It’s a vicious circle where lack of trust leads to unnecessary requirements, the requirements leads to cumbersome procedures, the procedures sets up the trap, the trap to the bribe, and the whole thing starts over again. Welcome to Central America.

Hugo Maul in his article on the blog of the National Economic Research Center (CIEN), unveils the hidden evil behind the red tape that stifles Central American economies – and not only in Guatemala, on which his analysis is focused.

Maul clearly indicates that the consequences of the excessive paperwork that abounds in the region, are not only in a delay in the time it takes to set up a company, or to obtain certificates or registration for a new product, but that it also encourages corruption.

“According to Doing Business, starting a business in Guatemala requires the completion of 12 procedures, takes 37 days to complete the paperwork and, has a cost equivalent to 52.5% of the average income of a Guatemalan citizen. Of course, this assumes that the entire process marches along at a typical pace; it does not take into account the “bites” (bribes) and, that the 37-days of waiting represent no cost to those who need to complete the process. These assumptions are almost never met and mean that those who undertake this process, and other procedures, face what is an insurmountable barrier for millions of Guatemalans. If the World Bank or the PRONACOM use the methodology of Doing Business to study what “living in Guatemala” means, they will be sure to find that the nightmare that businesses live in is only one more imprint on the variegated landscape of Guatemalan government paperwork.”

Source: cien-gt.blogspot.com