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Essay, 37 pages (10000 words)

The comparison of mauritius and madagascar economics essay

Introduction

Microeconomic outcomes, such as firm creation and employment have been given much attention. Recent research focuses on how business regulations affect the behaviour of firms by creating incentives (or disincentives) to register and operate formally, to create jobs, to innovate and to increase productivity. Many studies have also looked at the role played by courts, credit bureaus, and insolvency and collateral laws in providing incentives for creditors and investors to increase access to credit. Lower costs for business registration encourage entrepreneurship and enhance firm productivity. Economies with efficient business registration have a higher entry rate by new firms as well as greater business density. Economies where registering a new business takes less time have seen more businesses register in industries where the potential for growth is greatest. Also, reforms have made it easier to start a business tend to have a significant positive effect on investment in product market industries such as transport, communications and utilities, which are often sheltered from competition. For policy makers trying to improve their economy’s regulatory environment for business, a good place to start 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 based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size businesses through their life cycle. Economies are ranked from 1 to 183 by the ease of doing business index. For each economy the index is calculated as the ranking on the simple average of its percentile rankings on each of the 10 topics included in the index in Doing Business 2012: starting a business, dealing wid construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders and enforcing contracts. For policy makers, knowing where their economy stands in the aggregate ranking on the ease of doing business is useful. Also useful is to know how it ranks compared with other economies and compared with its benchmark to know exactly where it is lacking in its rules and regulation.

2. 0 Microeconomic Factors

2. 1 STARTING A BUSINESS

The process of registering companies formally has various advantages for a company, its owners and its employees. While formally registered companies have access to services from courts to banks and new markets, employees benefit from protections provided by the law. Moreover, personal assets of the owners are not put at risk since the financial liability of company owners on their investments is limited. As a result, governments make registration easy, encouraging more entrepreneurs to start business in the formal sector, thus creating more employments and revenues for the government.

What do the indicators cover?

Doing Business measures the ease of starting a business in an economy by recording all procedures officially required, time and cost needed to complete these procedures and paid-in-minimum capital deposited by companies before registration or within 3 months.

What are the number of procedures, time and cost required to start a business?

The indicators of starting business measure: 1) Procedures to legally start and operate a company (number)Preregistration (for example, name verification or reservation, notarizationRegistration in the economy‘ s largest business cityPost registration (for example, social security registration, company seal)2) TimeThe time is necessary for the completion of each procedure which starts on a separate day and a procedure is completed once the final document is received. Time here does not include the particular time spent on gathering information3) CostThe cost of entry regulation is based on all identifiable official expenses: fees, costs of procedures and forms, photocopies, fiscal stamps, legal and notary charges, etc. 4) Paid-up minimum capitalThis is calculated as a percentage of income per capita, with a start-up capital of 10 times income per capita and a turnover of at least 100 times income per capita.

Mauritius (2010-2011)

Where does the economy stand?

Indicator

DB2010

DB2011

Rank

..

12

Procedures (number)

55

Time (days)

66

Cost (% of income per capita)

4. 13. 8

Paid-in Min. Capital(% of income per capita)

00Source: Doing Business databaseTable 1. 1Based on the table 1. 1, Mauritius stands globally at 12 in the ranking of 183 economies on the ease of starting a business in Year 2011. According to data collected by Doing Business, starting a business in 2010 requires 5 procedures, takes 6 days, costs 4. 1% of income per capita and requires paid-in minimum capital of 0. 0% of income per capita. Similarly as in year 2011, starting a business take 5 procedures, takes 6 days but cost 3. 8% of income per capita.

What are the changes over time?

According to the above table, for the analysis of 2010 and 2011, there were not big changes for the starting up a business in Mauritius except for the cost (% of income per capita) has slightly decreased from 4. 1% to 3. 8%.

Madagascar (2010-2011)

Where does the economy stand?

Indicator

DB2010

DB2011

Rank

..

70

Procedures (number)

22

Time (days)

77

Cost (% of income per capita)

6. 212. 9

Paid-in Min. Capital(% of income per capita)

207. 4248. 1Source: Doing Business databaseTable 1. 2Madagascar stands at 70 in the year 2011 in the ranking of 183 economies on the basis of starting of a business. According to table 1. 2 collected by Doing Business, starting a business in Madagascar requires 23 procedures, takes 7days both in year 2010 and 2011. The costs in starting the business is 6. 2% of income per capita in 2010 and requires paid-in minimum capital of 207. 4 % of income per capita. However, in 2011, the cost is 12. 9% with a minimum paid-in capital of 248. 1%.

What are the changes over time?

Based on the table above, for the analysis of 2010 and 2011, there were no changes in procedures and time in Madagascar except for the cost (as % income per capita) which has doubled approximately from 6. 2% to 12. 9%. This is because in year 2010, the procedures were simplified and there was no stamp duty fee. YearReform2010Business start-up was simplified by streamlining procedures at the one-stop shop and eliminating the stamp duty and minimum capital requirement. 2011No reform

Comparison of Mauritius and Madagascar (year 2010-2011)

Mauritius

Economy

Year

Starting business

Rank

Procedures (number)

Time (days)

Cost (as a % of income per capita)

Paid-in Min. Capital(as a % of income per capita)

Mauritius

DB2010564. 10. 0DB201112563. 80. 0Source: Doing Business databaseTable 1. 3Madagascar

Economy

Year

Starting business

Rank

Procedures (number)

Time (days)

Cost (as a % of income per capita)

Paid-in Min. Capital(as a % of income per capita)

Madagascar

DB2010276. 2207. 4DB2011702712. 9248. 1Source: the World Bank doing businessTable 1. 4From our data based on table 1. 3 and 1. 4, we can see that Mauritius has been the one to be more favorable in starting a business compared to Madagascar both in year 2010 and 2011. In year 2010, although the procedures to start a business is higher in Mauritius, the time taken, cost and paid-in minimum capital is much lower in Mauritius as compared in Madagascar. It takes only 6 days at only 4. 1% its cost in Mauritius and with no paid-in minimum capital. A quick comparison for year 2011 shows that Madagascar ranked 70th for starting a business while Mauritius 12th. An analysis of setting up a company in Mauritius versus Madagascar shows that it is far easier, less expensive and less time consuming to register company in Mauritius as compared to incorporating a business in Madagascar. Furthermore, the paid up minimum capital in Mauritius is nil, compared to Madagascar which is 248. 1. Therefore for a Mauritian entrepreneur to start a business, he does not have to deposit an amount in a bank. Therefore Mauritius is better off because: In Mauritius, the procedures are simpler with new technology. As from year 2009, name verification for a new company is being done online and therefore this is being implemented in year 2010 also. In Mauritius, starting a business is more favored and is ranked before Madagascar since the paid-in minimum capital which a company must deposit before registration has been eliminated in this year 2010. In contrast, developing economies have made few reforms in aspects of labor regulation covered by Doing Business. Take the 2 regions with the most rigid employment regulation: in Sub- Saharan Africa only 6 of 46 economies made labor regulations more flexible in the past 5 years (Burkina Faso, Mauritius, Mozambique, Namibia, Rwanda and Uganda); in Latin America only 3 did (Argentina, Colombia and Peru). Finally, more recently in year 2011, the Board of Investment has played a role in helping to promoting Mauritius as an international investment, business, and service centre and provides counseling on investment opportunities in Mauritius and helps in setting up businesses. Reductions in the cost of communications as a major input of the services sector, whether off shoring or for the location of regional head-offices, together with the gains already made in easing business entry, is likely to make Mauritius more conducive as an investment destination. However, in Madagascar, custom duties range from 5% to 20%. Based on the 2011 budget law, inputs and capital goods for agriculture are exempt from customs duties as well as inputs for EPZ companies in the textile sector. Products for health security (medicine, vaccine, mosquito nets, glasses), equipment related to renewable energy and sports equipment are also exempt from custom duties.

