (that is, simultaneous dardized warehouse. These procedures include submitting all
procedures start on consecutive days). A procedure is con- relevant project-specific documents (for example, building
sidered completed once the company has received the final plans and site maps) to the authorities; obtaining all neces-
document, such as the company registration certificate or tax sary clearances, licenses, permits and certificates; completing
number. If a procedure can be accelerated for an additional all required notifications; and receiving all necessary inspec-
cost, the fastest procedure is chosen. It is assumed that the tions. Doing Business also records procedures for obtaining
entrepreneur does not waste time and commits to completing all utility connections. Procedures necessary to register the
each remaining procedure without delay. The time that the property so that it can be used as collateral or transferred
entrepreneur spends on gathering information is ignored. It are also counted. The survey divides the process of building
is assumed that the entrepreneur is aware of all entry regula- a warehouse into distinct procedures and calculates the time
tions and their sequence from the beginning but has had no and cost of completing each procedure in practice under
prior contact with any of the officials. normal circumstances.
Information is collected from experts in construction licens-
Cost ing, including architects, construction lawyers, construction
Cost is recorded as a percentage of the country's income per firms, utility service providers and public officials who deal
capita. It includes all official fees and fees for legal or profes- with building regulations, including approvals and inspec-
sional services if such services are required by law. Fees for tions. To make the data comparable across countries, several
purchasing and legalizing company books are included if assumptions about the business, the warehouse project and
these transactions are required by law. The company law, the the procedures are used.
commercial code and specific regulations and fee schedules
are used as sources for calculating costs. In the absence of fee
schedules, a government officer's estimate is taken as an offi-
cial source. In the absence of a government officer's estimate,
DATA noTes
Assumptions about the construction company Procedures
The business (BuildCo): A procedure is any interaction of the company's employees
� Is a limited liability company. or managers with external parties, including government
� Operates in the selected city. agencies, notaries, the land registry, the cadastre, utility com-
� Is 100% domestically and privately owned. panies, public inspectors and technical experts apart from
in-house architects and engineers. Interactions between com-
� Has 5 owners, none of whom is a legal entity. pany employees, such as development of the warehouse plans
� Is fully licensed and insured to carry out construction and inspections conducted by employees, are not counted as
projects, such as building warehouses. procedures. Procedures that the company undergoes to con-
� Has 20 builders and other employees, all of them nationals nect to electricity, water, sewerage and phone services are in-
with the technical expertise and professional experience
necessary to obtain construction permits and approvals. cluded. All procedures that are legally or in practice required
for building a warehouse are counted, even if they may be
� Has at least 1 employee who is a licensed architect and
registered with the local association of architects. avoided in exceptional cases.
� Has paid all taxes and taken out all necessary insurance Time
applicable to its general business activity (for example,
accidental insurance for construction workers and third- Time is recorded in calendar days. The measure captures
person liability insurance). the median duration that local experts indicate is necessary
� Owns the land on which the warehouse is built. to complete a procedure in practice. It is assumed that the
minimum time required for each procedure is 1 day. If a pro-
Assumptions about the warehouse project cedure can be accelerated legally for an additional cost, the
The warehouse: fastest procedure is chosen. It is assumed that BuildCo does
� Has 2 stories, both above ground, with a total surface of not waste time and commits to completing each remaining
approximately 14,000 square feet (1,300.6 square meters). procedure without delay. The time that BuildCo spends on
Each floor is 9 feet, 10 inches (3 meters) high. gathering information is ignored. It is assumed that BuildCo
� Has road access and is located in the periurban area of the is aware of all building requirements and their sequence from
country's most populous city (that is, is on the fringes of the beginning.
the city but still within its official limits). It is not located
in a special economic or industrial zone. Cost
� Is located on a land plot of 10,000 square feet (929 square Cost is recorded as a percentage of the country's income per
meters) that is 100% owned by BuildCo and is registered capita. Only official costs are recorded. All the fees associated
in the cadastre and land registry. with completing the procedures to legally build a warehouse
� Is a new construction (there was no previous construction are recorded, including those associated with obtaining
on the land). land use approvals and preconstruction design clearances;
� Has complete architectural and technical plans prepared receiving inspections before, during and after construction;
by a licensed architect. getting utility connections; and registering the warehouse
� Willbeconnectedtothefollowingutilities--electricity,water, property. Nonrecurring taxes required for the completion of
sewerage (sewage system, septic tank or their equivalent) and the warehouse project also are recorded. The building code,
one land phone line. The connection to each utility network information from local experts and specific regulations and
will be 32 feet, 10 inches (10 meters) long. fee schedules are used as sources for costs. If several local
� Will require a 10-ampere power connection and 140 partners provide different estimates, the median reported
kilowatts of electricity. value is used.
� Will require up to 100 cubic meters of water daily.
� Will be used for general storage activities, such as storage
of books or stationery. The warehouse will not be used Registering property
for any goods requiring special conditions, such as food,
chemicals or pharmaceuticals. Doing Business in Egypt 2008 records the full sequence of
� Will include all technical equipment required to make the
warehouse fully operational. procedures necessary when a business purchases land and a
building to transfer the property title from another business
� Will take 30 weeks to construct (excluding all delays due
to administrative and regulatory requirements). so that the buyer can use the property for expanding its busi-
ness, as collateral in taking new loans or, if necessary, to sell
to another business. Every procedure required by law or nec-
essary in practice is included, whether it is the responsibility
of the seller or the buyer or must be completed by a third
party on their behalf. Local property lawyers, notaries and
Doing Business in egYPT 2008
property registries provide information on procedures as well Table 6.2
as the time and cost to complete each of them. What does registering property measure?
To make the data comparable across countries, several as- Procedures to legally transfer title on real property
sumptions about the parties to the transaction, the property � Preregistration(checkingforliens,notarizingsalesagreement)
and the procedures are used. � Registrationintheeconomy'smostpopulouscity
� Postregistration(payingtaxes,filingtitlewithmunicipality)
Assumptions about the parties Time required to complete each procedure
The parties (buyer and seller): � Doesnotincludetimespentgatheringinformation
� Eachprocedurestartsonaseparateday
� Are limited liability companies. � Procedurecompletedoncefinaldocumentisreceived
� Are located in the periurban area of the country's selected � Nopriorcontactwithofficials
cities. Cost required to complete each procedure
� Are 100% domestically and privately owned. � Officialcostsonly,nobribes
� Novalueaddedorcapitalgainstaxesincluded
� Have 50 employees each, all of whom are nationals. Source: Doing Business database.
� Perform general commercial activities.
use lawyers or other professionals where necessary in the
Assumptions about the property registration process, it is assumed that it does not employ an
The property: outside facilitator in the registration process unless legally or
� Has a value of 50 times income per capita. The sale price in practice required to do so (table 6.2).
equals the value. Time
� Is fully owned by the seller.
� Has no mortgages attached and has been under the same Time is recorded in calendar days. The measure captures the
ownership for the past 10 years. median duration that property lawyers, notaries or registry
� Is registered in the land registry or cadastre, or both, and officials indicate is necessary to complete a procedure. It is
is free of title disputes. assumed that the minimum time required for each procedure
� Is located in a periurban commercial zone, and no is 1 day. Although procedures may take place simultaneously,
rezoning is required. they cannot start on the same day. It is assumed that the buyer
� Consists of land and a building. The land area is 6,000 does not waste time and commits to completing each remain-
square feet (557.4 square meters). A 2-story warehouse of ing procedure without delay. If a procedure can be acceler-
10,000 square feet (929 square meters) is located on the ated for an additional cost, the fastest legal procedure avail-
land. The warehouse is 10 years old, is in good condition able and used by the majority of property owners is chosen. If
and complies with all safety standards, building codes procedures can be undertaken simultaneously, it is assumed
and other legal requirements. The property of land and that they are. It is assumed that the parties involved are aware
building will be transferred in its entirety. of all regulations and their sequence from the beginning.
� Will not be subject to renovations or additional building Time spent on gathering information is not considered.
following the purchase.
� Has no trees, natural water sources, natural reserves or Cost
historical monuments of any kind. Cost is recorded as a percentage of the property value, as-
� Will not be used for special purposes, and no special permits, sumed to be equivalent to 50 times income per capita. Only
such as for residential use, industrial plants, waste storage or
certain types of agricultural activities, are required. official costs required by law are recorded, including fees,
transfer taxes, stamp duties and any other payment to the
� Has no occupants (legal or illegal), and no other party property registry, notaries, public agencies or lawyers. Other
holds a legal interest in it. taxes, such as capital gains tax or value added tax, are ex-
Procedures cluded from the cost measure. Both costs borne by the buyer
and those borne by the seller are included. If cost estimates
A procedure is defined as any interaction of the buyer or differ among sources, the median reported value is used.
the seller, their agents (if an agent is legally or in practice
required) or the property with external parties, including
government agencies, inspectors, notaries and lawyers. In-
teractions between company officers and employees are not
considered. All procedures that are legally or in practice
required for registering property are recorded, even if they
may be avoided in exceptional cases. It is assumed that the
buyer follows the fastest legal option available and used by
the majority of property owners. Although the buyer may
DATA noTes 5
Getting credit The index ranges from 0 to 10, with higher scores indicating
that collateral and bankruptcy laws are better designed to
expand access to credit.
Doing Business constructs measures of the legal rights of
borrowers and lenders and the sharing of credit information. Depth of credit information index
The first set of indicators describes how well collateral and The depth of credit information index measures rules affect-
bankruptcy laws facilitate lending. The second set measures ing the scope, accessibility and quality of credit information
the coverage, scope, quality and accessibility of credit infor- available through either public or private credit registries. A
mation available through public and private credit registries. score of 1 is assigned for each of the following 6 features of
The data on the legal rights of borrowers and lenders are the public registry or the private credit bureau (or both):
gathered through a survey of financial lawyers and verified
through analysis of laws and regulations as well as public � Both positive credit information (for example, loan
amounts and pattern of on-time repayments) and negative
sources of information on collateral and bankruptcy laws. information (for example, late payments, number and
The data on credit information sharing are built in 2 stages. amount of defaults and bankruptcies) are distributed.
First, banking supervision authorities and public information � Data on both firms and individuals are distributed.
sources are surveyed to confirm the presence of public credit � Data from retailers, trade creditors or utility companies as
registries and private credit information bureaus. Second, well as financial institutions are distributed.
when applicable, a detailed survey on the public or private � More than 2 years of historical data are distributed.
credit registry's structure, law and associated rules is admin- Registries that erase data on defaults as soon as they are
istered to the credit registry. Survey responses are verified repaid obtain a score of 0 for this indicator.
through several rounds of follow-up communication with re- � Data on loans below 1% of income per capita are
spondents as well as by contacting third parties and consult- distributed. A registry must have a minimum coverage of
ing public sources. The survey data are confirmed through 1% of the adult population to score a 1 for this indicator.
teleconference calls or on-site visits in all countries. � By law, borrowers have the right to access their data in the
Strength of legal rights index largest registry in the country.
The index ranges from 0 to 6, with higher values indicating
The strength of legal rights index measures the degree to the availability of more credit information, from either a
which collateral and bankruptcy laws protect the rights of public registry or a private bureau, to facilitate lending deci-
borrowers and lenders and thus facilitate lending. The index sions. If the registry is not operational or has coverage of less
includes 7 aspects related to legal rights in collateral law and than 0.1% of the adult population, the score on the depth of
3 aspects in bankruptcy law. A score of 1 is assigned for each credit index is 0.
of the following features of the laws: In Turkey, for example, both a public and a private registry
� General rather than specific description of assets is operate. Both distribute positive and negative information
permitted in collateral agreements. (a score of 1). The private bureau distributes data only on
� General rather than specific description of debt is individuals, but the public registry covers firms as well as in-
permitted in collateral agreements. dividuals (a score of 1). The public and private registries share
� Any legal or natural person may grant or take security in data among financial institutions only; no data are collected
the property. from retailers or utilities (a score of 0). The private bureau
� A unified registry operates that includes charges over distributes more than 2 years of historical data (a score of 1).
movable property. The public registry collects data only on loans of $3,493 (64%
� Secured creditors have priority outside of bankruptcy. of income per capita) or more, but the private bureau collects
� Secured creditors, rather than other parties such as information on loans of any value (a score of 1). Borrowers
government or workers, are paid first out of the proceeds have the right to access their data in both the private and the
from liquidating a bankrupt firm. public registry (a score of 1). Summing across the indicators
� Secured creditors are able to seize their collateral when a gives Turkey a total score of 5.
debtor enters reorganization; there is no "automatic stay"
or "asset freeze" imposed by the court. Public credit registry coverage
� Management does not stay during reorganization. An The public credit registry coverage indicator reports the
administrator is responsible for managing the business number of individuals and firms listed in a public credit reg-
during reorganization. istry with current information on repayment history, unpaid
� Parties may agree on out-of-court enforcement by debts or credit outstanding. The number is expressed as a
contract. percentage of the adult population. A public credit registry is
� By law, and without the need for a contract, creditors defined as a database managed by the public sector, usually by
may both seize and sell collateral out of court without the central bank or the superintendent of banks, that collects
restriction. information on the creditworthiness of borrowers (persons
6 Doing Business in egYPT 2008
or businesses) in the financial system and makes it available Assumptions about the transaction
to financial institutions. If no public registry operates, the
coverage value is 0. � Mr. James is Buyer's controlling shareholder and a member
of Buyer's board of directors. He owns 60% of Buyer and
Private credit bureau coverage elected 2 directors to Buyer's 5-member board.
