Madagascar Doing Business 2016
Madagascar Doing Business 2016
Madagascar Doing Business 2016
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CONTENTS
Introduction .................................................................................................................................. 4
Starting a business ..................................................................................................................... 17
Dealing with construction permits ........................................................................................... 24
Getting electricity ....................................................................................................................... 37
Registering property .................................................................................................................. 46
Getting credit .............................................................................................................................. 56
Protecting minority investors ................................................................................................... 62
Paying taxes ................................................................................................................................ 70
Trading across borders .............................................................................................................. 77
Enforcing contracts .................................................................................................................... 84
Resolving insolvency .................................................................................................................. 91
Labor market regulation ........................................................................................................... 99
Distance to frontier and ease of doing business ranking .................................................... 105
Resources on the Doing Business website ............................................................................ 108
Doing Business 2017 Madagascar 4
INTRODUCTION
Doing Business sheds light on how easy or difficult it is also provides data for other selected economies
for a local entrepreneur to open and run a small to (comparator economies) for each indicator. The data in
medium-size business when complying with relevant this report are current as of June 1, 2016 (except for the
regulations. It measures and tracks changes in paying taxes indicators, which cover the period January–
regulations affecting 11 areas in the life cycle of a December 2015).
business: starting a business, dealing with construction
The Doing Business methodology has limitations. Other
permits, getting electricity, registering property, getting
areas important to business—such as an economy’s
credit, protecting minority investors, paying taxes,
proximity to large markets, the quality of its
trading across borders, enforcing contracts, resolving
infrastructure services (other than those related to
insolvency and labor market regulation. Doing Business
trading across borders and getting electricity), the
2017 presents the data for the labor market regulation
security of property from theft and looting, the
indicators in an annex. The report does not present
transparency of government procurement,
rankings of economies on labor market regulation
macroeconomic conditions or the underlying strength of
indicators or include the topic in the aggregate distance
institutions—are not directly studied by Doing Business.
to frontier score or ranking on the ease of doing
The indicators refer to a specific type of business,
business.
generally a local limited liability company operating in
In a series of annual reports Doing Business presents the largest business city. Because standard assumptions
quantitative indicators on business regulations and the are used in the data collection, comparisons and
protection of property rights that can be compared benchmarks are valid across economies. The data not
across 190 economies, from Afghanistan to Zimbabwe, only highlight the extent of obstacles to doing business;
over time. The data set covers 48 economies in Sub- they also help identify the source of those obstacles,
Saharan Africa, 32 in Latin America and the Caribbean, 25 supporting policy makers in designing regulatory reform.
in East Asia and the Pacific, 25 in Eastern Europe and
More information is available in the full report. Doing
Central Asia, 20 in the Middle East and North Africa and
Business 2017 presents the indicators, analyzes their
8 in South Asia, as well as 32 OECD high-income
relationship with economic outcomes and presents
economies. The indicators are used to analyze economic
business regulatory reforms. The data, along with
outcomes and identify what reforms have worked, where
information on ordering Doing Business 2017, are
and why.
available on the Doing Business website at
This economy profile presents the Doing Business http://www.doingbusiness.org.
indicators for Madagascar. To allow useful comparison, it
Doing Business 2017 Madagascar 5
As part of a three-year update in methodology, Doing having equal evidentiary weight of women’s testimony in
Business 2017 expands further by adding postfiling court.
processes to the paying taxes indicator, including a
Also for the first time this year Doing Business collects
gender component in three of the indicators and
data on Somalia, bringing the total number of
developing a new pilot indicator on selling to the
economies covered to 190.
government. Also, for the first time this year Doing
Business collects data on Somalia, bringing the total
For more details on the changes, see the “”Old and new
number of economies covered to 190.
factors covered in Doing Business” section in the
The paying taxes indicator is expanded this year to Overview chapter starting on page 1 of the Doing
include postfiling processes – those processes that occur Business 2017 report. For more details on the data and
after a firm complies with its regular tax obligations. methodology, please see the “Data Notes” chapter
These include tax refunds, tax audits and tax appeals. In starting on page 114 of the Doing Business 2017 report.
particular, Doing Business measures the time it takes to For more details on the distance to frontier metric,
get a value added tax (VAT) refund, deal with a simple please see the “Distance to frontier and ease of doing
mistake on a corporate tax return that can potentially business ranking” chapter in this profile.
trigger an audit and good practices with administrative
appeals process.
This year’s Doing Business report presents a gender
dimension in four of the indicator sets: starting a
business, registering property, enforcing contracts and
labor market regulation. Three of these areas are
included in the distance to frontier score and in the ease
of doing business ranking, while the fourth—labor
market regulation—is not.
Doing Business has traditionally assumed that the
entrepreneurs or workers discussed in the case studies
were men. This was incomplete by not reflecting
correctly the Doing Business processes as applied to
women—which in some economies may be different
from the processes applied to men. Starting this year,
Doing Business measures the starting a business process
for two case scenarios: one where all entrepreneurs are
men and one where all entrepreneurs are women. In
economies where the processes are more onerous if the
entrepreneur is a woman, Doing Business now counts the
extra procedures applied to roughly half of the
population that is female (for example, obtaining a
husband’s consent or gender-specific requirements for
opening a personal bank account when starting a
business). Within the registering property indicators, a
gender component has been added to the quality of
land administration index. This component measures
women’s ability to use, own, and transfer property
according to the law. Finally, within the enforcing
contracts indicator set, economies will be scored on
Doing Business 2017 Madagascar 6
Figure 1.2 How Madagascar and comparator economies rank on the ease of doing business
Note: The rankings are benchmarked to June 2016 and based on the average of each economy’s distance to frontier (DTF) scores
for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to
regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s
distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier.
For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities.
Source: Doing Business database.
Doing Business 2017 Madagascar 9
Figure 1.5 How far has Madagascar come in the areas measured by Doing Business?
Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on
each Doing Business indicator. Getting credit, protecting minority investors and resolving insolvency had methodology changes in 2014
and thus are only comparable to 2013. Dealing with construction permits, getting electricity and trading across borders had
methodology changes in 2015 and thus are only comparable to 2014. Starting a business, registering property, paying taxes and
enforcing contracts had methodology changes in 2016 and thus are only comparable to 2015. The measure is normalized to range
between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing
Business 2017 report for more details on the distance to frontier score. Source: Doing Business database.
Doing Business 2017 Madagascar 11
Madagascar DB2016
Mauritius DB2017
Comoros DB2017
Rwanda DB2017
Indicator
Kenya DB2017
DB2017
Starting a Business
113 126 161 116 48 134 76 131 1 (New Zealand)
(Rank)
Procedure – Men
7.0 9.0 8.0 7.0 5.0 10.0 5.0 7.0 1.0 (New Zealand)
(number)
Time – Men (days) 11.0 13.0 15.0 22.0 6.0 19.0 4.0 43.0 0.5 (New Zealand)
Cost – Men (% of
40.4 43.7 98.4 21.1 1.8 18.0 48.5 0.2 0.0 (Slovenia)
income per capita)
Procedure – Women
7.0 9.0 8.0 7.0 6.0 10.0 5.0 7.0 1.0 (New Zealand)
(number)
Time – Women (days) 11.0 13.0 15.0 22.0 7.0 19.0 4.0 43.0 0.5 (New Zealand)
Cost – Women (% of
40.4 43.7 98.4 21.1 1.8 18.0 48.5 0.2 0.0 (Slovenia)
income per capita)
Madagascar DB2016
Mauritius DB2017
Comoros DB2017
Rwanda DB2017
Indicator
Kenya DB2017
DB2017
(Rank)
Dealing with
Construction Permits 36.88 35.21 68.88 57.18 76.55 77.85 55.40 68.21 87.40 (New Zealand)
(DTF Score)
Procedures (number) 15.0 15.0 10.0 17.0 15.0 10.0 15.0 19.0 7.0 (4 Economies*)
Time (days) 185.0 185.0 108.0 160.0 156.0 111.0 113.0 141.0 28.0 (Korea, Rep.)
Getting Electricity
185 186 135 106 110 168 117 111 1 (Korea, Rep.)
