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World Bank Doing Business 2007 Report: Business becomes easier worldwide; Ireland ranked 10th, UK gets 6th rank
By Finfacts Team
Sep 6, 2006, 12:34

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Doing business became easier worldwide in 2005/06, according to a new report by the World Bank and the International Finance Corporation (IFC), the private sector arm of the World Bank Group. Two hundred and thirteen regulatory reforms—in 112 economies— reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements. The report also finds that Africa is reforming and ranks the region’s progress ahead of Asia, Latin America, and the Middle East.

Doing Business 2007: How to Reform finds that the top-10 reformers on the ease of doing business, in order, are Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania. Thirteen other economies—Armenia, Australia, Bulgaria, Czech Republic, El Salvador, India, Israel, Latvia, Lithuania, Morocco, Nicaragua, Nigeria and Rwanda—had three  or more reforms. Reformers simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit, and reduced the cost of exporting and importing.

Doing Business 2007 also ranks 175 economies on the ease of doing business—covering 20 more economies than last year’s report. The top 30 economies in the world, in order, are Singapore, New Zealand, the United States, Canada, Hong Kong/China, the United Kingdom, Denmark, Australia, Norway, Ireland, Japan, Iceland, Sweden, Finland, Switzerland, Lithuania, Estonia, Thailand, Puerto Rico, Belgium, Germany, the Netherlands, Korea, Latvia, Malaysia, Israel, St. Lucia, Chile, South Africa and Austria.

"The report points out that in many economies the costs of doing business are so prohibitive that most entrepreneurs are forced to operate outside the formal economy," said Paul Wolfowitz, President of the World Bank Group. "The report is a critical tool for developing countries to determine where more reforms are needed," he said. 

The rankings track indicators of the time and cost to meet government requirements in business startup, operation, trade, taxation, and closure. They do not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. 

Doing Business allows policymakers to compare regulatory performance with other countries, learn from best practices globally, and prioritize reforms. "The annual Doing Business updates have already had an impact. The analysis has inspired and informed at least 48 reforms around the world.  The lesson—what gets measured gets done." said Caralee McLiesh, an author of the report.  

Georgia was the top reformer in 2005/06, improving in 6 of the 10 areas studied by Doing Business. It reduced the minimum capital required to start a business, sped up customs, licensing, and court procedures, and made labor regulation more flexible. Business registrations rose by 55% between 2005 and 2006. And unemployment has fallen by 2 percentage points. 

China and Eastern European countries were also active in enacting reforms. China sped business entry, increased investor protections, and reduced red tape in trading across borders. It also established a credit information registry for consumer loans. Now banks can check credit histories of 340 million citizens before extending them loans. The desire to join the European Union inspired reformers in Bulgaria, Croatia, and Romania (the second-fastest reformer). And regulatory competition in the enlarged union added to Latvia’s momentum for reform.

For the first time, Africa makes the top-three among reforming regions, after Eastern Europe and the OECD countries. Two-thirds of African countries made at least one reform, and Tanzania and Ghana rank among the top 10 reformers. In Côte d’Ivoire registering property took 397 days in 2005. Reforms eliminated a requirement to obtain governmental consent to transfer property, decreasing the time to 32 days. Burkina Faso cut the procedures for starting a business from 12 to 8 and the time from 45 days to 34. Madagascar reduced the minimum capital for start-ups from 10 million francs to 2 million. Tanzania introduced electronic data interexchange and risk-based inspections at customs. The time to clear imports fell by 12 days. Gambia, Nigeria, and Tanzania reduced delays in the courts.

"Such progress is sorely needed. African countries still have the most complex business regulations. They would greatly benefit from new enterprises and jobs, which can come with more business-friendly regulations," said Michael Klein, World Bank/IFC  Vice President for Financial and Private Sector Development and IFC Chief Economist. "Big improvements are possible. If an African country adopts the th region’s best practices in the ten areas covered by Doing Business, it would rank 11  globally."

The most popular reform in 2005/06 was easing the regulations of business start-up. Forty-three countries simplified procedures, reducing costs and delays. The second most popular reform—implemented in 31 countries—was reducing tax rates and the administrative hassle of paying taxes. 
 
Whatever reformers do, they should always ask the question, "Who will benefit the most?" If reforms are seen to benefit only foreign investors, or large investors, or bureaucrats-turned-investors, they reduce the legitimacy of the government. "Reforms should ease the burden on all businesses: small and large, domestic and foreign, rural and urban. This way there is no need to guess where the next boom in jobs will come from. Any business will have the opportunity to thrive," said Simeon Djankov, an author of the report. 

