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CIVETS Watch: Shredding Red Tape

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Developing nations are discovering it pays to make life easier for entrepreneurs.

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A new report from the World Bank finds that Mexico is the easiest place in all of Latin America to do business in, but Peru and Colombia are running close behind -- and they're all better business-wise than China, Russia, and Spain, among many others.

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Vietnam came in at 78th in the rankings, but made the World Bank's Top 10 list for its efforts to reform outdated and cumbersome business procedures.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.

Despite the improvement in developing countries, the top of the list is still dominated by some of the world's old reliables. The top 5 in the World Bank report, in order, are Singapore, Hong Kong, New Zealand, the UK and the US.

The Economist
has an in-depth look at the red tape of doing business around the globe here.

The View From Jakarta: American officials say President Barack Obama's stop in Indonesia this week underscores his determination to boost exports to other countries in order to create jobs in the US Naturally, that's not the first priority in Indonesia. The country's top economic minister told The Jakarta Globe that he hopes the presidential visit will encourage more investment in renewable energy and heavy machinery by companies like Caterpillar (CAT). The big American machinery builder already has a factory manufacturing mining equipment there, and plans to invest $500 million more in Indonesia next year. Hatta Rajasa, the economic minister, said US investment in Indonesia through September, excluding oil and gas, jumped to $871 million this year, from $171 million in 2009 and $157 million the year before.

On his arrival, President Obama, who spent four years of his childhood in Indonesia in the 1960s, said of Jakarta's radical transformation, "I barely recognize it."

Vietnam Is A Baby Tiger: Vietnam's infrastructure is literally leaky, according to a report in the Wharton Journal that examines the nation's super-powered economic growth and its equally outsized challenges. Flooding shuts down major trucking routes for days at a time during the rainy season. Moreover, the nation's energy and communications infrastructure are suffering from decades of neglect by the Communist government, which has embarked on a vast list of public projects to make up for lost time.

English Added to Vietnamese Curriculum: A subsidiary of CIBT Education Group (MBA) has signed an agreement with several state universities in Vietnam to teach English language and business skills to their 150,000-plus students. For some, the training is expected to lead to enrollment in CIBT's degree granting programs in Canada, in preparation for careers in the multinational companies and hotel chains which are doing business in Vietnam. CIBT is a for-profit education and communications company with programs in Asia and Canada.

New Business for Colombia: The city of Medellin, once known as the capital of the world's worst drug cartels, is cultivating a new image as a medical tourism destination, particularly for cosmetic treatments, dentistry and eye surgery. This is not as unlikely as it sounds. Colombia ranks 22nd in the world for "overall health system performance," according to the World Health Report 2010, well above the US at 37th place. And its costs are 30% to 90% lower. Asian countries pioneered the medical tourism industry.


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