Bangladesh demoted in doing business index despite carrying out key reforms

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FE ReportbrBangladesh got a demotion in the World Bank's Doing Business Report despite it reduced the time needed to register property by almost half and was the only country to record two reforms in South Asia.brThe joint report by the World Bank and its private sector financing arm International Finance Corporation (IFC) was released across the globe Wednesday in which Bangladesh's position was lowered to 110th from the previous 104th.brBangladesh has carried out key business reforms, cutting the time needed to register property from 425 days to 245 days and reduce procedures, time and cost to start a business by making lawyers involvement in company registration optional, the report said.brIt is encouraging to see that for the first time Bangladesh is showing a substantial improvement in as many as three indicators, said Mr. Zahid Hussain, Acting Country Director, World Bank, Bangladesh.brHaving established the Regulatory Reform Commission and the Bangladesh Better Business Forum, now the country must focus on swift implementation of the reforms in the pipeline in both individual regulatory areas as well as at the overall institutional level to improve the climate for doing business, he said.brKarim O. Belayachi, a co-author of the Doing Business 2009 report, said through a video conference from Washington that Bangladesh has outshone its South Asian nations in carrying out key reforms.brBut still the country needs 73 days in starting a business, 231 days in dealing with construction permits, 245 days in registering property, 302 hours per year in paying taxes, 28 days in export and 32 days in import, he said in the report.brAs a result, among the eight South Asian countries Bangladesh's doing business ranking is fourth followed by the tiny Maldives, Pakistan and Sri Lanka but ahead of giant India, Nepal, Bhutan and Afghanistan. brIn the report, Singapore has secured first position among the 181 economies, followed by New Zealand and the United States.brLast year Bangladesh eliminated the requirement that lawyers verify memorandum of articles of association, which reduced the cost of doing business by US$ 100 and made about 25 per cent reduction in time to pay taxes. brThe country has placed in better position in the strength of investor protection index and strength of legal right index, the report said.brBut the report said entry of several new countries and better performance by some weaker nations have caused Bangladesh's demotion, as its reforms in key areas such as construction permits, labour employment, investors protection and contract enforcement remained stagnant. brThree new countries Bahrain, Bahaman and Qatar have been added to the survey this year and some five to six countries, were much weaker in reforms last year, have been promoted in the rank, said Syed Akhtar Mahmood, an IFC official and a contributor to the report.brTherefore Bangladesh's position have been demoted despite its impressive reforms in some sectors, he said.br Mahmood said Bangladesh's position could be much better this year had its bureaucracy not slowing down implementation of the reforms recommended by the Regulatory Reforms Commission and Better Business Forum.brDoing Business ranks economies based on 10 indicators that track the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes, and closing a business. brThe rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.brDoing Business 2009 ranks 181 economies on the overall ease of doing business. The top five are, in order, Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom.brThe Doing Business project is based on the efforts of more than 6,700 local experts-business consultants, lawyers, accountants, and government officials-and leading academics around the world, who provided methodological support and review.brA Financial Times report adds from London The International Finance Corporation (IFC) plans to seek authority from its board to invest several hundred million dollars in emerging economies that have made the greatest business reforms, according to the organisation's chief economist.brMichael Klein made his remarks as the IFC and World Bank released their annual Doing Business 2009 report, which ranks countries according to the ease with which domestic entrepreneurs can start and run businesses that increase economic activity. brAzerbaijan topped the rankings as the country undertaking the most business reforms in 2007-08. It created a one-stop shop for new business registrations in January, leading to a 40 per cent surge in these in the first six months of the year. It also made labour markets more flexible and cut the number of steps necessary to transfer property.brThe report looks at reforms that aim to simplify business regulations, strengthen property rights, open access to credit, and enforce contracts - all measures that help aid the creation of enterprises that provide employment and economic growth.brThe overall ranking for the ease of doing business was topped by Singapore and New Zealand. While most of the world's largest economies rank highly - the US, UK and Germany are third, sixth and 25th on the list - some emerging economies also do well.brThailand ranks 13th, Georgia 15th and Estonia 22nd.brFor this ranking, the report looks at efforts to create business-friendly environments by examining measures such as the level of investor protection, dealing with construction permits and employing workers.brMr Klein said the report was first launched in 2004 because the IFC and the World Bank believed data on micro-economic developments, such as the speed of new business formation and jobs growth, were sparse. Some factors cannot be quantified, such as the overall level of political risk.brHe said the report did not look at what he termed the commanding heights issues such as whether foreign investors should be allowed access to national mineral rights.brBut it did try to look at countries' efforts to make it easy to set up and do business. The evidence is accumulating that reform efforts translate into business opportunity. brThe IFC is the arm of the World Bank that both invests directly in private sector projects in emerging markets and encourages direct investment by others.brIt has found that an investment in emerging markets weighted by the size of the economy and the pace and scale of its business reforms would have outperformed a basic emerging markets index by 30 per cent on a risk-adjusted basis.brIt is for that reason the IFC would like to create a new fund.br