Author: Michel Abdo Alaby

Source: Net Marinha - SC, 17/07/2009

In developed countries, de-bureaucracy has been the greatest antidote against corruption. In Brazil, there is a cost of bureaucracy that prevents the legalization of companies, increasing the degree of informality.

To open a company in Brazil, the number of requirements and procedures adds up to 17 items, tying with the countries with less economic development, such as Uganda, Paraguay and Guinea-Bissau, being only smaller than in Equatorial Guinea (20) and Chad (19).

According to the latest World Bank report (2005), available on the website www.worldbank.org, Brazil is 99th in the sample of 200 countries. The country with the least corruption problem is Iceland and the worst picture is presented by Equatorial Guinea.

Countries with too much bureaucracy have more cases of corruption, generating an informal economy with high participation rates in the Gross Domestic Product. According to studies presented by the World Bank, Brazil is ranked 121st. 175 countries.

The World Bank data show the difficulties of the Brazilian entrepreneur in producing and innovating in the country, with barriers and obstacles. Among other obstacles, the stability and security of legal rules (judicial costs to guarantee compliance with contracts), high crime, and disrespect for property rights stand out. All of these factors inhibit productive investment and the development of new activities.

The effort to secure the contract requires approximately 620 days, while in China the term for contract guarantee remedies is approximately 300 days and the average for the countries surveyed is approximately 580 days.

In relation to the fiscal-tax area, over-regulation and the structure of taxes and charges are currently unsolvable problems. The number of days to open a business in Brazil reaches 152, approximately three times the world average. In Australia it only takes two days. The number of days in Brazil is only exceeded by the following countries: Suriname (694 days), Guinea-Bissau (233 days), Haiti (203 days), Laos (163 days) and Congo (155 days).

Below is a reference framework for the informal economy in relation to Gross Domestic Product (GDP) in percentage terms:

Source-World Bank

** With regard to China, as there is no clear transparency of information, the informal economy must be much more expressive in relation to GDP than that declared by the World Bank, due to the fact that accounting is not the most accurate, intellectual property rights not being respected, among other factors.

At the same time, the World Bank study contains three very important and significant findings.

The first point of observation refers to the inverse relationship between the cost required to start a business and the country's income level, in other words, in the poorest countries, where there is a shortage of capital, bureaucratic requirements have higher costs. higher than in developed countries.

The second point of observation refers to the contrast between Canada and Mozambique, observing the comparison between the level of per capita income and the number of bureaucratic procedures for the registration and approval of a company.

The third point of observation refers to the relevant and negative relationship between the required bureaucratic procedures and the corruption index.

Roughly speaking, opening a company in Brazil requires several procedures. Among others, the following stand out: registration of social contract with the Commercial Registry; registration with the National Register of Legal Entities (CNPJ); business license at the City Hall; Licensing with agencies that regulate the protection of the environment; State and / or Municipal Registry; Registration with the National Institute of Social Security and Registration with the Class Union.

With regard to the facilitation for the entrepreneur, the quality of the business environment, Brazil practically presents inadequate conditions for starting and closing a company, in terms of costs and periods for registering and closing companies.

Due to these entrepreneurs' difficulties, there is a need for a significant reduction of bureaucracy to avoid the continuous growth of informality, hindering scale production and consequently economic growth.

In other words, the Brazil that wants to grow, necessarily needs structural reforms, fighting bureaucracy and consequently corruption, with agile justice, to guarantee new investments in production and receive foreign investments, which do not come to Brazil, precisely due to lack of guarantees, clear, transparent and objective rules.

Michel Abdo Alaby is secretary-general at the Arab-Brazilian Chamber of Commerce and president of the Association of Brazilian Companies for Market Integration.