State agencies should drop archaic rules to cut delays – Minister Basil Rajapaksa

Mnister of Economic Development Basil Rajapaksa last week said that inefficiency, old procedures and bureaucratic bottlenecks caused poor rankings of Sri Lanka in some sectors in the Ease of Doing Business ranking. He was addressing a seminar on improving business indicators of the country in Colombo last week.

Pointing out the poor ranking of Sri Lanka in ‘dealing with construction permits’ Minister Rajapaksa urged State agencies to drop archaic rules and procedures that are delaying infrastructure and other construction projects and help to ease the process of doing business in the country. He said that several approvals have to be obtained to even build a toilet and sometimes officials were continuing with old formalities.

In the World Bank and International Finance Corporation ranking of Ease of Doing Business, it took 217 days and 18 procedures to get a building permit in Sri Lanka compared with 26 days and 11 procedures in Singapore.

Minister Rajapaksa said that officials take several weeks to approve a file that could be approved on the same day. In contrast, approval of overseas trips for government officials is being done fast by ministers. If the correct procedure is followed, this is not necessary and I changed this in the Ministry of Economic Development”, he said.

The procedure followed today, such as obtaining certificate from the Ceylon Electricity Board to get a building permit from the Municipality or Urban Development Authority and Water Board can be removed. However, the idea in improving the Ease of Doing Business is not to allow rule breaking but to do away with rules that no longer have any purpose, he said.

Ease of Doing Business presents quantitative indicators on business regulations and property rights that can be compared across 183 countries from Afghanistan to Zimbabwe. It covers 11 areas of the life of a business; Starting a business , dealing with construction permits , registering property , getting credit , protecting investors , paying taxes, trading across borders, enforcing contracts, getting electricity, employing workers and closing a business.

Sri Lanka was at 102 position in the Ease of Doing Business index in 2010 and 2011 and there is no overall improvement over the last year. Singapore, Hong Kong and New Zealand hold first, second and third positions of the index. The index is considered as the key indicator that investors look, when they take an investment decision in a country.

Sri Lanka’s position in some sectors are at worst and the government is attempting to improve the situation. For instance in the index of Ease of Enforcing a Contract (number of days taken), Sri Lanka is among the slowest countries list. According to the 2011 report it takes 1,318 days to enforce a contract in Sri Lanka. In the index of getting electricity, in Sri Lanka it has to follow four steps, it takes 132 days and costs 1,381.6 percent of per capita income.

Most of the reforms undertaken in Sri Lanka in 2011 were to protect investors and paying of taxes. The ranking of Sri Lanka in the area of Protecting Investors improved dramatically from 74 to 46 during the year. Sri Lanka also undertook substantial tax reform during 2011.

Bureaucratic red tape is obstructing private sector business projects as well as government development projects. Some of the important infrastructure projects have been delayed for months due to the delay in getting approval from various government agencies. The renovation work of reservoirs under the Dam Safety and Water Resource Planning Project have been delayed for several months due to red tape in the Wild Life Department and Mineral Resources and Mines Bureau.

Many developing countries in the Asia region have improved their business environment and moved up in the index. According to the 2011 report, Kazakhstan improved conditions to start a business, obtaining construction permits, protecting investors, and trading across borders, as a result, it moved up 15 places in the rankings on the Ease of Doing Business to 59 among 183 economies. Two other economies, Tajikistan and Hungary, were also among the 10 most-improved economies, climbing 10 places and six places. GW