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Despite strong economic growth in recent decades led by the resource-based sectors, Lao PDR facessignificant challenges, including high poverty rates and limited productivity. A highly challenging business and investment environment continues to hamper stronger private sector-led growth, especially outside the natural resource sectors, where job creation could be larger. In the still largely unreformed business and trade environment, the World Bank's 2016 Enterprise Survey identified "practices of firms in the informal sector" as the biggest problem reported by firms in the country, and addressing these and other challenges fundamentally will be critical to generate inclusive growth. Based on interviews with business owners and top managers, this note finds that there are four main types of problematic informality in Lao PDR's business environment: inadequately registered enterprises that "fly under the radar"; widespread tax evasion; irregular adherence to complex and burdensome regulations; and a culture of noncompliance with basic rules and standards. Fully registered and formalized firms incur higher costs and feel unfairly targeted by authorities who are eager to collect revenue and fulfil their mandates. Unregistered or rule-evading competitors are alleged to escape the same level of scrutiny, due to the difficulty of enforcement and prevalence of petty corruption. Tackling problematic informality in the business environment will require stronger institutions and a continued government focus on eliminating petty corruption. In the near-term, this note recommends eliminating unnecessary regulations and streamlining others by leveraging public support for transparency and consistency in the tax and regulatory systems. This should be complemented by a functional, efficient one stop window for enterprise registration to encourage formalization. Putting these recommendations into practice will require improved monitoring, evaluation, and assessment practices based on reliable and timely common data.

Corporate Governance and Corruption --- Enterprise Development and Reform --- Microenterprises --- Private Sector Development --- Public Sector Development

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This guidebook is designed to address common questionson corporate governance that are frequently asked byowners and managers of companies in the Middle Eastand North Africa (MENA) region. It familiarizes readerswith the basic concepts of corporate governance,providing a comprehensive overview of the subject matter,using case studies as practical examples of corporategovernance application in a commercial context. Overall,it demonstrates the value of corporate governance forbusinesses and for the region as a whole.The guidebook is designed to either be read in its entirety,as a complete work, or in sections, according to thereader's interest. For ease of reference, the guidebookis organized into the following eight sections: 1) Commitment to Corporate Governance; 2)Corporate Governance for Small- and Medium-SizedEnterprises; 3) Board of Directors' Role and Composition; 4) Functioning of the Board of Directors; 5) Control Environment; 6) Shareholder Issues; 7)Disclosure Issues; 8) Corporate Governance for Family-Owned Businesses; The approach of the guidebook is to explain technicalconcepts using plain language to help the readerbecome familiar with concepts that may sound newand unusual but are, in fact, part of the way business iscommonly conducted, organized, and controlled. The listof questions presented is not exhaustive, but provides asimple introduction to corporate governance, which canhelp improve business practices and assist the reader inunderstanding complex corporate governance guidelines.

Accountability --- Corporate Governance --- Corporate Governance and Corruption --- Disclosure --- Governance --- Private Sector Development --- Social Accountability --- Social Development

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The World Bank Group conducted face-to-face interviews with top managers and business owners of 373 enterprises in Cambodia from February 2016 through June 2016. The Enterprise Survey (ES) sample is representative of Cambodia's formal private sector. The ES covers several aspects of business environment along with measures of firm performance. The main highlights from the survey are: firms in Cambodia experienced sluggish annual sales growth but performed well in employment growth; investment financing from banks has deteriorated and is lower than in comparator economies; firms face high levels of corruption; electricity provision in Cambodia has become more reliable since 2013; and firms consider informal competitors as the biggest business environment obstacle.

Business Environment --- Business in Development --- Corporate Governance and Corruption --- Corruption --- Electricity --- Informal Sector --- Private Sector Development --- Private Sector Economics

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This edition of the Law Digest for the World Bank Group's Sanctions Board presents structured summaries of the Sanctions Board's precedent as set out through more than 100 decisions issued since 2007. The Law Digest also includes key data relating to the work of the Sanctions Board and the World Bank Group's larger sanctions system. Themes covered in this digest include the scope of the Sanctions Board's authority, various types of procedural and evidentiary questions in sanctions proceedings, and the Sanctions Board's overall analysis of the allegations of fraud, corruption, collusion, and obstruction in projects supported by the World Bank Group that form the core of individual sanctions cases.

Corporate Governance and Corruption --- Corruption --- Governance --- International Governmental Organizations --- National Governance --- Private Sector Development --- Public Sector Development

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Payments of bribes and the expenses incurred on rent-seeking activities impose a significant financial burden on private firms, which is compounded when they do not have enough funds of their own or find it costly to borrow externally. This paper hypothesizes that financial constraints magnify the harmful effects of corruption. It applies this idea to the impact of corruption on employment growth among private firms. Using firm-level survey data for 109 countries, the analysis finds that corruption has a much larger negative impact on employment growth for firms that are financially constrained compared with firms that are not financially constrained. For the baseline specification, a one standard deviation increase in the bribery rate brings about a decline in the annual growth rate of employment of financially constrained firms that is 2.3 percent greater than that for firms that are not financially constrained. This is a large difference given that the mean employment growth is about 5.1 percent. The results show that corruption "sands the wheel" at high levels of financial constraint and "greases the wheels" of an otherwise slow bureaucracy at low levels of financial constraint.

Access to Finance --- Bribery --- Corporate Governance and Corruption --- Corruption --- Employment --- Finance and Financial Sector Development --- Financial Constraints --- Firm Performance --- Private Sector Development --- Private Sector Economics --- Rent Seeking