It takes eight procedures and 65 days to establish a foreign-owned limited liability company in South Africa, which a new World Bank study says is slower than both the sub-Saharan African average of 48 days and the global average of 42 days.

The ‘Investing Across Borders 2010' report - which analyses practices affecting foreign direct investment (FDI) in 87 countries - also notes that a foreign company wishing to engage in international trade would need to obtain an additional trade licence from the Department of Trade and Industry, which usually takes 38 days to secure.

By contrast, it involves only three procedures and four days to set up a foreign-owned business in Rwanda, where it takes only one additional day to obtaining a trade licence for international trade. Further, start-up procedures have been centralised under the Rwanda Development Board, which handles company registrations.

However, South Africa compares favourably against a country such as Angola, where it involves 12 procedures and 263 days to establish a foreign-owned company, and it even compares well against a country such as Brazil, where it takes 166 days.

The World Bank describes the study, which was published on Wednesday, as the first "objective" review of data on laws and regulations affecting FDI.

It uses the outcomes to reassert the bank's long-held argument that overly restrictive and obsolete laws are impeding FDI flows, while poor implementation is creating additional costs to investment.

Clear and effective laws and regulations are vital for ensuring best results for host economies, their citizens, and investors, financial and private sector development vice-president Janamitra Devan argues.

"Excessive red tape" in countries such as Angola and Haiti means that it can take half a year to establish a subsidiary of a foreign company, while the same process can be completed in less than a week in countries such as Canada, Georgia and Rwanda.

The report also provides indicators of sector-specific restrictions on foreign equity ownership, access to industrial land and commercial arbitration regimes.

In South Africa, several industry sectors were found to be subject to statutory foreign equity ownership restrictions including: the mining and the oil and gas industries where foreign ownership is limited to a maximum of 74%; telecommunications infrastructure (30%) and television channels (20%).

"Monopolistic market structures dominated by publicly owned enterprises further inhibit FDI in the electricity industry and in the port operation and railway freight transportation sectors," the report says of South Africa.

It also finds that foreign companies seeking to acquire land in South Africa have the option to lease or buy privately or publicly held land and that there are no restrictions on the amount of land that may be leased.

By contrast, leasing industrial land in Nicaragua and Sierra Leone typically requires half a year as opposed to less than two weeks in Armenia, the Republic of Korea and Sudan.

In Pakistan, the Philippines, and Sri Lanka, meanwhile, it can take up to two years to enforce an arbitration award, the bank noted.

Overall, the report finds that countries scoring high on the Investing Across Borders indicators also tend to attract more FDI relative to the size of their economies and population.

Conversely, countries that score poorly tend to have a higher incidence of corruption, higher levels of political risk and weaker governance structures.