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ANNUAL REVIEW

THE FACILITY fOR INVESTMENT CLIMATE ADVISORY SERVICES

2013

FIAS

World Bank Group

With support from:

2014 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff of the World Bank Group. The ndings, interpretations, and conclusions expressed in this volume do not necessarily reect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Ofce of the Publisher, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. About the Facility for Investment Climate Advisory Services (FIAS) Through the FIAS program, the World Bank Group and donor partners facilitate investment climate reforms in developing countries to foster open, productive, and competitive markets and to unlock sustainable private investments in sectors that contribute to growth and poverty reduction. The FIAS program is managed by the Investment Climate Department under the joint oversight of the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the World Bank (IBRD). For more information, visit www.wbginvestmentclimate.org. Cover and interior photo credits, p. 77.

Contents
Message from the Director . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 2 Main Achievements and Milestones . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 4 Special Topic: Promoting Market Competition through Investment Climate Interventions .. . . . 12 Operational Highlights. . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .20 Core Thematic Areas in Investment Climate Interventions . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .34 Collaboration, Knowledge and Learning . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .42 Financial Results and Resource Use . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .50 Annexes . . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .60
Annex 1: Reforms and Other Results Supported by FIAS in FY13. . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .62 . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .71 Annex 2: Portfolio of FIAS-Funded Projects in FY13 . Annex 3: Abbreviations. . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .76

MESSAGE FROM THE DIRECTOR


It is my pleasure to present the FIAS 2013 Annual Review, reporting on key achievements, milestones, and results within the context of the FIAS FY1216 strategy cycle. With the global economy slowly emerging from a protracted economic downturn, higher growth rates in some developing countries are attracting investors and entrepreneurs. Overall, however, developing countries have not recovered to pre-crisis growth and are striving to catch up. FIAS projects have helped unlock investment in key industries, facilitate business entry, streamline the ow of imports and exports, eliminate cumbersome regulation, and establish predictable scal and regulatory regimes. We strive to bring the benets of private sector-led growth to the poorest countries in the world. Our primary clients are indeed the countries served by the International Development Association (IDA), many of which are in Sub-Saharan Africa, as well as countries hampered by the effects of conict and instability. Two years into the FIAS strategy, we are fully engaged and delivering concrete results in our three strategic priorities: fostering enterprise creation and growth; facilitating international trade and investment; and unlocking sustainable investments in key industries. In scal year 2013, FIAS-funded activities have yielded a notable increase in reforms: 75 signicant changes affecting the business environment and private sector activity in 41 client countries and ve regions have been implemented by our clients. Ultimately, however, our value added is not just advice, nor even the resulting reforms, but rather the investment generated and jobs created from these activities. While precise numbers are hard to come by and indirect effects of our reforms are not reported on, FIAS-supported projects directly contributed to $329 million in new investment in FY13, tripling last years level, and we are on track to meet or exceed the target for the overall strategy cycle. One-third of our reforms have been achieved FIAS projects have helped unlock in fragile and conict-affected states. A record 94 percent of clients expressed satisfaction investment in key industries, facilitate with the advisory services provided by IFCs business entry, streamline the ow Investment Climate Business Line in FY13, through which a majority of FIAS-funded of imports and exports, eliminate programs are implemented. FIAS-supported projects ultimately foster thriving private sectors, where business entry, licensing, competition, trade, and a fair regulatory environment promote

cumbersome regulation, and establish predictable scal and regulatory regimes.

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

and encourage entrepreneurship and investment. This Annual Review highlights our work in the area of competition policy, which is gaining momentum and where FIAS is emerging as a global thought leader. The degree of competition in key markets in developing economies lags far behind developed countries, hampering rm productivity and reducing the competitiveness of domestic rms. More than 40 percent of emerging markets exhibit a monopolistic structure. In Sub-Saharan Africa, for example, regulations and practices restrict business entry in sectors that are key for doing business such as nancial services, air transportation, telecommunications, and professional services, and limit the ability of existing rms to compete. FIAS-supported teams are producing measurable results in countries as varied as Armenia, El Salvador, Honduras, Kenya, and Tunisia. Addressing rules that limit competition is a priority area of focus for FIAS-supported work. Implementation of the ve-year FIAS strategy is unfolding at a time of change and renewal in the World Bank Group. The reorganization being led by World Bank Group President Jim Kim emphasizes themes and areas of activity in which the Investment Climate Department already has a strong record. President Kim stresses the importance of global knowledge, owing just in time to the countries that need it: The FIAS model is built on developing and sharing global knowledge on investment climate reform, delivered through regional and country teams. President Kim wants a more integrated World Bank Group, where the World Bank, IFC, and MIGA work more seamlessly together: FIAS is a World Bank Group facility, implemented through the Investment Climate Departmentthe only joint World Bank Group operational department. He also wants more effective, focused, and timely delivery of services to clients: The FIAS business model relies on specic product expertise deployed rapidly in partnership with other World Bank Group units and our donors, and supported by a strong results focus (Managing for Impact is the title of our FY12-16 strategy). Likewise, FIAS projects and programs bring an important dimension to the Shared Prosperity agenda, with our focus on the private sector as the key engine of sustainable growth, and on helping the poorest countries maximize their economic potential, thus contributing to the elimination of extreme poverty. In FY13, we deepened our collaboration with IFC, World Bank, and MIGA teams, partnering with more than 45 different World Bank Group units to leverage maximum results from FIAS-supported programs. We are immensely grateful to our FIAS donors and partners, not only for their nancial support which is core to our business model, but also for their substantive engagement in multiple areas of our work, from designing specic interventions to shaping our ambitious impact evaluation program.

Pierre Guislain Director Investment Climate Department and FIAS World Bank Group

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FISCAL YEAR 2013

MAIN ACHIEVEMENTS AND MILESTONES


In scal year 2013, the pace of FIASsupported investment and reform accelerated, yielding tangible results and increased client satisfaction.

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

$329 million
in new investment generated, more than a threefold increase over FY12 total

94% 75

client satisfaction rating, a three percentage point increase from FY12 rating

reforms, 63 percent growth in the number of reforms, up from 46 in FY12

Momentum
In FY13, FIAS-funded activities continued to deliver the results and outcomes expected under the FY1216 strategy. Strong momentum is the theme of FY13. FIAS-funded activities produced a substantial increase in the number of investment climate reforms implemented in client countries, generated $329 million in new investment from FIASsupported work on key industries, and supported projects that have achieved high levels of development effectiveness ratings and client satisfaction. Through the work we do with client governments, FIAS projects help private sector investors and entrepreneurs by creating a level playing field for enterprise, streamlining regulation, easing business start-up, and fostering competition and trade.

Impact and Reform


Total FIAS-supported reforms: FIAS-funded activities in FY13 contributed to 75 reforms in 41 countries (46 reforms in 30 countries in FY12); 56 of these reforms, or 75 percent, were validated by the World Bank Groups Doing Business 2014 report (in FY12: 78 percent); of the other 18 reforms, 14 were on topics not covered by Doing Business while 4 involved Doing Business topics but achieved benets not tracked by Doing Business. (See FIAS-supported reforms table on p. 10.)

FIAS-Supported Reforms by Region 100% = 75 Reforms n Sub-Saharan Africa, 49 (65%) n Latin America and the Caribbean, 14 (19%) n Europe and Central Asia, 10 (13%) n East Asia and Pacic, 1 (1%) n South Asia, 1 (1%)
IBRD 40623 JANUARY 2014

Regional distribution: 65 percent of reforms occurred in Sub-Saharan Africa; 19 percent in Latin America and the Caribbean; 13 percent in Europe and Central Asia; 1 percent in East Asia and Pacic; 1 percent in South Asia.

FIAS-Supported Reforms by Region and Strategic Priority, FY13


Strategic Priorities - Key Fostering Enterprise Creation and Growth Unlocking Sustainable Investment Facilitating International Trade
Europe and Central Asia: 10
Armenia Belarus Kosovo Moldova Ukraine

South Asia: 1
Bangladesh

East Asia and Pacific: 1


Timor-Leste

Latin America and the Caribbean: 14


Colombia Costa Rica El Salvador Guatemala Haiti Honduras Jamaica Nicaragua Panama Trinidad and Tobago

Sub-Saharan Africa: 49
Benin Burkina Faso Burundi Chad Cameroon Comoros Congo, D.R. of Cte dIvoire Djibouti Gabon Guinea Guinea-Bissau Liberia Malawi Mauritania Mozambique Niger Rwanda So Tom and Prncipe Senegal Swaziland Togo Uganda Zambia

Strategic Priorities: Fostering Enterprise Creation and Growth

Unlocking Sustainable Investment

Facilitating International Trade

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

27 additional reforms achieved by the Investment  Climate Business Line and at least $92 million in investment generated from activities not funded by FIAS beneted from expertise and knowledge contributed by FIAS-supported teams. Doing Business 2014 lists 10 countries as showing the most improvement across three or more areas measured in the report. All 10 have beneted from FIAS-funded projects, and sevenBurundi, Cte dIvoire, Djibouti, Guatemala, Kosovo, Rwanda, and Ukraineimplemented FIAS-supported reforms in FY13.

Compliance cost savings for FY13 surpassed $30 million for ve projects where the data has been validated. Another $16 million of compliance cost savings is being validated.

Focus on Priority Client Groups: Conict Situations, Low-Income Countries, Sub-Saharan Africa
Reform totals in priority client areas are in line with associated expenditures. IDA countries2 accounted for 76 percent of reforms and 78 percent of expenditures; Sub-Saharan Africa, 65 percent of reforms, 57 percent of expenditures; and countries in fragile and conict-affected situations, 32 percent of reforms and 28 percent of expenditures.
Fiscal Year 2013 maiN achieVemeNts aNd milestoNes

FIAS-Supported Reforms by Region and Strategic Priority, FY13


Industry-specific projects in Bangladesh, Brazil, Haiti, and Rwanda reported generating $329 million in new investments compared with $108 million in investment generated reported in FY12.1

Results by Priority Client Group, FY13 Share of Total Reforms and Client-Facing Project Expenditures

100%

n Share of Client-Facing Project Expenditures (Targets) n Share of Client-Facing Project Expenditures (Actual) n Share of Total Reforms

80%

60%

40%

20%

0%

IDA-eligible countries

Sub-Saharan Africa

Fragile and conict-aficted situations

The planning, expenditures, and results of FIAS-supported work are in close alignment.

FY12 investment generated numbers were revised from $120 million to $108 million based on corrections acquired from investor surveys in the FIAS-funded project in Brazil. International Development Association (IDA) countries are those reporting per capita income in FY13 of less than $1,195 and lacking the nancial ability to borrow from the International Bank of Reconstruction and Development of the World Bank Group.

Investment Climate Department: Development Effectiveness and Client Satisfaction3


Development effectiveness4 rating for FIAS-funded projects dropped three percentage points to 83 percent but remains signicantly higher than FY08FY11 ratings. Six FIAS-funded projects belonging to three different regions closed in FY13. Five of these had positive development ratings.

Strong Results in FY13 across the FIAS Portfolio


Of 69 client-facing projects, 29 were implemented by the World Bank Groups Investment Climate Department; the remaining 40 were managed by regional units. Total project expenditures reached $22.9 million ($19.1 million in FY12), with $15.7 million going to clientfacing projects ($14.1 million in FY12), and $7 .2 million to knowledge management and product development activities ($5 million in FY12). The share of expenditures on industry-specific activity supported by FIAS rose in FY13 to 17 percent, with an increased focus on work in agribusiness, tourism, and manufacturing. This compares with 13 percent attained in FY12 and continues an upward trend of sector work in the Investment Climate Department, up from 7 to 8 percent during the FY0811 FIAS strategy cycle. Efforts must continue to maintain the upward trend and reach the 30 to 40 percent target laid out in the FIAS FY1216 Strategy.5
Total Expenditure by Thematic Priority of Client-Facing Projects, FY13 100% = $15.7 Million n Business Regulation for Enterprise Creation and Growth (47%) n International Trade and Investment (30%) n Investment Climate for Industry (19%) n Other (4%)

FIAS Development Effectiveness Ratings, FY08-FY13 (Share of completed projects with positive rating)
100% 80% 60% 40% 20% 0% 47% 57% 73% 67% 86% 83%

FY08

FY09

FY10*

FY11*

FY12

FY13

*DE recalculated to reect FIAS portfolio.

Client satisfaction with advisory services provided by IFCs Investment Climate Business Line in FY13, through which a majority of FIAS-funded programs are implemented, reached 94 percent.

FIAS-supported projects received a client satisfaction rating of 92 percent (FY12: 95 percent). FIAS-funding was used to cofinance 49 projects directly managed by the Investment Climate Department (including 20 non-client-facing projects focused on knowledge management and product development), and 40 projects managed by regional IFC Advisory Services units.6 Total budget for these FIAS activities amounted to $141 million; total project spending in FY13 was $30.3 million, of which spending from FIAS sources of funds was $15.7 million. FIAS-funded project spending for non-client-facing activities related to knowledge management and product development projects amounted to $7 .2 million (from $5 million in FY12).

Investment Climate Business Line Client Satisfaction, FY08-FY13 (Share of clients satised)
100% 80% 60% 40% 20% 0% FY08 FY09 FY10* FY11* FY12 FY13 92% 91% 94%

85%

88%

89%

Majority of Investment Climate Department projects are FIAS funded. Development effectiveness rating is a synthesis of the scores on strategic relevance, output achievement, outcome achievement, impact achievement, and efciency dimensions at completion. 5 Investment Climates work in special economic zones, which previously represented a sizeable part of industry sector work, was transferred in FY12 to the Competitive Industries Global Practice and so is excluded from the gures provided. Accounting for special economic zones work, the FIAS 0811 baseline would stand at 15 percent, and the FY12 and FY13 share would stand at 18 percent and 19 percent respectively. 6 Receiving at least 10 percent of their FY13 spending from FIAS trust funds and other FIAS-related funding sources.
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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Regional spending distribution is highest for Sub Saharan Africa with 57 percent, followed by Europe and Central Asia and World Projects at 11 percent each. Funding administered via FIAS contributed to 27 percent of total Investment Climate Business Line spending in FY13, and FIAS funding was involved in projects that supported the implementation of 73 percent of all Business Line reforms (75 of 102 reforms). The increasing share of expenditures devoted to knowledge and product development, from 26 percent in FY12 to 32 percent in FY13, reects the shift to knowledge products in line with the FIAS strategy.

Business regulation activities drew the largest share of expenditures in FY13 with 25 percent, followed closely by business taxation work, indicator-based reform advisory, and industry-specic activities.

Project Expenditures by Product, FY13 100% = $15.7 Million

n Business Regulation (25%) Industry-specic Real Sectors, and n  related (19%) n Business Taxation (17%) Indicator-based Reform n  Advisory (16%) n Trade Logistics (9%) n Debt Resolution & Business Exit (5%) n Other (5%) n Investment Policy (4%)

Fiscal Year 2013 maiN achieVemeNts aNd milestoNes

Total Project Implementation Expenditures, FY13 100% = $22.9 Million


Total Expenditures by Type Client-Facing Expenditure by Region

n Sub-Saharan Africa (57%) n Europe and Central Asia (11%)


Non-Client-Facing $7.2 M (32%) Client-Facing $15.7 M (68%)

n World (11%) n Latin America and the Caribbean (8%) n Middle East and North Africa (5%) n South Asia (5%) n East Asia and Pacic (3%)

FIAS-Supported Reforms by Region and Country, FY13 


Tax simplication and compliance management Special economic zones Licenses and permits Resolving insolvency Construction permits Industry-specic investment climate3

Enforcing contracts

Starting a business

Investor protection

Alternative dispute resolution

Property transfers

Getting electricity

Trade logistics * * * 10 7

Inspections

Region Country EAST ASIA AND PACIFIC Timor-Leste1, 2 East Asia aND Pacific TOtal EUROPE AND CENTRAL ASIA Armenia1 Belarus Kosovo1, 2 Moldova1 Ukraine EUrOpe aND CeNtral Asia TOtal Colombia LATIN AMERICA AND THE CARIBBEAN Costa Rica El Salvador Guatemala Haiti1,2 Honduras1 Jamaica Nicaragua1 Panama Trinidad and Tobago LatiN AMerica aND tHe CariBBeaN TOtal SOUTH ASIA Bangladesh1 SOUtH Asia TOtal SUB-SAHARAN AFRICA Benin1 Burkina Faso1 Burundi1, 2 Cameroon1 Chad1, 2 Comoros1, 2 Congo, Dem. Rep.1, 2 Cte dIvoire1, 2 Djibouti1 Gabon Guinea1, 2 Guinea-Bissau1, 2 Liberia1, 2 Malawi1 Mauritania Mozambique1 Niger1 Rwanda1 So Tom and Principe1 Senegal1 Swaziland Togo1, 2 Uganda1 Zambia1 SUB-SaHaraN Africa TOtal GRAND TOTAL Reforms captured by Doing Business 2014 report

1 NA

9 9

2 2

2 2
3

5 NA

4 NA

2 2

4 NA

11 11

2 2

1 NA

20 20

* 2 1

Reforms from FIAS-conanced projects mapped to regional IFC Advisory Services units. 1 International Development Association (IDA) countries. 2 Fragile or conict-affected situations.

Industry-investment climate category includes agribusiness, tourism, and other industries. * Reforms under Doing Business topics not validated by the Doing Business report.

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Total 1 1 3 1 3 2 1 10 2 2 1 2 1 1 1 1 2 1 14 1 1 2 2 6 1 1 2 1 4 1 2 2 1 1 1 1 3 2 7 1 1 2 1 2 2 49 75 56

FY12 and FY13 Funding and Expenditures


FY12 Contributions (Sources of Funds) WOrLD baNk grOUp CONTrIbUTIONs Core IFC 1 MIGA World Bank Project Specic/Other Contributions (IFC) 2 Donor Contributions Core Programmatic Project Specic Client Contributions Total Contributions Less Trust Fund Administration Fees Total Net Contributions Expenditures (Uses of Funds) 1 Staff Costs (including consultants) Operational Travel Costs Indirect Costs (including ofce and operating costs) Total Expenditures

1

FY13 In US$, Thousands 36% 24% 12% 8% 5% 11% 63% 17% 20% 26% 1% 100% 11,754 8,000 4,000 2,400 1,600 3,754 16,435 5,532 5,447 5,456 90 28,279 1,021 27,258 In US$, Thousands Share of Total 21,855 6,099 3,603 31,557 Share of Total 42% 28% 14% 8% 6% 13% 58% 20% 19% 19% 0.3% 100%

In US$, Thousands 12,089 8,188 4,088 2,500 1,600 3,901 21,390 5,730 6,678 8,982 484 33,9633 1,122 32,841

Share of Total

In US$, Thousands Share of Total 19,740 5,847 2,455 28,042

70% 21% 9% 100%

69% 19% 11% 100%

Includes FY12 and FY13 Advisory Services adminstration budget and expenditures of approximately $1.2 million provided by IFC to cover a number of Investment Climate Business Line positions and their related staff and travel costs. 2 Includes IFC project-specic contributions ($2,968,000 in FY12 and $3,084,000 in FY13) to support a range of global knowledge management and product desing initiatives and other IFC contributions ($934,000 in FY12 and $670,000 in FY13) to support activities indirectly related to projects, including initial project designs, portfolio management, monitoring and evaluation, and knowledge sharing associated with the global portfolio. 3 FY12 donor contributions amended to correct a typographic error in the FY12 Expenditures table on page 6 of the FIAS 2012 Annual Review.

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SPECIAL TOPIC

PROMOTING MARKET COMPETITION throUgh INVESTMENT CLIMATE INTERVENTIONS


The increasing pace of FIAS-funded activities in the competition eld reects a growing awareness of the connection between healthy business competition and sustainable development.

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

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countries with procompetition work in progress

23

technical studies on competition policy

13

FY13 projects with specic components on pro-competition

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A Level Playing Field


Promoting competition in key markets is a special area of focus under the ve-year FIAS strategy cycle, which has led to a signicant increase in competition-related projects supported by the FIAS-funded expert team over the past two years. Lowering legal and discriminatory entry barriers in specic markets induces existing market players to invest in innovation, improve the quality of products, and cut costs. Effective competition rules ensure that market players compete on a level playing eld, allowing the most efcient rms to survive and grow. Consumers benet from high quality products at competitive prices, and rms create jobs through expansion and new investment.

High productivity in key input markets such as telecommunications, transport, and professional services benets other sectors and sustainably increases productivity across the economy. Growth resulting from the multiplier effect of investment climate reforms is already evident in key markets. For example, actions by competition agencies to deter anticompetitive behavior in key sectors in Kenya and Zambia have spurred changes in pricesbeneting cotton farmers in Zambia, and maize and sugar consumers in Kenya. Additionally in Kenya, opening up competition in pyrethrin (a pesticide derived from a ower) will lead to at least $3 million in investment and growth in exports. The reforms in Zambia are expected to generate some $10 million in private sector savings. Eliminating anti-competitive regulation in inland water transport in the Philippines is expected to spur at least $9 million in additional investment per year in the maritime sector. An enhanced public procurement framework open to more competitors in El Salvador is expected to generate at least $14 million in savings over the course of a year as a result of more competitive pricing among rival rms. FIAS-supported work will continue to expand targeted, market-level interventions that implement an effective policy framework for promoting competition. The policy goal is to facilitate entry into markets, ensure a level playing eld, enable rms to freely decide on business and market variables, and penalize anti-competitive behavior.

restrain competition and to increase the effectiveness of competition policy implementation in 13 countries: Cambodia, Honduras, Kenya, Mexico, Moldova, Namibia, Nepal, Peru, the Philippines, Romania, Rwanda, Uganda, and Zambia. These efforts fall into three areas of focus. The rst helps clients eliminate market-specic constraints and open markets to competition by addressing anti-competitive product market regulation and discriminatory rules. The second helps clients increase the effectiveness of their antitrust and pro-competition frameworks, an area that includes anti-competitive agreements between rival rms, effective and non-intrusive merger control policies, and measures to reduce anti-competitive behavior from government bodies. The third area aims to minimize distortions generated by government aid granted on a selective basis that unduly benets specic players.