Benchmark

Economy

Year

Starting a business

Rank

Procedures (number)

Time (days)

Cost (% of income per capita)

Paid-in minimum capital(% of income per capita)

New Zealand

DB2010

..

110. 40. 0

New Zealand

DB20111110. 40. 0

New Zealand

DB20121110. 40. 0Source: Doing Business databaseTable 1. 5Based on the Doing Business (see table 1. 5), New Zealand is considered as the best economy for starting a business in 2011 as it has been ranked first. Since New Zealand has outperformed concerning the starting of a business, it can be used as a benchmark for Mauritius and Madagascar. With number of procedure and time equaling to 1, it becomes easier and quicker to start business in New Zealand. However, for both Mauriitus and Mdagascar, it takes on more procedures and time to start a business for both 2010 and 2011. The position of New Zealand in the Doing Business report is explained by a number of reasons: New Zealand reduced the number of interactions that an entrepreneur starting a business must have with outside agencies to 1. The economy did so not by cutting out necessary regulation but by linking all agencies involved through a single online interface. New Zealand is ranked as the world’s least corrupt country in the 2011 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians. Non-corrupt countries encourage the start up of a business. The Forbes magazine Best Countries For Business 2011 survey ranks New Zealand as the world’s 2nd best jurisdiction for business. The report takes into account a number of factors including investor protection, lack of corruption and red tape, and personal freedom, all for which New Zealand ranks number 1.

2. 2 DEALING WITH CONSTRUCTION PERMITS

Regulation of construction is important so as to protect the public; however, there is a need for an efficient regulation which avoids excessive constraints on sectors in an economy. A simple and inexpensive compliance with building regulations proves good for everyone. Whereas of compliance is costly, builders may pay bribes to pass inspections or simply build illegally, leading to hazardous construction that puts public safety at risk.

What do the indicators cover?

Doing Business measures the procedures, time and cost it takes a small to medium-size business to obtain all necessary approvals to build something and connect it to basic utility services The ranking on the ease of dealing with construction permits is the simple average of the percentile rankings on its component indicators: procedures, time and cost.

What are the number of procedures, time and cost required for the construction permit?

The indicators of construction permit measure: 1) Procedures to legally build a warehouse (number)Submitting all documents and obtaining all necessary licenses and permitsObtaining utility connectionsRegistration of warehouse after its completion2) TimeThe time is necessary for the completion of each procedure which starts on a separate day and a procedure is completed once the final document is received. Time here does not include the particular time spent on gathering information. 3) CostThe costs of construction permit include official costs only.

Mauritius (2010-2011)

Where does the economy stand?

Indicators

DB2010

DB2011

Rank

..

54

Procedures (number)

1616

Time (days)

136136

Cost (% of income per capita)

35. 532. 3Source: Doing Business databaseTable 1. 6According to data collected in table 1. 6, dealing with construction permits in Mauritius requires 16 procedures and takes 136 days both in years 2010 and 2011. However it costs 35. 5% of income per capita in year 2010 in dealing with construction permits while only 32. 3% in 2011. Moreover, Mauritius stands at 54 in the ranking of 183 economies on the ease of dealing with construction permits.

What are the changes over time?

Based on the above table, for the analysis of years 2010 and 2011, there were not big changes for the construction permits in Mauritius except for the cost (% of income per capita) which is lesser in year 2011 by only 3. 2%. This maybe because there were no reforms as such in these two years.

Madagascar (2010-2011)

Where does the economy stand?

Indicators

DB2010

DB2011

Rank

..

130

Procedures (number)

1616

Time (days)

172172

Cost (% of income per capita)

630. 7468. 8Source: Doing Business databaseTable 1. 7Based on the table 1. 7, it can be deduced that in dealing with construction permits in Madagascar, 16 procedures and 172 days are both needed in years 2010 and 2011. Only the costs have decreased over the lapse of one year. Moreover, Madagascar stands at 130 in the ranking of 183 economies on the ease of dealing with construction permits.

What are the changes over time?

Based on the above table, for the analysis of years 2010 and 2011, there were not big changes for the construction permits in Madagascar except for the cost (% of income per capita) which costs more in 2010 than in 2011 where the cost is 161. 9% lesser.

Comparison of Mauritius and Madagascar (year 2010-2011)

Mauritius

Economy

Year

Dealing with Construction Permits

Rank

Procedures (number)

Time (days)

Cost (as a % of income per capita)

Mauritius

DB20101613635. 5DB2011541613632. 3Source: Doing Business databaseTable 1. 8Madagascar

Economy

Year

Dealing with Construction Permits

Rank

Procedures (number)

Time (days)

Cost (as a % of income per capita)

Madagascar

DB201016172630. 7DB201113016172468. 8Source: the World Bank doing businessTable 1. 9As illustrated on the above tables 1. 8 and 1. 9, the costs in dealing with construction permits are much lower in Mauritius as compared to Madagascar, with only 35. 5% and 32. 3% in Mauritius. Once more, Mauritius has performed much better compare to Madagascar in both 2010 and 2011. In both years, Mauritius is taking less time and is cheaper to complete a construction, thus dealing better with construction permits. This maybe because: In Mauritius, smart regulation including construction permits, has ensured that standards are met while making compliance easy and accessible to all. Coherent and transparent rules, efficient processes and adequate allocation of resources are also important in sectors where safety is at stake. Construction is one of them. In an effort to ensure building safety while keeping compliance costs reasonable, governments around the world have worked on consolidating permitting requirements. Also, as from 2008/2009 , reforms has intensified in other areas in Mauritius, simplifying processes forgetting construction permits, for trading across borders and for enforcing contracts through the courts. Its benefits have proved advantageous in year 2010 and 2011 also.

Benchmark

Economy

Year

Dealing with Construction Permits

Rank

Procedures (number)

Time (days)

Cost (% of income per capita)

China

DB2010

..

66718. 7

China

DB2011

..

