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Latin America Investment News on Viva Tropical

Excessive Paperwork and Delays Hinder Investors in El Salvador

Article Summary:

In El Salvador, many businesses prefer to stay in the world of informality, due to the complicated procedures they must navigate in order to start a business. On average, a company must perform no less than eight procedures and wait up to 17 days to be granted business licenses, and those in the contstruction industry fair worse, passing through 19 different steps and waiting from 880 days to five years to obtain construction permits.

Original Article Text From El Salvador via Google Translate :

Procedures for excess Investment Country Repels

In El Salvador, many businesses prefer to stay in the world of informality, due to the complicated procedures that must be passed to start a business.

And no wonder, as ranked Doing Business 2012, World Bank (WB), to establish a Limited Liability Company (SRL) in El Salvador have to perform eight procedures and occupy a total of 17 days, while in other latitudes the planet is a matter of 25 minutes.

But the “ordeal” of transactions is higher for entrepreneurs in the field of construction, who have to go through 19 steps and wait 880 days to obtain permits for a project, in some cases up to 5 years.

The red tape bureaucracy is one of the reasons that El Salvador was held in 2012 at position 112 of Doing Business (Doing Business) presented yesterday by the Bank, together with the Salvadoran Foundation for Economic and Social Development (Fusades ) and the Competitiveness Initiative.

The position is not flattering when you take into account that the countries of the Latin American region are located on average at position 95, said Santiago Croci, co-author of World Bank ranking.

The results show that the country is far below the region, especially from Chile, Peru and Colombia, which have been positioned in the top 50 of the classification 2010-2011.

Fusades argues that in recent years the country has had a marked decline in business climate, from a ranking of 76 among 152 countries in 2006 to the current position 112 among 183 countries. The deterioration is reflected in the areas studied by the ranking, such as starting a business, building permits and taxes.

In the index of investment protection, the country also fell from position 141 to 146, between 2011 and 2012.

According to Maria Elena de Alfaro, president of the bureau of competition, in which participating employers, World Bank and the Government, although the results are troubling because “scare” any investor, is also a good opportunity to work together to reverse negative indicators.

He said the action agenda of this body include: accelerate-stop shop for building permits and business registers, reactivate Intergremial Commission for the Modernization of Customs (Cima), reduce paperwork, bureaucracy and customs response time between other.

The bet is also focusing on proposals to reduce the service times and number of procedures in the municipalities, the National Registration Center (CNR), the Ministry of Environment and Natural Resources (MARN) and the Directorate General of Customs.

Despite the sharp decline reflects the World Bank report highlighted the efforts made by El Salvador on reforms.

Jean Michel Lobet, specializing in Private Sector Development, World Bank, cited as an example, those made to the Commercial Code in 2008, which reduced the total time of procedures for starting a company, which went from 26 to 17 days as well as cost was $ 1.857 for before and is now $ 1.367.

The single window for imports that Customs established as part of modernization plans, was also cited as an example. But Doing Business reflects the challenge facing the country’s productive sectors with the decline of 43 positions held by the country since 2008.

Link to Original Article:

From El Salvador

Latin America Investment News on Viva Tropical