GENEVA — Asian apparel exporting nations India, Cambodia, Vietnam and Sri Lanka posted gains in implementing regulatory reforms that reduce costs and remove impediments to doing business, a World Bank report said.
The report, “Doing Business 2016,” found that 231 business reforms were implemented in 122 economies worldwide.
“A modern economy cannot function without regulation and, at the same time, can be brought to a standstill through poor and cumbersome regulation,” said Kaushik Basu, World Bank chief economist.
“Doing Business” tracked business practices in 10 key areas, including starting a business, dealing with construction permits, getting electricity, registering property, protecting minority investors, trading across borders, enforcing contracts and resolving insolvency.
The report shows that in the revised and expanded methodology for the ranking indicators, India moved four slots to 130th from 134th; Cambodia climbed six places to 127th; Vietnam moved up three slots to 90th, and Sri Lanka rose six places to 107th.
Cambodia made starting a business easier, the report said, by simplifying company name checks and streamlining tax registration. India abolished the requirement for paid-in minimum capital and certificate to commence business operations, and time to start a business has been sharply reduced to only 29 days, down from 127 days in 2004, but still below the world average that now stands at 20 days.
Augusto Lopez-Claros, director of the World bank’s Global Indicators Group, said in 2005 there were only 41 countries in the world that took less than 20 days. This year, the number has risen to 132, he noted.
But the report also shows some apparel-producing nations slipped in the rankings. These included Turkey, down four places to 55th; Bangladesh, down two places to 174th; Pakistan, also down two places to 138th, and China, down one ranking to 84th.
Out of 189 economies ranked globally, Singapore retained its top slot, followed by New Zealand, Denmark, South Korea and Hong Kong. The U.S. was ranked seventh behind the U.K.
“The best 30 performers are not those with little regulation, but those with good rules that allow efficient and transparent functioning of businesses and markets, while protecting the public interest,” the report said.
This year’s study also includes data for the first time that capture the reliability of electricity supply, and for construction permits, quality control and safety mechanisms of building regulations, both problematic issues for the apparel sector in many poor nations.
On power, the report outlines, “beyond the complexity and high cost of getting an electricity connection, inadequate or unreliable power supply and the price of electricity consumption are also perceived as important constraints on business activity.” A typical firm operating in a poor economy, it notes, “faces nearly 250 outages a year, lasting close to 1,000 hours in total, while a typical one in a high-income economy experiences only 1.5 outages a year, totalling around three hours. Economies in South Asia have the highest frequency of outages, averaging more than 200 outages.”
Cambodia reduced the average frequency and duration of power outages experienced by a customer over the course of a year in Phnom Penh by increasing power generation capacity.
On permits, the report said, the collapse of the Rana Plaza building in April 2013 in Bangladesh that claimed more than 1,000 lives “also resulted from a lack of the necessary quality-control mechanisms.”
“The building was constructed on a pond without authorization to be on one, then converted without permission from commercial to industrial use, then extended three floors beyond what was specified in the original building permit,” the report noted. “Moreover, the builders used substandard construction materials (which led to an overload of the building’s structure exacerbated by vibrations from its generators).”