WASHINGTON, October 31, 2017 – Business reforms continued at speed in East Asia and Pacific, with regional economies adopting 45 reforms during the past year, bringing to 371 the total number of private sector reforms enacted in the region over the past 15 years, says the World Bank Group’s latest Doing Business report, which monitors the ease of doing business for small and medium enterprises around the world.
The region is home to two of the world’s top 10 ranked economies, Singapore and Hong Kong SAR, China, and two of this year’s top 10 improvers, Brunei Darussalam (for a second consecutive year) and Thailand, says Doing Business 2018: Reforming to Create Jobs, the 15th edition in the report series, released today.
With eight reforms in the past year, Brunei Darussalam made dealing with construction permits less cumbersome by streamlining the process of obtaining a building permit, and strengthened access to credit by adopting a new law on secured transactions that establishes a unified legal framework for movable assets and creates a modern, notice-based collateral registry. It also made exporting and importing easier by enhancing the Brunei Darussalam National Single Window and the customs clearance process.
Thailand also adopted eight reforms in the past year, a record for the country in a single year. Starting a business was made easier by abolishing a requirement to obtain a company’s seal and eliminating the need for approval of company work regulations from the Labor Department. As a result, the time taken to start a business has been reduced to just 4.5 days, compared to 27.5 days previously. By implementing geographic information systems, Thai authorities have also streamlined the process for getting electricity and improved the reliability of the land administration system.
Reforms by other countries included the introduction of numerous measures to facilitate paying taxes and simplify business registration formalities in China, which made the process 52 hours and 6 days faster respectively; enhancements of port facilities to facilitate cross-border trade in Malaysia; and a decrease in the transfer tax in Indonesia, which made registering property less costly.
Indonesia implemented seven reforms across multiple Doing Business areas. Highlights of the country’s reforms included improving access to credit by launching a new credit bureau; making paying taxes easier; strengthening minority investor protections and enhancing corporate transparency; and reducing the start-up fees for new businesses.
Reforms improving the business environment were also adopted in the Pacific Islands of Palau and Samoa. Palau made paying taxes easier through process enhancements, while Samoa strengthened access to credit with the implementation of the Personal Property Securities Act and by establishing a modern collateral registry.
The region’s economies perform well in the Doing Business areas of Dealing with Construction Permits and Getting Electricity. Building a warehouse, for example, takes on average 138 days and costs 2.2 percent of the warehouse value, compared with the global averages of 158 days and 5.3 percent of the warehouse value.
However, important challenges remain in areas such as Enforcing Contracts, where there is wide variation between economies in the region. For example, with the adoption of international good practices, such as court automation tools, alternative dispute resolution, and the creation of specialized commercial courts, Shanghai has the highest global score (15.5) in the Quality of Judicial Processes index, on par with Australia. As a result, China has a global ranking of 5 in the Enforcing Contracts indicator. On the other hand, the cost of resolving a commercial dispute is highest at 103.4 percent of the claim value in Cambodia, which is ranked 179 globally in this area.
Highlights of the region’s successes over the past 15 years include:
- Starting a Business has been the most common area of reform, with 74 of the 371 reforms of the past 15 years aimed at making it easier for entrepreneurs to register a new business. As a result, the average cost to start a business in the East Asia and Pacific region has dropped to 19 percent of income per capita, from 59 percent in 2003.
- The region has implemented 17 reforms in the area of Resolving Insolvency over the past 15 years. Thanks to these reforms the average recovery rate has increased from 28.8 percent in 2003 to 37.3 today.
- Vietnam and Indonesia have implemented the most reforms in the past 15 years, with 39 reforms each. Today, an entrepreneur in Ho Chi Minh City spends 22 days and 6.5 percent income per capita registering a new company, compared to 61 days and 31.9 percent in 2003. In Jakarta, the average recovery rate for resolving insolvency today is 64.3 cents on the dollar, compared to 9.9 cents in 2003.
“In the past 15 years, the East Asia and Pacific region has made significant progress in enabling entrepreneurship. As the reform momentum continues building up in the region, those economies which lag behind have the opportunity to learn from the good practices adopted by their neighbors,” said Rita Ramalho, Acting Director of the World Bank’s Global Indicators Group, which produces the report.
This year’s report includes four case studies, including one which highlights three successful insolvency reforms, in France, Slovenia and Thailand, and the lessons learned that are transferable to other economies.
The full report and its datasets are available at www.doingbusiness.org