(Rank)
Procedures (number) 6.0 6.0 3.0 3.0 4.0 7.0 4.0 4.0 3.0 (15 Economies*)
Time (days) 450.0 450.0 120.0 97.0 81.0 91.0 34.0 84.0 18.0 (Korea, Rep.*)
Registering Property
159 157 90 121 98 107 4 105 1 (New Zealand)
(Rank)
Registering Property
44.56 44.46 63.47 54.40 61.99 58.76 92.67 59.03 94.46 (New Zealand)
(DTF Score)
Procedures (number) 6.0 6.0 4.0 9.0 4.0 6.0 3.0 7.0 1.0 (4 Economies*)
Doing Business 2017 Madagascar 13
Madagascar DB2016
Mauritius DB2017
Comoros DB2017
Rwanda DB2017
Indicator
Kenya DB2017
DB2017
Time (days) 100.0 100.0 30.0 61.0 14.0 40.0 12.0 23.0 1.0 (3 Economies*)
Cost (% of property
9.2 9.2 4.6 6.1 10.6 5.4 0.1 7.3 0.0 (Saudi Arabia)
value)
Depth of credit
0.0 0.0 2.0 7.0 7.0 4.0 8.0 7.0 8.0 (30 Economies*)
information index (0-8)
Protecting Minority
114 108 145 87 32 132 102 22 1 (New Zealand*)
Investors (Rank)
Protecting Minority
48.33 48.33 40.00 53.33 65.00 43.33 51.67 70.00 83.33 (New Zealand*)
Investors (DTF Score)
Strength of minority
investor protection 4.8 4.8 4.0 5.3 6.5 4.3 5.2 7.0 8.3 (New Zealand*)
index (0-10)
Extent of conflict of
interest regulation 6.0 6.0 4.3 6.7 7.7 5.3 6.3 8.0 9.3 (New Zealand*)
index (0-10)
Extent of shareholder 3.7 3.7 3.7 4.0 5.3 3.3 4.0 6.0 8.3 (Norway)
governance index (0-
Doing Business 2017 Madagascar 14
Madagascar DB2016
Mauritius DB2017
Comoros DB2017
Rwanda DB2017
Indicator
Kenya DB2017
DB2017
10)
1 (United Arab
Paying Taxes (Rank) 117 113 168 125 45 112 59 51
Emirates)
Time (hours per year) 183.0 183.0 100.0 195.5 152.0 200.0 124.0 203.0 55.0 (Luxembourg)
Postfiling index (0-100) 30.2 30.2 51.5 32.1 56.1 62.5 83.3 58.6 98.5 (Estonia)
Time to export:
Documentary 49 59 57 19 9 70 42 68 1 (25 Economies*)
compliance (hours)
Cost to export:
Documentary 117 117 124 191 128 220 110 170 0 (19 Economies*)
compliance (USD)
Madagascar DB2016
Mauritius DB2017
Comoros DB2017
Rwanda DB2017
Indicator
Kenya DB2017
DB2017
Cost to import: Border
595 595 765 833 372 354 282 657 0 (28 Economies*)
compliance (USD)
Time to import:
Documentary 58 68 29 84 9 24 72 36 1 (29 Economies*)
compliance (hours)
Cost to import:
Documentary 150 150 93 115 166 171 121 213 0 (30 Economies*)
compliance (USD)
Enforcing Contracts
158 157 179 87 34 185 95 113 1 (Korea, Rep.)
(Rank)
Enforcing Contracts
42.85 42.85 32.05 58.27 68.65 27.32 56.76 54.10 84.15 (Korea, Rep.)
(DTF Score)
Time (days) 871.0 871.0 506.0 465.0 519.0 950.0 230.0 600.0 164.0 (Singapore)
Cost (% of claim) 33.6 33.6 89.4 41.8 25.0 119.0 82.7 33.2 9.0 (Iceland)
Quality of judicial
5.0 5.0 5.0 9.0 12.0 9.0 13.0 7.0 15.5 (Australia)
processes index (0-18)
Resolving Insolvency
127 127 169 92 39 65 73 50 1 (Finland)
(Rank)
Resolving Insolvency
34.24 34.24 0.00 43.39 69.06 49.61 47.85 57.94 93.89 (Finland)
(DTF Score)
no
Time (years) 3.0 3.0 4.5 1.7 1.5 2.5 2.0 0.4 (22 Economies*)
practice
no
Cost (% of estate) 8.5 8.5 22.0 14.5 20.5 29.0 18.0 1.0 (22 Economies*)
practice
Strength of insolvency
9.0 9.0 0.0 9.0 10.5 10.0 12.0 12.5 15.0 (6 Economies*)
framework index (0-16)
Note: DB2016 rankings shown are not last year’s published rankings but comparable rankings for DB2016 that capture the effects of such
factors as data revisions and changes to the methodology. The global best performer on time for paying taxes is defined as the lowest
time recorded among all economies in the DB2017 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory
contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it
receives a “no practice” mark. Similarly, an economy receives a “no practice” mark if regulation exists but is never used in practice or if a
competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the
relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name
indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business
website (http://www.doingbusiness.org).
Doing Business 2017 Madagascar 17
STARTING A BUSINESS
Formal registration of companies has many WHAT THE STARTING A BUSINESS
immediate benefits for the companies and for
business owners and employees. Legal entities can INDICATORS MEASURE
outlive their founders. Resources are pooled as
several shareholders join forces to start a company. Procedures to legally start and operate a
Formally registered companies have access to company (number)
services and institutions from courts to banks as well
Preregistration (for example, name
as to new markets. And their employees can benefit
verification or reservation, notarization)
from protections provided by the law. An additional
benefit comes with limited liability companies. These Registration in the economy’s largest
limit the financial liability of company owners to their business city
1
Is 100% domestically owned and has five owners, Does not qualify for investment incentives or
none of whom is a legal entity. any special benefits.
Has start-up capital of 10 times income per Has at least 10 and up to 50 employees one
capita month after the commencement of
operations, all of them domestic nationals.
Performs general industrial or commercial
activities, such as the production or sale to the Has a turnover of at least 100 times income per
public of products or services. The business does capita.
not perform foreign trade activities and does not Has a company deed 10 pages long
handle products subject to a special tax regime,
for example, liquor or tobacco. It is not using The owners:
heavily polluting production processes. Have reached the legal age of majority and are
Leases the commercial plant or offices and is not capable of making decisions as an adult. If
a proprietor of real estate. there is no legal age of majority, they are
assumed to be 30 years old.
The amount of the annual lease for the office
space is equivalent to 1 times income per capita. Are sane, competent, in good health and have
no criminal record.
Are married, the marriage is monogamous and
registered with the authorities.
Where the answer differs according to the legal
system applicable to the woman or man in
question (as may be the case in economies
where there is legal plurality), the answer used
will be the one that applies to the majority of
the population.
Doing Business 2017 Madagascar 19
STARTING A BUSINESS
Where does the economy stand today?
What does it take to start a business in Madagascar? 2.1) is legally mandatory for both men and women. Most
According to data collected by Doing Business, starting a indicator sets refer to a case scenario in the largest
business there requires 7.0 procedures , takes 11.0 days, business city of an economy, except for 11 economies for
costs 40.4% of income per capita for men, and requires which the data are a population-weighted average of the
7.0 procedures , takes 11.0 days, costs 40.4% of income 2 largest business cities. See the chapter on distance to
per capita for women. A requirement of paid-in frontier and ease of doing business ranking at the end of
minimum capital of 0.0% of income per capita (figure this profile for more details.
STARTING A BUSINESS
Globally, Madagascar stands at 113 in the ranking of 190 average ranking provide other useful information for
economies on the ease of starting a business (figure 2.2). assessing how easy it is for an entrepreneur in
The rankings for comparator economies and the regional Madagascar to start a business.
Figure 2.2 How Madagascar and comparator economies rank on the ease of starting a
business
STARTING A BUSINESS
Economies around the world have taken steps making it they often are part of a larger regulatory reform
easier to start a business—streamlining procedures by program. Among the benefits have been greater firm
setting up a one-stop shop, making procedures simpler satisfaction and savings and more registered businesses,
or faster by introducing technology and reducing or financial resources and job opportunities.
eliminating minimum capital requirements. Many have
What business registration reforms has Doing Business
undertaken business registration reforms in stages—and
recorded in Madagascar (table 2.1)?
Table 2.1 How has Madagascar made starting a business easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
STARTING A BUSINESS
What are the details?
Underlying the indicators shown in this chapter for
STANDARDIZED COMPANY
Madagascar is a set of specific procedures—the
bureaucratic and legal steps that an entrepreneur
must complete to incorporate and register a new Legal form: Socièté a Responsabilité Limitée
firm. These are identified by Doing Business through (SARL)
collaboration with relevant local professionals and
the study of laws, regulations and publicly available Paid-in minimum capital requirement: MGA 0
information on business entry in that economy. City: Antananarivo
Following is a detailed summary of those procedures,
along with the associated time and cost. These Start-up Capital: 10 times GNI per capita
procedures are those that apply to a company
matching the standard assumptions (the
“standardized company”) used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators measure).
Table 2.2 Summary of time, cost and procedures for starting a business in Madagascar
Time to
No. Procedure Cost to complete
complete
Obtain a provisional fiscal identification number, verify the
necessary forms for registration at the front desk and obtain the
value to be paid to the tax authority
Upon arrival at the one stop shop, the entrepreneur needs to stop at
the front office to obtain a provisional fiscal identification number, for
verification of the documents to be submitted for registration and to
obtain the amount to the paid to the tax authority.
1 1 day no charge
After the front office provides a provisional fiscal identification number
to the applicant, they verify whether the forms were correctly filled and
no information is missing (these forms are available online and the
entrepreneurs either print them at home or obtain them at the registry).
Agency: EDBM
Once the tax authority issues the carnet with the value, the
entrepreneur goes to any commercial bank and obtains a nominal
check with the amount owed.
Agency: Bank
Doing Business 2017 Madagascar 23
Time to
No. Procedure Cost to complete
complete
Once the entrepreneur has the receipt confirming payment to the tax
authority, she/he goes back to the front office to lodge the application
for registration and payment of administrative fees to EDBM
Agency: EDBM
The entrepreneur must provide the information from the tax ID, the
statistics ID and the company registration number.
The K-Bis is the document that compiles all the relevant information
regarding the company. It shows the tax ID, the statistics ID, the
5 registration number and the date of the newspaper publication. 1 day MGA 2,000
Agency: EDBM
Doing Business 2017 Madagascar 24
Time to
No. Procedure Cost to complete
complete
Register employees with Social Security
The company must register its employees with the National Social
Security Fund (Caisse Nationale de Prevoyance Sociale), and file two
copies of an application form (bulletin d'adhesion nouveau membre)
6 along with a list of names of all employees and their identity cards to 1 day no charge
enroll for health insurance.
