92131 Doing Business 2015 Sri Lanka Economy Profile 2015 Sri Lanka Doing Business 2015 Sri Lanka 2 © 2014 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org All rights reserved. 1 2 3 4 17 16 15 14 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Doing Business 2015 Sri Lanka 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 6 Starting a business ..................................................................................................................... 16 Dealing with construction permits ........................................................................................... 24 Getting electricity ....................................................................................................................... 32 Registering property .................................................................................................................. 39 Getting credit .............................................................................................................................. 47 Protecting minority investors ................................................................................................... 54 Paying taxes ................................................................................................................................ 63 Trading across borders .............................................................................................................. 68 Enforcing contracts .................................................................................................................... 73 Resolving insolvency .................................................................................................................. 80 Labor market regulation ........................................................................................................... 83 Distance to frontier and ease of doing business ranking ...................................................... 90 Resources on the Doing Business website .............................................................................. 93 Doing Business 2015 Sri Lanka 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is 1, 2014 (except for the paying taxes indicators, which for a local entrepreneur to open and run a small to cover the period January–December 2013). medium-size business when complying with relevant The Doing Business methodology has limitations. Other regulations. It measures and tracks changes in areas important to business—such as an economy’s regulations affecting 11 areas in the life cycle of a proximity to large markets, the quality of its business: starting a business, dealing with construction infrastructure services (other than those related to permits, getting electricity, registering property, getting trading across borders and getting electricity), the credit, protecting minority investors, paying taxes, security of property from theft and looting, the trading across borders, enforcing contracts, resolving transparency of government procurement, insolvency and labor market regulation. macroeconomic conditions or the underlying strength of In a series of annual reports Doing Business presents institutions—are not directly studied by Doing Business. quantitative indicators on business regulations and the The indicators refer to a specific type of business, protection of property rights that can be compared generally a local limited liability company operating in across 189 economies, from Afghanistan to Zimbabwe, the largest business city. Because standard assumptions over time. The data set covers 47 economies in Sub- are used in the data collection, comparisons and Saharan Africa, 32 in Latin America and the Caribbean, 25 benchmarks are valid across economies. The data not in East Asia and the Pacific, 26 in Eastern Europe and only highlight the extent of obstacles to doing business; Central Asia, 20 in the Middle East and North Africa and they also help identify the source of those obstacles, 8 in South Asia, as well as 31 OECD high-income supporting policy makers in designing regulatory reform. economies. The indicators are used to analyze economic More information is available in the full report. Doing outcomes and identify what reforms have worked, where Business 2015 presents the indicators, analyzes their and why. relationship with economic outcomes and presents This economy profile presents the Doing Business business regulatory reforms. The data, along with indicators for Sri Lanka. To allow useful comparison, it information on ordering Doing Business 2015, are also provides data for other selected economies available on the Doing Business website at (comparator economies) for each indicator. The data in http://www.doingbusiness.org. this report are current as of June Doing Business 2015 Sri Lanka 5 CHANGES IN DOING BUSINESS 2015 As part of a 2-year update in methodology, Doing Finally, the name of the employing workers indicator set Business 2015 incorporates 7 important changes. First, has been changed to labor market regulation, and the the ease of doing business ranking as well as all topic- scope of this indicator set has also been changed. The level rankings are now computed on the basis of indicators now focus on labor market regulation distance to frontier scores (see the chapter on the applying to the retail sector rather than the distance to frontier and ease of doing business ranking). manufacturing sector, and their coverage has been Second, for the 11 economies with a population of more expanded to include regulations on labor disputes and than 100 million, data for a second city have been added on benefits provided to workers. The labor market to the data set and the ranking calculation. These regulation indicators continue to be excluded from the economies are Bangladesh, Brazil, China, India, aggregate distance to frontier score and ranking on the Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian ease of doing business. Federation and the United States. Third, for getting Beyond these changes there are 3 other updates in credit, the methodology has been revised for both the methodology. For paying taxes, the financial statement strength of legal rights index and the depth of credit variables have been updated to be proportional to 2012 information index. The number of points has been income per capita; previously they were proportional to increased in both indices, from 10 to 12 for the strength 2005 income per capita. For enforcing contracts, the of legal rights index and from 6 to 8 for the depth of value of the claim is now set at twice the income per credit information index. In addition, only credit bureaus capita or $5,000, whichever is greater. For dealing with and registries that cover at least 5% of the adult construction permits, the cost of construction is now set population can receive a score on the depth of credit at 50 times income per capita (before, the cost was information index. assessed by the Doing Business respondents). In addition, Fourth, the name of the protecting investors indicator set this indicator set no longer includes the procedures for has been changed to protecting minority investors to obtaining a landline telephone connection. better reflect its scope—and the scope of the indicator For more details on the changes, see the “What is set has been expanded to include shareholders’ rights in changing in Doing Business?” chapter starting on page corporate governance beyond related-party transactions. 24 of the Doing Business 2015 report. For more details Fifth, the resolving insolvency indicator set has been on the data and methodology, please see the “Data expanded to include an index measuring the strength of Notes” chapter starting on page 114 of the Doing the legal framework for insolvency. Sixth, the calculation Business 2015 report. For more details on the distance to of the distance to frontier score for paying taxes has frontier metric, please see the “Distance to frontier and been changed. The total tax rate component now enters ease of doing business ranking” chapter in this profile. the score in a nonlinear fashion, in an approach different from that used for all other indicators (see the chapter on the distance to frontier and ease of doing business ranking). Doing Business 2015 Sri Lanka 6 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to start ECONOMY OVERVIEW is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing business Region: South Asia based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size Income category: Lower middle income businesses through their life cycle. Economies are ranked from 1 to 189 by the ease of doing business ranking. This Population: 20,483,000 year's report presents results for 2 aggregate measures: the distance to frontier score and the ease of doing GNI per capita (US$): 3,170 business ranking. The ranking of economies is determined by sorting the aggregate distance to frontier (DTF) scores. DB2015 rank: 99 The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute DB2014 rank: 105* distance to the best performance in each Doing Business Change in rank: 6 indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the DB 2015 DTF: 61.4 worst performance and 100 the frontier. (See the chapter on the distance to frontier and ease of doing business). DB 2014 DTF: 60 The 10 topics included in the ranking in Doing Business 2015: starting a business, dealing with construction Change in DTF: 1.4 permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading * DB2014 ranking shown is not last year’s published across borders, enforcing contracts and resolving ranking but a comparable ranking for DB2014 that insolvency. The labor market regulation indicators captures the effects of such factors as data (formerly employing workers) are not included in this corrections and the changes in methodology. See year’s aggregate ease of doing business ranking, but the the data notes starting on page 114 of the Doing data are presented in this year’s economy profile. Business 2015 report for sources and definitions. The aggregate ranking on the ease of doing business benchmarks each economy’s performance on the indicators against that of all other economies in the Doing Business sample (figure 1.1). While this ranking tells much about the business environment in an economy, it does not tell the whole story. The ranking on the ease of doing business, and the underlying indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business. Doing Business 2015 Sri Lanka THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database. Doing Business 2015 Sri Lanka THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy regional average (figure 1.2). The economy’s rankings stands in the aggregate ranking on the ease of doing (figure 1.3) and distance to frontier scores (figure 1.4) business is useful. Also useful is to know how it ranks on the topics included in the ease of doing business relative to comparator economies and relative to the ranking provide another perspective. Figure 1.2 How Sri Lanka and comparator economies rank on the ease of doing business Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. Doing Business 2015 Sri Lanka 9 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Sri Lanka (Scale: Rank 189 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - Sri Lanka (Scale: Score 0 center, Score 100 outer edge) Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. Doing Business 2015 Sri Lanka 10 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business tells Doing Business introduced the distance to frontier score. This only part of the story, so do changes in that ranking. Yearly measure shows how far on average an economy is from the movements in rankings can provide some indication of best performance achieved by any economy on each Doing changes in an economy’s regulatory environment for firms, Business indicator. but they are always relative. Comparing the measure for an economy at 2 points in time Moreover, year-to-year changes in the overall rankings do allows users to assess how much the economy’s regulatory not reflect how the business regulatory environment in an environment as measured by Doing Business has changed economy has changed over time—or how it has changed in over time—how far it has moved toward (or away from) the different areas. To aid in assessing such changes, most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.5). Figure 1.5 How far has Sri Lanka come in the areas measured by Doing Business? Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2010, except for getting credit, paying taxes, protecting minority investors and resolving insolvency which had methodology changes in 2014 and thus are only comparable to 2013. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing Business 2015 report for more details on the distance to frontier score. Source: Doing Business database. Doing Business 2015 Sri Lanka 11 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part of regulation—such as a regulatory process that can be the story (table 1.1). The indicators, on their own or in completed with a small number of procedures in a few comparison with the indicators of a good practice days and at a low cost. Comparison of the economy’s economy or those of comparator economies in the indicators today with those in the previous year may region, may reveal bottlenecks reflected in large numbers show where substantial bottlenecks persist—and where of procedures, long delays or high costs. Or they may they are diminishing. reveal unexpected strengths in an area of business Table 1.1 Summary of Doing Business indicators for Sri Lanka Best performer globally Bangladesh DB2015 Sri Lanka DB2015 Sri Lanka DB2014 Maldives DB2015 Pakistan DB2015 Bhutan DB2015 Indicator Nepal DB2015 India DB2015 DB2015 Starting a Business 104 101 115 92 158 50 104 116 New Zealand (1) (rank) Starting a Business (DTF 83.01 82.34 81.36 85.01 68.42 91.07 83.01 80.92 New Zealand (99.96) Score) Procedures (number) 9.0 9.0 9.0 8.0 11.9 5.0 7.0 10.0 New Zealand (1.0)* Time (days) 11.0 11.0 19.5 17.0 28.4 9.0 17.0 19.0 New Zealand (0.5) Cost (% of income per 20.7 26.1 16.8 4.4 12.2 6.2 32.2 9.6 Slovenia (0.0) capita) Paid-in min. capital (% 0.0 0.0 0.0 0.0 111.2 2.3 0.0 0.0 112 Economies (0.0)* of income per capita) Dealing with Hong Kong SAR, Construction Permits 60 60 144 131 184 24 91 125 China (1) (rank) Dealing with Hong Kong SAR, Construction Permits 76.50 76.44 61.90 64.51 30.89 83.45 71.83 66.07 China (95.53) (DTF Score) Doing Business 2015 Sri Lanka 12 Best performer globally Bangladesh DB2015 Sri Lanka DB2015 Sri Lanka DB2014 Maldives DB2015 Pakistan DB2015 Bhutan DB2015 Indicator Nepal DB2015 India DB2015 DB2015 Hong Kong SAR, Procedures (number) 12.0 12.0 13.4 21.0 25.4 9.0 10.0 10.0 China (5.0) Time (days) 169.0 169.0 269.2 150.0 185.9 140.0 86.0 249.4 Singapore (26.0) Cost (% of warehouse 0.3 0.3 2.1 1.3 28.2 0.2 9.4 3.5 Qatar (0.0)* value) Getting Electricity 100 100 188 72 137 108 85 146 Korea, Rep. (1) (rank) Getting Electricity (DTF 72.71 72.24 17.32 78.28 63.06 71.14 76.07 60.10 Korea, Rep. (99.83) Score) Procedures (number) 5.0 5.0 9.0 5.0 7.0 6.0 5.0 5.0 12 Economies (3.0)* Time (days) 104.0 104.0 428.9 74.0 105.7 91.0 70.0 178.3 Korea, Rep. (18.0)* Cost (% of income per 901.6 1,017.0 3,890.1 606.5 487.7 391.5 1,284.9 1,353.3 Japan (0.0) capita) Registering Property 131 124 184 86 121 169 27 114 Georgia (1) (rank) Registering Property 58.45 58.44 31.34 68.82 60.40 43.85 83.08 61.48 Georgia (99.88) (DTF Score) Procedures (number) 9.0 9.0 8.0 3.0 7.0 6.0 3.0 6.0 4 Economies (1.0)* Time (days) 51.0 51.0 244.0 92.0 47.0 57.0 5.0 50.0 3 Economies (1.0)* Cost (% of property 5.1 5.1 7.2 5.0 7.0 16.2 4.8 7.6 4 Economies (0.0)* value) Getting Credit (rank) 89 86 131 71 36 116 116 131 New Zealand (1) Getting Credit (DTF 45.00 45.00 30.00 50.00 65.00 35.00 35.00 30.00 New Zealand (100) Score) Strength of legal rights 3 3 6 4 6 2 7 3 3 Economies (12)* index (0-12) Doing Business 2015 Sri Lanka 13 Best performer globally Bangladesh DB2015 Sri Lanka DB2015 Sri Lanka DB2014 Maldives DB2015 Pakistan DB2015 Bhutan DB2015 Indicator Nepal DB2015 India DB2015 DB2015 Depth of credit 6 6 0 6 7 5 0 3 23 Economies (8)* information index (0-8) Credit registry coverage 0.0 0.0 0.9 0.0 0.0 17.3 0.0 7.3 Portugal (100.0) (% of adults) Credit bureau coverage 44.5 39.0 0.0 18.0 22.4 0.0 1.0 4.5 23 Economies (100.0)* (% of adults) Protecting Minority 51 50 43 104 7 135 71 21 New Zealand (1) Investors (rank) Protecting Minority 59.17 59.17 60.83 50.00 72.50 44.17 56.67 66.67 New Zealand (81.67) Investors (DTF Score) Extent of conflict of interest regulation 6.0 6.0 6.3 4.0 6.7 5.3 5.3 6.0 Singapore (9.3)* index (0-10) Extent of shareholder governance index (0- 5.8 5.8 5.8 6.0 7.8 3.5 6.0 7.3 France (7.8)* 10) Strength of minority investor protection 5.9 5.9 6.1 5.0 7.3 4.4 5.7 6.7 New Zealand (8.2) index (0-10) United Arab Emirates Paying Taxes (rank) 158 167 83 86 156 134 126 172 (1)* Paying Taxes (DTF United Arab Emirates 55.00 45.93 73.98 73.55 55.53 63.76 66.52 44.46 Score) (99.44)* Payments (number per Hong Kong SAR, 47.0 58.0 21.0 19.0 33.0 30.0 34.0 47.0 year) China (3.0)* Time (hours per year) 167.0 209.5 302.0 274.0 243.0 413.0 334.0 594.0 Luxembourg (55.0) Trading Across Borders 69 85 140 165 126 132 171 108 Singapore (1) (rank) Trading Across Borders 76.94 73.96 61.36 43.10 65.47 63.63 36.08 69.05 Singapore (96.47) Doing Business 2015 Sri Lanka 14 Best performer globally Bangladesh DB2015 Sri Lanka DB2015 Sri Lanka DB2014 Maldives DB2015 Pakistan DB2015 Bhutan DB2015 Indicator Nepal DB2015 India DB2015 DB2015 (DTF Score) Documents to export 7 7 6 9 7 7 11 8 Ireland (2)* (number) Time to export (days) 16.0 20.0 28.3 38.0 17.1 21.0 40.0 20.7 5 Economies (6.0)* Cost to export (US$ per 560.0 595.0 1,281.0 2,230.0 1,332.0 1,625.0 2,545.0 765.0 Timor-Leste (410.0) container) Cost to export (deflated 560.0 635.0 1,281.0 2,230.0 1,332.0 1,625.0 2,545.0 765.0 US$ per container) Documents to import 7 7 9 11 10 9 11 8 Ireland (2)* (number) Time to import (days) 13.0 17.0 33.6 37.0 21.1 22.0 39.0 18.4 Singapore (4.0) Cost to import (US$ per 690.0 725.0 1,515.0 2,330.0 1,462.0 1,610.0 2,650.0 1,005.0 Singapore (440.0) container) Cost to import (deflated 690.0 773.8 1,515.0 2,330.0 1,462.0 1,610.0 2,650.0 1,005.0 US$ per container) Enforcing Contracts 165 165 188 74 186 91 134 161 Singapore (1) (rank) Enforcing Contracts 38.96 38.96 20.82 61.42 25.81 58.13 49.65 41.53 Singapore (89.54) (DTF Score) Time (days) 1,318.0 1,318.0 1,442.0 225.0 1,420.0 665.0 910.0 993.1 Singapore (150.0) Cost (% of claim) 22.8 22.8 66.8 23.1 39.6 16.5 26.8 23.0 Iceland (9.0) Procedures (number) 40.0 40.0 41.0 47.0 46.0 41.0 39.0 46.0 Singapore (21.0)* Resolving Insolvency 72 68 147 189 137 135 82 78 Finland (1) (rank) Resolving Insolvency 47.81 47.59 29.49 0.00 32.60 33.12 45.41 46.18 Finland (93.85) (DTF Score) Doing Business 2015 Sri Lanka 15 Best performer globally Bangladesh DB2015 Sri Lanka DB2015 Sri Lanka DB2014 Maldives DB2015 Pakistan DB2015 Bhutan DB2015 Indicator Nepal DB2015 India DB2015 DB2015 no Time (years) 1.7 4.0 4.3 1.5 2.0 2.7 Ireland (0.4) practice no Cost (% of estate) 10.0 10.0 8.0 9.0 4.0 9.0 5.6 Norway (1.0) practice Outcome (0 as no piecemeal sale and 1 as 0 0 0 0 0 0 0 practice going concern) Recovery rate (cents on 42.4 42.0 25.8 0.0 25.7 49.9 43.7 39.4 Japan (92.9) the dollar) Strength of insolvency no 8.0 8.0 5.0 6.0 2.0 7.0 8.0 5 Economies (15.0)* framework index (0-16) practice Note: DB2014 rankings shown are not last year’s published rankings but comparable rankings for DB2014 that capture the effects of s uch factors as data corrections and changes to the methodology. Trading across borders deflated and non-deflated values are identical in DB2015 because it is defined as the base year for the deflator. The best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2015 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practic e or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the eco nomy at the bottom of the ranking on the relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database. Doing Business 2015 Sri Lanka 16 STARTING A BUSINESS Formal registration of companies has many WHAT THE STARTING A BUSINESS immediate benefits for the companies and for business owners and employees. Legal entities can INDICATORS MEASURE outlive their founders. Resources are pooled as several shareholders join forces to start a company. Procedures to legally start and operate a Formally registered companies have access to company (number) services and institutions from courts to banks as well Preregistration (for example, name as to new markets. And their employees can benefit verification or reservation, notarization) from protections provided by the law. An additional benefit comes with limited liability companies. These Registration in the economy’s largest limit the financial liability of company owners to their business city 1 investments, so personal assets of the owners are not Postregistration (for example, social security put at risk. Where governments make registration registration, company seal) easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and Time required to complete each procedure generating more revenue for the government. (calendar days) What do the indicators cover? Does not include time spent gathering information Doing Business measures the ease of starting a business in an economy by recording all procedures Each procedure starts on a separate day (2 officially required or commonly done in practice by procedures cannot start on the same day). an entrepreneur to start up and formally operate an Procedures that can be fully completed industrial or commercial business—as well as the online are recorded as ½ day. time and cost required to complete these procedures. Procedure completed once final document is It also records the paid-in minimum capital that received companies must deposit before registration (or within 3 months). The ranking of economies on the No prior contact with officials ease of starting a business is determined by sorting Cost required to complete each procedure their distance to frontier scores for starting a (% of income per capita) business. These scores are the simple average of the distance to frontier scores for each of the component Official costs only, no bribes indicators. No professional fees unless services required To make the data comparable across economies, by law Doing Business uses several assumptions about the Paid-in minimum capital (% of income business and the procedures. It assumes that all per capita) information is readily available to the entrepreneur and that there has been no prior contact with Deposited in a bank or with a notary before officials. It also assumes that the entrepreneur will registration (or within 3 months) pay no bribes. And it assumes that the business:  Is a limited liability company, located in the  Has a start-up capital of 10 times income per largest business city and is 100% domestically capita. owned . 1  Has a turnover of at least 100 times income per  Has between 10 and 50 employees. capita.  Conducts general commercial or industrial  Does not qualify for any special benefits. activities.  Does not own real estate. 1 For the 11 economies with a population of more than 100 million, data for a second city have been added. Doing Business 2015 Sri Lanka 17 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Sri Lanka? largest business city of an economy, except for 11 According to data collected by Doing Business, starting a economies for which the data are a population-weighted business there requires 9.0 procedures, takes 11.0 days, average of the 2 largest business cities. See the chapter costs 20.7% of income per capita and requires paid-in on distance to frontier and ease of doing business minimum capital of 0.0% of income per capita (figure ranking at the end of this profile for more details. 2.1). Most indicator sets refer to a case scenario in the Figure 2.1 What it takes to start a business in Sri Lanka - Paid-in minimum capital (% of income per capita): 0.0 Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 Sri Lanka 18 STARTING A BUSINESS Globally, Sri Lanka stands at 104 in the ranking of 189 average ranking provide other useful information for economies on the ease of starting a business (figure 2.2). assessing how easy it is for an entrepreneur in Sri Lanka The rankings for comparator economies and the regional to start a business. Figure 2.2 How Sri Lanka and comparator economies rank on the ease of starting a business Source: Doing Business database. Doing Business 2015 Sri Lanka 19 STARTING A BUSINESS Economies around the world have taken steps making it they often are part of a larger regulatory reform easier to start a business—streamlining procedures by program. Among the benefits have been greater firm setting up a one-stop shop, making procedures simpler satisfaction and savings and more registered businesses, or faster by introducing technology and reducing or financial resources and job opportunities. eliminating minimum capital requirements. Many have What business registration reforms has Doing Business undertaken business registration reforms in stages—and recorded in Sri Lanka (table 2.1)? Table 2.1 How has Sri Lanka made starting a business easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka made starting a business easier by computerizing DB2013 and expediting the process of obtaining a registration number for the Employees Provident Fund and Employees Trust Fund. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 Sri Lanka 20 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for Sri STANDARDIZED COMPANY Lanka is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new Legal form: Private Limited Liability Company firm. These are identified by Doing Business through collaboration with relevant local professionals and Paid in minimum capital requirement: LKR 0 the study of laws, regulations and publicly available City: Colombo information on business entry in that economy. Following is a detailed summary of those procedures, Start-up Capital: 10 times GNI per capita along with the associated time and cost. These procedures are those that apply to a company matching the standard assumptions (the “standardized company”) used by Doing Business in collecting the data (see the section in this chapter on what the indicators measure). Table 2.2 Summary of time, cost and procedures for starting a business in Sri Lanka - Time to No. Procedure Cost to complete complete Reserve a unique company name Searching for a unique company name can be done online via the website of the Department of the Registrar of Companies LKR 1,000 + 12% 1 (www.drc.gov.lk). The company name reservation is valid for 3 months. 2 days VAT Agency: Registry of Companies The company secretary and director sign a consent According to Article 221(1) of the Companies Act No. 7 of 2007, every company shall have a secretary. The Company Secretary must be hired before incorporation because one of the requirements to incorporate is a consent form that the Company Secretary must sign saying he/she will be the secretary for the newly formed company in Form 19: Company Secretary Details for Consent. see procedure 2 1 day There is no specific fee schedule. The fees vary from firm to firm, and details are generally based on a quarterly retainer. The quarterly charges in the region vary between of USD$ 100 - 150 for private companies but some firms may charge up to USD 1000 annual fee for acting as a Company Secretary. LKR 10,000-15,000 is usually paid per month, so per quarter the amount ranges between LKR 30,000 - 45,000. The Director must sign Form 18: Director Details for Consent. Agency: Company Secretary Doing Business 2015 Sri Lanka 21 Time to No. Procedure Cost to complete complete Register at the Department of the Registrar of Companies A company may draft or adopt the standard set of Articles of Association in Table A of the Companies Act of Sri Lanka. Professional charges are higher for drafting new Articles of Association than for adopting the standard articles. The Articles of Association must be submitted in duplicate to the Department of the Registrar of Companies with the balance of documents for incorporation. No prior approval from the Registrar LKR 15,000 as the General is required for the articles of association. According to the new registration fee for Companies Act, notaries are no longer required to witness the signing Form 1 and LKR of the articles of association. 1,000 for each of 3 2 days Forms 18 and 19 A flat fee of LKR 15,000 + 12% VAT as the registration fee for Form 1, and the articles of and LKR 1,000 + 12% VAT is charged of the other two Forms 18 and 19 association + 12% and the Articles of Association. The Certificate of Incorporation will be received in about 3 days. VAT Under the new Companies Act, it is no longer required to confirm the Principal Directors and the situation of the registered office of the company within 14 days of incorporation. Moreover, the common seal was rendered optional. Agency: Registry of Companies Public Notice of Incorporation According to Section 9 of the Companies Act No. 7 of 2007, public notice must be given within a month of the incorporation of a company. The notice of incorporation specifying the name of the company, registration number, date of incorporation, and address of the registered office should be published in the Government Gazette and in any daily newspaper in three languages: English, Sinhala and Tamil. The proof of publication should then be filed with the Registrar 4 of Companies. The newspaper publications once handed over with the 3 days LKR 7,000 payment which depends on the size of the Notice, will appear within 3- 4 days. The publication in the Gazette will appear within 2 weeks of submitting the request with the payment. The Registrar of Companies accepts a copy of the receipt issued by the Government Printer as proof of publication. Agency: Daily Newspapers and Government Publication Bureau Doing Business 2015 Sri Lanka 22 Time to No. Procedure Cost to complete complete * Register with the tax authorities and obtain a Tax Identification Number (TIN) from Taxpayer Services Unit of Inland Revenue Department The applicant or an authorized representative of the applicant must be physically present at the Taxpayer Services Unit of Inland Revenue 1 day Department to pick up and complete the application for a Taxpayer (simultaneous with no charge 5 Identification Number (TIN) number with supporting documents procedure 4) including a copy of Form 1, Certificate of Incorporation and Articles of Association. Agency: Inland Revenue Department * Register for VAT with the Inland Revenue Department VAT Registration Branch To obtain permanent VAT registration, the applicant must submit 1 day documents proving turnover of LKR 2,500,000 per quarter or LKR (simultaneous with 6 no charge 12,000,000 per year according to Value Added Tax Act No. 14 of 2002. previous procedure) Agency: Inland Revenue Department * Payment of stamp duty on the issued shares at Stamp Duty Branch of Inland Revenue Department According to Section 50 of the Companies Act, immediately following the incorporation of a company, the company shall issue to each 1 day shareholder the shares to which that person is entitled. The stamp duty (simultaneous with 0.5% of the total 7 payment of the issued shares should be paid to the Inland Revenue stated capital in previous within 1 month from the issue of share. Upon the payment, multiples of LKR 5 procedure) entrepreneur can obtain the receipt of payment. Agency: Inland Revenue Department * Give notice to the Department of Registrar of Companies regarding the issue of shares Within 20 working days from incorporation, file Form 6: Receipt by 1 day Stamp Duty Unit for Share Issues at Registrar of Companies to show (simultaneous with LKR 1,000 for Form 8 that initial share issue has been done along with a copy of stamp duty previous 6 slip. procedure) Agency: Registry of Companies Doing Business 2015 Sri Lanka 23 Time to No. Procedure Cost to complete complete * Register with the Department of Labor and obtain the EPF number Companies must register with the Department of Labor to obtain the Employees Provident Fund (EPF) registration number. The fund is a government-owned and maintained by the Central Bank. No separate registration is required to register with the Employees Trust Fund (ETF). ETF uses the same EPF number for their monthly contributions. 1 day Companies must also pay gratuities to employees that have been (simultaneous with no charge 9 employed for more than 5 years. The gratuity provisions do not apply procedure 4) to companies that have fewer than 15 employees. There is no pension scheme for private sector employees. Businesses that engage in activities of a dangerous nature should obtain special Factories Ordinance checkups. Agency: Department of Labour and the Central Bank of Sri Lanka * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2015 Sri Lanka 24 DEALING WITH CONSTRUCTION PERMITS Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION public. But it needs to be efficient, to avoid excessive PERMITS INDICATORS MEASURE constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in time and money, Procedures to legally build a warehouse many builders opt out. They may pay bribes to pass (number) inspections or simply build illegally, leading to Submitting all relevant documents and hazardous construction that puts public safety at risk. obtaining all necessary clearances, licenses, Where compliance is simple, straightforward and permits and certificates inexpensive, everyone is better off. Submitting all required notifications and What do the indicators cover? receiving all necessary inspections Doing Business records the procedures, time and cost Obtaining utility connections for water and for a business in the construction industry to obtain sewerage all the necessary approvals to build a warehouse in Registering the warehouse after its the economy’s largest business city, connect it to completion (if required for use as collateral or basic utilities and register the warehouse so that it for transfer of the warehouse) can be used as collateral or transferred to another Time required to complete each procedure entity. (calendar days) The ranking of economies on the ease of dealing with Does not include time spent gathering construction permits is determined by sorting their information distance to frontier scores for dealing with Each procedure starts on a separate day. construction permits. These scores are the simple Procedures that can be fully completed online average of the distance to frontier scores for each of are recorded as ½ day. the component indicators. Procedure considered completed once final To make the data comparable across economies, document is received Doing Business uses several assumptions about the business and the warehouse, including the utility No prior contact with officials connections. Cost required to complete each procedure (% The business: of warehouse value) Official costs only, no bribes  Is a limited liability company operating in the construction business and located in  Will have complete architectural and the largest business city. For the 11 technical plans prepared by a licensed economies with a population of more than architect or engineer. 100 million, data for a second city have  Will be connected to water and sewerage been added. Is domestically owned and (sewage system, septic tank or their operated. equivalent). The connection to each utility  Has 60 builders and other employees. network will be 150 meters (492 feet) long. The warehouse:  Will be used for general storage, such as of books or stationery (not for goods requiring  Is valued at 50 times income per capita. special conditions).  