66719. 4

China

DB2012166717. 8Source: Doing Business databaseTable 1. 10Standing as first position in the ranking of 183 economies on the strength of dealing with construction permits as illustrated in the above table 1. 10, China can be used as a benchmark for both economies, Mauritius and Madagascar. The high ranking of China indeed indicates that the country provides the best time and costs to deal with construction permits. Both in years 2010 and 2011, Mauritius and Madagascar take much more time and to deal with construction permits. Also, as compared with China, it is cheaper both in Mauritius and Madagascar when construction permit is concerned. The performance of China is because of the measures taken by the economy itself: China had finished implementing a single window for preconstruction approvals and another for post construction approvals in its one-stop shop. In addition, authorities issued new rules on private inspections. These allow builders to perform inspections during the construction of lower risk commercial buildings with fewer than 5 floors.

2. 3 GETTING ELECTRICITY

Access to consistent and reasonable electricity is crucial for a business. The first step for a customer is always to gain access by obtaining a connection, whether or not electricity is available or not. According to World Bank surveys of businesses, managers in 108 economies consider the availability and reliability of electricity to be the second most important constraint to their business activity, after access to finance. Studies have shown that poor electricity supply adversely affects the productivity of firms and the investments they make in their productive capacity.

What do the indicators cover?

Doing Business records all the procedures required for a local business to obtain a permanent electricity connection and supply for a standardized warehouse. These procedures include applications and contracts with electricity utilities, clearances from other agencies and the external and final connection works.

What are the number of procedures, time and cost required to get electricity?

The indicators of getting electricity measure: 1) Procedures to obtain an electricity connection (number)Submitting all documents and obtaining all necessary licenses and permitsObtaining external installation worksFinalizing supply contract2) TimeThe time required to complete each procedure is at least one calendar day. It does not include the time spent on collecting information; in fact it reflects the time spent in practice. 3) CostThe cost of getting electricity to a warehouse includes the official costs only and excludes value added tax.

Mauritius (2010-2011)

Where does the economy stand?

Indicators

DB2010

DB2011

Rank

..

45

Procedures (number)

44

Time (days)

9191

Cost (% of income per capita)

382. 4347. 6Source: Doing Business databaseTable 1. 11The table 1. 11 reveals that in getting electricity, Mauritius take same number of procedures and time both in years 2010 and 2011. However it costs 382. 4% of income per capita in year 2010 in obtaining electricity while it takes 347. 6% in 2011. Moreover, Mauritius stands at 45th in the ranking of 183 economies on the ease of acquiring electricity.

What are the changes over time?

Over the one year from 2010 to 2011, only the cost as a % of income per capita, has fallen by 34. 8% while the other indicators have remained the same for the two years. This maybe because there were no reforms as such during these two years.

Madagascar (2010-2011)

Where does the economy stand?

Indicators

DB2010

DB2011

Rank

..

181

Procedures (number)

66

Time (days)

450450

Cost (% of income per capita)

8087. 89236. 4Source: Doing Business databaseTable 1. 12

What are the changes over time?

Comparing year 2010 with year 2011 from the table 1. 12, it can be seen that in both years the procedures and time taken in getting electricity are both 6 and 450 respectively. However, the costs (% of income per capita) for both years are high amounts with 8087. 8% in year 2010 and a higher amount of 9236. 4% in year 2011.

Comparison of Mauritius and Madagascar (year 2010-2011)

Mauritius

Economy

Year

Getting electricity

Rank

Procedures (number)

Time (days)

Cost (as a % of income per capita)

MauritiusDB2010491382. 4DB201145491347. 6Source: Doing Business databaseTable 1. 13Madagascar

Economy

Year

Getting Electricity

Rank

Procedures (number)

Time (days)

Cost (as a % of income per capita)

Madagascar

DB201064508087. 8DB201145491347. 6Source: the World Bank doing businessTable 1. 14According to the tables 1. 13 and 1. 14, in both years, Mauritius has performed better compared to Madagascar in the process of obtaining electricity. For both years 2010 and 2011, the procedures and time taken are lesser in Mauritius than in Madagascar. Furthermore, the costs of getting electricity are far cheaper in Mauritius during the two years as compared to Madagascar where the value of the costs is indeed high. There are various reasons to explain the better system of acquiring electricity in Mauritius: A grid-code has been prepared, providing technical framework for Small Independent Power Producers (SIPPs) with capacity below 50 kW to generate electricity for their own purpose and feed any surplus into the national grid. Schemes for sale of surplus electricity to the national grid are being worked out and would be implemented as from early 2010. To democratize and encourage greater competition in the energy sector, it is essential to have the appropriate market regulations. To that effect, a Utility Regulatory Authority Act was proclaimed in September 2008 and the Board of the multisectoral Regulatory Authority would be operational in 2010. A Master Plan for Renewable Energy is currently being prepared for the development of renewable energy projects up to year 2025. The report is expected to be completed in 2011. The GOM is also working on a set of incentives to encourage small producers and households to generate electricity. A Grid Code for connecting electricity produced by the small independent power producers to the grid of the public utility has been developed.

Benchmark

Economy

Year

Getting Electricity

Rank

Procedures (number)

Time (days)

Cost (% of income per capita)

Iceland

DB2010

..

4228. 7

Iceland

DB2011

..

4226. 6

Iceland

DB2012142213. 7Source: Doing Business databaseTable 1. 15Positioning first in the year 2011, Iceland can be used as a benchmark for both Mauritius and Madagascar. Based on the Doing Business report, Iceland is thus the best economy in obtaining electricity with number of procedures as 4, time taken 22 and cost 6. 6% in 2011. Comparing the cost of the Iceland with Mauritius and Madagascar in obtaining electricity, it is much cheaper in Iceland than in the other two countries. This may be attributed to various reasons: Two major transmission projects were completed in 2010. A 24. 6 km line was completed to provide a second connection between Nesjavellir Power Plant and the capital city area. The 140 MVA line is mostly below ground. The TSO also completed a 12 km, 28. 5 MVA underground cable in the rural West Fjords area, with the aim of shortening the distance of the existing connection and decreasing supply disruptions. At the end of 2010, installed capacity of power plant was 2, 579 MW. All electricity produced is renewable baseload electricity. The increase in installed capacity in 2010 was 5 MW, which constitutes a 0. 2% increase in installed capacity. The increase in electricity production was 367 GWh; or a 2. 2% increase. Total electricity consumption was 17, 059 GWh in 2010. Estimated production capability is 19250 GWh which yields reserves of 14% in the year 2010. The maximum annual peak load of 2, 181 MW occurred on December 21st.

2. 4 REGISTERING PROPERTY

Formal property rights are an important concept and the effective administration of land is part of the formal property rights. If formal property transfer tends to be too expensive, complicated or not administered properly, it has little chance of being accepted as collateral for loans that is limited access to finance.

What do the indicators cover?

Doing Business records the necessary procedures for a business (buyer) to purchase a property from another business (seller) and to transfer the property title to the buyer’s name. The buyer can use the property either to expand its business or use it as collateral for loan. Time, cost and procedures are important requirements for registering property.

What are the numbers of procedures, time and cost required for transferring a property?

