By Karen Abrams
The ease of doing business index ranks economies from 1 to 181, with first place being the best. A high ranking means that the regulatory environment is not conducive to business operation. The index ranks the simple average of the country’s percentile rankings in 10 areas. Guyana’s ranking rose 11 points from 90 to 101 indicating that the difficulty of doing business in Guyana increased from 2009 to 2010 and fell one point from 101 to 100 in 2010 to 2011.
In practical terms, the process records all procedures an entrepreneur needs to follow to formally start-up and operate an industrial or commercial business in Guyana. The summary of indicators include activities required in the following sub categories; starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business. This article will focus on the activities involved in the first subcategory; starting a business. The additional indicators will be explored in future articles.
In Guyana, there are eight procedures which must be completed in order for an entrepreneur to start a limited liability company and these procedures take an average of 30 days to complete. These activities include searching for company name and reserving proposed name, obtaining declaration of compliance, registering company with Registrar of Companies, filing for tax identification number (TIN) with the Revenue Authority, registering for PAYE, registering for VAT, registering employees for social security, and making a seal. Today, executing these activities for a limited liability company involve making multiple independent visits to different offices, and long waits in unnecessary lines.
Searching for a company name cost GY$175 and can be completed in one day. Obtaining a declaration of compliance cost GYD $15,000 and includes the filing of documents that require only a simple signature, with the exception of the declaration of compliance, which must be prepared by a lawyer. Lawyers and accountants are sometimes hired for other documents as well. Registering a company costs around GYD $73,000 and takes approximately 10 days. An incorporated business must provide the following documents for registration; Declaration of compliance, Articles of incorporation, Notice and consent of directors, Notice and consent of secretary and Notice of registered office. Filing TIN with the Revenue Authority takes approximately two days and there are no associated fees with this transaction. Once the TIN number is obtained, the company must register for VAT. This activity takes one day and is free of charge. Procedure seven includes registering employees for social security. This activity costs GYD $10,000 and takes approximately 7 days to complete. The final step is making a seal. This activity takes around two days at a cost of GYD $2000.
By contrast the Jamaican business start-up process includes six activities and takes eight days to complete. New Zealand ranks number one and has managed to consolidate these multiple activities into a one step process which is most often completed in one day.
Guyana can benefit greatly from improvements in the efficiency of the business start-up process. The online automation of many of these processes i.e. making it possible for entrepreneurs to register online has become the norm in developed countries.
An integrated system can easily be designed to allow for online registration which would immediately send business data to all agencies involved in the business start-up process. Fee payments can be done online by bank transfer, credit card or paypal accounts. This type of integrated and automated solution is relatively inexpensive and can probably be rolled out in one year. The return on this investment would include a significant increase in business registrations, a significant increase in tax revenue collection and a substantial increase in jobs as investors perceive a more business friendly environment. Countries which continue to stubbornly refuse to automate and integrate fundamental functions will continue to find themselves losing out on valuable investment opportunities and significant treasury collections.
