WASHINGTON, DC, United States – (UPDATE 2) Small and well-run Singapore, New Zealand, and Hong Kong are the world’s easiest places to run a business, while global giants China, Brazil, and India remain far down the list, according to the World Bank.
Three small but hot Pacific economies led the Bank’s annual “Doing Business” report, released Wednesday, October 29, which focuses on where businesses are best helped and least hindered by government.
The top 10 was filled out by Denmark, South Korea, Norway, the United States, Britain, Finland, and Australia, mostly the same developed economies as in previous years.
But the report, despite revisions to its methodology after upsetting China in past years, left emerging market giants far down the list, fast growth and success in drawing investment notwithstanding.
China ranked 90th out of 189 countries and territories, barely improved from 93 a year ago; Brazil is 120th, also up 3 places; and India was ranked at 142, two spots worse than before.
All 3 ranked lower than troubled economies and difficult investment environments like Russia and Greece.
In 2013, the Philippines leapfrogged 30 notches in the global survey to 108th. But due to data corrections in methodology changes, the Philippine ranking moved to 86th to now 95th spot in terms of ease of doing business, according to the latest report.
The “Doing Business” 2014 reference though is not last year’s published ranking but a comparable ranking for “Doing Business” 2014, capturing the effects of data corrections in methodology changes in the report, the World Bank clarified.
But that only underscored the admittedly narrow focus of the survey, in terms of assessing a country’s success.
“‘Doing Business’ measures a slender segment of the complex organism that any modern economy is,” admitted World Bank chief economist Kaushik Basu in a forward to the report.
“An economy can do poorly on ‘Doing Business’ indicators but do well in macroeconomic policy or social welfare interventions.”
The scores measure the operating environment for a business, including how easy it is to start a company, to transfer a property or resolve a commercial dispute; the time and cost of clearing imports and exports through a port; how easy is it to get an electricity connection, and other issues that face business owners in any country.
By those measures, Singapore was, as in recent past years, on top with a score of 88.27, and New Zealand close behind with 86.91.
The top 30 countries all had more than 74 points, while the bottom 5, with isolated and authoritarian East African pariah Eritrea at the very end, all scored below 40.
The contrast between the best and worst underscored why Singapore is highly praised and successful.
Entrepreneurs in the Southeast Asian island nation need just 2.5 days to open a business, 31 days to get electric power, and 4 days and $440 to import a container.
Meanwhile in Eritrea, a similar businessman would need on average 84 days to start a company and 59 days to get electricity, while importing goods takes 59 days and $2,000 per container.
Basu stressed that the survey is not a measure of the level of government intervention in an economy.
“A significant number of the top 30 economies in the ease of doing business ranking come from a tradition where government has had quite a prominent presence in the economy,” he noted.
“The top-performing economies … are therefore not those with no regulation but those in which governments have managed to create rules that facilitate interactions in the marketplace without needlessly hindering the development of the private sector.”
“Ultimately, ‘Doing Business’ is about smart regulations that only a well-functioning state can provide.”
“The secret of success is to have the essential rules and regulations in place – but more importantly to have a good system of clearing decisions quickly and predictably, so that small and ordinary businesses do not feel harassed.” – Rappler.com