The indicators the registering property measure:

Procedures to legally transfer title on immovable property (number)

Preregistration (for example, checking for liens, notarizing sales agreement, paying property transfer taxes)Registration in the economy’s largest business cityPost registration (for example, filing title with the municipality

Time

Time is recorded in calendar days and it is assumed that the minimum time required for each procedure is 1. As all the procedures cannot start on the same day, the buyer is committed to complete each remaining procedure without delay.

Cost

Cost is recorded as a percentage of the property value, assumed to be equivalent to 50 times income per capita. Only official costs such as fees, transfer taxes, stamp duties and any other payment to the property registry required by law are recorded.

Mauritius (2010-2011)

Where does the economy stand?

Indicator

DB2008

DB2009

DB2010

DB2011

DB2012

Rank

..

..

..

6567

Procedures (number)

64444

Time (days)

210210262622

Cost (% of property value)

10. 610. 710. 710. 610. 6Source: Doing Business database. Table 1. 16Globally, Mauritius stands at 65 in the year 2011 in the ranking of 183 economies on the ease of registering property as referred in table 1. 16. According to data collected by Doing Business, registering property for year 2010 requires 4 procedures, takes 26 days and costs 10. 7% of the property value; in addition for the year 2011 registering property requires 4 procedures, takes 26 days and costs 10. 6% of the property value.

What are the changes over time?

In order to make registering property easier: Land registries have been computerizedTime limits for procedures have been introducedLow fixed fees have been setAccording to the above table 1. 16, for the analysis of 2010 and 2011, there were not big changes for the registering property in Mauritius except for the cost (% of property value) has decreased from 10. 7% to 10. 6%, and this was due to the reform made in 2010. YearReform2010Property registration was made easier by setting limit of 15 days to obtain final property titles from the land registry2011No reform

Madagascar (2010-2011)

Where does the economy stand?

Indicator

DB2008

DB2009

DB2010

DB2011

DB2012

Rank

..

..

..

141146

Procedures (number)

66666

Time (days)

13474747474

Cost (% of property value)

11. 69. 09. 49. 810. 6Source: Doing Business databaseTable 1. 17Globally, Madagascar stands at 141 in the year 2011 in the ranking of 183 economies on the ease of registering property. According to data in table 1. 17, registering property for year 2010 requires 6 procedures, takes 74 days and costs 9. 4% of the property value and for the year 2011 registering property requires 6 procedures, takes 74 days and costs 9. 8% of the property value. There has been a slight change in the cost of the property value that is an increase of 0. 4% can be noticed.

What are the changes over time?

According to the above table (1. 2), for the analysis of 2010 and 2011, there were not changes in procedures and time for the registering property in Madagascar except for the cost (% of property value) has increased from 9. 4% to 9. 8%, and this was due to the reform made in 2010 which was not a good one as transferring property was more expensive. YearReform(more difficult)2010Transferring a property was made more costly by making use of a notary mandatory for property transactions. 2011No reform

Comparison of Mauritius and Madagascar (year 2010-2011)

Mauritius

Economy

Year

Registering Property

Rank

Procedures (number)

Time (days)

Cost (% of property value)

MauritiusDB2010

..

42610. 7MauritiusDB20116542610. 6MauritiusDB20126742210. 6Table 1. 18

Madagascar

Economy

Year

Registering Property

Rank

Procedures (number)

Time (days)

Cost (% of property value)

MadagascarDB2010

..

6749. 4MadagascarDB20111416749. 8MadagascarDB201214667410. 6Source: the World Bank doing businessTable 1. 19From the above analysis illustrated in tables 1. 18 and 1. 19, for registering of property, it can be deduced that Mauritius is better off compare to Madagascar. Mauritius has been ranked 65 globally in the year 2011 compare to Madagascar which has been ranked 141 among the 183 countries. The number of procedures and time taken for registering property in Mauritius is lower compare to Madagascar. The time taken in Madagascar that is 74 days for registering property is higher compare to Mauritius where the time taken is only 26 days. Also, the number of procedures also is lower for Mauritius compare to Madagascar. The lesser the procedures and time taken, the easier will be to register property in both countries. However, efforts to improve property registration have been increasing. Economies such as Madagascar and Mauritius have made agencies and systems more efficient through incentives, reorganization and better management tools. Through broad property reforms implemented since 2007, Mauritius has reduced the transfer tax by 5% of the property value, eliminated separate clearances by utilities and set strict time limits for notaries and the land registry. Like most African economies, Mauritius requires a physical valuation for each property sale. However a new computerized property registry linking the valuation office with a new cadastre that will use aerial maps is expected to change this.

Benchmark -2011

Globally, Saudi Arabia has been ranked first for registering property in the year 2011. However under the different criteria of registering property that is procedures, time and cost, different countries such as Portugal and Slovak Republic have been ranked first. These economies can be taken as a benchmark and they may provide a model for Mauritius and Madagascar to improve the ease of registering property.

Benchmark (Saudi Arabia)

Economy

Year

Registering Property

Rank

Procedures (number)

Time (days)

Cost (% of property value)

Saudi Arabia

DB2010

..

220

Saudi Arabia

DB20111220

Saudi Arabia

DB20121220Table 1. 20From the above table 1. 20, Saudi Arabia is considered as the best economy for registering property in 2011 as it has been ranked first. Entrepreneurs find it easier to register and transfer property in Saudi Arabia by computerising land registries, introducing time limits for procedures and most importantly setting low fees which are quite high for counties Mauritius and Madagascar.

2. 5 PROTECTING INVESTORS

Investor protections enable the companies to expand in terms of capital, diversify, innovate and sustain in the competitive environment. Investors may be reluctant to invest if the laws do not provide such protections as strong regulations encourage smooth and efficient disclosure requirements.

What do the indicators cover?

Doing business analyses the strength of shareholders against directors who make use of the corporate assets for personal use. There are 3 dimensions of investor protections: transparency of related-party transactions, liability for self-dealing and shareholders’ ability to sue officers and directors for misconduct. This can be determined in terms of extent of disclosure index, extent of director liability index and ease of shareholder suits index. Empirical research shows that stricter regulation of self-dealing is associated with greater equity investment and lower concentration of ownership. This is in line with the view that stronger legal protections make minority investors more confident about their investments, reducing the need for concentrated ownership to mitigate weaknesses in corporate governance.

Where does the economy stand in 2010 and 2011?

Mauritius (2010-2011)

Economy

Year

Protecting Investors

Rank

Extent of disclosure index (0-10)

Extent of director liability index (0-10)

Ease of shareholder suits index (0-10)

Strength of investor protection index (0-10)

Mauritius

DB2010

12

6

8

9

7. 7

Mauritius

DB2011

12

6

8

9

7. 7

Mauritius

DB2012

13

6

8

9

7. 7

Source: Doing Business databaseTable 1. 21According to the above table 1. 21, Mauritius has outperformed for investor protections because it has been ranked 12th out of the 183 economies globally. The economy has a score of 7. 7 on the strength of investor protection index, with a higher score indicating stronger protections. The other indexes also are quite high for Mauritius in both 2010 and 2011, with a score of 6 for the extent of disclosure index, a score of 8 for the extent of director liability, a score of 9 for the ease of shareholder suits index. Normally, the higher the score, the better the economy is performing in cost of doing business. In addition, no reform has been made in the years 2010 and 2011, thus the economy has been stagnant in both years.

