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World's most business-friendly countries

Last updated on: November 24, 2011 14:59 IST

World's most business-friendly countries

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A vibrant private sector - with firms making investments, creating jobs and improving productivity - promotes growth and expands opportunities for the poor.

Enabling private sector growth - and ensuring that poor people can participate in its benefits - requires a regulatory environment where new entrants with drive and good ideas, regardless of their gender or ethnic origin, can get started in business and where firms can invest and grow, generating more jobs.

Doing Business takes the perspective of domestic, primarily smaller companies and measures the regulations applying to them through their life cycle.

Economies are ranked on the basis of nine areas of regulation - for starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

In addition, data are presented for regulations on employing workers and for a set of pilot indicators on getting electricity.

Here we list 25 countries and see where they rank when it comes to doing business.

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Image: Economies are ranked on the basis of nine areas of regulation.
Photographs: Courtesy, Wikipedia Commons
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India

Doing Business rank (2011): 134

Doing Business rank (2010): 139

Doing Business reforms (2011): 2

World ranking: 134

India implemented 18 business regulation reforms in seven areas. Many focused on technology - implementing electronic business registration, electronic filing for taxes, an electronic collateral registry and online submission of customs forms and payments.

Changes also occurred at the sub-national level. In India, as in other large nations, business regulations can vary among states and cities.

While Doing Business focuses on the largest business city in an economy, it complements its national indicators with sub-national studies, recognizing the interest of governments in these variations.

According to Doing Business in India, 14 of the 17 Indian cities covered in the study implemented changes to ease business startup, construction permitting and property registration between 2006 and 2009.

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Image: Gateway of India, Mumbai.
Photographs: Courtesy, Wikipedia Commons
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China

Doing Business rank (2011): 79

Doing Business rank (2010): 78

Doing Business reforms (2011): 1

World ranking: 79

Some large emerging-market economies also made significant changes at a steady pace. China is one.

Over several years China introduced 14 policy changes making it easier to do business, affecting nine areas covered by Doing Business.

In 2005 a new company law reduced what had been one of the world's highest minimum capital requirements from 1,236 per cent of income per capita to 118 per cent.

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Image: Shanghai, China
Photographs: Courtesy, Wikipedia Commons
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Pakistan

Doing Business rank (2011): 83

Doing Business rank (2010): 75

Doing Business reforms (2011): 1

World ranking: 83

Pakistan raised the transfer tax by an average of 4.2 per cent of the property value. It reduced profit tax rates, but the reductions had little effect on the average total tax rate.

To avoid lengthy court trials, the private sector has introduced systems of alternative dispute resolution as a way to bypass the courts in such countries as Pakistan.

In 2002 Pakistan implemented the Access to Justice Programme to reduce delays in a number of pilot courts.

The improvements cost $350 million and focused on providing more training, such as in case management techniques.

Research analyzing court data for 2001-03 shows that after the court reform, 25 per cent more cases were decided in the affected districts.

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Image: Lahore Fort, Pakistan.
Photographs: Courtesy, Wikipedia Commons
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Singapore

Doing Business rank (2011): 1

Doing Business rank (2010): 1

Doing Business reforms (2011): 0

World ranking: 1

Singapore turned its one-stop shop for building permits into online systems in 2008. It is among the 85 economies that have fast-track permit application processes for small commercial buildings.

Singapore tends to hold public servants accountable through performance-based systems.

It has used performance measures in the judiciary since the late 1990s.

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Image: A view of Singapore.
Photographs: Courtesy, Wikipedia Commons
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Hong Kong

Doing Business rank (2011): 2

Doing Business rank (2010): 2

Doing Business reforms (2011): 2

World ranking: 2

Some economies have found other ways to protect investors and creditors, particularly in the case of limited liability companies.

Hong Kong outlines provisions on solvency safeguards in its company act.

In 2009 the local government in Hong Kong, as part of its "Be the Smart Regulator" programme, merged 8 procedures involving six different agencies and two private utilities through a one-stop centre.

A single window facilitates interaction for customers.

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Image: Hong Kong at night.
Photographs: Courtesy, Wikipedia Commons
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New Zealand

Doing Business rank (2011): 3

Doing Business rank (2010): 3

Doing Business reforms (2011): 1

World ranking: 3

Today 105 economies use information and communication technology for services ranging from name search to entirely online business registration.

New Zealand, one of the easiest place to start a business, was the first to launch an online company registration system, in 1996.

The online option has been mandatory since July 1, 2008.