Agency: EDBM
Agency: OSTIE
Doing Business records all procedures required for a Obtaining utility connections for water and
business in the construction industry to build a sewerage
warehouse along with the time and cost to complete Registering and selling the warehouse after its
each procedure. In addition, the building quality completion
control index evaluates the quality of building
Time required to complete each procedure
regulations, the strength of quality control and safety
(calendar days)
mechanisms, liability and insurance regimes, and
professional certification requirements. Does not include time spent gathering
information
The ranking of economies on the ease of dealing with
construction permits is determined by sorting their Each procedure starts on a separate day—
though procedures that can be fully
distance to frontier scores for dealing with
completed online are an exception to this rule
construction permits. These scores are the simple
average of the distance to frontier scores for each of Procedure considered completed once final
the component indicators. document is received
To make the data comparable across economies, No prior contact with officials
several assumptions about the construction Cost required to complete each procedure (%
company, the warehouse project and the utility of warehouse value)
connections are used.
Official costs only, no bribes
Assumptions about the construction company
Building quality control index (0-15)
The construction company (BuildCo):
Sum of the scores of six component indices:
Is a limited liability company (or its legal
Quality of building regulations (0-2)
equivalent).
Quality control before construction (0-1)
Operates in the economy’s largest business city.
For 11 economies the data are also collected for Quality control during construction (0-3)
the second largest business city. Quality control after construction (0-3)
Is 100% domestically and privately owned. Liability and insurance regimes (0-2)
Has five owners, none of whom is a legal entity. Professional certifications (0-4)
Is fully licensed and insured to carry out
construction projects, such as building
warehouses.
Has 60 builders and other employees, all of them
nationals with the technical expertise and
Doing Business 2017 Madagascar 26
Figure 3.1 What it takes to comply with formalities to build a warehouse in Madagascar
Figure 3.2 How Madagascar and comparator economies rank on the ease of dealing with construction permits
Table 3.1 How has Madagascar made dealing with construction permits easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
3 The planning officer will prepare a sketch of alignment and a 1 day no charge
report (procès verbal) detailing the constraints of alignment with
the road allowances of the Master Plan (delimitation of the
unbuildable portion). The file is then sent to the Régional de
l’Aménagement du Territoire et de la Ville, which verifies that the
file is in conformity with the rules of urban planning and the
provisions of the Master Plan of the Commune. The file is then
returned to the Town Hall.
A receipt showing that the request was made will be given back
Doing Business 2017 Madagascar 31
Time to
No. Procedure Cost to complete
complete
to BuildCo and at the same time, an appointment date will be
provided for the site visit with the owner and 2 inspectors.
6 - Official plan of the land with laborde coordinates (1 copy) 7 days no charge
- Certificate of legal status that is less than 3 months old (1 copy)
- Duly complete form to request the prescription d'urbanisme
obtained at the City Hall Analakely (1 copy)
- Alignment authorization (issued by the CUA)
- Alignment Sketch (issued by the CUA)
Time to
No. Procedure Cost to complete
complete
Once these two steps are completed, BuildCo may now request
the building permit and submit all necessary documents. Only
completed applications are accepted at the Commune Urbaine
d'Antananarivo (CUA- one-stop shop).
The cost is calculated based on the volume of the building
before SPAT issues its opinion. The cost can vary from MGA
1,000.00 to MGA 2,000.00 per cubic meter.
10 1 day no charge
Time to
No. Procedure Cost to complete
complete
Agency: Commission
* 12 1 day no charge
Agency: JIRAMA
Agency: JIRAMA
Once JIRAMA has provided both the cost estimate and the
survey plan (plan croquis de JIRAMA), BuildCo must request an
authorization from the Municipality to connect to water. Without 30 days MGA 285,000
14
this authorization, JIRAMA cannot proceed with the connection
work.
The building quality control index is the sum of the The index ranges from 0 to 15, with higher values
scores on the quality of building regulations, quality indicating better quality control and safety mechanisms in
control before construction, quality control during the construction permitting system.
construction, quality control after construction,
The indicator is based on the same case study
liability and insurance regimes, and professional
assumptions as the measures of efficiency.
certifications indices.
Table 3.3 Summary of quality control and safety mechanisms in Madagascar
Answer Score
Building quality control index (0-15) 5.0
How accessible are building laws and regulations in your Available online; Free of
1.0
economy? (0-1) charge.
List of required
Which requirements for obtaining a building permit are clearly
documents; Fees to be
specified in the building regulations or on any accessible website, 1.0
paid; Required
brochure or pamphlet? (0-1)
preapprovals.
No inspections are
What types of inspections (if any) are required by law to be
legally required during 0.0
carried out during construction? (0-2)
construction.
Mandatory inspections
Do legally mandated inspections occur in practice during are not always done in
0.0
construction? (0-1) practice during
construction.
Is there a final inspection required by law to verify that the Yes, final inspection is
building was built in accordance with the approved plans and done by government 2.0
regulations? (0-2) agency.
Which parties (if any) are held liable by law for structural flaws or
Architect or engineer;
problems in the building once it is in use (Latent Defect Liability 1.0
Construction company.
or Decennial Liability)? (0-1)
Doing Business 2017 Madagascar 36
Answer Score
Which parties (if any) are required by law to obtain an insurance
No party is required by
policy to cover possible structural flaws or problems in the
law to obtain insurance 0.0
building once it is in use (Latent Defect Liability Insurance or
.
Decennial Insurance)? (0-1)
What are the qualification requirements for the professional University degree in
responsible for verifying that the architectural plans or drawings architecture or 0.0
are in compliance with existing building regulations? (0-2) engineering.
University degree in
engineering,
What are the qualification requirements for the professional who
construction or 0.0
supervises the construction on the ground? (0-2)
construction
management.
Source: Doing Business database.
Doing Business 2017 Madagascar 37
GETTING ELECTRICITY
Access to reliable and affordable electricity is vital for WHAT THE GETTING ELECTRICITY
businesses. To counter weak electricity supply, many
firms in developing economies have to rely on self- INDICATORS MEASURE
supply, often at a prohibitively high cost. Whether
electricity is reliably available or not, the first step for Procedures to obtain an electricity connection
a customer is always to gain access by obtaining a (number)
connection.
Submitting all relevant documents and
What do the indicators cover? obtaining all necessary clearances and permits
Doing Business records all procedures required for a Completing all required notifications and
local business to obtain a permanent electricity receiving all necessary inspections
connection and supply for a standardized warehouse, Obtaining external installation works and
as well as the time and cost to complete them. These possibly purchasing material for these works
procedures include applications and contracts with
Concluding any necessary supply contract and
electricity utilities, clearances from other agencies
obtaining final supply
and the external and final connection works. In
addition, Doing Business also measures the reliability Time required to complete each procedure
of supply and transparency of tariffs index (included (calendar days)
in the aggregate distance to frontier score and Is at least 1 calendar day
ranking on the ease of doing business) and the price
Each procedure starts on a separate day
of electricity (omitted from these aggregate
measures). The ranking of economies on the ease of Does not include time spent gathering
getting electricity is determined by sorting their information
distance to frontier scores for getting electricity. Reflects the time spent in practice, with little
These scores are the simple average of the distance follow-up and no prior contact with officials
to frontier scores for each of the component Cost required to complete each procedure (%
indicators. To make the data comparable across of income per capita)
economies, several assumptions are used.
Official costs only, no bribes
Assumptions about the warehouse
Excludes value added tax
The warehouse: The reliability of supply and transparency of
Is owned by a local entrepreneur. tariffs index
Is located in the economy’s largest business city. Sum of the scores of six component indices:
For 11 economies the data are also collected for Duration and frequency of outages
the second largest business city.
Tools to monitor power outages
Is located in an area where similar warehouses Tools to restore power supply
are typically located. In this area a new electricity
connection is not eligible for a special investment Regulatory monitoring of utilities’ performance
promotion regime (offering special subsidization Financial deterrents aimed at limiting outages
or faster service, for example).
Transparency and accessibility of tariffs
Is located in an area with no physical constraints.
Price of electricity (cents per kilowatt-hour)*
For example, the property is not near a railway.
Price based on monthly bill for commercial
Is a new construction and is being connected to warehouse in case study
electricity for the first time.
*Price of electricity is not included in the
calculation of distance to frontier nor ease of
doing business ranking
Doing Business 2017 Madagascar 38
GETTING ELECTRICITY
Where does the economy stand today?
What does it take to obtain a new electricity connection Most indicator sets refer to a case scenario in the largest
in Madagascar? According to data collected by Doing business city of an economy, except for 11 economies for
Business, getting electricity there requires 6.0 procedures, which the data are a population-weighted average of the
takes 450.0 days and costs 5699.2% of income per capita 2 largest business cities. See the chapter on distance to
(figure 4.1). frontier and ease of doing business ranking at the end of
this profile for more details.
GETTING ELECTRICITY
Globally, Madagascar stands at 185 in the ranking of 190 average ranking provide another perspective in assessing
economies on the ease of getting electricity (figure 4.2). how easy it is for an entrepreneur in Madagascar to
The rankings for comparator economies and the regional connect a warehouse to electricity.
Figure 4.2 How Madagascar and comparator economies rank on the ease of getting electricity
GETTING ELECTRICITY
What are the details?
The indicators reported here for Madagascar are based
OBTAINING AN ELECTRICITY CONNECTION*
on a set of specific procedures—the steps that an
entrepreneur must complete to get a warehouse
connected to electricity by the local distribution utility— Jiro sy rano malagasy
Name of utility:
identified by Doing Business. Data are collected from the (JIRAMA)
distribution utility, then completed and verified by
electricity regulatory agencies and independent Price of electricity
professionals such as electrical engineers, electrical (US cents per kWh): 13.1
contractors and construction companies. The electricity
distribution utility surveyed is the one serving the area City: Antananarivo
(or areas) in which warehouses are located. If there is a
*Price is calculated as a monthly consumption of 26,880 kWh
choice of distribution utilities, the one serving the largest
for business customers, based on a standardized case study
number of customers is selected.
adopted by the getting electricity methodology. Doing Business
measures the price of electricity but does not include these
The procedures are those that apply to a warehouse and
data when calculating the distance to frontier score for getting
electricity connection matching the standard
electricity or the ranking on the ease of getting electricity.
assumptions used by Doing Business in collecting the
data (see the section in this chapter on what the
indicators cover). The procedures, along with the
associated time and cost, are summarized below.