Tackling Anti-competitive Behavior and Regulations for Increased Productivity and Shared Prosperity
Well-functioning markets depend on competitive rm behavior and market rules and regulations that promote entry and rm rivalry. Over the past two years, the work of the FIAS-supported expert team to prevent anti-competitive regulation and cartel behavior has been carried out in a total of 16 countries: Armenia, Cambodia, El Salvador, Georgia, Kenya, Mexico, Mongolia, Namibia, Nepal, Peru, Romania, Russia, Rwanda, Tunisia, Turkey, and Zambia. Eliminating and preventing price xing and market sharing agreements among competitors is critical to preventing rms from overcharging customers by as much as 42 percent compared with a competitive scenario. In Kenya, for example, the FIAS-supported competition team helped implement a new competition framework making clear that cartel agreements are illegal and enhancing the governments capacity to expose and punish cartels. In Zambia, legal immunity for whistle blowers who provide evidence exposing illegal cartel agreements is seldom available due to insufcient secondary regulation to effectively implement this law. The FIAS-supported team is helping Zambia implement a comprehensive reform

Robust Portfolio Growth in FY13


Demand for competition policy work in client countries has increased steadily. In FY13, the FIAS-funded competition policy team worked with clients and regional teams in 24 countries and two regional blocs (the East African Community and the Common Market for Eastern and Southern Africa), leading to eight improvements in competition policy in ve countries: Armenia, El Salvador, Honduras, Kenya, and Tunisia. The team also nalized 20 knowledge products that encouraged reform work in IFC and World Bank projects. Ongoing interventions are working to eliminate or improve regulations that tend to 14

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

program, including working protocols with relevant government bodies and peer-to-peer learning. These efforts will help replicate successes such as the recent exposure and elimination of anti-competitive behavior by a fertilizer cartel that overcharged the government by an estimated $20 million. In addition, reducing anti-competitive regulations fosters productivity growth. FIAS support has focused on eliminating and tackling regulations in key sectors where they are particularly harmful to the overall economy. As a rst step, FIAS support generated a framework for identifying and assessing such regulations to help prioritize reform areas (see box below). Client countries have employed the framework over the past two years to eliminate regulations that restrict the number of rms, limit private investment in specic industries, or favor particular rms. Based on this framework, the FIAS-supported team has been working on removing restrictions and policies that limit private sector participation in client countries. In 1980, for example, Kenya was the worlds leading supplier of pyrethrin, an organic insecticide made from the pyrethrum ower. Over the next 30 years, Kenyas share of the pyrethrin market plummeted from 82 to 4 percent. In large part this was because a state monopoly, the Pyrethrum Board of Kenya, was the only rm allowed to purchase and process the owers. The FIASsupported team has helped draft reforms and is providing implementation support to remove this monopoly, unlocking investment opportunities for at least two local

companies and potentially three international investors. This effort benets close to 40,000 farmers who will be able to grow and sell pyrethrum to new manufacturers and exporters. A project in Cambodia, meanwhile, has opened up competition among providers of fumigation services at the countrys main port of entry, reducing fumigation costs by around 40 percent. Various countries allow professionals to x prices and establish regulations that make it harder for new rms to compete. Kenya, with FIAS support, is working to eliminate minimum prices in insurance and legal services. Removal of minimum prices for business insurance would generate at least $18 million in savings. FIAS support helped eliminate regulations that prevented competition in public procurement, a key sector in many client countries. In El Salvador, more than $100 million in public procurement, or 12 percent of procurement contracts, was allocated over one year without mandatory competitive selection. The public procurement bylaws were ambiguous on whether competitive bidding was required. In some instances only a single bidder participated. The FIAS-supported team partnered with the Competition Agency to support changes to public procurement bylaws. Since May 2013, ofcials must publicize their procurements via an electronic system and assure competition between at least three market players. Direct involvement of the private sector and different government agencies favoring competition was critical to achieving these improvements.

Special TOpic: PromotiNg Market CompetitioN through INVestmeNt Climate INterVeNtioNs

Innovating to Eliminate Anti-competitive Subnational Policies in Mexico


Subnational regulations in Mexico have restricted business entry and tolerated cartel behavior, leading to higher prices and limited product quality and variety. These negative effects have been seen in the production of maize our and tortillas, sale of retail fuel, professional services, and licensing for ground passenger transportation. FIAS-supported advisory services are helping Mexico identify, assess, and remove select anti-competitive regulations in retail, road transportation, and public procurement in Oaxaca. An opaque registration process and exceptions to competitive bidding procedures in Oaxaca discourages participation in public procurement. Legal price xing and a legal ban on new concessions for certain transportation services effectively eliminate competition in a sector that employs about 40 percent of Oaxacas labor force. In retail transportation, regulations on minimum distances, and rules that give incumbents a say in the process for entry and expansion of new and rival rms, limit opportunities for small and medium enterprises. The FIAS-supported team used sectoral checklists developed as part of a competition toolkit to design indicators showing how subnational regulations restricted competition; this encouraged alignment with best practices and triggered reforms. Two anti-competitive regulations affecting the retail and transport sectors are being eliminated. Other Mexican states that have some of the same problems are taking note. The framework used for identifying anti-competitive regulations is encouraging pro-competition reforms in Mexico state and Tabasco under a reimbursable advisory services arrangement with the World Bank Group in a collaborative effort between the FIAS-supported team and the Bank Groups Latin America and Caribbean Financial and Private Sector Development team.

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Competition Reforms Boost International Trade and Sustainable Investment


FIAS supported efforts in FY13 to eliminate restrictions on competition in transportation, expand investment by rationalizing the approval of mergers and acquisitions, and minimize the market distortion caused by unfair investment incentives. All of these support the broader FIAS strategic goal of facilitating international trade and investment. A FIAS-funded reform project under implementation in the Philippines is expected to signicantly lower freight rates of inter-island container shipping and generate $9 million in additional investment in the domestic shipping industry. Freight rates for local containerized cargo are at least 47 percent higher than comparable overseas freight rates. For some major routes, local farmers and merchants must choose from only one or two shipping operators since more than 50 percent of the routes are monopolized. The team helped the government identify how the current regulations governing inter-island shipping markets and lack of competition affect sector performance, for example, by allowing incumbents to approve the number of vessels its competitors could deploy. Eliminating these regulations will allow new investors to enter the shipping market and lower shipping costs. In Armenia, regulatory practices favored incumbents in aviation, leading to fewer ights and signicantly higher ticket prices than in comparable countries. In a cooperative effort within the World Bank Group, the FIAS-supported competition team proposed several measures to eliminate preferential treatment toward the incumbent airline, establish adequate regulations, and open routes to competition through changes in air service agreements (ASAs). The team shared good practices and enabled peer to peer learning with other countries, such as Morocco, that have taken successful steps to liberalize air transport and introduce greater transparency. Armenia has since deregulated air transport and introduced greater transparency, a package of reforms expected to lead to better ight connectivity, lower prices, and savings equivalent to 1.4 percent of gross domestic product. Finally, effective pro-competition policies promote sustainable investment. For example, effective merger policies, such as appropriate thresholds to determine which mergers require mandatory approval, ensure that investment projects can be executed swiftly and help governments focus only on transactions that have the potential to harm competition. In Zambia, raising the threshold for mandatory approval is expected to generate almost $1 million in private sector savings per year. Similar reforms have beneted Kenya and Honduras, and will facilitate mergers and acquisitions in the Common Market for Eastern and Southern Africa, El Salvador, and Romania. Introducing competition principles in investment policies is crucial to guaranteeing a level playing eld among existing competitors and new market entrants. In Moldova, a FIAS-supported project helped to identify several state aid

measures that tended to benet only a few favored rms. This practice distorts the market by having government pick winners and losers. State aid regulations and the effective management of the state aid inventory are expected to prevent these situations and clear the way to rewarding the most efcient investors.

Opening Markets in Key Industries


FIAS-funded industry-specic work in the competition eld has helped achieve the objective of unlocking sustainable investments in agribusiness and tourism. Market competition in agriculture inputs and in the wholesale and retail marketing of agriculture products are critical. In the East African Community, FIAS support for the harmonization of seed standards for maize, sorghum, and soybeans is expected to allow for greater competition in domestic and regional seed markets. Eliminating policies that distort sugar and maize markets could reduce the incidence of poverty by at least 3.5 percent. A study completed by the competition team on modern retail markets in Armenia informed technical assistance on avoiding restrictive regulations that discourage market expansion and reduce the potential of retail marketing among Armenian farmers. FIAS support helped Honduras create more competitive agricultural input markets for the benet of farmers (see box, p. 17). Competition in the tourism sector covers a variety of intertwined markets, where improvements have positive effects on the entire tourism value chain. In Tunisia, certain operators have a monopoly over certain touristic routes, despite a legal framework that promotes competition. In 2013, the FIAS-supported competition team recommended eliminating discriminatory startup criteria and issuing a new regulation to allow new competitors to enter the market for tourist transport services. The ongoing reform process will result in transport to more tourist sites and specialized tourist attractions. Advisory services on pro-competition regulations in air transportation are expected to generate positive effects for tourism in East Africa and Nepal, where regulatory burdens discourage market entry and capacity expansion. The East African Community Civil Aviation Technical Committee incorporated 16 recommendations to improve draft air transport regulations for the region, ensure a level playing eld among carriers from different partner states, and spur competition on regional routes. In Nepal, advice to facilitate connectivity and competition in essential services for international routes will benet 75 percent of tourists who arrive by air. Better consumer information can generate more competitive markets. This is the aim of FIAS-supported reforms to be carried out in Nepals hospitality services, where a system for quality rating will facilitate consumer choice and encourage competition. Considering competition principles in the design of government concessions for hotel infrastructure has proved to be important in projects in Sub-Saharan Africa.

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Sharing Knowledge about Competition Reforms in the Development Agenda


Competition interventions have the potential to be truly transformational. Opening a particular market or tackling large cartels affecting the poor have large impacts, but they are risky undertakings that may require a longer timeframe. The approach to improving competition through FIAS programs takes into account the importance of generating relevant data for identifying and assessing reform needs and advocating with ex-ante estimations to generate demand for competition reforms.

Estimates of the benets and savings that greater competition can generate have proved useful to gathering stakeholder support for competition reforms. The estimations are typically carried out at the sector level, measuring the effects of competition on key variables such as productivity, prices, and consumer welfare. Results are shared with policymakers and stakeholders with an eye to increasing demand for pro-competition reforms.

Beneting Honduras Farmers through Competition Reforms


Agribusiness in Honduras contributes about 13 percent to GDP and produces more than two-thirds of all exports. Productivity, protability, and international competitiveness depend on the availability of high quality and reasonably priced agricultural inputs such as pesticides and fertilizers. But key agriculture inputs in Honduras cost much more than in neighboring countries, and variety and quality are limited. Regulations intended to ensure safe use of fertilizers and pesticides wound up beneting certain suppliers and limiting the competitiveness of small and new rms. Cumbersome registration procedures delayed commercialization of potentially better products. The FIAS-supported competition team worked with the Honduran Secretary of Agriculture and Livestock to introduce reforms that increase competition in the agricultural input market. The Honduran Competition Authority identied several issues stiing competition in the market, resulting in higher entry costs, more business risk for rms, and higher prices and limited availability of agricultural products for farmers. Advantageous treatment given to certain suppliers, the Authority found, delayed the commercialization of new products and created unpredictability within the registration process. The World Bank Group helped Honduras map the registration process. Three process manuals were developed to assist staff with technical and legal evaluation procedures, helping reduce discretionary and arbitrary treatment of rms. Relevant regulations were published for public use, and formal checklists of documents required for registration were disseminated to stakeholders. Among the results were:
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Special TOpic: PromotiNg Market CompetitioN through INVestmeNt Climate INterVeNtioNs

Optimized registration procedures for agricultural inputs. Enforced process manuals to ensure consistency and equal treatment of applicants.

An online database of registered input products and their associated crops by rm, with tracking information on the product registration process.

Now, approximately 35,000 farmers have access to lower-priced agricultural inputs (up to 9 percent lower for certain products) and more products are available to help farm productivity. In 2013, 300 products were registered, as compared to 68 in 2011. In some cases, average registration times decreased from around 220 days (as much as three years in one case) to less than 90 days.

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In Tunisia, the competition team calculated that the Tunisian economy could gain up to 5 percent in labor productivity per year if margins between the price of products and the cost of producing them declined by 5 percentage points as a result of more contestable markets. These potential gains informed the governments discussion to change the current competition rules and improve its implementation in key sectors such as telecommunications. In Armenia, the team estimated that consumer losses due to limited competition in food markets were at least $87 million per year, 2.3 percent of per capita gross domestic product (see box, p. 26). The team also calculated that Turkeys labor productivity growth would have been 4.5 percent higher each year between 2003 and 2008 if the degree of competition intensity had been 10 percent higher during this period. The FIAS-supported team analyzed nine Latin American and Caribbean countries to show how less restrictive regulations correlate with increased entrepreneurship. Results of the research have informed policy recommendations for Mexico and Honduras and inuenced the private sector development agenda in Costa Rica, Dominican Republic, El Salvador, Jamaica, and

Peru. This is an example of how, in addition to technical considerations, the team works to identify early on allies, champions, and beneciaries of competition interventions to generate reform momentum.

Fostering Peer-to-Peer Learning among Reformers


FIAS funding was used to support the organization of a peer-to-peer learning forum ahead of the annual conference of the International Competition Network (ICN) held in Warsaw in April 2013. This pre-conference forum served as a platform for exchange among more than 100 representatives from the worldwide competition community who shared valuable lessons on how to introduce competition into key markets. The consensus on the importance of inuencing policymakers about economic losses due to a lack of competition inspired further commitment from government participants to implement reforms in at least three regions. Armenia, for example, beneted from direct interaction with counterparts that had successfully carried out reforms in air transportation; this interaction then informed Armenian

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aviation policy. Overall, the forum was praised as among the best pre-ICN conference events in recent years. With support from the FIAS-funded team and the Canadian International Development Agency (CIDA),7 a peer-to-peer event in Lima, Peru, provided another forum to discuss the benets of integrating competition policy principles into government policies. The event attracted international experts and 40 government representatives from 14 countries in the Latin and Central American region. Overall, the discussion on competition reform work generated high-level interest in developing a regional initiative among Central American countries to facilitate trade with the promotion of competition as a pillar. Competition work is undertaken in collaboration with external development partners such as the Organization for Economic Co-operation and Development (OECD), the International Competition Network, and experienced competition agencies to ensure synergies in encouraging competition and strengthening competition policy in client countries. In addition, the FIAS-supported team provides

extensive cross support throughout the World Bank Group and in FY13, it has collaborated with 18 units to implement competition reforms or conduct studies to identify areas for potential reform and estimate the expected benets. Advisory services that incorporate competition objectives have expanded throughout the Bank Group. Efforts to identify competition issues have been applied by World Bank and IFC teams in 16 countries across all regions, including seven IDA countries. By the end of June 2013, 11 IFC projects with implementation plans approved in FY13 included objectives that aimed to increase competition in specic sectors or economy-wide. Just over half of projects in agribusiness, tourism, trade logistics, and investment policy embedded competition principles in their project design and implementation. Overall, over the past three years, demand for competition policy work has seen a signicant increase, from nine countries with competition interventions in 2011 to 24 in 2013 (see below).
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Special TOpic: PromotiNg Market CompetitioN through INVestmeNt Climate INterVeNtioNs

CIDA is now known as Foreign Affairs, Trade and Development Canada.

Signicant Increase in Advisory Services Projects with Pro-competition Component


Project Portfolio Evolution

Pro-competition interventions, by type


40
Subnational (economy wide and sector-specific) Sector-specific Economy-wide Economy-wide and sector specific

30

20

10

0 FY10 FY11 FY12 FY13

Number of countries with pro-competition interventions in design or implementation, by region (excluding regional projects)
25 20 15 10 5 0 FY10 FY11 FY12 FY13
South Asia Middle East and North Africa East Asia and Pacific Sub-Saharan Africa Latin America and the Caribbean Europe and Central Asia

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3
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OPERATIONAL HIGHLIGHTS
In scal year 2013, FIAS funding continued to emphasize support for Sub-Saharan Africa, fragile and conict-affected states, as well as IDA countries.

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

76%
share of total reforms in IDA countries

65%

share of total reforms in Sub-Saharan Africa

32%

share of total reforms in fragile and conict-affected situations

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Helping Fragile States


FIAS funding delivered on a portfolio that totaled 49 projects at the end of FY13 mapped to the World Bank Groups Investment Climate Department (53 in FY12). In addition there were 40 projects mapped to regional IFC Advisory Services units (19 in FY12). The total of 89 projects (69 of them client-facing) includes a sharp increase in the regional IFC projects, reflecting the emphasis on collaboration across the World Bank Group in the delivery of advisory services. Four industry-specific projects generated $329 million in new investment in FY13, up by more than three times from the $108 million generated in FY12.8

The FY13 portfolio shows continued momentum in investment climate work focusing on countries in fragile and conict-affected situations. Project expenditures in these countries were up 34 percent in FY13 and FIASsupported investment climate activities yielded 24 reforms in a dozen fragile and conict-affected countries, up from 11 reforms in six fragile countries in FY12 (see box below). FIAS-funded investment climate projects were recognized within the World Bank Group and by client countries for innovation and effectiveness in FY13, and also for fostering collaborative approaches drawing expertise from different parts of the Bank Group to offer clients holistic solutions to investment climate issues. Projects in Brazil, the Europe

and Central Asia Region, Haiti, Rwanda, and So Tom and Prncipe, were among winners of World Bank Group awards. The FIAS-funded portfolio delivered results to clients on an accelerated pace in FY13 in three strategic themes identied as crucial to the success of the ve-year strategy cycle:
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Fostering enterprise creation and growth. Facilitating international trade and investment.

Unlocking sustainable investment opportunities in key industries, particularly agribusiness and tourism.

This chapter presents highlights of FIAS efforts in each of

FIAS-Funded Activities in Fragile and Conict Situations in FY13


Active projects in 17 of 35 countries on the Harmonized List of Fragile Situations: East Asia and the Pacic: Timor-Leste. Europe and Central Asia: Bosnia and Herzegovina, Kosovo. Latin America and the Caribbean: Haiti. Middle East and North Africa: Afghanistan. South Asia: Nepal. Sub-Saharan Africa: Burundi, the Central African Republic, Chad, the Comoros, the Republic of Congo, the Democratic Republic of Congo, Cte dIvoire, Guinea, Guinea-Bissau, Liberia, Togo.

Reforms Achieved in FY13


24 reforms, representing one-third of all FIAS-funded reforms in FY13, achieved in 12 countries: 6 in Burundi; 4 in Cte dIvoire; 3 in Kosovo; 2 each in Chad and Guinea; and 1 each in the Comoros, Democratic Republic of Congo, Guinea-Bissau, Haiti, Liberia, Timor-Leste, and Togo (up from 11 reforms in 6 countries in FY12).

FIAS Client-Facing Project Expenditures in Fragile and Conict Situations


$4.4 million in expenditures, or 28 percent of total client-facing project spending. This is a 34 percent increase from the $2.9 million, or 21 percent, of client-facing project spending in FY12.

FY12 investment generated numbers were revised from $120 million to $108 million based on corrections acquired from investor surveys in the FIAS-funded project in Brazil.

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these areas. In line with the FIAS FY1215 strategy, the continued trend is for scaling up work in the industryspecic sectors, stemming from the growing recognition that within individual countries, some of the most signicant barriers to growth reside in specic industries. Industry-specic work is up markedly to 19 percent of client-facing project expenditures, and it is on track to reach the target share of 30 to 40 percent by FY16. Activities related to enterprise creation and growth remain the biggest area of FIAS-supported work, accounting for 47 percent of expenditures on activities in the FIAS-funded portfolio. International trade and investment accounts for 30 percent of expenditures.

to an external evaluation, these reforms have yielded $8 million in private sector investments, the formalization of 1,000 new businesses and the establishment of about 2,400 new jobs within the past three years. Licensing, a major constraint to doing business in Burkina Faso, is on the path to being streamlined. In FY13, the program prepared an inventory of all business licenses in the country. More than 300 licenses were identied and recommendations were submitted to the government, which established a secretariat to lead the licensing reform process in January 2013. Saturnin Zoetany recently took advantage of Burkina Fasos new streamlined business procedures and registered his company, Zoetanyande Distributing, which manufactures and sells yogurt to an expanding market, now including several large hotels. I started my rst informal business when I was 12 years old, making yogurt and goat cheese in my aunts kitchen. I now employ six people and have a small farm where we raise goats and cattle to supply the milk for the yogurt, says Zoetany. Only 23 years old, he is quickly establishing himself as one of Burkina Fasos brightest young entrepreneurs. As a member of the Organization for the Harmonization of Business Law in Africa (OHADA), a unique organization that enacts common business laws for 16 member countries, Burkina Faso has recently endorsed a series of measures to signicantly reduce costs and increase access to credit, and to encourage the development of economic activities. During FY13, a number of training sessions for national stakeholders were held in Ouagadougou and Bobo-Dioulasso to raise awareness of the OHADA-inspired reforms. In Burundi, a country still recovering from civil war, regulatory changes offer entrepreneurs new opportunities to rebuild. With FIAS support, Burundi has pushed ahead with its reform agenda in FY13, making it easier for new rms to register and pay taxes, obtain building permits, and start a business. Burundi was recognized in Doing Business 2014 as a top reformer for the third year running, recording sustained reforms that are paving the way for economic growth and job creation. Since the Burundi Investment Climate Programs launch in November 2010, the pace of business registration has doubled, increasing from fewer than 674 new businesses registered per year in 2010 to 1,346 in 2012, a gure that includes the rst half of FY13. The sharp increase stems in part from the improved ease of registering a business, the 13-day process required in 2010 was cut to ve days as of FY13. The cost of registering a business plunged from 145.7 percent of per capita income in 2010 to 17 .5 percent in FY13, reecting a meaningful savings in a country where the average revenue per capita is $240 per year. FIAS funding also supported a reform in FY13 to speed up Burundis construction permit process. This has allowed small businesses to build the infrastructure they require to grow and thrive. The change was accomplished in part

Starting Businesses and Fostering their Growth


The FIAS strategic theme of fostering enterprise creation and growth supports advisory services and the implementation of reforms that apply across a client countrys economy. This priority entails such efforts as improving the regulatory environment for business registration, streamlined systems for resolving business disputes, and fair and efcient procedures for managing insolvency and business exit. In FY13, FIAS built and expanded on work in all of these areas. FIAS-funded activities under this strategic priority fall into three areas: business regulation, debt resolution and business exit, and indicator-based reform advisory.

OperatioNal Highlights

Regulations Enabling the Ease of Business Entry and Operations


The FIAS-supported business regulation program assists client governments in improving the regulatory environment for business activities. In particular, the program supports legal, institutional, and regulatory reforms aimed at reducing the burden of starting and operating a business and improving the overall quality, consistency, and effectiveness of regulation. A critical part of this effort has involved helping countries harness the power of information and communication technologies (ICT) to create more transparent and efcient online systems in place of inefcient and often duplicative paperbased regimes. A key development in FY13 was the roll-out of a new strategy placing a stronger emphasis on the quality and sustainability of reform efforts. Through an improved regulatory framework, the business regulation program is focusing on the implementation of reformed regulations and building the capacity of regulatory agencies to deliver services to the private sector in a transparent and efcient manner. It is also exploring synergies with other FIAS-supported initiatives like the sector-specic work to increase the impact of the reform solutions offered to clients. In Burkina Faso, reforms have dramatically eased the burdens of starting a business, reducing costs by more than 50 percent and the time to open a company from 40 days in 2004 to 13 days in 2013more than three weeks faster than the Sub-Saharan Africa average. According

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by lowering the cost of geotechnical studies needed for building permits, and by a newly created one-stop shop for construction permits. This reform has reduced the cost of construction permit registration by more than 70 percent since 2009. The Burundi Investment Climate Program is launching an agribusiness program component to open up privatesector opportunities in areas where growth potential exists and continuing to build on the strong reform momentum that has been established. FIAS-funded business regulation projects continue to focus on reforming business entry and business licensing. The work on construction regulations and business inspections has been scaled up in response to increased demand from clients. New areas in the effort to add value include product regulations (standard and certication), procurement payment delays, and environmental regulations. In addition, the program is focusing more on contributing to public goods and increasingly applying governance tools, such as beneciary feedback and disclosure of information. For example, Jordan and Tajikistan have beneted from innovative FIAS-funded regional projects that enable inspected businesses to provide the government with feedback via mobile phone application on the quality of inspections and to lodge complaints about abuses. Such beneciary

feedback mechanisms are being piloted to assess the extent to which they reduce arbitrary behavior and lead to improvements in the quality of government regulatory services. The business regulation work has also been key to creating a better enabling environment for businesses in fragile and conict-affected situations as evidenced by the work in Burundi and Timor-Leste (see box below).

Efcient Debt Resolution and Business Exit Procedures


The FIAS-supported debt resolution and business exit program continues to assist countries around the world in improving their legal, regulatory, and institutional frameworks for resolving commercial disputes, nonperforming loans, business exit and reorganization, and the collection of debts. In FY13, many countries continued to experience the aftereffects of the global nancial crisis of 20082011. Many of the countries experienced reduced demand for goods and services coupled with constrained access to credit, resulting in a steep rise in the volume of non-performing loans held by commercial private and state-owned banks. The inability to effectively resolve these debts in a timely and cost-effective manner has led an increasing number of countries to seek reform assistance to modernize their debt resolution and business exit frameworks, a trend that spiked noticeably beginning in 2011 (see box, p. 25).

