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Costlier to start business in South Asia than OECD high income countries

October 20, 2011

Washington D.C., October 20, 2011— A new report from IFC and World Bank finds that Sri Lanka implemented the most reforms of any of the eight economies in South Asia, helping to create a better environment for entrepreneurs. The Entrepreneurs in South Asia face a regulatory environment that is on average less business-friendly than those in OECD high-income economies. This means costlier and more bureaucratic procedures to start a business, deal with construction permits, register property, trade across borders, and pay taxes.

Released today, Doing Business 2012: Doing Business in a More Transparent World assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders. This year, the ease of doing business ranking has expanded to include indicators on getting electricity. The report finds that getting an electrical connection is most efficient in Iceland, Germany, Taiwan, China, Hong Kong SAR, China, and Singapore.

This year, Singapore led on the overall ease of doing business, followed by Hong Kong SAR, China; New Zealand; the United States; and Denmark. The Republic of Korea was a new entrant to the top 10.

Over the past six years, all eight economies in South Asia have made their regulatory environment more business-friendly. “South Asia’s governments have empowered entrepreneurs by implementing regulations that are efficient, accessible, and sustainable, and they should continue to seek avenues for improvement,” said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group.

Sri Lanka Implemented the Most Business Reforms among Eight Economies in South Asia and became 89th in the global ranking. Bangladesh ranked 122 on the overall ease of doing business. A key constraint for Bangladesh is the difficulty in getting new electricity connections due to prevailing electricity shortage.  Bangladesh continues to do well in starting a business, with an expedited registration approval process as well as automation of name clearance which now takes only one day compared to seven days in previous years.  In the region, Bangladesh ranks fifth out of the eight South Asian countries, ahead of India’s overall ranking of 132.

"In achieving the ‘Digital Bangladesh’ vision, the Government has introduced online tax filing and electronic bidding in four key government agencies,” said Tahseen Sayed, World Bank Acting Country Head, World Bank Bangladesh. "When technology is used effectively, it not only increases efficiency but also ensures more transparency."

In five of South Asia’s economies, traders have access to relevant documentation requirements online or through public notices. Meanwhile, fee schedules for electricity connections are easily accessible in three economies.

"Simpler regulations, increased access to information and critical infrastructure are key to an improved operating environment for businesses,” said Kyle F. Kelhofer, Country Manager, IFC. "Bangladesh’s commitment to reform and the efforts to implement regulatory best practices are visible and appreciated by the government, private sector and civil society.

About the Doing Business report series
Doing Business analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and resolving insolvency. The aggregate ease of doing business rankings are based on 10 indicators and cover 183 economies. Previous year’s rankings are back-calculated to account for the addition of new indicator(s), data corrections, and methodology changes in existing indicators so as to provide a meaningful comparison with the new rankings.  Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, the level of skills, or the strength of financial systems. Its findings have stimulated policy debates in more than 80 economies and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies.

About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world.

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