Reforms in East Asia and Pacific, 2006-07
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China
China's first law regulating the bankruptcy of private enterprises since 1949 came into effect. Secured creditors with claims created after the law was passed now rank first in payment priority, even over tax and new wage claims. A reorganization procedure for restructuring insolvent companies was also introduced. Finally, the law introduced provisions for bankruptcy administrators, creditors' committees. In China, Beijing and Shanghai now process applications for construction permits electronically and allow construction companies to apply for safety certificates online, reducing delays by 2 weeks. A new bankruptcy law gives secured creditors priority in receiving proceeds from their collateral if the borrower becomes insolvent. The bankruptcy law also allows bankruptcy administrators to operate the insolvent company in place of the original management. And a new property law expands the range of assets that can be used as collateral to include inventory and accounts receivable. Before the reform, Chinese businesses held more than $2 trillion in "dead capital" - assets that could not be used as collateral because of restrictions in laws. With the new property law, some of these assets can be used for loans to expand businesses.
Fiji
Fiji's reform results on judges focusing exclusively on deciding legal disputes. A magistrate called "Master" was appointed to deal with all other matters, such as assessing damages after liability has been established. In June 2006, the High Court Rules were amended to reflect the new role and responsibilities of the Master.
Indonesia
Indonesia introduced a simplified process and new temporary permits that allow construction to begin while the full permit is being approved, cutting the time to obtain a building permit from 49 days to 21. The minimum loan threshold was lowered from 50 million Rupiah (US$ 5,460) to zero in the public credit registry, increasing coverage of loans by 150%. Indonesia now requires more detailed information on companies' activities in their annual report, thus increasing disclosure.
Lao PDR
Lao PDR has implemented some border cooperation agreements which will help to reduce overall time to trade.
Malaysia
Malaysia sped name checking and registration, reducing delays by a week. Malaysia reduced the profit tax by 1 percentage point (with another 1 percentage point reduction planned by 2008) and simplified tax filing online to reduce the time burden by 24 hours.
Micronesia
Micronesia implemented its first secured transactions law and also launched a unified online registry for all security rights in movable property. The registry covers all types of creditors and debtors.
Mongolia
Mongolia put in place new laws for the corporate income, value added and personal income taxes, including a new flat tax for individual income. The top marginal rate for corporate income tax decreased from 30% to 25% as of January 2007.
Thailand
Thailand, a one-stop electronic automation stop has allowed Thailand to drop 5 days from its import-export time.
Timor-Leste
Timor-Leste eliminated approvals by the Ministry of Land, reflected in the indicator by a drop of one procedure and 10 days.
Tonga
Tonga cut the time to enforce contracts from 510 days to 350. A newly appointed chief justice introduced case management, transferring 90% of all cases - criminal, commercial and land - from paper to computer. Cases are now monitored daily through a computerized spreadsheet system. Tonga also adopted new procedural rules for the Supreme Court and the Magistrates Court and it increased the threshold for the Magistrates Courts.
Vanuatu
Vanuatu made it more costly to register property. The cost to apply for registration of the Deed of Transfer at the Department of Lands Records increased from 2% to 6% property value. The change is a result of a new amendment that has been made to the land law by the Acting Director General of Ministry of Land, Geology and Water Supply on December 27, 2006.
Vietnam
Vietnam now allows businesses to use general description of assets and obligations in collateral agreements, as well as to use future assets to secure a debt or obligation. Vietnam adopted new securities and enterprise laws. The securities law sets up a new securities exchange and trading center. The enterprise law mandates investor involvement in major company actions and increases disclosure for related-party transactions. In addition, it introduces fiduciary duties for directors.