Is a new construction (there was no  Will take 30 weeks to construct (excluding all previous construction on the land). delays due to administrative and regulatory requirements). Doing Business 2015 Sri Lanka 25 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to build an economy, except for 11 economies for which the data a warehouse in Sri Lanka? According to data collected by are a population-weighted average of the 2 largest Doing Business, dealing with construction permits there business cities. See the chapter on distance to frontier requires 12.0 procedures, takes 169.0 days and costs and ease of doing business ranking at the end of this 0.3% of the warehouse value (figure 3.1). Most indicator profile for more details. sets refer to a case scenario in the largest business city of Figure 3.1 What it takes to comply with formalities to build a warehouse in Sri Lanka - Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 Sri Lanka 26 DEALING WITH CONSTRUCTION PERMITS Globally, Sri Lanka stands at 60 in the ranking of 189 other useful information for assessing how easy it is for economies on the ease of dealing with construction an entrepreneur in Sri Lanka to legally build a permits (figure 3.2). The rankings for comparator warehouse. economies and the regional average ranking provide Figure 3.2 How Sri Lanka and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database. Doing Business 2015 Sri Lanka 27 DEALING WITH CONSTRUCTION PERMITS Smart regulation ensures that standards are met while an effort to ensure building safety while keeping making compliance easy and accessible to all. Coherent compliance costs reasonable, governments around the and transparent rules, efficient processes and adequate world have worked on consolidating permitting allocation of resources are especially important in sectors requirements. What construction permitting reforms has where safety is at stake. Construction is one of them. In Doing Business recorded in Sri Lanka (table 3.1)? Table 3.1 How has Sri Lanka made dealing with construction permits easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka made dealing with construction permits more DB2010 difficult by increasing some fees and adding a procedure. Sri Lanka made dealing with construction permits easier by DB2014 eliminating the requirement to obtain a tax clearance and by reducing building permit fees. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 Sri Lanka 28 DEALING WITH CONSTRUCTION PERMITS What are the details? The indicators reported here for Sri Lanka are based BUILDING A WAREHOUSE on a set of specific procedures—the steps that a company must complete to legally build a warehouse—identified by Doing Business through Estimated cost of information collected from experts in construction LKR 20,588,700 construction : licensing, including architects, civil engineers, construction lawyers, construction firms, utility City : Colombo service providers and public officials who deal with building regulations. These procedures are those The procedures, along with the associated time and cost, that apply to a company and structure matching the are summarized below. standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Table 3.2 Summary of time, cost and procedures for dealing with construction permits in Sri Lanka - Time to No. Procedure Cost to complete complete Submit building permit application to Municipal Council of Colombo (CMC) 1 1 day no charge Agency: Municipal Council of Colombo (CMC) Receive on-site inspection from Municipal Council of Colombo (CMC) The applicant normally provides transportation or is responsible for the cost of a taxi or a trishaw. The cost depends on the location, but does 1 day no charge 2 not normally exceed USD 10.00. Agency: Municipal Council of Colombo (CMC) Receive on-site inspection from Fire Service Department and obtain fire safety clearance for proposed building The Fire Service Department will carry out the inspection when the relevant department of the CMC sends the plan. The Fire Officers of the Fire Service Department will carry out a study of the plan and then may 14 days no charge 3 conduct a fire inspection and issue fire safety clearance. It takes 10 working days to obtain a fire inspection. Agency: Fire Service Department of the CMC Doing Business 2015 Sri Lanka 29 Time to No. Procedure Cost to complete complete Obtain building permit from Municipal Council of Colombo (CMC) An application for a building permit must be submitted along with five copies of the building plan. The following are the internal steps involved in the issuance of the building permit: • The Water Supply and Drainage Department of the Municipal Council of Colombo (CMC) marks the drainage (no longer applicable; water lines and supply related work transferred to Water Supply and Drainage Board) on the proposed plan and issues the drainage clearance • The Fire Service Department of the CMC issues the fire report with or without conditions • The Building Department of the CMC issues the street line certification. An on-site inspection is conducted by an area inspector of the CMC and a report is prepared based on the investigations. • The Area Inspector’s report is assessed by an Officer in Charge, Planning Officer or Building Engineer, and presented to the Planning Committee with comments and recommendations • The Planning Committee may approve the building plan and grant the 4 development permit with or without conditions 67 days LKR 150 • The street/building lines must be demarcated on the ground, before the commencement of construction The building permit application form costs LKR 150.00. If the floor area is more than 3,500 square feet, the application should be certified by an architect and a chartered engineer. The following documents are needed: • A certificate from a qualified civil structural engineer regarding the design, supervision, and structural stability of the proposed development in order to ensure that no damage would be caused to adjoining properties • An insurance policy and a letter of indemnity Agency: Municipal Council of Colombo (CMC) Request and receive water sanction inspection and sewage inspection The following documents must be submitted to obtain a drainage certificate: • The prescribed application form, signed in duplicate • Six copies of the approved building plan • The water and drainage plans • Two copies of the building permit 5 • A copy of the water sanction 1 day LKR 204 All applications for drainage certificates must be submitted by a contractor registered with the local authority, and the drainage connection should be carried out by such contractor. Agency: Water and Drainage Department of the CMC Doing Business 2015 Sri Lanka 30 Time to No. Procedure Cost to complete complete * Request and receive on-site inspection by fire inspector of Fire Service Department of CMC 6 1 day no charge Agency: Fire Service Department of the CMC Obtain the water sanction and the drainage certificate from Water and Drainage Department of the Municipal Council of Colombo (CMC) 7 7 days LKR 21,420 Agency: Water and Drainage Department of the CMC Request and receive on-site inspection by Area Inspector of the Planning Department of the Municipal Council of Colombo (CMC) to check the conformity of the warehouse to the development permit 8 1 day no charge Agency: Planning Division of the CMC Obtain certificate of conformity from Municipal Council of Colombo The application to obtain a certificate of conformity must be signed by the owner(s) and a qualified person. The certificate of conformity is issued only under the names of the owners. To obtain a certificate of conformity, an application must be submitted with the following documents: • Water sanction • Drainage certificate • Approved building plan: the building plan should be strictly in compliance with the Building Regulations of the Urban Development Authority Act • On-site inspection by an Area Inspector of the Planning Department 42 days LKR 701 9 of the CMC to ensure that construction has been completed according to the approved plan • On-site inspection by a fire inspector. The inspector’s report is then assessed by a technical staff assistant and by an Officer in Charge, Planning Officer or Building Engineer, and presented to the Planning Committee • A certificate approving the mechanical ventilation system by private air-conditioning engineers (working for AC suppliers) • Any other certificates mentioned in the building permit Agency: Municipality Doing Business 2015 Sri Lanka 31 Time to No. Procedure Cost to complete complete Apply for water connection from National Water Supply and Drainage Board To obtain the water connection, BuildCo must submit an application to the National Water Supply and Drainage Board, an assessment notice, the title deed and an ownership certificate. After that, BuildCo receives 1 day no charge 10 an on-site inspection, pays the water installation costs, and signs an agreement with the Board. Agency: National Water Supply and Drainage Board Receive on-site inspection by inspector from National Water Supply and Drainage Board 11 1 day no charge Agency: National Water Supply and Drainage Board Obtain water connection 12 32 days LKR 31,000 Agency: National Water Supply and Drainage Board * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2015 Sri Lanka 32 GETTING ELECTRICITY Access to reliable and affordable electricity is vital for WHAT THE GETTING ELECTRICITY businesses. To counter weak electricity supply, many firms in developing economies have to rely on self- INDICATORS MEASURE supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the first step for Procedures to obtain an electricity a customer is always to gain access by obtaining a connection (number) connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for a Completing all required notifications and local business to obtain a permanent electricity receiving all necessary inspections connection and supply for a standardized warehouse, as well as the time and cost to complete them. These Obtaining external installation works and procedures include applications and contracts with possibly purchasing material for these works electricity utilities, clearances from other agencies Concluding any necessary supply contract and and the external and final connection works. The obtaining final supply ranking of economies on the ease of getting electricity is determined by sorting their distance to Time required to complete each procedure frontier scores for getting electricity. These scores are (calendar days) the simple average of the distance to frontier scores Is at least 1 calendar day for each of the component indicators. To make the data comparable across economies, several Each procedure starts on a separate day assumptions are used. Does not include time spent gathering The warehouse: information  Is owned by a local entrepreneur, located Reflects the time spent in practice, with little in the economy’s largest business city, in follow-up and no prior contact with officials an area where other warehouses are Cost required to complete each procedure located. For the 11 economies with a (% of income per capita) population of more than 100 million, data Official costs only, no bribes for a second city have been added. Excludes value added tax  Is not in a special economic zone where the connection would be eligible for subsidization or faster service.  Is to either the low-voltage or the medium- voltage distribution network and either  Is located in an area with no physical overhead or underground, whichever is more constraints (ie. property not near a railway). common in the area where the warehouse is  Is a new construction being connected to located. Included only negligible length in the electricity for the first time. customer’s private domain.  Is 2 stories, both above ground, with a total  Requires crossing of a 10-meter road but all surface of about 1,300.6 square meters the works are carried out in a public land, so (14,000 square feet), is built on a plot of there is no crossing into other people's 929 square meters (10,000 square feet), is private property. used for storage of refrigerated goods  Involves installing one electricity meter. The The electricity connection: monthly electricity consumption will be 26880 kilowatt hour (kWh). The internal  Is 150 meters long and is a 3-phase, 4-wire electrical wiring has been completed. Y, 140-kilovolt-ampere (kVA) (subscribed capacity) connection. Doing Business 2015 Sri Lanka 33 GETTING ELECTRICITY Where does the economy stand today? What does it take to obtain a new electricity connection Most indicator sets refer to a case scenario in the largest in Sri Lanka? According to data collected by Doing business city of an economy, except for 11 economies for Business, getting electricity there requires 5.0 procedures, which the data are a population-weighted average of the takes 104.0 days and costs 901.6% of income per capita 2 largest business cities. See the chapter on distance to (figure 4.1). frontier and ease of doing business ranking at the end of this profile for more details. Figure 4.1 What it takes to obtain an electricity connection in Sri Lanka - Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 Sri Lanka 34 GETTING ELECTRICITY Globally, Sri Lanka stands at 100 in the ranking of 189 average ranking provide another perspective in assessing economies on the ease of getting electricity (figure 4.2). how easy it is for an entrepreneur in Sri Lanka to connect The rankings for comparator economies and the regional a warehouse to electricity. Figure 4.2 How Sri Lanka and comparator economies rank on the ease of getting electricity Source: Doing Business database. Doing Business 2015 Sri Lanka 35 GETTING ELECTRICITY Obtaining an electricity connection is essential to enable ensure safety in the connection process while keeping a business to conduct its most basic operations. In many connection costs reasonable, governments around the economies the connection process is complicated by the world have worked to consolidate requirements for multiple laws and regulations involved—covering service obtaining an electricity connection. What reforms in quality, general safety, technical standards, procurement getting electricity has Doing Business recorded in Sri practices and internal wiring installations. In an effort to Lanka (table 4.1)? Table 4.1 How has Sri Lanka made getting electricity easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka made getting electricity easier by improving the DB2014 utility’s internal workflow and by reducing the time required to process new applications for connections. Source: Doing Business database. Doing Business 2015 Sri Lanka 36 GETTING ELECTRICITY What are the details? The indicators reported here for Sri Lanka are based on a OBTAINING AN ELECTRICITY CONNECTION set of specific procedures—the steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution utility— Name of utility: Ceylon Electricity Board identified by Doing Business. Data are collected from the distribution utility, then completed and verified by City: Colombo electricity regulatory agencies and independent professionals such as electrical engineers, electrical The procedures are those that apply to a warehouse and contractors and construction companies. The electricity electricity connection matching the standard distribution utility surveyed is the one serving the area assumptions used by Doing Business in collecting the (or areas) in which warehouses are located. If there is a data (see the section in this chapter on what the choice of distribution utilities, the one serving the largest indicators cover). The procedures, along with the number of customers is selected. associated time and cost, are summarized below. Table 4.2 Summary of time, cost and procedures for getting electricity in Sri Lanka - Time to No. Procedure Cost to complete complete Submit application to Ceylon Electricity Board and await external site inspection An application should be submitted to the City Office of Ceylon Electricity Board, together with the following documents. These documents need not be notarized. (i) A copy of the approved Building Plan; (ii) Documentary evidence to establish the street address/assessment number allotted to the property by the Colombo Municipal Council (e.g. - Certificate of ownership, Statutory Notice of 4 calendar days LKR 2,000 1 Assessment for the current year, Non-vesting certificate or a letter issued by the CMC); and (iii) a copy of the certificate of incorporation to identify the customer. CEB visits the site to ascertain the distance from the nearest supply point, and to estimate total cost of the construction works. Agency: Ceylon Electricity Board Ceylon Electricity Board conducts site inspection and provides estimate to customer Utility makes the estimate of total cost of construction works and the refundable security deposit, and conveys these to the customer. Note - the customer must be ready with the transformer substation room at this 25 calendar days LKR 0 2 stage. The security deposit is refundable upon disconnection of the electricity supply. Agency: Ceylon Electricity Board Doing Business 2015 Sri Lanka 37 Time to No. Procedure Cost to complete complete * Request and receive installation test certificate from Chartered Electrical Engineer The request for internal wiring inspection from the Colombo Municipal Commission in person. Applicant has to submit only the building plan (COC) approved by CMC. This inspection is carried out by a Chartered 1 calendar day LKR 15,000 3 Electrical Engineer, who is registered with the City Office of CEB. Request for the inspection could be made by phone. Agency: Chartered Electrical Engineer Obtain excavation permit from Colombo Municipal Council Ceylon Electricity Board gives the customer an excavation sketch which needs to be provided by the customer to Central Road Maintenance Unit (CRMU) of the Colombo Municipal Council. The CRMU will examine the same and if necessary visit the site and provide an estimated reinstatement cost which will be the cost of the excavation permit. 