Madagascar (2010-2011)

Economy

Year

Protecting Investors

Rank

Extent of disclosure index (0-10)

Extent of director liability index (0-10)

Ease of shareholder suits index (0-10)

Strength of investor protection index (0-10)

Madagascar

DB2010

59

5

6

6

5. 7

Madagascar

DB2011

60

5

6

6

5. 7

Madagascar

DB2012

65

5

6

6

5. 7

Source: Doing Business databaseTable 1. 22Globally, Madagascar stands at 60 in the ranking of 183 economies on the strength of investor protection index in 2011 and has been ranked 59th in 2010. The economy has a score of 5. 7 on the strength of investor protection index, in both 2010 and 2011, followed with a score of 5 for the extent of disclosure index, a score of 6 for the extent of director liability, a score of 6 for the ease of shareholder suits index. While the indicator does not measure all aspects related to the protection of minority investors, a higher ranking does indicate that an economy‘ s regulations offer stronger investor protections against self-dealing in the areas measured. In addition, no reform has been made in the years 2010 and 2011, thus the economy has been stagnant in both years just like Mauritius. However, although the different indexes have the same score in both 2010 and 2011, but still Madagascar has been ranked 59th in 2010 and 60th in 2011, this is so because other economies have performed better compare to Madagascar.

Comparison of Mauritius and Madagascar (2010-2011)

Economy

Year

Protecting Investors

Rank

Extent of disclosure index (0-10)

Extent of director liability index (0-10)

Ease of shareholder suits index (0-10)

Strength of investor protection index (0-10)

Mauritius

DB2010

12

6

8

9

7. 7

Mauritius

DB2011

12

6

8

9

7. 7

Economy

Year

Protecting Investors

Rank

Extent of disclosure index (0-10)

Extent of director liability index (0-10)

Ease of shareholder suits index (0-10)

Strength of investor protection index (0-10)

Madagascar

DB2010

59

5

6

6

5. 7

Madagascar

DB2011

60

5

6

6

5. 7

Source: Doing Business databaseTable 1. 23Mauritius has again performed much better compare to Madagascar in both 2010 and 2011. In both the years Mauritius has a higher score compare to Madagascar as illustrated in the table 1. 23. Mauritius has stronger protections of minority investors from self-dealing transactions and also more disclosure and defines clear duties for directors are required. Mauritius has also well-functioning courts and up-to-date procedural rules that give minority investors the means to prove their case and obtain a judgment within a reasonable time compare to Madagascar which lag behind in certain procedures. In Mauritius an external body that is an external auditor does review all the necessary transactions before they take place which is not the case for Madagascar.

Benchmark-2011

Globally, New Zealand stands at 1 in the ranking of 183 economies on the strength of investor protection index as shown in the table below and it can be used as a benchmark for both economies that is, Mauritius and Madagascar. A higher ranking in extent of disclosure index, extent of director liability index , ease of shareholder suits index and strength of investor protection index do indicate that an economy’s regulations offer stronger investor protections against self-dealing in the areas measured.

Economy

Year

Protecting Investors

Rank

Extent of disclosure index (0-10)

Extent of director liability index (0-10)

Ease of shareholder suits index (0-10)

Strength of investor protection index (0-10)

New Zealand

DB2010

1

10

9

10

9. 7

New Zealand

DB2011

1

10

9

10

9. 7

New Zealand

DB2012

1

10

9

10

9. 7

Source: Doing Business databaseTable 1. 24According to the table 1. 24, both Mauritius and Madagascar were worst off compare to New Zealand, because they lagged behind in certain procedures. In New Zealand, there are full disclosures of all material and also there is disclosure of transaction to the public, the regulator and the shareholders to create awareness in those transactions. In addition, the CEO or members of the board of directors are likely to be liable if business transaction is unfair to other shareholders.

2. 6 GETTING CREDIT

Doing business also comprise of credit information and the legal rights obtained by borrowers and lenders with respect to secured transactions. The 2 sets of indicators, that is the depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through a public credit registry. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. Two types of frameworks can facilitate access to credit and improve its allocation: credit information systems and the legal rights of borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable lenders to view a potential borrower’s financial history (positive or negative)—valuable information to consider when assessing risk. Also, sound collateral laws enable businesses to use their assets, especially movable property, as security to generate capital. The ranking on the ease of getting credit is based on the percentile rankings on its component indicators: the depth of credit information index (weighted at 37. 5%) and the strength of legal rights index (weighted at 62. 5%).

Mauritius (2010-2011)

Where does the economy stand?

Economy

Year

Getting Credit

Rank

Strength of legal rights index (0-10)

Depth of credit information index (0-6)

Public registry coverage (% of adults)

Private bureau coverage (% of adults)

Mauritius

DB2010

..

6336. 80

Mauritius

DB2011756349. 80

Mauritius

DB2012786349. 80Source: Doing Business databaseTable 1. 25How efficient is getting credit in Mauritius depends on the credit information system and collateral and bankruptcy laws. The economy has a score of 3 on the depth of credit information index and a score of 6 on the strength of legal rights index both for the year 2010 and 2011 as shown in the table 1. 25. Higher scores indicate more credit information and stronger legal rights for borrowers and lenders. Globally, Mauritius stands at 75 in the ranking of 183 economies in 2011 on the ease of getting credit (Table 1. 25). The rankings for comparator economies and the regional average ranking provide other useful information for assessing how well regulations and institutions in Mauritius support lending and borrowing. YearReform2010Access to credit information was strengthened by allowing the licensing of private credit information bureaus and expanding the bureaus’ coverage to all credit facilities. 2011No reform

What are the details?

The getting credit indicators reported here for Mauritius are based on detailed information collected in that economy. The data on credit information sharing are collected through a survey of a public credit registry or private credit bureau (if one exists). To construct the depth of credit information index, a score of 1 is assigned for each of 6 features of the public credit registry or private credit bureau (see summary of scoring below). The data on the legal rights of borrowers and lenders are gathered through a survey of financial lawyers and verified through analysis of laws and regulations as well as public sources of information on collateral and bankruptcy laws. For the strength of legal rights index, a score of 1 is assigned for each of 8 aspects related to legal rights in collateral law and 2 aspects in bankruptcy law.

Madagascar (2010-2011)

Where does the economy stand?

Economy

Year

Getting Credit

Rank

Strength of legal rights index (0-10)

Depth of credit information index (0-6)

Public registry coverage (% of adults)

Private bureau coverage (% of adults)

Madagascar

DB2010

..

2

1

0. 1

0

Madagascar

DB2011

177

2

0

0

0

Madagascar

DB2012

177

2

0

0. 1

0

Source: Doing Business databaseTable 1. 26The economy has a zero score on the depth of credit information in the year 2011 and a score of 1 in the year 2010. Additionally, Madagascar has a score of 2 on the strength of legal rights index both for the year 2010 and 2011 as shown in the table above. Higher scores indicate more credit information and stronger legal rights for borrowers and lenders. Globally, Madagascar stands at 177 in the ranking of 183 economies in 2011 on the ease of getting credit (table 1. 26)YearReform2010No reform2011No reformAs there was no reform made in both years, Madagascar has not made any progress on the ease of getting credit.