� Mr. James also owns 90% of Seller, a company that
The private credit bureau coverage indicator reports the operates a chain of retail hardware stores. Seller recently
number of individuals and firms listed by a private credit bu- closed a large number of its stores.
reau with current information on repayment history, unpaid � Mr. James proposes to Buyer that it purchase Seller's
debts or credit outstanding. The number is expressed as a unused fleet of trucks to expand Buyer's distribution of its
percentage of the adult population. A private credit bureau is food products. Buyer agrees. The price is equal to 10% of
defined as a private firm or nonprofit organization that main- Buyer's assets and is higher than the market value.
tains a database on the creditworthiness of borrowers (per- � The proposed transaction is part of the company's ordinary
sons or businesses) in the financial system and facilitates the course of business and is not outside the authority of the
exchange of credit information among banks and financial company.
institutions. Credit investigative bureaus and credit report- � Buyer enters into the transaction. All required approvals
ing firms that do not directly facilitate information exchange are obtained, and all required disclosures made (that is,
among banks and other financial institutions are not consid- the transaction is not fraudulent).
ered. If no private bureau operates, the coverage value is 0. � The transaction is unfair to Buyer. Shareholders sue
Mr. James and the other parties that approved the
This methodology was developed in Djankov, McLiesh and transaction.
Shleifer (2007) and is adopted here with minor changes. Extent of disclosure index
The extent of disclosure index has 5 components:
Protecting investors � What corporate body can provide legally sufficient
approval for the transaction. A score of 0 is assigned if it
is the CEO or the managing director alone; 1 if the board
Doing Business measures the strength of minority shareholder of directors or shareholders must vote and Mr. James is
protections against directors' misuse of corporate assets for permitted to vote; 2 if the board of directors must vote and
personal gain. The indicators distinguish 3 dimensions of in- Mr. James is not permitted to vote; 3 if shareholders must
vestor protection: transparency of related-party transactions vote and Mr. James is not permitted to vote.
(extent of disclosure index), liability for self-dealing (extent � Whether immediate disclosure of the transaction to the
of director liability index) and shareholders' ability to sue of- public, the regulator or the shareholders is required. A
ficers and directors for misconduct (ease of shareholder suits score of 0 is assigned if no disclosure is required; 1 if
index). The data come from a survey of corporate lawyers and disclosure on the terms of the transaction but not Mr.
are based on securities regulations, company laws and court James's conflict of interest is required; 2 if disclosure
on both the terms and Mr. James's conflict of interest is
rules of evidence. required.
To make the data comparable across countries, several as- � Whether disclosure in the annual report is required. A
sumptions about the business and the transaction are used. score of 0 is assigned if no disclosure on the transaction
Assumptions about the business is required; 1 if disclosure on the terms of the transaction
but not Mr. James's conflict of interest is required; 2 if
The business (Buyer): disclosure on both the terms and Mr. James's conflict of
� Is a publicly traded corporation listed on the country's interest is required.
most important stock exchange. If the number of publicly � Whether disclosure by Mr. James to the board of directors
traded companies listed on that exchange is less than is required. A score of 0 is assigned if no disclosure is
10, or if there is no stock exchange in the country, it required; 1 if a general disclosure of the existence of a
is assumed that Buyer is a large private company with conflict of interest is required without any specifics; 2 if
multiple shareholders. full disclosure of all material facts relating to Mr. James's
� Has a board of directors and a chief executive officer interest in the Buyer-Seller transaction is required.
(CEO) who may legally act on behalf of Buyer where � Whether it is required that an external body, for example,
permitted, even if this is not specifically required by law. an external auditor, review the transaction before it takes
� Is a food manufacturer. place. A score of 0 is assigned if no; 1 if yes.
� Has its own distribution network. The index ranges from 0 to 10, with higher values indicat-
ing greater disclosure. In Poland, for example, the board of
directors must approve the transaction and Mr. James is not
allowed to vote (a score of 2). Buyer is required to disclose
immediately all information affecting the stock price, includ-
DATA noTes 7
ing the conflict of interest (a score of 2). In its annual report to disgorge his profits (a score of 0). Mr. James cannot be
Buyer must also disclose the terms of the transaction and Mr. fined or imprisoned (a score of 0). Direct suits are available
James's ownership in Buyer and Seller (a score of 2). Before for shareholders holding 10% or less of share capital (a score
the transaction Mr. James must disclose his conflict of inter- of 1). Adding these numbers gives Panama a score of 4 on the
est to the other directors, but he is not required to provide extent of director liability index.
specific information about it (a score of 1). Poland does not
require an external body to review the transaction (a score Ease of shareholder suits index
of 0). Adding these numbers gives Poland a score of 7 on the The ease of shareholder suits index has 6 components.
extent of disclosure index. � What range of documents is available to the shareholder
Extent of director liability index plaintiff from the defendant and witnesses during trial.
A score of 1 is assigned for each of the following types of
The extent of director liability index has 7 components: documents available: information that the defendant has
� Whether a shareholder plaintiff is able to hold Mr. James indicated he intends to rely on for his defense; information
liable for damage the Buyer-Seller transaction causes to that directly proves specific facts in the plaintiff's claim;
the company. A score of 0 is assigned if Mr. James cannot any information relevant to the subject matter of the
be held liable or can be held liable only for fraud or bad claim; and any information that may lead to the discovery
faith; 1 if Mr. James can be held liable only if he influenced of relevant information.
the approval of the transaction or was negligent; 2 if Mr. � Whether the plaintiff can directly examine the defendant
James can be held liable when the transaction is unfair or and witnesses during trial. A score of 0 is assigned if no; 1
prejudicial to the other shareholders. if yes, with prior approval of the questions by the judge; 2
� Whether a shareholder plaintiff is able to hold the if yes, without prior approval.
approving body (the CEO or board of directors) liable for � Whether the plaintiff can obtain categories of relevant
damage the transaction causes to the company. A score of documents from the defendant without identifying each
0 is assigned if the approving body cannot be held liable specifically. A score of 0 assigned if no; 1 if yes.
or can be held liable only for fraud or bad faith; 1 if the � Whethershareholdersowning10%orlessofthecompany's
approving body can be held liable for negligence; 2 if the share capital can request that a government inspector
approving body can be held liable when the transaction is investigate the Buyer-Seller transaction without filing suit
unfair or prejudicial to the other shareholders. in court. A score of 0 is assigned if no; 1 if yes.
� Whether a court can void the transaction upon a � Whethershareholdersowning10%orlessofthecompany's
successful claim by a shareholder plaintiff. A score of 0 share capital have the right to inspect the transaction
is assigned if rescission is unavailable or is available only documents before filing suit. A score of 0 is assigned if no;
in case of fraud or bad faith; 1 if rescission is available 1 if yes.
when the transaction is oppressive or prejudicial to the � Whether the standard of proof for civil suits is lower than
other shareholders; 2 if rescission is available when the that for a criminal case. A score of 0 is assigned if no; 1 if
transaction is unfair or entails a conflict of interest. yes.
� Whether Mr. James pays damages for the harm caused to
the company upon a successful claim by the shareholder The index ranges from 0 to 10, with higher values indicating
plaintiff. A score of 0 is assigned if no; 1 if yes. greater powers of shareholders to challenge the transaction.
� Whether Mr. James repays profits made from the In Greece, for example, the plaintiff can access documents
transaction upon a successful claim by the shareholder
plaintiff. A score of 0 is assigned if no; 1 if yes. that the defendant intends to rely on for his defense and that
directly prove facts in the plaintiff's claim (a score of 2). The
� Whether fines and imprisonment can be applied against
Mr. James. A score of 0 is assigned if no; 1 if yes. plaintiff can examine the defendant and witnesses during
trial, though only with prior approval of the questions by the
� Whether shareholder plaintiffs are able to sue directly
or derivatively for damage the transaction causes to the court (a score of 1). The plaintiff must specifically identify
company. A score of 0 is assigned if suits are unavailable the documents being sought (for example, the Buyer-Seller
or are available only for shareholders holding more than purchase agreement of July 15, 2006) and cannot just request
10% of the company's share capital; 1 if direct or derivative categories (for example, all documents related to the trans-
suits are available for shareholders holding 10% or less of action) (a score of 0). A shareholder holding 5% of Buyer's
share capital. shares can request that a government inspector review sus-
The index ranges from 0 to 10, with higher values indicat- pected mismanagement by Mr. James and the CEO without
ing greater liability of directors. To hold Mr. James liable in filing suit in court (a score of 1). And any shareholder can
Panama, for example, a plaintiff must prove that Mr. James inspect the transaction documents before deciding whether
influenced the approving body or acted negligently (a score to sue (a score of 1). The standard of proof for civil suits is the
of 1). To hold the other directors liable, a plaintiff must prove same as that for a criminal case (a score of 0). Adding these
that they acted negligently (a score of 1). The unfair transac- numbers gives Greece a score of 5 on the ease of shareholder
tion cannot be voided (a score of 0). If Mr. James is found li- suits index.
able, he must pay damages (a score of 1) but he is not required
8 Doing Business in egYPT 2008
Strength of investor protection index Assumptions about the business
The strength of investor protection index is the average of The business:
the extent of disclosure index, the extent of director liability � Is a limited liability, taxable company. If there is more
index and the ease of shareholder suits index. The index than one type of limited liability company in the country,
ranges from 0 to 10, with higher values indicating more in- the limited liability form most popular among domestic
vestor protection. firms is chosen. The most popular form is reported by
incorporation lawyers or the statistical office.
This methodology was developed in Djankov and others (forth- � Started operations on January 1, 2005. At that time the
coming) and is adopted here with minor changes. company purchased all the assets shown in its balance
sheet and hired all its workers.
� Operates in the country's most populous city.
Paying taxes � Is 100% domestically owned and has 5 owners, all of
whom are natural persons.
Doing Business records the taxes and mandatory contribu- � Has a start-up capital of 102 times income per capita at the
tions that a medium-size company must pay or withhold in a end of 2005.
given year, as well as measures of the administrative burden � Performs general industrial or commercial activities.
in paying taxes and contributions. Taxes and contributions Specifically, it produces ceramic flowerpots and sells them
measured include the profit or corporate income tax, social at retail. It does not participate in foreign trade (no import
or export) and does not handle products subject to a
contributions and labor taxes paid by the employer, property special tax regime, for example, liquor or tobacco.
taxes, property transfer taxes, the dividend tax, the capital � Owns 2 plots of land, 1 building, machinery, office
gains tax, the financial transactions tax, waste collection taxes equipment, computers and 1 truck and leases 1 truck.
and vehicle and road taxes. � Does not qualify for investment incentives or any
Doing Business measures all taxes and contributions that benefits apart from those related to the age or size of the
are government mandated (at any level--federal, state or company.
local), apply to the standardized business and have an impact � Has 60 employees--4 managers, 8 assistants and 48
in its income statements. In doing so, Doing Business goes workers. All are nationals, and 1 manager is also an
beyond the traditional definition of a tax: as defined for the owner.
purposes of government national accounts, taxes include only � Has a turnover of 1,050 times income per capita.
compulsory, unrequited payments to general government. � Makes a loss in the first year of operation.
