Identifying business-friendly regulatory reforms in economies across the world (part II)
In the previous issue, we highlighted important trends in regulatory reform in regions and economies around the world and closely examined the smarter regulations for small and medium-size businesses in 185 economies. That piece covered the first five areas of business regulation as identified in the 2013 10th edition of Doing Business, published by the World Bank.
In this article, we take a closer look at the ease of doing business in the next five out of the 10 regulatory reforms.
Thirteen economies have strengthened investor protections in the past year, with the strongest protections provided by nations of high-income, as defined by the Organisation for Economic Co-operation and Development (OECD).
For the eighth year in a row, New Zealand has provided the strongest minority investor protections whereas Kosovo improved such protections the most in the past year.
Since 2005, Eastern Europe and Central Asia have been quickly catching up with OECD economies, having passed East Asia and the Pacific in 2007. Tajikistan, Albania, and Rwanda made the biggest improvements.
For the first year ever, increasing director liability was the most common regulatory reform. In the previous eight years, improving disclosure was the most common feature of all investor protection reforms.
Peru and Greece were active in instituting reforms to instill more transparency and Sub-Saharan Africa continued a trend of upgrading company law with a priority for increasing director liability.
Chile, Colombia, and Mexico were among the few economies in Latin America implementing investor protection reforms. In the Middle East and North Africa, despite improvements in Morocco and Saudi Arabia, protections were often weak because of limited access to corporate information during litigation.
South Asia was the least active with only three investor protection reforms over the past eight years implemented in India, Pakistan, and Srilanka.
Doing Business recorded the mandatory contributions that a medium-size company must pay in a given year with three indicators: number of payments, time and total tax rate for the case study firm. Thirty-one reforms making it easier and less costly for firms to pay taxes were recorded from June 2011 to June 2012.
Sixteen economies mandated or enhanced electronic filing ,including Uruguay who now allows small and medium-size companies to file and pay corporate income tax, value added tax, and capital tax online.
While firms in the United Arab Emirates faced the lightest administrative burden in paying taxes, Saudi Arabia this year ranked among the 10 economies with fewest payments and lowest tax compliance time.
In the past year, Liberia made the biggest improvement in the ease of paying taxes by reducing the corporate income tax rate from 35 to 25 percent and abolishing the turnover tax. Belarus advanced the most in this category since 2004.
Twelve economies reduced profit tax rates in 2012, whereas eleven economies introduced new tax rates. Among regions, Eastern Europe and Central Asia had the biggest improvement in the past eight years in regulatory reforms associated with business taxation.
Trading across borders
Trading across borders remains easiest in Singapore. Doing Business recorded 22 reforms making it easier to trade across borders from June 2011 to June 2012. South Africa made the biggest improvement in the ease of trading across borders in the past year whereas Georgia has made the greatest progress.
The most common feature of trade facilitation reforms in the past eight years was the introduction or improvement of electronic submission and processing.
Economies in Latin America and the Caribbean have made the biggest reductions in the time needed to trade across borders since 2005. Those in the Middle East and North Africa have made the biggest reductions in the documents required to export and import.
Enforcing contracts is easiest in Luxembourg, where it takes 321 days, requires 26 procedures and costs 9.7 percent of the value of the claim. Doing Business recorded 11 reforms making it easier to enforce contracts from June 2011 to June 2012.
In the past year Poland improved the most in the ease of enforcing contracts. Bhutan has advanced the furthest toward the frontier in regulatory practice in contract enforcement since 2005. Among the 10 economies making the greatest progress in this period, six are in Sub-Saharan Africa.
The most common reform that has it easier to enforce contracts over the past eight years was the introduction of specialist commercial courts or divisions.
Creditors of firms facing insolvency benefit from the highest recovery rate in Japan. Doing Business recorded 17 reforms aimed at improving insolvency proceedings from June 2011 through June 2012.
Poland is among the 10 economies advancing the furthest in regulatory practices to resolve insolvency since 2004. The most common insolvency reforms in the past eight years include passing new bankruptcy laws, promoting reorganization proceedings, shortening time limits, regulating the qualifications of insolvency administrators, and strengthening the rights of secured creditors.