4 8 calendar days LKR 457,025 The cost of the excavation permit will depend on the type of paving on the road or foot path that has to be excavated to lay the underground cabling and that must be therefore reinstated. Agency: Colombo Municipal Council Customer signs supply contract with Ceylon Electricity Board, and Ceylon Electricity Board conducts external connection works, installs the meter and electricity starts flowing Once the estimate is paid, the utility applies for the road excavation permit from the Colombo Municipal Council/Road Development Authority. Labor costs are charged by the RDA/CMC for reinstatement of excavation. Construction cost is essentially for construction of sub- station. This amount has to be submitted to the CEB. Approved building plan from CMC is sufficient from applicant's side. But CEB has to get approval from following institutes (before cable laying);- 67 calendar days LKR 3,238,518.39 5 Presidential Security Division; Traffic Police; Sri Lanka Police; Colombo Municipal Council. All the material needed for the external connection is provided by the CEB. Meter is installed by the Construction Unit of the CEB and at the same time the connection is provided by the Area Unit of the CEB. Prior to the connection, the applicant should enter into an Agreement with the CEB for supply of electricity. Agency: Ceylon Electricity Board * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2015 Sri Lanka 38 Doing Business 2015 Sri Lanka 39 REGISTERING PROPERTY Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY Effective administration of land is part of that. If INDICATORS MEASURE formal property transfer is too costly or complicated, formal titles might go informal again. And where property is informal or poorly Procedures to legally transfer title on administered, it has little chance of being accepted immovable property (number) as collateral for loans—limiting access to finance. Preregistration (for example, checking for liens, notarizing sales agreement, paying property What do the indicators cover? transfer taxes) Doing Business records the full sequence of Registration in the economy’s largest business procedures necessary for a business to purchase city 2 property from another business and transfer the property title to the buyer’s name. The transaction is Postregistration (for example, filing title with the municipality) considered complete when it is opposable to third parties and when the buyer can use the property, Time required to complete each procedure use it as collateral for a bank loan or resell it. The (calendar days) ranking of economies on the ease of registering Does not include time spent gathering property is determined by sorting their distance to information frontier scores for registering property. These scores are the simple average of the distance to frontier Each procedure starts on a separate day. scores for each of the component indicators. To Procedures that can be fully completed online are recorded as ½ day. make the data comparable across economies, several assumptions about the parties to the Procedure considered completed once final transaction, the property and the procedures are document is received used. No prior contact with officials The parties (buyer and seller): Cost required to complete each procedure  Are limited liability companies, 100% (% of property value) domestically and privately owned and Official costs only, no bribes perform general commercial activities. No value added or capital gains taxes included  Are located in the economy’s largest business city . 2  Is located in a periurban commercial zone, and no rezoning is required.  Have 50 employees each, all of whom are nationals.  Has no mortgages attached, has been under the same ownership for the past 10 years. The property (fully owned by the seller):  Consists of 557.4 square meters (6,000 square  Has a value of 50 times income per capita. feet) of land and a 10-year-old, 2-story The sale price equals the value. warehouse of 929 square meters (10,000  Is registered in the land registry or cada- square feet). The warehouse is in good stre, or both, and is free of title disputes. condition and complies with all safety standards, building codes and legal  Property will be transferred in its entirety. requirements. There is no heating system. 2 For the 11 economies with a population of more than 100 million, data for a second city have been added. Doing Business 2015 Sri Lanka 40 REGISTERING PROPERTY Where does the economy stand today? What does it take to complete a property transfer in Sri Most indicator sets refer to a case scenario in the largest Lanka? According to data collected by Doing Business, business city of an economy, except for 11 economies for registering property there requires 9.0 procedures, takes which the data are a population-weighted average of the 51.0 days and costs 5.1% of the property value (figure 2 largest business cities. See the chapter on distance to 5.1). frontier and ease of doing business ranking at the end of this profile for more details. Figure 5.1 What it takes to register property in Sri Lanka - Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the registering property indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 Sri Lanka 41 REGISTERING PROPERTY Globally, Sri Lanka stands at 131 in the ranking of 189 regional average ranking provide other useful economies on the ease of registering property (figure information for assessing how easy it is for an 5.2). The rankings for comparator economies and the entrepreneur in Sri Lanka to transfer property. Figure 5.2 How Sri Lanka and comparator economies rank on the ease of registering property Source: Doing Business database. Doing Business 2015 Sri Lanka 42 REGISTERING PROPERTY Economies worldwide have been making it easier for the time required substantially—enabling buyers to use entrepreneurs to register and transfer property—such as or mortgage their property earlier. What property by computerizing land registries, introducing time limits registration reforms has Doing Business recorded in Sri for procedures and setting low fixed fees. Many have cut Lanka (table 5.1)? Table 5.1 How has Sri Lanka made registering property easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka made registering property faster by introducing an DB2013 electronic system at the Land Registry in Colombo. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 Sri Lanka 43 REGISTERING PROPERTY What are the details? The indicators reported here are based on a set of STANDARD PROPERTY TRANSFER specific procedures—the steps that a buyer and seller must complete to transfer the property to the buyer’s name—identified by Doing Business through information collected from local property lawyers, Property value: LKR 20,588,700 notaries and property registries. These procedures are those that apply to a transaction matching the City: Colombo standard assumptions used by Doing Business in collecting the data (see the section in this chapter on The procedures, along with the associated time and what the indicators cover). cost, are summarized below. Table 5.2 Summary of time, cost and procedures for registering property in Sri??Lanka Time to No. Procedure Cost to complete complete Seller needs to obtain certificate of non-vesting and certificate of ownership stating that the seller is the owner of the land and premises from the Municipality The seller obtains the following documents from the Municipality (from a different counter than the building and street line certificate in 16 days procedure 2): (simultaneous 1 LKR 598.50 1. Certificate of non-vesting with Procedures 2. Certificate of ownership stating that the seller is the owner of the land 1,2 and 4) and premises Agency: Colombo Municipal Council * Seller needs to obtain the building and street line certificate from the Municipality 14 days The seller obtains the following document from the Municipality: (simultaneous 2 1. The building and street line certificate LKR 330 with Procedures 1,3 and 4) Agency: Colombo Municipal Council * Obtain an updated survey plan of the property Obtaining a new updated plan of the land and the building is advisable 14 days to ensure that the boundaries on the ground have not changed or if the (simultaneous About 0.1% of 3 survey plan is old. with Procedures property value 1,2 and 3) Agency: Colombo Municipal Council Doing Business 2015 Sri Lanka 44 Time to No. Procedure Cost to complete complete * A title search must be carried out at the relevant Land Registry On receipt of the last title deed and plan from the seller, a title search has to be carried out at the relevant Land Registry. A lawyer/notary engaged by the purchaser has to recommend the title. Good title has to be established for the past 35 years. All deeds and plans have to be checked. If prior deeds are not available with the seller the notary will have to check duplicates of deeds at the Land Registry. If plans are not available, the relevant surveyors would have to be contacted and obtain duplicates of the plans. Other checks must be carried out as well by the lawyer (notary) at the local authority. Confirmation from the lawyer (notary) should be obtained that the title to the property is clear. On confirmation that the title to the property is clear, step 2 will apply; if not title insurance is recommended, and the next step would be to obtain a policy of title Insurance (procedure 1a). 4 days If title insurance is recommended in procedure 1 due to a defect in title, (simultaneous 4 LKR 500 then the next step would be to obtain a Buyer's Policy of Title Insurance with procedures to cover defects. This step is optional and contingent to the result of step 2, 3 and 4) 1. If the policy is needed, the time necessary to obtain this title will depend on the time taken by the title insurance company to evaluate the title, make a decision to issue or not to issue the title insurance policy and the cost will depend on the premium payable. Usually title insurance is recommended for the following reasons: • Prior deeds and documentation not being available and further if the registers at the land registry cannot be traced for 35 years (if the books are damaged). • If there are any discrepancies in the title deeds and plans. • If the present owner had owned an undivided share of a larger land, and had sub-divided it without the consent of the other parties or without a Deed of Partition or Partition Plan. Agency: Land Registry Transfer deed is signed in favor of the buyer The following document with regard to the Selling company must be presented to the buyer’s lawyer/notary for the deed of transfer to be signed in favor of the buyer: 1% of purchase The documents are as follows: price (Lawyer’s 5 1. Articles of Association of the company 2 days fees) + LKR 500 2. Certificate of incorporation of the seller additional cost 3. Resolution authorizing the sale of land. If the purchase-sale is a major transaction as defined by section 185 of Companies Act No. 7 of 2007, such a transaction should require the shareholders sanction as well. The buyer needs to pass a resolution to purchase the property. On receipt of the above documents the deed of transfer in favor of the purchaser can be signed. Lawyer’s fees are paid by the buyer and will Doing Business 2015 Sri Lanka 45 Time to No. Procedure Cost to complete complete depend on the lawyer (usually 1% of purchase price). Agency: Lawyer/Notary Obtain the market value from the Provincial Department of Revenue Before or after the payment of stamp duty the instrument of transfer is forwarded to the office of the Provincial Department of Revenue of the Western Province for the purpose of obtaining the market value of the property. This measure was introduced beginning March 1, 2013 with the purpose of ensuring that stamp duties are paid based on the correct market value. The appropriate value will be provided at the discretion of the department's valuer. If the instrument is submitted after the stamp duties have already been paid the and after the examination the 1 day LKR 250 6 department determines that the amount paid is inadequate, then the balance must be settled. The department will provide the certification of "instrument with duly paid stamp duties." By ensuring that the stamp duty was paid based on the value provided by the Provincial Department of Revenue the instrument will not be recalled later on for examination of its value and will not be refused registration. Agency: Provincial Department of Revenue, Western Province Payment of stamp duty at a nominated bank After execution of the deed of transfer stamp duty will have to be paid Stamp duty within 7 days to a nominated state bank in favor of the Revenue payable as Commissioner of the relevent Provincial Council in which the land is follows3% on the 7 1 day situated. First Rs. 100 0004% on the Agency: State Bank Balance Deed is sent for registration to the relevant land registry After payment of stamp duty, the deed duly attested by the notary, will have to be sent for registration to the relevant Land Registry. The deed is registered and returned to the notary from the Land Registry within 3 days after receiving the Day Book. Notaries are involved with searching, preparing title report and attestation, as well as paying stamp duty. The 8 details of the registered deeds are published in the Land Registry 15 days LKR 100 website (www.Rgd.gov.lk) and notice boards are available at the Land Registry office. Computerized system and greater number of staff are ensuring faster registration of deeds. Agency: Land Registry Doing Business 2015 Sri Lanka 46 Time to No. Procedure Cost to complete complete Name of the buyer must be registered at the Municipality and the certificate of ownership is obtained The name of the new company will have to be registered as the new owner at the Colombo Municipal Council. An abstract of Title form should be duly filled by a Notary Public and should be submitted to the LKR 570 for relevent Local Authority together with a Pedigree, a cerificate and a 16 days commercial 9 covering letter prepared by the Notary. Thereafter the name of the new properties owner will be regsitered in the Assessment regsiters and the Certificate of Ownership will be issued giving the present owner's name. Agency: Colombo Municipal Council * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2015 Sri Lanka 47 GETTING CREDIT Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS credit and improve its allocation: credit information MEASURE systems and borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable Strength of legal rights index (0–12) 3 lenders’ rights to view a potential borrower’s financial history (positive or negative)—valuable information to Rights of borrowers and lenders through consider when assessing risk. And they permit collateral laws borrowers to establish a good credit history that will Protection of secured creditors’ rights through allow easier access to credit. Sound collateral laws bankruptcy laws enable businesses to use their assets, especially Depth of credit information index (0–8) 4 movable property, as security to generate capital— while strong creditors’ rights have been associated Scope and accessibility of credit information with higher ratios of private sector credit to GDP. distributed by credit bureaus and credit registries What do the indicators cover? Credit bureau coverage (% of adults) Doing Business assesses the sharing of credit information and the legal rights of borrowers and Number of individuals and firms listed in lenders with respect to secured transactions through largest credit bureau as percentage of adult 2 sets of indicators. The depth of credit information population index measures rules and practices affecting the Credit registry coverage (% of adults) coverage, scope and accessibility of credit Number of individuals and firms listed in information available through a credit registry or a credit registry as percentage of adult credit bureau. The strength of legal rights index population measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. Doing Business uses two case scenarios, Case A and Case B, to determine the scope of the secured transactions system, involving a  Has up to 50 employees. secured borrower and a secured lender and  Is 100% domestically owned, as is the lender. examining legal restrictions on the use of movable collateral (for more details on each case, see the Data The ranking of economies on the ease of getting Notes section of the Doing Business 2015 report). credit is determined by sorting their distance to These scenarios assume that the borrower: frontier scores for getting credit. These scores are the distance to frontier score for the strength of legal  Is a private limited liability company. rights index and the depth of credit information  Has its headquarters and only base of index. operations in the largest business city. For the 11 economies with a population of more than 100 million, data for a second city have been added. 3 For the legal rights index, 2 new points are added in Doing Business 2015 for new data collected to assess the overall legal framework for secured transactions and the functioning of the collateral registry. 4 For the credit information index, 2 new points are added in Doing Business 2015 for new data collected on accessing borrowers’ credit information online and availability of credit scores. Doing Business 2015 Sri Lanka 48 GETTING CREDIT Where does the economy stand today? How well do the credit information system and collateral Globally, Sri Lanka stands at 89 in the ranking of 189 and bankruptcy laws in Sri Lanka facilitate access to economies on the ease of getting credit (figure 6.1). The credit? The economy has a score of 6 on the depth of rankings for comparator economies and the regional credit information index and a score of 3 on the strength average ranking provide other useful information for of legal rights index (see the summary of scoring at the assessing how well regulations and institutions in Sri end of this chapter for details). Higher scores indicate Lanka support lending and borrowing. more credit information and stronger legal rights for borrowers and lenders. Figure 6.1 How Sri Lanka and comparator economies rank on the ease of getting credit Source: Doing Business database. Doing Business 2015 Sri Lanka 49 GETTING CREDIT One way to put an economy’s score on the getting credit rights index for Sri Lanka and shows the scores for indicators into context is to see where the economy comparator economies as well as the regional average stands in the distribution of scores across economies. score. Figure 6.3 shows the same for the depth of credit Figure 6.2 highlights the score on the strength of legal information index. Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared — and lenders? and how widely? Economy scores on strength of legal rights index Economy scores on depth of credit information index Note: Higher scores indicate that collateral and bankruptcy Note: Higher scores indicate the availability of more credit laws are better designed to facilitate access to credit. information, from either a credit registry or a credit bureau, Source: Doing Business database. to facilitate lending decisions. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Source: Doing Business database. Doing Business 2015 Sri Lanka 50 GETTING CREDIT When economies strengthen the legal rights of lenders information, they can increase entrepreneurs’ access to and borrowers under collateral and bankruptcy laws, and credit. What credit reforms has Doing Business recorded increase the scope, coverage and accessibility of credit in Sri Lanka (table 6.1)? Table 6.1 How has Sri Lanka made getting credit easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka improved access to credit information through a consolidation of systems at the private credit bureau allowing DB2010 all shareholder lending institutions to submit credit data, with no minimum threshhold for the loans to be reported to the database. Sri Lanka strengthened its secured transactions system by DB2013 establishing an electronic, searchable collateral registry and issuing regulations for its operation. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 Sri Lanka 51 GETTING CREDIT What are the details? The getting credit indicators reported here for Sri Lanka The data on the legal rights of borrowers and lenders are are based on detailed information collected in that gathered through a survey of financial lawyers and economy. The data on credit information sharing are verified through analysis of laws and regulations as well collected through a survey of a credit registry and/or as public sources of information on collateral and credit bureau (if one exists). To construct the depth of bankruptcy laws. For the strength of legal rights index, a credit information index, a score of 1 is assigned for each score of 1 is assigned for each of 10 aspects related to of 8 features of the credit registry or credit bureau (see legal rights in collateral law and 2 aspects in bankruptcy summary of scoring below). law. Strength of legal rights index (0–12) Index score: 3 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents to security interests in movable No assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of No movable assets, without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of Yes its assets, without requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend automatically No to the products, proceeds or replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement No include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an electronic database indexed by debtor's Yes name? Does a notice-based collateral registry exist in which all functional equivalents can be No registered? Does a modern collateral registry exist in which registrations, amendments, cancellations and No searches can be performed online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor No defaults outside an insolvency procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is No liquidated? Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law protect secured creditors’ rights by No providing clear grounds for relief from the stay and/or sets a time limit for it? Doing Business 2015 Sri Lanka 52 Strength of legal rights index (0–12) Index score: 3 Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell the collateral through Yes public auction and private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Depth of credit information index (0–8) Credit bureau Credit registry Index score: 6 By law, do borrowers have the right to access their Yes No 1 data in the credit bureau or credit registry? Can banks and financial institutions access borrowers’ credit information online (for example, through an Yes No 1 online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value- added service to help banks and financial institutions No No 0 assess the creditworthiness of borrowers? Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and financial institutions - No No 0 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on Yes No 1 defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per Yes No 1 capita distributed? Note: Prior to Doing Business 2015, the depth of credit information index covered only the first 6 features listed above. An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Credit bureau Credit registry Coverage (% of adults) (% of adults) Number of firms 308,522 0 Number of individuals 5,743,484 0 Percent of total 44.5 0.0 Doing Business 2015 Sri Lanka 53 Source: Doing Business database. Doing Business 2015 Sri Lanka 54 PROTECTING MINORITY INVESTORS Protecting minority investors matters for the ability of companies to raise the capital they need to grow, WHAT THE PROTECTING MINORITY innovate, diversify and compete. Effective regulations INVESTORS INDICATORS MEASURE define related-party transactions precisely, promote clear and efficient disclosure requirements, require shareholder participation in major decisions of the Extent of disclosure index (0–10) company and set detailed standards of accountability Review and approval requirements for related-party for company insiders. transactions ; Disclosure requirements for related-party transactions What do the indicators cover? Doing Business measures the protection of minority Extent of director liability index (0–10) investors from conflicts of interest through one set of Ability of minority shareholders to sue and hold interested indicators and shareholders’ rights in corporate directors liable for prejudicial related-party transactions; governance through another. The ranking of economies Available legal remedies (damages, disgorgement of on the strength of minority investor protections is profits, fines, imprisonment, rescission of the transaction) determined by sorting their distance to frontier scores Ease of shareholder suits index (0–10) for protecting minority investors. These scores are the Access to internal corporate documents; Evidence simple average of the distance to frontier scores for the obtainable during trial and allocation of legal expenses extent of conflict of interest regulation index and the extent of shareholder governance index. To make the Extent of conflict of interest regulation index data comparable across economies, a case study uses (0–10) several assumptions about the business and the Sum of the extent of disclosure, extent of director liability transaction. and ease of shareholder indices, divided by 3 The business (Buyer): Extent of shareholder rights index (0-10.5)  Is a publicly traded corporation listed on the Shareholders’ rights and role in major corporate decisions economy’s most important stock exchange (or at least a large private company with Strength of governance structure index (0- multiple shareholders). 10.5) Governance safeguards protecting shareholders from  Has a board of directors and a chief executive undue board control and entrenchment officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not Extent of corporate transparency index (0-9) specifically required by law. Corporate transparency on ownership stakes, The transaction involves the following details: compensation, audits and financial prospects  Mr. James, a director and the majority Extent of shareholder governance index shareholder of the company, proposes that (0–10) the company purchase used trucks from Sum of the extent of shareholders rights, strength of another company he owns. governance structure and extent of corporate transparency indices, divided by 3  The price is higher than the going price for used trucks, but the transaction goes forward. Strength of investor protection index (0–10)  All required approvals are obtained, and all Simple average of the extent of conflict of interest required disclosures made, though the regulation and extent of shareholder governance indices transaction is prejudicial to Buyer.  Shareholders sue the interested parties and the members of the board of directors. Doing Business 2015 Sri Lanka 55 PROTECTING MINORITY INVESTORS Where does the economy stand today? How strong are minority investor protections against protection index (figure 7.1). While the indicator does self-dealing in Sri Lanka? The economy has a score of 5.9 not measure all aspects related to the protection of on the strength of minority investor protection index, minority investors, a higher ranking does indicate that an with a higher score indicating stronger protections. economy’s regulations offer stronger minority investor protections against self-dealing in the areas measured. Globally, Sri Lanka stands at 51 in the ranking of 189 economies on the strength of minority investor Figure 7.1 How Sri Lanka and comparator economies perform on the strength of minority investor protection index Source: Doing Business database. Doing Business 2015 Sri Lanka 56 PROTECTING MINORITY INVESTORS One way to put an economy’s scores on the protecting indices for Sri Lanka in 2014. A summary of scoring for minority investors indicators into context is to see where the protecting minority investors indicators at the end of the economy stands in the distribution of scores across this chapter provides details on how the indices were comparator economies. Figures 7.2 through 7.7 highlight calculated. the scores on the various minority investor protection Figure 7.2 How extensive are disclosure Figure 7.3 How extensive is the liability regime for directors? requirements? Extent of director liability index (0-10) Extent of disclosure index (0-10) Note: Higher scores indicate greater liability of directors. Note: Higher scores indicate greater disclosure. Source: Doing Business database. Source: Doing Business database. Doing Business 2015 Sri Lanka 57 PROTECTING MINORITY INVESTORS Figure 7.4 How easy is accessing internal corporate documents? Ease of shareholder suits index (0-10) Note: Higher scores indicate greater minority shareholder access to evidence before and during trial. Source: Doing Business database. Doing Business 2015 Sri Lanka 58 PROTECTING MINORITY INVESTORS Figure 7.5 How extensive are shareholder rights? Extent of shareholder rights index (0-10.5) Note: The higher the score, the stronger the protections. Source: Doing Business database. Figure 7.6 How strong is the governance structure? Strength of governance structure index (0-10.5) Note: Higher scores indicate more stringent governance structure requirements. Source: Doing Business database. Doing Business 2015 Sri Lanka 59 Figure 7.7 How extensive is corporate transparency? Extent of corporate transparency index (0-9) Note: Higher scores indicate greater transparency. Source: Doing Business database. Doing Business 2015 Sri Lanka 60 PROTECTING MINORITY INVESTORS Economies with the strongest protections of minority result, reforms to strengthen minority investor investors from self-dealing require detailed disclosure protections may move ahead on different fronts—such and define clear duties for directors. They also have well- as through new or amended company laws, securities functioning courts and up-to-date procedural rules that regulations or civil procedure rules. What minority give minority shareholders the means to prove their case investor protection reforms has Doing Business recorded and obtain a judgment within a reasonable time. As a in Sri Lanka (table 7.1)? Table 7.1 How has Sri Lanka strengthened minority investor protections—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka strengthened investor protections by requiring DB2012 greater corporate disclosure in case of transactions between interested parties. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 Sri Lanka 61 PROTECTING MINORITY INVESTORS What are the details? The protecting minority investors indicators reported to disclosure, director liability, shareholder suits, here for Sri Lanka are based on detailed information shareholder rights, governance structure and corporate collected through a survey of corporate and securities transparency in a standard case study (for more details, lawyers about securities regulations, company laws and see the Data Notes section of the Doing Business 2015 court rules of evidence and procedure. To construct the report). The summary below shows the details underlying six indicators on minority investor protection, scores are the scores for Sri Lanka. assigned to each based on a range of conditions relating Table 7.2 Summary of scoring for the protecting minority investors indicators in Sri Lanka Answer Score Extent of disclosure index (0-10) 6.0 Which corporate body can provide legally sufficient Shareholders or board of directors 1 approval for the Buyer-Seller transaction? (0-3) including interested parties Is disclosure by the interested director to the board of Existence of a conflict without any 1 directors required? (0-2) specifics Is disclosure of the transaction in published periodic filings Disclosure on the transaction and 2 (annual reports) required? (0-2) on the conflict of interest Is immediate disclosure of the transaction to the public Disclosure on the transaction and 2 and/or shareholders required? (0-2) on the conflict of interest Must an external body review the terms of the transaction No 0 before it takes place? (0-1) Extent of director liability index (0-10) 5.0 Can shareholders sue directly or derivatively for the damage caused by the Buyer-Seller transaction to the company? (0- Yes 1 1) Can shareholders hold the interested director liable for the Liable if negligent 1 damage caused by the transaction to the company? (0-2) Can shareholders hold members of the approving body liable for the damage cause by the transaction to the Liable if negligent 1 company? (0-2) Must the interested director pay damages for the harm caused to the company upon a successful claim by a Yes 1 shareholder plaintiff? (0-1) Must the interested director repay profits made from the transaction upon a successful claim by a shareholder No 0 plaintiff? (0-1) Can both fines and imprisonment be applied against the No 0 interested indrector? (0-1) Can a court void the transaction upon a successful claim by Voidable if negligently concluded 1 a shareholder plaintiff? (0-2) Ease of shareholder suits index (0-10) 7.0 Before filing suit, can shareholders owning 10% of the company’s share capital inspect the transaction documents? No 0 (0-1) Can the plaintiff obtain any documents from the defendant No 3 Doing Business 2015 Sri Lanka 62 and witnesses during trial? (0-3) Can the plaintiff request categories of documents from the No 0 defendant without identifying specific ones? (0-1) Can the plaintiff directly question the defendant and Yes 2 witnesses during trial? (0-2) Is the level of proof required for civil suits lower than that of Yes 1 criminal cases? (0-1) Can shareholder plaintiffs recover their legal expenses from Yes if successful 1 the company? (0-2) Strength of minority investor protection index (0-10) 5.9 Extent of conflict of interest regulation index (0-10) 6.0 Extent of shareholder rights index (0-10.5) 5.5 Can shareholders amend company bylaws or statutes with a No 0 simple majority? Can shareholders owning 10% of the company's share Yes 1.5 capital call for an extraordinary meeting of shareholders? Can shareholders remove members of the board of Yes 1.5 directors before the end of their term. Must a company obtain its shareholders’ approval every Yes for listed companies 1 time it issues new shares? Are shareholders automatically granted subscription rights No 0 on new shares? Must shareholders approve the election and dismissal of the Yes 1.5 external auditor? Can shareholders freely trade shares prior to a major No 0 corporate action or meeting of shareholders? Strength of governance structure index (0-10.5) 6.0 Is the CEO barred from also serving as chair of the board of Yes 1.5 directors? Must the board of directors include independent board Yes for listed companies 1 members? Must a company have a separate audit committee? Yes for listed companies 1 Must changes to the voting rights of a series or class of shares be approved only by the holders of the affected Yes 1.5 shares? Must a potential acquirer make a tender offer to all Yes for listed companies 1 shareholders upon acquiring 50% of a company? Is cross-shareholding between 2 independent companies No 0 limited to 10% of outstanding shares? Is a subsidiary barred from acquiring shares issued by its No 0 parent company? Extent of corporate transparency index (0-9) 6.0 Must ownership stakes representing 10% be disclosed? Yes for listed companies 1 Must information about board members’ other directorships as well as basic information on their primary employment Yes for listed companies 1 be disclosed? Must the compensation of individual managers be No 0 disclosed? Must financial statements contain explanatory notes on significant accounting policies, trends, risks, uncertainties Yes 1.5 and other factors influencing the reporting? Must annual financial statements be audited by an external Yes 1.5 Doing Business 2015 Sri Lanka 63 auditor? Must audit reports be disclosed to the public? Yes for listed companies 1 Extent of shareholder governance index (0-10) 5.8 Source: Doing Business database. PAYING TAXES Taxes are essential. The level of tax rates needs to be carefully chosen—and needless complexity in tax WHAT THE PAYING TAXES INDICATORS rules avoided. Firms in economies that rank better MEASURE on the ease of paying taxes in the Doing Business study tend to perceive both tax rates and tax Tax payments for a manufacturing company administration as less of an obstacle to business in 2013 (number per year adjusted for according to the World Bank Enterprise Survey electronic and joint filing and payment) research. Total number of taxes and contributions paid, What do the indicators cover? including consumption taxes (value added tax, sales tax or goods and service tax) Using a case scenario, Doing Business measures the taxes and mandatory contributions that a medium- Method and frequency of filing and payment size company must pay in a given year as well as the Time required to comply with 3 major taxes administrative burden of paying taxes and (hours per year) contributions. This case scenario uses a set of financial statements and assumptions about Collecting information and computing the tax payable transactions made over the year. Information is also compiled on the frequency of filing and payments as Completing tax return forms, filing with well as time taken to comply with tax laws. The proper agencies ranking of economies on the ease of paying taxes is Arranging payment or withholding determined by sorting their distance to frontier scores on the ease of paying taxes. These scores are Preparing separate tax accounting books, if required the simple average of the distance to frontier scores for each of the component indicators, with a Total tax rate (% of profit before all taxes) threshold and a nonlinear transformation applied to Profit or corporate income tax one of the component indicators, the total tax rate . 