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business newsCIVETS Watch: Shredding Red Tape
By
Carol Kopp
Nov 10, 2010 12:10 pm
Developing nations are discovering it pays to make life easier for entrepreneurs.
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The report ranks 183 countries worldwide for the ease and cost of navigating their bureaucracies in order to start, run or even shut down a business. How many bureaucratic hoops do you have to jump through to get a construction permit, or register a business? How hard is it to get a business loan? Can tax returns be filed online? These bread-and-butter issues are all examined and rated.
Overall, the bank found that 85% of the world’s economies have made it easier for entrepreneurs to start and run businesses over the past five years, by streamlining processes and adopting new technologies.
Of the CIVETS group, South Africa leads the pack overall, but Vietnam gets points on the list of “most improved” for its efforts to streamline its bureaucracy. Here’s a rundown of each nation’s showing in the report:
South Africa ranks highest of the CIVETS countries at 34th out of 183, though it slipped a couple of places from last year’s report. It gained points this year by abolishing a stamp duty to ease the business tax burden.
Colombia, at 39th, was one of three Latin American countries that have a greatly improved business climate, according to the World Bank report. Peru and Guatemala also introduced successful reforms.
Turkey’s appearance at number 65 is seen as something of a triumph, considering that the country is emerging from overwhelming economic troubles in the 1990s. The Economist has an analysis of Turkey’s emergence as the “Anatolian Tiger.”
Vietnam came in at 78th in the rankings, but made the World Bank’s Top 10 list for its efforts to reform outdated and cumbersome business procedures. Most recently, Vietnam’s government created a “one-stop shop” for taxes and licenses, modernized its credit system and cut the cost of red tape for new construction. The corporate income tax rate also was cut to 25% from 28%.
Egypt landed at 94th, rising five places in the rankings after introducing an electronic system for submitting export and import documents. But it’s still near the bottom of the list in dealing with construction permits, tax payments and enforcing contracts. In a report on Egypt’s ranking, Daily News Egypt notes that the country’s red tape is so grueling that up to 90% of building projects are done without the proper permits and approvals.
Indonesia comes in at 121st, the worst ranking among the CIVETS countries. In a report in The Seattle Times, James Castle, a veteran of business in Indonesia, blames the country’s relatively poor performance on ingrained official corruption even in the face of high-level efforts at a crackdown. He compares the crooked bureaucrats there to a horde of wildebeests at the edge of a river: “One million cross, and 100 get eaten,” Castle said, so the odds are still in their favor.
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