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Brazil Drowning in Red Tape
Written by Brazzil Magazine
Wednesday, 25 August 2004
Brazilian bureaucracy and legislative complexities make the country one of the worst places in the world to open and run a business. But the country is also one of the most transparent of the emerging nations, at least with regard to corporate financial data, which is regularly made public.
That pretty sums up the conclusions of a report by the
International Finance Corporation which is housed in the World Bank. The IFC
report is entitled "How to Make Brazil the Country of the Moment."
The
IFC report compares 145 countries with regard to the business climate and tries
to explain why Brazil has not been growing recently.
"Brazil has abundant resources and macroeconomic stability. But
over the last five years per capita income growth has been less than 1
percent annually—such growth rates are in the same category as countries
racked by civil war. So, there have to be other reasons for such low growth,"
says Simeon Djankov, the author of the World Bank report.
"What happened to growth? Where did it go? Our report tries to
answer those questions," he explains.
One problem cited is the fact that
it takes an average of 152 days to open a business in Brazil. To put that in
proper perspective, suffice it to say that only Haiti, Laos, Congo and
Mozambique are worse. In Neighboring Argentina, it takes only 32 days to open a
business. In England and the Scandinavian countries it can be done in 10 days.
The red tape in hiring and firing employees is also monumental. On a
scale of 0 to 100, the rigidity of Brazilian legislation came in at 72, just a
little better than eleven African nations (Argentina is also rigid, coming in at
51 in this category).
The World Bank report did find some bright spots
in Brazil.
"There are some islands of excellence where things really do
work efficiently" says the report.
There was praise for the private credit rating agency, Serasa.
And for the stock market and corporate reporting, which were cited as among the
best in Latin America. The report also cited improved property deed registration
and the proposed new Bankruptcy Law.
Agência Brasil Reporter: Mylena
Fiori Translator: Allen Bennett
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