World
Business
Singapore and New Zealand
Lead the
World
|
If
your company is considering exporting, or setting up
operations abroad, this may be a good time because it’s
getting easier to do business internationally — at least
according to the findings
|
Comparison of the
Overall Rankings
of the U.S.
and
Canada
|
U.S. |
Canada |
|
Doing
Business |
3 |
4 |
|
Starting
Up |
3 |
1 |
|
Obtaining
Licenses |
22 |
32 |
|
Hiring |
1 |
13 |
|
Registering
Property |
10 |
22 |
|
Obtaining
Credit |
7 |
7 |
|
Investor
Protection |
5 |
5 |
|
Paying
Taxes |
62 |
22 |
|
Cross-Border
Trading |
11 |
8 |
|
Enforcing
Contracts |
6 |
16 |
|
Closing a
Business |
16 |
5 | of the Doing
Business 2007 survey done by the World Bank and
International Finance Corporation.
The third annual
report, released earlier this month, surveyed more than 5,000
professionals and business owners in 175 countries. It tracks
important business issues such as hiring workers, paying
taxes, and enforcing contracts, as well as the time and costs
involved in meeting government regulations for start-ups,
trade, taxation, and business closures.
According to
the report, taxes and regulation are two of the biggest policy
issues that predict entrepreneurial activity worldwide. Lower
tax rates, simpler systems, and fewer regulations invite
entrepreneurial development and the World Bank rankings are
designed to be an objective way of looking at those issues.
The World Bank report does not include social issues.
It also does not track variables such as macroeconomic policy,
quality of infrastructure, currency volatility, investor
perceptions, crime rates, the underlying strength of
institutions, and other factors.
This year’s report,
titled Doing Business 2007: How to Reform, found that
the top countries worldwide in terms of ease of doing business
are: Singapore, New Zealand, the United States, Canada, Hong
Kong, the United Kingdom, Denmark, Australia, Norway and
Ireland. (At the bottom of this article is a chart listing the
top ten countries and their rankings in each of the
categories.)
The report also found that the top 10
countries that made reforms in terms of making it easy to do
business in their countries in 2005–2006 were: Georgia,
Romania, Mexico, China, Peru, France, Croatia, Guatemala,
Ghana, and Tanzania. The reforms included simplified business
regulations, strengthened property rights, eased tax
regulations, increased access to credit, and reduced cost of
exporting and importing. In contrast, there were no reforms in
Iran, Iraq, Lebanon, or the West Bank and Gaza.
The
most popular reform was easing start-up regulations, with 43
nations simplifying procedures and reducing costs and delays.
The second most popular reform (31 countries) was reducing tax
rates and the hassles of paying.
China picked up the
pace of its business reforms by making it quicker to start a
business, increasing investor protections, and reducing the
amount of red tape involved in cross-border trading. The
country also established a registry that allows banks to check
the credit histories of 340 million of the country’s citizens
before extending consumer loans.
Below is an overview
of the rankings in five of the report’s 11 categories. The top
five listings go from first to fifth and the bottom five go
from worst to better. (Click here for the full report, as
well as access to what the World Bank calls “the largest free
online collection of business laws and
regulations.”)
1. PAYING TAXES –
Of course, no country still sends tax
collectors to the guillotine, as the French did during
|
Taxes: Top
5 |
Bottom
5 |
|
Maldives |
Belarus |
|
Ireland |
Ukraine |
|
United Arab
Emirates |
Mauritania |
|
Oman |
Colombia |
|
Hong Kong |
Central
African Republic | the
Révolution, but taxes still aren’t particularly
popular, and are often a major consideration when considering
whether to do business in a country.
The World Bank
survey asked accountants in 155 countries to review the
financial statements and a list of transactions of a
hypothetical standardized business called TaxpayerCo. The
business started with the same financial position in every
country. The survey asked for the total tax the business had
to pay and the process involved, including the hours needed to
comply.
The results reflect all taxes, from corporate
income tax to value-added tax, to advertising and
environmental taxes, as well as all deductions and exemptions.
How does the U.S. compare with other countries
in terms of the time it takes to comply with tax requirements?
According to the survey, it takes 325 hours a year in the
U.S., compared with 12 in the United Arab Emirates, 30 in
Singapore, 41 in St. Lucia and 52 in Oman. But despite popular
opinion, the United States is far from the most time-consuming
tax country. In Brazil, it takes 2,600 hours to comply and the
numbers are much higher in Ukraine (2185), Cameroon (1,300),
and Belarus (1,188).
2. STARTING A BUSINESS
– Afghanistan is the top reformer
on the list when it comes to making it easier to start a
business (it ranked 17th on the overall list). The country may
not have
|
Start-Up: Top
5 |
Bottom
5 |
|
Canada |
Guinea-Bissau |
|
Australia |
Chad |
|
U.S. |
West
Bank/Gaza |
|
New
Zealand |
Congo |
|
Hong Kong |
Yemen | reliable
electricity and Western-style paved roads, but it cut the
number of procedures to start a new business to one from 28
and trimmed the time to complete the process to seven days
from 90 days.
