Comparison Of Mauritius And Madagascar Business Essay

The making concern index ranks economic systems harmonizing to the easiness business communities have in transporting out their concerns in the different economic systems. It takes into history different subjects which affect concern activities. These are get downing a concern ; covering with building license ; acquiring electricity ; registering belongings ; acquiring recognition ; protecting investors ; paying revenue enhancements ; merchandising across boundary lines ; implementing contracts ; shuting a concern and using workers. The study besides analyses reforms undertaken by authoritiess in order to do their economic systems conducive for transporting out concern. It encourages reforms in the sense that authoritiess have to continually better their concern environment in order to accomplish a good placement in the Doing Business rankings. Since its first publication in 2003, Making Business has become an international benchmark for investors wishing to transport out concern in different economic systems. It has besides established itself as the yardstick with which Bankss and authoritiess measure the concern environment in developing states. Harmonizing to the Wall Street Journal, Doing Business is “ a manner to promote states to cut down obstructions to entrepreneurship. Developing states compete to set down a topographic point on the top 10 list of most-improving states because it is seen as a manner to acquire attending and investing. ” The index covers 185 economic systems and this twelvemonth Singapore is ranked first followed by Hong Kong and New Zealand which take the 2nd and 3rd place severally. Mauritius is at the 19th place globally but ranks foremost in the Sub-saharan African part. This study will compare Doing Business rankings for the different subjects between Mauritius and Madagascar for the twelvemonth 2010 and 2011. But first, we will transport out a Plague ( Political Economic Social Technological ) analysis of the two states.

From a political point of position, Mauritius is a democratic province as proclaimed by the Constitution which is the supreme jurisprudence of the island. The Constitution provides basic human rights and freedoms and any statement inconsistent with the Constitution is held to be void. Elections are held every five old ages and the elective members constitute the National Assembly, the state ‘s jurisprudence devising establishment. In add-on, the best also-ran system ensures that all cultural groups are adequately represented in parliament. Mauritius has an independent bench and is a member of assorted organisations such as the Common Market for Eastern and Southern Africa ( COMESA ) , Southern African Development Community ( SADC ) , Indian Ocean Rim-Association for Regional Cooperation ( IOR-ARC ) and the World Trade Organization ( WTO ) .

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The political state of affairs in Madagascar nevertheless is being portrayed by violent agitation and go oning hassles for power since 1960. Like Mauritius, Madagascar has a fundamental law and holds elections every five old ages though this has non been respected recently due to political instability. Madagascar besides has a Senate with 33 members and signifiers portion of assorted organisations like the COMESA, IOR-ARC, Indian Ocean Commission ( IOC ) , and the Francophone Organization ( OIF ) . The island has strong ties with France every bit good as economic and cultural links with French-speaking West Africa ( BBC News ) .

Economically, Mauritius is ranked as a in-between income state and is 67th globally out of 173 states for the Human Development Index. The island enjoys a stable and modern environment with good substructure. The chief pillars of the economic system are sugar, fabric, touristry, fiscal services and information and telecommunication engineering ( ICT ) . The Seafood Hub is on the manner of going another pillar of the economic system. Inflation has been lower than 10 % since 1993 and was at 3.9 % in December 2012 ( Trading Economicss ) . On the contrary, Madagascar is one of the poorest states in the universe. The World Bank has estimated that 70 % of Malagasy live on less than $ 1 per twenty-four hours. But it has really fertile land, for which there is strong competition and which is doing the diminution of its woods. These woods are place to a alone diverseness of wildlife and could be an emerging tourer industry. Madagascar is rich in natural resources and excavation is one of the major industries of the economic system along with fishing, java, cotton and spices like clove and Piper nigrum. With an rising prices rate of 9.5 % in 2011 ( Trading Economics ) , for over three decennaries Madagascar recorded the fifth-lowest rate of GDP growing in the universe -0.5 % per annum ( World Bank )