Doing Business differs from this definition because it mea- � Has a gross margin (pretax) of 20% (that is, sales are 120%
sures imposts that affect business accounts, not government of the cost of goods sold).
accounts. The main differences are in labor contributions � Distributes 50% of its profits as dividends to the owners at
and value added tax. The Doing Business measure includes the end of the 2nd year.
government-mandated contributions paid by the employer to � Sells one of its plots of land at a profit during the 2nd
a requited private pension fund or workers' insurance fund. year.
The indicator includes, for example, Australia's compulsory � Has annual fuel costs for its trucks equal to twice income
superannuation guarantee and workers' compensation insur- per capita.
ance. It excludes value added taxes because they do not affect � Is subject to a series of detailed assumptions on expenses
the accounting profits of the business--that is, they are not and transactions to further standardize the case. All
reflected in the income statement. financial statement variables are proportional to 2005
To measure the taxes and contributions paid by a standard- income per capita. For example, the owner who is also a
ized business and the complexity of a country's tax system, a manager spends 10% of income per capita on traveling for
case study is prepared with a set of financial statements and the company (20% of the expenses are purely private, 20%
assumptions about transactions made over the year. Experts for entertaining customers and 60% for business travel).
in each country compute the taxes and contributions owed Assumptions about the taxes and contributions
in their jurisdiction based on the standardized case facts. In-
formation is also compiled on the frequency of filing, audits � All the taxes and contributions paid or withheld in the
and other costs of compliance. The project was developed and second year of operation (fiscal 2006) are recorded.
implemented in cooperation with PricewaterhouseCoopers. A tax or contribution is considered distinct if it has a
different name or is collected by a different agency. Taxes
To make the data comparable across countries, several and contributions with the same name and agency, but
assumptions about the business and the taxes and contribu- charged at different rates depending on the business, are
tions are used. counted as the same tax or contribution (table 6.3).
DATA noTes 9
Table 6.3 added or sales tax and labor taxes, including payroll taxes and
What does paying taxes measure? social contributions. Preparation time includes the time to
Tax payments for a manufacturing company in 2006 collect all information necessary to compute the tax payable. If
� Totalnumberoftaxesandcontributionspaid,includingconsumption separate accounting books must be kept for tax purposes--or
taxes(valueaddedtax) separate calculations made--the time associated with these
� Methodandfrequencyofpayment processes is included. This extra time is included only if the
Time required to comply with 3 major taxes regular accounting work is not enough to fulfill the tax ac-
� Collectinginformationtocomputetaxpayable
� Completingtaxforms,filingwithproperagencies counting requirements. Filing time includes the time to com-
� Arrangingpaymentorwithholding plete all necessary tax forms and make all necessary calcula-
� Preparingseparatetaxaccountingbooks tions. Payment time is the hours needed to make the payment
Total tax rate online or at the tax office. Where taxes and contributions are
� Profitorcorporateincometax
� Socialcontributionsandlabortaxespaidbytheemployer paid in person, the time includes delays while waiting.
� Propertyandpropertytransfertaxes
� Dividend,capitalgainsandfinancialtransactionstaxes Total tax rate
� Wastecollection,vehicle,roadandothertaxes The total tax rate measures the amount of taxes and manda-
Source: Doing Business database. tory contributions payable by the business in the second
year of operation, expressed as a share of commercial profits.
� The number of times the company pays or withholds taxes
and contributions in a year is the number of different taxes Doing Business 2008 reports the total tax rate for fiscal 2006.
or contributions multiplied by the frequency of payment The total amount of taxes is the sum of all the different taxes
(or withholding) for each one. The frequency of payment and contributions payable after accounting for deductions
includes advance payments (or withholding) as well as and exemptions. The taxes withheld (such as sales or value
regular payments (or withholding). added tax or personal income tax) but not paid by the com-
Tax payments pany are excluded. The taxes included can be divided into 5
categories: profit or corporate income tax, social contribu-
The tax payments indicator reflects the total number of taxes tions and labor taxes paid by the employer (for which all
and contributions paid, the method of payment, the fre- mandatory contributions are included, even if paid to a pri-
quency of payment and the number of agencies involved for vate entity such as a requited pension fund), property taxes,
this standardized case during the second year of operation. turnover taxes and other small taxes (such as municipal fees
It includes payments made by the company on consumption and vehicle and fuel taxes).
taxes, such as sales tax or value added tax. These taxes are Commercial profits are defined as sales minus cost of
traditionally withheld on behalf of the consumer. Although goods sold, minus gross salaries, minus administrative ex-
they do not affect the income statements of the company, they penses, minus other expenses, minus provisions, plus capital
add to the administrative burden of complying with the tax gains (from the property sale) minus interest expense, plus
system and so are included in the tax payments measure. interest income and minus commercial depreciation. To
The number of payments takes into account electronic compute the commercial depreciation, a straight-line depre-
filing. Where full electronic filing is allowed and it is used by ciation method is applied with the following rates: 0% for the
the majority of medium-size businesses, the tax is counted as land, 5% for the building, 10% for the machinery, 33% for the
paid once a year even if the payment is more frequent. For computers, 20% for the office equipment, 20% for the truck
taxes paid through third parties, such as tax on interest paid and 10% for business development expenses. The assumption
by a financial institution or fuel tax paid by the fuel distribu- on the interest expense was changed this year, reducing the
tor, only one payment is included even if payments are more value of this expense. Commercial profits therefore changed
frequent. These are taxes withheld at source where no filing from 57.8 times income per capita to 59.4 times.
is made by the company. The methodology is consistent with the calculation of
Where 2 or more taxes or contributions are paid jointly total tax contribution by PricewaterhouseCoopers. The total
using the same form, each of these joint payments is counted tax contribution measures the taxes that are borne by compa-
once. For example, if mandatory health insurance contribu- nies and affect their income statements, as in Doing Business.
tions and mandatory pension contributions are filed and paid However, PricewaterhouseCoopers bases its calculation on
together, only one of these contributions would be included data from the largest companies in the country, while Doing
in the number of payments. Business focuses on a standardized medium-size company.
Time This methodology was developed in Djankov and others
Time is recorded in hours per year. The indicator measures (2007).
the time to prepare, file and pay (or withhold) 3 major types
of taxes and contributions: the corporate income tax, value
0 Doing Business in egYPT 2008
Trading across borders Table 6.4
What does trading across borders measure?
Doing Business compiles procedural requirements for export- Documents necessary to import or export
� Bankdocuments
ing and importing a standardized cargo of goods by ocean � Customsclearancedocuments
transport. Every official procedure for exporting and import- � Portandterminalhandlingdocuments
ing the goods is recorded--from the contractual agreement � Transportdocuments
between the 2 parties to the delivery of goods--along with Time required to import or export
the time and cost necessary for completion. All documents � Obtainingallthedocuments
� Inlandtransport
required for clearance of the goods across the border are � Customsclearanceandinspections
also recorded. For exporting goods, procedures range from � Portandterminalhandling
packing the goods at the factory to their departure from the � Doesnotincludeoceantransporttime
port of exit. For importing goods, procedures range from the Cost required to import or export
vessel's arrival at the port of entry to the cargo's delivery at the � Obtainingallthedocuments
� Inlandtransport
factory warehouse. Payment is made by letter of credit. � Customsclearanceandinspections
Local freight forwarders, shipping lines, customs brokers � Portandterminalhandling
and port officials provide information on required documents � Officialcostsonly,nobribes
and cost as well as the time to complete each procedure. To Source: Doing Business database.
make the data comparable across countries, several assump-
tions about the business and the traded goods are used. Time
Assumptions about the business Time is recorded in calendar days. The time calculation for
a procedure starts from the moment it is initiated and runs
The business: until it is completed. If a procedure can be accelerated for
� Has 100 or more employees. an additional cost, the fastest legal procedure is chosen. It is
� Is located in the country's most populous city. assumed that neither the exporter nor the importer wastes
� Is a private, limited liability company. It does not operate time and that each commits to completing each remaining
within an export processing zone or an industrial estate procedure without delay. Procedures that can be completed
with special export or import privileges. in parallel are measured as simultaneous. The waiting time
� Is domestically owned with no foreign ownership. between procedures--for example, during unloading of the
� Exports more than 10% of its sales. cargo--is included in the measure (table 6.4).
Cost
Assumptions about the traded goods Cost measures the fees levied on a 20-foot container in U.S.
The traded product travels in a dry-cargo, 20-foot, full dollars. All the fees associated with completing the proce-
container load. The product: dures to export or import the goods are included. These
� Is not hazardous nor does it include military items. include costs for documents, administrative fees for customs
� Does not require refrigeration or any other special clearance and technical control, terminal handling charges
environment. and inland transport. The cost measure does not include tar-
� Does not require any special phytosanitary or iffs or trade taxes. Only official costs are recorded.
environmental safety standards other than accepted
international standards. This methodology was developed by Djankov, Freund and
Pham (2007) and is adopted here with minor changes.
Documents
All documents required to export and import the goods are
recorded. It is assumed that the contract has already been Ease of doing business
agreed upon and signed by both parties. Documents include
bank documents, customs declaration and clearance docu- The ease of doing business index ranks selected cities from
ments, port filing documents, import licenses and other of- 1 to 3. The index is calculated as the ranking on the simple
ficial documents exchanged between the concerned parties. average of country percentile rankings on each of the 3 topics
Documents filed simultaneously are considered different covered in Doing Business in Egypt 2008. The ranking on each
documents but with the same time frame for completion. topic is the simple average of the percentile rankings on its
component indicators.
The ease of doing business index is limited in scope. It
does not account for a selected cities? proximity to large
markets, the quality of its infrastructure services (other than
DATA noTes 1
services related to trading across borders), the security of
property from theft and looting, macroeconomic conditions
or the strength of underlying institutions. There remains a
large unfinished agenda for research into what regulation
constitutes binding constraints, what package of reforms is
most effective and how these issues are shaped by the country
context. The Doing Business indicators provide a new empiri-
cal data set that may improve understanding of these issues.
32 Doing Business in egypt 2008
City tables
ALEXANDRIA Easeofdoingbusiness(rank) 3
Starting a business Dealing with licenses Registering property
Procedures(number) 8 Procedures(number) 30 Procedures(number) 7
Time(days) 15 Time(days) 207 Time(days) 159
Cost(%ofincomepercapita) 28.60 Cost(%ofincomepercapita) 474.87 Cost(%ofpropertyvalue) 1.02
Minimum capital
(%ofincomepercapita) 12.89
ASSIUT Easeofdoingbusiness(rank) 1
Starting a business Dealing with licenses Registering property
Procedures(number) 8 Procedures(number) 19 Procedures(number) 7
Time(days) 14 Time(days) 109 Time(days) 33
Cost(%ofincomepercapita) 28.60 Cost(%ofincomepercapita) 475.39 Cost(%ofpropertyvalue) 0.72
Minimum capital
(%ofincomepercapita) 12.89
CAIRO Easeofdoingbusiness(rank) 2
Starting a business Dealing with licenses Registering property
Procedures(number) 7 Procedures(number) 28 Procedures(number) 7
Time(days) 9 Time(days) 249 Time(days) 193
Cost(%ofincomepercapita) 28.60 Cost(%ofincomepercapita) 474.87 Cost(%ofpropertyvalue) 1.02
Minimum capital
(%ofincomepercapita) 12.89
List oF pRoCeDuRes � apeRtuRa DepRopeRty
estuDios De Caso RegisteRing empResa 33
List of procedures
34 Doing Business in egypt 2008
STARTING A BUSINESS Procedure 5. Notarize the company contract
Alexandria
Time to complete: 1day
Standard company legal form: Sharikat that Massouliyyah Mahdoodah Cost to complete: Nocost
Paid in minimum capital requirement: EGP 1,000
Date as of: July 2007 Comments:Thenotarizationcanbedoneatthenotarycounterintheone-stop
shop.NostampdutyhastobepaidaspertheamendmentsofJuly1,2006tothe
Procedure 1. Check the company name StampDutyLawNo.111of1980.Therequireddocumentsaretheoriginalcopyof
thecompanycontractandthepowerofattorney.
