S Asia still to catch up with world pace of reforms

INDIA might have caught world attention with its sudden economic turnaround, but South Asia, home to over one-fifth of the global population, has a long way to go.

Giving a realistic analysis of reforms all over the world, a report Doing Business 2007: How to Reform released jointly by World Bank and International Finance Corporation (IFC) said India still ranks relatively low at 134 and lies 41 places after Chinawhich is ushering in reforms at a faster pace.

The top 10 countries on the reform scale are Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana and Tanzania. The good news is that India this year has emerged as top reformer in the sub-continent. In its report, the Bank concluded that South Asia ranks behind all others on ‘pace of reforms’ with only a quarter of countries making at least one reform that improved Doing Business indicators.

The report also ranks 175 economies on the ease of doing business. The rankings highlight significant obstacles to business in South Asia, compared to countries around the world. The rankings track indicators of the time and cost to meet government requirements in business start-up, operation, trade, taxation and closure, while leaving out variables such as market size, macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions or crime rates.

Accroding to the report, the top 30 economies in the world are Singapore, New Zealand, USA, Canada, Hong Kong, the UK, Denmark, Australia, Norway, Ireland, Japan, Iceland, Sweden, Finland, Switzerland, Lithuania, Estonia, Thailand, Puerto Rico, Belgium, Germany, the Netherlands, Korea, Latvia, Malaysia, Israel, St. Lucia, Chile, South Africa and Austria.

Referring to South Asia, the report says India has taken over the top spot from Pakistan last year. While doing business in India and Pakistan improved over the past few years, in at least two countries, Sri Lanka and Maldives, the process was made more difficult. Sri Lanka, hit by a civil war, reintroduced stamp duty and levied a new tax on profits. The tiny island nation of Maldives, on the other hand, now requires a mandatory two-month notice period before workers can be dismissed, a move that may especially discourage small business and hiring of poor, low-skilled, and young workers, it said. India cut the time to start a business from 71 to 25 days and reduced corporate income tax rate from 36.59 percent to 33.66 percent, the report said.

It implemented reforms to simplify business registration, cross-border trade, and payment of taxes, as well as easing access to credit and strengthening investor protection, the Bank said in its report. Five reforms in India and two in Pakistan reduced time, cost, and hassle for businesses to comply with legal and administrative requirements.