From a societal point of view, Mauritius is a extremely overpopulated island with people of diverse spiritual groupings. Education is mandatory and free up to the age of 16. The citizens besides benefit from free wellness attention available unit of ammunition the clock, which caters specially to the ageing population. Festivals are celebrated on a national degree such that there are 13 public vacations in a twelvemonth. In Madagascar, the Malagasy cultural group forms over 90A per centum of the island ‘s population and is typically divided into 18 cultural sub-groups. Malagasy pay a batch of attending to their dead and spend much attempt on hereditary graves, which are opened from clip to clip so the remains can be carried in emanation, before being rewrapped in fresh shrouds ( BBC News ) . Education is presently free and compulsory up to the age of 16. However the quality of instruction provided is considered weak with mean student to teacher ratios of 47:1 in 2008 ( Trading Economicss )

Technologically, the ICT sector has been promoted as the 5th pillar of the economic system. Home to legion BPOs ( Business Process Outsourcing ) , broadband cyberspace services is besides easy available at a sensible monetary value. ICT literacy classs are offered to the populace with the purpose to do Mauritius a cyber-island. As for Madagascar, engineering is non a precedence due to the many jobs it is presently confronting. Because of poorness, the locals do non hold entree to computing machines or cyberspace. The few that do hold entree are largely companies.

Comparison of Mauritius and Madagascar in cost of making concern

Below are the ranks of the ability to have and run a concern in Mauritius and Madagascar for the twelvemonth 2010 and 2011, as per the survey of the World Bank. A strong ranking on the easiness of making concern index means the regulative environment is more unfastened to get downing and runing a house.

Year

2010

2011

State

Mauritius

Malagasy republic

Mauritius

Malagasy republic

Get downing a concern

10

12

12

70

Covering with building licenses

42

107

54

130

Geting Electricity

45

181

Registering concern

66

152

65

141

Geting recognition

87

167

75

177

Protecting investors

12

57

12

60

Paying Taxs

12

74

11

74

Trading Across Barriers

19

111

21

110

Enforcing Contracts

66

155

60

156

Deciding Insolvency

76

147

Note: Getting Electricity was a new class that was introduced by Making Business in 2011. In our farther analysis of the different subjects, Getting Electricity could non be included as we were non able to entree Doing Business studies for Mauritius and Madagascar for the twelvemonth 2011.

The above tabular array clearly shows that Mauritius has a comparative advantage over Madagascar in all the different classs. The ranking of the different indexs changed between the twelvemonth 2010 and 2011 to a better ranking. For the twelvemonth 2010 the ranking was as follows: get downing a concern ( 10th ) , covering with building licenses ( 42nd ) , registering concern ( 66th ) , acquiring recognition ( 87th ) , protecting investors ( 12th ) , paying revenue enhancements ( 12th ) , merchandising across barriers ( 19th ) and implementing contracts ( 66th ) . While for that of 2011, the ranking changed for case get downing a concern ( 12th ) , covering with building licenses ( 54th ) , registering concern ( 65th ) , acquiring recognition ( 75th ) , protecting investors ( 12th ) , paying revenue enhancements ( 11th ) , merchandising across barriers ( 21st ) , implementing contracts ( 60th ) and two new classs was introduced viz. acquiring electricity and deciding insolvency ( 76th ) .

Madagascar ‘s rankings for the twelvemonth 2010 and 2011 are reasonably low compared to that of Mauritius. This is because of the fact that of import back uping indexs such as get downing a concern, covering with building, acquiring electricity, paying revenue enhancements, trading across barriers, deciding insolvency are placed in an uncompetitive place for the twelvemonth 2010 and 2011. It should besides be of concern that the state ‘s ranking in many of these countries remains the same or deteriorated between 2010 and 2011. These are illustrated in the above tabular array.