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Image: Auckland, New Zealand.
Photographs: Courtesy, Wikipedia Commons
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The United Kingdom

Doing Business rank (2011): 4

Doing Business rank (2010): 4

Doing Business reforms (2011): 2

World ranking: 4

The United Kingdom stands out for its strict regulations on the transparency of related-party transactions, liability of company directors for self-dealing and ability of shareholders to sue directors for misconduct.

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Image: London, United Kingdom.
Photographs: Courtesy, Wikipedia Commons
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The United States

Doing Business rank (2011): 5

Doing Business rank (2010): 5

Doing Business reforms (2011): 0

World ranking: 5

A 2007 survey among young people in the United States showed that four in 10 have started a business or would like to someday.

With some 550,000 small businesses created across the country every month, entrepreneurs are a powerful economic force, contributing half the GDP and 64 per cent of net new jobs over the past 15 years.

Such impacts are possible where business registration is efficient and affordable.

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Image: New York City, United States.
Photographs: Courtesy, Wikipedia Commons
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Denmark

Doing Business rank (2011): 6

Doing Business rank (2010): 6

Doing Business reforms (2011): 2

World ranking: 6

Denmark has just introduced a new computerized land registration system.

Increasing the efficiency of property registration systems benefits users as well as administrators.

In Denmark in 2009 practitioners reported losing thousands of kroner in interest because transaction money was blocked in escrow accounts for more than a month while the new online registry was being implemented.

But new systems may be worth the wait.

Electronic interactions are more transparent.

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Image: Copenhagen, Denmark.
Photographs: Courtesy, Wikipedia Commons
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Canada

Doing Business rank (2011): 7

Doing Business rank (2010): 9

Doing Business reforms (2011): 2

World ranking: 7

Today 105 economies use information and communication technology for services ranging from name search to entirely online business registration.

Canada, one of the easiest places to start a business, followed suit in 1999. Its system has been entirely paperless since May 2006.

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Image: Toronto, Canada.
Photographs: Courtesy, Wikipedia Commons
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Norway

Doing Business rank (2011): 8

Doing Business rank (2010): 7

Doing Business reforms (2011): 0

World ranking: 8

In Norway a computer system that tracks deadlines and requires judges to justify postponements, together with new procedural rules since 2008, helped reduce the time for trial by a month.

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Image: Oslo, Norway.
Photographs: Courtesy, Wikipedia Commons
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Ireland

Doing Business rank (2011): 9

Doing Business rank (2010): 8

Doing Business reforms (2011): 0

World ranking: 9

Also among the top 10, Hong Kong, Singapore, Ireland and Canada apply a low tax cost, with total tax rates averaging less than 30 per cent of profit.

They also stand out for their low administrative burdens. They levy up to nine different taxes on businesses, yet for a local business to comply with taxes takes only about one day a month and six payments.

Electronic filing and payment and joint forms for multiple taxes are common practice among these four economies.

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Image: Dublin, Ireland.
Photographs: Courtesy, Wikipedia Commons
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Australia

Doing Business rank (2011): 10

Doing Business rank (2010): 10

Doing Business reforms (2011): 0

World ranking: 10

Fifteen of 30 OECD economies, including Australia, clearly regulate approval and disclosure of related-party transactions.

It has announced major reforms of its tax systems in the next few years.

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Image: Melbourne, Australia.
Photographs: Courtesy, Wikipedia Commons
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Saudi Arabia

Doing Business rank (2011): 11

Doing Business rank (2010): 12

Doing Business reforms (2011): 4

World ranking: 11

The 10 economies that made the largest strides in making their regulatory environment more favourable to business include Saudi Arabia.

Most reformers start out by seeking examples. For example, Saudi Arabia used the company law of France as a model for revising its own.

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Image: Riyadh, Saudi Arabia.
Photographs: Courtesy, Wikipedia Commons
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Georgia

Doing Business rank (2011): 12

Doing Business rank (2010): 13

Doing Business reforms (2011): 4

World ranking: 12

The 10 economies that made the largest strides in making their regulatory environment more favourable to business include Georgia.

In Georgia a 2009 survey found that the new start-up service centre helped businesses save an average of 3.25 per cent of profits - and this is just for registration services.

For all businesses served, the direct and indirect savings amounted to $7.2 million.

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Image: Tbilisi, Georgia.
Photographs: Courtesy, Wikipedia Commons
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Finland

Doing Business rank (2011): 13

Doing Business rank (2010): 11

Doing Business reforms (2011): 0

World ranking: 13

Twelve economies, including Finland, have fixed fees for registration but charge other taxes and stamp duties in proportion to the property value.

Between 2006 and 2009, Finland mandated or enhanced electronic filing or simplified the process of paying taxes, reducing compliance time by 13 days (101 hours) on average.

