Doing Business 2016: Singapore on top; Ireland slips to 17 ranking
Doing Business 2016: The latest World Bank flagship assessment of the ease of doing business in 189 economies puts Singapore on top again while Ireland slipped to a 17 rank from 13 last year. In the global ranking stakes, joining Singapore on the list of the top 10 economies with the most business-friendly regulatory environments are New Zealand, in second place; Denmark (3); South Korea (4); Hong Kong, China (5); United Kingdom (6); United States (7); Sweden (8); Norway (9); and Finland (10).
Ireland was at 8 in 2008 and the top 6 in that year were Singapore, New Zealand, US, Hong Kong, Denmark and UK.
Ireland gets a 93 rank for enforcing contracts which typically takes 650 days and costs 27% of the value of the claim. The rank for starting a business is 25; 30 for getting electricity and 43 for dealing with construction permits.
Singapore gets the top rank for enforcing contracts and cases typically take 150 days while New Zealand has a 15 rank and cases are completed in 216 days.
The cost of a claim is 26 to 27% in the 3 countries. It is 14% in Germany.
The report notes that, "Ireland made paying taxes more costly and complicated for companies by increasing landfill levies and by requiring additional financial statements to be submitted with the income tax return." However, the paying taxes rank was 6 in the world.
The 2011 general election campaign aspiration of Enda Kenny, taoiseach, that by 2016 Ireland would be "the best small country in the world in which to do business," will not be met.
Together with other comparative international metrics, Ireland among advanced / developed countries has been stuck at average for many years. It has been an achievement over several decades to bring Ireland to this level, but there simply isn't the interest or appetite for the reform / change that would put the country in the top league.
Among the top 20 countries in the Doing Business rankings, Ireland at 17 is behind emerging economy Estonia at 16 and ahead of Malaysia at 18. Macedonia, a poor Balkan country, at 12 is ahead of Australia (13), Canada (14) and Germany (16). Greece at 60 and Italy at 45, reflect improvements in recent years.
Enda Kenny is not interested in significant Irish legal services reform and while Richard Bruton, enterprise minister, each quarter produces a list of actions as part of the Action Plan for Jobs programme, it will take a future minister or government to enact the enduring change: empirically-proven policies and the use of sunset clauses in public enterprise and innovation supports. Two years ago the OECD said: "There are now over 170 separate budget lines, sometimes for very small amounts of money, and 11 major funding agencies involved in disbursing the Science Budget, although it is small by international standards."
Seven years after one of the world's biggest housing busts, the Government has responded to the housing crisis in Dublin with baby-step measures.
Tax breaks remain the main policy tool: they are easy to implement; without having to worry about evidence, they can intuitively seem wise and in accord with the conventional wisdom, and they are always welcomed by vested interests.
State of business environment elsewhere
The Doing Business 2016: Measuring Regulatory Quality and Efficiency report finds that 85 developing economies implemented 169 business reforms during the past year, compared with 154 reforms the previous year. High-income economies carried out an additional 62 reforms, bringing the total for the past year to 231 reforms in 122 economies around the world.
The majority of the new reforms during the past year were designed to improve the efficiency of regulations, by reducing their cost and complexity, with the largest number of improvements made in the area of Starting a Business, which measures how long it takes to obtain a permit for starting a business and its associated processing costs. A total of 45 economies, 33 of which were developing economies, undertook reforms to make it easier for entrepreneurs to start a business. India, for example, made significant improvements by eliminating the minimum capital requirement and a business operations certificate, saving entrepreneurs an unnecessary procedure and five days’ wait time. Kenya also made business incorporation easier by simplifying pre-registration procedures, reducing the time to incorporate by four days.
Efforts to strengthen legal institutions and frameworks were less common, with 66 reforms implemented in 53 economies during the past year. The largest number of such reforms were carried out in the area of Getting Credit, with 32 improvements, of which nearly half were undertaken in Sub-Saharan Africa.