Get downing a concern

Making Business measures the easiness of get downing a concern in an state by entering all processs that are required by a man of affairs to set in topographic point and run a concern. It besides records the clip, cost and the paid-in minimal capital that companies must lodge before enrollment. The easiness of get downing a concern is based on the 4 component indexs: processs, clip, cost and paid-in minimal capital demand.

To do the informations comparable across economic systems, Making Business assumes that all information is readily available to the enterpriser and that there has been no anterior contact with functionaries. It besides assumes that all authorities and nongovernment entities involved in the procedure map without corruptness.

In 2010 Mauritius was ranked tenth while Madagascar was 12th on the list for easiness of get downing a concern. In 2011, Mauritius was 12th while Madagascar faced a serious diminution to the seventieth place.

In order to get down a concern in Mauritius, one must follow these processs:

Incorporate and register the concern and hunt for company name online

Receive review by local governments

Pay licence fees

Register with the Social Security Office

Make a company seal

In Madagascar it requires 2 processs and takes 7 yearss to get down a concern. The processs are as follows:

Obtain a new financial designation figure

Deposit registered position, use for licence, statistical designations and register a notice of fundamental law to be published in a Gallic newspaper.

The tabular array below compares Mauritius and Madagascar on their easiness of get downing a concern for 2010 and 2011.

States

Malagasy republic

Mauritius

Year

2010

2011

2010

2011

Rank

12

70

10

12

Procedures

2

2

5

5

Time

7 yearss

7 yearss

6 yearss

6 yearss

Cost ( % of income per capita )

12.9

6.2

3.8

4.1

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

248.1

207.4

0.00

0.00

Beginning: Doing Business database

Reforms Worldwide

In 2010/11, 42 economic systems made get downing a concern easier, with streamlining enrollment formalities the most popular characteristic of reforms that have been undertaken. These include Ghana, Hungary, Montenegro, Samoa and Singapore. Peru improved the easiness of get downing a concern the most, set uping a one-stop store and simplifying station enrollment formalities at the territory council degree. This reduced the figure of processs for get downing a concern by 33 % , the clip by 34 % and the cost by 18 % . Reforms that were undertaken were to simplify the enrollment formalities, to present on-line application processs, to make a one halt store and to cut down or extinguish minimal capital demand.

Mauritius made name confirmation go online in 2009 and see a little lessening in cost from 2010 to 2011. Madagascar simplified concern start-up through the streamlining of processs at the one halt store, riddance of cast responsibility and riddance of the minimal capital demand in 2010. No reforms were undertaken by either state in 2011.

The last reform done in Mauritius was in 2009 where name confirmation for a new company was done online doing the start-up easier. Although no reform was undertaken from 2010 to 2011, Mauritius climbed from the tenth place to the 12th. This may be due to the little addition in cost from 3.8 % to 4.1 % of income per capita.

In 2010, Madagascar simplified concern start-up through the streamlining of processs at one halt store together with the riddance of cast responsibility and minimal capital demand. There were no reforms in 2011.

The ground behind the diminution of Madagascar to the seventieth place may partially be attributed to the rise in paid in minimal capital, but it is besides due to the fact that in 2011 many other states undertook reforms to do concern get down up easier. For illustration, Peru improved the easiness of get downing a concern the most set uping a one halt store and simplifying station enrollment formalities at the territory council degree. This reduced the figure of processs to get down a concern by 33 % , the clip by 34 % and the cost by 18 % . ( DB study 2011 ) . The tabular array below shows some good patterns that have been adopted around the universe doing it easy to get down a concern.

Practice

Economies ( out of 183 )

Examples

Puting processs online

105

Cape Verde, Maldives, New Zealand, Saudi Arabia, Singapore

Having no minimal capital

Requirement

80

Bangladesh, Belarus, Canada, Colombia, Tunisia,

Vietnam

Having a one-stop store

72

Afghanistan, Azerbaijan, Italy, Jordan, Peru, Philippines

Beginning: Doing Business database

This explains why Madagascar was ranked seventieth although it had done nil to do concern start-ups more hard. In fact, other economic systems have surpassed Madagascar by seting in topographic point reforms as described above.