Timor-Leste: A One-Stop Shop for Business Registration Gives Entrepreneurs a Boost


Entrepreneurs in Timor-Leste used to wait 94 days to register their start-ups or renew their business licenses. Since the opening of the one-stop shop for businessServio de Registo e Vericao Empresarial (SERVE)in June 2013, however, the average wait time has been reduced to 5 days.a I was shocked when I got a call asking me to come and collect my certicates today, said Lucas Sarmento, owner of LUTTOM Unipessoal Lda, a company based in Dili. I know that this process normally takes six to seven months. I didnt believe it until I came and saw that my registration was already done! The one-stop shop is part of a FIAS conanced investment climate project in Timor-Leste that is aiming to streamline business procedures and improve the countrys commercial environment. Ranked 172 of 189 countries in the Doing Business 2014 report, Timor-Leste suffers from poor access to information and inadequate government assistance, two factors which have stunted commercial growth and entrepreneurship. Over the past three years, the FIAS-funded project has supported the government in implementing business reforms and establishing a one-stop shop for entrepreneurs and business owners. In its rst week of operation, SERVE was visited by more than 1,000 Timorese business owners, registered more than 50 new businesses and renewed hundreds of business licenses. The one-stop shop has located tax registration, licensing and business registration under one roof. SERVE has assisted more than 16,000 clients to date and compiled cost savings of more than $1 million. In its rst three months in operation SERVE registered 1,470 new companies, and about 40 percent of all applicants are women. In addition to more streamlined registration procedures, half of businesses are now exempt from the requirement to obtain a license following the enactment of the SERVE law in 2012, a FIAS-conanced reform that saves those businesses $458,349 in compliance costs annually. Licensing renewal requirements were also eliminated, resulting in $66,345 in annual savings for affected businesses (see Annex 1.3).
a. The SERVE one-stop-shop for business opened on June 4, 2013. Results were not reported in Doing Business 2014, which only measured results up to June 1, 2013.

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Creating Stronger Insolvency Frameworks in Eastern Europe


With FIAS support, the Moldovan Insolvency Law, passed in September 2012, came into force the following March. The new law is expected to facilitate the restructuring of more viable companies to help reallocate assets more efciently into the economy in liquidation proceedings. It creates new restructuring mechanisms, reduces opportunities for appeals, adds moratorium provisions, and establishes strict statutory periods. It also establishes expedited restructuring procedures which should reduce the time required to introduce a restructuring plan and provides for stricter accountability of shareholders and directors of insolvent companies. Similarly, with FIAS support, Belarus adopted a new insolvency law in July 2012. Recommendations from the team incorporated into the law include a requirement for insolvency practitioners to notify creditors individually of the opening of insolvency proceedings and of the rst creditors meeting. The requirement also species the procedure for the cessation of an insolvency practitioners appointment, including setting out concrete reasons for dismissal. These provisions will help make the insolvency process in Belarus more transparent, provide better legal protection for insolvency process participants, and enhance the institutional framework for insolvency practitioners.

OperatioNal Highlights

Increasing global trade volumes and the complexity of global supply chains continue to drive both domestic and foreign businesses to seek speedy and efcient dispute resolution mechanisms. The FIAS-supported program is providing assistance to countries in developing commercial mediation mechanisms for resolving business disputes, as well as arbitration regimes. Countries that have adopted the New York Convention on the Recognition and Enforcement of Arbitral Awards, for example, have provided a measure of comfort to foreign investors that basic contractual disputes will not be tied up in local courts. Technical assistance to the government of Burkina Faso helped establish the rst mediation law in West Africa. The law, which came into effect in February 2013, established a dispute resolution system, now in use, by removing civil and commercial cases from overburdened domestic courts. The increases are now settled through more exible and cost-efcient mediation procedures, which is expected to improve access to justice, particularly for micro and small businesses. Mediation work has helped fragile states like the Comoros, where in May 2013 the Board of Directors of the Court of Arbitration of the Comoros formally adopted new mediation regulations that comply entirely with international best practices. This new regime should also serve as a demonstration effect model for other SubSaharan Africa countries within the OHADA jurisdiction. Expected results include:
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Targeted Advice on Key Investment Climate Indicators


The FIAS-supported indicator based reform advisory program serves as an entry point for investment climate programs in response to demand from client governments. It provides technical assistance in nine key areas: business start-up, construction permitting, property registration, access to credit, investor protections, tax administration, trade logistics, enforcing contracts, and resolving insolvency. In FY13, FIAS-funded projects in this area supported over 25 countries around the world in making regulation more business friendly. For example, with FIAS support Cte dIvoire streamlined business entry and lowered the cost of property transfer. It also implemented legislative changes aimed at increasing womens standing as head of household. In Afghanistan, under a FIASsupported project, the World Bank Group worked with the government to improve the business environment. In Togo, another fragile and conict-affected state, FIAS funding was used to support a combined World Bank Group effort to improve the countrys one-stop shop system for business registration. The effort complemented improvements in the legal framework provided by OHADA to its member states. Businesses can now be registered in 19 days in Togo, down from 84 days in 2012. The cost of registration fell from 177 percent of income per capita in FY12 to 121 percent in FY13. A total of 11,548 rms beneted from the reformed registration requirements in FY13. Facilitating knowledge sharing between client countries on specic reforms captured by Doing Business and other indicators has been a strong continued feature of this work in FY13, with the team organizing several high level events for policy makers in different regions to learn from each others reform experiences (see box, p. 47).

A rise in the number of cases referred to mediation annually. Speedier resolution of contract disputes and debt recovery matters. Signicant reduction in administrative and litigation costs. Enhanced access to credit for smaller businesses.

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Support to Subnational Doing Business


The FIAS-supported subnational Doing Business project, funded under the indicator-based reform advisory program, has been deployed successfully around the developing world for benchmarking business regulations across locations within a country. In FY13, the project was expanded to explore issues such as excessive discretion in the implementation of rules, regulatory uncertainty, and transparency. A pilot project in the Arab Republic of Egypt collected data on the transparency of regulatory practices of building authorities in 15 Egyptian governorates, or states. Ongoing projects in Nigeria and Central America aim to assess legal and administrative constraints faced by women entrepreneurs at the local level.

A report, Doing Business in Hargeisa, focusing on a city in the conict-affected Somaliland region of Somalia, was one of three issued in FY13 showing how government regulations and their implementation can ease or constrain business activity; the others focused on cities in Russia and Italy. The Hargeisa report was the rst to provide this kind of data and analysis in Somaliland where, as in other conict-affected regions, the generation of jobs and government revenue is essential to establishing peace and sustaining growth. Smart and transparent regulations foster predictability and level the business playing eld, particularly for small and medium-size domestic rms. The report identied regulatory bottlenecks, highlighted opportunities for improvement, and presented international and regional good practices.

Sweeping Business Reforms Aid Entrepreneurs in Armenia


Businesses and entrepreneurs in Armenia are beneting from an ambitious and comprehensive FIASfunded investment climate reform program. Reforms implemented in FY13 are reducing the costs of doing business and improving regulations in two key areas: inspections reform and food safety. FIAS-funded advisory support has helped simplify export procedures for businesses looking to meet rising demand for agricultural products. The introduction of a Food Safety Law has enabled easier access to European Union markets. Start-up costs, the time to register a business, reduced regulations, and a streamlined online customs clearance system are among the benets delivered by this effort. said Harry Megerian, president of Within the last two years signicant changes have taken place, the Megerian-Shin construction company. I now have time to concentrate on my business, and the burdensome regulations do not impede it anymore. The FY13 highlights include the following reforms: Inspections reform: The Armenia Investment Climate Reform project assisted the government with inspections reform, resulting in the merger of the Sanitary and Epidemiology Inspectorate and the Labor Inspectorate to form a new Public Safety Inspectorate, reducing the regulatory burden for entrepreneurs. Food safety: The project has helped the government adopt 30 checklists covering all aspects of a business that an inspector or agency is authorized to inspect. The government makes the checklists public and easily accessible to businesses, resulting in a more transparent inspection system and signicantly reducing the time businesses need to comply with food safety inspections and regulation. Armenias broad and comprehensive investment climate reforms have signicantly reduced the costs of doing business for entrepreneurs. The reforms have also boosted Armenias global ranking in terms of ease of doing business. From FY11 to FY13, the country moved up 13 places in the overall ranking of the World Bank Groups Doing Business report (from 50th to 37th of 189 countries and territories), and improved signicantly in the paying taxes indicator (rising from 152nd to 103rd).

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Boosting Trade and Investment in Developing Economies


In FY13, FIAS support under the facilitating international trade and investment strategic theme catalyzed investment and trade in client countries and advanced the overall competitiveness agenda. A broad range of activities focused on implementing sound investment policies, efcient trade logistics systems, and effective and transparent business taxation mechanisms.

on options for harmonizing its foreign investment regime across economic sectors, strengthening investor protection clauses consistent with international investment agreements, and distinguishing between investment and tax policies to increase the governments ability to meet scal requirements while adjusting to the changing nature of FDI.

Facilitating Cross-border Trade


FIAS funding supported activities that demonstrated a strong track record in helping client governments enhance their trade logistics systems and services leading to signicant reductions in the time and cost to import and export. During FY13, the trade logistics program consolidated its border management interventions and aligned its work with World Trade Organization Trade Facilitation Agreement articles, thus placing the work in a broader, more coherent context. It also substantially increased its agribusiness and supply chain focus. As of the end of FY13, trade logistics work entailed 23 projects, 7 of them regional, in a total of 45 countries. These include 27 International Development Association countries, 11 of them Sub-Saharan Africa countries, and 8 countries considered fragile and conict-affected states. Trade logistics reforms brought about with the help of FIAS funding and a strong commitment by the government of Liberia have helped the West African country recover from years of conict. The project has supported sustained reforms aimed at simplifying and reducing the time and cost to complete import and export transactions. This helped shorten the list of product categories subject to the Import Permit Declaration from 27 to 17 . The Liberian Bureau of Customs and Excise implemented ASYCUDA World (the Automated Systems for Customs Data established by the United Nations Conference on Trade and Development), enhancing efciency and transparency in customs operations. The introduction of e-manifests has allowed shippers to electronically log manifests via ASYCUDA World. Liberian traders, including about 15,000 rms, have beneted from these improvements and now enjoy increased access to global markets. The momentum for signicant improvement in areas integral to private sector growth continued in FY13. Burkina Fasos commitment to reforming government to encourage growth was evident in its FY13 achievements supported by FIAS. One of the worlds poorest countries, Burkina Faso has been engaged in this effort since 2006. In the words of Arthur Kafando Patiend, the countrys Minister of Industry, Trade, and Handicrafts: The need to foster the emergence of a vibrant private sector that will drive economic growth is at the heart of the governments agenda. Trading across borders is now easier following automation of the rail transit process between Burkina Faso and Cte dIvoire and elimination of the transit document requirement for import and export. Traders moving goods from Burkina Faso to Togo have also beneted from a newly interconnected customs clearance system. The number of truck trips between Lom and Ouagadougou was up 17 percent in the rst month alone, 27

Helping Countries Develop and Implement Policies to Attract and Retain Investments
As a result of the strategic revamping of the investment policy product under FIAS, in FY13 a set of innovative areas of technical assistance covering the entire investment cycle has been developed to help governments attract, retain, and benet from private investment. The product has focused on developing advisory solutions in investment policy strategy, investment incentives, investment entry regime, investor protection, linkages and spillovers, and investment facilitation through regional integration. In each of these areas, toolkits providing step-by-step guidance on the rationale and process of reform are being developed to assist governments and practitioners undertaking such reform initiatives. In FY13, 24 investment incentive activities commenced in ve regions. In Bosnia and Herzegovina, for example, with the help of funding provided by Austria through FIAS, the government has taken a major step toward creating a level playing eld for investors and strengthening governance mechanisms related to incentives administration. The government agreed to publish and disclose the complete inventory of investment incentives to foster transparency and increase access to information. In Morocco, FIAS supported the development of a guide and framework, enabling the government to assess the anticipated costs and benets associated with investment incentives. This toolkit provided the foundation for the government to allocate scarce budget resources in the most effective way to achieve its desired development objectives. In Mongolia, FIAS funding was used to help the government remove legal and regulatory barriers to equal treatment for national and foreign investors and to strengthen investor protection measures. The FIAS co-funded project helped the government of Mongolia identify the underlying causes for the countrys worsening investment climate. Extensive discussions revealed investor concerns about a series of government actions during the year leading up to elections. In May 2012, in a politically charged environment, the government passed legislation perceived as being adverse to foreign direct investment (FDI). These developments, combined with issues surrounding the Oyu Tolgoi mine negotiations and the draft mining law, contributed to a 40-percent drop in FDI to Mongolia in less than a year. Under the FIAS-funded project, the World Bank Group advised the government

OperatioNal Highlights

from 3,993 to 4,686. In interviews, truckers indicate they expect the number of trips they can manage in a given time period to double. In FY13, FIAS funding continued to support regional trade logistics programs in South Asia, Latin America and the Caribbean, and East and West Africa. In a concerted effort to integrate developing countries into the global economy, trade logistics projects strengthened systems and services at and across borders, and realized economies of scale through reforms that further regional integration. With conancing support from FIAS, the South Asia Regional Integration in Trade and Investment Project, involving Bangladesh, Nepal, and Eastern India, is working towards improving the overall cargo movement efciency at key customs stations between these countries. The project was launched in August 2012 and quickly began delivering results. Nepal harmonized its customs working hours with those of India and China, prompting banks in the major customs ofces to follow suit and resulting in a 14-percent increase in the number of active trading days. Traders may now submit their personal account number, pay value-added tax, and provide rm registration and agent authorization letters once per year rather than for each consignment. Additional checkpoints between the border and Kathmandu have been eliminated, speeding cargo transit. In FY13, Nepal implemented ASYCUDA in 18 customs ofces, allowing traders to enter declaration data directly in the system. In the Southeastern Europe region, FIAS supported the Western Balkans Trade Logistics Project, with its mandate to facilitate cross-border trade. Albania Customs introduced an e-payment system which enabled traders to pay customs dues online, eliminating the need to submit a payment receipt and speeding the release by up to a day. The project supported negotiations between food authorities and customs in Kosovo and Albania toward their agreement to facilitate the transit of goods arriving at the port of Durres, Albania, and destined for Kosovo. In Bosnia and Herzegovina, the project extended the working hours of federal inspectors at the three busiest border crossings with Croatia to align them with the working hours of Croatia Customs, cutting the lead time for clearing plant goods by 7 .2 percent. These three border points handle 70 percent of Bosnia and Herzegovinas entire trade volume. In the FYR Macedonia, the project, in collaboration with the World Bank, started training inspection agency ofcials to apply a risk-based approach to import controls. This initiative is to be completed in the fall of 2013, resulting in fewer inspections and sampling, thus speeding up border clearance. In Serbia, the project held an Inland Waterways Conference attended by stakeholders from government and the private sector to discuss streamlining clearance procedures along the Danube and Sava Rivers. One recommendation, to mandate the use of the River Information Services (RIS) system, which can be used for pre-arrival information, has already been implemented by the government.

Effective and Transparent Business Taxation Mechanisms


In the area of business taxation, FIAS-funded projects continued to support governments in introducing reforms that improve the efcacy and transparency of tax administrations, reduce the private sector tax compliance burden, and expand the tax base. In FY13, the FIASsupported tax program assisted in 36 countries, including ve fragile or conict-affected states. Given that an estimated 30 to 50 percent of all economic activity takes place within rms or under the umbrella of a single parent company, transfer pricing rules are essential to provide investors certainty and predictability. In FY13, transfer pricing activities were scaled up, and collaboration with the Organisation for Economic Co-operation and Development, the European Union, and the World Bank Group was intensied. The tax administration of Colombia increased revenues by 60 percent, from $3.3 million in 2011 to $5.8 million in 2012. More efcient work by the revenue authority of Kenya translated into an increase in the number of audit cases completed, revenue collected, and number of dispute cases resolved. For instance, Kenya recently increased revenues from one transfer pricing audit by $23.8 million. As part of an effort to lower tax compliance costs and expand the tax base of micro and small businesses, FIAS-funded tax simplication programs in Burundi, Georgia, and India are generating signicant private sector savings and helping small businesses reap the benets of formalization. In January 2013, Burundi enacted an enhanced income tax law that introduced a simplied regime for small and medium-size enterprises. The law provides very light compliance requirements, for example, annual ling and payment, self-assessment, and no accounting obligations, as well as exemptions for businesses in key sectors operating at the subsistence level, such as small farmers and shermen. The law also aligns Burundis corporate income tax rate with the rate in the other four East African Community countries. In Georgia, a simplied tax regime introduced with FIAS support saved micro and small businesses an estimated $15.8 million in compliance costs, with approximately two-thirds of all Georgian businesses beneting from the regime. A tax code adopted in 2010 has improved the tax appeals process, and new mediation procedures have resulted in businesses winning 47 percent of cases, as compared to 10 percent prior to mediation. Tax code reforms include a transfer pricing clause that is expected to improve tax revenues, and a taxpayer education campaign of 12 training events is expected to help up to 700 micro and small enterprises comply with the new tax code. In the state of Bihar, India, nearly two-thirds of business taxpayers surveyed in 2009 stated that the process of paying taxes was more burdensome than the tax itself. This means many micro and small enterprises remain off-book, losing out on the benets of formalization. FIAS-

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supported Bank Group teams helped introduce a simplied tax regime in BiharIndias poorest statethat has helped relieve administrative burdens, reducing tax compliance costs by 31 percent and generating $7 million annually in private sector savings. Straightforward procedures for small businesses have helped increase formalization and led to a 24-percent increase in the tax base. In addition, FIAS-supported teams helped implement an electronic tax payment and ling system for larger businesses. Electronic tax ling is now commonplace in Bihar: the number of businesses that led online grew from 146 in 2009 to 78,000 by March 31, 2013. Tax revenues in the state increased by more than 300 percent within ve years from approximately $678 million in 2008 to $3 billion in 2013. Risk-based inspection is another instrument that helps reduce compliance costs and uncertainty for taxpayers. The risk-based approach for planning and conducting tax inspections, which achieved a reform in FY12 in the Kyrgyz Republic, is being replicated in Tajikistan under the Central Asia Tax project. In 2013, a risk-based approach was fully incorporated into the audit module of the new Integrated Tax Administration System, developed with Asian Development Bank assistance. Region-wide, close to 13,000 rms beneted from reformed and streamlined inspection requirements. The Kyrgyz Republic reform is helping to improve the selection process for planned audits and internal administration for audits resulting in a signicant 50 percent reduction in the number and duration of inspections and a rise in tax revenue per audit.

By the end of 2012, the risk-based audit system was used in 17 of 64 local tax ofces, and 63 percent of planned audits were selected through the new system.

Focus on Key Industries Spurs Growth


FIAS work to unlock sustainable and climatefriendly investments in key industries, particularly agribusiness, tourism, and light manufacturing has delivered important impacts, expanded its reach, and received project and product-level recognition through both IFC corporate and World Bank vice-presidential awards. The industry-specic offering is improving its response to climate change through its Climate Efcient Industries initiative, which includes innovative green solutions for industrial zones in Bangladesh (see box, p. 33). One of the primary impact measures for industry-specic investment climate work, investment generated, reached $329 million in new investment in FY13 alone:
n

OperatioNal Highlights

$9.5 million in garments sector investment in Haiti, a project selected for a World Bank Group Vice Presidential Unit Team Award. $305.8 million in a range of light manufacturing and information technology sectors in Brazil a fully client-funded project that beneted from extensive FIAS-supported advisory services and created 2,728 jobs in the northern frontier region and an additional 1,347 elsewhere in Brazil.

Extensive FIAS-Supported Work in Tax Transparency


In FY13, with funding support from Luxembourg, the Netherlands, and Switzerland, FIAS-supported advisory services helped improve the efciency and transparency of tax regimes in several countries. Transfer Pricing: In a joint effort of the World Bank Group, the Organisation for Economic Co-operation and Development, and the European Union, FIAS provided support for transfer pricing in pilot projects in Colombia, Ghana, Honduras, Kenya, and Vietnam. Exchange of Information: The program team has been actively involved in providing country-level technical support to Georgia, Jamaica, Kenya, Panama, the Philippines, and Uruguay through missions and provision of technical advice on specic topics related to meeting the standards of the Global Forum on Transparency and Exchange of Information for Tax Purposes. Knowledge Management and Regional Training: Exchange of information tracking software was developed in partnership with the Global Forum, and it was introduced to audiences at a regional event in Brazil and a global event attended by 77 jurisdictions in the Netherlands in May 2013. The software helps tax authorities manage the process of incoming and outgoing requests for information exchange with other countries. The software was piloted by eight countries and key feedback was taken into account throughout its development. A practical manual on exchange of information for jurisdictions was also developed and portions shared at an international tax event in Fiji. Partnerships: The collaboration with the Organisation for Economic Co-operation and Development and the European Union in the area of transfer pricing has allowed the team to leverage resources and expertise. As the tax transparency program expands, FIAS support and the continuous cooperation of the three organizations will remain vital to ensure targeted, coherent and coordinated assistance to new client countries.

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$9 million generated in the agribusiness sector by investor outreach and investment climate reforms in Rwanda. $4.6 million in energy efciency investments by four companies generated by a low-carbon industry initiative in Bangladesh.

These totals do not include $92 million of investment generated in a project in Rajasthan, India, not directly funded by FIAS but which beneted from substantial advisory services delivered by FIAS-supported teams (see box, p. 32).

regulation and warehouse receipts, inspections regimes, and investment promotion, expertise supported by FIAS funding has established a growing reputation with client countries and within the Bank Group. Development of follow-on reform programs in several African countries has been enhanced by leveraging the diagnostic work of bilateral agencies, such as the U.S. Agency for International Developments (USAID) Agribusiness Commercial, Legal and Institutional Reform, and the agribusiness indicator work undertaken by the World Banks Agriculture and Rural Development Department. In developing these reform programs, much of this work builds on wider World Bank Group expertise and policy platforms. Project development work in Cte dIvoire is a prime example (see box below.) Work in South Asia ramped up signicantly in FY13 with pilot projects launched in Bangladesh and India. In the Indian state of Odisha, investments are increasing but generally centered on extractive industries. This has had distorted distributive effects, with investments concentrated in mineral-rich and environmentally fragile regions. The government of Odisha has recognized this, assigned priority to diversifying its investment base, and begun work with IFC to launch the Odisha Inclusive Growth Partnership. The project focuses on the agribusiness and tourism sectors and aims at catalyzing new private investments in non-natural resource-based sectors and unlocking compliance cost savings through regulatory streamlining aimed at the agribusiness sector. The most important theme in Eastern Europe and Central Asia is food safety reform, as in Moldova, where the government has aligned its food safety regulations with those of the European Union and streamlined regulatory oversight. In Moldova, FIAS funding has been used to support an investment climate reform project aimed at making the agribusiness sector more investor-friendly and its exports more competitive in European Union markets. Improving the food safety legislation and other agribusiness-related regulations was among the conditions

Investment Climate Reforms in the Agribusiness Sector


FIAS funding was used in FY13 to implement 21 agribusiness projects across all regions except the Middle East and North Africa. Seven of the projectsa third of the totalare located in Sub-Saharan Africa. The agribusiness work is still growing at double-digit rates and now stands at 21 portfolio projects, representing a 24 percent increase over 17 projects in FY12. An additional 11 projects were in the pipeline for development globally at the close of FY13 compared to eight at the close of FY12. Most of the existing and pipeline agribusiness projects target regulatory reforms of agricultural input and output markets, complemented by investment promotion work. In terms of regional focus, agribusiness work in Africa is scaling up, with reforms focused on improving agricultural input markets including seeds and fertilizers and access to nance through warehouse receipts. Results are expected during the FY1415 period. Output market reforms, including reforms addressing pricing and competition issues, are also important to FIASsupported client-facing work, as are agricultural export commodity market reforms. Comprehensive scoping work was conducted in FY13, supported by FIAS funds and requested by client governments in Burkina Faso, Burundi, Cte dIvoire, Malawi, Mozambique, Senegal, Tanzania, Uganda and Zambia. With a tight focus on a small number of core themes, such as input certications, warehouse

An Integrated Bank Group Approach to Agribusiness Reform in Cte dIvoire


In Cte dIvoire, the cashew value chain has signicant potential for investment generation, value addition, and jobs. But this potential is hindered by a set of investment climate barriers along the value chain. To be transformational in agribusiness requires coordination of activitiesfrom input markets to nal sale, which no single actor in the World Bank Group can achieve. Consequently, the Cte dIvoire Investment Climate Agribusiness Project has followed an integrative approach across the World Bank Group to identify complementary ways to boost the cashew value chain in Cte dIvoire. The project is coordinating investment climate work on an array of issues ranging from trade logistics to warehouse receipts nancing, with related activities of other IFC advisory services business lines such as Sustainable Business Advisory and Access to Finance. This coordination will extend to the upstream support of production and producer organizations planned by the Bank Groups Agricultural Sector Support Project, to the wider investor conference work envisioned by the Competitive Industries and Innovation Program in the World Bank-IFC Financial and Private Sector Development Network, and to the regional work of IFC investment services on the Africa Cashew Alliance.