Comparison between Mauritius and Madagascar (2010-2011)

Economy

Year

Getting Credit

Rank

Strength of legal rights index (0-10)

Depth of credit information index (0-6)

Public registry coverage (% of adults)

Private bureau coverage (% of adults)

Mauritius

DB2010

..

6336. 80

Mauritius

DB2011756349. 80

Mauritius

DB2012786349. 80Source: Doing Business databaseTable 1. 27

Economy

Year

Getting Credit

Rank

Strength of legal rights index (0-10)

Depth of credit information index (0-6)

Public registry coverage (% of adults)

Private bureau coverage (% of adults)

Madagascar

DB2010

..

2

1

0. 1

0

Madagascar

DB2011

177

2

0

0

0

Madagascar

DB2012

177

2

0

0. 1

0

Source: Doing Business databaseTable 1. 28Mauritius has performed better compare to Madagascar because of certain differences in the procedures. As far as the strength of legal rights is concerned, in Mauritius, all types of debts and obligations are secured between parties and the collateral agreements include a maximum amount for which assets are encumbered. Additionally, in Mauritius, collateral registry which is in operation is unified with an electronic database and also, the law permits parties to agree in a collateral agreement whereby when the security interest is created, the lender may implement its security out of court. These procedures are not implemented in Madagascar which has made Madagascar lagging behind. In Mauritius, to facilitate the depth of credit information, data are distributed on both firms and individuals. Moreover the data distributed on all loans is below 1% of income and the borrowers have the right to inspect their data in the largest credit registry guaranteed by law.

Benchmark-2011

Economy

Year

Getting Credit

Rank

Strength of legal rights index (0-10)

Depth of credit information index (0-6)

Public registry coverage (% of adults)

Private bureau coverage (% of adults)

United Kingdom

DB2010

..

1060100

United Kingdom

DB201111060100

United Kingdom

DB201211060100Source: Doing Business databaseTable 1. 29The UK economy can be used as a benchmark for both Mauritius and Madagascar as it has been ranked first globally in the year 2011. Madagascar is worst off compare to both economies and as Mauritius is concerned; some procedures have not been implemented compare to UK. In UK, in case of insolvency of business, secured creditors are paid first i. e. before general tax claims and employee claims. In addition, the secured creditors are not subject to an automatic stay on enforcement procedures when a debtor enters a court supervised reorganization procedure. Also, UK has outperformed as concerning the depth of credit information, for private credit bureau, both positive and negative data are distributed on both firms and individuals. The registry plays an important role as it has the ability to distribute more than 2 years of historical credit information from retailers, creditors and financial companies. Paying TaxesTax is an important aspect of any economy for it funds the public amenities, infrastructure and services that are crucial for a properly functioning the economy. The level of tax rates needs to be carefully selected and, at the same time, needless complexity in tax rules avoided. In economies where it is more difficult and costly to pay taxes, larger shares of economic activity end up in the informal sector—where businesses pay no taxes at all.

What do the indicators cover?

Doing Business measures the taxes and mandatory contributions that a medium-size company must pay in a given year as well as the administrative burden of paying taxes and contributions. It makes use of a set of financial statements and assumptions about transactions made over the year. Information is also compiled on the frequency of filing and payments as well as time taken to comply with tax laws. The ranking on the ease of paying taxes is the simple average of the percentile rankings on its component indicators: number of annual payments, time and total tax rate, with a threshold being applied to the total tax rate.

The indicator paying tax measure:

Tax payments for a manufacturing company in 2010 (number per year adjusted for electronic or joint filing and payment)

Total number of taxes and contributions paid, including consumption taxes (value added tax, sales tax or goods and service tax)Method and frequency of filing payments

Mauritius (2010-2011)

Where does the economy stand?

Indicator

DB2008

DB2009

DB2010

DB2011

DB2012

Rank

..

..

..

1111

Payment (number per year)

77777

Time (hours per year)

161161161161161

Total tax rate (% profit)

21. 722. 222. 924. 125. 0Source: Doing Business database. Table 1. 30Globally, Mauritius stands at 11 in the year 2011 in the ranking of 183 economies for the indicator paying taxes. According to the data collected by Doing Business(table 1. 30), the payment of payment that companies are required to file each year is 7 and this have been constant for 2008 up to 2012, including 2011. It is to be noted that Mauritius in the region best performer for this sub category in the African countries. The hours per year that it takes company to compute the tax and file is 161 hours and it can be noted that this have also been constant. For this sub category the regional best performer is Seychelles at 76 hours per years. For the total tax rate, which is the percentage of the company profit, has seen an upward trend, that is, companies are paying more taxes now than previously. In 2010 companies were paying 22. 9% of their profit as taxes whereas in 2011 this has increased by more than 2%, to 24. 1%. the regional best performer under this category id Namibia at 9. 8%, which shows a real disparity between Mauritius and Namibia.

What are the changes over time?

No major changes have been made by Mauritius, which can be deduced from the trend analysis in the table above. However, only in the year 2011, Mauritius introduced a new law, the Corporate Social Responsibility tax, which is be said to have resulted in the increased in tax percentage over the two years. YearReform2010No Reform2011Mauritius introduced a new Corporate Social Responsibility Tax.

Madagascar (2010-2011)

Where does the economy stand?

Indicator

DB2008

DB2009

DB2010

DB2011

DB2012

Rank

..

..

..

7475

Payments (Number per years)

2625232323

Time (hours per year)

238238201201201

Total Tax (% profit)

46. 542. 839. 237. 736. 6

Source: Doing Business database

Table 1. 31

Globally, Madagascar stands at 74 in the year 2011 in the ranking of 183 economies under the category paying taxes. According to the data collected by Doing Business(as illustrated in table 1. 31), the payment of payment that companies are required to file each year is 23 hours and this have been constant for the year 2010 and 2011. It is to be noted that Madagascar lag well behind in the region best performer for this sub category in the African countries. The hours per year that it takes company to compute the tax and file is 201 hours and this has been constant for 2010 and 2011. For this sub category the regional best performer is Seychelles at 76 hours per years. For the total tax rate, which is the percentage of the company profit, has seen a downward trend, that is, companies are paying less taxes now than previously. In 2010 companies were paying 39. 2% of their profit as taxes whereas in 2011 this has decreased to 37. 7%. The regional best performer under this category is Namibia at 9. 8%, which shows a real disparity between Madagascar and Namibia.

What are the changes over time?

