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Doing Business: Need for improving regulations & Empowering Entrepreneurs!

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Doing Business 2011: Making a Difference for Entrepreneurs, the eighth in a series of annual reports published by IFC and the World Bank is a report to reckon with. The study conducted on the world’s economies gives ranking to countries after executing lot of calculations on various parameters on “ease of doing business”. The study is like report card for all the efforts put in by world’s economies covering the period June 2009 through May 2010.

The various parameters considered were ease of starting a business, Dealing with court permits, registering properties, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts & Closing a business.

doing Business

Among the world economies Kazakhstan showed phenomenal change in rankings by improving conditions for starting a business, obtaining construction permits, protecting investors, and trading across borders. As a result, it moved up 15 places in the rankings on the ease of doing business—to 59 among 183 economies. Two other regional economies, Tajikistan and Hungary, were also among the 10 most-improved economies, climbing 10 places and six places respectively.

This year’s list of the 10 most-improved economies includes three in Sub-Saharan Africa—Rwanda (a consistent reformer of business regulation), Cape Verde, and Zambia—as well as Peru, Vietnam, Grenada, and Brunei Darussalam.

Globally, doing business remains easiest in the high-income economies of the Organization for Economic Co-Operation and Development and most difficult in Sub-Saharan Africa and South Asia. But developing economies are increasingly active. In the past year, 66 percent reformed business regulation, up from 34 percent six years earlier.

In the past five years, about 85 percent of the world’s economies have made it easier for local entrepreneurs to operate, through 1,511 improvements to business regulation. Doing Business 2011 pioneers a new measure showing how much business regulation has changed in 174 economies since 2005.

Doing Business Ease

For the fifth year running, Singapore leads in the ease of doing business, followed by Hong Kong SAR China, New Zealand, the United Kingdom, and the United States. Among the top 25 economies, 18 made things even easier over the past year.

Worldwide, more than half the regulatory changes recorded in the past year eased business start-up, trade, and the payment of taxes. Many of the improvements involve new technologies. Technology is an enabler which makes compliance easier, less costly, and more transparent.

China and India are among the top 40 most-improved economies that made significant changes in business regulation at a steady pace in 2009 to make it easier for firms to operate, according to a new World Bank report.

Though India comes in at number 134 out of the 183 (one rung higher than last year’s 135) it has a long way to go, since its counterparts are way ahead china stands at 79, Russia& Brazil at decent 123 & 127 respectively.

Since 2005, India has implemented 18 business regulation reforms in seven areas, creating more opportunities for local firms, according to the report.

Many of the reforms focused on technology-implementing electronic business registration, electronic filing for taxes, and online submission of customs forms and payments, and the report notes.

Governments worldwide have been consistently taking steps to empower local entrepreneurs since entrepreneurs play quintessential role of a catalyst in today’s society in defining a promising future for society at large & nation on a whole. Private sector development and entrepreneurship development are crucial for social & economic development.

Nations need to nurture and develop entrepreneurs to be able to take advantage of opportunities created by globalization. This report is testimony to the fact that today entrepreneurship is touted as the powerful growth engine of economic growth, job opportunities, wealth creation and improvising quality of standards for the society.

Doing Business 2011 – Full pdf report

  1. Charu says

    Dear Altaf & Nikhil,
    I appreciate your perspective, its painful to see development getting stalled for the sake of interests of local officials/corrupt politicians or goondas. Besides spreading awareness or at most going for RTI what else can we do?

  2. Altaf Rahman says

    Two of the projects that are relavent with this article are :
    1) Tata Nano (Singur to Gujarat) It shows how it is difficult in one place i.e. WB (I am not starting the debate of the truth about obstacles) to another place i.e. Guj. It simply shows how easy it is actually to set up business but how if some parties decide to put obstacles will drag the whole issue.
    2) Posco in Orissa. This is going on for the last 5 years. I am not saying that India should make all licences at once. But the delay in giving env clearances, compensation to locals etc are mishandled both at higher level and at local level.

    The above two projects are high profile in nature and visible to the intl community as to what kind of a country India is.

    There are so many small medium projects which are stalled by local goondas. Suppose take a state govt taking up a road project. The local mafia will get the exact routes of the project even before the ministers know, thanks to the corrupt officials who draw the plans. This gives first mover advantage to the local goondas who immediately buy up the lands at throwaway prices from innocent farmers and they are not afraid of picking fight with admin regarding higher compensations some times more than 10 times their investment. Same way canal projects got stalled, road widening got stalled.

    Even businesses have to shell out higher prices to local goondas to make the transition smooth. Just name a project and these goondas will land at project sites in the name of real estate brokers.

    What I mean to say is some elements like to stiffle any activity unless they get paid. They dont care if it stalls national development. It can be govt officials (who famously revised the outer ring road project in Hyderabad 100s of times to accomodate high profile land deals) to local goondas objecting development projects or corrupt officials refusing clearances on flimsy grounds unless they get kickbacks or corrupt officals overly cooperative to certain projects coz they got their share of kickbacks.

    Simply put India has no scope for greenfield projects. Brownfield projects can take off with a little effort. No brick and mortar projects can pass from concept to commissioning with out harassment and delays.

    IT, software and services are different issues which will not be effected.

    The only reason why international companies are queuing in front of India is its population as a big market. Take out that advantage and no one will ever turn their face towards India.

    1. Nikhil Bhagia says

      well said altaf,…. & it is @ sch a ground level,…. the other day, we poked our office boy why doesn’t he starts a roadside-stall, he being a gr8 cook…. he replies, he had tried once, but the other stalls had sent goondas who crashed his ladi (stall) . . . & since then, he didn’t dared to start one again, as they warned him that next time, they’ll kidnap his wife … ~ . . . & he, being a UP bhaiya into Pune didn’t had any sort of support nor any connections…instead the local politicians would get in more danger !
      sometimes, ground realities makes you feel helpless ! :/

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