Sri Lanka ups rank in ‘Doing Business Index’

A new report from IFC and World Bank finds that the reforms implemented by Sri Lanka have helped create a much better business environment for entrepreneurs.

Sri Lanka rose to 89th position in the global ranking of 183 countries, partly by strengthening investor protections and reducing taxes on business. Sri Lanka made paying taxes less costly for businesses by abolishing the turnover tax and social security contribution and by reducing corporate income tax, value added tax and nation building tax rates.

However, despite the significant improvements seen in Sri Lanka’s business landscape, the report has also identified further areas requiring intervention in the future, as the country has seen less progress in paying taxes, registering property and enforcing contracts. Sri Lanka continues to rank poorly on paying taxes (rank 173) as well as registering property (rank 161) and enforcing contracts (rank 136).   Sri Lanka also strengthened investor protection by requiring greater corporate disclosure on transactions between interested parties.

Released yesterday, ‘Doing Business 2012: Doing Business in a More Transparent World’ assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders. This year, the ease of doing business ranking has expanded to include indicators on getting electricity.

Over the past six years, all eight economies in South Asia have made their regulatory environment more business-friendly.

“Entrepreneurs in developing economies have a vital role in creating economic opportunities,” said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group. “South Asia’s governments have empowered entrepreneurs by implementing regulations that are efficient, accessible, and sustainable, and they should continue to seek avenues for improvement.”

Among the region’s economies, the low- and lower-middle-income economies of Afghanistan, Bhutan, India, and Nepal also improved business regulations for local firms. Bhutan, rising four places to 142, recently launched a public credit registry and streamlined business start-up while Afghanistan, ranked 160, made it easier for local businesses to get an electrical connection.

New data show that improving access to information on business regulations can aid entrepreneurs.  In five of South Asia’s economies, traders have access to relevant documentation requirements online or through public notices. Meanwhile, fee schedules for electricity connections are easily accessible in three economies.

“South Asian economies have an opportunity to increase access to information for entrepreneurs,” said lead author of the report Sylvia Solf, adding, “One route is new technology, which is increasingly used by governments to provide electronic services for filing taxes or registering businesses. This not only enhances efficiency but opens opportunities to increase transparency.”

‘Doing Business’ analyses regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and resolving insolvency. The aggregate ease of doing business rankings are based on 10 indicators and cover 183 economies.

Previous year’s rankings are back-calculated to account for the addition of new indicator(s), data corrections, and methodology changes in existing indicators so as to provide a meaningful comparison with the new rankings.

‘Doing Business’ does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, the level of skills, or the strength of financial systems. Its findings have stimulated policy debates in more than 80 economies and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies.

For more information about the ‘Doing Business’ report series, please visit: www.doingbusiness.org.; check Facebook: http://www.facebook.com/DoingBusiness.org; or compare ‘Doing Business’ data on your iPhone: www.doingbusiness.org/iphone

The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID).

Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit www.worldbank.org, www.miga.org, and www.ifc.org.