By Arun Kumar
Washington, Sep 27 (IANS) Led by India, South Asia picked up the pace of regulatory reform over the last year to become the second-fastest reforming region in the world, according to the World Bank’s “Doing Business 2008” report.
Now on par with the speed of reform in the countries of the Organisation for Economic Cooperation and Development (OECD), South Asia last year ranked lowest on the rate of reform. This year, two-thirds of its countries had at least one reform, said the annual report brought out jointly with the International Finance Corporation – the private sector arm of the bank.
India was considered the top reformer worldwide in trading across borders as it rose 12 places on the ease of doing business and made the reform of business regulation a policy objective.
Bhutan and Sri Lanka are the other top reformers in South Asia this year. Bhutan introduced the country’s first fundamental labour protections. Sri Lanka made it easier to start a business and to trade across borders.
Singapore, for the second year running, tops the aggregate rankings on the ease of doing business. The top-ranking countries in South Asia are Maldives (60) and Pakistan (76). India improved its ranking to 120th this year-achieving a bigger gain than China, which rose by nine places to 83rd.
“The report finds that equity returns are highest in countries that are reforming the most,” said Michael Klein, World Bank and IFC vice president for financial and private sector development. “Investors are looking for upside potential, and they find it in economies that are reforming-regardless of their starting point,” he added.
Large emerging markets are reforming fast: China, India, Malaysia, Vietnam, and Egypt all improved in the ease of doing business. The report also finds that thanks to regulatory reform, more businesses are starting up.
India is now setting the standard for reform in South Asia, with an explicit policy objective to become a leading business-friendly economy, the report said.
Besides making it easier to trade across borders, India increased access to credit by expanding credit bureau coverage to individuals as well as businesses.
It also introduced an electronic registry for security rights granted by companies.
The report shows that the time to obtain a business license in India ranges from 159 days in Bhubaneshwar to 522 in Ranchi. The time to register property ranges from 35 days in Hyderabad to 155 in Calcutta.
If the top score among Indian cities in each of the “Doing Business 2008” indicators were used for the country as a whole, India would rise 55 places in the aggregate country rankings. The Indian government is using this information to plan further reform, the report said.
The report also finds that higher rankings on the ease of doing business are associated with higher percentages of women among entrepreneurs and employees. “The benefits of increased regulatory reform are especially large for women,” said Melissa Johns, an author of the report.
“Women often face regulations that may be aimed at protecting them. But the effect is counterproductive, forcing women into the informal sector, where they lose out on job security and social benefits,” she said.
“Doing Business 2008” ranks 178 economies on the ease of doing business. The top 25 in the overall rankings are, in order, Singapore, New Zealand, the US, Hong Kong, Denmark, Britain, Canada, Ireland, Australia, Iceland, Norway, Japan, Finland, Sweden, Thailand, Switzerland, Estonia, Georgia, Belgium, Germany, the Netherlands, Latvia, Saudi Arabia, Malaysia, and Austria.
The rankings are based on 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure.
The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. Since 2003, “Doing Business” has inspired or informed more than 113 reforms around the world.
Worldwide the top 10 reformers are, in order, Egypt, Croatia, Ghana, Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China, and Bulgaria. Reformers made it simpler to start a business, strengthened property rights, enhanced investor protections, increased access to credit, eased tax burdens, and expedited trade while reducing costs. In all, 200 reforms in 98 economies were introduced between April 2006 and June 2007.