Time to complete: 1day
Cost to complete: Nocost Procedure 6. Obtain the notification of incorporation
Comments:GAFIAlexandriasendsafaxtothecentralcommercialregistryinCairo. Time to complete: 1day
Thecommercialregistrywillcheckthatthedesiredcompanynameisnotinuseand
respondwithinafewhours. Cost to complete: Nocost
Comments:Oncethecompanycontracthasbeensubmitted,thecompetent
Procedure 2. Obtain a certificate from an authorized bank authoritymustratifyitandgivetheapplicantacertificateconfirmingthereceiptof
allrequireddocuments.Thiscertificateallowsfortheregistrationofthecompany
Time to complete: 1day inthecommercialregistryandisissuedwithin24hoursfollowingthesubmission
Cost to complete: Nocost ofthenotarizedcontract.Theapplicantreceivesalsotheapprovalofthechamber
Comments:TheCommercialInternationalBankbranchatGAFIissuesanddelivers ofcommerce.Thecompanyassumeslegalresponsibilityandjudicialpersonality
thecertificatewithin1-2days.Thebankcertificateisfreeofchargebuttheaccount onthedateofregistration.Wherethecompetentauthorityhasnoobjection,the
openingfeesrangefromEGP200to500dependingonthebank.Uponanagree- Companiesdepartmentisthereafterresponsibleforpublishingthecompanynotice
mentbetweenGAFIandtheCentralBankofEgyptregardingthebankcertificate, intheInvestmentGazetteattheexpenseofthecompany.
thereisnolongertheneedtosubmitthecompanycontractandthecertificate
clarifyingthatthenameofthecompanyisnotinusetoanybank. Procedure 7. Register for taxes
Time to complete: 7days
Procedure 3. Submit documents to the Companies Department Cost to complete: Nocost
and obtain invoice Comments:Taxregistration,includingobtainingthetaxcardcanbecompletedat
Time to complete: 1day thetaxcounterattheone-stopshoponceincorporationiscompleted.
Cost to complete: EGP1,811 UnlikeinCairo,thetaxcardisnotissuedimmediatelyinAlexandria.Instead,the
Comments:Theentrepreneurneedstosubmittheapprovedcompanycontract, applicantreceivesatemporarydocument,whichisvalidfor1month.Thetaxauthor-
alongwiththerestoftherequireddocumentation:thecertificateissuedbythecom- ityinCairoprocessesandsendstheapplicantthefinaltaxcardwithinonemonth.
mercialregistryregardingthenameofthecompanyandthepowerofattorney.The Doing Businessassumesthatittakes2daystoprocesstherequestforthetaxcard(as
entrepreneurpresentsthedocumentsatthereceptiondeskwheretheyarereviewed itdoesinCairo)and5daystomailittotheapplicantinAlexandria.
immediatelybyalawyer.Theemployeeofthedivisionreviewsthedocumentsand Thecompanycanalsoregisterforsalestaxatthispoint.Companiesmayalsochoose
issuesaninvoicedetailingthecostsbelow,whichshouldbepaidatonce,withthe toregisterforsalestaxonlyoncetheyhavestartedproduction.Companiesareonly
exceptionoflegalfees. obligedtoregisterforsalestaxoncetheyreachatleastEGP54,000insalesforindus-
NotaryPublicOffice: trialactivitiesandEGP150,000forcommercialactivities.Therequireddocuments
0.25%ofcapitalcappedatEGP1,000withaminimumofEGP125 includethebankconfirmationoftheauthenticityofthesignaturethatthemanager
issuesonbehalfofthecompanyinfavorofthepersonworkingonthematter,the
Establishmentfees: taxcard,anoriginalextractfromthecommercialregistryofthecompanyandthe
0.1%ofthecapitalcappedEGP1,000withaminimumofEGP100asperarticle17D originalcopyoftheleaseagreementofthepremisesofthecompany.
oftheCompanyLaw
Servicecharge: Procedure 8. Register employees with the National Authority of
0.1%ofthecapitalcappedatEGP10,000withaminimumofEGP1,000forservices Social Insurance
renderedbytheCompaniesdepartment
Commercialsyndicatefee: Time to complete: 2days
EGP125ifthecapitalislessthanorequaltoEGP500,000,ifthecapitalismorethan Cost to complete: Nocost
EGP500,000thefeeisEGP250 Comments:Socialinsuranceprovidesdisabilityandretirementpensionsandcom-
Publication:EGP150forArabic,EGP300forArabicandEnglish pensationforunemploymentandwork-relatedinjuries.Thisprocedureisrequired
Chamberofcommercefees: bylaw;otherwisetheemployermaybesubjectedtosanctions.Thefollowingdocu-
0.2%ofthecapitalcappedatEGP2,000withaminimumofEGP100 mentsshallbesubmittedtothecompetentauthorityoffice:
Commercialregistration:EGP56.2 a.Leaseagreementofthepremisesoftheemployer;
Issuanceofoperationcertificate:EGP30.80 b.Taxcardoftheemployer;
Ratificationoflawyer'ssignatureatlawyer'ssyndicate:0.5%ofcapitalcappedatEGP c.Acopyoftheidentificationcard,birthcertificate,andthegraduationcertificateof
5,000withaminimumofEGP100plusEGP20forthestamptaxpaidtotheEgyptian theemployeeaswellastheemployer;
barassociation. d.Applicationformsnumber1and2,issuedbytheauthoritycompletedwiththe
AllcorporationsunderbothLaw8/1997andLaw159/1981assumelegalresponsibil- requiredinformation.
ityassoonastheyareregisteredinthecommercialregistry,anddonothavetowait
15dayslikeinthepast,unlessGAFIdecidesotherwise;withexceptionsforspecific
activitiesmentionedinthedecree.
Procedure 4. Pay fees
Time to complete: 1day
Cost to complete: EGP408
Comments:FeescanbepaidattheCommercialInternationalBankGAFIbranch
List oF pRoCeDuRes � staRting a Business 35
STARTING A BUSINESS Procedure 5. Notarize the company contract
Assiut
Time to complete: 1day
Standard company legal form: Sharikat that Massouliyyah Mahdoodah Cost to complete: Nocost
Paid in minimum capital requirement: EGP 1,000
Date as of: July 2007 Comments:Thenotarizationcanbedoneatthenotarycounterintheone-stop
shop.NostampdutyhastobepaidaspertheamendmentsofJuly1,2006tothe
Procedure 1. Check the company name StampDutyLawNo.111of1980.Therequireddocumentsaretheoriginalcopyof
thecompanycontractandthepowerofattorney.
Time to complete: 1day
Cost to complete: Nocost Procedure 6. Obtain the notification of incorporation
Comments:GAFIAssiutsendsafaxtothecentralcommercialregistryinCairo.The Time to complete: 1day
commercialregistrywillcheckthatthedesiredcompanynameisnotinuseand
respondwithinafewhours. Cost to complete: Nocost
Comments:Oncethecompanycontracthasbeensubmitted,thecompetent
Procedure 2. Obtain a certificate from an authorized bank authoritymustratifythecompanycontractandgivetheapplicantacertificate
confirmingthereceiptofallrequireddocuments.Thiscertificateallowsforthe
Time to complete: 1day registrationofthecompanyinthecommercialregistryandisissuedwithin24hours
Cost to complete: Nocost followingthesubmissionofthenotarizedcontract.Theapplicantreceivesalsothe
Comments:TherearenobankbrancheswithintheAssiutonestopshopasthere approvalofthechamberofcommerce.Thecompanyassumeslegalresponsibility
areinCairoandAlexandriasoapplicantsmaygototheirownbank.Thebank andjudicialpersonalityonthedateofregistration.Wherethecompetentauthority
certificateisfreeofchargebuttheaccountopeningfeesrangefromEGP200to500 hasnoobjection,theCompaniesdepartmentisthereafterresponsibleforpublishing
dependingonthebank.UponanagreementbetweenGAFIandtheCentralBank thecompanynoticeintheInvestmentGazetteattheexpenseofthecompany.
ofEgyptregardingthebankcertificate,thereisnolongertheneedtosubmitthe
companycontractandthecertificateclarifyingthatthenameofthecompanyisnot Procedure 7. Register for taxes
inusetoanybank. Time to complete: 7days
Procedure 3. Submit documents to the Companies Department Cost to complete: Nocost
and obtain invoice Comments:Taxregistration,includingobtainingthetaxcardcanbecompleted
atthetaxcounterattheone-stopshoponceincorporationiscompleted.Unlikein
Time to complete: 1day Cairo,thetaxcardisnotissuedimmediatelyinAlexandria.Instead,theapplicant
Cost to complete: EGP1,811 receivesatemporarydocument,whichisvalidfor1month.ThetaxauthorityinCairo
processesandsendstheapplicantthefinaltaxcardwithinonemonth.Doing Busi-
Comments:Theentrepreneurneedstosubmittheapprovedcompanycontract, nessassumesthatittakes2daystoprocesstherequestforthetaxcard(asitdoesin
alongwiththerestoftherequireddocumentation:thecertificateissuedbythecom- Cairo)and5daystomailittotheapplicantinAlexandria.
mercialregistryregardingthenameofthecompanyandthepowerofattorney.The
entrepreneurpresentsthedocumentsatthereceptiondeskwheretheyarereviewed Thecompanycanalsoregisterforsalestaxatthispoint.Companiesmayalsochoose
immediatelybyalawyer.Theemployeeofthedivisionreviewsthedocumentsand toregisterforsalestaxonlyoncetheyhavestartedproduction.Companiesareonly
issuesaninvoicedetailingthecostsbelow,whichshouldbepaidatonce,withthe obligedtoregisterforsalestaxoncetheyreachatleastEGP54,000insalesforindus-
exceptionoflegalfees. trialactivitiesandEGP150,000forcommercialactivities.Therequireddocuments
includethebankconfirmationoftheauthenticityofthesignaturethatthemanager
NotaryPublicOffice: issuesonbehalfofthecompanyinfavorofthepersonworkingonthematter,the
0.25%ofcapitalcappedatEGP1,000withaminimumofEGP125 taxcard,anoriginalextractfromthecommercialregistryofthecompanyandthe
Establishmentfees: originalcopyoftheleaseagreementofthepremisesofthecompany.
0.1%ofthecapitalcappedEGP1,000withaminimumofEGP100asperarticle17D
oftheCompanyLaw Procedure 8. Register employees with the National Authority of
Servicecharge: Social Insurance
0.1%ofthecapitalcappedatEGP10,000withaminimumofEGP1,000forservices
renderedbytheCompaniesdepartment Time to complete: 1day
Commercialsyndicatefee: Cost to complete: Nocost
EGP125ifthecapitalislessthanorequaltoEGP500,000,ifthecapitalismorethan Comments:Socialinsuranceprovidesdisabilityandretirementpensionsandcom-
EGP500,000thefeeisEGP250 pensationforunemploymentandwork-relatedinjuries.Thisprocedureisrequired
Publication:EGP150forArabic,EGP300forArabicandEnglish bylaw;otherwisetheemployermaybesubjectedtosanctions.Thefollowingdocu-
Chamberofcommercefees: mentsshallbesubmittedtothecompetentauthorityoffice:
0.2%ofthecapitalcappedatEGP2,000withaminimumofEGP100 a.Leaseagreementofthepremisesoftheemployer;
Commercialregistration:EGP56.2 b.Taxcardoftheemployer;
Issuanceofoperationcertificate:EGP30.80 c.Acopyoftheidentificationcard,birthcertificate,andthegraduationcertificateof
Ratificationoflawyer'ssignatureatlawyer'ssyndicate:0.5%ofcapitalcappedatEGP theemployeeaswellastheemployer;
5,000withaminimumofEGP100plusEGP20forthestamptaxpaidtotheEgyptian d.Applicationformsnumber1and2,issuedbytheauthoritycompletedwiththe
barassociation. requiredinformation.
AllcorporationsunderbothLaw8/1997andLaw159/1981assumelegalresponsibil-
ityassoonastheyareregisteredinthecommercialregistry,anddonothavetowait
15dayslikeinthepast,unlessGAFIdecidesotherwise;withexceptionsforspecific
activitiesmentionedinthedecree.
Procedure 4. Pay fees
Time to complete: 1day
Cost to complete: EGP408
Comments:Feesarepaidatthebank.
36 Doing Business in egypt 2008
STARTING A BUSINESS Procedure 4. Notarize the company contract
Cairo
Time to complete: 1day
Standard company legal form: Sharikat that Massouliyyah Mahdoodah Cost to complete: Nocost
Paid in Minimum Capital Requirement: EGP 1,000
Date as of: July 2007 Comments:Thenotarizationcanbedoneatthenotarycounterintheone-stop
shop.NostampdutyhastobepaidaspertheamendmentsofJuly1,2006tothe
Procedure 1. Obtain a certificate from an authorized bank StampDutyLawNo.111of1980.Therequireddocumentsaretheoriginalcopyof
thecompanycontractandthepowerofattorney.
