Georgia, Romania get rid of the red tape

By Ahmed ElAmin

- Last updated on GMT

Regulatory reforms are making it easier to do business worldwide,
especially in places such as Singapore, Georgia, Romania, the UK,
according to a World Bank report.

The need to grow profits, coupled with relatively less barriers to trade are the sparks of the ongoing globalisation in the food industry. As such the report provides a ready guide to which countries have cut the red tape and might be prime locations for setting up manufacturing plants.

The World Bank and the International Finance Corp. (IFC), in their fourth yearly Doing Business report, rank 175 economies on the ease of doing business and pinpoints some 213 specific reforms cutting out the red tape in over 100 economies, and ranks 175 economies on the ease of doing business.

Reformers simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit and reduced the cost of exporting and importing.

This year the report ranks Singapore first on the ease of doing business. New Zealand moved to second place after two years at the top spot. The report ranks Georgia as the top reformer this year. The fledgling economy improved its ranking in six of 10 areas the report studied. The result was business registrations rose by 20 per cent between 2005 and 2006.

Georgia reduced the minimum capital required to start a new business, with the result that Reforms in customs and the border police simplified border procedures. It took 54 days to meet all the administrative requirements to export in 2004 - it now takes 13. Georgia also amended its procedural code for the courts, introducing specialised commercial sections of the courts and reforming the appeals process.

The time to resolve simple commercial disputes fell to 285 from 375 days. Georgia's new labour regulations also helped workers move to better jobs. The social security contributions paid by businesses decreased to 20 per cent from 31 per cent of wages, making it easier for employers to hire new workers.

Better collection of corporate taxes, which shot up by 300 per cent, more than made up for the loss in revenues and employment fell by two percentage points, the World Bank noted.

"Its progress also highlights that new governments with fresh mandates often have the best window of opportunity for reform,"​ the World Bank stated. "This year's report finds, in fact, that 85 percent of reforms on the ease of doing business take place within 15 months of a new government taking office. And this holds true across all countries-poor, middle-income, or wealthy."

Romania is the runner-up to Georgia. The government made reforms in six of the 10 areas the report assesses. Its government simplified the procedures for obtaining building permits and set up a single office to process applications.

Before, entrepreneurs had to run around to five different agencies. The time required for obtaining construction documents fell by 49 days. To encourage businesses to hire first-time workers, Romania adopted new labour regulation allowing term contracts to extend up to six years.

It also eased trading across borders. After-clearance audits now enable customs to quickly release cargo to importers, with the container contents verified after it reaches the warehouse, the report stated.

The time that traders need to satisfy all regulatory requirements was cut in half, to 14 days. And the number of export documents fell to four, matching the EU average.

After Georgia and Romania the other reforming governments in the top ten of the rankings are Mexico, China, France, Croatia, Guatemala, Ghana and Tanzania.

Overall in the rankings Singapore takes the top spot as the easiest place to set up a new business and export and import products. Singapore is followed by New Zealand, the US in third spot, Canada, Hong Kong, UK, Denmark, Australia, Norway and Ireland.

Ranked by region Eastern Europe improved the most in the ease of doing business, according to the report. The desire to join the European Union inspired reformers in Croatia and Romania. And Bulgaria and Latvia are among the runner-up reformers-economies that rank 11-15 on the list of top reformers - along with El Salvador, India and Nicaragua.

Doing Business 2007 is available at www.doingbusiness.org.

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