According to the table below, it can be deduced that in 2010 Madagascar has not made any reform under this category. However for the year 2011 Madagascar pass on legislation, reducing its tax rate for corporate tax further. This is the reason for the lowering tax paid by companies. YearReform2010No reform2011Madagascar further reduced corporate tax

Comparison of Mauritius and Madagascar (year 2010-2011)

Mauritius

Economy

Year

Paying taxes

Rank

Payments(Number per year)

Time(Hours per Year)

Total Tax (%profit)

MauritiusDB201011716124. 1MauritiusDB201111716125

Source: Doing Business database

Table 1. 32

Madagascar

Economy

Year

Paying taxes

Rank

Payment (number per year)

Time(Hours per Year)

Total Tax (% profit)

MadagascarDB2010742320137. 7MadagascarDB2011752320136. 6

Source: the World Bank doing business

Table 1. 33

From the above tables 1. 32 and 1. 33, under the category paying taxes, it can be deduced that Mauritius is more favorable for investment purposes, for investors pays a lesser percentage of profit as tax than compared to Madagascar. Moreover, it takes company more hours to compute and file the tax payment and also companies have to file tax payment more number of times than in Madagascar. This makes Mauritius more favorable than Madagascar under this category. It has to be noted that Mauritius enables online filing of taxes, which is basically absent in Madagascar. Continued progress is required in Mauritius for the betterment of the process for paying taxes and Madagascar has to embark on an online basis for filing taxes, which will reduce cost and also bureaucracy and attract investors.

Benchmark -2011

Globally, The United Arab Emirates has been ranked first for the category paying taxes for the year 2011. The UAE can be taken as a benchmark for Mauritius and Madagascar to ameliorate themselves under this category.

Benchmark (Saudi Arabia)

Economy

Year

Registering Property

Rank

Payment(Number per Year)

Time (Hours per year)

Total tax (% Profit)

Saudi Arabia

DB20101141214. 1

Saudi Arabia

DB20111141214. 1

Source: Doing Business database

Table 1. 34

It can be deduced that UAE is ranked first for this category and the diffrence between the Mauritian economy and Madagascar economy via-a-vis UAE is alarming. These two countries should adopt the policies that UAE has implemented. Nevertheless, it should be taken into account that the UAE is amongst the top countries with full oil resources, on which it’s economy run and it is much easier for UAE to implement such low-tax policies that Mauritius and Madagascar. Trading Across Borders. In today’s globalized world, making trade between economies easier is increasingly important for business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to extra costs and delays for exporters and importers, stifling trade potential. The trading across borders category index is also important in a globalised trading world like ours.

What do the indicators cover?

Doing Business measures the time and cost (excluding tariffs) associated with exporting and importing a standard shipment of goods by sea and the number of documents necessary to complete the transaction. The indicators cover procedural requirements such as documentation requirements and procedures at customs and other regulatory agencies as well as at the port. They also cover trade logistics, including the time and cost of inland transport to the largest business city.

Where does the economy stand in 2010 and 2011?

Mauritius (2010-2011)

Economy

Year

Trading across borders

Rank

Documents to export

(number)

Time to Export

(days)

Cost to export

(US$ per container)

Documents to import

(number)

Time to Import

(Days)

Cost to Import

(US$ percontainer)

Mauritius

DB

2010

21

5

13

737

6

13

689

Mauritius

DB

2011

21

5

13

737

6

13

689

Source: Doing Business database

Table 1. 35

Mauritius has been ranked 21 globally under the index trading across bordersas illustrated in the table 1. 35. It can be noticed that the documents to import and export are rather insignificant at 6 and 5, respectively. However the time it takes to import and export those documents is rather considerable at 13 days. Given that Mauritius is competing with countries like China and India for trading across borders, these considerable bureaucracies and the large number of days it takes will definitely make Mauritius suffer on this basis. Also, the cost of importing and exporting those documents are considerable, high at 737 US$ and 689 US$.

What are the changes over time?

YearReform2010The introduction of electronic submission of customs declaration and bills of lading has expedited trade2011No ReformIt can be seen that in 2011 Mauritius has taken no reform. However in 2010, Mauritius has introduced an electronic system for the submission of bill of lading and customs declaration, but the sub category under trading across borders seemed to be unaffected in 2011. It maybe due to the fact that this change will show off its result in the long run.

Madagascar (2010-2011)

Economy

Year

Trading across borders

Rank

Documents to export

(number)

Time to Export

(days)

Cost to export

(US$ per container)

Documents to import

(number)

Time to Import

(Days)

Cost to Import

(US$ percontainer)

Madagascar

DB

2010

110

4

21

1279

9

26

1660

Madagascar

DB

2011

111

4

21

1197

9

24

1555

Source: Doing Business databaseTable 1. 36Globally, Madagascar stands at 111 in the ranking of 183 economies under the trading across borders index in 2011 and has been ranked 110 in 2010 (refer to table 1. 36). This shows deterioration. The improvements in the cost to import and export are significant, and also these two sub-categories have improved, they were not able have a positive effect of Madagascar global ranking.

What are the changes over time?

YearReform2010No Reform2011Madagascar improved communication and coordination between customs and terminal port operators through its single-window system (GASYNET)Madagascar has introduced a new window, GASYNET, to improve the cost to import and export. Madagascar need to embark on such initiatives to be able to curb the problems it is facing under the trading across borders index.

Comparison of Mauritius and Madagascar (2010-2011)

Economy

Year

Trading across borders

Rank

Documents to export

(number)

Time to Export

(days)

Cost to export

(US$ per container)

Documents to import

(number)

Time to Import

(Days)

Cost to Import

(US$ percontainer)

Mauritius 2010

DB 2010

21

5

13

737

6

13

698

Madagascar

DB

2010

110

4

21

1279

9

26

1660

Mauritius 2011

DB 2011

21

5

13

737

6

13

689

Madagascar

DB

2011

111

4

21

1197

9

24

1555

Source: Doing Business database

Table 1. 37

Mauritius has again performed much better compare to Madagascar in both 2010 and 2011. In both the years Mauritius has a much higher score compare to Madagascar. These disparity seems to stem from the costs and the number of days for the import and export of documents(table 1. 37)

Benchmark-2011

Globally, Singapore stands at 1 in the ranking of 183 economies under the trading across border index and it can be used as a benchmark for both economies that is, Mauritius and Madagascar. A higher ranking in extent under all the sub categories imply that Singapore has a better coordination for doing business across borders.

Economy

Year

Trading across borders

Rank

Documents to export

(number)

Time to Export

(days)

Cost to export

(US$ per container)

Documents to import

(number)

Time to Import

(Days)

Cost to Import

(US$ percontainer)

Singapore

DB

2010

110

4

5

456

4

4

439

Singapore

DB

2011

111

4

5

456

4

4

439

Source: Doing Business database

Table 1. 38

As shown in the above table 1. 38, Mauritius and Madagascar lag behind Singapore, but Mauritius does not have significant disparity on the number of documents to import and export. However, the disparity between the two countries and the benchmark Singapore seems to be greatly caused by the costs item. This may mainly be due to the exchange rate, since the currency of Singapore is more competitive vis-à-vis the US dollar than the Mauritian currency and the currency of Madagascar. Enforcing contractsWell-functioning courts help businesses expand their network and markets. Without effective contract enforcement, people might well do business only with family, friends and others with whom they have established relationships. Where contract enforcement is efficient, firms are more likely to engage with new borrowers or customers, and they have greater access to credit.