Time to complete: 1day
Cost to complete: Nocost Procedure 5. Obtain the notification of incorporation
Comments:TheBankofAlexandriabranchatGAFIissuesanddeliversthecertificate Time to complete: 1day
within1-2days.Thebankcertificateisfreeofchargebuttheaccountopeningfees
rangefromEGP200to500dependingonthebank.Uponanagreementbetween Cost to complete: Nocost
GAFIandtheCentralBankofEgyptregardingthebankcertificate,thereisnolonger Comments:Oncethecompanycontracthasbeensubmitted,thecompetent
theneedtosubmitthecompanycontractandthecertificateclarifyingthatthename authoritymustratifythecompanycontractandgivetheapplicantacertificate
ofthecompanyisnotinusetoanybank. confirmingthereceiptofallrequireddocuments.Thiscertificateallowsforthe
registrationofthecompanyinthecommercialregistryandisissuedwithin24hours
Procedure 2. Submit documents to the Companies Department followingthesubmissionofthenotarizedcontract.Theapplicantreceivesalsothe
and obtain invoice approvalofthechamberofcommerce.Thecompanyassumeslegalresponsibility
andjudicialpersonalityonthedateofregistration.Wherethecompetentauthority
Time to complete: 1day hasnoobjection,theCompaniesdepartmentisthereafterresponsibleforpublishing
Cost to complete: EGP1,811 thecompanynoticeintheInvestmentGazetteattheexpenseofthecompany.
Comments:Theentrepreneurneedstosubmittheapprovedcompanycontract,
alongwiththerestoftherequireddocumentation:thecertificateissuedbythecom- Procedure 6. Register for taxes
mercialregistryregardingthenameofthecompanyandthepowerofattorney.The Time to complete: 2days
entrepreneurpresentsthedocumentsatthereceptiondeskwheretheyarereviewed Cost to complete: Nocost
immediatelybyalawyer.Theemployeeofthedivisionreviewsthedocumentsand
issuesaninvoicedetailingthecostsbelow,whichshouldbepaidatonce,withthe Comments:Taxregistration,includingobtainingthetaxcardcanbecompletedat
exceptionoflegalfees. thetaxcounterattheone-stopshoponceincorporationiscompleted.Thecompany
canalsoregisterforsalestaxatthispoint.Companiesmayalsochoosetoregister
NotaryPublicOffice: forsalestaxonlyoncetheyhavestartedproduction.Companiesareonlyobligedto
0.25%ofcapitalcappedatEGP1,000withaminimumofEGP125 registerforsalestaxoncetheyreachatleastEGP54,000insalesforindustrialactivi-
Establishmentfees: tiesandEGP150,000forcommercialactivities.Therequireddocumentsincludethe
0.1%ofthecapitalcappedEGP1,000withaminimumofEGP100asperarticle17D bankconfirmationoftheauthenticityofthesignaturethatthemanagerissueson
oftheCompanyLaw behalfofthecompanyinfavorofthepersonworkingonthematter,thetaxcard,an
Servicecharge: originalextractfromthecommercialregistryofthecompanyandtheoriginalcopy
0.1%ofthecapitalcappedatEGP10,000withaminimumofEGP1,000forservices oftheleaseagreementofthepremisesofthecompany.
renderedbytheCompaniesdepartment
Commercialsyndicatefee: Procedure 7. Register employees with the National Authority of
EGP125ifthecapitalislessthanorequaltoEGP500,000,ifthecapitalismorethan Social Insurance
EGP500,000thefeeisEGP250 Time to complete: 1-2days
Publication:EGP150forArabic,EGP300forArabicandEnglish Cost to complete: Nocost
Chamberofcommercefees: Comments:Socialinsuranceprovidesdisabilityandretirementpensionsandcom-
0.2%ofthecapitalcappedatEGP2,000withaminimumofEGP100 pensationforunemploymentandwork-relatedinjuries.Thisprocedureisrequired
Commercialregistration:EGP56.2 bylaw;otherwisetheemployermaybesubjectedtosanctions.Thefollowingdocu-
Issuanceofoperationcertificate:EGP30.80 mentsshallbesubmittedtothecompetentauthorityoffice:
Ratificationoflawyer'ssignatureatlawyer'ssyndicate:0.5%ofcapitalcappedatEGP a.Leaseagreementofthepremisesoftheemployer;
5,000withaminimumofEGP100plusEGP20forthestamptaxpaidtotheEgyptian b.Taxcardoftheemployer;
barassociation. c.Acopyoftheidentificationcard,birthcertificate,andthegraduationcertificateof
AllcorporationsunderbothLaw8/1997andLaw159/1981assumelegalresponsibil- theemployeeaswellastheemployer;
ityassoonastheyareregisteredinthecommercialregistry,anddonothavetowait d.Applicationformsnumber1and2,issuedbytheauthoritycompletedwiththe
15dayslikeinthepast,unlessGAFIdecidesotherwise;withexceptionsforspecific requiredinformation.
activitiesmentionedinthedecree.
Procedure 3. Pay fees
Time to complete: 1day
Cost to complete: EGP408
Comments:FeescanbepaidattheBankofAlexandriaGAFIbranch.
List oF pRoCeDuRes � DeaLing WitH LiCenses 37
DEALING WITH LICENSES than25yearsindicatingthataninspectionandastudyoftheexistingbuildingshave
Alexandria proventhattheywilltoleratetheapplicableloads.
Procedures to build a warehouse Law4of2006reducedthefeetoobtainabuildingpermitfrom1%ofconstruction
costto0.2%.
Data as of: July 2007
Procedure 1. Obtain cadastral documents from the survey Procedure 5. Receive inspection and obtain project clearance
department from Ministry of agriculture
Time to complete: 7days Time to complete: 60days
Cost to complete: EGP110 Cost to complete: Nocost
Comments:Themeasurementspecificationdocumentsinclude:cadastraldelimita- Comments:ManyareasinAlexandriaareinfestedwithwhiteants.Consequently,
tionstatement,cadastralmapsignedbysurveyauthority,andcoloredcadastralmap theLicensingofficeintheAlexandriagovernoraterequiresaclearancefromtheMinis-
takenbyairplanefortheconstructionsite.Thesurveydepartmentusuallyhasto tryofagriculture.ApplicantsforabuildingpermitmustfollowupwiththeMinistryof
obtaindocumentsfromCairo,whichtakesafewdays. agriculturedirectly.Applicantshavetoshowproofthatthelandiseithernotinfested
withwhiteantsorthatithasexterminatedthewhiteants.Arepresentativeofthe
Procedure 2.* Obtain technical approvals from an independent Ministryofagriculturethenexaminesthepremisesandissuesaclearancedocument.
syndicate engineer Procedure 6.* Receive inspection and obtain project clearance
Time to complete: 3days from Civil defense bureau
Cost to complete: EGP1,750 Time to complete: 30days
Comments:Thesedocumentsinclude:approvalofthecoloredcadastralmap; Cost to complete: Nocost
approvalofprobeestimation;executionsupervisioncertificate(costEGP250-350);
approvalofarchitecturaldrawings(costEGP150-200);accountingbook;reportcon- Comments:OncethepermitapplicationissubmittedtotheDistrictbureau,itis
firmingthequalityofthebuildingfoundations(costEGP250to300);andacquiringa passedontheCivildefensebureauforclearance.TheCivildefensebureauchecks
soilinvestigationreport(costEGP1000). thatthedesigndrawingscomplywithnationalfiresafetyregulations.Theclearance
usuallytakes1month,butcantakelongeriftheapplicantdoesnotconsistently
Procedure 3. Obtain location permit from the office of planning followup.
in the Alexandria governorate Procedure 7.* Obtain project clearance from the Alexandria
Time to complete: 5days Water general authority
Costtocomplete:Nocost Time to complete: 21days
Comments:Alexandrialacksanupdatedmasterplan.Beforeapplyingforthebuild- Cost to complete: Nocost
ingpermitinAlexandria,thebuildermustsubmitanapplicationforalanduse/loca-
tionpermitattheofficeofplanningattheAlexandriagovernorate. Comments:Applicantsforabuildingpermitmustreceiveanapprovaloftheir
buildingplansfromtheAlexandriawatergeneralauthority.Applicantswhointend
Theapplicationfileforthispermitcontains:3copiesofthesurveymap,certifiedbya tobuildwithinthecityduringthesummermonthsrequireaspecialexcavation
syndicateengineer,Landtitle,Copyoftheapplicant'snationalID,Lotplan. permitfromtheAuthoritypriortobuilding.Doing Businessassumesthatthisisnot
Procedure 4. Submit building permit application to Licensing thecase.
department of the Alexandria governorate Procedure 8.* Obtain project clearance from the Alexandria
Time to complete: 1day Electricity distribution company
Cost to complete: EGP2,000 Time to complete: 21days
Comments:Theapplicantmustsubmitanextensivelistofdocuments(includedthe Cost to complete: Nocost
onesdescribedinthepreviousprocedures)totheLicensingdepartment.Thelistis
asfollows: Procedure 9.* Receive inspection prior to permit issuance from
a. Originalownershipcontractoftheplotofland(notarized) the Licensing office
b. MeasurementspecificationstatementfromtheSurveydepartment Time to complete: 1day
c. Surveyplan"airphotography"specifyinglocation.Suchsurveyplanshallbe
approvedbyanaccreditedsyndicateengineer Cost to complete: Nocost
d. AlignmentlicensefromtheUrbanplanningdepartmentofAlexandriagovernorate Comments:AninspectorfromtheLicensingofficeinspectstheproposedconstruc-
tionsitetoverifytheinformationincludedontheapplication.
e. Probeestimationapprovedbyasyndicatedengineer
f. Executionsupervisioncertificatefromasyndicateengineerorconsultantengi- Procedure 10.* Pay real estate tax at the Tax authority
neerincasethebuilding'svalueismorethanEGP1,000,000.00
g. Areceiptattestingthepaymentofthedutyrelatedtotheexaminationofthe Time to complete: 1day
drawingsanddetails Cost to complete: EGP30
h. Ageneraldrawingofthesiteatadrawingscaleofaminimum1:1000thatindi-
catetheboundariesanddimensionsofthelandofthesiteforwhichthepermitis Procedure 11. Obtain building permit from the Licensing office
required,togetherwiththetotallandarea,andthatpartonwhichconstruction Time to complete: 30days
isrequested,aswellasthefacingroadsandtheirwidths Cost to complete: Nocost
MinisterialDecree92of2006,issuedbytheMinistryofHousing,Utilities,andUrban- Comments:Law106of1976establishesa30daystatutorytimelimitforissuing
Communities,reducedthenumberoffilesnecessarytorequestabuildingpermit. buildingpermits,butthese30daysarecountedonlyafterallpreliminaryapprovals
Consequently,thefollowingdocumentsarerequired:onefilecontainingacopy areobtained.
ofthearchitecturaldrawingsinrespectofthehorizontalprojectionsoffloorsand
facades,averticalsectionindicatingthebuildingheightastotheroad'szerolevel
andthestructuraldrawingsofthefoundations,columnsandtheenforcedceilings Procedure 12. Receive on-site inspection from the Licensing
togetherwithcopiesofthestructuralcalculationnotes.Alldrawingsshallbesigned office (1)
byanaccreditedengineer.Also,areportfromastructuralengineermustbesubmit- Time to complete: 1day
tedconfirmingthatthestructuralskeletonandthefoundationsofthebuildingwill Cost to complete: Nocost
toleratetherequiredlicensedworks,areincompliancewithsafetyprovisions,willre-
sistthenaturaldisasters,areinaccordancewiththeEgyptianconstructionstandards, Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis
andillustratethesoilcompositionatthesite.Incaseofanyelevationormodification (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection
itisrequiredtosubmitareportfromaconstructionconsultantaccreditedfornoless takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson
average.
38 Doing Business in egypt 2008
Procedure 13. Receive on-site inspection from the Licensing office (2) Procedure 21. Receive on-site inspection from the Licensing
Time to complete: 1day office (10)
Cost to complete: Nocost Time to complete: 1day
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis Cost to complete: Nocost
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection
average. takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson
average.
Procedure 14. Receive on-site inspection from the Licensing office (3)
Time to complete: 1day Procedure 22. Receive final inspection by a committee from the
Cost to complete: Nocost Licensing office
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis Time to complete: 1day
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection Cost to complete: Nocost
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson Comments:Onceconstructioniscompleted,acommitteefromthegovernorate
average. makesafinalinspectiontocertifythatthewarehouseconformstothespecifications
outlinedinthebuildingpermit.
