Washington: Russia, India and Brazil are lagging behind other countries in making regulations friendlier to business, a World Bank Report said.
The annual Doing Business Report by the World Bank ranks 181 countries on government rules that affect setting up, running and closing a business. Singapore topped the list on characteristics amenable to business, followed by NewZealand, the US and Hong Kong. Russia slid to 120th, down from 112th last year. India also declined two places, ranking 122nd on the list of countries. Brazil climbed just one place to 125th.
The report, which private investors use to help decide where to place funds, indicates that several of the largest developing economies have done little to cut red tape or make their rules less onerous. The World Bank said that in the year to June, 113 countries had made it easier to do business.
“It isn’t that countries like Russia did anything wrong, they simply didn’t reform and so lagged behind,” said Penelope Brook, a director at the International Finance Corp., the arm of the World Bank that lends to private businesses in poor countries.
China climbed up the rankings to 83rd from 90th place.
The report rated countries on rules that affect starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.
The most improved nation was Azerbaijan, leaping to 33rd place from 97th. World Bank officials said Azerbaijan had set up a one-stop shop for opening a new business and now allowed firms to file taxes online. “Starting a business used to take 122 days; now it only takes 16,” the report said.
Africa had a record year for regulatory improvements, with 28 countries completing 58 changes that make it easier to do business.
The report has been criticized by some US policymakers for encouraging countries to reduce worker protection. Barney Frank, chairman of the US House Committee on Financial Services, said in a statement in September 2007 that the report tended to “exacerbate the global trend towards increasing inequality”.
“Despite the fact that China bans independent labour unions, it scores considerably higher than India or Brazil, which do not,” Frank said. The report also ranks Saudi Arabia higher than Sweden, which Frank said had “exemplary worker protection”.
World Bank officials said it was possible to get the best possible score and still adhere to all of the core conventions of the International Labour Organization.
Even Pakistan, Bangladesh are better for businesses
In South Asia, India has ranked sixth among eight countries that include Pakistan, Sri Lanka, Bangladesh, Nepal and the Maldives. Bhutan and Afghanistan are the only countries in the region ranked below India.
“India’s ranking was influenced by (lack of) efficiency in the court system and the number of tax payments,” Sabine Hertveldt, co-author of the report, told Mint. The slippage in ranking also indicated other countries improved faster, she said.
The rankings function as a measure of the health of the economy as small companies are critical to driving an economy’s growth, the report said. (Sanjiv Shankaran/ Mint)