5 The financial statement variables have been updated Social contributions and labor taxes paid by to be proportional to 2012 income per capita; the employer previously they were proportional to 2005 income Property and property transfer taxes per capita. To make the data comparable across Dividend, capital gains and financial economies, several assumptions are used. transactions taxes  TaxpayerCo is a medium-size business that Waste collection, vehicle, road and other taxes started operations on January 1, 2012.  Taxes and mandatory contributions include  The business starts from the same financial corporate income tax, turnover tax and all position in each economy. All the taxes labor taxes and contributions paidof by the 5 The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power 0.8. The threshold is defined as and mandatory the total contributions tax rate at the 15th percentilepaid during of the company. overall distribution for all years included in the analysis. It is calculated and adjusted on a the yearly basis. second The thresholdyear of is not operation based are recorded. on any economic theory of an “optimal tax rate” that minimizes distortions or maximizes efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set  range Alower at the end ofstandard of deductions the distribution and of tax rates levied on medium-size  Taxes and mandatory contributions are exemptions enterprises in the manufacturing sector as observed through the paying taxes indicators. are also This reduces recorded. the bias in the indicators toward economies that do not need to levyat measured all levels significant government. ofon taxes companies like the Doing Business standardized case study company because they raise public revenue in other ways—for example, through taxes on foreign companies, through taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of the methodology). This year’s threshold is 26.1%. Doing Business 2015 Sri Lanka 64 PAYING TAXES Where does the economy stand today? What is the administrative burden of complying with 2 largest business cities. See the chapter on distance to taxes in Sri Lanka—and how much do firms pay in taxes? frontier and ease of doing business ranking at the end of On average, firms make 47.0 tax payments a year, spend this profile for more details. 167.0 hours a year filing, preparing and paying taxes and Globally, Sri Lanka stands at 158 in the ranking of 189 pay total taxes amounting to 55.6% of profit (see the economies on the ease of paying taxes (figure 8.1). The summary at the end of this chapter for details). Most rankings for comparator economies and the regional indicator sets refer to a case scenario in the largest average ranking provide other useful information for business city of an economy, except for 11 economies for assessing the tax compliance burden for businesses in Sri which the data are a population-weighted average of the Lanka. Figure 8.1 How Sri Lanka and comparator economies rank on the ease of paying taxes Source: Doing Business database. Doing Business 2015 Sri Lanka 65 PAYING TAXES Economies around the world have made paying taxes concrete results. Some economies simplifying tax faster and easier for businesses—such as by payment and reducing rates have seen tax revenue rise. consolidating filings, reducing the frequency of What tax reforms has Doing Business recorded in Sri payments or offering electronic filing and payment. Lanka (table 8.1)? Many have lowered tax rates. Changes have brought Table 8.1 How has Sri Lanka made paying taxes easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka made paying taxes more costly by introducing a new DB2011 tax called the Nation Building Tax (NBT) that is levied on the turnover of a company. Sri Lanka made paying taxes less costly for businesses by abolishing the turnover tax and social security contribution and DB2012 by reducing corporate income tax, value added tax and national building tax rates. Sri Lanka made paying taxes easier for companies by DB2014 introducing an electronic filing system for social security contributions. Sri Lanka made paying taxes more costly for companies by DB2015 increasing the reduced corporate income tax rate for qualifying small and medium-size enterprises. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 Sri Lanka 66 PAYING TAXES What are the details? The indicators reported here for Sri Lanka are based LOCATION OF STANDARDIZED COMPANY on the taxes and contributions that would be paid by a standardized case study company used by Doing Business in collecting the data (see the section in this City: Colombo chapter on what the indicators cover). Tax practitioners are asked to review a set of financial statements as well as a standardized list of assumptions and transactions that the company The taxes and contributions paid are listed in the completed during its 2nd year of operation. summary below, along with the associated number of Respondents are asked how much taxes and payments, time and tax rate. mandatory contributions the business must pay and how these taxes are filed and paid. Table 8.2 Summary of tax rates and administration Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate Nation Building Tax 12 0 2% turnover 35.4 Employer paid - Social gross 1 online filing 9 12% 13.5 security contribution (EPF) salaries gross Employees Trust Fund (ETF) 12 online filing 0 3% 3.4 salaries annual Property tax 1 0 35% property 1.7 value taxable Corporate income tax 5 16 10% 1.6 profit interest included in Tax on interest 0 withheld 0 10% 0.3 income other taxes varies from Municipal business tax 1 0 LKR 250 to 0 LKR 5,000 fixed fee depending Vehicle tax 1 0 LKR 1,000 0 on vehicle type Doing Business 2015 Sri Lanka 67 Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate value not Value added tax (VAT) 12 142 12% 0 addition included various small Stamp duty 1 0 0 rates amount included in small Fuel tax 1 0 the price 0 amount of fuel Employee paid - Social gross 0 filed jointly 0 8% 0 withheld security contribution (EPF) salaries Totals 47.0 167.0 55.6 Source: Doing Business database. Doing Business 2015 Sri Lanka 68 TRADING ACROSS BORDERS In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS economies easier is increasingly important for INDICATORS MEASURE business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to Documents required to export and import extra costs and delays for exporters and importers, (number) stifling trade potential. Research shows that Bank documents exporters in developing countries gain more from a Customs clearance documents 10% drop in their trading costs than from a similar reduction in the tariffs applied to their products in Port and terminal handling documents global markets. Transport documents What do the indicators cover? Time required to export and import (days) Doing Business measures the time and cost Obtaining, filling out and submitting all the (excluding tariffs and the time and cost for sea documents transport) associated with exporting and importing a Inland transport and handling standard shipment of goods by sea transport, and the number of documents necessary to complete the Customs clearance and inspections transaction. The indicators cover predefined stages Port and terminal handling such as documentation requirements and procedures Does not include sea transport time at customs and other regulatory agencies as well as at the port. They also cover trade logistics, including Cost required to export and import (US$ per the time and cost of inland transport to the largest container) business city. The ranking of economies on the ease All documentation of trading across borders is determined by sorting their distance to frontier scores for trading across Inland transport and handling borders. These scores are the simple average of the Customs clearance and inspections distance to frontier scores for each of the component Port and terminal handling indicators. To make the data comparable across economies, Doing Business uses several assumptions Official costs only, no bribes about the business and the traded goods. The business:  Is located in the economy’s largest The traded product: business city. For the 11 economies with a population of more than 100 million, data  Is not hazardous nor includes military items. for a second city have been added.  Does not require refrigeration or any other  Is a private, limited liability company, special environment. domestically owned and does not operate  Do not require any special phytosanitary or with special export or import privileges. environmental safety standards other than  Conducts export and import activities, but accepted international standards. does not have any special accreditation  Is one of the economy’s leading export or such as an authorized economic operator import products. status.  Is transported in a dry-cargo, 20-foot full container load. Doing Business 2015 Sri Lanka 69 TRADING ACROSS BORDERS Where does the economy stand today? What does it take to export or import in Sri Lanka? population-weighted average of the 2 largest business According to data collected by Doing Business, exporting cities. See the chapter on distance to frontier and ease of a standard container of goods requires 7 documents, doing business ranking at the end of this profile for more takes 16.0 days and costs $560.0. Importing the same details. container of goods requires 7 documents, takes 13.0 Globally, Sri Lanka stands at 69 in the ranking of 189 days and costs $690.0 (see the summary of four economies on the ease of trading across borders (figure predefined stages and documents at the end of this 9.1). The rankings for comparator economies and the chapter for details). Most indicator sets refer to a case regional average ranking provide other useful scenario in the largest business city of an economy, information for assessing how easy it is for a business in except for 11 economies for which the data are a Sri Lanka to export and import goods. Figure 9.1 How Sri Lanka and comparator economies rank on the ease of trading across borders Source: Doing Business database. Doing Business 2015 Sri Lanka 70 TRADING ACROSS BORDERS In economies around the world, trading across borders systems. These changes help improve the trading as measured by Doing Business has become faster and environment and boost firms’ international easier over the years. Governments have introduced competitiveness. What trade reforms has Doing Business tools to facilitate trade—including single windows, risk- recorded in Sri Lanka (table 9.1)? based inspections and electronic data interchange Table 9.1 How has Sri Lanka made trading across borders easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform Sri Lanka reduced the time to export by implementing the DB2013 ASYCUDA World electronic data interchange system. Sri Lanka made trading across borders easier by introducing DB2014 an electronic payment system for port services. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 Sri Lanka 71 TRADING ACROSS BORDERS What are the details? The indicators reported here for Sri Lanka are based LOCATION OF STANDARDIZED COMPANY on a set of specific predefined stages for trading a standard shipment of goods by ocean transport (see the section in this chapter on what the indicators Port Name: Colombo cover). Information on the required documents and the time and cost to complete export and import is City: Colombo collected from local freight forwarders, shipping lines, The predefined stages, and the associated time and cost, customs brokers, port officials and banks. for exporting and importing a standard shipment of goods are listed in the summary below, along with the required documents. Table 9.2 Summary of predefined stages and documents for trading across borders in Sri Lanka Stages to export Time (days) Cost (US$) Customs clearance and inspections 2 160 Documents preparation 9 135 Inland transportation and handling 2 115 Ports and terminal handling 3 150 Totals 16 560 Stages to import Time (days) Cost (US$) Customs clearance and inspections 2 285 Documents preparation 7 140 Inland transportation and handling 2 115 Ports and terminal handling 2 150 Totals 13 690 Doing Business 2015 Sri Lanka 72 Documents to export Bill of Lading Cargo Dispatch Note (CDN) Central Bank Form 1 Commercial invoice Customs export declaration (CUSDEC) Packing list Shipping note (pre-advice form) Documents to import Bill of Lading Central Bank Form 1 Commercial invoice Customs import declaration (CUSDEC) Delivery order Letter of Credit Packing list Source: Doing Business database. Doing Business 2015 Sri Lanka 73 ENFORCING CONTRACTS Effective commercial dispute resolution has many WHAT THE ENFORCING CONTRACTS benefits. Courts are essential for entrepreneurs INDICATORS MEASURE because they interpret the rules of the market and protect economic rights. Efficient and transparent courts encourage new business relationships because Procedures to enforce a contract through businesses know they can rely on the courts if a new the courts (number) customer fails to pay. Speedy trials are essential for Steps to file and serve the case small enterprises, which may lack the resources to Steps for trial and judgment stay in business while awaiting the outcome of a long court dispute. Steps to enforce the judgment What do the indicators cover? Time required to complete procedures (calendar days) Doing Business measures the efficiency of the judicial system in resolving a commercial dispute before Time to file and serve the case local courts. Following the step-by-step evolution of Time for trial and obtaining judgment a standardized case study, it collects data relating to Time to enforce the judgment the time, cost and procedural complexity of resolving a commercial lawsuit. The ranking on the ease of Cost required to complete procedures (% of enforcing contracts is the simple average of the claim) percentile rankings on its component indicators: Average attorney fees procedures, time and cost. Court costs The dispute in the case study involves the breach of a sales contract between 2 domestic businesses. The Enforcement costs case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. To make the data comparable across economies, Doing Business uses several assumptions about the case:  The seller and buyer are located in the economy’s largest business city. For the 11 economies with a population of more than  The seller requests a pretrial attachment to 100 million, data for a second city have secure the claim. been added.  The dispute on the quality of the goods  The buyer orders custom-made goods, requires an expert opinion. then fails to pay.  The judge decides in favor of the seller; there  The seller sues the buyer before a is no appeal. competent court.  The seller enforces the judgment through a  The value of the claim is 200% of the public sale of the buyer’s movable assets. income per capita or the equivalent in local currency of USD 5,000, whichever is greater. Doing Business 2015 Sri Lanka 74 ENFORCING CONTRACTS Where does the economy stand today? How efficient is the process of resolving a commercial business cities. See the chapter on distance to frontier dispute through the courts in Sri Lanka? According to and ease of doing business ranking at the end of this data collected by Doing Business, contract enforcement profile for more details. takes 1318.0 days, costs 22.8% of the value of the claim Globally, Sri Lanka stands at 165 in the ranking of 189 and requires 40.0 procedures (see the summary at the economies on the ease of enforcing contracts (figure end of this chapter for details). Most indicator sets refer 10.1). The rankings for comparator economies and the to a case scenario in the largest business city of an regional average ranking provide other useful economy, except for 11 economies for which the data benchmarks for assessing the efficiency of contract are a population-weighted average of the 2 largest enforcement in Sri Lanka. Figure 10.1 How Sri Lanka and comparator economies rank on the ease of enforcing contracts Source: Doing Business database. Doing Business 2015 Sri Lanka 75 ENFORCING CONTRACTS What are the details? The indicators reported here for Sri Lanka are based COURT NAME on a set of specific procedural steps required to resolve a standardized commercial dispute through the courts (see the section in this chapter on what Claim value: LKR 731,651 the indicators cover). These procedures, and the time and cost of completing them, are identified through Court name: Colombo District Court study of the codes of civil procedure and other court regulations, as well as through questionnaires City: Colombo completed by local litigation lawyers (and, in a quarter of the economies covered by Doing Business, by judges as well). Table 10.2 Summary of time, cost and procedures for enforcing a contract in Sri Lanka South Asia Indicator Sri Lanka average Time (days) 1,318 1,077 Filing and service 62 Trial and judgment 1,000 Enforcement of judgment 256 Cost (% of claim) 22.8 30.4 Attorney cost (% of claim) 20.2 Court cost (% of claim) 1.1 Enforcement Cost (% of claim) 1.5 Procedures (number) 40 43 Number of procedures (without bonus points) 41 Specialized commercial courts -1 Total number of procedures (including bonus points) 40 Doing Business 2015 Sri Lanka 76 No. Procedures Filing and service: Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply with the 1 contract. A third person formally notifies Defendant: A third person formally notifies Defendant. A person other 2 than the Plaintiff or his lawyer, such as a notary public, formally notifies Defendant of Plaintiff’s request for payment. 