Table 4.2 Summary of time, cost and procedures for getting electricity in Madagascar
Time to
No. Procedure Cost to complete
complete
Submit application to JIRAMA and await estimate
When the utility has received the application, it inspects the client’s site
to determine the specifics of the connection and prepare an estimate of
*2 the connection fees. 1 calendar day MGA 0
Time to
No. Procedure Cost to complete
complete
Obtain right of way from local authority
The customer needs to obtain a right of way from the 'Commune' before
paying the estimate so that the utility can carry out the external works of
3 expanding the overhead network. 50 calendar days MGA 60,000
Only the utility is in charge of the external works. The client needs to pay
the connection fees at the utility’s offices for the works to start. In this
case an expansion of the network (installation of a unit substation) is
necessary. JIRAMA tests the client's material before carrying out the
works to check they are conform to its standards. 19 calendar days MGA 55,748,923
5
The final connection is carried out after the client has signed a supply
contract and paid an advance on consumption. The installation of the
meter is carried out by the utility.
Madagascar had suffered from some capacity issues over the last few
years. New power projects completed recently (JIRAMA installed an extra 366 calendar days MGA 9,801,267.76
6
66MW on Tana interconnected network) did however, increase the
existing capacity so that more customers can obtain supply. Despite the
availability of supply, JIRAMA still needs to deal with a back-log of
applications submitted over the many years when obtaining a
connection was not yet possible. The utility also accepts new applications
and prepares estimates of connection costs for those.
Delays are due to treating old and new applications and to lack of some
Doing Business 2017 Madagascar 43
Time to
No. Procedure Cost to complete
complete
materials, namely transformers, cables, etc.
GETTING ELECTRICITY
Reliability of supply and transparency of tariffs index
The reliability of supply and transparency of tariffs Doing Business uses the system average interruption
index encompasses quantitative data on the duration duration index (SAIDI) and the system average
and frequency of power outages as well as interruption frequency index (SAIFI) to measure the
qualitative information on the mechanisms put in duration and frequency of power outages in the largest
place by the utility for monitoring power outages business city of each economy (for 11 economies the data
and restoring power supply, the reporting are also collected for the second largest business city).
relationship between the utility and the regulator for SAIDI is the average total duration of outages over the
power outages, the transparency and accessibility of course of a year for each customer served, while SAIFI is
tariffs and whether the utility faces a financial the average number of service interruptions experienced
deterrent aimed at limiting outages (such as a by a customer in a year. Annual data (covering the
requirement to compensate customers or pay fines calendar year) are collected from distribution utility
when outages exceed a certain cap). companies and national regulators on SAIDI and SAIFI.
Both SAIDI and SAIFI estimates include load shedding.
The index ranges from 0 to 8, with higher values
indicating greater reliability of electricity supply and
greater transparency of tariffs.
Total duration and frequency of outages per customer a year (0-3) 0.0
Answer Score
g/
http://www.jirama
.mg/index.php?w
=scripts&f=Jiram
a-
page.php&act=ta
rifelec
Are customers notified of a change in tariff ahead of the billing cycle? Yes
Answer
Price of electricity (US cents per kWh) 13.1
REGISTERING PROPERTY
Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY
Effective administration of land is part of that. If
INDICATORS MEASURE
formal property transfer is too costly or
complicated, formal titles might go informal again.
And where property is informal or poorly Procedures to legally transfer title on
administered, it has little chance of being accepted immovable property (number)
as collateral for loans—limiting access to finance. Preregistration (for example, checking for liens,
notarizing sales agreement, paying property
What do the indicators cover?
transfer taxes)
Doing Business records the full sequence of Registration in the economy’s largest business
procedures necessary for a business to purchase city
property from another business and transfer the
property title to the buyer’s name. The transaction is Postregistration (for example, filing title with
the municipality)
considered complete when it is opposable to third
parties and when the buyer can use the property, Time required to complete each procedure
use it as collateral for a bank loan or resell it. In (calendar days)
addition, Doing Business also measures quality of
Does not include time spent gathering
the land administration system in each economy. information
The ranking of economies on the ease of registering
property is determined by sorting their distance to Each procedure starts on a separate day—
frontier scores for registering property. These scores though procedures that can be fully completed
online are an exception to this rule
are the simple average of the distance to frontier
scores for each of the component indicators. To Procedure considered completed once final
make the data comparable across economies, document is received
several assumptions about the parties to the No prior contact with officials
transaction, the property and the procedures are
used. Cost required to complete each procedure
(% of property value)
The parties (buyer and seller):
Official costs only, no bribes
Are limited liability companies, 100%
domestically and privately owned and perform No value added or capital gains taxes included
general commercial activities in the economy’s Quality of land administration index (0-30)
largest business city.
Have 50 employees each, all of whom are
Has no mortgages attached, has been under the
nationals.
same ownership for the past 10 years.
The property (fully owned by the seller):
Consists of 557.4 square meters (6,000 square feet)
Has a value of 50 times income per capita. The of land and a 10-year-old, 2-story warehouse of 929
sale price equals the value and entire property square meters (10,000 square feet). The warehouse is
will be transferred. in good condition and complies with all safety
Is registered in the land registry or cadastre, or standards, building codes and legal requirements.
both, and is free of title disputes. There is no heating system.
REGISTERING PROPERTY
Where does the economy stand today?
What does it take to complete a property transfer in Most indicator sets refer to a case scenario in the largest
Madagascar? According to data collected by Doing business city of an economy, except for 11 economies for
Business, registering property there requires 6.0 which the data are a population-weighted average of the
procedures, takes 100.0 days and costs 9.2% of the 2 largest business cities. See the chapter on distance to
property value (figure 5.1). The score on the quality of frontier and ease of doing business ranking at the end of
land administration index is 8.5 this profile for more details.
REGISTERING PROPERTY
Globally, Madagascar stands at 159 in the ranking of 190 regional average ranking provide other useful
economies on the ease of registering property (figure information for assessing how easy it is for an
5.2). The rankings for comparator economies and the entrepreneur in Madagascar to transfer property.
Figure 5.2 How Madagascar and comparator economies rank on the ease of registering
property
REGISTERING PROPERTY
Economies worldwide have been making it easier for the time required substantially—enabling buyers to use
entrepreneurs to register and transfer property—such as or mortgage their property earlier. What property
by computerizing land registries, introducing time limits registration reforms has Doing Business recorded in
for procedures and setting low fixed fees. Many have cut Madagascar (table 5.1)?
Table 5.1 How has Madagascar made registering property easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
REGISTERING PROPERTY
What are the details?
The indicators reported here are based on a set of
STANDARD PROPERTY TRANSFER
specific procedures—the steps that a buyer and seller
must complete to transfer the property to the buyer’s
name—identified by Doing Business through
information collected from local property lawyers, Property value: MGA 57,561,351
notaries and property registries. These procedures
are those that apply to a transaction matching the City: Antananarivo
standard assumptions used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators cover). The procedures, along
with the associated time and cost, are summarized
below.
Table 5.2 Summary of time, cost and procedures for registering property in Madagascar
Time to
No. Procedure Cost to complete
complete
Request two copies of the certificate of registration and the legal
situation of the land at the Registrar of the Property Registry
This certificate is an extract from the property registry books and must
have been obtained in the past three months maximum. It gives the
situation of the (past) registrations on the Registry books and indicates 21 days
the identity of the proprietor of the land who has registered his rights to (simultaneous MGA 4,000 (MGA
1 it. It also indicates any encumbrances on the land. According to Article I
with Procedures 2,000 per copy)
of the Decree No. 21 020/2012-VPDAT/SG/DGSF of the Deputy Prime
2)
Minister in charge of Development and Planning, effective August 2,
2012, the cost is: MGA 2,000 plus 100 MGA per owner from the fourth.
These coordinates allow the marking of the property and are expressed
in ‘x’ and ‘y’. This plan is to be signed by both parties and is annexed to
the request for authorization of the real estate transaction. This extract
can also be traced by a sworn surveyor to delimit the part of the land to 21 days
be ceded, in case the transaction does not cede the property in its (simultaneous MGA 5,000 per
*2 entirety. The cost and time noted here are for a simple plan, intended for
with Procedures plan
a transfer whereby the buyer is not planning on making changes or
1)
constructions to the property. For more complex uses of the property, a
more detailed plan would have to be drawn, costing between MGA 5000
and 15000, depending on whether a government or private surveyor was
used. According to Article 14 of Decree No. 21 021/2012-
VPDAT/SG/DGSF of the Deputy Prime Minister in charge of Development
and Planning, effective August 2, 2012, the rates are:
1000 MGA by plan size 720 mmx 1020 mm,
Doing Business 2017 Madagascar 51
Time to
No. Procedure Cost to complete
complete
- 1,000 MGA by plan size 520 mm X 720 mm,
- 1000 MGA by plan size 420 mm X 620 mm
-500 MGA per plane for size 320mm X 420 mm
-500 MGA per plane for the format 210 X 297 mm
Agency: Notary
Doing Business 2017 Madagascar 52
Time to
No. Procedure Cost to complete
complete
Registration of sale agreement at the Office of Property Registry
This is the most important procedure in the process. The property right
on a land is not transferred until it has been transcribed onto the books
at the Registry. When the notary or the buyer file for registration at the
Land registry, the "Duplicata" must be attached to the sale and purchase
agreement duly notarized. Once the transcription is done, the Registrar 2% property value
will give the "Duplicata" to the new buyer with his name written as the (transfer tax) +
6 60 days
new owner of the property. According to Article I of the Decree No. 21 MGA 15,000 (fixed
020/2012-VPDAT/SG/DGSF of the Deputy Prime Minister in charge of fee)
Development and Planning, effective August 2, 2012, the cost is 2% the
market value of the property with a minimum of 15,000 MGA + fixed fee:
15,000 MGA.