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for a World Bank Development Policy Loan concluded in November 2012. The joint IFC-World Bank effort helped ensure the inclusion of key triggers intended to improve Moldovas investment climate and contributed to the adoption of a series of reforms supporting the development of agribusiness. The reforms helped simplify Moldovas agribusiness regulations and align them with EU standards. FIAS funding was also used to help strengthen Armenias competitiveness in agribusiness under the Armenia Investment Climate Reform Project. The project supports the government in promoting private sector growth by creating business-friendly regulations and administrative processes. For example, the governments new electronic tax system is making tax ling easier for businesses like Euroterm, Armenias leading food and drink producer. Previously, Euroterm led its taxes and communicated with government ofcials through postal services or faceto-face interaction with ofcials. Under the new system, our accounting department saves notable time, said Vahe Ghazaryan, general manager of Euroterm. He said Euroterm staff is able to focus on tasks such as improving logistics to make the company more efcient. Euroterm, backed by a $2.5 million loan from IFC, is planning to grow, employ more workers, encourage farmers to boost production, and explore foreign markets. To help companies more quickly access new markets, the project has advised the government on legislation to simplify export procedures. In addition, the FIAS-funded Food Safety Improvement Project is helping Euroterm and other agribusiness rms adopt an international food safety management systemone of the preconditions for exporting to demanding foreign markets. According to Karine Minasyan, Deputy Minister of Economy, the advice from the project helps use the governments resources more efciently, enables businesses to reduce costs needed to comply with the regulations, and contributes to an improved investment climate that can attract more investments. Improving key economic sectors in fragile states has been an important aspect of the FIAS-supported industry work. In Cte dIvoire, the team has employed a collaborative approach working with different parts of the Bank Group to design a client solution (see box, p. 30). In Bosnia and Herzegovina, signicant progress was made on agribusiness in FY13 with the government adopting the secondary food safety legislation needed for an effective implementation of the food safety regulations aligned with the European Union model. The effort was funded by lead donor SIDA (Swedish International Development Cooperation Agency) with nancial support from FIAS and the government of Bosnia and Herzegovina. It provided the government with advice on the drafting and development of regulations aimed at boosting exports by better integrating food processing, inspection and labeling systems with those of the EU. The project has resulted in adoption of the following regulations:

Four implementing rules on dairy, microbiological sampling and production and processing of poultry meat adopted by the governments veterinary ofce and food safety agency. Ofcial adoption of the rulebook on labeling a key part of the national hygiene package of regulations designed to help local companies export to EU markets beginning in 2014.

FIAS support has led the way on agribusiness diagnostics and product development. Competitiveness assessments were done for three agribusiness value chains in the dairy, meat, and fruit and vegetables sectors. Most competitive value chains (dairy and fruits and vegetables) have been approved by the Bosnia and Herzegovina and Republika Srpska governments. Work has been initiated on strategies for increasing competitiveness and attracting investments. In parallel, FIAS funding has been used to develop a set of recommendations for streamlining of export-import procedures for key trade sectors. FIAS support is also helping the client governments adopt more than 60 streamlined procedures at the national and subnational levels, yielding a reduction in processing time and associated costs (over 19,000 days in total saved for all businesses exporting or importing, based on 2012 actual frequency, representing private sector cost savings estimated to be $830,000 annually in reduced waiting time).

OperatioNal Highlights

Enabling Investment Opportunities in Tourism


Robust demand for tourism-related investment climate advisory services continued during FY13, resulting in an expansion of the project portfolio to eight active projects. In addition, a strong pipeline of new projects is being developed for FY14 with activities in Haiti, Mozambique, Namibia, Sri Lanka, Uganda, and Zambia, with direct FIAS funding supporting a project in Nepal. FIAS funding continues to help provide cross-support to other units in the World Bank Group on tourism projects in which there is a clear role for advisory services aimed at improving the investment climate and mobilizing investment. Technical assistance was provided in FY13 for tourism-related advisory projects in Uzbekistan, Georgia, Azerbaijan and Armenia. During the year, the portfolio was reviewed to sharpen the focus on investment mobilization and to better link reforms to specic investment outcomes. In So Tom and Prncipe, a FIAS-funded project helped the immigration department to introduce an online visa portal (www.smf.st/virtualvisa) that currently receives over 600 applications per month. The online system was desperately needed. Previously, the process of getting a visa involved applying in person at an embassy of So Tom and Prncipecumbersome under any circumstances but especially so given the country has only ve embassies worldwide. The only alternative was for applicants to send their passports, along with the $109 processing fee. In parallel to the rollout of the online portal, the visa application fee has also been reduced from

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$109 to $27 and travelers can apply without mailing in their passports for processing. Prior to the implementation of the online visa portal, the tourist visas issued by So Tom and Prncipe ranged from 4,000 to 7 ,500 per year. In only its rst year, the online system is helping to boost the tourism industry, drawing more than 7 ,000 new tourist visa applications in addition to traditional visa applications, which continue to be led at about the same rate. Helping fragile states generate greater revenues by developing a thriving tourism industry has also been a focus of FIAS support. In some countries, such as Nepal, where investment in the tourism sector is lagging and tourism expenditure per capita is in decline, merely maintaining the status quo is a challenge. A FIAS-supported project launched in FY13 was designed to streamline procedures and regulations that constrain tourism growth, build investment in a series of key subsectors and, at the same time, build standards and thus competitiveness in tourism services such as air safety, food safety, and trekking activities. A capacity-building event involving key stakeholders on aviation safety resulted in a safety action plan, and a concept note on offering concessions at national parks was submitted to the government. The project has generated encouraging early results on the investment front; a number of potential tourism-related investment projects have been identied and are now being assessed for further support.

Translating Light Manufacturing Opportunities into Investments and Jobs


FIAS support for work in light manufacturing sectors has grown in recent years. The garments sector in Haiti, equipment manufacturing in Brazil, and the automotive sector in Rajasthan in India (see box below) stand out as the largest of these initiatives. This work is principally aimed at leveraging reforms and providing investor outreach support to grow investment, thereby delivering new sources of employment. The Brazil Frontier States Investment Generation Program started with the recognition that while Brazil as a whole has been one of the more prosperous countries in the developing world, some of its frontier states, such as Para and Pernambuco, have rates of poverty and unemployment comparable to those of the worlds poorest countries. In FY13 this FIAS-supported project, implemented through a partnership with the Investment Climate Department, IFCs Sustainable Business Advisory, and Apex-Brasil, the nations investment promotion agency, generated signicant investment in the frontier states and other regions of the country. The project developed a coherent national and subnational support framework that more effectively promotes and facilitates investment into the two frontier states. The federal government paid the entire client engagement cost of $2.3 million in this investment generation program. Of the $365 million in investment generated to date, 44 percent went to Para

Attracting Investments to High Potential Sectors in Rajasthan, India


The Rajasthan Knowledge Partnership project is an innovative approach to sector-focused reform and investment promotion, identifying potential investments that would encourage wider sector reforms and stimulate improvements in investor services offered by government agencies. Although funded principally by the client and the IFC South Asia region, support from FIAS-funded global technical teams has played a major role in helping design and implement the project. In FY13, investment promotion support was provided to the government to facilitate new investment based on the results of sector competitive benchmarking studies. Total investment generated so far by the Rajasthan Knowledge Partnership project has reached $310 million, including $92 million in FY13 alone, with solid prospects for substantial additional investment. In addition to the investment promotion work, the project also helped the government implement eight reforms streamlining business registration and approval processes. For example, the waiting time to register a non-hazardous factory has now been reduced by 80 percent from 30 to 5 days, helping approximately 450 factories get started each year. Procedures for power connections and industrial land allocations will become more streamlined and transparent. The project also helped facilitate the signing of a Memorandum of Understanding between KOTRA, the Korean Trade-Investment Promotion Agencyand RIICO, the Rajasthan State Industrial Development and Investment Corp., for the establishment of a new 250-acre Korean industrial zone in Ghiloth. Fourteen Korean investors have already expressed interest. In FY13, a new tourism component was added to the Rajasthan Knowledge Partnership project commencing with an analysis of the major investment climate blockages to tourism development and the creation of a master plan for the development of the Doodh Talai Lake and Kaylana Lake tourism centers, with sites now selected for new developments.

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and Pernambuco, creating some 2,700 jobs, or more than two-thirds of the jobs the project has generated nationwide. In Para, the project generated $145 million in investment (included in the above total) related to agroindustry, particularly fruticulture, packaging and other supplies for concentrated fruit drinks and wood recycling bricks. In Pernambuco, $15 million (included above) of new investment was generated in equipment manufacturing projects focused particularly in the renewable energy eld, such as wind component manufacturing.

and opportunities are maximized through these networks. The Climate Efcient Industries initiative has initially focused on light manufacturing, but it will expand its offering in construction, agribusiness, and low-carbon cities initiatives in the World Bank. As an example, in Bangladesh, IFC assisted the government in adopting low-carbon zone guidelines for its export processing zones (see box below).

Recognition of Industry Achievements through World Bank Group Awards


In recognition of project achievements and their impacts on the ground, Industry projects were recognized with a number of awards during FY13. The Rwanda Green Leaf Tea reform, discussed in the FIAS Annual Review last year, was one of only a few advisory projects given an IFC Corporate Award in FY13, and it was the only project to also win a World Bank Financial and Private Sector Vice Presidential Unit Award in the same year. FIAS-supported work to support job creation and investment attraction in Haiti also received an award from the Latin America and the Caribbean vice presidency. The same unit also recognized the project to facilitate investment in Brazils frontier states with an award. The Food Safety Toolkit was selected from among 81 entrants as one of the winners of the rst annual IFC KnowBel awards. This award is given to teams evidencing the most innovative use of knowledge transfer, collaboration, replication, and lessons learned that led to a signicant client, business, or process impact.

Acting on Climate Change through Climate Efcient Industries


To respond to the unavoidable challenge of climate change, the Investment Climate Department is developing its second offering under the theme of climate efcient industries. The initiative provides policymakers with business-minded resource efciency regulatory support by focusing on resource efciency regulations, standards and certication, and green incentives. Client projects start with energy analyses that help rms identify the most viable cost-savings opportunities through resource efciency. These opportunities are then promoted through industry-wide regulatory reforms and expanded across industrial sectors through strategic dialogue platforms. These dialogue platforms typically involve local nanciers, energy service companies, energy efciency product providers and government agencies to ensure the benets

OperatioNal Highlights

Lowering the Carbon Footprint of Industrial Zones in Bangladesh


A FIAS-funded project is helping to lower the carbon footprint of export processing zones in Bangladesh, one of the worlds most vulnerable countries to the effects of climate change. Rising fuel and utility costs are putting a strain on textile and ready-made garment investments in Bangladeshsectors important to the success of the export processing zones (EPZs). This makes energy efciency measures an important element in cutting costs to help producers maintain their competitiveness. To add to this, global buyers of garments such as Adidas, Puma, Marks & Spencer, and Levis, are introducing stringent criteria for supply chain partners to encourage greater compliance and climate-friendly, green operations. To meet these challenges, the Bangladesh Export Processing Zone Authority has partnered with IFCs Bangladesh Investment Climate Fund and the World Bank, together with the United Kingdoms Department for International Development, the European Union, and the government of Korea, to develop and implement a low carbon green zone initiative in the Chittagong Export Processing Zone. The underlying goal is to help companies go green as a route to improved protability by easing the burden of rising energy costs. The project has helped facilitate an anticipated $170 million in investment by the United Power Development Group, a private utility, with the potential for a $42.5 million IFC investment. The project has encouraged four rms to implement ve recommended energy efciency changes to date, generating more than $4.6 million in direct investment in FY13 and an estimated 4,382 metric tons of carbon dioxide reduction per year. Bangladesh is now seeking to take the success of the project nationwide, working with the FIAS-supported investment climate team, IFCs Sustainable Business Advisory team, and the World Bank. The project has also beneted from Koreas support as a donor and through staff expertise integrated into the team.

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4
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CORE THEMATIC AREAS IN INVESTMENT CLIMATE INTERVENTIONS


FIAS-funded activities are underpinned by core thematic areas that guide resource allocation and enhance the overall development impact.

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

INFORMATION COMMUNICATIONS TECHNOLOGIES

GREEN GROWTH

GENDER

TRANSPARENCY

PUBLIC-PRIVATE DIALOGUE

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Innovation for Growth


Projects driven by innovation are given a priority in receiving FIAS funding. As an incubator for new ideas, the Investment Climate Department and FIAS, as its main partnership funding platform, promote innovative interventions not only in the core service areas outlined in the previous section, but also in approaches to information and communication technologies, green growth, gender inclusion, transparency, and publicprivate dialogue mechanisms. These five core thematic areas cut across the full range of FIAS-supported investment climate work. Two other cross-cutting programs, the Impact Measurement Work Program and the new monitoring and evaluation framework have helped develop more accurate client-oriented ways of consistently and accurately measuring the impact of investment climate programs, leading to better project design at the front end and stronger results.

Leveraging Information and Communication Technologies as a Catalyst for Reforms


In FY13, FIAS funding supported two pilot projects using innovative mobile applications to improve government service delivery as well as research into emerging best practices in this area. Other projects supported the deployment of information and communication technology (ICT) solutions and built capacity among governments to manage technology, which reduced the time and cost of doing business and enabled online transactions that limit interactions between business and government ofcials. There are examples of this work throughout this report, including the development of online portals that facilitate and make more transparent the registration and licensing of businesses. The number of reform programs supported by ICT work increased to 50 active and pipeline project components in 32 country programs and one regional project in FY13, up from 48 active and pipeline components in 27 country programs and three regional projects in FY12. These included six country programs directly funded by FIAS. FIAS support also fostered a collaborative IFC-World Bank initiative, exemplied in Uganda, where an online information portal was developed to simplify business licensing (see page 44). During FY13, FIAS funding supported implementation of a number of online government-to-business applications to improve public service delivery as well as small business access to information and services in Rwanda. The program assisted the city of Kigali in launching an online construction permitting portal (http://kcps.gov.rw/) allowing property developers and architects to upload blueprints, and the city to efciently process permitting requests. The new system, coupled with related regulatory and process reforms, has reduced the number of procedures required to obtain a permit from 14 to 13 and cut processing times from 166 to 104 days. Following

an audit of business licenses, the program helped launch a business licensing information portal (http:// www.businesslicenses.gov.rw/index.php) to reduce the administrative and regulatory burdens associated with operating a business. It serves as the authoritative online source for entrepreneurs seeking information on licenses and permits required for operating their businesses. The web application developed in Rwanda is also serving as a model elsewhere. It has been deployed in four more countries in Africa and eight others worldwide, with more roll-outs expected. Targeting micro and small enterprises, the program also supported the development of a new mobile application currently in pilot and expected to be ofcially launched in the rst half of FY14. The application enables online ling and tax payment and will save time and money for entrepreneurs, particularly those operating in remote locations. This innovation builds on a successful tax simplication program that streamlined most of the standard administrative procedures faced by taxpayers, thus contributing to a fourfold increase in tax compliance between 2009 and 2012.

Increasing Focus on Green Reforms


In developing countries, only a negligible proportion of buildings are designed and rated as green. Market forces alone are not yet sufcient to drive sustainable and resource-efcient solutions for buildings. Energysaving technology is readily available, and a strong business case exists for the ability of green buildings to deliver substantial savings. But there is a wide knowledge gap in some middle-income countries. This requires hands-on work with associations of developers and architects in countries to provide persuasive and country-specic information that the savings promised by the use of energy efcient, green-building technologies can be realized.

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In FY13, FIAS-funded expertise contributed to a more proactive engagement in this area by supporting technical assistance projects underway in Bangladesh, China, Colombia, Indonesia, the Philippines, and Vietnam. International partners such as the Global Green Building Council also play a critical role in supporting these efforts. In April 2013, the rst green building code supported by IFC was implemented in the province of Jakarta, Indonesia, a year after passage of the source legislation crafted with the help of investment climate teams funded by FIAS. Experience in construction regulation and enforcement reform has proved a decisive advantage in FIAS support of projects to help design and implement energy and water efciency components of new building codes. Green buildings can save 20 to 40 percent in operating costs through a range of proven insulation solutions. Client countries can achieve $3.2 billion in cost savings by 2030 derived from energy savings of 25 million megawatt hours. This will translate into 19 million metric tons of avoided carbon dioxide emissions per year, roughly equivalent to the annual emissions of 4 million cars. FIAS-supported expertise also contributed to the launch of the new EDGE Market Transformation Program, an IFC-wide corporate initiative endorsed in April 2013 which builds on the considerable growth of IFCs investment portfolio last year, with total commitments close to $500 million. The objective of the program is to get 20 percent of new buildings in target markets to meet green building standards within seven years from the start of local market interventions. Initial estimates indicate that by 2020 the program could cumulatively catalyze $309 billion in bank nancing and direct investment in green buildings and abate annual emissions equivalent to taking about one million cars off the road. The EDGE program pulls resources from multiple elds of in-house World Bank Group expertise. Specically, FIAS-supported activities will continue to assist regional IFC teams in developing effective green building codes and green building compliance instruments with a focus on good practice enforcement such as promoting private third-party checks and private inspection systems. Moving forward, FIAS-supported assistance will primarily help global teams designing and initiating new country programs with an initial focus on large and emerging economies such as Brazil, China, and India. In FY13 FIAS also continued to support green solutions in its industry-focused work, in particular in the area of industrial zones (see box, p. 33).

economic development. Through several innovative pilot projects, FIAS funding has supported an increased focus on reforms in FY13 that address constraints to womens economic empowerment. The years key achievement in the gender arena was the enactment of reforms based on indicators in the joint World Bank-IFC Women, Business and the Law report. Implementing such reforms is a key theme of the FIAS-supported gender program and is expected to drive investment climate gender work going forward. FIAS support enabled progress in understanding and measuring regulatory discretion that can negatively affect women entrepreneurs, such as laws that bar women access to or membership in business institutions and associations. The investment climate gender program seeks to explore and better understand instances in which laws and regulations that appear gender neutral sometimes constrain women seeking entrepreneurship opportunities due to the discriminatory implementation of rules.
Core Thematic Areas iN INVestmeNt Climate INterVeNtioNs

FIAS funding has been used to help identify legal barriers to womens economic participation in Cte dIvoire and recommend specic amendments to legislation. The government enacted reforms to its family law in early 2013, removing the requirement of a husbands authorization for his wifes employment, choice of residence, and receipt of a passport. Reforms also made married women eligible for income tax deductions based on head-of-household status, adjusting a married womans net income to her husbands. By lowering barriers and providing incentives to women in the workplace, these measures are expected to enhance womens physical and economic mobility. A study on the economic impact of these reforms was launched and the team continues to assist the government in implementing the enacted reforms through efforts to increase public awareness. In many countries, opening up sectors with growth potential does not automatically translate into jobs, decent wages, or better working conditions for women. In Haiti, FIAS is supporting the development of an integrated economic zones regime, which has the potential to generate over 380,000 jobs in the next two decades. Integrated economic zones are instrumental to fully realizing the high potential of Haitis textile and apparel industry, which in 2012 employed more than 30,000 Haitianstwo-thirds of whom were women. Thus far, the project has supported the creation of new employment opportunities for over 2,000 workers while maintaining the same gender ratio. The garment sector, and economic zones in particular, often offer an entry point for women into formal employment. By improving working conditions and creating sustainable economic opportunities for women, the zones present a unique way to economically empower women. The program has the opportunity to introduce gender-balanced employment policies and good practices in Haitian zones and industrial parks. These measures would include appropriate regulations, gender-sensitive professional development

Strengthening Womens Participation in the Private Sector


The World Bank Groups World Development Report 2012 asserted that women in businesses, both as entrepreneurs and employees, represent an untapped and undervalued resource for private sector growth. A greater economic role for women yields social as well as economic benets as the realization of more of their economic potential through increased participation in the private sector contributes to advancing social and

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programs, family-support mechanisms, womens health programs, and capacity-building initiatives.

Enhancing Governance and Transparency in Client Countries


Transparency encompasses a broad range of subject areas:
n Clarity with which business laws and regulations are written. n Easy (often online) availability of those laws and regulations to the businesses they affect. n Availability of information on implementation of laws, regulations, and government investment incentives.

and disclosure of key indicators. The project is supporting government agencies in three areas: procurement payment delays, VAT reimbursement delays, and construction permits. It aims to strengthen government accountability and eventually provide better implementation of regulations. In Nepal and Guinea, investment climate teams are working with government agencies on the publication of reform outcome data as another element in providing transparency into the followthrough on implementing investment climate reforms. To help clients assess the degree of transparency in investment climate-related policies, regulations, and administrative practices, FIAS funding is helping develop transparency check-lists for relevant investment climate products. In FY13, work has begun on two such check-lists: business regulation, covering items such as entry into business and construction permitting as well as investment policy, including policy incentives for investment. First drafts of these check-lists have been completed and those on construction and investment incentives have been piloted in Morocco to test their relevance. A literature review of the impact of transparency on the investment climate is also underway and will serve as the basis for focusing on the most relevant products. FIAS is also supporting the development of tools to increase transparency and disclosure requirements in key areas of the investment climate.

Promoting transparency is important for establishing level playing elds to promote economic growth, avoid corruption and inefciency, and reward the best business performers. Strengthening economic governance and transparency is a key element of the current FIAS strategy. In FY13, the frontiers of FIAS-supported transparency work expanded in three directions:
n

Enhancing accountability and closing implementation gaps through business feedback on actual reform experiences. Reducing arbitrary and undue discrimination by government ofcials in the application of policies, laws, and regulations.