3 Plaintiff hires a lawyer: Plaintiff hires a lawyer. Plaintiff files a summons and complaint: Plaintiff files a summons and complaint with the court (orally or * in writing). Plaintiff pays court fees: Plaintiff pays court fees (e.g. court duties, stamp duties, or any other type of court * fees). Answer ‘yes’ even if Plaintiff recovers these costs. Registration of court case: Registration of court case by the court administration (this can include 4 assigning a reference number to the case). Judicial scrutiny of summons and complaint: Judge examines Plaintiff's summons and complaint for 5 formal requirements as a matter of law or standard practice. Judge admits summons and complaint: Judge admits summons and complaint (after verifying the formal * requirements). Plaintiff requests service of process on Defendant: Plaintiff requests in writing to the court for an order 6 that process be served on Defendant. 7 Court order for service: Upon Plaintiff’s request, judge orders process be served on Defendant. Delivery of summons and complaint to person authorized to perform service of process on Defendant: 8 The judge or a court officer delivers the summons to a summoning office, officer, or authorized person (including Plaintiff), for service of process on Defendant. Arrangements for physical delivery of summons and complaint: Plaintiff takes the necessary steps to * arrange for physical service of process on Defendant (e.g. instructing a court officer or a private bailiff). Mailing of summons and complaint: Court or process server, including (private) bailiff, mails summons * and complaint to Defendant. Attempt at physical delivery: An attempt to physically deliver summons and complaint to Defendant is 9 made. Second attempt at physical delivery: If a first attempt is not ordinarily successful, a second attempt to 10 physically deliver the summons and complaint to Defendant is required by law or standard practice. (Check ‘yes’ only if a first attempt at physical delivery is not ordinarily successful) Application for substituted service: Because physical delivery is NOT successful, Plaintiff has recourse to 11 substituted service. Substituted service can include, but is not limited to, service by publication in newspapers or affixing of a notice in court or on public bulletin boards. Only ch Doing Business 2015 Sri Lanka 77 No. Procedures Court order regarding substituted service: Judge in a court order sets out acceptable means for 12 substituted service in a particular case. Substituted service: Substituted service is completed by publication in newspapers, by affixing a notice in 13 court or on public bulletin boards, etc. * Proof of service: Plaintiff submits proof of service to court, as required by law or standard practice. Trial and judgment: Defendant files an answer to Plaintiff’s claim: Defendant files a written pleading which includes his answer 14 or defense on the merits of the case (see assumption 4). Deadline for Plaintiff to reply to Defendant's defense or answer: Judge sets a deadline for Plaintiff’s 15 submission of a reply to the Defendant's defense or answer. Plaintiff’s written reply to Defendant's answer: Plaintiff responds to Defendant’s answer with a written 16 pleading, which may or may not include witness statements or expert (witness) statements. Framing of issues: Plaintiff and Defendant assist the court in framing issues on which evidence is to be 17 presented. Request for interlocutory order: Defendant raises preliminary issues, such as jurisdiction, statute of * limitation, etc. Checked as ‘yes’ if commonly raised by the Defendant as a matter of practice, regardless of justification. Court’s issuance of interlocutory order: Court decides the preliminary issues the Defendant raised by * issuing an interlocutory order. Check as ‘yes’ if this is commonly the case in commercial cases. Plaintiff’s appeal of court's interlocutory order: Plaintiff appeals the court's interlocutory order, which 18 suspends the court proceedings. Check as ‘yes’ if an appeal by Plaintiff is common in this case. Request for oral hearing or trial: Plaintiff lists the case for trial on the court’s calendar or applies for the 19 date(s) for the oral hearing or trial. * Setting of date(s) for oral hearing or trial: Judge sets the date(s) for the oral hearing or trial. * List of (expert) witnesses: The parties file a list of (expert) witnesses with the court (see assumption 5-a). Adjournments: Court proceedings are delayed because one or both parties request and obtain an 20 adjournment to prepare for the oral hearing or trial as a matter of common practice. Trial (prevalent in common law): The parties argue the merits of the case at (an) oral session(s) before the 21 court. Witnesses and expert witnesses are questioned and cross-examined during trial. Adjournments: Court proceedings are delayed because one or both parties request and obtain an 22 adjournment during the oral hearing or trial, resulting in an additional or later trial or hearing date. Order for submission of final arguments: The judge sets a deadline for the submission of final factual and 23 legal arguments. Final arguments: The parties present their final factual and legal arguments to the court either by oral * presentation or by a written submission. 24 Judgment date: The judge sets a date for delivery of the judgment. Doing Business 2015 Sri Lanka 78 No. Procedures 25 Notification of judgment in court: The parties are notified of the judgment at a court hearing. 26 Writing of judgment: The judge produces a written copy of the judgment. Registration of judgment: The court office registers the judgment after receiving a written copy of the 27 judgment. Plaintiff receives a copy of the judgment: Plaintiff receives a copy of the written judgment which is 100% 28 in favor of Plaintiff (see assumption 6). Appeal period: By law Defendant has the opportunity to appeal the judgment during a specified period. 29 Defendant decides not to appeal. Seller decides to start enforcing the judgment when the appeal period ends (see assumption 8). Order for reimbursement by Defendant of Plaintiff's court fees: The judgment orders Defendant to 30 reimburse Plaintiff for the court fees Plaintiff has advanced, because Defendant has lost the case. Enforcement of judgment: Plaintiff hires a lawyer: Plaintiff hires a lawyer to enforce the judgment or continues to be represented by * a lawyer during the enforcement of judgment phase. Plaintiff retains an enforcement agent to enforce the judgment.: Plaintiff retains the services of a court 31 enforcement officer such as a court bailiff or sheriff, or a private bailiff. Plaintiff requests an enforcement order: Plaintiff applies to the court to obtain the enforcement order * ('seal' on judgment). 32 Plaintiff advances enforcement fees: Plaintiff pays the fees related to the enforcement of the judgment. Attachment of enforcement order to judgment: The judge attaches the enforcement order (‘seal’) to the 33 judgment. Delivery of enforcement order: The court's enforcement order is delivered to a court enforcement officer * or a private bailiff. Identification of Defendant's assets by court official or Defendant for purposes of enforcement: The judge, 34 a court enforcement officer, a private bailiff or the Defendant himself identifies Defendant's movable assets for the purposes of enforcing the judgment through a sale of Defendant’s assets. Contestation of selection of assets identified for sale: A party, Plaintiff or Defendant, which was not 35 involved in the designation of the assets for attachment, contests the selection of assets for enforcement of judgment through a sale. Attachment: Defendant’s movable goods are attached (physically or by registering, marking or separating 36 assets). Report on execution of attachment: A court enforcement officer or private bailiff delivers a report on the 37 attachment of Defendant's movable goods to the judge. Enforcement disputes before court: The enforcement of the judgment is delayed because Defendant 38 opposes aspects of the enforcement process before the judge. Call for public auction: Judge calls a public auction by, for example, advertising or publication in the 39 newspapers. Doing Business 2015 Sri Lanka 79 No. Procedures 40 Sale through public auction: The Defendant’s movable property is sold at public auction. 41 Payment: Court orders that the proceeds of the public auction or the direct sale be delivered to Plaintiff. * Not counted in the total number of procedures. Source: Doing Business database. Doing Business 2015 Sri Lanka 80 RESOLVING INSOLVENCY A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY ensuring the survival of economically efficient INDICATORS MEASURE companies and reallocating the resources of inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of businesses Time required to recover debt (years) to normal operation and increase returns to Measured in calendar years creditors. By improving the expectations of creditors Appeals and requests for extension are and debtors about the outcome of insolvency included proceedings, well-functioning insolvency systems can facilitate access to finance, save more viable Cost required to recover debt (% of debtor’s businesses and thereby improve growth and estate) sustainability in the economy overall. Measured as percentage of estate value What do the indicators cover? Court fees Doing Business studies the time, cost and outcome of Fees of insolvency administrators insolvency proceedings involving domestic legal Lawyers’ fees entities. These variables are used to calculate the recovery rate, which is recorded as cents on the Assessors’ and auctioneers’ fees dollar recouped by secured creditors through Other related fees reorganization, liquidation or debt enforcement (foreclosure) proceedings. To determine the present Outcome value of the amount recovered by creditors, Doing Whether business continues operating as a Business uses the lending rates from the International going concern or business assets are sold Monetary Fund, supplemented with data from piecemeal central banks and the Economist Intelligence Unit. Recovery rate for creditors In addition, Doing Business evaluates the adequacy Measures the cents on the dollar recovered and integrity of the existing legal framework by secured creditors applicable to liquidation and reorganization proceedings through the strength of insolvency Outcome for the business (survival or not) determines the maximum value that can be framework index. The index tests whether economies recovered adopted internationally accepted good practices in four areas: commencement of proceedings, Official costs of the insolvency proceedings management of debtor’s assets, reorganization are deducted proceedings and creditor participation. Depreciation of furniture is taken into The ranking of the Resolving Insolvency indicator is account based on the recovery rate and the total score of the Present value of debt recovered strength of insolvency framework index. The Strength of insolvency framework index (0- Resolving Insolvency indicator does not measure 16) insolvency proceedings of individuals and financial institutions. The data are derived from survey Sum of the scores of four component indices: responses by local insolvency practitioners and Commencement of proceedings index (0-3) verified through a study of laws and regulations as well as public information on bankruptcy systems. Management of debtor’s assets index (0-6) Reorganization proceedings index (0-3) Creditor participation index (0-4) Doing Business 2015 Sri Lanka 81 RESOLVING INSOLVENCY Where does the economy stand today? Combination of quality regulations and efficient practice According to data collected by Doing Business, Sri Lanka characterize the top-performing economies. How scores 2.5 out of 3 points on the commencement of efficient are insolvency proceedings in Sri Lanka? proceedings index, 3.0 out of 6 points on the According to data collected by Doing Business, resolving management of debtor’s assets index, 0.5 out of 3 points insolvency takes 1.7 years on average and costs 10.0% of on the reorganization proceedings index, and 2.0 out of the debtor’s estate, with the most likely outcome being 4 points on the creditor participation index. Sri Lanka’s that the company will be sold as piecemeal sale. The total score on the strength of insolvency framework average recovery rate is 42.4 cents on the dollar. Most index is 8.0 out of 16. indicator sets refer to a case scenario in the largest Globally, Sri Lanka stands at 72 in the ranking of 189 business city of an economy, except for 11 economies for economies on the ease of resolving insolvency (figure which the data are a population-weighted average of the 11.1). The rankings for comparator economies and the 2 largest business cities. See the chapter on distance to regional average ranking provide other useful frontier and ease of doing business ranking at the end of benchmarks for assessing the efficiency of insolvency this profile for more details. proceedings in Sri Lanka. Figure 11.1 How Sri Lanka and comparator economies rank on the ease of resolving insolvency Doing Business 2015 Sri Lanka 82 Source: Doing Business database. Doing Business 2015 Sri Lanka 83 Figure 11.2 Recovery Rate (0-100) - Sri Lanka Source: Doing Business database. Figure 11.3 Strength of insolvency framework index (0-16) - Sri Lanka Source: Doing Business database. Doing Business 2015 Sri Lanka 84 LABOR MARKET REGULATION Doing Business measures flexibility in the regulation of Doing Business 2015 presents the data for the labor employment, specifically as it affects the hiring and market regulation indicators in an annex. The report redundancy of workers and the rigidity of working hours. does not present rankings of economies on these This year, for the first time, the indicators measuring indicators nor include the topic in the aggregate distance flexibility in labor market regulations focus on those to frontier score or ranking on the ease of doing affecting the food retail industry, using a standardized business. Detailed data collected on labor market case study of a cashier in a supermarket. Also new is that regulations are available on the Doing Business website Doing Business collects data on regulations applying to (http://www.doingbusiness.org). The data on labor employees hired through temporary-work agencies as market regulations are based on a detailed survey of well as on those applying to permanent employees or employment regulations that is completed by local employees hired on fixed-term contracts. The indicators lawyers and public officials. Employment laws and also cover additional areas of labor market regulation, regulations as well as secondary sources are reviewed to including social protection schemes and benefits as well ensure accuracy. To make the data comparable across as labor disputes. economies, several assumptions about the worker and the business are used. Over the period from 2007 to 2011 improvements were made to align the methodology for the labor market The worker: regulation indicators (formerly the employing workers  Is a cashier in a supermarket or a grocery store indicators) with the letter and spirit of the International  Is a full-time employee Labour Organization (ILO) conventions. Only 6 of the 188  Is not a member of the labor union, unless ILO conventions cover areas measured by Doing membership is mandatory Business: employee termination, weekend work, holiday The business: with pay, night work, protection against unemployment  Is a limited liability company (or the equivalent and medical care and sickness benefits. The Doing in the economy) with 60 employees. Business methodology is fully consistent with these 6  Operates a supermarket or grocery store in the conventions. The ILO conventions covering areas related economy’s largest business city. For 11 to the labor market regulation indicators do not include economies the data are also collected for the the ILO core labor standards—8 conventions covering second largest business city. the right to collective bargaining, the elimination of  Is subject to collective bargaining agreements if forced labor, the abolition of child labor and equitable such agreements cover more than 50% of the treatment in employment practices. food retail sector and they apply even to firms that are not party to them. Between 2009 and 2011 the World Bank Group worked  Abides by every law and regulation but does not with a consultative group—including labor lawyers, grant workers more benefits than those employer and employee representatives, and experts mandated by law, regulation or (if applicable) from the ILO, the Organisation for Economic Co- collective bargaining agreements. operation and Development (OECD), civil society and the private sector—to review the methodology for the labor market regulation indicators and explore future areas of research. A full report with the conclusions of the consultative group is available at: http://www.doingbusiness.org/methodology/employing-workers. Doing Business 2015 Sri Lanka LABOR MARKET REGULATION What are the details? The data reported here for Sri Lanka are based on a Employment laws and regulations as well as secondary detailed survey of labor market regulation that is sources are reviewed to ensure accuracy. completed by local lawyers and public officials. Difficulty of hiring index Difficulty of hiring covers 4 areas: (i) whether fixed-term wage to the average value added per worker. The contracts are prohibited for permanent tasks; (ii) the average value added per worker is the ratio of an maximum cumulative duration of fixed-term contracts; economy’s GNI per capita to the working-age population (iii) the minimum wage for a cashier, age 19, with 1 year as a percentage of the total population. of work experience; and (iv) the ratio of the minimum Difficulty of hiring index Data Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study 83.03 (US$/month) Ratio of minimum wage to value added per worker 0.21 Source: Doing Business database. Doing Business 2015 Sri Lanka 86 LABOR MARKET REGULATION Rigidity of hours index Rigidity of hours covers 7 areas: (i) whether the premium for work on a weekly rest day (as a percentage workweek can extend to 50 hours or more (including of hourly pay); (v) whether there are restrictions on night overtime) for 2 months in a year to respond to a work; (vi) whether there are restrictions on weekly seasonal increase in workload; (ii) the maximum number holiday work; and (vii) the average paid annual leave for of days allowed in the workweek; (iii) the premium for workers with 1 year of tenure, 5 years of tenure and 10 night work (as a percentage of hourly pay); (iv) the years of tenure. Rigidity of hours index Data 50-hour workweek allowed for 2 months a year in case of a seasonal Yes increase in workload? Maximum working days per week 5.5 Premium for night work (% of hourly pay) 0% Premium for work on weekly rest day (% of hourly pay) 0% Major restrictions on night work? Yes Major restrictions on weekly holiday? No Paid annual leave for a worker with 1 year of tenure (in working days) 14.0 Paid annual leave for a worker with 5 years of tenure (in working days) 14.0 Paid annual leave for a worker with 10 years of tenure (in working days) 14.