REGISTERING PROPERTY
Quality of land administration
The quality of land administration index is the sum of If private sector entities were unable to register property
the scores on the reliability of infrastructure, transfers in an economy between June 2015 and June
transparency of information, geographic coverage, 2016, the economy receives a “no practice” mark on the
land dispute resolution and equal access to property procedures, time and cost indicators. A “no practice”
rights indices. economy receives a score of 0 on the quality of land
administration index even if its legal framework includes
The index ranges from 0 to 30, with higher values
provisions related to land administration.
indicating better quality of the land administration
system.
Table 5.3 Summary of quality of land administration in Madagascar
Answer Score
Quality of the land administration index (0-30) 8.5
Service des
Domaines et de
What is the institution in charge of immovable property registration?
la Conservation
Foncière
In what format are the majority of title or deed records kept in the
largest business city—in a paper format or in a computerized format Paper 0.0
(scanned or fully digital)?
In what format are the majority of maps of land plots kept in the
largest business city—in a paper format or in a computerized format Paper 0.0
(scanned or fully digital)?
Who is able to obtain information on land ownership at the agency in Anyone who pays
1.0
charge of immovable property registration in the largest business city? the official fee
Is the list of documents that are required to complete any type of Yes, on public
0.5
property transaction made publicly available–and if so, how? boards
Doing Business 2017 Madagascar 54
Answer Score
Link for online access:
Number of property transfers in the largest business city in 2015: 1530 transfers
Is the applicable fee schedule for accessing maps of land plots made Yes, on public
0.5
publicly available—and if so, how? boards
Are all privately held land plots in the economy formally registered at
No 0.0
the immovable property registry?
Are all privately held land plots in the largest business city formally
No 0.0
registered at the immovable property registry?
Are all privately held land plots in the economy mapped? No 0.0
Are all privately held land plots in the largest business city mapped? No 0.0
Answer Score
Does the law require that all property sale transactions be registered at
the immovable property registry to make them opposable to third Yes 1.5
parties?
If yes, who is responsible for checking the legality of the documents? Notary.
Does the legal system require verification of the identity of the parties
Yes 0.5
to a property transaction?
If yes, who is responsible for verifying the identity of the parties? Registrar; Notary.
For a standard land dispute between two local businesses over tenure Land section of
rights of a property worth 50 times gross national income (GNI) per the First Instance
capita and located in the largest business city, what court would be in Tribunal of
charge of the case in the first instance? Antananarivo
How long does it take on average to obtain a decision from the first- More than 3
0.0
instance court for such a case (without appeal)? years
Are there any statistics on the number of land disputes in the first
No 0.0
instance?
GETTING CREDIT
Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS
credit and improve its allocation: credit information
MEASURE
systems and borrowers and lenders in collateral and
bankruptcy laws. Credit information systems enable
lenders to view and consider a potential borrower’s Strength of legal rights index (0–12)
financial history (positive or negative) when assessing Rights of borrowers and lenders through
risk and they allow borrowers to establish a good collateral laws
credit history that will facilitate their access to credit. Protection of secured creditors’ rights through
Sound collateral laws enable businesses to use their bankruptcy laws
assets, especially movable property, as security to
generate capital—while strong creditors’ rights have Depth of credit information index (0–8)
been associated with higher ratios of private sector Scope and accessibility of credit information
credit to GDP. distributed by credit bureaus and credit
registries
What do the indicators cover?
Credit bureau coverage (% of adults)
Doing Business assesses the sharing of credit
information and the legal rights of borrowers and Number of individuals and firms listed in largest
lenders with respect to secured transactions through credit bureau as percentage of adult population
2 sets of indicators. The depth of credit information Credit registry coverage (% of adults)
index measures rules and practices affecting the
coverage, scope and accessibility of credit Number of individuals and firms listed in credit
registry as percentage of adult population
information available through a credit registry or a
credit bureau. The strength of legal rights index
measures whether certain features that facilitate
lending exist within the applicable collateral and
bankruptcy laws. Doing Business uses two case
scenarios, Case A and Case B, to determine the scope
Has up to 50 employees.
of the secured transactions system, involving a
secured borrower and a secured lender and Is 100% domestically owned, as is the lender.
examining legal restrictions on the use of movable
The ranking of economies on the ease of getting credit
collateral (for more details on each case, see the Data
is determined by sorting their distance to frontier scores
Notes section of the Doing Business 2017 report).
for getting credit. These scores are the distance to
These scenarios assume that the borrower:
frontier score for the strength of legal rights index and
Is a domestic limited liability company. the depth of credit information index.
Has its headquarters and only base of operations in
the largest business city. For the 11 economies with a
population of more than 100 million, data for a
second city have been added.
Doing Business 2017 Madagascar 57
GETTING CREDIT
Where does the economy stand today?
How well do the credit information system and collateral Globally, Madagascar stands at 170 in the ranking of 190
and bankruptcy laws in Madagascar facilitate access to economies on the ease of getting credit (figure 6.1). The
credit? The economy has a score of 0.0 on the depth of rankings for comparator economies provide other useful
credit information index and a score of 3.0 on the information for assessing how well regulations and
strength of legal rights index (see the summary of institutions in Madagascar support lending and
scoring at the end of this chapter for details). Higher borrowing.
scores indicate more credit information and stronger
legal rights for borrowers and lenders.
Figure 6.1 How Madagascar and comparator economies rank on the ease of getting credit
GETTING CREDIT
One way to put an economy’s score on the getting credit rights index for Madagascar and shows the scores for
indicators into context is to see where the economy comparator economies as well as the regional average
stands in the distribution of scores across economies. score. Figure 6.3 shows the same for the depth of credit
Figure 6.2 highlights the score on the strength of legal information index.
Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared—
and lenders? and how widely?
Economy scores on strength of legal rights index Economy scores on depth of credit information index
GETTING CREDIT
When economies strengthen the legal rights of lenders information, they can increase entrepreneurs’ access to
and borrowers under collateral and bankruptcy laws, and credit. What credit reforms has Doing Business recorded
increase the scope, coverage and accessibility of credit in Madagascar (table 6.1)?
Table 6.1 How has Madagascar made getting credit easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
GETTING CREDIT
What are the details?
The getting credit indicators reported here for The data on the legal rights of borrowers and lenders are
Madagascar are based on detailed information collected gathered through a survey of financial lawyers and
in that economy. The data on credit information sharing verified through analysis of laws and regulations as well
are collected through a survey of a credit registry and/or as public sources of information on collateral and
credit bureau (if one exists). To construct the depth of bankruptcy laws. For the strength of legal rights index, a
credit information index, a score of 1 is assigned for each score of 1 is assigned for each of 10 aspects related to
of 8 features of the credit registry or credit bureau (see legal rights in collateral law and 2 aspects in bankruptcy
summary of scoring below). law.
Does an integrated or unified legal framework for secured transactions that extends to the
creation, publicity and enforcement of functional equivalents to security interests in movable 0
assets exist in the economy?
Does the law allow businesses to grant a non possessory security right in a single category of
0
movable assets, without requiring a specific description of collateral?
Does the law allow businesses to grant a non possessory security right in substantially all of its
1
assets, without requiring a specific description of collateral?
May a security right extend to future or after-acquired assets, and may it extend automatically to
1
the products, proceeds or replacements of the original assets?
Is a general description of debts and obligations permitted in collateral agreements; can all types
of debts and obligations be secured between parties; and can the collateral agreement include a 1
maximum amount for which the assets are encumbered?
Is a collateral registry in operation for both incorporated and non-incorporated entities, that is
0
unified geographically and by asset type, with an electronic database indexed by debtor's name?
Does a notice-based collateral registry exist in which all functional equivalents can be registered? 0
Does a modern collateral registry exist in which registrations, amendments, cancellations and
0
searches can be performed online by any interested third party?
Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor
0
defaults outside an insolvency procedure?
Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is
0
liquidated?
Are secured creditors subject to an automatic stay on enforcement when a debtor enters a
court-supervised reorganization procedure? Does the law protect secured creditors’ rights by 0
providing clear grounds for relief from the stay and/or sets a time limit for it?
Does the law allow parties to agree on out of court enforcement at the time a security interest is
created? Does the law allow the secured creditor to sell the collateral through public auction and 0
private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?
