LIBERIA: REFORMS BOOST INVESTMENT CLIMATE

UNCLAS SECTION 01 OF 02 MONROVIA 000373

SIPDIS

E.O. 12958: N/A
TAGS: EINV BEXP ETRD EAID ECON KMCA LI
SUBJECT: LIBERIA: REFORMS BOOST INVESTMENT CLIMATE

Ref: 08 MONROVIA 336


1. Liberia continues to work at improving the business climate and
moving up the IFC's "Doing Business" index. Eighteen new reforms,
following up on 21 last year, simplify requirements for Starting a
Business, Trading Across Borders, Registering Property, and
Construction Permits. (See para. 5.) In 2008, Liberia ranked 157
of 181 countries, up from 170 of 178 countries in its 2007 debut on
the index. The process is guided by the Cabinet level Business
Reform Committee, in conjunction with the IFC-sponsored
public/private Liberia Better Business Forum (LBBF).


2. The 18 reforms continue the effort to reduce the number of
signatures and permits required to do business in Liberia. The key
is implementation: does the LBBF structure work, and do bureaucrats
respect the new procedures? Businesses give us mixed reports. LBBF
functions through working groups, and their effectiveness depends on
the commitment of members. Our observation is that when an issue is
important, public and private sector representatives have been able
to cooperate on bringing about real change. Bureaucrats can still
present obstructions, but every reform reduces their scope and the
sense of impunity in Liberia is gradually waning.


3. This is the first time reforms have been made in the thorny area
of land ownership. Land disputes are possibly the biggest threat to
Liberia's stability and economic growth, and simplifying the
administrative process will allow policy makers to focus on the more
complex issues. For the first time, these reforms include the
Environmental Protection Agency, and reach beyond the central
government, to include actions by the Monrovia City Corporation.


4. The GOL's 2009-10 draft budget, submitted to the legislature May
19, includes $2 million to support Liberian businesses. In her
budget submission, President Sirleaf also called for rapid action on
other legislation that will improve the business climate, specifying
revisions to the Revenue Code, that will lower business and personal
tax rates, passage of the Public Financial Management Act. The
revised Investment Code still has not been resubmitted to the
legislature.


5. Following is a list of the 18 reforms:

Starting A Business
--------------

-- Harmonization of unique corporate taxpayer IDs between agencies
(Finance, Commerce and NASSCORP, the social security agency) allows
streamlined business registration (e.g., all agencies will used the
same ID number).

-- Streamlining documentation required by NASSCORP: eliminates the
requirement to produce copies of articles of incorporation and/or
partnership, and will rely on proof of registration from the
Ministry of Commerce.

-- Clarification and documentation of Environmental Protection
Agency (EPA) procedures for an Environmental Impact Assessment or
EPA permit.

-- Elimination of annual re-registration requirement at the Ministry
of Commerce. Commerce will accept proof of payment at the Ministry
of Finance as proof of annual registration. (Note: this follows up
on last year's reform that businesses could register any time, not
just in January. Extending the registration period beyond one year
is the next goal, but requires legislative action. End note.)

Trading Across Borders
--------------

-- Establishment of a centralized facility at the port to provide a
single location for cargo clearance.

-- Introduction of a preliminary risk-based inspection regime to
eliminate 100% inspection of imports.

-- Delegation of signature authority by the Deputy Minister of
Revenue for duty free clearances.

-- Reduction in number of signatures on import permits (IPD) from
three to two (the Director of Foreign Trade and the Assistant
Minister of Commerce),and elimination of the fee.

-- Elimination of the requirement to obtain a permit for
destination inspection of imports. (Ministry of Commerce)

-- Elimination of the 150% collateral check requirement for vehicle
imports; the Ministry of Finance now uses the web-based Kelly's Blue
Book to determine vehicle values.

-- Elimination of the Ministry of Agriculture import/export
permit.


MONROVIA 00000373 002 OF 002


-- Elimination of the Forestry Development Agency export license.

Registering Property
--------------

- Ministry of Lands, Mines & Energy has agreed to remove the
requirement that surveyors be issued permits for each survey. Will
now accept an annual license from the Board of Surveyors. (Comment:
This does not, however, address the problem of fraud by land
surveyors. End comment.)

-- Clarification by the Ministry of Lands, Mines & Energy of the
notice period that must be provided by surveyors (five days
exclusive of Sundays).

-- Archives agrees to notify the Bureau of Internal Revenue of title
transfer upon registration (seller/buyer no longer required to do
so).

-- Probate court has agreed to approve deeds within five business
days.

Construction Permits
--------------

-- Significant reduction in fees by the Monrovia City Corporation,
from 3% of value to $.04 per sq. ft., and elimination of the
requirement to submit signed drawings. MCC will rely on the
approved permit from the Ministry of Public Works.

-- Elimination of the need to obtain a tax waiver from the Ministry
of Finance prior to obtaining a permit.


THOMAS-GREENFIELD