Procedure 15. Receive on-site inspection from the Licensing office (4)
Time to complete: 1day Procedure 23. Obtain letters from Licensing office about water
Cost to complete: Nocost and sewage connection and about electricity cables installation
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis Time to complete: 2days
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection Cost to complete: Nocost
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson
average. Comments:Asdescribedabovethecompanymustobtainapprovallettersfromthe
Licensingofficenecessaryforobtainingutilityconnections.
Procedure 16. Receive on-site inspection from the Licensing office (5) Procedure 24. Obtain certificate of natural disaster from an
Time to complete: 1day independent syndicate engineer
Cost to complete: Nocost Time to complete: 1day
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection Cost to complete: EGP102
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson Comments:Asupervisingengineerissuesthecertificateofnaturaldisaster.Thecost
average. reflectsthefeesforissuingthecertificate.
Procedure 17. Receive on-site inspection from the Licensing Procedure 25. Obtain the water and sewerage connection
office (6) Time to complete: 45days
Time to complete: 1day Cost to complete: EGP15,000
Cost to complete: Nocost Comments:ThecompanysubmitsanapplicationtotheMunicipaldepartmentto
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis obtainalettertobeprovidedtothewatercompany.Then,thecompanysubmitsan
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection applicationtothecompetentwaterauthority,alongwiththeoriginallicenseanda
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson copyofthebuildingpermit.FeesincludeapproximatelyEGP10,000forthewater
average. connectionandEGP5,000forthesewerageconnection.
Procedure 18. Receive on-site inspection from the Licensing Procedure 26.* Apply for an electricity connection with the
office (7) Alexandria electricity distribution company
Time to complete: 1day Time to complete: 1day
Cost to complete: Nocost Cost to complete: Nocost
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis Procedure 27. Receive electrical inspection
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson Time to complete: 1day
average. Cost to complete: Nocost
Procedure 19. Receive on-site inspection from the Licensing Comments:TheElectricityauthorityinspectstheconstructionsitetoprovidean
estimateforthecost.
office (8)
Time to complete: 1day Procedure 28.* Obtain electricity connection
Cost to complete: Nocost Time to complete: 19days
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis Cost to complete: EGP15,000
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection Comments:Connectionfeesincludethelayingdownofthecables.
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson
average. Procedure 29*. Obtain phone connection from Telecom Egypt
Procedure 20. Receive on-site inspection from the Licensing Time to complete: 18days
office (9) Cost to complete: EGP850
Time to complete: 1day Comments:Thecompanyshouldsubmitthefollowingdocuments:
Cost to complete: Nocost a.Titledeedfortheunit,orleasecontractifitisnotownedbytheapplicant;
Comments:TheLicensingofficewillinspecttheconstructionsiteonaregularbasis b.Copyofapplicant'sID;
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspection c.Operationlicenseforfactories,stores,commercialstoresandworkshops.
takesatmostoneday.Doing Businessassumesthesiteisinspectedevery3weekson
average.
List oF pRoCeDuRes � DeaLing WitH LiCenses 39
Procedure 30*. Register the building with the real estate registry andillustratethesoilcompositionatthesite.Incaseofanyelevationormodification
itisrequiredtosubmitareportfromaconstructionconsultantaccreditedfornoless
Time to complete: 45days than25yearsindicatingthataninspectionandastudyoftheexistingbuildingshave
Cost to complete: EGP2,000 proventhattheywilltoleratetheapplicableloads.
Comments:Thecompanymustsubmitaformaswellasthebuildingpermitforthe Law4of2006reducedthefeetoobtainabuildingpermitfrom1%ofconstruction
warehouseandtheprimarypurchasecontractofthelandonwhichthewarehouse costto0.2%.Uponsubmittingtheapplicationfile,buildingpermitapplicantsin
hadbeenbuilt. Assiutpaythepermitfeeatthecashier'sofficeintheGovernorate.
Law83of2006amendedDecreeno.70fortheyear1964todecreaseregistration
feestoaflatfeeofEGP2,000insteadofthefeebeingapercentageofthebuilding Procedure 4. Receive inspection and obtain project clearance
value. from Civil defense bureau
Time to complete: 45days
*Simultaneouswiththepreviousprocedure Cost to complete: Nocost
DEALING WITH LICENSES Comments:OncethepermitapplicationissubmittedtotheDistrictbureau,itis
Assiut passedontheCivildefensebureauforclearance.TheCivildefensebureauchecks
thatthedesigndrawingscomplywithnationalfiresafetyregulations.Theclearance
Procedures to build a warehouse fromtheCivildefensebureau.Theclearancetakesbetween1to2monthsdepend-
Data as of: July 2007 ingontheamountoffollowup.
Procedure 1. Obtain cadastral documents from the Survey Procedure 5.* Obtain project clearance from Water authority
department of the Assiut Governorate Time to complete: 30days
Time to complete: 7days Cost to complete: Nocost
Cost to complete: EGP110
Comments:Themeasurementspecificationdocumentsinclude:cadastraldelimita- Procedure 6.* Obtain project clearance from Electricity authority
tionstatement,cadastralmapsignedbysurveyauthority,andcoloredcadastralmap Time to complete: 30days
takenbyairplanefortheconstructionsite. Cost to complete: NoCost
Procedure 2.* Obtain technical approvals from independent Procedure 7.* Receive inspection prior to permit issuance from
syndicate engineer the Licensing office
Time to complete: 5days Time to complete: 1day
Cost to complete: EGP1,750 Cost to complete: Nocost
Comments:Thesedocumentsinclude:approvalofthecoloredcadastralmap,
approvalofprobeestimation,executionsupervisioncertificate(costEGP250-350), Comments:Aninspectorfromthemunicipalityinspectstheproposedconstruction
approvalofarchitecturaldrawings(costEGP150-200),accountingbook,reportcon- sitetoverifytheinformationincludedontheapplication
firmingthequalityofthebuildingfoundations(costEGP250to300),andacquiringa
soilinvestigationreport(costEGP1,000). Procedure 8.* Pay real estate tax at the Tax authority
Time to complete: 1day
Procedure 3. Submit building permit application to Licensing Cost to complete: EGP30
department of the Assiut governorate
Time to complete: 1day Procedure 9. Obtain building permit from the Licensing office
Cost to complete: EGP:2,000 Time to complete: 30days
Comments:Theapplicantmustsubmitanextensivelistofdocuments(includedthe Cost to complete: Nocost
onesdescribedinthepreviousprocedures)totheLicensingdepartment.Thelistis Comments:Law106of1976establishesa30daystatutorytimelimitforissuing
asfollows: buildingpermits,butthese30daysarecountedonlyafterallpreliminaryapprovals
a.Originalownershipcontractoftheplotofland(notarized) areobtained.
b.MeasurementspecificationstatementfromtheSurveydepartment Afterthetechnicalportionofthefileisreviewed,theLicensingofficeoftheAssiut
c. Surveyplan"airphotography"specifyinglocation.Suchsurveyplanshallbe governoratesendsthefiletotheSocialsecurityadministrationandthecompany's
approvedbyanaccreditedsyndicateengineer choseninsuranceprovidertoensurethatthebuilderhaspurchasedinsurancefor
d.AlignmentlicensefromtheUrbanplanningdepartmentofAssiutgovernorate theproject.Afterthischeckiscompleted,thebuildercanpickupitsbuildingpermit
fromthegovernorate.
e.Probeestimationapprovedbyasyndicatedengineer
f. Executionsupervisioncertificatefromasyndicateengineerorconsultantengi- Procedure 10. Receive on-site inspection from the Licensing
neerincasethebuilding'svalueismorethanEGP1,000,000.00 office
g.Areceiptattestingthepaymentofthedutyrelatedtotheexaminationofthe
drawingsanddetails Time to complete: 1day
h.Ageneraldrawingofthesiteatadrawingscaleofaminimum1:1000thatindi- Time to complete: EGP20
catetheboundariesanddimensionsofthelandofthesiteforwhichthepermitis Comments:InspectionsoccurrarelyinAssiut.Thenumberofinspectionsacon-
required,togetherwiththetotallandarea,andthatpartonwhichconstruction structionsitereceivesduringconstructionvariesdependingonthevisibilityofthe
isrequested,aswellasthefacingroadsandtheirwidths project.Forasmallerscaleprojectsuchasawarehouse,inspectorsmayonlyvisitthe
MinisterialDecree92of2006,issuedbytheMinistryofHousing,Utilities,andUrban- siteonceduringconstruction.
Communities,reducedthenumberoffilesnecessarytorequestabuildingpermit. Thereareofteninformalfeespaidtotheinspector,howeverthestandardofficialfee
Consequently,thefollowingdocumentsarerequired:onefilecontainingacopy foreachinspectionisEGP20.
ofthearchitecturaldrawingsinrespectofthehorizontalprojectionsoffloorsand
facades,averticalsectionindicatingthebuildingheightastotheroad'szerolevel Procedure 11. Receive final inspection by a committee from the
andthestructuraldrawingsofthefoundations,columnsandtheenforcedceilings Licensing office
togetherwithcopiesofthestructuralcalculationnotes.Alldrawingsshallbesigned
byanaccreditedengineer.Also,areportfromastructuralengineermustbesubmit- Time to complete: 1day
tedconfirmingthatthestructuralskeletonandthefoundationsofthebuildingwill Cost to complete: EGP20
toleratetherequiredlicensedworks,areincompliancewithsafetyprovisions,willre- Comments:Onceconstructioniscompleted,acommitteefromtheLicensingoffice
sistthenaturaldisasters,areinaccordancewiththeEgyptianconstructionstandards, makesafinalinspectiontocertifythatthewarehouseconformstothespecifications
outlinedinthebuildingpermit.
40 Doing Business in egypt 2008
Procedure 12. Obtain letters from Municipality about water and DEALING WITH LICENSES
sewage connection and about electricity cables installation Cairo
Time to complete: 1day Procedures to build a warehouse
Cost to complete: Nocost Data as of: July 2007
Comments:Asdescribedabovethecompanymustobtainapprovallettersfromthe Procedure 1. Obtain cadastral documents from the Survey
municipalitynecessaryforobtainingutilityconnections. department
Procedure 13. Obtain certificate of natural disaster from an Time to complete: 1day
independent syndicate engineer Cost to complete: EGP110
Time to complete: 7days Comments:Themeasurementspecificationdocumentsinclude:cadastraldelimita-
tionstatement,cadastralmapsignedbysurveyauthority,andcoloredcadastralmap
Cost to complete: EGP102 takenbyairplanefortheconstructionsite.
Comments:Asupervisingengineerissuesthecertificateofnaturaldisaster.Thecost
reflectsthefeesforissuingthecertificate. Procedure 2. Obtain technical approvals from independent
syndicate engineer
Procedure 14. Obtain water and sewerage connection from the
Assiut water authority Time to complete: 9days
Cost to complete: EGP1,750
Time to complete: 30days Comments:Thesedocumentsinclude:approvalofthecoloredcadastralmap,
Cost to complete: EGP15,000 approvalofprobeestimation,executionsupervisioncertificate(costEGP250-350),
Comments:ThecompanysubmitsanapplicationtotheMunicipaldepartmentto approvalofarchitecturaldrawings(costEGP150-200),accountingbook,reportcon-
obtainalettertobeprovidedtowatercompany.Then,thecompanysubmitsan firmingthequalityofthebuildingfoundations(costEGP250to300),andacquiringa
applicationtothecompetentwaterauthority,alongwiththeoriginallicenseanda soilinvestigationreport(costEGP1,000).
copyofthebuildingpermit.FeesincludeapproximatelyEGP10,000forthewater
connectionandEGP5,000forthesewerageconnection. Procedure 3. Submit building permit application to District
department of the Municipality
Procedure 15.* Apply for electricity connection from the Assiut
electricity distribution company Time to complete: 1day
Cost to complete: EGP2,000
Time to complete: 1day Comments:Theapplicantmustsubmitanextensivelistofdocuments(included
Cost to complete: Nocost theonesdescribedinthepreviousprocedures)totheDistrictdepartment.Thelist
isasfollows:
Procedure 16.* Receive electrical inspection a.Originalownershipcontractoftheplotofland(notarized);
Time to complete: 1day b.MeasurementspecificationstatementfromtheSurveydepartment;
Cost to complete: Nocost c. Surveyplan"airphotography"specifyinglocation.Suchsurveyplanshallbeap-
Comments:TheElectricityauthorityinspectstheconstructionsitetoprovidean provedbyanaccreditedsyndicateengineer;
estimateforthecost. d.AlignmentlicensefromtheUrbanplanningdepartmentofCairogovernorate;
e.Probeestimationapprovedbyasyndicatedengineer;
Procedure 17.* Obtain electricity connection f. Executionsupervisioncertificatefromasyndicateengineerorconsultantengi-
Time to complete: 14days neerincasethebuilding'svalueismorethanEGP1,000,000.00;
Cost to complete: EGP15,000 g.Areceiptattestingthepaymentofthedutyrelatedtotheexaminationofthe
Comments:Connectionfeesincludethelayingdownofthecables. drawingsanddetails;
h.Ageneraldrawingofthesiteatadrawingscaleofaminimum1:1000thatindi-
Procedure 18*. Obtain phone connection with Telecom Egypt catetheboundariesanddimensionsofthelandofthesiteforwhichthepermitis
required,togetherwiththetotallandarea,andthatpartonwhichconstructionis
Time to complete: 14days requested,aswellasthefacingroadsandtheirwidths.
