Discussing Doing Business
By Paul
World Bank is running an online discussion of its recent report Doing Business 2007, via PSD Blog. The discussion questions are interesting particularly the second one. I’ve tried to link to various local news coverage of the report – among the media there seems to be some fundamental misunderstanding of the purpose of the report it seems. World Bank should be doing more for media to understand its publications.
-Of the 10 topics in the Doing Business report, where do you think reforms can most significantly improve the investment climate? -A country's ranking in the Doing Business report has become a well-known indicator. Are countries beginning to "game" the ranking by reforming only those areas of business regulation covered by the report’s methodology? -What are good reform strategies for administrations which have left the "reform window" of the first 15 months? -Have you read earlier Doing Business reports and how would you evaluate this one in comparison to the others? -The next report may address topics like the quality of business infrastructure and the cost of corruption. With this addition to the indicators, what research questions would you like to see in future Doing Business reports?
Some news coverage of the report;
Doing business is still very tough
"How free is India's economy after 15 years of liberalisation? Not very, say two reports released last week. Economic Freedom of the World 2006, published by the Fraser Institute and Cato Institute in North America, ranks India 53rd out of 130 countries in its Freedom of the World Index.
Not too bad. But Doing Business 2007, a World Bank report on how difficult it is to conduct business, ranks India 134th out of 175 countries, deep in the bottom half. The indicators used in the two reports are different."
Chasing the dragon
There is no point belabouring comparisons with China that attracts nine times more foreign direct investment (FDI) than India gets every year.
Time for step two
"Investment Minister Mahmoud Mohieddin was not a happy man. Speaking at the opening of this year's 11th annual Euromoney conference in Cairo, the minister directed his anger at the International Finance Corporation's (IFC) 2006 Doing Business report, which ranked Egypt at 165th worldwide in terms of countries that had improved business regulations and cut red tape. Mohieddin said the experts who put together the report did not appear to "have a full understanding of our economy". The 16 firms that the IFC -- the World Bank's private sector arm -- chose to examine for its report, he said, were not a very representative sample."
Business Scene-GEORGIAN AMBASSADOR Lasha Zhvania is happily circulating a World Bank and International Finance Corporation report that lists Georgia as the top reformer in the Commonwealth of Independent States (CIS). According to the report, Georgia also led the global top 10 reformer rankings on the ease of doing business in 2005-2006.
World Bank says: work 24/7 with no rights;"A new World Bank report calls for the wholesale elimination of workers' rights. The 2007 edition of the ‘Doing Business’ report has declared the Marshall Islands to be the world’s “Best Performer” for its almost total absence of labour regulation, displacing last year’s champion, Palau. According to the International Confederation of Free Trade Unions (ICFTU), both Marshall Islands and Palau have in common that they are tiny Pacific island nations that have no labour code and are not members of the International Labour Organisation. The World Bank’s online Doing Business database explains that it has given top ranking for labour market regulations to these countries because, among other exemplary features, both allow workers to be forced to work up to 24 hours per day and up to seven days per week and require no vacations or advance notice for dismissal."
India, top reformer in South Asia, says World Bank report
China is ranked top ten in reforming business practices
GHANA AMONG TOP TEN BUSINESS REFORMERS
World Bank praises Romanian reforms
Cameroon: Harsh Taxes Impede Business - World Bank
Consultant reiterates obstacles persist for doing business in Dominican Republic
World Bank rectifies report on Dominican business standing
Bettering business environment with ‘iron hands’
Tanzania and Rwanda Lead in Regional Economic Reforms
Hungary slips 6 places on World Bank's “Doing Business" ranking
World Bank's 2007 Doing Business Report ranks Saudi Arabia #1 in the MENA region
Africa is performing better than Latin America
World Bank: CR no. 52
"The CR dropped two spots year on year. Of the 10 indicators of the overall business environment tracked in the study, the Czech Republic had improved only in two categories: starting a business (74), the time period for which shortened to nine months, and the dealing with licenses (110) category, which relates to already-existing business operations. The country fared best in the getting credit category (21) and worst in closing a business (113), that is bankruptcy procedures — which can still take up to nine years, compared to the average 3.5 years in European and Central Asian regions. Creditors receive 18 hellers for each Kč 1 of debt, again less than half the regional average."
