'Ease of doing business':

Overall improvement of our position vital

By Gamini Warushamana

Sri Lanka has been ranked 85 in the World Bank's ‘Doing Business 2014’ report, a slip from 81 last year. In this report 189 economies are ranked on their ease of doing business, from 1 to 189.

A high rank in the ease of doing business index means the regulatory environment is more conducive to start and operate a local company. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2013. Analysts said that comparisons such as this are important to review the areas where reforms are necessary and improve the ease of doing business environment in the country.

This index is one parameter that foreign investors consider when making investment decisions and, therefore, overall improvement of our position is important for investment promotion.

The slip in rank by four places does not necessarily mean deterioration of the business environment. It may be due to slow reforms or faster reforms in other countries. Countries that overtook Sri Lanka over the past year include Moldova, which moved up to 78 from 83 and Guatamala which moved up to 79 from 93.

We have to deeply consider our poor ranking in some crucial areas. For instance in registering property our position is 145, in paying taxes it is 171, enforcing contracts - 135, dealing with construction permits - 108 and that means we have much to do in these areas.

In starting a business, Sri Lanka is ranked at 54, getting credit at 73, protection of investors - 52, trading across borders – 51, resolving insolvency - 59, getting electricity - 91 and in these areas too we have to improve our position.

The report also gives detailed information in each area and clearly points out what reforms are needed. For instance to get construction permits in Sri Lanka it takes 186 days and 17 procedures have to be followed and due to this our world rank is 108.

Hong Kong is at the top of the rank and it takes 71 days and there are only six procedures to obtain construction permits.

Despite the slip in the overall doing business position, during the course of the year, some key reforms and good practices adopted by Sri Lanka have been recognised by the report.

Sri Lanka's reforms in the financial sector has been recognised by the report under good practices. Under 'making it easy to get credit' Sri Lanka has been recognised as a country that has granted legal rights allowing out-of-court enforcement and in credit information, distributing data on loans below 1% of income per capita.

Under 'making it easy to pay taxes' Sri Lanka has been recognised as a country that allows self-assessment. Under the 'who made dealing with construction permits easier' Sri Lanka has been recognised as a country that streamlined procedures by reducing time for processing of applications and reducing the fee to obtain a construction permit by eliminating the development tax.

Improved process and efficiency in getting electricity in Sri Lanka is another area the report has highlighted.

The report said that the Ceylon Electricity Board has introduced an electronic document management system that streamlined its internal work flow and cut new application processing time by 22 days.

Under 'who made paying taxes easier and lowered the tax burden', Sri Lanka's introduction of electronic systems has been recognised while under 'who made trading across borders easier', the introduction of the electronic submission and processing system has been recognised.