International Institute of Business & Tax Excellence Newsletter (IIBTE.com)
Edition 8: September 2020
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Welcome to the eight edition of the IIBTE newsletter, welcome to Edition 8!
The International Institute of Business & Tax Excellence is poised to harness globalization, one business at a time.
In this edition:
Doing Business in India
by Saijal Singh of Cayman International Asset Managers (Pty) Ltd
www.caymanassetmanagers.comApproaching Diversity and Inclusion
by Nazneen Adam of Coral International Asset Managers
www.coralassetmanagers.comArticle 1:
DOING BUSINESS IN INDIA
A. INTRODUCTION
According to the World Bank (2019), the annual Doing Business ranking procedure measures aspects of business regulation and their implications for company establishment and operations within 190 different jurisdictions. The report does not include all relevant issues for businesses’ decisions but covers pertinent aspects which are under the control of policy makers.
In Doing Business 2020, India along with other top improvers implemented a total of 59 regulatory reforms from 2018/19—accounting for one-fifth of all the reforms recorded worldwide.
Falling into a lower to middle income category classification, India has performed well and was thus selected for profile analysis from the South Asian region.
The latest indicators which underwent reform include Starting a Business, Dealing with Construction Permits, Trading Across Borders and Resolving Insolvency, two of which will be discussed further below.
B. STARTING A BUSINESS
The factors of measure under this indicator include procedures, time, cost and minimum capital to start a limited liability company.
In 2019, India made starting a business easier by fully integrating multiple application forms into a general incorporation form. They’ve also replaced the value added tax with the GST (Goods and Services Tax) for which the registration process is faster. In 2020, India further simplified starting a business by abolishing filing fees for the SPICe company incorporation form, electronic memorandum of association, and articles of association hence reducing related expenses, making starting a business in India a simpler, more attractive process.
Foreign individuals may look at India to start a business as India is ranked as the second most favored destination for foreign direct investment over 2010-12 and has undergone significant reform (World Investment Prospects Survey 2010-2012, UNCTAD).
The timeframe for incorporation of a company ranges between 3 days to 6 weeks based on the level of due diligence, Know-Your-Client and Anti-Money Laundering background checks that are required for the directors and beneficial owners of the company.
The time frame for bank account opening procedures may be as short as 3 days, provided that the client has satisfied all documentary requirements.
Audretsch et al (2006) stated that economies with cumbersome regulations and administrative procedures for starting a business are associated with fewer legally-registered firms, greater informality, particularly relevant for many developing economies, a smaller tax base and more opportunities for corruption compared to economies with more efficient regulations, indicating that by enforcing significant reform under this indicator, India endeavors to reduce barriers facing aspiring entrepreneurs when entering the market and positively contributing to the economy.
C. TRADING ACROSS BORDERS
Access to international markets plays an important role in any economy’s development, however developing economies, such as India, are uniquely impacted by trade policy. Developing economies are skewed toward labor-intensive activities, hence their growth depends on their ability to import capital-intensive products. Without access to international markets, developing economies must produce these goods themselves and at a higher cost, which pulls resources away from areas where they hold a comparative advantage.
In many economies, inefficient processes, unnecessary bureaucracy, and redundant procedures add to the time and cost for border and documentary compliance.
India has however significantly improved trading across borders regulations in terms of time and cost to export and/or import products of comparative advantage. In 2019, India implemented various initiatives, including the implementation of electronic sealing of containers, the upgrading of port infrastructure and allowing electronic submission of supporting documents with digital signatures.
In 2020, they have enabled post-clearance audits, integrating trade stakeholders on a single electronic platform, upgrading port infrastructure, and enhancing the electronic submission of documents, thereby further encouraging international trade.
D. CONCLUSION
India was among the economies with the most notable improvement in Doing Business 2020, which continued to show a steady convergence between developing and developed economies, especially under the Starting a Business indicator.
Economies that score well on Doing Business tend to benefit from higher levels of entrepreneurial activity and lower levels of corruption, hence policymakers recognize the economic and political benefits of improved business regulation. As a developing nation, India has performed significantly well and has encouraged both entrepreneurial activity and international trade, both key drivers of developing economies.
