The true test

Prime Minister Ranil Wickremesinghe, delivering his economic policy framework in Parliament on Thursday, outlined a slew of ambitious plans including propelling Sri Lanka to be among the top 70 countries in the Ease of Doing Business Index compiled by the World Bank.

Incidentally, the latest edition of the report was released by the World Bank on Tuesday. It showed that despite Sri Lanka making progress in two reform areas, this was not enough to stop a decline in the country’s overall rank from 109 in 2016 to 110 in 2017 in the latest Ease of Doing Business Index as competitive peer economies pushed ahead faster.

Brunei Darussalam, Kazakhstan, Kenya, Belarus, Indonesia, Serbia, Georgia, Pakistan, the United Arab Emirates and Bahrain were the most improved economies in 2015/16 in areas tracked by Doing Business. Together, these 10 top improvers implemented 48 regulatory reforms making it easier to do business.

In its global country rankings of business efficiency, Doing Business 2017 awarded its coveted top spot to New Zealand while Singapore ranks second, followed by Denmark, Hong Kong SAR, China, South Korea, Norway, the United Kingdom, the United States, Sweden and the former Yugoslav Republic of Macedonia.

Economies in all regions are implementing reforms easing the process of doing business, but Europe and Central Asia continue to be the regions with the highest share of economies implementing at least one reform—96% of economies in these regions have implemented at least one business regulatory reform, the report said. This clearly shows the gigantic challenges before Sri Lanka, not just to simply reform but do so ahead of the rest of the world.

The two key reforms implemented by Sri Lanka in 2016 that are covered by the Doing Business report are under the categories of Starting a Business and Protecting Minority Investors. A total of 11 reforms, making it easier to do business, were implemented by five of eight economies in South Asia in the past year. This is significantly higher than the region’s annual average of nine reforms over the past five years.

India also implemented reforms across multiple areas. In the past five years, Sri Lanka has implemented the highest number of Doing Business reforms in the region, with 12 reforms in total, followed by India with 10. Wickremesinghe in his speech emphasised plans to remove hurdles that stand in the way of achieving untitled-growth for business start-ups. The processes of starting a business, getting construction permits, electricity connections and bank credit, registering property, protecting minority investors, the payment of taxes, trading across borders, the enforcement of contracts, the resolution of insolvency and regulations governing the labour market will be efficient mechanisms that will facilitate business growth.

Beyond the sweeping policy statement, which also gave a sector-wise break down, the Government wants to implement stronger access avenues for women and improve their participation in the formal workforce from the current 34% to 40% by 2020. The Central Bank has also appointed committees to look into each pillar of the ease of doing business rankings to shoulder Sri Lanka up the rungs. Now that the stage has been set, implementation will be the true test for the Government and its stakeholders.