Cost to complete: EGP850 MinisterialDecree92of2006,issuedbytheMinistryofhousing,utilities,andurban
Comments:Thecompanyshouldsubmitthefollowingdocuments: communities,reducedthenumberoffilesnecessarytorequestabuildingpermit.
a.Titledeedfortheunit,orleasecontractifitisnotownedbytheapplicant; Consequently,onlyonefilecontainingacopyofthearchitecturaldrawingsin
b.Copyofapplicant'sID; respectofthehorizontalprojectionsoffloorsandfacades,averticalsectionindicat-
ingthebuildingheightastotheroad'szerolevelandthestructuraldrawingsofthe
c.Operationlicenseforfactories,stores,commercialstoresandworkshops. foundations,columnsandtheenforcedceilingstogetherwithcopiesofthestruc-
turalcalculationnotes.Alldrawingsshallbesignedbyanaccreditedengineer.Also,
Procedure 19. Register the building with the real estate registry areportfromastructuralengineerconfirmingthatthestructuralskeletonandthe
Time to complete: 30days foundationsofthebuildingwilltoleratetherequiredlicensedworksandareincom-
Cost to complete: EGP2,000 pliancewithsafetyprovisionsandwillresistthenaturaldisastersandinaccordance
withtheEgyptianconstructionstandardsandillustratingthesoilcompositionatthe
Comments:Thecompanymustsubmitaformaswellasthebuildingpermitforthe site.Itisconditionalincaseoftherequirementofanyelevationormodificationto
warehouseandtheprimarypurchasecontractofthelandonwhichthewarehouse submitareportfromaconstructionconsultantaccreditedfornotlessthan25years
hadbeenbuilt. indicatingthataninspectionandastudyoftheexistingbuildingshasprovedtobe
Law83of2006amendedDecreeno.70fortheyear1964todecreaseregistration toleranttotheapplicableloadssubjectofthelicense.
feestoaflatfeeofEGP2,000insteadofthefeebeingapercentageofthebuilding Law4of2006reducedthefeetoobtainabuildingpermitfrom1%ofconstruction
value. costto0.2%.
*Simultaneouswiththepreviousprocedure
List oF pRoCeDuRes � DeaLing WitH LiCenses 41
Procedure 4. Receive inspection and obtain project clearance Procedure 13. Receive on-site inspection from the municipality (4)
from Civil defense department Time to complete: 1day
Time to complete: 60days Cost to complete: Nocost
Cost to complete: Nocost Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis
Comments:OncethepermitapplicationissubmittedtotheDistrictdepartment, (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec-
itispassedontheCivildefensedepartmentforclearance.TheCivildefensedepart- tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3
mentchecksthatthedesigndrawingscomplywithnationalfiresafetyregulations. weeksonaverage.
Theclearancetakesbetween1to3monthsdependingontheamountoffollowup.
Procedure 14. Receive on-site inspection from the municipality (5)
Procedure 5.* Obtain project clearance from the Greater Cairo Time to complete: 1day
Water authority Cost to complete: Nocost
Time to complete: 30days Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis
Cost to complete: Nocost (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec-
tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3
Procedure 6.* Obtain project clearance from Greater Cairo weeksonaverage.
Electricity authority Procedure 15. Receive on-site inspection from the municipality (6)
Time to complete: 30days
Cost to complete: Nocost Time to complete: 1day
Cost to complete: Nocost
Procedure 7.* Receive inspection prior to permit issuance from Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis
municipality (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec-
tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3
Time to complete: 1day weeksonaverage.
Cost to complete: Nocost
Comments:Aninspectorfromthemunicipalityinspectstheproposedconstruction Procedure 16. Receive on-site inspection from the municipality (7)
sitetoverifytheinformationincludedontheapplication. Time to complete: 1day
Procedure 8.* Pay real estate tax at the Tax authority Cost to complete: Nocost
Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis
Time to complete: 1day (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec-
Cost to complete: EGP30 tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3
weeksonaverage.
Procedure 9. Obtain building permit from the District
department Procedure 17. Receive on-site inspection from the municipality (8)
Time to complete: 30days Time to complete: 1day
Cost to complete: Nocost Cost to complete: Nocost
Comments:Law106of1976establishesa30daystatutorytimelimitforissuing Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis
buildingpermits,butthese30daysarecountedonlyafterallpreliminaryapprovals (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec-
areobtained. tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3
weeksonaverage.
Procedure 10. Receive on-site inspection from the municipality (1) Procedure 18. Receive on-site inspection from the municipality (9)
Time to complete: 1day
Cost to complete: Nocost Time to complete: 1day
Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis Cost to complete: Nocost
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec- Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis
tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3 (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec-
weeksonaverage. tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3
weeksonaverage.
Procedure 11. Receive on-site inspection from the municipality (2) Procedure 19. Receive on-site inspection from the municipality (10)
Time to complete: 1day
Cost to complete: Nocost Time to complete: 1day
Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis Cost to complete: Nocost
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec- Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis
tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3 (usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec-
weeksonaverage. tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3
weeksonaverage.
Procedure 12. Receive on-site inspection from the municipality (3) Procedure 20. Receive final inspection by a committee from the
Time to complete: 1day Municipality
Cost to complete: Nocost
Comments:Themunicipalitywillinspecttheconstructionsiteonaregularbasis Time to complete: 1day
(usuallyonceamonthbutinspectionscanoccuronceevery2weeks).Eachinspec- Cost to complete: Nocost
tiontakesatmostoneday.Doing Businessassumesthesiteisinspectedevery3 Comments:Onceconstructioniscompleted,themunicipalitymakesafinalinspec-
weeksonaverage. tiontocertifythatthewarehouseconformstothespecificationsoutlinedinthe
buildingpermit.
42 Doing Business in egypt 2008
Procedure 21. Obtain letters from Municipality about water and REGISTERING PROPERTY
sewage connection and about electricity cables installation Alexandria
Time to complete: 1day Property value: EGP 387, 915.75 = US$ 67,500
Cost to complete: Nocost Data as of: July 2007
Comments:Asdescribedabovethecompanymustobtainapprovallettersfromthe Procedure 1. Request for registration submitted by the buyer
municipalitynecessaryforobtainingutilityconnections.
Time to complete: 15days
Procedure 22. Obtain certificate of natural disaster from an Cost to complete: Nocost
independent syndicate engineer Comments:Thebuyersubmitsaregistrationapplicationtotherealestateregistry
alongwithacopyofhispersonalidentification,acopyoftheseller'spersonaliden-
Time to complete: 1day tification,thepropertyvalue,andthepropertylocation.Thereisnoapplicationfee.
Cost to complete: EGP102 ThisrequestistheninternallytransferredtotheMeasurementdepartment.
Comments:Asupervisingengineerissuesthecertificateofnaturaldisaster.Thecost
reflectsthefeesforissuingthecertificate. Procedure 2. Site inspection by the Measurement department
Procedure 23. Obtain water and sewerage connection Time to complete: 23days
Cost to complete: Nocost
Time to complete: 60days Comments:Nofeesarepaidatthisstage.Afterinspectingthepropertyandvalidat-
Cost to complete: EGP15,000 ingitsspecifications,theMeasurementdepartmentpreparesareport.
Comments:ThecompanysubmitsanapplicationtotheMunicipaldepartmentto
obtainalettertobeprovidedtowatercompany.Then,thecompanysubmitsan Procedure 3. Payment and issuance of the inspection report
applicationtothecompetentwaterauthority,alongwiththeoriginallicenseanda
copyofthebuildingpermit.FeesincludeapproximatelyEGP10,000forthewater Time to complete: 40days
connectionandEGP5,000forthesewerageconnection. Cost to complete: Nocost
Comments:ThebuyervisitstheMeasurementdepartmentlocatedintherealestate
Procedure 24.* Apply for electricity connection registryandmeetsthemeasurementofficer.Themeasurementofficerisresponsible
forcheckingdocumentsandtransferringthemtotheheadoftherealestateregistry
Time to complete: 1day forapproval.Afterapprovingthereport(kashftahdeed),themeasurementdepart-
Cost to complete: Nocost menttransfersitbacktotherealestateregistry.Theregistryhastoapproveitinor-
Comments:Inorderfortheelectricityauthoritytoextendtheelectriccablesnet- dertobevalid.Afterapprovingit,theregistryissuesafinalapprovalcalledmaqbul.
work,thecompanymustsubmitthedesigndrawingsofelectricitytobeendorsedby
theauthorityandelectricitycompany. Procedure 4. Final contract is drafted and approved by the
lawyer's syndicate
Procedure 25.* Receive electrical inspection Time to complete: 45days
Time to complete: 1day Cost to complete: EGP1,940(0.5%ofpropertyvalue)
Cost to complete: Nocost Comments:Thefinalsaleagreement(bluecontract)issubmittedtothelawyer's
Comments:TheGreaterCairoElectricityauthorityinspectstheconstructionsiteto syndicateforfinalrevisionaftertherealestateregistryapproval.Thereisan"ac-
provideanestimateforthecost. ceptedapproval"anda"finalapproval".Betweenthemthereisfinalrevision.The
lawyer'ssyndicatehastoreviewandapprovethefinalcontract(mashrua).After
Procedure 26.* Obtain electricity connection beingdraftedbythepartiesonaspecialformatthelawyer'ssyndicate,thefinal
Time to complete: 19days contractissubmittedtotherealestateregistry.
Cost to complete: EGP15,000 Procedure 5. The buyer obtains the contract from the Real estate
Comments:Connectionfeesincludethelayingdownofthecables. registry
Procedure 27*. Obtain phone connection with Telecom Egypt Time to complete: 4days
Cost to complete: EGP2,000
Time to complete: 18days Comments:Thebuyerobtainsthecontractfromtherealestateregistryagainst
Cost to complete: EGP850 paymentoffeesamountingtoEGP2,000.Thisregistrationfeewaschangedfrom3%
Comments:Thecompanyshouldsubmitthefollowingdocuments: andcappedatEGP2,000during2006toencourageallindividualstoregistertheir
a.Titledeedfortheunit,orleasecontractifitisnotownedbytheapplicant; property.
b.Copyofapplicant'sID;
c.Operationlicenseforfactories,stores,commercialstoresandworkshops. Procedure 6. Seller and buyer sign the contract at the real estate
registry
Procedure 28. Register the building with the real estate registry Time to complete: 31days
Time to complete: 75days Cost to complete: Nocost
Cost to complete: EGP2,000 Comments:Sellerandpurchasermustsignthecontractattherealestateregistry.
Comments:Thecompanymustsubmitaformaswellasthebuildingpermitforthe Theregistryreviewsthecontractagaintomakesurethatthefeeswerepaidand
warehouseandtheprimarypurchasecontractofthelandonwhichthewarehouse thatthedetailsarecorrect.Theregistrywillalsoaddaregistrationnumbertothe
hadbeenbuilt. contract.
Law83of2006amendedDecreeno.70fortheyear1964todecreaseregistration
feestoaflatfeeofEGP2,000insteadofapercentageofthebuildingvalue. Procedure 7. The buyer picks-up the new contract/title at the real
estate registry
*Simultaneouswiththepreviousprocedure Time to complete: 1day
Cost to complete: Nocost
Comments:Aftertheregistryaddsthenewregistrationnumbertothecontract,itis
readytobepicked-upbythebuyer.