Doing Business 2017 Madagascar 61
Depth of credit information index (0–8) Credit bureau Credit registry Index score: 0.0
Figure 7.1 How Madagascar and comparator economies perform on the strength of minority investor protection
index
Table 7.1 How has Madagascar strengthened minority investor protections—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
Table 7.2 Summary of scoring for the protecting minority investors indicators in Madagascar
Answer Score
Strength of minority investor protection index (0-10) 4.8
Extent of conflict of interest regulation index (0-10) 6.0
Extent of disclosure index (0-10) 7.0
Which corporate body is legally sufficient to approve the Shareholders excluding interested
3.0
Buyer-Seller transaction? (0-3) parties
Must Mr. James disclose his conflict of interest to the board
Full disclosure of all material facts 2.0
of directors? (0-2)
Must Buyer disclose the transaction in published periodic Disclosure on the transaction and
2.0
filings (annual reports)? (0-2) on the conflict of interest
Must Buyer immediately disclose the transaction to the
No disclosure obligation 0.0
public and/or shareholders? (0-2)
Must an external body review the terms of the transaction
No 0.0
before it takes place? (0-1)
Extent of director liability index (0-10) 6.0
Can shareholders representing 10% of Buyer's share capital
sue directly or derivatively for the damage the transaction Yes 1.0
caused to Buyer? (0-1)
Can shareholders hold the interested director liable for the
Liable if negligent 1.0
damage the transaction caused to Buyer? (0-2)
Can shareholders hold the other directors liable for the
Liable if negligent 1.0
damage the transaction caused to Buyer (0-2)
Must Mr. James pay damages for the harm caused to Buyer
Yes 1.0
upon a successful claim by shareholders? (0-1)
Must Mr. James repay profits made from the transaction
No 0.0
upon a successful claim by shareholders? (0-1)
Is Mr. James disqualifed or fined and imprisoned upon a
Yes 1.0
successful claim by shareholders? (0-1)
Can a court void the transaction upon a successful claim by
Voidable if negligently concluded 1.0
shareholders? (0-2)
Ease of shareholder suits index (0-10) 5.0
Before suing can shareholders representing 10% of Buyer's
Yes 1.0
share capital inspect the transaction documents? (0-1)
Can the plaintiff obtain any documents from the defendant
Any relevant document 3.0
and witnesses at trial? (0-3)
Can the plaintiff request categories of documents from the No 0.0
Doing Business 2017 Madagascar 68
PAYING TAXES
Taxes are essential. The level of tax rates needs to be
WHAT THE PAYING TAXES INDICATORS
carefully chosen—and needless complexity in tax
rules avoided. Firms in economies that rank better MEASURE
on the ease of paying taxes in the Doing Business
study tend to perceive both tax rates and tax Tax payments for a manufacturing company
administration as less of an obstacle to business in 2015 (number per year adjusted for
according to the World Bank Enterprise Survey electronic and joint filing and payment)
research.
Total number of taxes and contributions paid,
What do the indicators cover? including consumption taxes (value added tax,
sales tax or goods and service tax)
Using a case scenario, Doing Business records the
taxes and mandatory contributions that a medium- Method and frequency of filing and payment
size company must pay in a given year as well as Time required to comply with 3 major taxes
measures of the administrative burden of paying (hours per year)
taxes and contributions and dealing with postfiling
processes. This case scenario uses a set of financial Collecting information and computing the tax
payable
statements and assumptions about transactions
made over the year. Information is also compiled on Completing tax return forms, filing with
the frequency of filing and payments, time taken to proper agencies
comply with tax laws, time taken to comply with the Arranging payment or withholding
requirements of postfiling processes and time
waiting for these processes to be completed. The Preparing separate tax accounting books, if
required
ranking of economies on the ease of paying taxes is
determined by sorting their distance to frontier Total tax rate (% of profit before all taxes)
scores on the ease of paying taxes. These scores are
Profit or corporate income tax
the simple average of the distance to frontier scores
for each of the four component indicators – number Social contributions and labor taxes paid by
of tax payments. time, total tax rate and postfiling the employer
index – with a threshold and a nonlinear Property and property transfer taxes
transformation applied to one of the component
1 Dividend, capital gains and financial
indicators, the total tax rate . If both VAT (or GST)
transactions taxes
and corporate income tax apply, the postfiling index
is the simple average of the distance to frontier Waste collection, vehicle, road and other taxes
scores for each of the four components: the time to Postfiling Index
comply with a VAT or GST refund, the time to obtain
The time to comply with a VAT or GST refund
a VAT or GST refund, the time to comply with a
corporate income tax audit and the time to complete The time to receive a VAT or GST refund
a corporate income tax audit. If only VAT (or GST) or The time to comply with a corporate income
corporate income tax If onapplies, the postfiling tax audit
index is the simple average of the scores for only the The time to complete a corporate income tax
two components pertaining to the applicable tax. If audit
neither VAT (or GST) nor corporate income tax
The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8.
1
The threshold is defined as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up
to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same
score as the economy at the threshold.
Doing Business 2017 Madagascar 71
PAYING TAXES
Where does the economy stand today?
What is the administrative burden of complying with tax table 8.2 and table 8.3 the end of this chapter for details).
obligations and postfiling processes in Madagascar—and Most indicator sets refer to a case scenario in the largest
how much do firms pay in taxes? Globally, Madagascar business city of an economy, except for 11 economies for
stands at 117 in the ranking of 190 economies on the which the data are a population-weighted average of the
ease of paying taxes (figure 8.1). The rankings for 2 largest business cities. See the chapter on distance to
comparator economies and the regional average ranking frontier and ease of doing business ranking at the end of
provide other useful information for assessing the tax this profile for more details.
compliance burden for businesses in Madagascar (see
.
Figure 8.1 How Madagascar and comparator economies rank on the ease of paying taxes
PAYING TAXES
Economies around the world have made paying taxes and exemptions. Many have lowered tax rates. Changes
faster, easier and less costly for businesses—such as by have brought concrete results. Some economies
consolidating payments and filings of taxes, offering simplifying tax payment and reducing rates have seen
electronic systems for filing and payment, establishing tax revenue rise. What tax reforms has Doing Business
taxpayer service centers or allowing for more deductions recorded in Madagascar (table 8.1)?
Table 8.1 How has Madagascar made paying taxes easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
PAYING TAXES
What are the details?
The indicators reported here for Madagascar are
LOCATION OF STANDARDIZED COMPANY
based on the taxes and contributions that would be
paid by a standardized case study company used by
Doing Business in collecting the data (see the section City: Antananarivo
in this chapter on what the indicators cover). Tax
practitioners are asked to review a set of financial
statements as well as a standardized list of
assumptions and transactions that the company
The taxes and contributions paid are listed in table 8.2,
completed during its 2nd year of operation.
along with the associated number of payments, time
Respondents are asked how much taxes and
and tax rate.
mandatory contributions the business must pay, how
these taxes are filed and paid, how much time The postfiling index is based on four components—the
taxpayers spend preparing, filing and paying three time to comply with a VAT or GST refund, the time to
major taxes (profit taxes, labor taxes including obtain a VAT or GST refund, the time to comply with a
mandatory contributions and consumption taxes) and corporate income tax audit and the time to complete a
how much time taxpayers spend complying with corporate income tax audit (table 8.3). These
postfiling processes and waiting for these processes components are based on expanded case study
to be completed. assumptions. If only VAT (or GST) or corporate income
tax applies for an economy, the postfiling index is the
simple average of the scores for only the two
components pertaining to the applicable tax. If neither
VAT (or GST) nor corporate income tax applies, the
postfiling index is not included in the ranking of the
ease of paying taxes.
Restricted to
Restrictions on VAT refund process international traders
and others
Time to comply with a corporate income tax audit (hours) 13.5 78.0
Answer Score
Department of Tax
litigations - Direction
First level administrative appeal authority
de la Législation Fiscale
et du Contentieux
Independent
Is the appeal authority independent? department within tax
office
online/in printed
Source of appeal guidelines publication/in person at
tax office
Note:
The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to
comply with a corporate income tax audit and time to complete a corporate income tax audit.
N/A = Not applicable.
Doing Business 2017 Madagascar 77
Assumptions of the case study If government fees are determined by the value of the
shipment, the value is assumed to be $50,000.
For each of the 190 economies covered by
Doing Business, it is assumed that a shipment The product is new, not secondhand or used
travels from a warehouse in the largest merchandise.
business city of the exporting economy to a
The exporting firm is responsible for hiring and paying
warehouse in the largest business city of the
for a freight forwarder or customs broker (or both)
importing economy. For 11 economies the
and pays for all costs related to international shipping,
data are also collected, under the same case
domestic transport, clearance and mandatory
study assumptions, for the second largest
inspections by customs and other government
business city.
agencies, port or border handling, documentary
The import and export case studies assume compliance fees and the like for exports. The
different traded products. It is assumed that importing firm is responsible for the above costs for
each economy imports a standardized imports.
shipment of 15 metric tons of containerized
The mode of transport is the one most widely used for
auto parts (HS 8708) from its natural import
the chosen export or import product and the trading
partner—the economy from which it imports
partner, as is the seaport, airport or land border
the largest value (price times quantity) of auto
crossing.
parts. It is assumed that each economy exports
the product of its comparative advantage All electronic submissions of information requested by
(defined by the largest export value) to its any government agency in connection with the
natural export partner—the economy that is shipment are considered to be documents obtained,
the largest purchaser of this product. Special prepared and submitted during the export or import
products, such as precious metal and gems, process.
live animals and pharmaceuticals are excluded A port or border is defined as a place (seaport, airport
from the list of possible export products,
or land border crossing) where merchandise can enter
however, and the second largest product
or leave an economy.
category is considered as needed.
Government agencies considered relevant are
A shipment is a unit of trade. Export shipments agencies such as customs, port authorities, road
do not necessarily need to be containerized, police, border guards, standardization agencies,
while import shipments of auto parts are ministries or departments of agriculture or industry,
assumed to be containerized. national security agencies and any other government
authorities.
Doing Business 2017 Madagascar 79
Figure 9.1 How Madagascar and comparator economies rank on the ease of trading across borders
Table 9.1 How has Madagascar made trading across borders easier—or not?
By Doing Business report year from DB2011 to DB2017
DB year Reform
Table 9.2 Summary of export and import time and cost for trading across borders in Madagascar
Madagascar Sub-Saharan Africa
Table 9.3 Summary of trading details, transport time and documents for trading across borders in Madagascar
Export Import
HS 61 : Articles of apparel
HS 8708: Parts and accessories
Product and clothing accessories,
of motor vehicles
knitted or crocheted
Trade partner Germany China
Border Toamasina port Toamasina port
Distance (km) 356 356
Domestic transport time (hours) 13 14
Domestic transport cost (USD) 610 680
data in calculating the distance to frontier score for trading across borders or the ranking on the ease of trading across
borders.
