Regulation exists to protect workers, public safety, businesses, and investments. But inefficient or inadequate regulation can stifle entrepreneurial activity and business growth and impact the ease of doing business. It takes over 200 hours to complete export border requirements for maritime transport in Cameroon and Côte d’Ivoire. In contrast, it takes only 10 hours in Singapore. Border compliance costs for export at seaports in Gabon average over $1,600, but just over $300 in Mauritius.
Burdensome rules may drive businesses away from the oversight of regulators and tax collectors into the shadows of the informal sector or out of the country in search of a more supportive business environment. Foreign investors may shun economies where rules prevent economic activity from flourishing.
Cumbersome red tape holds back more than individual businesses or investors: an economy’s ability to grow sustainably may suffer. Economic freedom to do business goes hand in hand with economic development and a thriving private sector, and these in turn underpin poverty elimination and the pursuit of shared prosperity.
Doing Business 2020measures regulations across 190 economies in 12 business regulatory areas to assess the business environment in each economy. Ten of these indicators were used to estimate an ease of doing business score this year, over the 12 months ending April 30, 2019. This is the 17th edition of a study that has motivated governments worldwide to undertake business reforms with the goal of bolstering sustainable economic growth.
The study looks at rules affecting a business from inception through operation to wind-down: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.
Best places to do business
The top 10 best places in the world to do business, according to the study, are New Zealand (with a score of 86.8 out of 100), Singapore (86.2), Hong Kong SAR, China (85.3), Denmark (85.3), the Republic of Korea (84), the United States (84), Georgia (83.7), the United Kingdom (83.5), Norway (82.6), and Sweden (82).
Economies that score highest on the ease of doing business ranking share several common features, including the widespread use of electronic systems. The top 20 economies have online business incorporation processes, electronic tax-filing platforms, and allow online procedures related to property transfers. Moreover, 11 economies have electronic procedures for construction permitting.
In general, the 20 top performers have sound business regulation with a high degree of transparency.
Most improved places to do business
Doing Business also looks at which economies improved the most. Doing Business 2020 found that the 10 economies that improved the most in their ease of doing business score were Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria.
In Saudi Arabia, authorities established a one-stop shop for company incorporation and eliminated the requirement for married women to provide additional documentation when applying for a national identity card. The country also streamlined and merged pre- and post-registration processes.
Jordan joins the top reformers for the first time with three reforms. The economy strengthened access to credit by introducing a new secured transactions law, amending the insolvency law and launching a unified, modern and notice-based collateral registry. In addition, Jordan made paying taxes easier by implementing electronic filing and payment for labor taxes and other mandatory contributions.
With five reforms to business regulations, Togo ranked among the world’s top 10 most improved economies on the ease of doing business score for the second year in a row and for the third time in the past five years. Authorities abolished the requirement to notarize company documents and reduced the time to register a company. The government streamlined the process for getting a construction permit and made it easier to connect to the electrical grid. It also facilitated the processes of registering property and getting credit.