The start-up category takes into account
the bureaucratic and legal hurdles involved in launching a
commercial or industrial firm with up to 50 employees. This
includes registration procedures, time and cost of each
required procedure, as well as the minimum capital needed as a
percentage of per-capita income. The data reflects launching a
business with start-up capital of 10 times the economy's
per-capita gross national income.
3. DEALING WITH LICENSES –
About 4,000 years ago, the Code of
Hammurabi called for the execution of any contractor
whose
|
Licenses: Top
5 |
Bottom
5 |
|
St.
Vincent/
Grenadines |
Eritrea |
|
Japan |
Timor-Leste |
|
Thailand |
Tanzania |
|
Belize |
Zimbabwe |
|
Marshall
Islands |
Croatia | shoddy work
resulted in the collapse of a building and the death of its
owner. These days, there’s obviously more of a trade-off
between protecting the lives of people (including tenants,
construction workers and those passing by) and containing
costs.
The licensing category measures the procedures, time, and
costs to build a warehouse, including obtaining licenses,
permits and utility connections, as well as completing
required notifications and inspections.
The data
reflect a typical medium-size company constructing a
two-story, 1,300-square-meter warehouse that complies with all
zoning and building regulations, and has electricity, water,
sewerage and a regular telephone line.
4. GETTING CREDIT –
The survey measured two sets of issues —
credit information registries and the effectiveness
|
Credit: Top
5 |
Bottom
5 |
|
U.K. |
Afghanistan |
|
Hong Kong |
Cambodia |
|
Germany |
Lao PDR |
|
Australia |
Uganda |
|
Malaysia |
Burundi | of
collateral and bankruptcy laws in facilitating lending.
The main indicators in the rankings are:
- A Legal Rights Index, which measures the degree to which
collateral and bankruptcy laws facilitate lending.
- A Credit Information Index, which measures rules
affecting the scope, access, and quality of credit
information.
- Public credit registry and private credit bureau
coverage.
5. EMPLOYING
WORKERS – The World Bank survey examined
the difficulty of hiring new workers, the rigidity of rules on
expanding or contracting working hours, the non-salary costs
of hiring, and the difficulties and costs involved in
dismissing a redundant worker.
|
Employees: Top
5 |
Bottom
5 |
|
U.S. |
Săo Tomé
/
Principe |
|
Marshall
Islands |
Bolivia |
|
Singapore |
Guinea-Bissau |
|
Tonga |
Equatorial
Guinea |
|
Maldives |
Sierra
Leone |
In determining the rankings for hiring workers, the survey
made the following assumptions
-
The employees are male, non-executive,
full-time and have worked in the same company for 20
years.
-
They earn a salary, plus benefits, equal to
the country’s average wage during the entire period of his
employment.
-
Each employee is a lawful citizen with a
wife and two children. The families reside in the country’s
most populous city.
-
The employees are not members of labor
unions, unless membership is mandatory.
Companies that do business internationally must
be concerned about applicable employment laws. The World Bank
maintains a law library with details about labor regulations
imposed by various countries. Click here to access the library.
| Top Ten
Countries for Overall Ease of Doing
Business |
| |
Singapore
|
New
Zealand
|
U.S.
|
Canada
|
Hong
Kong
|
|
Ease of Doing Business |
1 |
2 |
3 |
4 |
5 |
|
Starting a Business |
11 |
3 |
3 |
1 |
5 |
|
Dealing with Licenses |
8 |
18 |
22 |
32 |
64 |
|
Employing Workers |
3 |
10 |
1 |
13 |
16 |
|
Registering Property |
12 |
1 |
10 |
22 |
60 |
|
Getting Credit |
7 |
3 |
7 |
7 |
2 |
|
Protecting Investors |
2 |
1 |
5 |
5 |
3 |
|
Paying Taxes |
8 |
10 |
62 |
22 |
5 |
|
Trading Across Borders |
4 |
12 |
11 |
8 |
1 |
|
Enforcing Contracts |
23 |
15 |
6 |
16 |
10 |
|
Closing a Business |
2 |
21 |
16 |
5 |
14 |
|
U.K.
|
Denmark
|
Australia
|
Norway
|
Ireland
|
|
Ease of
Doing Business |
6 |
7 |
8 |
9 |
10 |
|
Starting a
Business |
9 |
14 |
2 |
21 |
6 |
|
Dealing with
Licenses |
46 |
6 |
29 |
14 |
20 |
|
Employing
Workers |
17 |
15 |
9 |
109 |
83 |
|
Registering
Property |
19 |
36 |
27 |
6 |
80 |
|
Getting
Credit |
1 |
13 |
3 |
33 |
7 |
|
Protecting
Investors |
9 |
19 |
46 |
15 |
5 |
|
Paying
Taxes |
12 |
15 |
35 |
16 |
2 |
|
Trading
Across Borders |
14 |
3 |
23 |
5 |
30 |
|
Enforcing
Contracts |
22 |
1 |
7 |
3 |
24 |
|
Closing a
Business |
10 |
20 |
12 |
3 |
7 | |  | |
|