Morocco is top reformer in the Middle East and North Africa
World Bank hails Kenya’s success in tax reforms
"THE World Bank (WB) and the International Finance Corporation (IFC) have praised the Kenyan government for introducing the electronic data interface system in the Customs department. Consequently, Kenya is ranked among Africa’s top nations striving to create an enabling atmosphere to do business"
World Bank reports rank Tanzania among top reformers
Nigeria: World Bank Ranks Nigeria's Economic Climate Low
"We know Nigeria is making efforts to ease the process of doing business" but advised that "there is still room for improvement". She said reforms need to address the whole process, including business registration. She noted there still exists, some complex regulations as against other countries."
The World Bank said early this week that the impact of reforms instituted by the current administration led by President Olusegun Obasa-njo was rather slow.
Dominican Customs is Latin America's 2nd best;Argentina is better than Brazil and Mexico when it comes to customs procedures. And Haiti is generally among the worst in the region.
Cameroon: Harsh Taxes Impede Business - World Bank
Why reform has become a dirty word;“Reform” has been hijacked, even by the World Bank, which should know better, to mean reducing the “burden” on corporations. Te Bank’s index, which has become quite influential and is widely used by governments around the world to set their policies, specifically excludes things like infrastructure, institutions and security, i.e. these pesky things usually provided by good governments and paid by taxes and “forgotten” by businesses when they complain about governmental interference (but not when they choose where to invest, as attests France’s almost permanent presence in the top five favorite destinations for FDI alongside China and the USA). That such issues can be mindlessly excluded from public discourse on this topic via a 3 line disclaimer in their report is profoundly dishonest.
If the logic was to facilitate wealth creation by companies with a later focus on redistribution of that wealth, that might make a little bit of sense, but the goal seems only to be wealth capture by corporations per se, whether out of actual creation of wealth or, increasingly, from the shifting of costs from their P&L to the public purse. Where that wealth goes is obviously no longer a worry of the World Bank, something I find frankly disquieting. Even more, as taxes are seen as a negative thing, any redistributive policy is explicitly considered an obstacle to “reform”. Thus we end up in situations where economies appear to be growing strongly and yet median income (as opposed to average income) is stagnant or even declining, a sure sign of growing inequality rather than growing prosperity."
Malawi drops 14 steps on business ease index
Reforms in Charter to make RP business-friendly, says AdCom
The Philippines' dismal ranking in the latest World Bank (WB) economy rankings of countries worldwide should serve as a wake-up call that the local business environment is not too encouraging to foreign investors.
Pace of business reforms slows-"UGANDA has lagged behind Kenya on the pace of reforms to ease doing business, but a report notes that her effort to ease registration requirements made it easy for companies to operate in the formal sector. Uganda was ranked 107 compared to Kenya’s 83rd position, while Tanzania trailed at 142, a study on tracking reforms done by the World Bank and the International Finance Corporation (IFC) shows. However, Uganda was cited as one of the countries that undertook reforms that eased the burden of doing business in the country"
World Bank study laments red tape in the Philippines
African Countries Emerge as Regulation Reformers, Report Says; World Bank views a push by donor countries as a contributing factor
"China, Number 93 a year ago, moved up 15 places. Like Georgia, Mexico, Tanzania and Ghana, China is among the World Bank’s “top 10 reformers.” Its government has sped up the business-starting process, increased investor protections, reduced red tape in trade, and established a credit-information registry for consumer loans that provides credit histories of 340 million citizens, according to the report.
A separate report on foreign direct investment, released by Columbia University and The Economist publishing group, predicts that until 2010 China will be the top emerging market for business investment inflows, but Africa will not receive much investment any time soon.
Karl Sauvant, director of the Columbia Program on International Investment, which released the investment report, said China will attract $87 billion from U.S. businesses alone in 2006, while sub-Saharan Africa, with 10 percent of the world’s population, gets less than 1 percent of total foreign direct investment flows."
Fiji ranks 31 in World Bank report
"FIJI has dropped back two rankings to 31 on the 2007 World Bank's Doing Business report after being ranked 29 this year.