Documents to export
Bill of lading
Certificate of origin
Commercial invoice
Inspection report
Packing list
Documents to import
Bill of lading
Certificate of origin
Commercial invoice
Gate Pass
Import permit
Packing list
Source: Doing Business database.
Note: Doing Business continues to collect data on the number of documents needed to trade internationally. Unlike in previous
years, however, these data are excluded from the calculation of the distance to frontier score and ranking. The time and cost
for documentary compliance serve as better measures of the overall cost and complexity of compliance with documentary
requirements than does the number of documents required.
Doing Business 2017 Madagascar 83
ENFORCING CONTRACTS
WHAT THE ENFORCING CONTRACTS
Effective commercial dispute resolution has many
benefits. Courts are essential for entrepreneurs INDICATORS MEASURE
because they interpret the rules of the market and
protect economic rights. Efficient and transparent Time required to enforce a contract through
courts encourage new business relationships because the courts (calendar days)
businesses know they can rely on the courts if a new
customer fails to pay. Speedy trials are essential for Time to file and serve the case
small enterprises, which may lack the resources to Time for trial and to obtain the judgment
stay in business while awaiting the outcome of a long
Time to enforce the judgment
court dispute.
Cost required to enforce a contract through
What do the indicators cover? the courts (% of claim)
Doing Business measures the time and cost for Attorney fees
resolving a standardized commercial dispute through
a local first-instance court. In addition, Doing Court fees
Business measures the quality of judicial processes Enforcement fees
index, evaluating whether each economy has
Quality of judicial processes index (0-18)
adopted a series of good practices that promote
quality and efficiency in the court system. The Court structure and proceedings (0-5)
ranking of economies on the ease of enforcing Case management (0-6)
contracts is determined by sorting their distance to
frontier scores. These scores are the simple average Court automation (0-4)
of the distance to frontier scores for each of the Alternative dispute resolution (0-3)
component indicators.
The dispute in the case study involves the breach of a
sales contract between 2 domestic businesses. The The seller sues the buyer before the court with
case study assumes that the court hears an expert on jurisdiction over commercial cases worth 200% of
the quality of the goods in dispute. This distinguishes income per capita or $5,000.
the case from simple debt enforcement. To make the
The seller requests a pretrial attachment to secure
data comparable across economies, Doing Business
the claim.
uses several assumptions about the case:
The dispute on the quality of the goods requires an
expert opinion.
The dispute concerns a lawful transaction
The judge decides in favor of the seller; there is no
between two businesses (Seller and Buyer), both
appeal.
located in the economy’s largest business city.
For 11 economies the data are also collected for The seller enforces the judgment through a public
the second largest business city. sale of the buyer’s movable assets.
The buyer orders custom-made goods, then fails
to pay.
The value of the dispute is 200% of the income
per capita or the equivalent in local currency of
USD 5,000, whichever is greater.
Doing Business 2017 Madagascar 85
ENFORCING CONTRACTS
Where does the economy stand today?
How efficient is the process of resolving a commercial frontier and ease of doing business ranking at the end of
dispute through the courts in Madagascar? According to this profile for more details.
data collected by Doing Business, contract enforcement
Globally, Madagascar stands at 158 in the ranking of 190
takes 871.0 days and costs 33.6% of the value of the
economies on the ease of enforcing contracts (figure
claim. Most indicator sets refer to the largest business
10.1). The rankings for comparator economies and the
city of an economy, except for 11 economies for which
regional average provide other useful benchmarks for
the data are a population-weighted average of the 2
assessing the efficiency of contract enforcement in
largest business cities. See the chapter on distance to
Madagascar.
Figure 10.1 How Madagascar and comparator economies rank on the ease of enforcing contracts
ENFORCING CONTRACTS
What are the details?
The data on time and cost reported here for
ECONOMY DETAILS
Madagascar are built by following the step-by-step
evolution of a commercial sale dispute within the
court, under the assumptions about the case Claim value: MGA 11,968,367
described above (figure 10.2). The time and cost of
resolving the standardized dispute are identified
Court name: First Instance Court
through study of the codes of civil procedure and
other court regulations, as well as through
City: Antananarivo
questionnaires completed by local litigation lawyers
(and, in a quarter of the economies covered by
Doing Business, by judges as well).
Figure 10.2 Time and cost of contract enforcement in Madagascar and comparator economies
Table 10.2 Details on time and cost for enforcing contracts in Madagascar
Sub-Saharan
Indicator Madagascar
Africa average
ENFORCING CONTRACTS
Quality of judicial processes index
The quality of judicial processes index measures The scores reported here show which of these good
whether each economy has adopted a series of good practices are available in Madagascar (figure 10.3).
practices in its court system in four areas: court
This methodology was initially developed by Djankov and
structure and proceedings, case management, court
others (2003) and is adopted here with several changes.
automation and alternative dispute resolution. The
The quality of judicial processes index was introduced in
score on the quality of judicial processes index is the
Doing Business 2016. The good practices tested in this
sum of the scores on these 4 sub-components. The
index were developed on the basis of internationally
index ranges from 0 to 18, with higher values
recognized good practices promoting judicial efficiency.
indicating more efficient judicial processes.
Figure 10.3 Quality of judicial processes index in Madagascar and comparator economies
Doing Business 2017 Madagascar 89
1.a. Are there laws setting overall time standards for key court events in
Yes
a civil case?
1.b. If yes, are the time standards set for at least three court events? No
1.c. Are these time standards respected in more than 50% of cases? Yes
2. Adjournments 0.0
2.a. Does the law regulate the maximum number of adjournments that
No
can be granted?
2.c. If rules on adjournments exist, are they respected in more than 50%
n.a.
of cases?
5. Are there any electronic case management tools in place within the
No 0.0
competent court for use by judges?
Doing Business 2017 Madagascar 90
Answer Score
6. Are there any electronic case management tools in place within the
No 0.0
competent court for use by lawyers?
3. Can court fees be paid electronically within the competent court? No 0.0
1. Arbitration 1.5
1.b. Are there any commercial disputes—aside from those that deal
with public order or public policy—that cannot be submitted to No
arbitration?
2. Mediation/Conciliation 1.0
RESOLVING INSOLVENCY
A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY
ensuring the survival of economically efficient
companies and reallocating the resources of INDICATORS MEASURE
inefficient ones. Fast and cheap insolvency
proceedings result in the speedy return of businesses Time required to recover debt (years)
to normal operation and increase returns to
Measured in calendar years
creditors. By clarifying the expectations of creditors
and debtors about the outcome of insolvency Appeals and requests for extension are
proceedings, well-functioning insolvency systems can included
facilitate access to finance, save more viable Cost required to recover debt (% of debtor’s
businesses and sustainably grow the economy. estate)
What do the indicators cover? Measured as percentage of estate value
Doing Business studies the time, cost and outcome of Court fees
insolvency proceedings involving domestic legal Fees of insolvency administrators
entities. These variables are used to calculate the Lawyers’ fees
recovery rate, which is recorded as cents on the Assessors’ and auctioneers’ fees
dollar recovered by secured creditors through Other related fees
reorganization, liquidation or debt enforcement
Outcome
(foreclosure or receivership) proceedings. To
determine the present value of the amount Whether business continues operating as a
recovered by creditors, Doing Business uses the going concern or business assets are sold
lending rates from the International Monetary Fund, piecemeal
supplemented with data from central banks and the Recovery rate for creditors
Economist Intelligence Unit.
Measures the cents on the dollar recovered
To make the data on the time, cost and outcome by secured creditors
comparable across economies, several assumptions
Outcome for the business (survival or not)
about the business and the case are used:
determines the maximum value that can be
A hotel located in the largest city (or cities) has recovered
201 employees and 50 suppliers. The hotel Official costs of the insolvency proceedings
experiences financial difficulties. are deducted
The value of the hotel is 100% of the income per Depreciation of furniture is taken into
capita or the equivalent in local currency of USD account
200,000, whichever is greater.
Present value of debt recovered
The hotel has a loan from a domestic bank,
Strength of insolvency framework index (0-
secured by a mortgage over the hotel’s real
16)
estate. The hotel cannot pay back the loan, but
makes enough money to operate otherwise. Sum of the scores of four component indices:
Commencement of proceedings index (0-3)
In addition, Doing Business evaluates the adequacy
and integrity of the existing legal framework Management of debtor’s assets index (0-6)
applicable to liquidation and reorganization Reorganization proceedings index (0-3)
proceedings through the strength of insolvency Creditor participation index (0-4)
framework index. The index tests whether economies
adopted internationally accepted good practices in management of debtor’s assets, reorganization
four areas: commencement of proceedings, proceedings and creditor participation.
Doing Business 2017 Madagascar 92
RESOLVING INSOLVENCY
Where does the economy stand today?
Globally, Madagascar stands at 127 in the ranking of 190 not measure insolvency proceedings of individuals and
economies on the ease of resolving insolvency (figure financial institutions. The data are derived from
11.1). The ranking of economies on the ease of resolving questionnaire responses by local insolvency practitioners
insolvency is determined by sorting their distance to and verified through a study of laws and regulations as
frontier scores for resolving insolvency. These scores are well as public information on bankruptcy systems.
the simple average of the distance to frontier scores for
the recovery rate and the strength of insolvency
framework index. The resolving insolvency indicator does
Figure 11.1 How Madagascar and comparator economies rank on the ease of resolving insolvency
RESOLVING INSOLVENCY
Recovery of debt in insolvency
Data on the time, cost and outcome refer to the most average recovery rate is 11.4 cents on the dollar. Most
likely in-court insolvency procedure applicable under indicator sets refer to a case scenario in the largest
specific case study assumptions. business city of an economy, except for 11 economies for
which the data are a population-weighted average of the
According to data collected by Doing Business, resolving
2 largest business cities.
insolvency takes 3.0 years on average and costs 8.5% of
the debtor’s estate, with the most likely outcome being
that the company will be sold as piecemeal sale. The
Figure 11.2 Efficiency of proceedings - time, cost and recovery rate in Madagascar and comparator economies.
