Doing business easier in India: WB
The World Bank report says no other South Asian economy has improved its business regulations in 2005-06.Updated: Sep 07, 2006 12:58 IST
Reforms in India and Pakistan have "reduced the time, cost and hassle" for doing business, though the region as a whole has been found lacking, states a new report by the World Bank and its private sector arm International Finance Corporation (IFC).
"Doing business became easier in India and Pakistan in 2005-2006. Five reforms in India and two in Pakistan reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements," states the report 'Doing Business 2007' of the multilateral bodies released on Wednesday.
"No other South Asian economy improved its business regulations in 2005-06, ranking the region last in the pace of reforms."
'Doing Business 2007' also ranks 175 economies on the ease of doing business -covering 20 more economies than last year's report. These rankings highlight significant obstacles to business in South Asia, compared to countries around the world.
Although the reforms improved India's ranking over last year's, it still ranks relatively low at 134 and lies 41 places after China, which is reforming at a faster pace than India.
India, as leading reformer in South Asia, has taken over the top spot from Pakistan in last year's report.
The top 10 reformers in the order of their ranking are Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania.
The top ranked countries in the region are the Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100) and India (134).
Bhutan (138) and Afghanistan (162) are ranked lowest in the region.
The top 30 economies in the world in ranking are: Singapore, New Zealand, the US, Canada, Hong Kong (China), the UK, Denmark, Australia, Norway, Ireland, Japan, Iceland, Sweden, Finland, Switzerland, Lithuania, Estonia, Thailand, Puerto Rico, Belgium, Germany, the Netherlands, South Korea, Latvia, Malaysia, Israel, St. Lucia, Chile, South Africa and Austria.
"India cut the time to start a business from 71 to 25 days and reduced the corporate income tax rate from 36.59 per cent to 33.66 per cent," states the report.
It pointed out the Indian Supreme Court decision made enforcing collateral simpler - easing access to credit.
Further, new risk management procedures in customs have lowered import time by two days and exports by nine days. And reforms to stock exchange rules have toughened investor protections.
Pakistan was the runner-up reformer in South Asia this year.
According to the report, Pakistan reforms to modernise customs reduced time to import from 39 to 15 days and time to export from 33 to 24 days.
Corporate tax rates fell from 39 per cent in 2004 to 37 per cent in 2005 and 35 percent in 2006.
Bangladesh also reformed - introducing new land registration legislation to improve security and reduce corruption in land transactions.
"More such progress is needed. South Asian countries would greatly benefit from new enterprises and jobs, which can come with more business-friendly," said Michael Klein, World Bank-IFC vice president for financial and private sector development, and IFC chief economist.
The report finds the South Asian region ranks behind all others on the pace of reforms, with only a quarter of countries making at least one reform that improved the 'Doing Business' indicators.
The two countries in the South Asia region to have regressed on the reforms are Sri Lanka and the Maldives, which "made doing business more difficult".
Sri Lanka reintroduced stamp duty and levied a new tax on profits.
The Maldives now requires a mandatory two-month notice period before workers can be dismissed, a move that may especially discourage small business and the hiring of poor, low-skilled and young workers.
The report finds the greatest remaining obstacles in the region are slow courts and rigid labour laws.
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.