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Image: Helsinki, Finland.
Photographs: Courtesy, Wikipedia Commons
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Sweden

Doing Business rank (2011): 14

Doing Business rank (2010): 18

Doing Business reforms (2011): 3

World ranking: 14

In the past 6 years Doing Business recorded 18 reforms in investor protections in 14 of the 30 OECD high-income economies.

These countries, including Sweden, focused mainly on improving disclosure requirements for related-party transactions.

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Image: Stockholm, Sweden.
Photographs: Courtesy, Wikipedia Commons
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Iceland

Doing Business rank (2011): 15

Doing Business rank (2010): 14

Doing Business reforms (2011): 0

World ranking: 15

Here is one example of how the ranking is constructed.

In Iceland it takes five procedures, five days and 2.3 per cent of annual income per capita in fees to open a business. The minimum capital required amounts to 11.97 per cent of income per capita.

On these four indicators Iceland ranks in the 13th, 4th, 15th and 63th percentiles. So on average Iceland ranks in the 24th percentile on the ease of starting a business.

It ranks in the 50th percentile on protecting investors, 40th percentile on trading across borders, 10th percentile on enforcing contracts, ninth percentile on closing a business and so on.

Higher rankings indicate simpler regulation and stronger protection of property rights.

The simple average of Iceland's percentile rankings on all topics is 25 per cent. When all economies are ordered by their average percentile rank, Iceland is in 15th place.

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Image: Reykjavik, Iceland.
Photographs: Courtesy, Wikipedia Commons
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South Korea

Doing Business rank (2011): 16

Doing Business rank (2010): 15

Doing Business reforms (2011): 1

World ranking: 16

In an effort to stimulate economic growth and create a more business-friendly environment, South Korea reduced the corporate income tax rate from 25 per cent to 22 per cent in 2009 and plans to reduce it even further in future years.

The revenue collected by the government in 2009 did not fall. Instead, the number of companies registered for corporate income tax increased by seven per cent and the corporate income tax revenue by 11 per cent.

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Image: Seoul, South Korea.
Photographs: Courtesy, Wikipedia Commons
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Estonia

Doing Business rank (2011): 17

Doing Business rank (2010): 17

Doing Business reforms (2011): 3

World ranking: 17

Seventeen OECD economies have low fixed taxes and fees for property transfer, ranging from around $20 to $300, regardless of the property value.

Nine economies in Eastern Europe and Central Asia apply fixed transfer taxes and fees, including Estonia.

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Image: Tallinn, Estonia.
Photographs: Courtesy, Wikipedia Commons
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Japan

Doing Business rank (2011): 18

Doing Business rank (2010): 19

Doing Business reforms (2011): 1

World ranking: 18

In the European Union, the United States and Japan combined, more than 40 million people work in construction.

It is estimated that for every 10 jobs directly related to a construction project, another eight jobs may be created in the local economy.

Small domestic firms account for most of the sector's output and most of its jobs.

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Image: Tokyo, Japan.
Photographs: Courtesy, Wikipedia Commons
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Thailand

Doing Business rank (2011): 19

Doing Business rank (2010): 16

Doing Business reforms (2011): 1

World ranking: 19

Regional competition for investment spurred legal changes in Thailand, inspired by neighbouring Hong Kong and Singapore.

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Image: Bangkok, Thailand.
Photographs: Courtesy, Wikipedia Commons
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Mauritius

Doing Business rank (2011): 20

Doing Business rank (2010): 20

Doing Business reforms (2011): 1

World ranking: 20

Some economies have found other ways to protect investors and creditors, particularly in the case of limited liability companies.

Hong Kong outlines provisions on solvency safeguards in its company act. Mauritius conducts solvency tests.

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Image: Mauritius.
Photographs: Courtesy, Wikipedia Commons
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Malaysia

Doing Business rank (2011): 21

Doing Business rank (2010): 23

Doing Business reforms (2011): 3

World ranking: 21

Some economies tend to hold public servants accountable through performance-based systems.

Malaysia introduced a performance index for judges in 2009. Case disposal rates are already improving.

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Image: Kuala Lumpur, Malaysia.
Photographs: Courtesy, Wikipedia Commons
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Germany

Doing Business rank (2011): 22

Doing Business rank (2010): 21

Doing Business reforms (2011): 1

World ranking: 22

Entrepreneurs open new businesses even in times of economic crisis. In 2008 Germany introduced a new legal form of limited liability company, UG, with no minimum capital requirement while maintaining the 25,000 euros requirement for the standard form (GmbH).

While many still opt for the traditional form, the number of registered UGs increased by 12,000 between November 2008 and January 2010.


Image: Leipzig, Germany.
Photographs: Courtesy, Wikipedia Commons
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