List oF pRoCeDuRes � RegisteRing pRopeRty 43
REGISTERING PROPERTY REGISTERING PROPERTY
Assiut Cairo
Property value: EGP 387, 915.75 = US$ 67,500 Property value: EGP 387, 915.75 = US$ 67,500
Data as of: July 2007 Data as of: July 2007
Procedure 1. Request for registration submitted by the buyer Procedure 1. Request for registration submitted by the buyer
Time to complete: 3days Time to complete: 15days
Cost to complete: EGP3 Cost to complete: Nocost
Comments:Thebuyersubmitsaregistrationapplicationbecauseownershipdoes Comments:Afteraninitialwrittenagreementbetweenthepartieshasbeencon-
nottransferwithoutofficialregistration.Allofficialagenciesrequirethiskindofreg- cludedandthebuyerpaystheestablishedpricetotheseller,thepurchaserpresents
istrationasasecuritytool.Thesellergoeswiththebuyertotherealestateregistry. totherealestateregistryarequestforregistration.Thisrequestistheninternally
Theybothsigntheapplicationandsubmitallrequireddocuments. transferredtothemeasurementdepartment.
Procedure 2. Site inspection by the measurement department Procedure 2. Site inspection by the measurement department
Time to complete: 7days Time to complete: 30days
Cost to complete: EGP250 Cost to complete: Nocost
Comments:Themeasurementdepartmentverifiesthesales-purchasecontractand Comments:Afterpaymentfortheinspection,themeasurementdepartment
itsvaliditytoensuretheselleristhesoleowner.Theselleristheonewhopaysthe inspectsthesite,takesthenecessarymeasurementsandspecificationsandprepares
inspectionfeesifheistheowner.Incasethesellerturnsoutnottobetheowner,he areport.
wouldhavetopayapenalty.Aftermakingtheinspection,themeasurementdepart-
mentpreparesareport. Procedure 3. Payment and issuance of the inspection report
(maqbul)
Procedure 3. Payment and issuance of the inspection report
Time to complete: 42days
Time to complete: 5days Cost to complete: Nocost
Cost to complete: Nocost Comments:Theinspectionreportwillbeapprovedorrefusedbythemeasurement
Comments:Theinspectionreportisusedtodeterminewhetheralldetailsabout department.Theapprovaliscalledkashftahdeed.Theapprovedrequestisthen
thepropertyarevalid.Afterapprovingthereport,themeasurementdepartment transferredbacktotherealestateregistry.Theregistrywillexaminethereportand
submitsitwiththeregistrationrequesttotherealestateregistryinordertohaveit issueafinalapprovalcalledmaqbul.
examinedandthefinalapprovalissued.
Procedure 4. Final contract is drafted and approved by the
Procedure 4. Final contract is drafted and approved by the lawyer's syndicate
lawyer's syndicate
Time to complete: 67days
Time to complete: 5days Cost to complete: EGP1,940(0.5%ofpropertyvalue
Cost to complete: EGP500 Comments:Afinalsaleagreementisdraftedbythepartiesonaspecialformat
Comments:Thenewpropertyregistrationlawrequiresthatthelawyer'ssyndicate thelawyer'ssyndicate.Thereisnoneedforaninterventionofanotaryorlawyerin
reviewsthecontract.Thelawyer'ssyndicateisneutralandhasthetrustofthe fillingthisform.Thelawyer'ssyndicatereviewsthefinalcontractandwillapprove
governmentatthesametime.Itsroleistoreviewandapprovethefinalcontract. thecontract(mashrua).
Thelawyer'ssyndicateusuallychargestheEGP500forapropertysimilartotheone
consideredinourstudy. Procedure 5. The buyer obtains the contract from the real estate
Procedure 5. The buyer obtains the contract from the real estate registry
registry Time to complete: 7days
Time to complete: 3days Cost to complete: EGP2,000
Cost to complete: EGP2,000 Comments:Thebuyerobtainsthecontractfromtherealestateregistryagainst
paymentoffeesamountingtoEGP2,000.Thisregistrationfeewaschangedfrom3%
Comments:AfterpayingtheEGP2,000fees,thebuyerobtainsanoriginalcopy andcappedatEGP2,000during2006toencourageallindividualstoregistertheir
ofthecontractfromtherealestateregistryofficer,whichassuresownership.Ifthis property.
copyislost,thebuyercanaskforanothercopyafterpayingasmallfee.Theregistra-
tionfeewasdroppedfrom3%andcappedatEGP2,000during2006toencourage Procedure 6. Seller and buyer sign the contract before the real
allindividualstoregistertheirproperty. estate registry
Procedure 6. Seller and buyer sign the contract before the real Time to complete: 31days
estate registry Cost to complete: Nocost
Time to complete: 7days Comments:Sellerandpurchasermustsignthecontractbeforetherealestate
Cost to complete: EGP30 registry(1day).
Comments:Sellerandpurchasermustsignthecontractbeforetherealestatereg- Theregistryreviewsthecontractagain,makingsurethatpaymentshavebeen
istry.Theregistryreviewsthecontractagain,makingsurethatpaymentshavebeen madeandthatdetailsarecorrect(30days)andwilladdaregistrationnumbertothe
madeandthatdetailsarecorrectandwilladdaregistrationnumbertothecontract. contract.
Procedure 7. The buyer picks-up the new contract/title at the real Procedure 7. The buyer picks-up the new contract/title at the real
estate registry estate registry
Time to complete: 3days Time to complete: 1day
Cost to complete: Nocost Cost to complete: Nocost
Comments:Aftertheregistryaddsthenewregistrationnumbertothecontract,itis Comments:Aftertheregistryaddsthenewregistrationnumbertothecontract,itis
readytobepicked-upbythebuyer. readytobepicked-upbythebuyer.
44
Acknowledgements
Contactdetailsoflocalpartners
areavailableontheDoing Businesswebsitesat
www.SubnationalDoingbusiness.organd
www.Doingbusiness.org
Doing Business in Egypt 2008 was prepared by a team led by More than 70 lawyers, construction experts, accountants,
Mierta Capaul. The team comprised Jamal Ibrahim Haidar, businesspeople and public officials participated in the analysis
Zenaida Hernandez, Jana Malinska, Dana Omran and Luis found in this report. Data collection in Assiut was coordinated
Aldo Sanchez Ortega. Xavier Forneris provided leadership in by Gamal El-Din Abd Elmetal and Engy Nashaat of the
the regional policy dialogue. Valuable assistance was received Assiut Business Association. Respondents in Alexandria were
from Fernanda Almeida, Diego Borrero, Frederic Bustelo, coordinated by Ashraf Nadoury of the law firm Nadoury
Claudia Contreras, Allen Dennis, Manuel Enrique Garcia and Nahas. The team wishes to extend their gratitude to the
Huitron, Jean Michel Lobet, Rita Ramalho, Martin Steindl, public officials who made valuable observations during the
Sylvia Solf and Caroline Van Coppenolle. Simeon Djankov, consultation period. Their names are listed on the facing page.
Sahar Nasr, Frank Sader and Damien Shiels reviewed the text.
The report was edited by Linda Moll and designed by Gerry
Quinn.
The team is also grateful to Sherif Bahig Hamdy and Thomas
Moullier from the IFC Private Enterprise Partnership for the
Middle East and North Africa (PEP-MENA), Paul Brunning
from the United States Agency for International Development
(USAID) and David Wall from USAID's TAPR II project. The
project was funded by FIAS, IFC and USAID.
aCknoWLeDgements 45
PRiVaTE Maher Fawzi Public caiRo
PRofEssioNals Maher Fawzi Office officials Alaa Amer
Ahmed Abdel Warith Sherif El Kamary Vice Chairman, Capital Market
AAW Consulting Engineers Mazars, Mostafa Shawki & Co. alEXaNDRia Authority
Mohamed Elwany Hazem Saleh Osama Abdel Moneam Hanan Hassan Arafat
Abu-Ghazaleh Legal Mazars, Mostafa Shawki & Co. General Manager of International Housing and Utilities Sector,
Relations, General Organization
Yasser Yousry Tamer Shaaban Ministry of Housing
for Exports Imports & Control
Abu-Ghazaleh Legal Mazars, Mostafa Shawki & Co. Nermine Abo El Atta
Naiera Abd El-Moneim Ahmed
Greiss Youssef Amin Abbasi Economic Expert, Ministry of
Head of Investment Service Industry and Trade
Afifi Air Cargo Mecca El-Mokarama Office Complex, General Authority for Abdel Kader El Dardiry
Abdel Aal Aly Hend Abdel Ghany Investment and Free Zones
Housing Department Manager,
Afifi World Transport Mena Associates, member of
Amereller Rechtsanw�lte Mustafa Awad Cairo Governorate
Ahmed Sadek Ammar Representative of the Ministry of Amr Eleish
Ahmed Sadek Ammar Law Office Ingy Rasekh Housing in the Governorate
Mena Associates, member of General Manager, Policy
Aiman Salem Amereller Rechtsanw�lte Nagah Zaki Azab Department, General Authority
Aiman Salem Office General Manager Tax Department, for Investment and Free Zones
Fardous El Ghandakly General Authority for Investment
Mohamed Ibrahim Mohamed El Shafeiy & Fardous El and Free Zones, Ashraf Gamal Eldin
Alexandria Construction Company Ghandakly Law Office Yousef Labib Aziz Head, Institute of Directors,
Ministry of Investment
Mostafa Mostafa Mahmoud Gaber Morsy Undersecretary of Foodstuff test
Al Kamel Law Office Morsy Taha Engineering labs, General Organization for Hossam El-Din Omar Ibrahim
Exports Imports & Control Legal Counsel to the Chairman,
Arafah Kamel Abdul Hameed Consultancy Office Capital Market Authority
Arafah Kamel Abdul Hameed Law Mohammad Omar Shedeed Sohaila Basyouni
Office Nadoury & Nahas Law Offices Representative of the Ministry Hassan Fahmy
of Local Development, Head of Investment Service
Yasser Omar Mohamed Fahim Representative of the Sector, General Authority for
Assiut Engineering Office PricewaterhouseCoopers / Governorate in the One-stop shop Investment and Free Zones
Magdy Asham Mansour & Co. Samir A. El Gamal Mustafa Khamees Farahat
Assiut United Company for Sherif Mansour Minister's Advisor of Information Director, Greater Cairo Utility
Contracting and Construction PricewaterhouseCoopers / Technology, General Organization Data Center
Abdel Rahman Megahid Mansour & Co. for Exports Imports & Control Salama Fares
Assiut University, Faculty of Girgis Abd El-Shahid Mervat Ibrahim Hussein Senior Legal Advisor to the
Engineering Sarwat A. Shahid Law Firm Representative of the Chairman, General Authority for
Investment and Free Zones
Sonia Safwat Mohamed Serry Governorate in the One-stop shop
CMA-CGM Egypt, Alexandria Serry Law Office Soman Said Hammad
Office assiuT
Emad El Shalakany Governor's Advisor for
Communication and Technology
Hossam Lehita Shalakany Law Office, member of Amal Ahmed Abu Ela
Egytrans Co. Lex Mundi Manager, Governorate Licensing Emad Hassan
Office Database Program Manager,
Hossam Mohamed Hellal Dina Salah Ministry of State for
Grant Thornton Mohamed Hilal Shalakany Law Office, member of Abdel Aziz Mustafa Amer
Head of Investment Service Administrative Development
Hamdy Mohammad Al-Otefe Lex Mundi Complex, General Authority for Ahmed Helmi
Hamdy Mohammad Al-Otefe Law Shereen Zaky Investment and Free Zones Assistant to the Secretary
Office Shalakany Law Office, member of Mustafa Ahmed Badri General, Cairo Governorate
Ahmed Abou Ali Lex Mundi Manager, Investment Tax Office, Mohamed Refaat
Hassouna & Abou Ali Law Firm Mona Zulficar One-stop shop Managing Director, Egyptian
Ashraf Elibrachy Shalakany Law Office, member of Credit Bureau
Lex Mundi Romani Hakim
Ibrachy Law Firm Sales Tax Office Manager, One- Ismail Tahoun
Yaser Gamaluddin Hamam
Kamal Omar stop shop Maadi District Head, Cairo
The Egyptian Law Firm
Kamal Omar Law Office Ali Hussein Governorate
Ahmed Ibrahim
Magdi Azab Assiut Governorate
Trowers & Hamlins Representative
Magdi Azab Architects Maged Fakhry
UPS SCS, Egypt LLC.