“A modern economy cannot function without regulation and, at the same time, it can be brought to a standstill through poor and cumbersome regulation. The challenge of development is to tread this narrow path by identifying regulations that are good and necessary, and shunning ones that thwart creativity and hamper the functioning of small and medium enterprises. The World Bank Group’s Doing Business report tracks the regulatory and bureaucratic systems of nations by conducting detailed annual surveys. For policymakers faced with the challenge of creating jobs and promoting development, it is well worth studying how nations fare in terms of the various Doing Business indicators,” said Kaushik Basu, World Bank chief economist.
Doing Business data for the past 12 years show that in 2003, it took an average of 51 days worldwide to start a new business — it has now been more than halved to 20 days. The World Bank adds that the data show encouraging signs of convergence toward best practices, as lower-income economies have shown more improvement than high-income economies over time. The case of Mozambique illustrates this trend. In 2003, it took an entrepreneur 168 days to start a business, but now it only takes 19 days.
The report also notes the increasing use of the internet for entrepreneurs to interact with the government, given the potential economic benefits of providing online electronic services across all areas measured by Doing Business. In the past year, 50 reforms were aimed at providing or improving online tax payment systems, import-export document processing, and business and property registration, amongst others.
This year’s report unveils a two-year effort to significantly add more measurements of the quality of institutions supporting the business environment, to better capture realities on the ground. For example, in the area of Registering Property, a new index on the quality of land administration measures the reliability, transparency and geographic coverage of land administration systems as well as aspects of dispute resolution for land issues.
The report for example cites: Saudi Arabia, where the property transfer process is fast but opaque, and France, where the process is slow but the land administration system is of high quality.
The world’s top 10 improvers, i.e. economies that implemented at least three reforms during the past year and moved up the rankings scale, are Costa Rica, Uganda, Kenya, Cyprus, Mauritania, Uzbekistan, Kazakhstan, Jamaica, Senegal, and Benin.
Earlier this month the International Monetary Fund forecast Venezuela's economy to shrink 10% in 2015 and another 6% next year as the collapse in the oil price and economic mismanagement has resulted in the country becoming a failed state.
Venezuela — holds the world's largest oil reserves — and the World Bank has ranked it at 189 — the worst economy in the world for business.
The World Bank says:
In República Bolivariana de Venezuela lawyers are required to provide a legal assessment as part of the process of preparing a company’s incorporation documents — a procedure that takes five days and costs more than 87% of income per capita.
Resolving a commercial dispute through the courts takes longer in Greece than in any other European country — about 1,580 days, or more than four years, through the Athens First-Instance Single Member Court. Worldwide, only three economies have a longer process: Guinea Bissau, Suriname and Afghanistan.
The World Bank compares Denmark and Greece in the area of property registration:
An example from Denmark illustrates how regulatory efficiency and quality go together and in fact reinforce each other in a virtuous cycle. The country’s state of-the-art land registry provides both efficient registration of property transfers and valuable property titles, thanks to its transparent, accurate information and complete geographic coverage. Because the registration is so efficient (requiring only three procedures and four days), people are more likely to register property transfers — helping to maintain the accuracy of the registry’s data and the quality of land administration. And because the registry is therefore so reliable, the process of registering a property transfer can be kept simple, fast and inexpensive.
By contrast, Greece exhibits a vicious cycle in its land administration system. To transfer property, a local buyer has to complete 10 different procedures — a process that takes 20 days and costs 4.9% of the property value. Beyond the efficiency issues, there are also quality issues. For example, there are no official cadastral maps for the municipality of Athens, and very little of the privately owned land across the country is mapped in the cadastre. Transparency is poor, with no separate mechanism for filing a complaint at the property registry and no up-to-date statistics about the number of land transactions in Athens. And there is no specific compensation mechanism to cover for losses incurred by someone who engaged in good faith in a property transaction based on erroneous information from the registry.