Engaging Stakeholders through Public-Private Dialogue


During FY13, FIAS fostered the development of new and more exible multi-faceted mechanisms for publicprivate dialogue (PPD), providing Bank Group staff with guidance on the most appropriate PPD approaches for a given country or circumstance. The world is changing. With dramatic political and economic transitions unfolding globally, adaptive approaches to stakeholder engagement are required. Economy-wide engagement with stakeholders at the highest level of government to tackle investment climaterelated reforms is often necessary in countries with weak institutions, such as in fragile and conict-affected situations. In FY13, nearly one-third of the 35 global PPD portfolio projects in the Investment Climate Business Line took place in fragile countries where public-private dialogue can address the lack of legitimate institutions, create transparency and trust between stakeholders, and identify the need for reforms. In Nepal, for example, a regionally funded public-private dialogue through the Nepal Business Forum has brought together stakeholders to resolve policy constraints and provided a crucial venue for engagement in a country that continues to be challenged by fragmented politics and rival interest groups. The Nepal Business Forum is also supporting the governments efforts to improve governance by facilitating a transparent dialogue process from which change can occur based on research and technical inputs, or broad consensus, rather than individual inuence. The impressive results generated with the help of the business forum have bolstered

Applying information and communication technologies as a transparency-enhancing tool. Implementation gaps occur when there is an uneven enforcement of laws and regulations intended to encourage transparency. Investment climate teams are helping client governments use the power of information to avoid these situations and incentivize accountability. Feedback mechanisms being piloted in Central Asia, in the Kyrgyz Republic and Tajikistan, will generate useful information from businesses on their experience with inspection reforms on the ground. Government agencies in these countries have agreed on which inspection reforms to use in the feedback exercises, and which jurisdictions to cover. In the Kyrgyz Republic, the rst round of pilots focuses on ecology-related inspections in the capital city of Bishkek. The survey ndings will be discussed in meetings involving both the reforming agency and the affected businesses, leading to agreement on where implementation gaps remain and what remedial actions need to be taken. A second round of surveys will validate the results of the remedial actions. It is expected that businesses and government agencies alike will nd value in these exercises, and lessons learned can be integrated into government policies. An investment climate project in Morocco is helping several government agencies improve the measurement of regulatory performance and increase transparency 38

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Nepals efforts to move from conict and poverty to peace and prosperity. To date 55 recommendations by the Nepal Business Forum have been implemented, yielding substantial benets for private sector development by promoting investments, facilitating trade, improving market opportunities, and establishing a social security fund, among other measures. Follow-on work at the industry level in Nepal, funded by FIAS, is leveraging this platform to improve the competitiveness and investment levels in the tourism sector. Three Investment Climate Business Line reforms in the tax, export credit, and hydropower sectors have generated $6 million in private sector savings. The results of this PPD project are informing work funded by FIAS in other countries and regions that leverages successes achieved in Nepal. The drive for innovation has pushed PPD to venture into sector-specic applications that can provide an integrated response to factors constraining sector growth and improve the pace of sector reform. Industrycentered PPD can be particularly helpful in improving competitiveness and provide a highly valued platform for collaboration along the supply chain and across governments, businesses, and communities. Sector PPD can also be implemented at a subnational or regional

level. PPD principles have been rened and adapted to facilitate business reforms which are sector-specic, such as agribusiness in Cte dIvoire around the cashew nut supply chain, extractive industries in Guinea, infrastructure in Myanmar, and trade and logistics in Pakistan. In the case of extractive industries for example, areas that could benet from PPD interventions include: informing local communities about mining projects, enhancing transparency around contractual agreements, establishing the relationship between large investors and local suppliers, identifying local content and training needs, improving communication between stakeholders, fostering dialogue around security issues, and projects are under development. In the Philippines, agribusiness is a critical sector of the countrys economy. It accounts for 18 percent of GDP and employs over 11.5 million people accounting for almost 35 percent of the workforce. While critical to livelihoods and poverty alleviation, the sector is underperforming. The Bank Group uses public-private dialogue as a tool and platform to advance a structured stakeholders dialogue, help dene and advocate for policy and regulatory-

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related reform, and ultimately contribute to broadening the private sector base for agribusiness development. It is expected the project will contribute to $7 million in private sector savings from trade logistics reform and $9 million in investments generated from shipping and logistics reform. Taking into consideration the need to be more inclusive and integrate a broad-based approach to project design and stakeholder dialogue, there are also shortterm, nimble applications of PPD to deliver project objectives and goals. For example, in Haiti, the project to set up and facilitate the Leadership Group and the Extended Consultative Group aims to accelerate the drafting, discussion, buy-in, and adoption of a law on economic zones. These PPD interventions are designed to strengthen the private sector, facilitate dialogue among private stakeholders and with the public sector, and increase outreach to civil society and disengaged communities. Responding to the needs of changing economic and business environments, PPD mechanisms range from large national-level platforms anchored at the highest level, to sector-specic or subnational platforms, to an informal platform, all of which seek to convene stakeholders in a trusted environment with the ultimate goal of fostering private sector development and creating jobs.

An independent evaluation of the business operations product was completed in FY13 and has been shared widely. The ndings of the evaluation have been fed back into FIAS operations, contributing to the development of the strategy for the second generation of business regulation service offerings. Evaluations of the business taxation, indicator-based reform advisory, and industryspecic agribusiness products are planned for FY1415. Product evaluations are managed and coordinated together with the Corporate Development Impact Department of IFC. Preparations for the mid-term FIAS FY1216 strategy cycle evaluation are also under way. FIAS donors will be consulted as to the scope of the evaluation, and it is expected that the ndings and results of the evaluation will be shared with donors at the 2014 Annual Meeting of the FIAS Consultative Committee of Donors.

Measuring Impact
Deepening our understanding of the impacts of investment climate reforms is a major FIAS priority. The latest strategy therefore called for a scaling up of efforts to learn from past investment climate activities and feed this learning back into the design and implementation of new projects. To carry out this objective, FIAS established the Investment Climate Impact Measurement Work Program, which operates with continued support from USAID and the United Kingdoms Department for International Development (DFID). The program aims to increase the cost-effectiveness of investment climate reform advisory projects by developing improved measurement tools and mainstreaming evidence-based operational practices. Clients and donors are also increasingly interested in rigorously assessing the impact of trade and investment reforms and in identifying the best incentives to promote formalization, market linkages, and rm growth. Responding to this interest, in FY13 the Impact Program launched a systematic impact evaluation practice (see box, p. 41). Projects in the portfolio are designed not only to answer questions about overall impacts of business registration interventions on informality and rm performance, but also measure and compare the impacts of interventions packaged with a common goal. This latter contribution is aligned to the World Bank Group science of delivery agenda, and will be fundamental to shaping the next generation of FIAS-supported investment climate products. The Bank Group and registration agencies in Benin, Malawi, and Nepal agreed to assess the impacts of alternative packages of business entry reforms aimed at promoting sustainable business growth through various incentives that reduce formalization costs. These include access to nance and tax ling support, and improving access to markets through network connections. These reform alternatives are transformative; they go beyond simply increasing registration rates to focus on long-term

New Monitoring and Evaluation Framework Better Reects Investment Climate Achievements
FIAS support in FY13 delivered signicant economic impact in client countries, and that impact can now be measured and veried much more thoroughly thanks to a variety of industry projects that received FIAS support. FIAS is supporting innovative ways to capture data and assess impactbuilt into project designthat will add maximum value in lessons learned. In FY13, FIAS successfully rolled out an enhanced monitoring and evaluation (M&E) framework, developed and implemented with a high level of engagement and coordination with the regional operations staff, who were also trained to use the new system. The framework focuses on using a practical calculation methodology and ensuring consistency in its application. It better reects the achievements expected from projects through improved guidance on indicators and reforms, the addition of relevant reform topics, internal tools for documenting reforms, and measures for tracking investment generation and private sector savings in trade and compliance costs. Tracking indicators for reach and compliance cost savings have not yet been fully adopted due to difculties in collecting data in some regions for some types of projects. It is expected this will improve in FY14, and guidance and methodologies will be adjusted as necessary.

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Ongoing Impact Evaluations under the Investment Climate Impact Program


1. Georgia Tax Simplication for Small and Medium Enterprises 2. Malawi Business Registration 3. Benin Entrepreneurial (Entreprenant) Status and Informality 4. Nepal Building Market Linkages and Trust through E-Government 5. Tajikistan Tax E-Filing and Risk-Based Audits 6. Kenya Improving Health Safety and Quality of Care through Inspections 7. Southeast Europe Border Delays and Trade Patterns (Albania, Kosovo, Montenegro, and Serbia) 8. Rwanda Tea Sector Pricing Reform

The impact program is signicantly changing current internal practices and slowly shifting the organizational culture towards more evidence-based decision making. For instance, teams in Afghanistan, Kosovo, and Nepal are piloting a sustainability diagnostic model developed in FY13 with FIAS support. This tool is used to assess the degree to which projects include key elements linked to reform sustainability. The value-for-money component under the program will help establish cost benchmarks and develop guidelines that are intended to improve value for money and the decision-making process. This will shape the way project budgets are prepared, enabling the comparison of key outcome costs in relation to the overall project impact. For increased global access, the Impact Program created an online repository (www. wbginvestmentclimate.org/results/impact-program.cfm) to share information, including literature reviews and impact evaluation methodology notes, and sustain the momentum for action amongst the impact community of practice it has established. In mid-FY13, the Development Impact Evaluation Initiative, in partnership with the Investment Climate Department, organized a ve-day workshop in Paris on Innovations in Investment Climate Reforms under the impact evaluation practice. The workshop aimed at establishing a systemic impact evaluation practice for investment climate reforms. About 90 participants were grouped into nine country-specic project teams designed to facilitate a process of discussion, agree on the policy questions, and develop an initial design for the impact evaluation of their interventions. Each team included country clients, project representatives, and impact evaluation and sector experts providing support, with the objective of enhancing the technical capacity and ability of participants to design and implement impact evaluations.
Core Thematic Areas iN INVestmeNt Climate INterVeNtioNs

integration among rms, registries, and other related agencies and institutions such as tax authorities and banks. Under the trade and investment policy impact evaluations, agreement was reached with agencies from four countries in Southeastern Europe to test the effects of incentives and risk management solutions on promoting transparency, improving border performance, reducing delays, and ultimately increasing local and international trade and investment.

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COLLABORATION, KNOWLEDGE, AND LEARNING


FIAS pulls together examples of best practices from the public and private sectors to stimulate discussion, peerto-peer learning, and investment climate innovation in client countries.

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1,806

participants in 43 investment climate knowledge and learning events in FY13

200+ 23
key publications, including toolkits, reports, technical papers, notes, and journal articles

senior investment promotion and policy officials from 70+ countries attending events on Global Investment Promotion Best Practices

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Leveraging Knowledge
FIAS support for investment climate projects is a unifying force in the World Bank Group, encouraging and thriving on collaboration, the sharing of expertise and learning among partners, donors, and public and private sector clients. Individual country projects in specific topic areas can deliver substantial positive impact, benefiting thousands of businesses and entrepreneurs. But a significant share of the contribution FIAS makes toward growth and poverty eradication in developing countries stems from the cumulative impact of projects and knowledge dissemination.

In FY13, FIAS-funded efforts to deliver comprehensive investment climate solutions to clients, not only through individual projects and reforms but also through knowledge sharing and learning programs, were further intensied. A key part of this effort entails bringing together different parts of the World Bank Group, combining the resources and expertise of teams in the investment climate space across IFC, the World Bank, and MIGA. In FY13 FIAS-funded programs deepened the collaboration between IFC, World Bank, and MIGA teams by partnering in a signicant manner with more than 45 Bank Group units. This collaboration helped to align strategies and create synergies in the investment climate work. This unied approach to investment climate reform helps provide a stronger value proposition and builds strong client commitment when governments receive an end-to-end development solution through a range of nancial and advisory instruments. Lessons from recent collaborationsuch as the essential role of public-private dialogue in the reform processare helping improve how World Bank Group teams work together, design, and deliver their projects.

insolvency regime and improve implementation of the new law. Rules and regulations relating to insolvency practitioner registration and a code of conduct were published. As a result, 31 insolvency practitioners have registered and are subject to the code of conduct. To encourage the business rescue of nancially distressed but viable businesses, an out-of-court framework was developed, with the endorsement of the Mauritius Bankers Association and the Bank of Mauritius, and published in January 2013. The World Bank and IFC also helped improve the business environment in Afghanistan. Since September 2011, FIAS funding has been used to support the Afghan government in facilitating business entry, streamlining the construction permitting process, and strengthening minority investor protections. Funded by the World Banks New Market Development project, Afghanistans Private Sector Development Directorate led the dialogue with government agencies to ensure successful implementation of reforms with strong results. In FY13, procedures for business registration and construction permitting were streamlined; license fees for new small and medium enterprises were also halved. FIAS funding supports not only the passage of reforms by clients but also effective implementation. Knowledge dissemination can be crucial, as in Morocco, where private sector representatives have raised concerns that the impacts of the reforms are not yet evident. A joint World Bank and IFC team partnered with the National Committee for the Business Environment, a public-private entity in Morocco that has coordinated a number of business reforms, to help improve efciency, transparency, and traceability of services in these three pilot areas: construction permit delivery, value added tax refunds, and public sector payments. The team is working with relevant agencies to develop performance indicators and provide recommendations to increase transparency through the use of public-private dialogue. IFC and the World Bank are designing solutions to improve Ugandas business environment, bringing different resources and skill sets that deliver timely and

Fostering Collaboration across World Bank Group Institutions


Projects to assist countries in fragile and conict-affected situations, including Cte dIvoire, Guinea, Haiti, and South Sudan, were designed within a collaborative World Bank Group framework. The FIAS-supported publicprivate dialogue team and IFCs FCS Coordination Unit, hosted in the Investment Climate Department, have formed a strategic partnership to enhance collaboration at the policy and operational levels. Other projects were implemented jointly, with IFCs Sustainable Business Advisory unit in the Bangladesh Water Partnership for Cleaner Textiles, and with the Private Sector Development Networks Competitive Industries Global Practice in Ethiopia. In Mauritius, under an FPD Development Policy Loan, the FIAS-supported debt resolution and business exit team provided signicant technical assistance. Following the enactment of an insolvency law in 2009, the Mauritius Insolvency Services sought to strengthen the countrys 44

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effective support. Drawing from FIAS-supported reform expertise in the area of business regulation and ICT, a World Bank and IFC initiative is simplifying business licensing in Uganda and developing the countrys capability to move licensing processes to an online licensing information portal. Collaboration played a major role in the Comoros, where IFC teams worked closely with counterparts from MIGA. FIAS-supported investment climate teams directly advised the government on the ratication of the MIGA Convention, which had been signed two years earlier. Together with MIGA, the team provided technical information on various aspects of the membership process, functioned as an intermediary between the government and MIGA, and supported MIGA colleagues during a joint IFC-MIGA mission to the Comoros. This allowed MIGA to move forward with its engagement in the Comoros, furthering the nations investment attractiveness by providing political risk insurance to investors and lenders against non-commercial risks. In March 2013, the Comoros ofcially became MIGAs 179th member country.

Knowledge and Learning fueled by FIAS-supported Investment Climate Expertise


In FY13, FIAS funding supported the strategic priority of developing in-house knowledge and expertise on specic areas of reform and disseminating know-how gained through project experience. These efforts entail learning events focused on staff learning and South-South exchanges between clients (see box, p. 47), as well as research and publications (see box, p. 48). Dissemination of investment climate good practices to development partners outside the World Bank Group also remained an important aspect of the FIAS program in FY13, exemplied by the agship Global Investment Promotion Best Practices (GIPB) project, a global survey designed to promote and expand best practices for providing better information services to investors. The GIPB dissemination work focuses on using best practice examples from both the public and private sectors to stimulate discussion and peer-to-peer learning. The GIPB team has prepared and disseminated around 205 reports, including a report on the overall global results, regional and sector reports, and some 200 condential

reports for the individual participating investment promotion intermediaries. More directly, clients showed improvements in GIPB performance between 2009 and 2012 after receiving technical assistance under FIASsupported industry-specic projects. Wider collaboration with external partnersincluding the Asia Pacic Economic Cooperation organization, the European Commission, the Caribbean Association of Investment Promotion Agencies, and the governments of Spain, Austria, Turkey, and the Sultanate of Omanhas resulted in the publication of two special GIPB regional reports in FY13. One covers the Africa, Caribbean, and Pacic regions. The other covers the Middle East and North Africa region. A series of regional GIPB conferences and training events were attended by over 200 senior investment promotion and policy ofcials from more than 70 countries. In FY13, some 25 detailed planning sessions were conducted with individual investment agencies around the world. The sessions led to the adoption of detailed action plans designed to improve the level and quality of investor services offered by investment promotion intermediaries. The GIPB 2012 report also received considerable government and media attention, with over 220 media citations during the year. Knowledge sharing and learning has also been a feature of the FY13 work program. An online agribusiness primer was launched to provide training for Bank Group staff. The online training brings together videos and presentations of leading global experts on retail transformation in food. Other topics covered include seeds and fertilizer markets, warehouse receipts, and the globalization of food. The program unfolds within a strategic framework for staff to build knowledge around the Bank Groups agribusiness objectives. Over 150 staff accessed the training materials in the rst six weeks after the launch. In FY13, a series of knowledge and learning events engaged practitioners, government and private sector clients, donor partners, and other stakeholders. FIAS funding was used to support 43 investment climate learning and knowledge-sharing events in 10 countries that attracted 1,806 staff, clients, and other participants. These seminars, including deep dive learning events and client peer-to-peer workshops (see box, p. 47), earned an average quality rating of 4.57 of 5, based on participant evaluations.

CollaboratioN, KNowledge aNd LearNiNg

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Robust Communications Expanded the Reach and Visibility of FIAS Activities


In FY13, the Investment Climate Department showcased the results of FIAS-supported reforms and research through various print, online, and multimedia initiatives. Communications efforts were focused on highlighting real, tangible impact of investment climate reform on people and businesses in client countries. Feature stories emphasized the role of collaboration across the organization in investment climate work. As a true partnership department between IFC, MIGA and the World Bank, the Investment Climate Department conveyed messages aligned with its One World Bank Group service offerings. Enhanced web presence: The investment climate thematic website, www.wbginvestmentclimate.org, rolled out innovative tools and informative updates on investment climate activities around the globe in FY13. In addition, the organization of the investment climate activities on the website was revised to better correspond to the underlying FIAS strategy for the FY1216 cycle, including organization by specic service lines and products. The website recorded over a half million page views in FY13, an increase in the number of visitors compared to the previous year. The website is now the top search result for the term investment climate on Google. Diverse portfolio of communications tools: Monthly investment climate newsletters informed internal and external audiences of the latest stories, knowledge products, and news on investment climate activities. New marketing materials including a pocket folder with overview factsheets on the different products, as well as a series of results-focused project factsheets were developed to communicate the achievements of FIASsupported work in client countries in a concise and easy-to-digest format. Eight multimedia offerings, with visually compelling narratives, captured the essence of FIAS-supported activities on the ground. Interaction through social media: Social media has increasingly become an integral tool for communicating and engaging with external audiences. FIAS-supported activities reached and were shared by nearly 587 ,000 Twitter and Facebook followers across a wide range of corporate and regional World Bank Group channels. Nineteen contributions by investment climate staff to the World Banks Private Sector Development Blog drove site trafc in FY13, consistently making it one of the top-ve most read blogs of the World Bank Group. Investment climate activities received wide coverage in traditional news media with numerous citations in local, regional, and international outlets in FY13.

Strong reputation among internal and external partners: FIAS-supported activities gained more prominence within the World Bank Group in FY13, earning key spots in the IFC and World Bank intranets and participating in corporate newsletters, external publications, and other products (such as the IFC Advisory Services Stories of Impact series). Communications efforts around FIAS-supported activities encouraged conversations on investment climate among World Bank Group staff and management, development and donor partners, and clients.

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Drawing from Experience: Peer-to-Peer Learning Events Inform and Encourage Reforms
Thought leadership was a major component of FIAS-supported activities in FY13. From a forum that convened over 100 competition policy experts in Warsaw, Poland, to the range of training services offered for stakeholders and development practitioners alike, such events complemented FIAS-supported advisory work for client governments and encouraged bilateral cooperation in improving business environments. Encouraging the establishment of regional networks of reforming countries has been a central theme of the FIAS-supported indicator based advisory work. Regional representatives and global experts came together in Panama for a high-level, peer-to-peer learning event on how to improve the investment climate in Latin American and the Caribbean. More than 100 participants from 15 countries attended the two-day forum in June 2013, co-hosted by FIAS-supported project teams and Panamas Ministry of the Presidency. The forum helped to encourage collaboration and bring together a network of reformers across the region. Participants embraced the opportunity to share experiences. Chiles success in business entry reforms drew interest from representatives of Honduras and Nicaragua, while delegations from El Salvador, Grenada, and Jamaica were among the participants interested in learning from Panama on how to facilitate trade. FIAS-supported teams are facilitating follow-up discussions between countries and similar peer-to-peer learning events will be integrated into ongoing reforms for client countries. A similar network of reformers hosted in Johannesburg in April 2013 by the government of South Africa, focused on regulatory reforms in Sub-Saharan Africa. The forum, the fourth in a series of peer-to-peer learning events, provided 180 delegates from 14 countries an opportunity to leverage regional synergies to inform and improve their reform strategies. In Nairobi, Kenya, more than 70 delegates representing from some 20 jurisdictions across the African continent came together in September 2012 for a peer-to-peer learning event on insolvency reforms. Participating policymakers and insolvency practitioners discussed challenges such as outdated bankruptcy laws and the lack of a business rescue culture, that are hindering the development of insolvency regimes in Africa. Knowledge sharing around the adoption of technology solutions was the focus of a peer-to-peer learning event in Zambia on an upgrade to ASYCUDA, an automated system for customs data, and a workshop on e-government services in Georgia. FIAS-supported project teams partnered with the Zambian Revenue Authority and the United Nations Conference on Trade and Development to bring together over 50 development and government practitioners in Zambia to share lessons learned from trade facilitation reforms stemming from the ASYCUDA upgrade. In Georgia, a workshop jointly hosted with the Georgian Ministry of Justice gathered over 100 representatives from over 20 countries to discuss ways governments can use online services to reduce the cost of doing business, increase transparency, and improve access, particularly for small and medium-size rms. In December 2012, a one-week study tour to Thailand and the Lao Peoples Democratic Republic, attended by ofcials from South Asia, sought to share lessons and practices in trade competitiveness, transport, and logistics services, and to showcase the benets of economic cooperation. Organized jointly by World Bank and IFC teams working on trade and transport facilitation in South Asia and East Asia, the tour highlighted the importance of regional integration for access to global markets, particularly for the poorer landlocked countries. The tour brought 22 transport, trade, and customs ofcials from Bangladesh, India, Nepal, and Pakistan to ports, border posts, and logistics infrastructure facilities. Customs and economic development authorities from Lao PDR and Thailand briefed the participants on the countries services and systems. The tour also included participants from the private sector, a critical constituency for improved trade competitiveness. The tour exemplied the World Bank Groups emphasis on collaboration across organizational, sectoral, and regional lines. Participants evaluated the tour favorably, noting the value of an opportunity to form professional relationships and the potential for increased cross-country knowledge exchange.

CollaboratioN, KNowledge aNd LearNiNg

47

Key Publications Released in FY13


All publications are available electronically on the investment climate website: www.wbginvestmentclimate.org/publications.

Toolkits and reports


Global Investment Promotion Best Practices 2012: Seizing the Potential for Better Investment Facilitation in the Middle East and North Africa presents well-timed and useful insights into the capacities of investment promotion intermediaries to perform their key function of facilitating investments. Global Investment Promotion Best Practices 2012: Eyes on Africa, The Caribbean and the Pacic presents data on the quality of facilitation services received by prospective investors in these regions. Good Practices for Construction Regulation and Enforcement Reform: Guidelines for Reformers provides an overview of international good practices and guidelines for developing strategies to improve transparency and efciency in building policy and regulatory frameworks, developed from a series of interviews with regulators and practitioners and including 10 in-depth case studies. IM-Mediate Resolution: The Role of the Lawyer in Out-of-Court Dispute Resolution discusses mediation as a mechanism for resolving commercial disputes in developing countries, addressing misconceptions stakeholders may have about its impact on the legal community. Implementing a Framework for Managing Fiscal Commitments for Public-Private Partnerships provides practical guidance for World Bank Group task team leaders and government clients on setting up an institutional framework to manage scal commitments during project development, implementation, and throughout the lifetime of the project, including roles, responsibilities, and processes. Private Health Policy Toolkit: Tools for Engaging the Private Health Sector and Private Health Policy Toolkit for Africa: Tools for Engaging the Private Health Sector (also available in French) compile previously unavailable resources and outline opportunities for policymakers and practitioners in developing, engaging, and supporting a well-managed and effectively regulated private health sector. Reforming Business Registration: A Toolkit for Practitioners provides a systematic analysis of reform options and the fundamentals of international good practice for policymakers and practitioners implementing business registration reform.

