The World Bank Group works closely with governments to design business regulations and improve regulatory delivery to create transparent and predictable operating environments conducive to business entry, expansion, and international competition.
Why it matters:
Regulatory burdens continue to constrain firms doing business in many developing countries. Our work helps to ensure that business environments provide companies with a predictable, transparent, simple, and inexpensive way to anticipate and comply with regulation. In this way, governments can open markets to competition, strengthen the competitiveness of firms in the international marketplace, increase investment, reduce corruption, safeguard public goods, and save scarce public resources. While the IC unit’s Indicator-Based Reform work focuses on regulatory improvements relating to Doing Business, the Business Environment work covers a broader range of reforms impacting the ability of the private sector to operate efficiently. These proven benefits explain why programs to reform the business environment and create optimal operating conditions is in such high demand among developing countries.
The World Bank Group’s Business Environment team, part of the Macroeconomics, Trade and Investment (MTI), helps developing country governments to improve policy formulation, enhance the quality of government-to-business services, and to sustain implementation of reforms. Business Environment work helps create markets through improved regulatory frameworks that de-risk countries and investments by improving the predictability and efficiency of government-to-business services. The team leverages reform tools in several thematic areas that span the business lifecycle, ranging from business entry to operations, as well as expansion into international markets. Some of these areas include:
- Business entry reforms: Fragmented, incomplete, and inaccessible business registries and complex business entry procedures pose significant barriers to business entry. Reforms remove unnecessary constraints and help governments capture needed data.
- Business licensing and inspections reform: Licensing costs can represent a significant burden for businesses, especially when governments use licensing to generate revenue rather than secure public goods. Reforms ensure licensing is limited to high-risk activities affecting public safety, environment, and health.
- Construction permitting reform: Construction permitting continues to place complex procedural hurdles in the way of business growth. In addition to raising compliance costs, such rules can have the unintended consequence of encouraging construction without permits. In most developing countries, between 60 and 80 percent of buildings lack controls. Construction regulation and permit reforms simplify procedures, leading to greater compliance.
- Quality infrastructure and standards reform: Quality infrastructure reforms are an important part of broader efforts aimed at enhancing trade and investment opportunities and opening markets for new innovative products. As demand grows for help in accessing new markets and competing with higher quality products, the Bank Group is committed to helping clients establish the infrastructure necessary to provide accreditation to local suppliers that meet international standards and enable them to trade on the international market.
A comprehensive approach to BE reform requires implementation at the national, sub-national and sectoral levels. To support BE regulatory reforms, our experts apply good practices on varying cross-cutting topics such as:
- Process re-engineering: Cutting red tape by addressing inefficiencies in government processes to achieve improvements in predictability and speed of implementation.
- Integrating government services: Fully exploiting the cost efficiency and transparency benefits offered by integrating government-to-business (G2B) service delivery, especially leveraging information and communications technology.
- Improving transparency, consultation and feedback: Putting in place effective, transparent, accountable, and consultative reform processes enhance the quality of regulatory regimes and their outcomes.
- Introducing risk-based approaches: Targeting resources where regulation is most needed eases unnecessary burdens on the private sector and frees up scarce public sector resources for other uses.
MTI worked with IFC’s Inclusive Business team to develop a G20 Inclusive Business Framework, providing policy options for G20 and non-G20 governments, companies, and international financial institutions to promote and foster inclusive business. Nepal adopted a comprehensive reform approach that cut time and costs and led the business registry and tax authority to launch government-to-government data sharing. Digitization transformed sacks full of company records into a state-of-the-art digital archive. In Rajasthan, India, the World Bank Group helped implement self-certification for annual inspections, extending the expiration of business licenses from five to ten years, and eliminating mandatory annual license renewals. India’s ‘competitive federalism’ approach applied to its business environment agenda has led to the implementation of more than 7,000 reform. And in Kenya automation has decreased approval times for provisional building permits from six months to 30 days. Construction permit applications increased by 300 percent from 2009 to 2010, reflecting significantly improved formalization and construction safety compliance. Kyrgyzstan decreased the number of mandatory trade standards from 22,000 to 100 in 2016, and reduced the number of products subject to mandatory certification from 5,500 to 684. In Myanmar, a requirement to obtain import licenses for more than 5,000 products (more than half the total number of imports) was abolished, a reform that benefited some 5,000 domestic enterprises.