What does the indicator cover?

Doing Business measures the efficiency of the judicial system in resolving a commercial dispute before local courts. It collects data relating to the time, cost and procedural complexity of resolving a commercial lawsuit.

Mauritius (2010-2011)

Where does the economy stand?

Economy

Year

Enforcing Contracts

Rank

Time (days)

Cost (% of claim)

Procedures (Number)

Mauritius

DB20106172017. 436

Mauritius

DB20116064517. 436Source: Doing Business databaseTable 1. 39Globally, Mauritius has been ranked 60 under the index enforcing contracts. It can be seen from the table 1. 39 that the ranking of Mauritius has improved from 61 to 60 in 2011. This improvement can be seem to have been mainly due to the reduction in the time it takes to gets the credit required by companies. On the other hand, the claim and the number of procedures it takes to get credit have not seen any improvements.

What are the changes over time?

YearReform2010A specialized commercial division of the supreme court was created, improving contract enforcement. 2011Mauritius speeded up the resolution of commercial disputes by recruiting more judges and adding more courtrooms. Mauritius is continuingly amending its law with regard to the enforcement of contracts. With the view that Mauritius has embarked on an offshore platform, it is neccesary that it tkes such measures and reforms to attract offshore companies.

What are the details?

The indicators reported here for Mauritius are based on a set of specific procedural steps required to resolve a standardized commercial dispute through the courts. These procedures, and the time and cost of completing them, are identified through study of the codes of civil procedure and other court regulations, as well as through surveys completed by local litigation lawyers (and, in a quarter of the economies covered by Doing Business, by judges as well).

Madagascar (2010-2011)

Where does the economy stand?

Economy

Year

Enforcing Contracts

Rank

Time (days)

Cost (% of claim)

Procedures (Number)

Madagascar

DB201015687142. 438

Madagascar

DB201115587142. 438

Source: Doing Business database

Table 1. 40

From the above table 1. 40 it can be seen that Madagascar has been ranked at 155 globally. Under the sub-categories, no change or improvements have been seen. This can be said to have resulted from the fact that Madagascar have not concluded any reform for the past 4 years in a row. YearReform2010No reform2011No reformAs there was no reform made in both years, Madagascar has not made any progress.

Comparison between Mauritius and Madagascar (2010-2011)

Economy

Year

Enforcing Contracts

Rank

Time (days)

Cost (% of claim)

Procedures (Number)

Mauritius

DB20106172017. 436

Madagascar

DB201015687142. 438

Mauritius

DB20116064517. 436

Madagascar

DB201115587142. 438Source: Doing Business databaseTable 1. 41From the table 1. 41, it can be deduced that Mauritius has again performed better compare to Madagascar under this index and there is a great disparity between the two countries. This major disparity seems to stem from the fact that the cost is much higher in Madagascar than Mauritius. Madagascar need to enforce its law regarding the cost and to reduce the cost.

Benchmark-2011

Economy

Year

Enforcing Contracts

Rank

Time (days)

Cost (% of claim)

Procedures (Number)

Luxembourg

DB201013319. 726

Luxembourg

DB201113319. 726Source: Doing Business databaseTable 1. 42Luxembourg can be used as a benchmark for both Mauritius and Madagascar as it has been ranked first globally in the year 2011(refer to table 1. 42). Luxembourg has reached the first ranking by enhancing efficiency by introducing new technologies. This is usually done by high income countries. Lower-income countries, such as Mauritius and Madagascar must work on reducing backlogs by introducing periodic reviews to clear inactive cases from the docket and by making procedures faster.

3. 0 Macroeconomics Factors

MadagascarThe country continues to rank poorly on the ease of doing business indicator, knowledge economy and economic competitiveness in 2010 and 2011. The Africa Competitiveness Report 2011 reports several constraints for doing business in Madagascar are: Government instabilitycorruptionaccess to financeCrime and theftExpensive and unreliable electricityland regulation and access to landuncompetitive practicesgovernance challengesThe political crisis continued in 2010 and 2011, affecting the economy and society. Additionally, higher oil and food prices and poor rainfall have also affected the economy and real GDP rose by only 0. 6%, barely more than the 0. 5% in 2010. Consumer price inflation was also high at 9. 5% in 2011 because of increases in oil and food prices. The weakness of the economy since the start of the political crisis has greatly affected living conditions and a 2010 household survey showed 76% of Madagascans were considered poor, up from 68% in 2005. MauritiusMauritius’s global ranking for the Ease of Doing Business in Doing Business 2012, dropped to 23 in 2012 from 21 in 2011. Therefore the main priorities to enable the authorities turn to new emerging markets are: Sustaining a strong business environment andaccelerating human-capacityinfrastructure developmentThe monetary statement issued by the Bank of Mauritius noted that global inflation has increased across regions because mainly of food and energy prices. On the domestic level, the BOM estimated economic growth at 4. 4 per cent in 2010 a growth rate of 4. 6 per cent in 2011. The BOM also forecast year-on-year inflation to reach 7. 8 per cent by June and 7 per cent in December while headline inflation could exceed 5 per cent in June and 8 per cent in December. This has had a great impact on cost of doing business.

4. 0 Conclusion

Doing Business provides a ranking of 183 economies on the overall ease of doing business based on indicator sets that measure and benchmark regulations applied to business. From our analysis, it should be noted that there are several indicators in assessing the cost of doing business in Mauritius and Madagascar. Both economies have used the 10 Doing Business indicators to shape reform agendas and monitor improvements on the ground. Various comparisons between Madagascar and Mauritius, including the respective benchmark country have been made for the years 2010 and 2011. Based on our study, it can therefore be concluded that the Mauritian economy had performed much better as compared with Madagascar for both 2010 and 2011 periods, but still Mauritius will require some more economic reforms to perform better internationally. On Overall Ease of Doing Business 2011, Mauritius has been ranked 20th in global rankings while Madagascar 144th.

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EduFrogs. (2022) 'The comparison of mauritius and madagascar economics essay'. 24 August.

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EduFrogs. (2022, August 24). The comparison of mauritius and madagascar economics essay. Retrieved from https://edufrogs.com/the-comparison-of-mauritius-and-madagascar-economics-essay/

References

EduFrogs. 2022. "The comparison of mauritius and madagascar economics essay." August 24, 2022. https://edufrogs.com/the-comparison-of-mauritius-and-madagascar-economics-essay/.

1. EduFrogs. "The comparison of mauritius and madagascar economics essay." August 24, 2022. https://edufrogs.com/the-comparison-of-mauritius-and-madagascar-economics-essay/.


Bibliography


EduFrogs. "The comparison of mauritius and madagascar economics essay." August 24, 2022. https://edufrogs.com/the-comparison-of-mauritius-and-madagascar-economics-essay/.

Work Cited

"The comparison of mauritius and madagascar economics essay." EduFrogs, 24 Aug. 2022, edufrogs.com/the-comparison-of-mauritius-and-madagascar-economics-essay/.

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