Technical papers and notes


Innovative techniques to evaluate the impact of private sector development reforms: An approach to Rwanda and 11 other countries summarizes the results and implications of a study applying two methodologies to measure ex-post the impact of policy reforms. Prot Shifting: Drivers and Potential Countermeasures provides initial insights on the relative prot-shifting risk associated with different sectors of multinational enterprise activities, which may support the design of antiavoidance approaches and allocation of scarce analytical and enforcement resources. Viewpoint note series (published by the World Bank Group FPD Vice Presidency) Competition Policy: Encouraging Thriving Markets for Development, based on a literature review, indicates that competition policy reforms allow markets to work more efciently for the benet of consumers and drive sustainable economic growth. Trade Logistics Reforms: Linking Business to Global Markets reviews the literature on the effects of reforms improving trade logistics systems and services.

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FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs 2013 ANNUaL REVIEW >

Electricity Reforms: What Some Countries Did Right and Others Can Do Better, based on a review including the experiences of developing countries indicates the standard reform model when correctly implementedwith competition, unbundling, and effective regulationcan lead to performance gains. Small-Scale Generation: Issues in Standardizing Power Purchase Agreements discusses key considerations in designing a standardized agreement for a small power producer program. Feed-in Tariffs or Auctions? Procuring Renewable Energy Supply in South Africa looks at the countrys recent experience, rst exploring feed-in tariffs and then turning to competitive tenders, resulting in encouraging initial outcomes. Nuts & Bolts: Technical Guidance for Reform Implementation series (published by the Investment Climate Department) Implementing a Shared Inspection Management System: Insights from Recent International Experience, summarizes the experiences and provides research insights from 12 jurisdictions and helps identify emerging best practices in the development of shared inspections management capabilities. Introducing a Risk-based Approach: How to Build a Risk Matrix to Classify Enterprises or Activities offers guidance for practitioners developing risk matrices to classify establishments and adapt business regulations accordingly, which supports an effective, efcient use of resources and minimizes the administrative burden. SmartLessons (published by IFC) Of nine notes published on investment climate topics in FY13, two authored or co-authored by Investment Climate Department staff were rst prize winners in World Bank Group competitions: It Started in Ghana: Implementing Africas rst collateral registry by Alice Ouedraogo, Isabel Caruana, Elsa Rodriguez, Susann Tischendorf (1st prize winner) When the Wind Blows: Shifting Strategies without Breaking the Cradle by Cecile Fruman (1st prize winner)

CollaboratioN, KNowledge aNd LearNiNg

SmartLessons are available on the IFC website: smartlessons.ifc.org

Journal articles
Commonwealth Business Council Trade & Investment Report 2013: Transfer Pricing for Developing Countries FDI Magazine (December 2012): Investment Promotion Agencies Must Take Off Their Blinkers Handshake (IFC quarterly journal, July 2012): The 4 Cs of Trade Logistics Handshake (IFC quarterly journal, April 2013): Open for Business: A favorable investment climate speeds post-conict recovery

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6
50

FINANCIAL RESULTS AND RESOURCE USE


Strong results generated by investment climate advisory services underlie the consistent support for the Investment Climate Department from the World Bank Group and donor countries.

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

93%
of expenditures are project related

$27
million
received in total FY13 contributions from FIAS donors, clients, and the World Bank Group

million

$16
received from donors, 61 percent of all contributions 51

Shared Investment
FIAS-supported activities covered in the FIAS 2013 Annual Review are cofinanced via a set of FIAS trust funds managed by the World Bank Groups Investment Climate Department. In addition to FIAS trust funds, the Investment Climate Department manages additional funds received from the World Bank and IFC for operational and administrative tasks related to FIAS as well as the departments anchor or backbone function in the investment climate space (for example, as backbone and anchor for IFCs Investment Climate Business Line and the World Bank FPD Investment Climate Global Practice), and administers donor funds for activities managed outside the scope of FIAS (such as the policy and advisory component of IFCs Health in Africa initiative and work related to policies and regulations affecting private participation in infrastructure).

The Investment Climate Department also hosts the Water Resources Group, funded by IFC and other public and private partners to help governments set up multi-stakeholder platforms to address water resource issues; this mandate is also outside the scope of the FIAS program and not covered in this report, as is the departments mandate to host IFCs coordination team for fragile and conict-affected situations. The nancial results reported in this section only cover the funds managed by the Investment Climate Department under the FIAS trust fund structure as well as supplemental funds earmarked for the implementation of the FIAS strategy. The Investment Climate Department follows IFCs standard accounting policies and procedures, as noted below.9 FIAS nancial reports use cash-based reporting in alignment with the quarterly nancial reports on IFCs donor-funded operations.

Luxembourg (C) Multilateral Investment Guarantee Agency (C) The Netherlands (C) Norway Sweden (C) Switzerland (C) Trademark East Africa United Kingdom (C) United States

Most donors who supported FIAS during the FY0811 cycle also provided consent to roll over the unused portions (fund balances) of their FY0811 contributions to the FY1216 strategy cycle. In addition to the core donors listed above, roll-over consents were provided by Australia and France.
n Contributions

Funding
New FIAS-related contributions received in FY13 from the following donors, World Bank Group partners, and clients are gratefully acknowledged:
n Direct

for FIAS projects made available through IFCs Technical Assistance Trust Funds program:

Korea contributions: Costa Rica Guatemala

contributions to FIAS trust funds:*

n Client

Austria (C) Canada (C) France

International Bank for Reconstruction and Development (C)


International Finance Corporation (C) Ireland (C)

Additional client contributions were received by IFC regions for IFC region-managed projects receiving conancing from FIAS trust funds. Such client contributions are accounted for at the regional program level.

Annual contributions from IFC, MIGA, and the World Bank are treated in the same manner as core donor funds and are co-mingled with other donor funds in the FIAS Parent Trust Fund  account, as terms and conditions allow. Contributions from the IFC Investment Climate Business Line are treated as an additional source of project-specic funding. Contributions received from IFC in the form of regular administrative budget as part of the mainstreaming of contributions from the Funding Mechanism for Technical Assistance and Advisory Services (FMTAAS) are treated as separate from the trust fund contributions. The total of IFCs contribution to the FIAS Core Trust Fund and its contribution to FIAS in the form of regular administrative budget reect IFCs core contribution in line with the funding targets in the FIAS FY1216 strategy. *Donors contributing some or all of their funding in the form of core contributions are are marked with C.

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Core and Programmatic Funding


In FY13, FIAS donors, clients and the World Bank Group contributed a total of $27 .0 million (including trust fund administration fees of $1.0 million) to the various FIAS trust funds, supporting the implementation of a broadbased investment climate reform program under the FIAS umbrella (see details in Tables 1 and 2). An additional S1.2 million was made available by IFC in the form of regular administrative budget to cover salaries and related costs of a small number of staff working mostly on FIAS-related projects. Total FY13 contributions were slightly below the FY13 funding target of $27 .7 million. Core funding raised in FY13 remained at at $12.3 million, whereas program- and project-specic donor contributions dropped signicantly (by approximately $5 million combined) from FY12 levels. World Bank Group core contributions totaled $6.8 million in FY13, including $2.8 million from IFC, $2.4 million from the Multilateral Investment Guarantee Agency, and $1.6 million from the World Bank. It should be noted that IFCs total contribution to FIAS in FY13 was approximately $4.0 million; $2.8 million as direct contribution to the FIAS core trust fund and $1.2 million as administrative budget to cover sustaining costs associated with the management of FIAS and the Investment Climate Business Line. Including the $1.2 million of administrative budget from IFC, the World Bank Groups core contribution to FIAS was $8.0 million or 30 percent of total funds raised. Core contributions received from donors amounted to $5.5 million in FY13, including $0.75 million from the Netherlands earmarked for activities in IDA countries. Overall, the amount of core funding received from the World Bank Group and donors ($13.5 million, including $1.2 million of IFC regular administrative budget) remained slightly below the FY13 fund-raising target of $14.3 million. Programmatic contributions from donors, made available through thematic and regional FIAS Trust Funds, totaled $5.4 million in FY13 versus $6.2 million in FY12. Continuing a trend initiated several years ago, donor contributions for regional and country-specic programs are increasingly owing through and managed by IFC and World Bank regional units rather than global FIAS trust funds.

($9.5 million, including two large contributions from the European Commission for investment climate projects in Kenya and Eastern Africa) but above the $4.9 million target for FY13. Client contributions received in FY13 totaled $0.09 million, a signicant decrease compared to client contributions collected in FY12 and below the funding target set forth in the FIAS FY1216 strategy. The potential to generate signicant cash contributions from clients continues to remain modest given the high concentration of FIAS activities in IDA as well as fragile and conict-affected countries. Also, in the case of FIAS conanced projects managed by IFC regional units, client contributions typically are accounted for under the regional programs. Efforts to increase client contributions are ongoing and will be supported in FY14 with the roll-out of a new IFC Advisory Services Pricing Policy. Project-specic contributions from IFC, received in the form of project-specic FMTAAS allocations,10 amounted to $3.1 million in FY13. These allocations primarily supported a range of global knowledge management and product design and development initiatives implemented under the FIAS umbrella (see Table 2). Other contributions from IFC, amounting to $0.7 million in FY13, supported activities indirectly related to projects, including initial product design and development, portfolio management, monitoring and evaluation, and knowledge sharing associated with the global portfolio implemented under the FIAS umbrella.

FiNaNcial Results aNd Resource Use

Contributions outside FIAS Regular Financial Structure


A range of indirect contributions for FIAS-related advisory activities were made available to the Investment Climate Department via non-FIAS specic funding mechanisms (see Table 3). These contributions include project-specic nancial support from Korea, made available through IFCs Technical Assistance Trust Funds program ($0.2 million) and administrative budget ($1.2 million) provided by IFC to cover the staff costs of certain mainstreamed Investment Climate Business Line positions associated with the management of FIAS and the Investment Climate Business Line. As noted above, IFCs total FY13 contribution to FIAS is $4.0 million, including $2.8 million as direct contribution to the FIAS core trust fund and $1.2 million as administrative budget. In FY14, the IFC Advisory Services administrative budget allocation to the Investment Climate Department is expected to increase to provide budget to cover the costs of other key Advisory Services operational support staff. This will have a direct effect on IFCs contribution to the FIAS core trust fund, although the total contribution to FIAS will remain in line with the target included in the FY1216 strategy.

Project-Specic Funding
In FY13, project-specic contributions from donor partners, clients, and IFC amounted to $8.6 million, including $5.4 million from donor partners, $0.09 million from clients, and $3.1 million from IFCs Investment Climate Business Line. As compared to FY12, projectspecic contributions signicantly decreased in FY13, a 33 percent decrease from FY12 total project-specic contributions of $12.9 million. Project-specic contributions from donors totaled $5.4 million in FY13. This is a signicant decrease compared to project-specic contributions raised from donors in FY12

10

FMTAAS is IFCs Funding Mechanism for Technical Assistance and Advisory Services.

53

In-Kind Support Via Staff Exchanges and Secondments


The FIAS program continues to benet from in-kind resources that several donors make available in the form of secondees and staff exchanges. Throughout FY13, the FIAS program beneted from secondments to the Investment Climate Department under the World Bank Groups Donor Funded Stafng Program: one staff member funded by the Government of Italy; a second staff member by the Government of Japan. In addition, direct secondments were supported by the Korean Ministry of Trade, Investment and Energy and the Spanish ICEX Trade and Investment Institute. Such staff exchanges and secondments offer an attractive way for FIAS partners to be directly involved in the program and establish direct connections between their respective private sector development programs and FIAS.

Administration fees are collected by IFC to cover trust fund administration costs and are deducted from donor contributions at the time of receipt. In FY13, IFC collected trust fund administration fees of $1.0 million from FIAS donor contributions.11 At the end of FY13, fund balances in the various FIAS trust funds totaled $ 20.9 million,12 including $11.3 million of core funds and about $9.6 million of program and project-specic funds received under multi-year donor agreements. This reects about 70 percent of the average annual budget for FIAS and is an appropriate level to maintain sufcient liquidity for FIAS. The level of endof-year fund balances is expected to drop to around 50 percent as FIAS activities are scaled up over the coming years. In FY13, project-related expenditures, both direct and indirect, accounted for 93 percent of total FIAS expenditures with the remaining 7 percent for general and administration, including rent, communications, equipment, and other non-overhead costs such as administrative and back-ofce support staff (see Table 4, Expenditures by Advisory Services Activity). Direct project implementation expenditures increased 20 percent in FY13. As reported above, this increase is due in large part to the allocation of FIAS funds for the implementation of regional investment climate client-facing projects. In comparison, average project-related expenditures for the FY0811 cycle accounted for 83 percent of total FIAS expenditures with the remaining 17 percent for general and administration.13

Use of Funds
In FY13, FIAS trust fund expenditures for investment climate reform activities reached $30.4 million (Table 1, Uses of Funds); this is a 14 percent increase in FIAS expenditures from FY12 ($26.7 million). In addition, $1.2 million of expenditures were incurred against the administrative budget provided by IFC, bringing the total expenditures to $31.6 million. The increase in FY13 expenditures is due in large part to the allocation of additional FIAS core funding (approximately $3.0 million) to support the development and implementation of investment climate activities in Sub-Saharan Africa, Latin America, South Asia, and Eastern Europe and Central Asia. A focus on FIAS priority clients in Sub-Saharan Africa, IDA, and fragile and conict-affected countries, as well as industry-specic sectors, formed the basis for the funds allocation.

11 FIAS trust funds established after July 1, 2009 are subject to the standard IFC trust fund administration fee of 5 percent. Trust fund administration fees collected by IFC are included in Table 1, Sources of Funds. 12 FIAS trust fund cash balances excluding outstanding consultant commitments. 13 In July 2010, IFC implemented a new cost allocation methodology for Advisory Services which resulted in a redistribution between direct and indirect project costs. As a result of this change, some gures in Table 4 are not consistent with gures reported in FIAS Annual Reports/Reviews, FY0810. General and administration expenditures, however, are not affected by this change in methodology (see Table 4).

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Table 1: Sources and Uses of Funds a In US$ Thousands


FY09 Sources of Funds WOrlD BaNK GrOUp COre CONtriBUtiONs IFCb IBRD MIGA Subtotal World Bank Group Core Contributions 2,000 1,600 3,500 7,100 2,000 1,600 3,000 6,600 1,862 400 8,862 1,502 355 1,403 1,950 384 475 345 332 6,746 2,489 307 724 400 154 150 1,122 400 300 600 96 724 7,466 8,868 23,080 31,942 1,830 33,772 1,140 32,632 4,000 1,600 2,700 8,300 1,915 1,687 880 12,782 331 829 1,550 1,138 396 309 4,552 2,287 531 263 600 428 500 400 200 500 1,704 7,413 8,267 20,231 33,013 283 33,296 1,212 32,084 2,863 1,600 2,500 6,963 2,968 934 10,865 708 205 1,870 1,448 400 1,099 5,730 2,010 615 200 300 500 600 700 300 978 6,203 9,457 21,390 32,255 484 32,739 1,122 31,617 2,800 1,600 2,400 6,800 3,084 670 FY10 FY11 FY12 FY13

WOrlD BaNK GrOUp PrOJect-Specific aND OtHer CONtriBUtiONs 2,672 IFC IC Business Line - Project Specic IFC IC Business Line - Administration IFC AS Contingency 150 IFC Global Fund Subtotal World Bank Group Contributions 9,922 COre DONOr CONtriBUtiONs Australiac Austria Canada Francec Ireland Italy Luxembourgc Netherlands (Global Program)d New Zealand Norway Sweden Switzerland United Kingdom Subtotal Core Donor Contributions PrOgraMMatic DONOr CONtriBUtiONs Austria (Investment Climate Cooperation Program) Austria (Investment Generation) Austria (Crisis Response) Ireland (Africa) Italy (Africa) Korea (Trade Logistics) Luxembourg (Crisis Response) Luxembourg (Tax Transparency) Netherlands (Investing Across Borders) Netherlands (Tax Transparency) Netherlands (Trade Logistics) Netherlands (Secured Lending) Norway (Business Entry) Norway (Trade Logistics) Sweden (Africa) Switzerland (Industry) Switzerland (Secured Lending) Switzerland (Tax) Switzerland (Tax Transparency) Switzerland (Western Balkans) United Kingdom (Western Balkans) United Kingdom (Tax) United States (Doing Business) Subtotal Programmatic Donor Contributions DONOr CONTrIbUTIONs (PrOjECT SpECIfIC)e Total Donor Contributions
TOtal WOrlD BaNK GrOUp aND DONOr CONtriBUtiONs

10,554 621 985 186 1,033 750 1,494 300 163 5,532 1,841 559 200 646 500 400 500 300 501 5,447 5,456 16,435 26,989 90 27,079 1,021 26,079

676 373 1,281 1,414 539 2,350 276 475 285 240 494 8,401 2,608 280 750 400 450 340 630 500 500 600 440 183 1,150 8,830 4,436 21,667 31,589 1,093 32,682 973 31,709

FiNaNcial Results aNd Resource Use

ClieNt CONtriBUtiONs TOTaL RECEIpTs Trust Fund Administrative Fees f TOTaL (NET) RECEIpTs

Continued on next page

55

Table 1: Sources and Uses of Funds a In US$ Thousands (continued)


FY09 Uses of Fundsg Staff COsts Staff Consultants and Temporaries Total Staff Costs TraVel Travel INDirect COsts Ofce Occupancy Ofce Equipment Other Operating Costs Other Costs Total Indirect Costs TOtal Uses Of FUNDs 1,071 53 863 1,693 3,681 32,073 1,018 57 242 2,256 3,573 27,616 1,073 47 528 1,718 3,366 30,273 102 84 635 1,634 2,455 26,679 274 114 711 2,491 3,590 30,356 6,488 5,229 5,678 5,618 5,893 11,636 10,268 21,905 11,181 7,634 18,815 13,128 8,101 21,229 12,036 6,570 18,606 14,934 5,939 20,873 FY10 FY11 FY12 FY13

a. The FIAS Annual Review is prepared as a reporting tool for FIAS donors and management, utilizing management accounting principles. b. IFC contributions during the FY0811 strategy cycle amounted to $4.0 million per annum ($16 million over the duration of the cycle), with disbursements frontloaded in FY08 (by $4.0 million) and FY09 (by $2.0 million). IFC contributions during the FY1216 strategy cycle include direct contributions to the FIAS core trust fund ($2.9 million in FY12 and $2.8 million in FY13), and IFC Advisory Services administrative budget ($1.2 million each in FY12 and FY13), to cover staff costs of a number of mainstreamed Investment Climate business line positions related to FIAS. As a result, total IFC core contributions to FIAS amounted to $4.1 million in FY12 and $4.0 million in FY13. c. While Australia and France did not make fresh core contributions to FIAS in FY12 and FY13, they provided consent to roll over their remaining shares in core funding from the FY0811 cycle to the new FIAS cycle that started in FY12. Luxembourg signed a new agreement with IFC in September 2012 to contribute core (and other) funding; Luxembourg contributions for FY12 and FY13 were received and recorded in FY13. d. The Netherlands core contributions are earmarked for activities in IDA countries. e. For details of FY13 project specic contributions, see Table 2. f. Administration fees collected by IFC cover cost of trust fund administration. g. The Uses of Funds table does not include the use of $1.2 million of regular administrative budget received from IFC in FY12 and FY13 under the FMTASS mainstreaming (see note b).

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Table 2: Project-specic Donor and Client Contributions In US$ Thousands


PROJECT WORLD BANK GROUP CONTRIBUTIONS [IFC INVestMeNt CliMate BUsiNess LiNe (IC BL)] Business Regulation Indicator-based Reform Advisory Tax Transparency Debt Resolution and Business Exit Investment PolicyProduct Development Impact Measurement Trade Logistics Trade Logistics (Honduras) Special Economic Zones Business Taxation Agribusiness Agribusiness (Africa) Tourism Public - Private Dialogue Competition Policy ICT Theme Green Building Pakistan Energy Investment Climate Transparency Subtotal World Bank Group Contributions DONOR CONTRIBUTIONS OHADA Business Law Reform Investment Climate Reform in East Africa Afghanistan: Doing Business Reform Impact and Knowledge Management LAC: Doing Business Reform LAC: Tax Product Morocco: Doing Business Reform Subtotal Donor Contributions CLIENT CONTRIBUTIONS LAC: Doing Business Reform LAC: Doing Business Reform Subtotal Client Contributions TOtal FY12 PrOJect-Specific DONOr aND ClieNt CONtriBUtiONs Costa Rica Guatemala 75 15 90 8,630 France Trademark East Africa USAID USAID USAID USAID USAID 1,293 2,550 436 415 191 333 238 5,456 IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL IFC IC BL 320 222 163 246 198 243 199 30 99 92 280 109 149 185 200 150 178 4 17 3,084 FiNaNcial Results aNd Resource Use DONOR AMOUNT

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Table 3: Other Funding Indirect Support to FIAS Program In US$ Thousands


OTHER FUNDING INDIRECT SUPPORT TO FIAS PROGRAM PrOJect-specific DONOr fUNDiNg apprOVeD UNDer IFC's TecHNical AssistaNce TrUst FUNDs Koreaa IFC ADVisOry SerVices ADMiNistratiVe BUDget AllOcatiON AS administrative budget - staff-related costsb TOTAL FY13 OTHER FUNDING IFC 1,200 1,200 Korea See Table 1 DONOR AMOUNT

a. $200,000 provided by IFCs Technical Assistance Trust Fund program through delegated authority to the Investment Climate Department and included in Table 1: Sources of Funds. b. Advisory Services administrative budget provided by IFC for certain mainstreamed Investment Climate Business Line positions associated with the management of FIAS and the Investment Climate Business Line. IFCs FY13 total contribution to FIAS: $4.0 million; $2.8 million as direct contribution to the FIAS core trust fund; $1.2 million as administrative budget. [IFCs direct contribution to FIAS ($2.8 million) is included in Table 1: Sources of Funds.]

Table 4: Expenditures By Advisory Services Activity


StaNDarD ADVisOry SerVices ActiVity EXpeNDitUres d PrOJect-RelateD EXpeNDitUres Direct Project Expenditures a Indirect Project Expenditures b TOtal PrOJect-RelateD EXpeNDitUres GeNeral & ADMiNistratiON COsts c TOtal StaNDarD ADVisOry SerVices ActiVity EXpeNDitUres 21,993,742 3,734,697 25,728,439 6,344,667 32,073,106 69% 12% 80% 20% 100% 18,988,606 3,322,980 22,311,586 5,304,256 27,615,842 69% 12% 81% 19% 100% 19,057,472 7,679,623 26,737,095 3,535,986 30,273,081 63% 25% 88% 12% 100% 19,116,172 5,252,790 24,368,962 2,310,393 26,679,355 72% 20% 91% 9% 100% 22,943,307 5,282,040 28,225,347 2,130,521 30,355,868 76% 17% 93% 7% 100% FY09 ActUal % FY09 ActUal FY10 ActUal % FY10 ActUal FY11 ActUal % FY11 ActUal FY12 ActUal % FY12 ActUal FY13 ActUal % FY13 ActUal

a. Direct Project Expenditures include project preparation, implementation, and supervision costs. b. Indirect Project Expenditures include program management and operational support costs (product development, M&E, knowledge sharing and staff development, donor relations, and public relations) previously reported separately and consolidated under the new IFC cost allocation methodology introduced in July 2010. c. General & Administration includes overheads (rent, communications, equipment, and so on) and other non-overhead costs such administrative and back-ofce support staff. d. Due to the change in IFCs cost allocation methodology, some gures in Table 4 are not consistent with gures reported in FIAS Annual Reports/Reviews, FY0810. The new cost allocation methodology redistributes expenditures between direct and indirect project costs. Although General & Administration expenditures are not affected by the change in the cost allocation methodology, FY08FY10 G&A expenditures restated to exclude trust fund administration fees previously reported as expenditures. FY08FY12 trust fund administration fees are reported on Table 1: Sources and Uses of Funds as a reduction to receipts.

