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Doing Business in Brazil: Report Compares Ease of Doing Business in 13 Brazilian Cities


In Washington, D.C.:
Nadine Ghannam
Phone: +1 (202) 458-0482
Email: nsghannam@ifc.org

In Brazil:
Karina Manasseh
Phone: + 55-11-5185-6881
Email: kmanasseh@ifc.org


Rio de Janeiro, July 26, 2006 – Brazilian cities vary significantly in the ease of doing business, according to the new Doing Business in Brazil report, launched today in Rio de Janeiro.

The report covers five areas of business regulation – starting a business, registering property, obtaining credit, paying taxes, and enforcing a contract – across 13 cities: Belo Horizonte, Minas Gerais; Brasília, Federal District; Campo Grande, Mato Grosso do Sul; Cuiabá, Mato Grosso; Florianópolis, Santa Catarina; Fortaleza, Ceará; Manaus, Amazonas; Porto Alegre, Rio Grande do Sul; Porto Velho, Rondônia; Rio de Janeiro, Rio de Janeiro; Salvador, Bahia; São Luís, Maranhão;  and São Paulo, São Paulo.

Varying state- and municipal-level regulatory requirements, as well as differences in the implementation of national-level regulations, can either enhance or constrain local business activity. The report finds that state and city level reforms are becoming increasingly important in a globalized world, where cities, as much as countries, compete for investment – e.g., São Paulo competes with Shanghai rather than Brazil with China.

“Creating jobs is a priority for any government, especially in Latin America, where many people work in the informal sector. Doing more to ease regulation and establish a favorable business environment for entrepreneurs is key to creating more jobs – and equitable growth," said Mierta Capaul, the lead author of Doing Business in Brazil.  “The Brazilian government and many state and municipal governments have recently undertaken reforms that make it easier to do business. This report suggests areas where further reforms are possible.” Capaul added.

Reforms also expand the reach of regulation by bringing businesses and employees into the formal sector, thus reducing informality, which is widespread in Brazil’s economy.

The main report findings are:

  • Complying with business regulations is easiest in Brasilia, followed by Manaus, and most onerous in Fortaleza. Low income is not a barrier to good regulation: São Luís in Maranhão, which has the lowest income per capita of the states in which cities were evaluated, ranks 5th among the 13 cities in the overall ease of doing business.
  • The report also looks at how the Brazilian cities compare with other cities globally, providing another perspective on the time it takes to start a business. São Paulo ranks 149 out of 155 major cities, whereas Belo Horizonte, the Brazilian city with the fastest time to start a business, ranks 30th.
  • When compared with a similar subnational study in Mexico, Brazilian cities perform better when it comes to the cost of registering property. But despite identical regulations across Brazil, there is a wide variation in the time it takes to transfer property. In São Luís an entrepreneur spends less than a month to register property, while in Campo Grande and Salvador the entrepreneur needs almost three months to do this.
  • In Belo Horizonte it takes a mere two days to create and register collateral, as compared to 45 days in Brasilia. In Rio de Janeiro, an entrepreneur spends 0.2% of the loan value to register a security right, while in Fortaleza it costs 3.8% of the value of the loan - much higher than the state average of 1.7%.
  • The tax burden is heavy in Brazil, both in terms of tax rates and administrative complexities: businesses in Rio de Janeiro have one of the highest tax burdens in the world.  
  • The city where it is easiest to enforce a contract is São Paulo, at 18 months. By contrast, in Campo Grande, contract enforcement takes over 4 years.

The report finds a gap between Brazil’s best performer (Brasilia) and the ease of doing business in other world cities such as Bangkok or Shanghai. But reforms are underway – state and city officials are taking measures to simplify procedures, share information among agencies, and introduce online processes. Cities and states can look for best practice reforms within Brazil, while also learning from reforms in other countries, such as Egypt, New Zealand, and Spain.
Doing business in Brazil: where is it easiest?
Easiest
1Brasilia, Federal District
2Manaus, Amazonas
3Belo Horizonte, Minas Gerais
4Porto Velho, Rondônia
5São Luís, Maranhão
6Porto Alegre, Rio Grande do Sul
7Campo Grande, Mato Grosso do Sul
8Rio de Janeiro, Rio de Janeiro
9Florianópolis, Santa Catarina
10Salvador, Bahia
11São Paulo, São Paulo
12Cuiabá, Mato Grosso
13Fortaleza, Ceará
Most difficult


This report is the second of its kind to be issued in Latin America – following the release of
Doing Business in Mexico last year. The subnational report in Mexico showed that the pressure to reform is even larger if comparisons are made within a country. And as the news about reforms spreads, there will be increased public interest in replicating success stories throughout Brazil.

Doing Business in Brazil is a World Bank Group production cofinanced by United States Agency for International Development (USAID), with support from Movimento Brasil Competitivo (MBC). It creates quantitative indicators on business regulations and their enforcement for 13 cities and states in Brazil.

For more information, please contact:

In Brazil: Karina Manasseh + 55-11-5185-6881, e-mail: kmanasseh@ifc.org
In Washington, D.C.: Nadine Ghannam +1 (202) 458-0482, e-mail:nsghannam@ifc.org
- For more information on the Doing Business report series, please visit: www.doingbusiness.org
- For copies of the Doing Business in Brazil report, please visit: http://www.doingbusiness.org/brazil