Economy Ease of Doing Business Rank Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit
Singapore 1 11 8 3 12 7
New Zealand 2 3 18 10 1 3
United States 3 3 22 1 10 7
Canada 4 1 32 13 22 7
Hong Kong, China 5 5 64 16 60 2
United Kingdom 6 9 46 17 19 1
Denmark 7 14 6 15 36 13
Australia 8 2 29 9 27 3
Norway 9 21 14 109 6 33
Ireland 10 6 20 83 80 7
Japan 11 18 2 36 39 13
Iceland 12 16 30 42 8 13
Sweden 13 20 17 94 7 33
Finland 14 18 35 111 15 21
Switzerland 15 27 38 24 11 21
Lithuania 16 48 23 119 3 33
Estonia 17 51 13 151 23 48
Thailand 18 28 3 46 18 33
Puerto Rico 19 8 91 33 46 21
Belgium 20 37 48 23 158 48
Germany 21 66 21 129 42 3
Netherlands 22 38 80 86 20 13
Korea 23 116 28 110 67 21
Latvia 24 25 65 123 82 13
Malaysia 25 71 137 38 66 3
Israel 26 15 101 82 150 7
St. Lucia 27 43 10 29 51 101
Chile 28 32 40 58 30 33
South Africa 29 57 45 87 69 33
Austria 30 74 50 103 28 21
Fiji 31 55 27 28 71 21
Mauritius 32 30 49 64 156 83
Antigua and Barbuda 33 22 15 40 71 101
Armenia 34 46 36 41 2 65
France 35 12 26 134 160 48
Slovak Republic 36 63 47 72 5 13
Georgia 37 36 42 6 16 48
Saudi Arabia 38 156 44 21 4 65
Spain 39 102 53 161 33 21
Portugal 40 33 115 155 98 65
Samoa 41 91 51 11 60 83
Namibia 42 86 19 44 127 33
Mexico 43 61 30 108 79 65
St. Vincent and the Grenadines 44 29 1 48 101 83
Mongolia 45 55 34 61 17 65
Kuwait 46 104 109 20 69 83
Taiwan, China 47 94 148 154 24 48
Botswana 48 93 136 62 34 13
Romania 49 7 116 101 114 48
Jamaica 50 10 93 26 107 101
Tonga 51 23 37 4 108 117
Czech Republic 52 74 110 45 58 21
Maldives 53 31 9 5 172 143
Bulgaria 54 85 140 100 65 33
Oman 55 81 127 51 14 143
Belize 56 103 4 14 117 83
Papua New Guinea 57 69 102 19 64 101
Vanuatu 58 65 33 96 91 117
Trinidad and Tobago 59 35 81 27 154 48
Kiribati 60 72 76 18 62 101
Slovenia 61 98 63 146 97 48
Palau 62 45 42 7 13 117
Kazakhstan 63 40 119 22 76 48
Uruguay 64 134 56 58 138 33
Peru 65 92 121 158 32 33
Hungary 66 87 143 90 103 21
Nicaragua 67 62 82 32 127 48
Serbia 68 60 157 73 110 33
Solomon Islands 69 76 40 53 159 143
Montenegro 70 83 154 76 106 83
El Salvador 71 123 90 70 49 33
Dominica 72 24 51 50 78 101
Grenada 73 50 12 34 145 83
Pakistan 74 54 89 126 68 65
Poland 75 114 146 49 86 65
Swaziland 76 112 16 47 140 21
United Arab Emirates 77 155 79 57 8 117
Jordan 78 133 70 30 110 83
Colombia 79 90 60 77 56 83
Tunisia 80 59 110 92 71 101
Panama 81 26 72 139 63 13
Italy 82 52 104 101 53 65
Kenya 83 111 24 68 115 33
Seychelles 84 42 69 84 50 159
St. Kitts and Nevis 85 105 7 35 136 117
Lebanon 86 116 99 43 95 48
Marshall Islands 87 13 5 1 172 117
Bangladesh 88 68 67 75 167 48
Sri Lanka 89 44 71 98 125 101
Kyrgyz Republic 90 41 143 63 31 65
Turkey 91 53 148 146 54 65
Macedonia, FYR 92 76 86 117 87 48
China 93 128 153 78 21 101
Ghana 94 145 83 120 113 117
Bosnia and Herzegovina 95 141 160 95 139 7
Russia 96 33 163 87 44 159
Ethiopia 97 95 59 79 146 83
Yemen 98 171 39 53 43 117
Azerbaijan 99 96 162 66 59 21
Nepal 100 49 127 150 25 101
Argentina 101 106 125 138 74 48
Zambia 102 67 123 80 119 83
Moldova 103 84 119 128 47 101
Vietnam 104 97 25 104 34 83
Costa Rica 105 99 57 65 37 33
Micronesia 106 39 11 12 172 101
Uganda 107 107 110 8 166 159
Nigeria 108 118 129 56 170 83
Greece 109 140 55 166 94 83
Malawi 110 89 117 68 90 65
Honduras 111 138 88 81 89 21
Paraguay 112 135 124 169 48 48
Gambia, The 113 124 73 25 130 143
Lesotho 114 113 75 91 129 117
Morocco 115 47 133 156 45 143
Algeria 116 120 117 93 152 117
Dominican Republic 117 119 77 127 126 33
Guatemala 118 130 165 105 26 48
Iran 119 64 167 141 143 65
Albania 120 121 161 113 76 48
Brazil 121 115 139 99 124 83
Suriname 122 158 100 39 120 117
Ecuador 123 139 60 161 84 65
Croatia 124 100 170 130 109 117
Cape Verde 125 144 93 137 122 65
Philippines 126 108 113 118 98 101
West Bank and Gaza 127 173 108 97 118 65
Ukraine 128 101 107 107 133 65
Belarus 129 148 84 31 96 117
Syria 130 142 87 89 88 117
Bolivia 131 149 57 174 115 65
Gabon 132 142 54 159 149 101
Tajikistan 133 166 85 52 40 143
India 134 88 155 112 110 65
Indonesia 135 161 131 140 120 83
Guyana 136 78 74 60 52 159
Benin 137 126 133 121 85 117
Bhutan 138 79 145 116 41 159
Haiti 139 167 60 37 135 117
Mozambique 140 153 103 157 105 83
Côte d'Ivoire 141 154 158 133 101 143
Tanzania 142 127 172 143 157 117
Cambodia 143 159 159 124 100 174
Comoros 144 136 68 149 83 159
Iraq 145 150 97 114 37 143
Senegal 146 150 66 152 151 143
Uzbekistan 147 70 138 67 165 159
Mauritania 148 164 105 142 55 101
Madagascar 149 110 152 136 162 159
Equatorial Guinea 150 162