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Total FIAS FY13 Expenditures


Percent of FIAS FY13 Total Expenditures 100% = $30.4 Million n Client-Facing Direct Project Expenditures (52%) n Non-Client-Facing Direct Project Expenditures (24%) n Non-Client-Facing In-Direct Project Expenditures (17%) n General and Administartive (7%) Percent of FIAS FY13 Direct Project Expenditures 100% = $22.9 Million n Client-Facing IDA (54%) n Client-Facing Non-IDA (15%) n Non-Client-Facing Knowledge Management Product Development (32%)

Total FIAS FY13 Donor Contributions


Percent of FY13 Source of Funding (Gross) Receipts* 100% = $28.3 Million

FiNaNcial Results aNd Resource Use

WORLD BANK GROUP CONTRIBUTIONS n Core (28%) n Project Specic (11%) n Administrative Support (2%) DONOR CONTRIBUTIONS n Core (20%) n Program Specic (19%) n Project Specic (20%)

*Includes administrative fees of $1,021,000 and $1,225,000 IFC Advisory Services administrative budget to cover staff costs of certain mainstreamed Investment Climate Business Line positions.

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60

ANNEXES
n Reforms and Other Results Supported by FIAS in FY13 n Portfolio of FIAS-Funded Projects in FY13 n Abbreviations

2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Reforms funded by FIAS


REFORM COUNT

REFORMS BY REGION

REFORM description

Portfolio of FIAS-Funded Projects


PROJECTS IN PORTFOLIO

PROJECT FUNDING

PROJECT SPENDING

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ANNeX 1: RefOrMs aND OtHer ResUlts SUppOrteD By FIAS iN FY13


1.1  FIAS-Supported Reforms by Region and Country, FY13
Tax simplication and compliance management Special economic zones Licenses and permits Resolving insolvency Construction permits Industry-specic investment climate3 Enforcing contracts Starting a business Investor protection Alternative dispute resolution Property transfers Getting electricity Trade logistics * * * 10 7 Inspections

Region Country EAST ASIA AND PACIFIC Timor-Leste1, 2 East Asia aND Pacific TOtal EUROPE AND CENTRAL ASIA Armenia1 Belarus Kosovo1, 2 Moldova1 Ukraine EUrOpe aND CeNtral Asia TOtal LATIN AMERICA AND THE Colombia CARIBBEAN Costa Rica El Salvador Guatemala Haiti1,2 Honduras1 Jamaica Nicaragua1 Panama Trinidad and Tobago LatiN AMerica aND tHe CariBBeaN TOtal SOUTH ASIA Bangladesh1 SOUtH Asia TOtal SUB-SAHARAN AFRICA Benin1 Burkina Faso1 Burundi1, 2 Cameroon1 Chad1, 2 Comoros1, 2 Congo, Dem. Rep.1, 2 Cte dIvoire1, 2 Djibouti1 Gabon Guinea1, 2 Guinea-Bissau1, 2 Liberia1, 2 Malawi1 Mauritania Mozambique1 Niger1 Rwanda1 So Tom and Principe1 Senegal1 Swaziland Togo1, 2 Uganda1 Zambia1 SUB-SaHaraN Africa TOtal GRAND TOTAL Reforms captured by Doing Business 2014 report

1 NA

9 9

2 2

2 2
3

5 NA

4 NA

2 2

4 NA

11 11

2 2

1 NA

20 20

* 2 1

Reforms from FIAS-conanced projects mapped to regional IFC Advisory Services units. 1 International Development Association (IDA) countries. 2 Fragile or conict-affected situations.

Industry-specic investment climate category includes agribusiness, tourism, and other industries. * Reforms under Doing Business topics not validated by the Doing Business report.

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Total 1 1 3 1 3 2 1 10 2 2 1 2 1 1 1 1 2 1 14 1 1 2 2 6 1 1 2 1 4 1 2 2 1 1 1 1 3 2 7 1 1 2 1 2 2 49 75 56

ANNeX 1: RefOrMs aND OtHer ResUlts SUppOrteD By FIAS iN FY13


1.2 R  eforms and Results from FIAS-Funded Projects Mapped to the World Bank Group Investment Climate Department
Country Reform Topic Reform Description Number of reforms 1 Doing Business Validated 1 Simplied construction permitting. New laws governing construction permitting require that permit fees be calculated on cost recovery principles. A new, unied building code establishes health and safety norms for construction. Other provisions eliminate or simplify a variety of approval procedures. Kosovo Property Transfers Cost-recovery fee system. An amendment to property transfer law establishes registration fees based on cost-recovery principles. A number of operational improvements have reduced registration times from 33 to 28 days. Drafting and legalization fees for land agreements have been reduced and put under a schedule. Kosovo Starting a Business Reducing hurdles for starting a business. A new law signicantly reduces registration times through streamlining the procedures through one-stop shops, among other operational improvements. Twenty-seven one-stop shops have been established throughout Kosovo, demonstrably reducing the time it takes to obtain such key items as the business certicate, scal number, and VAT number. The law eliminates the pre-registration tax inspection by the Tax Administration of Kosovo, the notarization requirement for articles of incorporation, the Pristina Business License requirement for most businesses, and related technical inspection. All these result in savings in cost and time to start a business. A new regulation on fees, tariffs, and nes eliminates the business license and related technical inspection requirements for an estimated 85 percent of all businesses. The requirements continue to apply only to specically listed activities. Simplifying construction permitting. Ukraine began implementing a law in late 2012 Ukraine Construction Permits introducing a risk-based approval system that classies construction projects based on complexity and signicantly simplies permitting for the less complex building projects. In these simpler categories, builders no longer need a construction permit but must give notice when construction commences. The law eliminates the requirement to obtain technical conditions from the Fire Safety Department and the Department of State Auto Inspection for smaller projects. It also simplies project supervision by eliminating the requirement to obtain approvals from the State Enterprises and the State Inspectorate of Architecture and Construction Control in Kiev. Simplifying ownership registration. A new property rights law took effect in January 2013 authorizing the State Registration Service of Ukraine to register ownership rights of real estate and to issue ownership certicates. Prior to this, an applicant had to undergo two separate procedures with two separate agencies. The law also sets a legal time limit of 14 business days for registering buildings, speeding the typical time needed to register a new warehouse. LATIN AMERICA AND THE CARIBBEAN Colombia Enforcing Contracts Time limit for setting commercial disputes. Colombia introduced a new General Procedure Code in July 2012 that sets a one-year time limit for decisions to be issued for commercial disputes, beginning from the date the defendant was served. Getting Electricity Speeding access to electricity. Codensa, the electric utility in Bogota, set up a one-stop shop Colombia for builders that became fully operational in late 2012. Meanwhile, a resolution that took effect in July 2012 establishes the maximum delay for the utility to respond to a Solicitud de Factibilidad, or feasibility of service request. Costa Rica Construction Permits The government established an electronic system for construction documents. Use of the platform became mandatory in March 2013. The system enables applicants to submit required documentation electronically, saving time, while also streamlining the approval process among relevant agencies, which can now review documentation in parallel through the electronic system. An executive decree establishes time limits for reviewing agencies: 15 days for commercial activities; 7 days for housing; and 30 days for condominiums and other buildings. Starting a Business Costa Rica Online platform for business regulation. Crear Empresa, an online platform for business registration launched in February 2012, has gained wide use among entrepreneurs and reduced signicantly the time to register a business. Costa Rica also eliminated the requirement to legalize accounting books and simplied the legalization of books. El Salvador Trade Logistics One-stop shop for trade. El Salvador made trade easier by developing a new one-stop shop for exports and by implementing an electronic data interchange system. The number of days to export was reduced from 14 to 13. EUROPE AND CENTRAL ASIA Kosovo Construction Permits

1 ANNeXes

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1.2 R  eforms and Results from FIAS-Funded Projects Mapped to the World Bank Group Investment Climate Department (continued)
Country Guatemala Reform Topic Construction Permits Number of Reform Description reforms 1 Reducing requirements for low-impact construction. An administrative resolution adopted by Guatemala in May 2012 establishes a simplied approval window for activities with minimal impact on the environment, including 39 different cases, such as storage warehouses. Qualied projects undergo an expedited permitting process. 1 A single, simplied business registration form. Guatemala launched an online platform in March 2013 providing new companies with a single form to register with the commercial registry, the tax authority, the social security institute, and the Ministry of Labor, reducing the time required for an entrepreneur to obtain denitive registration, tax and social security numbers, as well as the authorization to print invoices. 1 Honduras leveled the playing eld for new entrants in agribusiness by eliminating discriminatory treatment of applicants and increasing transparency of the registration process for pesticides and fertilizers. More than 400 new products have been registered since the reform and prices have dropped by up to 9 percent for some pesticides. Previously, regulations on fertilizer and pesticide registration had constituted a key barrier for new competitors, with some rms waiting more than three years to enter the market while others were approved in less than 20 days. A new, expedited process for registering products now takes less than 90 days. 1 Saving a trip to the tax ofce. In October 2012, the Companies Ofce began electronic stamping of articles of incorporation. Company founders no longer need to visit the Stamp Duty and Transfer Tax Department to obtain this service prior to the incorporation of their limited liability companies. 1 One-stop shop for registration and licensing. In June 2012, the municipality of Managua made available a single document that allows simultaneous registration for sales taxes, social security, and the pre-municipal license at the one-stop shop. Payment of the premunicipal license can be made at the one-stop shop. 1 Transparency in major business transactions. In November 2012, the Securities Commission enacted a provision of law designed to increase the transparency of major acquisitions by public companies. The amendment requires that sale or acquisition of assets worth 10 percent or more of the value of the company be publicly disclosed, providing investors and the public with information relevant to origins and features of the transaction. The previous reporting threshold was 20 percent. 1 Streamlining business entry. Beginning in April 2012, the Ministry of Trade and Industry and the municipality of Panama became interconnected through the online platform Panama Emprende, eliminating the need for entrepreneurs to visit the municipal ofces to obtain a taxpayer number. Municipal taxpayer numbers are issued automatically along with the operations permit. 1 Eliminating business entry paperwork. Under a law that took effect in February 2013, businesses are no longer required to submit a separate statutory declaration of compliance before a certied commissioner of afdavits. Instead, this declaration is now part of the standard articles of incorporation form. Lowering the carbon footprint in zones. The Low-carbon Export Processing Zone Guidelines provide industries in Bangladesh EPZs and other zones, as well as rms in these zones, with guidance on how to signicantly lower their their carbon footprint. It provides specic business friendly guides based on the projects technical evaluation of energy efciency opportunities in the EPZs. The Low-carbon EPZ Roadmap is a policy document for the Bangladesh Export Processing Zone in Chittagong to reduce carbon emissions by a set percentage. The guidelines and roadmap have been adopted by the Bangladesh Export Processing Zone Authority. Industries in the Bangladesh Export Processing Zone in Chittagong voluntarily adopted many of the guidelines, generating $4.6 million in investments in energy-saving technologies that will more than cover the costs of the upgrades. Business entry improvements. Benin reforms in starting a business have reduced time to register a business from 31 to 15 days, cut the number of procedures to register a business from 5 to 4, and reduced the cost to register a business by 27 percent. Easing barriers to trade. Trade reforms implemented in FY13 include elimination of the requirement for a packing list and customs release order, establishment of a system for managing shipping berth turnover and reducing berthing time, and implementation of measures to improve trafc inside and around the Cotonou Port, leading to lower transit delays from the warehouse to the seaport and making it easier for traders to arrange for road transportation. 1 Doing Business Validated 1

Guatemala

Starting a Business

Honduras

Industry-Specic Investment Climate

Jamaica

Starting a Business

Nicaragua

Starting a Business

Panama

Investor Protection

Panama

Starting a Business

Trinidad and Tobago

Starting a Business

SOUTH ASIA Bangladesh Industry-Specic Investment Climate

SUB-SAHARAN AFRICA Benin Starting a Business

Benin

Trade Logistics

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Country Burkina Faso

Reform Topic Trade Logistics

Burundi

Construction Permits

Burundi

Getting Electricity

Burundi

Property Transfers

Burundi

Starting a Business

Burundi

Tax Simplication and Compliance Management

Burundi Chad Congo, Dem. Rep Cte dIvoire

Trade Logistics Property Transfers Starting a Business

Construction Permits

Cte dIvoire

Enforcing Contracts

Reform Description Connecting joint border customs clearance. Customs authorities in Burkina Faso and Togo have improved the border clearance system at their joint border post of Cinkance by connecting the countries customs clearance systems, increasing cargo ows between Togo, Burkina Faso, and other countries using the corridor. For Burkina Faso, this reform is crucial because the corridor represents between 15 and 20 percent of the countrys total trade volume. This reform will enhance the regional integration and ease development of the customs union in the region. Construction permitting at a single window. The Ministry of Planning and Habitat created a one-stop shop for construction permits in the city of Bujumbura in March 2013. The move places in one location all services for sewer, water, and landline connections and land registry. Construction permits, utility connections, and inspections can now be arranged at the same time at a single window. The total number of required procedures has been reduced from 21 to 15. Improved access to electricity. Burundi made getting electricity connection easier and cheaper by giving free will to sell or buy transformers and other equipment in the local or international market. Property registration made easy. Burundi made it easier to transfer property by creating a one-stop shop for property registration, reducing the number of procedures from 8 to 5, and the number of days from 64 to 26. In March 2013, Burundi initiated a one-stop shop for property transfer, combining services of the municipality of Bujumbura, the Burundi Revenue Authority, and the Land Registry, and eliminating the need for multiple visits to different agencies. The regulation also sets a four-day time limit for processing all procedures. Previously, these procedures took 27 days. The municipality of Bujumbura implemented a decision in April 2013 eliminating the cost of the non-encumbrance certicate for property transfer. The Land Registry issued a public notice in April 2013 stating that it would conduct inspections at the same time as the Burundi Revenue Authority in generating valuation reports. Expedited business registration. Burundi made starting a business easier by allowing registration with the Ministry of Labor at a one-stop shop and expediting the process of obtaining the registration certicate. A decree issued in April 2013 allows entrepreneurs to register with the Ministry of Labor without visiting the ministry. The time to obtain the registration certicate at the one-stop shop was reduced from 32 to 3 days through such steps as elimination of the company seal requirement, as well as merging of the different registration procedures for the Ministry of Labor and Social Security. New tax simplication laws. A new Law on Income Taxation took effect in January 2013, improving and simplifying tax policy and rationalizing tax rates and the tax base for small and medium-size enterprises. Among other improvements, the revised law abolished accounting requirements, ling, and payment of tax forfeiture for micro and small enterprises, eliminating a burden which fell heavily on the smallest rms. It also established exemptions for incomes at the subsistence level in agriculture, shing, and livestock. The law reduces the corporate income tax rate from 35 to 30 percent, aligning it with the personal income tax rate, which should improve clarity and understanding among businesses, in particular smaller rms, which sometimes have similar personal and business incomes. The new rate is aligned with rates in the East African Community countries. Reducing required documentation for trade. Burundi reduced the number of documents required to import from 11 to 10. Tax certicates may now be obtained free of charge. A reduction in property transfer tax. Chad adopted a law in 2013 reducing the property transfer tax from 17.9 percent of property value to 15.4 percent. Streamlined business entry. The Democratic Republic of Congo reduced the time required to start a business and eliminated a requirement that rms obtain a certicate conrming the location of their headquarters. Quicker, streamlined procedures. The number of days for delivering a construction permit was reduced from 474 to 364 days: electricity, water, and civil protection permit process was reduced from 7 to 5 days, the urbanism and sanitation visa was consolidated in one visa, treatment of dossier at the one-stop shop was reduced time from 200 to 90 days due to the introduction of an online client record mechanism. The team supported the Ministry in streamlining procedures at the Guichet Unique by helping develop new procedures and draft corresponding regulation. A website for the Commerce Tribunal. Cote dIvoires Commerce Tribunal became functional in October 2012 and, as of March 2013, was publishing on its website key reference documents, statistics, and decisions rendered by the Tribunal. Trial and judgment proceedings now take no more than 30 days.

Number of reforms 1

Doing Business Validated

1 1

1 1

ANNeXes

1 1 1

1 1 1

Continued on next page

65

1.2 R  eforms and Results from FIAS-Funded Projects Mapped to the World Bank Group Investment Climate Department (continued)
Country Cte dIvoire Reform Topic Property Transfers Reform Description Reduced property transfer tax. An ordinance that went into effect in May 2013 reduced the property transfer tax from 10 to 7 percent. The government also streamlined the registration process of new titles to simplify property transfers at the land registry. Applicants are no longer required to obtain a topographic survey to transfer property. Helping businesses get started. Djibouti eliminated minimum capital requirements that must be put up by new businesses, put in place efciency reforms, and established a company registry, reducing the time new businesses must spend on required start-up procedures. Streamlining construction permitting. Gabon has reduced the time required to obtain a construction permit and eliminated the requirement for businesses to have an on-site inspection before construction can begin. Background checks for business founders eased. Gabon instituted a change in law eliminating the requirement that criminal records of founders of new businesses be provided. The law now requires founders to provide a sworn declaration. Guinea made trading across borders easier by improving port management systems. Since September 2012, the Conakry port has implemented a system of berthing windows known as fentres daccostage whereby vessels have xed weekly time-tables and given schedules to dock and unload their merchandise. This contrasts with the rst-come, rst-served system that was previously in place, and the new system has resulted in productivity gains and a reduction in layover time. The port now records 35 movements per hour compared to 15 prior to the new system. Staff increase to speed property transfers. Guinea-Bissau has increased the number of notaries available to process property transfers. Reduced stamp duty. Malawi has made transferring property easier by reducing the stamp duty from 3 percent of property value to 1.5 percent. Easing trade through risk-based inspections. Mauritania made cross-border trading easier by introducing a new risk-based inspection system using scanners. Reducing fees for property transfers. Niger has reduced registration fees for property transfers. Background checks for business founders eased. Niger now requires a sworn declaration by the business founder, replacing the requirement that founders provide copies of their criminal record. Better prices for Greenleaf tea. The Greenleaf pricing reform approved by the government is showing positive impact, with farmers realizing higher prices for their Greenleaf crop in 2013 and, as a result, improving their livelihoods and productivity. By 2017, the government is committed to raising the prices farmers obtain to a level equal to 50 percent of the price of Greenleaf tea at auction. The new pricing is expected to increase the net income of over 60,000 farmers and will enable sustainability as the government embarks on an expansion plan to double tea exports from Rwanda by 2020. An online platform for construction permitting. Rwanda implemented an online platform for requesting construction permits in February 2013, establishing a new fee schedule, reducing the number of procedures from 14 to 13, and cutting the average time to obtain a construction permit, down from 166 to 104 days. Smoother resolution of insolvency. The government made resolving insolvency easier by: clarifying the commencement standards for insolvency; preventing the separation of assets from the insolvency estate during reorganization proceedings; setting clear limits for the submission of a reorganization plan; and implementing an automatic stay of creditors enforcement actions. A new insolvency law became effective in May 2013. Among its provisions, the law claries the commencement standards for insolvency, allowing cessation of payments as well as over-indebtedness as grounds for debtors to le for insolvency. It introduces an automatic stay provision for a period of up to six months, applicable to all creditors claims in cases in which the debtor shows intent to submit a reorganization plan. The law also sets a three-month time limit for the submission of a reorganization plan and gives secured creditors priority over unsecured creditors with claims arising prior to the insolvency case. Easing tax clearance documentation in property transfers. Rwanda eliminated the procedure and the fee for obtaining a tax clearance certicate. Easing resolution of insolvency. Rwanda made resolving insolvency easier by clarifying the commencement standards for insolvency, preventing the separation of assets from the insolvent estate during reorganization proceedings, setting clear limits for the submission of a reorganization plan, and implementing an automatic stay of creditors enforcement actions. Number of reforms 1 Doing Business Validated 1

Djibouti

Starting a Business

Gabon

Construction Permits

Gabon

Starting a Business

Guinea

Trade Logistics

GuineaBissau Malawi Mauritania Niger Niger

Property Transfers Property Transfers Trade Logistics Property Transfers Starting a Business

1 1 1 1 1

1 1 1 1 1

Rwanda

Industry-Specic Investment Climate

Rwanda

Construction Permits

Rwanda

Investor Protection

Rwanda Rwanda

Property Transfers Resolving Insolvency

1 1

1 1

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Country Rwanda Rwanda

Reform Topic Starting a Business Trade Logistics

Senegal Swaziland

Property Transfers Starting a Business

Swaziland

Trade Logistics

Togo

Starting a Business

Uganda

Licenses and Permits

Uganda Grand Total

Property Transfers

Reform Description One-stop shop for starting a business. Rwanda has accelerated the process of issuing a registration certicate at its one-stop shop for business registration. Unclogging the trade system. Rwanda introduced an electronic single window at the border, reducing time required to clear exports from 29 to 26 days, and the time to import from 31 to 30 days. Reducing the property transfer tax. Senegal adopted a tax law decreasing the property transfer tax to 10 percent. Easier business start-up. Swaziland shortened the administrative processing times of registration of new businesses and obtaining the trading license. The Ministry of Commerce, Industry & Trade and the Swaziland Investment Promotion Agency launched the Swaziland Investment Road Map 2013 in April 2012. As a result of ongoing administrative reforms including computerization and the streamlining of the Registry and the Ministry of Commerce, Industry & Trade, the time it takes to register and obtain a trading license have been reduced. Streamlined trade process. The Swaziland Revenue Authority allows certication to be done at the same time as customs clearance and under the same roof. The new process also allows blank certicates to be issued to manufacturers and exporters for each shipment by the clearing agent. These are submitted to the Swaziland Revenue Authority for stamping along with the other export documents. As a result, the time to obtain a certicate of origin has been reduced. Speeding the process of business entry. Introduction of a one-stop shop improved the workow for company registration by requiring that founders provide a sworn declaration at the time of registration rather than a copy of their criminal records. Reforms reduced the number of days needed to register a business from 38 to 19. The process was accelerated by bringing together all the agencies involved in the registration processsocial security, tax administration, labor inspection, and so onat the one-stop shop. The cost for business registration, excluding notary fees, was reduced as a result of a 50 percent cut in the registration fee. Guidelines for trading licenses. Local government authorities simplied guidelines and forms for obtaining trading licenses, and they also reduced fees for obtaining such licenses by 25 percent. Online means to certify documents. Uganda introduced a new procedure (eStamp) to certify documents subject to stamp duty.

