Friday, October 26, 2012

Government fails to improve business climate

Despite government's preparation to observe the year 2012-13 as an Investment Year to lure foreign direct investment (FDI), it has failed to create conducive doing business environment as the country has ranked 108th — among the 185 economies — with not a single reform in easing doing business, according to the Doing Business report 2013 published by the World Bank higher score therefore indicates a more efficient business regulatory system.
Earlier last year, the country was ranked 107th on ease of doing business out of 183 economies in Doing Business 2012.
The improvements in the ranking due to reforms will help attract FDI because the prospective investors' decide on the basis of country’s ranking in the annual Doing Business report that covers 11 indicators that are keys to doing business.
The top 10 economies witnessed an average of $50,384 million FDI inflow; weheras the bottom 10 economies have witnessed an average of $1,257 million FDI inflow in 2011, the report said, and proving the claim those economies that provide a good regulatory environment for domestic investors also provides a good one for foreign firms too.
It takes five days to register properties in Nepal, the report revealed. "Similarly, some 0.47 per cent of the adults — borrowers — are covered by credit registries or bureau," according to the report that has highlighted Nepal as a country that needs the most — some 11 — documents for exports.
Nepal ranks 105th in starting business that takes 29 days with seven procedures to follow costing 33 per cent of income per capita.
"It takes 97 days to deal with construction permits in Nepal with 13 procedures and 115 days that costs 654.6 per cent of income per capita," it said. "Nepal has improved in getting electricity ranking from last year's 99 to 96, but takes 70 days with five procedures that costs 1,762.8 per cent of income per capita," adds the ease of doing business report in Nepal that witnessed no regulatory reforms, however.
Worldwide, 108 economies implemented 201 regulatory reforms in 2011-12 making it easier to do business as measured by Doing Business, according to the 10thh edition of Doing Business that has ‘Smarter Regulations for Small and Medium-Size Enterprises’ theme. Economies that rank high on the ease of doing business tend to combine efficient regulatory processes with strong legal institutions that protect property and investor Rights Through indicators benchmarking 185 economies, Doing Business measures and tracks changes in the regulations applying to domestic small and medium size companies in 11 areas in their life cycle.
This year’s aggregate ranking on the ease of doing business is based on indicator sets that measure and benchmark regulations affecting 10 areas from starting a business to dealing with construction permits, getting electricity, registering property, Getting credit, protecting investors, paying taxes, trading across borders, and enforcing Contracts to resolving insolvency.
Doing Business also documents regulations on employing workers, which are not included in this year’s aggregate ranking or in the count of reforms. The economies that rank highest on the ease of doing business are not those where there is no regulation—but those where governments have managed to create rules that facilitate interactions in the marketplace without needlessly hindering the development of the private sector. In essence, Doing Business is about SMART business regulations — Streamlined, Meaningful, Adaptable, Relevant, Transparent — not necessarily fewer regulations.

South Asian ranking
Sri Lank — 81
Maldives — 95
Pakistan — 107
Nepal — 108
Bangladesh — 129
India — 132
Bhutan — 148
Afghanistan — 168
(Source: Doing Business 2013 report)

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