South Asian economies adopt record number of business reforms in past year

South Asian economies adopt record number of business reforms in past year

ISLAMABAD: South Asian economies carried out a record 20 business reforms in the past year, bringing to a total of 127 the number of reforms enacted in the region over the past 15 years, says the World Bank Group’s Doing Business report, which monitors the ease of doing business for small and medium enterprises around the world.

Pakistan implemented four of the past year's reforms, while during last 15 years it carried out 19 business reforms.

India implemented eight of the past year’s reforms, a record for the country in a single year. This earned India a spot among this year’s global top improvers, says Doing Business 2018: Reforming to Create Jobs, the 15th annual edition in the report series released on Tuesday.

A major focus of reforms in the past year were in the area of protecting minority investors, with half of the region’s eight economies implementing measures to strengthen protections for minority shareholders.

The reforms included enhanced remedies to address cases of  prejudicial transactions between interested parties in India; rules to clarify ownership and control structures in Bhutan; greater corporate transparency in Nepal; and facilitating legal action against directors in case of prejudicial transactions with interested parties in Pakistan.

“With three-quarters of regional economies making positive reforms, it’s no surprise that this is a record year for regional reforms. India, as the largest economy in the region, is leading by example with its eight reforms,” said Rita Ramalho, Acting Director of the World Bank’s Global Indicators Group, which produces the report.

Pakistan, which implemented four reforms in the past year, also made it easier to register a new business, transfer commercial property and facilitate cross border trade.

Bhutan, the region’s top-ranked economy, also implemented four reforms to make it easier to register a new business, improve access to credit, and enhance the enforcement of contracts.

In Afghanistan, no reform was recorded but, instead, starting a business  was made more costly. Afghanistan also imposes an additional procedure for women to register a business.

The region’s economies perform well in the doing business areas of protecting minority investors and staring a business. Registering a new business, for example, takes on average 15.5 days, which is faster than the current global average of 20 days, and a significant improvement over the 50 days it took to start a business in the region 15 years ago.

The region lags in areas such as registering property and resolving insolvency. It takes on average 112 days to register property in South Asia, compared with the global average of 49.5 days. And, creditors for resolving insolvency recover about one-third of the property value, which is less than half of the recovery rate of 71.2 percent in OECD high-income economies.

Since the start of doing business, all eight regional economies have carried out a total of 127 reforms. Starting a business, with 25 reforms, was the leading indicator for regional reforms.

Fifteen  years ago, it cost over 40 percent of the value of a claim to enforce a  contract in the region; now, it takes less than 30 percent, which is better than the global average of 33 percent. Bhutan has made the largest improvement in this area. Fifteen years ago, it cost 90 percent of the value of a claim to enforce a contract in Bhutan; now, it takes 23 percent, placing the country in the top 25 globally in this area.

India has carried out the most reforms in the region in the past 15 years, with 37 reforms, followed by Sri Lanka 22 and Pakistan 19.