Number of reforms 1 1

Doing Business Validated 1 1

1 1

1 1

ANNeXes

1 54

1 49

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ANNeX 1: RefOrMs aND OtHer ResUlts SUppOrteD By FIAS iN FY13


1.3  Reforms and Results from FIAS-Conanced Projects Mapped to Regional IFC Advisory Services Units
Country Reform Topic Reform Description Exempting businesses from license requirements. The SERVE law (Services for Registration and Verication of Entrepreneurs), enacted in 2012, exempted half of businesses from the requirement to obtain a license, saving those businesses $458,349 in compliance costs annually . The streamlined requirement eliminated licensing renewal requirements, resulting in $66,345 in annual savings for affected businesses. The law exempts business activities considered low risk from being licensed. Number of reforms 1 Doing Business Validated East Asia aND Pacific Timor-Leste Licenses and Permits

Improved food inspection system. A government decree adopted in February 2013 established a risk-based inspection methodology for imported food. Food imports with high health risks will require documents, sampling, and laboratory examination. In low-risk categories, only document checking will be conducted. Inspections Armenia Bringing inspections in line with international standards. The risk-based inspection methodology that entered into force in February 2013 divides entities into the following three categories: high, medium, and low risk, with low-risk food products inspected no more than once in ve years; medium risk no more than once in three years; and high risk no more than once per year. In addition to simplifying inspection activities, the methodology establishes a system that is consistent with international standards, a change that could prove highly benecial to Armenian producers. Simplifying tax calculations. The government approved a new law on turnover tax for 2013 Tax Simplication Armenia beneting smaller entities with a simplied tax calculation to help reduce their tax burden. and Compliance The measure aims to create a more favorable business environment, clarify and simplify the Management taxation system, eliminate misinterpretation of the law, make the system more efcient, and reduce opportunities for tax evasion. Inspections Improving the inspection system. An October 2012 decree seeks to improve the risk-based Belarus inspection system and reduce the number of overall inspections and the number of scheduled inspections of bona de businesses. Absent a violation of the law, scheduled inspections will be conducted no more than once every ve years, regardless of the risk group of such businesses. The measure steps up preventive efforts through training events and roundtables with businesses to raise awareness of the importance of compliance and provide information about typical violations and how to correct or prevent them. The number of scheduled inspections decreased by 20.1 percent in the rst six months of 2013 compared to inspections in the same period of 2012. Moldova Inspections Modernized inspections process. The government instituted reform of inspection bodies, leading to a reduction from 64 to 33 in the number of of authorities initiating inspections. A risk-based inspections system has been adopted. The reform included creation of an oversight authority at the level of the State Chancellery and of an inspection e-registry with credentialed access to stakeholders from the private and public sectors. A new law sets up clear and straightforward processes and procedures for planned inspections repeated inspections, and unplanned inspections, and it sets clear deadlines and appeal procedures. Moldova Resolving Insolvency Simplied insolvency process. A sweeping new Law on Insolvency institutes a number of reforms designed to speed and simplify the process of closing a business due to insolvency, an important ingredient in helping economies clear obstacles to growth by shedding businesses that are failing. The law establishes rules governing the duration of procedures, the rights and obligations of parties, priority of claims and the cost of procedures. It also shifts most technical responsibilities from a judge to an administration practitioner. Businesses can now seek an accelerated restructuring or reorganization without going through a preliminary procedure in cases where the business is in trouble but still able to cover debts. Decisions of the insolvency court are nal in all but a few exceptions, replacing a cumbersome procedure for ling objections that slowed resolution to a crawl. Now there are xed maximum time limits for the duration of certain phases. LatiN AMerica aND tHe CariBBeaN Strengthening economic zones in Haiti. In 2012, Haitian President Michel Martelly Haiti Special Economic Zones signed into law a measure strengthening the Free Zones Law of July 2002 to include implementation of regulations related to environmental, social, and construction standards.

EUrOpe aND CeNtral Asia Armenia Industry-Specic Investment Climate

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2013 ANNUaL REVIEW FIAS - THE FaCILITY FOR INVEsTMENT CLIMaTE ADVIsOrY SErVICEs

Country

Reform Topic

Reform Description Regulating modern medical clinics. A decree in FY13 set conditions for opening and operating modern and traditional medical establishments. An absence of regulations had allowed private actors to operate informally. Under the new system, these establishments will be formalized, leading to improved services delivered from modern clinics. More than 32 businesses have been formalized since the decree. Faster construction permitting. On the recommendation of the Cameroon Business Forum, an organization established by IFC, the government has implemented reforms that have reduced the time to obtain a construction permit from 147 to 139 days. The time involved in approving a project upon completion has been reduced from 45 to 30 days. Accelerating use of ADR. The number of commercial judgment sessions has doubled and is expected to reduce the time required to resolve commercial disputes. Business entry paperwork reduction. The government reduced the number of procedures from 9 to 8 and the number of days required to start a business from 20 to 15. Reducing fees for starting a business. Notary fees were reduced from $760 to $240 for documents relating to starting a business, and the publication charge has been cut from $140 to $30. These savings, signicant for a small business in Africa, have been supplemented with the creation of a one-stop shop for business registration. Lower rates for property transfers. A tax law passed in December 2012 that took effect for 2013 decreased the general business tax rate for property transfers from 10 to 5 percent. For industries, the rate declined from 10 to 2 percent. Eliminating fees to start a business. The Ministry of Commerce and Industry issued an Administrative Notice in June 2012 canceling the business trade license fees previously payable at the Liberian Business Registry. This cancellation took effect as of June 27, 2012. Abolishment of pre-inspection procedures. The government enacted new commercial licensing regulations which have eliminated the need for pre-inspections for most businesses except food products and/or certain types of chemicals. Approved in May 2013, the new regulations have reduced the number of activities subject to inspections. Reducing the cost of business compliance. In May 2013, the government enacted new commercial licensing regulations which harmonize fees, resulting in a reduction of about 9 percent overall in the compliance costs of business regulation. The changes range from a 73 percent cost reduction for certain licensesfrom $89 to $24to a cost increase of 165 percent for othersfrom $9 to $24. Boosting tourism through simplied regulation. Tourism reforms enacted in February 2012 have yielded signicant reductions in costs, time, and procedures in the licensing of tourismrelated activities, including motels, guesthouses, bars, and coffee shops. The average cost for tourism-related licenses declined from $724 to $46, an 88 percent reduction, and the license is now valid indenitely. The number of days required to comply with regulations for tourism-related activities has declined by 92 percent; the simplied license can be obtained on the same day upon submission of required documentation and payment of the applicable fee. The number of procedures needed to comply with regulations has declined by 33 percent. And tourism activities under the licensing regime no longer require pre-inspection. Electronic manifest for trade. In adopting an electronic manifest system for trade logistics based on the ASYCUDA World system, the government promulgated a decree that manifests can no longer be processed in handwritten form but must be processed exclusively through the system. This had an immediate and positive effect on customs duty revenues and related fees. Within the rst two weeks of the application of the new system, revenues more than doubled against a very similar volume of trade. The results stem from much improved transparency in revenue collection and a reduction in corruption. Easing business entry through tax reform. The governments Value-Added Tax Order 2012, issued in December 2012, increased the VAT registration threshold as of January 1, 2013 and simplied registration formalities, making it easier to start a business. A reform action plan used to monitor the activities and risk contributed to the efforts success.

Number of reforms 1

Doing Business Validated

SUB-SaHaraN Africa Burkina Faso Licenses and Permits

Cameroon

Construction Permits

Comoros Comoros Cte dIvoire

Alternative Dispute Resolution Starting a Business Starting a Business

1 1 1 1 1

ANNeXes

Guinea

Property Transfers

Liberia

Starting a Business

Mozambique Inspections

Mozambique Licenses and Permits

Mozambique Tourism

So Tom and Prncipe

Trade Logistics

Zambia

Starting a Business

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1.3 R  eforms and Results from FIAS-Conanced Projects Mapped to Regional IFC Advisory Services Units (continued)
Country Zambia Reform Topic Trade Logistics Reform Description Applying international best practices to trade. Zambia implemented an improved risk management and compliance policy and institutional infrastructure. The system facilitates legitimate, low-risk trade and focuses control efforts on high or unknown risks. It also encourages voluntary compliance by providing information, assistance, and support to help businesses understand requirements. The system rewards highly compliant, low-risk clients through streamlined processing and related privileges. It enforces compliance through riskbased actions to deter, detect, and sanction violations and, over time, reduce interventions at the time of clearance while placing greater reliance on pre-arrival processing and postclearance verication. Number of reforms 1 Doing Business Validated

GRAND TOTAL

21

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ANNeX 2: pOrtfOliO Of fias-sUppOrteD prOJects iN fy13


2.1  FIAS-Funded Client-Facing Projects Mapped to the World Bank Group Investment Climate Department
Region Name EUROPE AND CENTRAL ASIA LATIN AMERICA AND THE CARIBBEAN MIDDLE EAST AND NORTH AFRICA SOUTH ASIA Country Name Eastern Europe Region Colombia Project Name Indicator Based Reform Advisory in Europe and Central Asia Trade Logistics Advisory Program in Colombia Total FY Total FY FIAS Total Funding Expenditures Expenditures % FIAS US$ US$ Share Expenditures Project Stage1 $630,000 $107,078 $107,078 100% PORTFOLIO

$1,992,030

$294,881

$181,776

62%

PORTFOLIO

Middle East and Doing Business Reform Middle East and North Africa North Africa Region Bangladesh Benin Burkina Faso Burundi2 Eastern Africa Region Kenya Kenya Kenya Rwanda Uganda Western Africa Region World Region Low-Carbon Industry Initiative in Bangladesh Benin Investment Climate Reform Program Trade Logistics Burkina Faso Burundi Investment Climate Reform Program East African Community Investment Climate Phase 2 Kenya Investment Generation Program Trade Logistics Kenya Kenya Regulatory Reform Rwanda Investment Climate Reform Program Uganda Investment Climate Program OHADA Uniform Acts Reform Phase 2 Global Investment Promotion Benchmarking 2012 Tax Transparency Technical Assistance Program Competition Policy for Investment Climate Doing Business Reform East Europe and Central Asia Brazil Frontier States Investment Generation (National-Subnational) Doing Business Reform Latin America and the Caribbean OHADA: Building the Capacity to Improve the Quality of the Legislation (Phase 1) Doing Business Reform Sub-Saharan Africa Kenya: Improving Regulatory Performance and Capacities

$1,441,247

$534,836

$534,836

100%

PORTFOLIO ANNeXes

$775,000 $700,000 $823,591 $2,501,990 $8,100,000 $1,500,000 $2,532,939 $4,042,265 $4,500,000 $1,553,000 $2,565,000 $2,000,613 $4,600,000 $1,355,000 $863,602

$429,979 $600,188 $75,513 $754,362 $2,294,890 $240,573 $443,270 $450,045 $1,157,239 $637,688 $746,823 $366,885 $775,068 $594,312 $61,638

$375,051 $387,342 $27,176 $749,914 $2,294,890 $240,573 $223,591 $117,117 $185,452 $633,924 $704,160 $316,761 $775,068 $594,312 $22,470

87% 65% 36% 99% 100% 100% 50% 26% 16% 99% 94% 86% 100% 100% 36%

PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO COMPLETED (DE3 Rating: Positive) COMPLETED (DE3 Rating: Positive) COMPLETED (DE3 Rating: Positive) COMPLETED (DE3 Rating: Negative) COMPLETED (DE3 Rating: Positive) COMPLETED (DE3 Rating: Positive)
Continued on next page

SUBSAHARAN AFRICA

WORLD

World Region World Region

EUROPE AND CENTRAL ASIA LATIN AMERICA AND THE CARIBBEAN

Eastern Europe Region Brazil

$2,142,259

$212,750

$212,750

100%

Latin America Region Africa Region

$1,896,102

$411,035

$411,035

100%

$4,690,056

$15,848

$15,848

100%

SUBSAHARAN AFRICA

Africa Region

$1,842,609

$193,357

$193,357

100%

Kenya

$4,925,000

$1,506

$1,506

100%

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2.1 F  IAS-Funded Client-Facing Projects Mapped to the World Bank Group Investment Climate Department (continued)
Region Name MIDDLE EAST AND NORTH AFRICA Project Name Morocco Quality of Public Service Delivery and Transparency to Improve the Investment Climate Middle East and Indicator-Based Reform Advisory Project in the Middle East and North North Africa Africa Region Region Africa Region Indicator-Based Reform in SubSaharan Africa Guinea2 Guinea Conakry Investment Climate Reform Program Western Africa West Africa Trade Logistics Reform Region Western Africa West Africa Investment Policy Region Reform Country Name Morocco Total FY Total FY FIAS Total Funding Expenditures Expenditures % FIAS US$ US$ Share Expenditures Project Stage1 $555,000 $111,525 $111,525 100% PIPELINE

$824,900

$43,160

$43,160

100%

PIPELINE

$1,150,000 $3,818,000 $3,850,000 $350,000

$77,995 $98,970 $8,482 $38,246

$77,995 $66,313 $8,482 $38,246

100% 67% 100% 100%

PIPELINE PIPELINE PIPELINE PRE-PIPELINE

SUBSAHARAN AFRICA SUBSAHARAN AFRICA Grand Total FY13


1 2 3

$68,520,203

$11,778,144

$9,651,764

Continued on next page

Portfolio includes active and hold projects. Fragile and conict situations. DE abbreviates: development effectiveness.

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ANNeX 2: pOrtfOliO Of fias-sUppOrteD prOJects iN fy13


2.2  FIAS-Conanced Client-Facing Projects Mapped to Regional IFC Advisory Services Units
Region Name EAST ASIA AND THE PACIFIC Country Name Philippines Timor-Leste2 Armenia Belarus Project Name Philippines Agribusiness Trade Competitiveness Timor-Leste Business Registration and Licensing Reform Project Armenia Investment Climate Reform Project Belarus: Regulatory Simplication and Investment Generation 20102013 Bosnia and Herzegovina Investment Climate Project (ISCRA) Georgia Tax Simplication Project Kosovo Investment Climate Europe and Central Asia Tax Project Investment Climate Green Growth: Renewable Energy for Macedonia Moldova Investment Climate Reform Europe and Central Asia Trade Logistics Haiti Investment Generation Strategy Honduras Agribussines Trade Logistics Egypt SubNational Doing Business 2013 Odisha Inclusive Growth Partnership Nepal Investment Climate for Industry South Asia Regional Trade Burkina Faso Investment Climate Reform Program Cameroon Investment Climate Reform Program Comoros Investment Climate and Leasing Reform Program Cte dIvoire Investment Climate Reform ProgramBusiness Regulation Ethiopia Business Forum Guinea Business Regulation Investment Climate Reform in Guinea Investment Policy and Taxation Lesotho Tourism Public-Private Partnerships Liberia Investment Climate Advisory Services Phase 3 Liberia Trade 2 Total FY Total FY FIAS Total Funding Expenditures Expenditures % FIAS US$ US$ Share Expenditures Project Stage1 $3,299,113 $500,487 $183,039 37% PORTFOLIO $1,951,582 $1,656,702 $3,048,058 $471,437 $612,958 $782,817 $249,652 $220,370 $79,430 53% 36% 10% PORTFOLIO PORTFOLIO PORTFOLIO

EUROPE AND CENTRAL ASIA

LATIN AMERICA AND THE CARIBBEAN MIDDLE EAST AND NORTH AFRICA

Bosnia and Herzegovina2 Georgia Kosovo2 Europe and Central Asia Macedonia, Former Yugoslav Republic of Moldova Europe and Central Asia Haiti2 Honduras Egypt, Arab Republic of India Nepal2 Southern Asia Region Burkina Faso Cameroon Comoros2 Cte dIvoire2

$3,230,360 $1,281,003 $2,443,260 $2,452,931 $1,515,455

$1,085,363 $284,794 $389,361 $636,953 $225,204

$60,965 $250,326 $277,189 $100,713 $113,566

6% 88% 71% 16% 50%

PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO

ANNeXes

$2,456,844 $2,408,755 $3,346,418 $704,156 $1,190,000

$764,085 $1,000,574 $470,849 $310,816 $648,282

$118,646 $40,718 $272,385 $106,902 $92,537

16% 4% 58% 34% 14%

PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO

SOUTH ASIA

$2,048,563 $2,054,001 $3,646,250 $2,283,000 $1,400,000 $1,200,000 $2,395,000

$422,015 $556,604 $789,060 $470,067 $474,618 $494,344 $533,871

$143,969 $143,673 $68,762 $171,067 $153,137 $73,155 $445,363

34% 26% 9% 36% 32% 15% 83%

PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO

SUBSAHARAN AFRICA

Ethiopia Guinea2 Guinea2

$1,144,800 $1,840,000 $1,600,000

$248,147 $397,529 $277,652

$49,692 $330,866 $277,652

20% 83% 100%

PORTFOLIO PORTFOLIO PORTFOLIO

Lesotho Liberia2 Liberia2

$1,564,821 $3,318,500 $600,000

$585,471 $1,573,666 $412,906

$53,573 $298,696 $30,747

9% 19% 7%

PORTFOLIO PORTFOLIO PORTFOLIO


Continued on next page

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2.2  FIAS-Conanced Client-Facing Projects Mapped to Regional IFC Advisory Services Units (continued)
Total FY Total FY FIAS Total Funding Expenditures Expenditures % FIAS US$ US$ Share Expenditures Project Stage1 $1,018,000 $354,718 $107,180 30% PORTFOLIO $1,136,786 $920,000 $871,000 $3,040,000 $2,150,000 $91,069 $1,330,000 $1,855,800 $1,643,500 $1,772,000 $256,606 $20,543 $231,521 $922,768 $476,784 $61,069 $172,145 $106,486 $145,727 $145,414 $234,583 $20,543 $16,071 $503,606 $26,659 $61,069 $122,193 $106,486 $104,615 $118,464 91% 100% 7% 55% 6% 100% 71% 100% 72% 81% PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PIPELINE PIPELINE PIPELINE PIPELINE PIPELINE

Region Name

SUBSAHARAN AFRICA

EUROPE AND CENTRAL ASIA LATIN AMERICA AND THE CARIBBEAN SUBSAHARAN AFRICA Grand Total
1 2 3

Project Name Mozambique Investment Climate Program So Tom and So Tom and Principe Investment Principe Climate Project Tanzania Tanzania Investment Climate Program Togo2 Togo Investment Climate Reform Program Zambia Zambia Iinvestment Climate Program II Zambia Investment Climate Rapid Response Uzbekistan Uzbekistan Tax Simplication Project Azerbaijan Azerbaijan Investment Climate Phase II Georgia Georgia Investment Climate Project Southern Europe Europe and Central Asia Debt Region Resolution and Business Exit Central America Regional Latin America Region Agribusiness Trade Logistics Project

Country Name Mozambique

Ethiopia Uganda

Ethiopia Investment Climate [Advisory] Program Uganda Investment Climate for Industry

$200,000 $1,050,000 $73,157,727

$154,754 $97,016 $18,565,478

$134,390 $97,016 $6,059,665

87% 100%

PIPELINE PIPELINE

Continued on next page Portfolio includes active and hold projects. Fragile and conict situations. Project on hold.

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ANNeX 2: pOrtfOliO Of fias-sUppOrteD prOJects iN fy13


2.3 F  IAS-Funded Knowledge Management and Product Development Projects Mapped to the World Bank Group Investment Climate Department
Region Name WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD WORLD Project Name Global Secured Transactions and Collateral Registries Program Investing Across Borders Indicators2 Tax Product Program Design Global Trade Logistics Advisory Program Investment Climate Agribusiness Global Product Development Project Investment Climate Indicator Based Reform Advisory Global Investment Climate-Business Line Impact Estimations and Evaluations Debt Resolution and Business Exit5 Tourism Global Phase 2 Investment Policy Product Development and Roll-out Public-Private Dialogue Global Product Development and Knowledge Management Business Regulation Product Development and Knowledge Management6 Transparency and Access to Information in Investment Climate Operations Gender in Investment Climate Promoting Competition ICT-enabled Investment Climate Reform Theme Project7 Commercial Mediation Product Development and Knowledge Management5 Special Economic Zones Product Development Knowledge Management Phase 2 Business Regulation Product Management and Knowledge Management6 ICT Cross-Cutting Theme7 Prorated Total Total FY Total FY FIAS Funds Managed Expenditure Expenditure % FIAS by IFC US$ Share Expenditures Project Stage1 $2,380,000 $609,897 $20,564 3% PORTFOLIO $3,449,209 $4,726,301 $1,855,008 $1,712,500 $1,029,204 $2,181,691 $1,752,196 $795,000 $1,616,924 $436,000 $704,500 $230,000 $500,000 $1,000,000 $465,200 $1,395,000 $392,122 $889,978 $596,510 $899,883 $397,644 $1,085,282 $544,868 $394,339 $840,999 $354,234 $239,629 $17,644 $102,460 $49,313 $154,266 $71,015 $365,984 $856,995 $594,050 $899,883 $332,923 $1,085,282 $544,868 $394,339 $840,999 $354,234 $239,629 $17,644 $35,767 $49,313 $154,266 $288 93% 96% 100% 100% 84% 100% 100% 100% 100% 100% 100% 100% 35% 100% 100% 0% PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO COMPLETED (DE3 Rating: MEC4) COMPLETED (DE3 Rating: MEC4) COMPLETED (DE3 Rating: MEC4) PIPELINE ANNeXes

$474,132

$98,869

$98,869

100%

$1,183,000

$299,382

$299,382

100%

$450,000 $27,885,865

$46,705 $8,038,336

$46,705 $7,185,280 89%

Grand Total
1 2 3 4 5

Portfolio includes active and hold projects. Project managed by Global indicator and Analysis Unit with funding from FIAS. DE abbreviates: development effectiveness. MEC abbreviates: meets exclusion criteria. The Debt Resolution and Business Exit project is a continuation of the Commercial Mediation Product Development and Knowledge Management (completed during FY13) and the Restructuring and Insolvency Advisory Services program (completed in FY12). The Business Regulation Product Development and Knowledge Management project is a continuation of the Business Regulation Product Management and Knowledge Management (completed during FY13). The ICT-enabled Investment Climate Reform Theme Project is a continuation of the ICT Cross-Cutting Theme project (completed during FY13).

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ANNeX 3: ABBreViatiONs
ASYCUDA CIDA COMESA FDI FIAS GIPB IBRD ICT IDA IFC M&E MIGA OECD OHADA PPD USAID Automated Systems for Customs Data Canadian International Development Agency Common Market for Eastern and Southern Africa foreign direct investment Facility for Investment Climate Advisory Services Global Investment Promotion Best Practices International Bank for Reconstruction and Development information and communication technologies International Development Association International Finance Corporation monitoring and evaluation Multilateral Investment Guarantee Agency Organisation for Economic Co-operation and Development Organization for the Harmonization of Business Law in Africa public-private dialogue U.S. Agency for International Development

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PHOTO CREDITS
Cover: Vietnamese farmer in the eld, Dreamstime. Chapter introduction photos:* Chapter 1, pages 4-5, Brazilian renewable energy generation, Paulo Capiotti. Chapter 2, pages 12-13, Cambodian market, Katherine Jao. Chapter 3, pages 20-21, people and hay in Bangladesh, Mohamed Fahad Ifaz, World Bank Group. Chapter 4, pages 34-35, Afghanistan Ministry of Telecommunications, Graham Crouch, World Bank Group. Chapter 5, pages 42-43, Liberian marketplace, Shoana Solomon for the World Bank Group. Chapter 6, pages 50-51, Bangladesh sherman, Mohamed Fahad Ifaz, World Bank Group. Chapter 7 , pages 60-61, Mongolia camel herd, Kathy Khuu, World Bank Group.

*These photos also appear on the cover.

Other photos: Page 39, Peruvian landscape with solar panels, Dreamstime. Page 46: Textile workers in a small factory in Old Delhi, in Delhi, India.

Acknowledgements: FIAS would like to thank the participants of the 2013 Investment Climate Photo Contest for contributing many of the photographs in this publication. More than 45 photos depicting investment climate activities and private sector engagement were submitted by World Bank Group staff. The images seen on pages 12-13, 20-21, 50-51, and 60-61 were chosen from this years contest.

III

Through the FIAS program, the World Bank Group and donor partners facilitate investment climate reforms in developing countries to foster open, productive, and competitive markets and to unlock sustainable private investments in sectors that contribute to growth and poverty reduction. The FIAS program is managed by the Investment Climate Department under the joint oversight of the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the World Bank (IBRD). For more information, visit www.wbginvestmentclimate.org.

World Bank Group