I’ve been researching the best and worst places for ease of doing business and according to the latest World Bank report Bahrain sits at 62nd on the list; one place behind Kenya and just ahead of Albania.
Bahrain and the UAE are far and away the best performing countries in the Middle East, but let’s not get too excited. Georgia, who at number six, has jumped 94 places in the index in just 10 years.
When it comes to supporting new businesses, it is not a level-playing field. Whether it’s the basics, like hooking up electricity and registering the business, or more complex regulatory hurdles, your location can impact the success of your venture in a big way.
The World Bank Ease of Doing Business ranking breaks countries’ complex regulatory ecosystems down into quantifiable components. The resulting index and ranking system is a global look at who’s making it easy to do business.
Since the inception of the project in 2003, the business regulatory environment has changed dramatically. Governments have embraced and nurtured advances in information technology to reduce bureaucratic hurdles and increase transparency. Today, in 65 of the 190 economies examined, entrepreneurs can complete at least one business incorporation procedure online, compared with only nine of the 145 measured in 2004.
Let’s consider the case of a potential software entrepreneur. If she was a Canadian, it would take just two procedures, one and a half days and less than one per cent of income per capita to start her business in Toronto.
First, she would need to file for federal incorporation and provincial registration online costing $200 and is completed within a day.
Second, she would need to register online for VAT; this costs nothing and is completed within half a day. She can perform these steps online from the comfort of her home. As her business expands and becomes profitable, she would be expected to pay 20.9pc of her commercial profits in taxes annually.
However, if the same entrepreneur were a national of the Philippines, living in Quezon City, the business incorporation process would require 16 procedures, take 28 days and cost around 16pc of income per capita. She would need to make 20 different tax and contribution payments and visit multiple agencies in person. Furthermore, her business would be expected to pay 42.9pc of its commercial profits in taxes and contributions annually.
Cumbersome regulatory structures such as these constrain the ability of entrepreneurs to transform their ideas into viable businesses.
The report measures the processes for starting a business, obtaining a building permit, getting an electricity connection, transferring property, paying taxes, taking a commercial dispute to court, and resolving an insolvency case, as well as credit and equity market regulations and logistics of importing and exporting goods.
There are many other factors such as the availability of skilled labour of market size that are not captured in the report. But it is clear the key areas of interaction between the government and entrepreneurs have some way to go in many countries.
Come on Bahrain with Gulf Air flying three times a week to Georgia it is time we got on the plane to find out how Georgia managed to get to number six in the world when it comes to ease of doing business.