Thursday, September 11, 2008

Doing Business 2009: India Speeds Trade; Sri Lanka is South Asia's Leading Reformer of Business Regulation

Regulatory reforms in South Asia continued this year, according to Doing Business 2009—the sixth in an annual series of reports published by IFC and the World Bank. The report records reforms that eased the regulatory burden of doing business in four of the region’s countries—Bangladesh, Bhutan, India, and Sri Lanka—between June 2007 and June 2008.

India continued to make import and export procedures easier. A separate subnational Doing Business report on the country will track the time and cost required to meet government regulations in 16 Indian cities and states. The aim is to encourage cities to bring about changes that improve their competitiveness nationally and globally and that attract more businesses.

Sri Lanka, the region’s leading reformer of business regulations, made it easier to obtain credit by strengthening the legal rights of creditors and enhancing the availability of credit information. Bangladesh reduced the time for registering property by almost half and simplified business start-up. Bhutan made contract enforcement through the courts easier.

No reforms were recorded in Pakistan this year, but the government has a Doing Business study underway to track business regulations in 12 cities. The goal is to facilitate the sharing of best practices locally and foster cooperation among various levels of government.

“South Asian countries are increasingly committed to agendas for business-friendly reforms,” said Sabine Hertveldt, a coauthor of the report. “They are also getting inspiration from other economies that have made regulatory reforms and by benchmarking local best practices.”

Doing Business ranks economies based on 10 indicators of business regulation that track the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.

Among regions, Eastern Europe and Central Asia led in reforms of business regulation for a fifth consecutive year, with more than 90 percent of its countries making improvements. East Asia and the Pacific was second, with China leading the way by making make it easier to access credit, pay taxes, and enforce contracts; the Middle East and North Africa tied at second. The top 10 economies for reforms of business regulations are, in order, Azerbaijan, Albania, the Kyrgyz Republic, Belarus, Senegal, Burkina Faso, Botswana, Colombia, the Dominican Republic, and Egypt.

Singapore leads the global rankings on the overall regulatory ease of doing business for a third consecutive year. New Zealand is runner-up, and the United States third.

“Economies need rules that are efficient, easy to use, and accessible to all who use them. Otherwise, businesses get trapped in the unregulated, informal economy where they have less access to finance and hire fewer workers, and where workers lack the protection of labor law,” said Michael Klein, World Bank/IFC Vice President for Financial and Private Sector Development. “Doing Business encourages good rules, and good rules are a better basis for healthy business than ‘who you know,’” he added.

Doing Business 2009 ranks 181 economies on the overall ease of doing business. The top 25 are, in order, Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Ireland, Canada, Australia, Norway, Iceland, Japan, Thailand, Finland, Georgia, Saudi Arabia, Sweden, Bahrain, Belgium, Malaysia, Switzerland, Estonia, Korea, Mauritius, and Germany.

Fact Sheet – Summary of Reforms in South Asia

In Afghanistan no major reforms were recorded.

Rank in Doing Business 2009: 162

Bangladesh cut the time needed to register property by almost half, from 425 days to 245, through reforms at the Municipal Deed Registry Office. Starting a business has also become easier. Bangladesh made involving lawyers in company registration optional. That eliminated one procedure and reduced the cost by $100.

Areas of Reform: Starting a Business, Registering Property

Rank in Doing Business 2009: 110

Bhutan made it easier to enforce contracts by creating a Land Commission to handle cases involving the transfer of property. Because a large number of land disputes had been ending up in court, setting up the new commission took about 30 percent of all cases out of the district courts. As a result, the total time required to enforce a contract through the courts fell from 275 days to 225.

Areas of Reform: Enforcing Contracts

Rank in Doing Business 2009: 124

India implemented electronic data interchange (EDI), allowing exporters to submit documents to customs online. The EDI system also enables customs to automatically assess export documents, making customs clearance more efficient. The new system reduced the time needed to export by 1 day.

Areas of Reform: Trading across Borders

Rank in Doing Business 2009: 122

In Maldives no major reforms were recorded.

Rank in Doing Business 2009: 69

In Nepal no major reforms were recorded.

Rank in Doing Business 2009: 121

In Pakistan no major reforms were recorded.

Rank in Doing Business 2009: 77

Sri Lanka, the top regional reformer, strengthened the legal rights of creditors by enforcing the new Companies Act. When a company goes into liquidation, the claims of its secured creditors are no longer frozen. Secured creditors now have the right during liquidation to seize or attach their collateral or appoint a receiver. Sri Lanka also implemented an online system for uploading credit information. Now the Credit Information Bureau (CRIB) can collect data on all loans extended by its members. The minimum threshold for the loans recorded was eliminated and data can be maintained over a longer period.

Areas of Reform: Getting Credit

Rank in Doing Business 2009: 102