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 14.0 working days) Source: Doing Business database. Doing Business 2015 Sri Lanka 87 LABOR MARKET REGULATION Difficulty of redundancy index Difficulty of redundancy index looks at 9 questions: (i) whether the employer needs approval from a third party what the length is in months of the maximum to terminate 1 redundant worker; (vi) whether the probationary period; (ii) whether redundancy is employer needs approval from a third party to terminate disallowed as a basis for terminating workers; (iii) a group of 9 redundant workers; (vii) whether the law whether the employer needs to notify a third party (such requires the employer to reassign or retrain a worker as a government agency) to terminate 1 redundant before making the worker redundant; (viii) whether worker; (iv) whether the employer needs to notify a third priority rules apply for redundancies; and (ix) whether party to terminate a group of 9 redundant workers; (v) priority rules apply for reemployment. Difficulty of redundancy index Data Maximum length of probationary period (months) 6.0 Dismissal due to redundancy allowed by law? Yes Third-party notification if 1 worker is dismissed? Yes Third-party approval if 1 worker is dismissed? Yes Third-party notification if 9 workers are dismissed? Yes Third-party approval if 9 workers are dismissed? Yes Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? No Source: Doing Business database. Doing Business 2015 Sri Lanka 88 LABOR MARKET REGULATION Redundancy cost Redundancy cost measures the cost of advance notice requirements and severance payments applicable to a requirements, severance payments and penalties due worker with 1 year of tenure, a worker with 5 years and when terminating a redundant worker, expressed in a worker with 10 years is considered. One month is weeks of salary. The average value of notice recorded as 4 and 1/3 weeks. Redundancy cost indicator (in salary weeks) Data Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 4.3 of tenure) Severance pay for redundancy dismissal for a worker with 1 year of tenure 10.8 Severance pay for redundancy dismissal for a worker with 5 years of tenure 54.2 Severance pay for redundancy dismissal for a worker with 10 years of tenure 97.5 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 54.2 of tenure) Source: Doing Business database. Social protection schemes and benefits & Labor disputes Doing Business collects data on the existence of Doing Business also assesses the mechanisms available unemployment protection schemes as well as data on to resolve labor disputes. More specifically, it collects whether employers are legally required to provide data on what courts would be competent to hear labor health insurance for employees with permanent disputes and whether the competent court is contracts. specialized in resolving labor disputes. Social protection schemes and benefits & Labor disputes indicator Data Availability of unemployment protection scheme? No Health insurance existing for permanent employees? No Availability of courts or court sections specializing in labor disputes? Yes Source: Doing Business database. Doing Business 2015 Sri Lanka 89 Doing Business 2015 Sri Lanka 90 DISTANCE TO FRONTIER AND EASE OF DOING BUSINESS RANKING This year’s report presents results for 2 aggregate defined as the total tax rate at the 15th percentile of the measures: the distance to frontier score and the ease of overall distribution for all years included in the analysis. doing business ranking, which for the first time this year For the time to pay taxes the frontier is defined as the is based on the distance to frontier score. The ease of lowest time recorded among all economies that levy the doing business ranking compares economies with one 3 major taxes: profit tax, labor taxes and mandatory another; the distance to frontier score benchmarks contributions, and value added tax (VAT) or sales tax. In economies with respect to regulatory best practice, addition, the cost to export and cost to import for each showing the absolute distance to the best performance year are divided by the GDP deflator, to take the general on each Doing Business indicator. When compared price level into account when benchmarking these across years, the distance to frontier score shows how absolute-cost indicators across economies with different much the regulatory environment for local entrepreneurs inflation trends. The base year for the deflator is 2013 for in an economy has changed over time in absolute terms, all economies. while the ease of doing business ranking can show only In the same formulation, to mitigate the effects of how much the regulatory environment has changed extreme outliers in the distributions of the rescaled data relative to that in other economies. for most component indicators (very few economies Distance to Frontier need 700 days to complete the procedures to start a business, but many need 9 days), the worst performance The distance to frontier score captures the gap between is calculated after the removal of outliers. The definition an economy’s performance and a measure of best of outliers is based on the distribution for each practice across the entire sample of 31 indicators for 10 component indicator. To simplify the process, 2 rules Doing Business topics (the labor market regulation were defined: the 95th percentile is used for the indicators are excluded). For starting a business, for indicators with the most dispersed distributions example, Canada and New Zealand have the smallest (including time, cost, minimum capital and number of number of procedures required (1), and New Zealand the payments to pay taxes), and the 99th percentile is used shortest time to fulfill them (0.5 days). Slovenia has the for number of procedures and number of documents to lowest cost (0.0), and Australia, Colombia and 110 other trade. No outlier was removed for component indicators economies have no paid-in minimum capital bound by definition or construction, including legal requirement (table 15.1 in the Doing Business 2015 index scores (such as the depth of credit information report). index, extent of conflict of interest regulation index and strength of insolvency framework index) and the Calculation of the distance to frontier score recovery rate (figure 15.1 in the Doing Business 2015 Calculating the distance to frontier score for each report). economy involves 2 main steps. First, individual Second, for each economy the scores obtained for component indicators are normalized to a common unit individual indicators are aggregated through simple where each of the 31 component indicators y (except for averaging into one distance to frontier score, first for the total tax rate) is rescaled using the linear each topic and then across all 10 topics: starting a transformation (worst − y)/(worst − frontier). In this business, dealing with construction permits, getting formulation the frontier represents the best performance electricity, registering property, getting credit, protecting on the indicator across all economies since 2005 or the minority investors, paying taxes, trading across borders, third year after data for the indicator were collected for enforcing contracts and resolving insolvency. More the first time. For legal indicators such as those on complex aggregation methods—such as principal getting credit or protecting minority investors, the components and unobserved components —yield a frontier is set at the highest possible value. For the total ranking nearly identical to the simple average used by tax rate, consistent with the use of a threshold in Doing Business . Thus Doing Business uses the simplest 6 calculating the rankings on this indicator, the frontier is 6 See Djankov, Manraj and others (2005). Principal components and unobserved components methods yield a ranking nearly identical to Doing Business 2015 Sri Lanka 91 method: weighting all topics equally and, within each overall tax system. Instead, it is mainly empirical in topic, giving equal weight to each of the topic nature. The nonlinear transformation along with the components . threshold reduces the bias in the indicator toward 7 economies that do not need to levy significant taxes on An economy’s distance to frontier score is indicated on a companies like the Doing Business standardized case scale from 0 to 100, where 0 represents the worst study company because they raise public revenue in performance and 100 the frontier. All distance to frontier other ways—for example, through taxes on foreign calculations are based on a maximum of 5 decimals. companies, through taxes on sectors other than However, indicator ranking calculations and the ease of manufacturing or from natural resources (all of which are doing business ranking calculations are based on 2 outside the scope of the methodology). In addition, it decimals. The difference between an economy’s distance acknowledges the need of economies to collect taxes to frontier score in any previous year and its score in from firms. 2014 illustrates the extent to which the economy has closed the gap to the regulatory frontier over time. And Calculation of scores for economies with 2 cities in any given year the score measures how far an covered economy is from the best performance at that time. For each of the 11 economies for which a second city Treatment of the total tax rate was added in this year’s report, the distance to frontier score is calculated as the population-weighted average This year, for the first time, the total tax rate component of the distance to frontier scores for the 2 cities covered of the paying taxes indicator set enters the distance to (table 12.1). This is done for the aggregate score, the frontier calculation in a different way than any other scores for each topic and the scores for all the indicator. The distance to frontier score obtained for the component indicators for each topic. total tax rate is transformed in a nonlinear fashion before it enters the distance to frontier score for paying taxes. Table 12.1 Weights used in calculating the distance to As a result of the nonlinear transformation, an increase in frontier scores for economies with 2 cities covered the total tax rate has a smaller impact on the distance to Economy City Weight (%) frontier score for the total tax rate—and therefore on the Dhaka 78 distance to frontier score for paying taxes—for Bangladesh Chittagong 22 economies with a below-average total tax rate than it São Paulo 61 would have in the calculation done in previous years (line Brazil Rio de Janeiro 39 B is smaller than line A in figure 15.2 of the Doing Shanghai 55 China Business 2015 report). And for economies with an Beijing 45 extreme total tax rate (a rate that is very high relative to Mumbai 47 India the average), an increase has a greater impact on both Delhi 53 these distance to frontier scores than before (line D is Jakarta 78 Indonesia bigger than line C in figure 15.2 of the Doing Business Surabaya 22 Tokyo 65 2015 report). Japan Osaka 35 The nonlinear transformation is not based on any Mexico City 83 Mexico economic theory of an “optimal tax rate” that minimizes Monterrey 17 distortions or maximizes efficiency in an economy’s Lagos 77 Nigeria Kano 23 Karachi 65 Pakistan that from the simple average method because both these methods Lahore 35 assign roughly equal weights to the topics, since the pairwise Moscow 70 Russian Federation correlations among indicators do not differ much. An alternative to the St. Petersburg 30 simple average method is to give different weights to the topics, New York 60 depending on which are considered of more or less importance in the United States Los Angeles 40 context of a specific economy. Source: United Nations, Department of Economic and Social 7 For getting credit, indicators are weighted proportionally, according to their contribution to the total score, with a weight of 60% assigned Affairs, Population Division, World Urbanization Prospects, to the strength of legal rights index and 40% to the depth of credit 2014 Revision. http://esa.un.org/unpd/wup/CD- information index. Indicators for all other topics are assigned equal ROM/Default.aspx. weights Doing Business 2015 Sri Lanka 92 Economies that improved the most across 3 or more Selecting the economies that implemented regulatory Doing Business topics in 2013/14 reforms in at least 3 topics and had the biggest improvements in their distance to frontier scores is Doing Business 2015 uses a simple method to calculate intended to highlight economies with ongoing, broad- which economies improved the ease of doing business based reform programs. The improvement in the the most. First, it selects the economies that in 2013/14 distance to frontier score is used to identify the top implemented regulatory reforms making it easier to do improvers because this allows a focus on the absolute business in 3 or more of the 10 topics included in this improvement—in contrast with the relative improvement year’s aggregate distance to frontier score. Twenty-one shown by a change in rankings—that economies have economies meet this criterion: Azerbaijan; Benin; the made in their regulatory environment for business. Democratic Republic of Congo; Côte d’Ivoire; the Czech Republic; Greece; India; Ireland; Kazakhstan; Lithuania; the former Yugoslav Republic of Macedonia; Poland; Ease of Doing Business ranking Senegal; the Seychelles; Spain; Switzerland; Taiwan, China; Tajikistan; Togo; Trinidad and Tobago; and the The ease of doing business ranking ranges from 1 to 189. United Arab Emirates. Second, Doing Business sorts these The ranking of economies is determined by sorting the economies on the increase in their distance to frontier aggregate distance to frontier scores, rounded to 2 score from the previous year using comparable data. decimals. Doing Business 2015 Sri Lanka 93 RESOURCES ON THE DOING BUSINESS WEBSITE Current features Law library News on the Doing Business project Online collection of business laws and regulations http://www.doingbusiness.org relating to business http://www.doingbusiness.org/law-library Rankings How economies rank—from 1 to 189 Contributors http://www.doingbusiness.org/rankings More than 10,700 specialists in 189 economies who participate in Doing Business Data http://www.doingbusiness.org/contributors/doing- All the data for 189 economies—topic rankings, business indicator values, lists of regulatory procedures and details underlying indicators Entrepreneurship data http://www.doingbusiness.org/data Data on business density (number of newly registered companies per 1,000 working-age Reports people) for 139 economies Access to Doing Business reports as well as http://www.doingbusiness.org/data/exploretopics/ent subnational and regional reports, reform case repreneurship studies and customized economy and regional profiles Distance to frontier http://www.doingbusiness.org/reports Data benchmarking 189 economies to the frontier in regulatory practice Methodology http://www.doingbusiness.org/data/distance-to- The methodologies and research papers underlying frontier Doing Business http://www.doingbusiness.org/methodology Information on good practices Showing where the many good practices identified Research by Doing Business have been adopted Abstracts of papers on Doing Business topics and http://www.doingbusiness.org/data/good-practice related policy issues http://www.doingbusiness.org/research Doing Business iPhone App Doing Business at a Glance—presenting the full Doing Business reforms report, rankings and highlights for each topic for Short summaries of DB2015 business regulation the iPhone, iPad and iPod touch reforms, lists of reforms since DB2008 and a ranking http://www.doingbusiness.org/specialfeatures/ simulation tool iphone http://www.doingbusiness.org/reforms Historical data Customized data sets since DB2004 http://www.doingbusiness.org/custom-query Doing Business 2015 Sri Lanka 94