The drop in ranking comes amid concerns from the bank about some aspects of doing business in Fiji even though it has improved a lot from its previous ranking in previous years."
Bangladesh 3rd best business place in S Asia
"Bangladesh is the third easiest country in which to do business in South Asia, although as a whole is lagging behind other parts of the world when it comes to reforms that could enhance business activity, says a World Bank-IFC (International Finance Corporation) report. The top ranked countries in the region are the Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89) and Nepal (100). India comes in at 134, Bhutan at 138 and Afghanistan at 162."
Mozambique says to cut red tape in 2007
Mozambique will shake up its ineffective judiciary in a series of radical measures aimed at cutting red-tape and increasing business confidence in its resurgent economy
World Bank: Indonesia Losing Appeal As Invest Destination
Less Foreign Direct Investment forecasted for 2007;In a global context of weaker foreign direct investment, FDI, in emerging markets because of “structural weaknesses”, Latinamerica is also set to suffer, according to a report from the University of Columbia in New York and The Economist group. ..
However another report but from the International Finance Corporation, IFC, the private sector arm of the World Bank shows that doing business became easier worldwide in 2005/06. Two hundred and thirteen regulatory reforms—in 112 economies— reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements.
Meeting with private sector to clarify delivery system..He said Malaysia’s 25th ranking in the recent World Bank’s report on Doing Business 2007 needed to be improved.
Taiwan climbs a spot to become 24th-freest economy; Taiwan is the world's 24th freest economy among 130 nations, one spot up from last year, according to a report released on Thursday by the Fraser Institute, an independent public policy organization in Canada
According to a recent report released by the World Bank and the International Finance Corp, Taiwan ranked No. 47 in ease of doing business, down from 43rd last year.
In what do we trust?The language of business is peppered with the word trust. Trust deed, deed of trust, unit trust, trust account, investment trust, trust fund are just a few of the plethora of trust terms in the commercial world.
That's no coincidence. Without trust, much business activity could not be carried out. There has to be an underlying belief that the other party to a transaction will fulfill his/her obligations. Two reports that came out recently give a seemingly contradictory view of the state of trust in contemporary China.
WB Increases Azerbaijan’s Rating on Favorable Business Environment
Israel 26th business-friendly country
Malaysia Is More Business Friendly Than That Rated By World Bank, Says MB
Caribbean Way Behind as Business Destination
Slovakia offers best business conditions of V4 states
Britain overtaken by Hong Kong in table of best places to do business
Zambian investment environment worsening
ARMENIA LEADER IN CIS AS A COUNTRY WITH TROUBLE-FREE CONDITIONS FOR RUNNING A BUSINESS
Sri Lanka lags reforming nations in South Asia
''The Easiest Place To Do Business In South Asia''-“The Maldives remains ‘the easiest place to do business’ in South Asia, but it is only the best of a bad bunch, according to an influential World Bank report….
The report found that the South Asia 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.
However, the World Bank’s methodology is fiercely skewed towards liberalization and privatization regardless of context. It does not track variables such as market size, macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.
The Maldives was therefore criticized in this year’s report for introducing some measure of labour protection. The World Bank condemned the new mandatory two-month notice period before workers can be dismissed, saying it was ‘a move that may especially discourage small business and the hiring of poor, low-skilled, and young workers’.
The Maldives’ high regional ranking reflects its exceptionally laissez-faire attitude to tax and employment protection. It ranked first out of all 175 countries on ‘paying taxes’ – businesses pay back an average of just 9.3% of profit to the state, in comparison to a regional average of 45.1% and a developed world average of 47.8%...”
Australia eighth in easy business survey
Australia has moved up one spot into eighth place in the World Bank's latest ranking of the easiest markets to do business, overtaking Norway.
NZ knocked from top business spot
"New Zealand has been knocked off its perch, at the top of world rankings for ease of doing business….Australia's significant reforms of the last year have helped it improve to 8th place"
How Nations Prosper: Economic Freedom and Doing Business in 2007- an event coming up at Cato later in the month.
Earliers posts- The Road Less Traveled of Business Regulatory Reform, Excessive Anti-Corruption Drive Hurting the Economy?