E. BIBLIOGRAPHY
Audretsch, David, Max Keilbach and Erik Lehmann. 2006. "Entrepreneurship and Economic Growth." New York: Oxford University Press.
Gao Shangquan, 2000. "Economic Globalization: Trends, Risks and Risk Prevention," CDP Background Papers 001, United Nations, Department of Economics and Social Affairs.
Unctad.org. (2010). unctad.org | World Investment Prospects Survey 2010 - 2012. [online] Available at: https://unctad.org/en/pages/PublicationArchive.aspx?publicationid=620 [Accessed 3 Sep. 2020].
World Bank. (2019). Doing Business Report 2019 “Ease of Doing Business Report 2019.”
World Bank. (2020). Doing Business Report 2020 “Ease of Doing Business Report 2020.”
Article 2:
APPROACHING DIVERSITY AND INCLUSION
South Africa’s diverse landscape is a rich, vibrant tapestry interwoven with various cultures and traditions, contributing to a sense of shared heritage amongst its citizens. The myriad of people within this country and the obstacles they have overcome together, have created a unique feeling of solidarity that is almost impossible to replicate.
Our history is a painful one that has been defined by the exclusionary policies of Apartheid and whilst strides have certainly been made, in terms of legislation, to redress the inequalities of the past, there is much more to be done before we reach the ultimate goal of being a truly inclusive society.
Pressure is placed on businesses to accept the social responsibility to create a more inclusive workplace for employees, and not to defer this duty to the prevailing governments in its entirety. Generation Z employees are those who were raised in the post- Apartheid South Africa, in a democratic country who seek the embracing of diversity from those around them, especially in their workplaces. This generation is racially and ethnically diverse, probably more so than the previous generations which is testament to how mindsets have begun to change. The world is more aware of the need for inclusion, and we know this from movements like #BlackLivesMatter which has been followed on an international scale, that discrimination is not confined to South Africa and is a global ‘disease’ needing eradicating.
In Deloitte’s 2019 Global Human Capital Trends report, global chief executive offices (CEO’s) rated the “impact on society, including income inequality, diversity and the environment” as the most important challenge to overcome for success. This is pleasing to note as these are the decision-makers who have an influence on how much is spent, both in time and money on programmes aimed at achieving the goal of inclusion in the workplace.
Despite this rating, Deloitte research has also shown that the change required is usually underestimated. There needs to be more importance placed on having a diverse workforce and the work needed to create this in a sustainable way should be prioritised. In South Africa, the approach to diversity and inclusion should be less about just achieving compliance - rather efforts should be directed to using D&I as an investment, contributing to success by way of a competitive advantage. There are multiple benefits associated with having a successfully integrated diverse workforce which include increased innovation, achieving or exceeding financial targets and an increased likelihood of foreseeing change.
HR Departments will need to foster a culture of inclusion and an appreciation of diversity if they want employees to feel a sense of belonging and acceptance. As the lines between personal lives and the workplace become blurred with remote working arrangements and the like, there is no time than the present to motivate for the acceptance and understanding of the various constructs that contribute to our differences, whether visible or not. This is a challenge that requires a global commitment – world leaders, political parties, all organisations and communities. Everyone.
Each person has a role to play in ending racism, not just in the country they reside, but everywhere.
BIBLIOGRAPHY
Deloitte (2020). The Right Mind-set: Approaching Diversity and Inclusion in South Africa - Value Beyond Compliance Series. Available at: https://www2.deloitte.com/content/dam/Deloitte/za/Documents/africa/ZA-Deloitte-Approaching-diversity-and-inclusion-in-South-Africa.pdf
Parker, K & Igielnik, R (2020). On the cusp of adulthood and facing an uncertain future: what we know about GenZ so far. Available at: https://www.pewsocialtrends.org/essay/on-the-cusp-of-adulthood-and-facing-an-uncertain-future-what-we-know-about-gen-z-so-far/
Tsebe, L. (2020) What the corporate world can learn from South Africa’s post-apartheid struggles. Available at: https://qz.com/africa/1879583/lessons-for-the-anti-racist-movement-from-south-africas-post-apartheid-era/
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