Tuesday, October 25, 2016

Nepal slips in Doing Business ranking, still second easiest destination for business in South Asia

The business environment in Nepal has been deteriorating continuously in recent years, according to a global report.
Nepal has been ranked 107th in the World Bank’s Doing Business 2017 report compared to 99th last year. "The main reasons behind the drop are a decline in Nepal’s business regulatory environment and data revisions,” the report states. "Nonetheless, Nepal has second most favourable business environment in South Asia after Bhutan (73)."
On the distance to frontier metric, Nepal’s score went down from 59.36 in Doing Business 2016 to 58.88 in Doing Business 2017, using a comparable methodology. “It indicates a widening gap between Nepal’s regulatory environment and global best practices,” the report noted.
Under the method, rankings are determined by sorting the aggregate distance to frontier scores in various topics related to conducive business environment as considered by the World Bank, each comprising several indicators, giving equal weightage to each topic.
This indicates widening gap between Nepal’s regulatory environment and global best practices.
"More specifically, Doing Business finds Nepal made dealing with construction permits more difficult by increasing the cost of obtaining a building permit in 2015-16," it added.
However, on the positive side, Nepal also made exporting and importing easier by implementing ASYCUDA World, an electronic data interchange system.
Nepal has recently made progress in institutional reforms on several fronts that will take some time to be reflected in international rankings, the global report noted.
"For example, the government has commissioned a Cloud Infrastructure, introduced Public Key Infrastructure for Digital Signature and is close to launching an online registration and approval system for Foreign Direct Investment,” says the World Bank’s country manager for Nepal Takuya Kamata. "Wider public uptake of these systems can help ensure that these positive developments are captured in future rankings,” he added.
Nepal’s drop in ranking was also partially offset by changes in methodology. Apart from the regular 11 indicators that are used to rank economies, such as starting a business, dealing with construction permits, supply of electricity, property registration, easy availability of credit, protection for minority investors, paying taxes, trade across the borders, enforcing contracts, resolving insolvency and labour market regulations, the report has for the first time included a gender dimension in three sets of indicators: ‘Starting a Business’, ‘Registering Property’ and ‘Enforcing Contracts’. The Paying Taxes indicator set has been expanded to cover post-filing processes, such as tax audits and VAT refund.
High ease of doing business ranking means the regulatory environment is more conducive for setting up and operating a local firm.
South Asian countries have improved performance in the Doing Business areas of ‘Protecting Minority Investors’ – with an average rank of 80 – and ‘Starting a Business’ with an average of 100. Except for the Maldives, no economy in the South Asia region has a minimum capital requirement for starting a business, the report stated.

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