RESOLVING INSOLVENCY
Strength of resolving insolvency index
The strength of insolvency framework index is the with higher values indicating insolvency legislation that is
sum of the scores on the commencement of better designed for rehabilitating viable firms and
proceedings index, management of debtor’s assets liquidating nonviable ones. Madagascar’s score on the
index, reorganization proceedings index and creditor strength of insolvency framework index is 9.0 out of 16.
participation index. The index ranges from 0 to 16, Data on provisions applicable to judicial liquidation and
reorganization is based on the current law governing
insolvency proceedings in each economy.
Figure 11.3 Strength of insolvency framework index (0-16) in Madagascar and comparator economies
reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome
indicators are recorded as “no practice”.
Doing Business 2017 Madagascar 97
Table 11.2 Summary of data for the strength of insolvency framework index in Madagascar
Answer Score
Strength of insolvency framework index (0-16) 9.0
(a) Debtor is
What basis for commencement of the insolvency proceedings is allowed generally unable
1.0
under the insolvency framework? to pay its debts
as they mature
Does the insolvency framework allow the rejection by the debtor of overly
Yes 1.0
burdensome contracts?
Does the insolvency framework provide for the possibility of the debtor
Yes 1.0
obtaining credit after commencement of insolvency proceedings?
Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5
Are the creditors devided into classes for the purposes of voting on the
reorganization plan, does each class vote separately and are creditors in No 0.0
the same class treated equally?
Doing Business 2017 Madagascar 98
Answer Score
Creditor participation index (0-4) 1.0
Does the insolvency framework require approval by the creditors for sale
No 0.0
of substantial assets of the debtor?
Does the insolvency framework provide that a creditor has the right to
No 0.0
request information from the insolvency representative?
Does the insolvency framework provide that a creditor has the right to
Yes 1.0
object to decisions accepting or rejecting creditors' claims?
Source: Doing Business database.
Doing Business 2017 Madagascar 99
The worker:
Is a cashier in a supermarket or grocery store,
age 19, with one year of work experience.
Is a full-time employee.
Is not a member of the labor union, unless
membership is mandatory.
The business:
Is a limited liability company (or the equivalent
in the economy).
Operates a supermarket or grocery store in the
economy’s largest business city. For 11
economies the data are also collected for the
second largest business city.
Has 60 employees.
Is subject to collective bargaining agreements if
such agreements cover more than 50% of the
Doing Business 2017 Madagascar 100
Hiring
Data on hiring cover five areas: (i) whether fixed-term minimum wage to the average value added per worker
contracts are prohibited for permanent tasks; (ii) the (the ratio of an economy’s GNI per capita to the
maximum cumulative duration of fixed-term contracts; working-age population as a percentage of the total
(iii) the minimum wage for a cashier, age 19, with one population).
year of work experience; and (iv) the ratio of the
Hiring Data
Fixed-term contracts prohibited for permanent tasks? Yes
Maximum length of a single fixed-term contract (months) 24 months, Art. 8, Code du Travail, 2004.
Maximum length of fixed-term contracts, including renewals (months) 24.0
Minimum wage applicable to the worker assumed in the case study
58.0
(US$/month)
Ratio of minimum wage to value added per worker 0.9
Source: Doing Business database.
Doing Business 2017 Madagascar 101
Paid annual leave for a worker with 1 year of tenure (working days) 24.0
Paid annual leave for a worker with 5 years of tenure (working days) 24.0
Paid annual leave for a worker with 10 years of tenure (working days) 24.0
Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in 24.0
working days)
Source: Doing Business database.
Doing Business 2017 Madagascar 102
Data on redundancy cover nine areas: (i) the length of whether the employer needs approval from a third party
the maximum probationary period (in months) for to terminate one redundant worker; (vi) whether the
permanent employees; (ii) whether redundancy is employer needs approval from a third party to terminate
allowed as a basis for terminating workers; (iii) whether a group of nine redundant workers; (vii) whether the law
the employer needs to notify a third party (such as a requires the employer to reassign or retrain a worker
government agency) to terminate one redundant worker; before making the worker redundant; (viii) whether
(iv) whether the employer needs to notify a third party to priority rules apply for redundancies; and (ix) whether
terminate a group of nine redundant workers; (v) priority rules apply for reemployment.
Redundancy cost measures the cost of advance notice severance payments applicable to a worker with 1 year of
requirements and severance payments due when tenure, a worker with 5 years and a worker with 10 years
terminating a redundant worker, expressed in weeks of is considered. One month is recorded as 4 and 1/3
salary. The average value of notice requirements and weeks.
Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3
Notice period for redundancy dismissal for a worker with 5 years of tenure 6.5
Notice period for redundancy dismissal for a worker with 10 years of tenure 6.5
Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years 5.8
of tenure)
Severance pay for redundancy dismissal for a worker with 1 year of tenure 1.7
Severance pay for redundancy dismissal for a worker with 5 years of tenure 8.3
Severance pay for redundancy dismissal for a worker with 10 years of tenure 16.7
Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years 8.9
of tenure)
Source: Doing Business database.
Doing Business 2017 Madagascar 104
Job quality
Doing Business introduced new data on job quality in leave receive 100% of wages; (vi) the availability of five
2015. Doing Business 2017 covers eight questions on job fully paid days of sick leave a year; (vii) whether a worker
quality (i) whether the law mandates equal remuneration is eligible for an unemployment protection scheme after
for work of equal value; (ii) whether the law mandates one year of service; and (viii) the minimum duration of
nondiscrimination based on gender in hiring; (iii) the contribution period (in months) required for
whether the law mandates paid or unpaid maternity unemployment protection.
leave; (iv) the minimum length of paid maternity leave (in .
calendar days); (v) whether employees on maternity
identical to the simple average used by Doing Business . The nonlinear transformation is not based on any
2
Thus Doing Business uses the simplest method: economic theory of an “optimal tax rate” that minimizes
weighting all topics equally and, within each topic, giving distortions or maximizes efficiency in an economy’s
equal weight to each of the topic components . overall tax system. Instead, it is mainly empirical in
3
2
See Djankov, Manraj and others (2005). Principal components and
unobserved components methods yield a ranking nearly identical to
that from the simple average method because both these methods
assign roughly equal weights to the topics, since the pairwise
correlations among indicators do not differ much. An alternative to the
simple average method is to give different weights to the topics,
depending on which are considered of more or less importance in the
context of a specific economy.
3
For getting credit, indicators are weighted proportionally, according
to their contribution to the total score, with a weight of 60% assigned
to the strength of legal rights index and 40% to the depth of credit
information index. Indicators for all other topics are assigned equal
weights
Doing Business 2017 Madagascar 107
Table 13.1 Weights used in calculating the distance to the most. First, it selects the economies that in 2015/16
frontier scores for economies with 2 cities covered implemented regulatory reforms making it easier to do
business in 3 or more of the 10 topics included in this
Economy City Weight (%)
year’s aggregate distance to frontier score. Twenty-nine
Dhaka 78
Bangladesh economies meet this criterion: Algeria; Azerbaijan;
Chittagong 22
São Paulo 61 Bahrain; Belarus; Brazil; Brunei Darussalam; Burkina Faso;
Brazil
Rio de Janeiro 39 Côte d’Ivoire; Georgia; India; Indonesia; Kazakhstan;
Shanghai 55 Kenya; Madagascar; Mali; Mauritania; Morocco; Niger;
China
Beijing 45 Pakistan; Poland; Senegal; Serbia; Singapore; Thailand;
Mumbai 47 Togo; Uganda; the United Arab Emirates; Uzbekistan and
India
Delhi 53
Vanuatu. Second, Doing Business sorts these economies
Jakarta 78
Indonesia on the increase in their distance to frontier score from
Surabaya 22
Tokyo 65
the previous year using comparable data.
Japan
Osaka 35
Mexico City 83 Selecting the economies that implemented regulatory
Mexico
Monterrey 17 reforms in at least three topics and had the biggest
Lagos 77 improvements in their distance to frontier scores is
Nigeria
Kano 23 intended to highlight economies with ongoing, broad-
Karachi 65 based reform programs. The improvement in the
Pakistan
Lahore 35 distance to frontier score is used to identify the top
Moscow 70
Russian Federation improvers because this allows a focus on the absolute
St. Petersburg 30
improvement—in contrast with the relative improvement
New York 60
United States
Los Angeles 40
shown by a change in rankings—that economies have
made in their regulatory environment for business.
Source: United Nations, Department of Economic and Social
Affairs, Population Division, World Urbanization Prospects,
2014 Revision. http://esa.un.org/unpd/wup/CD-
ROM/Default.aspx.
Ease of Doing Business ranking
The ease of doing business ranking ranges from 1 to 190.
Economies that improved the most across 3 or more
The ranking of economies is determined by sorting the
Doing Business topics in 2015/16
aggregate distance to frontier scores, rounded to 2
Doing Business 2017 uses a simple method to calculate decimals.
which economies improved the ease of doing business
Doing Business 2017 Madagascar 108
Historical data
Customized data sets since DB2004
http://www.doingbusiness.org/custom-query
Doing Business 2017 Madagascar 109