2: Optimizing the Regulatory Environment

The unleashing of entrepreneurship requires an environment that enables the entrepreneur to create, operate, manage, and if necessary, close a business within a context where compliance with the rule of law governing disclosure, licensing and registration procedures, and the protection of physical and intellectual property is guaranteed. The regulatory environment should encourage people to set up their own business, to try new business ideas and to take on calculated risks, keeping administrative burdens to the minimum required to support public policy and sustainable development objectives.

Policy Objectives

Examine regulatory requirements for start-ups

Policy options (recommended actions):

• Benchmark time and cost of starting a business
• Benchmark sector- and region-specific regulations
• Set up public-private dialogue on regulatory costs and benefits
• Balance regulation and standards with sustainable development objectives

Minimize regulatory hurdles for business start-ups where appropriate

Policy options (recommended actions):

• Review and, where appropriate, reduce regulatory requirements (e.g. licenses, procedures, and administrative fees)
• Introduce transparent information and fast-track mechanisms and one-stop-shops to bundle procedures
• Enhance ICT-based procedures for businesses registration and reporting

Minimize regulatory hurdles for business start-ups where appropriate

Policy options (recommended actions):

• Ensure good governance
• Make contract enforcement easier and faster
• Establish alternative conflict resolution mechanisms
• Guarantee property protection
• Reduce the bankruptcy stigma and facilitate re-starts

Guide entrepreneurs through the start-up administrative process and enhance the benefits of formalization

Policy options (recommended actions):

• Carry out information campaigns on regulatory requirements
• Make explicit the link between regulatory requirements and public services, including business support services
• Assist start-ups in meeting regulatory requirements

Checklist of key questions

• Has the government carried out an assessment of the process of starting a business? Does it benchmark the time and cost of starting a business? Does it have a good overview of sector- and region-specific regulations?
• Is a public-private dialogue on regulatory costs and benefits in place?
• Has the government considered initiating a process of weeding out unnecessary regulations?
• Are there special provisions for social entrepreneurship?
• Does the country have fast-track mechanisms and one-stop-shops to bundle procedures? Does it make use of ICT-based administrative procedures?
• Does the government offer mechanisms to make contract enforcement easier and faster?
• Has it considered the introduction of alternative dispute resolution mechanisms?
• Do bankruptcy laws allow for business re-starts?
• Does the government offer services to assist start-ups in meeting regulatory requirements?
• Is information about business establishment procedures transparent? Are business regulations available online? Are there tutorials available for start-ups? Is information on business regulations also made available to disadvantaged groups?

Indicators to measure effectiveness

Possible indicators

• Number of procedures to open a business, number of agencies involved
• Number of days, cost to start or close a business
• Number of days, cost to register a title to property
• Timeliness of dispute resolution mechanism: number of days from filing to judicial decision

What they monitor

• Ease of starting/closing a business
• Effectiveness of judicial system