Isabelle Strauss of Chemonics’ Economic Growth and Trade practice reviews the latest World Bank Doing Business Report.
The World Bank Doing Business report is a tool that is used by the public and private sectors to determine the opportunities and challenges of doing business in various countries. The 10 key indicators tracked by the report comprise one of the measurement tools used by Chemonics projects seeking to improve the business enabling environment of the countries in which they operate. Chemonics currently implements 12 projects with primary objectives that include business enabling reforms and, of these, six projects implement activities that contribute to improving one or more of the Doing Business report indicators.
What is New with the Doing Business Report?
The 2015 World Bank Doing Business – Going Beyond Efficiency report highlights a new ranking system called the Distance to Frontier (DTF). The DTF is an absolute measure of performance that shows the distance of each economy to the “frontier,” which represents global best practice for each indicator. During the Doing Business 2015 launch in Washington, D.C., last October, Dr. Augusto Lopez Claros, director of Global Indicators and Analysis at the World Bank, explained that the DTF addressed circumstances when a country has been engaged in business regulation reform but whose ranking has decreased or remained the same due to other countries having made a greater amount of reforms. He continued by stating, “You can actually tell countries, ‘hey, you may have dropped in the ranking a couple of places but your score has gone up, which means the quality of your business environment is better this year than it was last year,’ and this is a very encouraging message to deliver to countries.”
Moldova’s Future is Bright
Moldova saw marked improvements in its Doing Business 2015 ranking, rising from 82 in the 2014 report to 63, with particular improvements in starting a business, getting credit, and paying taxes. Also notable is Moldova’s improvement in its DTF score, which increased by 3.8 percentage points, the 10th highest DTF increase across all economies. Improving Moldova’s ranking has been a key objective of Chemonics’ USAID Moldova Business Regulatory, Investment, and Trade Environment Program (BRITE) since it began in 2012. Many actions contained in government policy documents facilitated by the project are designed to have a direct impact on individual indicators. With collaboration from the Moldova Ministry of Economy, BRITE drafted and promoted amendments to the Joint Stock Companies Law which will streamline the regulatory framework on protecting investors through provisions on public disclosure, auditing, and concluding transactions. The draft amendments were recently approved by Moldova’s government and will be enacted by parliament following their recess. The project is also working with the Moldova Customs Service to introduce electronic submission of export documents, expand customs service hours, eliminate export transit declaration, and allow accelerated cross-border movement.
Better Investment Climate in West Bank and Gaza
The USAID West Bank and Gaza Investment Climate Improvement Project (ICI) has built the capacity of the Palestinian Authority to pass and implement business regulation reforms. In the project’s final year, Chemonics’ efforts ended in success when the Doing Business report cited a 28-place jump in Paying Taxes from a ranking of 79 to 51, directly attributable to the project’s technical assistance on tax administration. Although many of the project’s other major reforms were not passed in time for the Doing Business 2015 report, they are sure to make a splash in next year’s rankings once those reforms are considered “in practice” by the majority of the private sector. Improvements that will be reflected in the 2016 report include a reduction of the number of procedures and amount of time required to start a business from nine procedures to five and from 34 days to 10. ICI has also focused on improving the property registration ranking with reforms such as reduction in time of registration from 56 days to 38 and a move by the Land Authority to eliminate two procedures by introducing new registration software that corrected administrative inefficiencies. Other improvements include having eliminated the minimum capital requirement at the time of registration for new companies to help attract foreign investors and encourage formal business registration of local enterprises. ICI has developed sustainable mechanisms within the Palestinian Authority to build upon these successes, engage private sector stakeholders, and continue to improve the West Bank and Gaza’s doing business rankings.
Every year the World Bank Doing Business report website receives approximately 4.5 million visits and the report itself is downloaded over 500,000 times. These figures demonstrate the extent to which the report is used as a benchmark for the effectiveness of a country’s overall business enabling environment. The West Bank and Gaza ICI and Moldova BRITE projects, as well as other current Chemonics projects across 14 countries, have achieved successes in improving operating conditions for businesses. Many of these achievements are reflected in improved Doing Business rankings. The work of these projects allow individuals and businesses to access credit more easily, provide more opportunities for investment and trade, make it easier to start and grow a business, and ultimately make a lasting impact on a country’s economy, the lives of entrepreneurs, and their families.
Chemonics Business Enabling Environment Projects
- Kosovo Partnerships for Development*
- Moldova Business Regulatory, Investment and Trade Environment*
- Serbia Sustainable Local Development
- Tajikistan Land Reform and Farm Restructuring Project
- Central Asian Republics Regional Economic Cooperation*
- Afghanistan Trade and Revenue Project*
- Financial Access for Investing in the Development of Afghanistan
- Mongolia Business Plus Initiative*
- Punjab Enabling Environment Project
- Vietnam Governance for Inclusive Growth Program*
- El Salvador Small and Medium Enterprises (SME) Development Program
*Projects that contribute to Doing Business report indicators
Image credit: The World Bank Group