Covering with building licenses

Regulation of building is critical for public protection. But it requires to be efficient, to avoid undue limitations on an of import sector of the economic system. Where following with edifice ordinances is overly dearly-won in clip and money, many builders opt out. Bribery may go the preferable manner of go throughing reviews or builders may merely construct illicitly, doing via medias on public safety. For this interest, conformity ought to be simple, straightforward and cheap. Making Business measures the processs, clip and cost for a little to moderate-sized concern to obtain all the necessary blessings to construct a simple commercial warehouse and link it to basic public-service corporation services.

In 2010 Mauritius was ranked 42nd in the easiness of covering with building licenses and moved to the 54th place in 2011. Madagascar moved from 107 in 2010 to 130 in 2011.

The ranking on the easiness of covering with building licenses is based on three component indexs: processs, clip and cost.

States

Malagasy republic

Mauritius

Year

2010

2011

2010

2011

Rank

107

130

42

54

Procedures

16

16

16

16

Time ( yearss )

172

172

136

136

Cost ( % of income per capita )

1250.6

1298.7

35.5

32.3

Beginning: Doing Business database

Reforms Worldwide

Eastern Europe and Central Asia was the part with the most reforms of building permitting in the past 6 old ages. Twenty economic systems implemented 33 new ordinances, chiefly to revamp out-of-date building formalities from the Communist epoch. Georgia, after 6 old ages of steady betterments, has the most efficient permitting system. Among the reforms that were put in topographic point in 2011 were to follow new edifice ordinances, to present risk-based blessings, to hold an approved edifice codification and to cut down clip for treating license applications.

In 2010/11, neither Mauritius nor Madagascar undertook reforms in the instance of covering with building licenses and no reform has been put in topographic point in both states since 2009. This explains why both states are dawdling behind.

Since 2008 neither Mauritius nor Madagascar has undertaken any reform in the easiness of covering with building licenses. But they have non done anything to do the procedure more hard either. The ground why these two states have moved down the ladder still lies in the fact that other economic systems have been reforming their processs so that covering with buildings licenses become easier. Harmonizing to Doing Business, the Democratic Republic of Congo improved the easiness of covering with building permits the most in 2011 by cut downing the clip to cover with buildings licenses from 248 yearss to 128 and the mean cost from $ 6,908 to $ 4,307. The tabular array below shows what economies around the universe have done in 2011 to do covering with building licenses easier.

Features

Economies

Some Highlights

Decreased clip for treating license applications

Benin, Burkina Faso, Democratic Republic of Congo, Croatia, Hungary, Kazakhstan, Mexico

In Benin a new committee to treat edifice license applications reduced the mean clip for covering with building licenses from 410 yearss to 320.

Streamlined processs

Cote d’Ivoire, Croatia, Kazakhstan, Mali, Mexico, Saudi

Arabia, Ukraine

Ukraine cut 9 of 31 processs, cut downing clip by a 3rd and cost by 6 % .

Adopted new edifice ordinances

Croatia, Hungary, Kazakhstan, Romania

Amendments to Romania ‘s building jurisprudence and edifice ordinances cut clip by 15 yearss and cost by 12.9 % .

Reduced fees

Burkina Faso, Democratic Republic of Congo, Rwanda

Vietnam ‘s new enrollment fee for completed

edifices cut entire cost by 43 % .

Introduced or improved one-stop store

Kazakhstan, Paraguay, Russian Federation, Saudi Arabia

In Paraguay a new single-window attack in

the municipality cut clip from 291 yearss to 179

Introduced risk-based blessings

Kazakhstan, Mali

Mali ‘s new simplified environmental impact appraisal for noncomplex commercial edifices cut clip by 9 % and cost by 32.7 % .

Improved electronic platforms or online services

Colombia

Colombia improved its electronic confirmation of prebuilding certifications, which cut 1 process.

Beginning: Doing Business database