Arab states better business rankings

Dubai: The UAE and Egypt are among the world's top 10 reformers from the Middle East and North Africa, according to the latest World Banks report, Doing Business 2010: Reforming through Difficult Times, released on Wednesday.

The Middle East and North Africa picked up the pace of business regulatory reform faster than any other region in a year of global financial uncertainty, according to a the report, a copy of which was obtained by Gulf News in advance.

The UAE moved up to 33 from 47 for the ease of doing business and became one of the world's 10 most active reformers for the first time by eliminating the minimum capital requirement for business start-ups and simplifying registration, it said.

Singapore is the top-ranked economy for the ease of doing business for the fourth year in a row, with New Zealand as runner-up.

"The UAE has shortened the time for delivering building permits by improving its online system for processing applications. Business start-up was eased by simplifying the documents needed for registration, abolishing the minimum capital requirement, and removing the requirement that proof of deposit of capital be shown for registration," the report said.

The UAE improved its ranking also by reducing processes in starting a business, dealing with construction permits, trading across borders and so forth.

"Greater capacity at the container terminal, elimination of the terminal handling receipt as a required document, and an increase in trade finance products have improved trade processes," it said.

Doing business analyses regulations that apply to an economy's businesses during their life cycles, including start-up and operations, trading across borders, paying taxes, and closing a business. Doing business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, skill level, or the strength of fin-ancial systems. Penelope Brook, Acting Vice-President for Financial and Private Sector Development for the World Bank Group, said, "The quality of business regulation helps determine how easy it is to reorganise troubled firms to help them survive difficult times, to rebuild when demand rebounds, and to get new businesses started."

Egypt moved up to 106 from 116 among 183 economies in the overall ease of doing business ranking while Saudi Arabia rose to 13th from 15th on the ease of doing business - making it the highest-ranked economy in the region - by establishing a one-stop centre for business registration and a faster process for construction permits.

"Economies in the Middle East and North Africa are reforming at an impressive rate, and in sustained and comprehensive ways that highlight insights gained from other reformers," said Dahlia Khalifa, an author of the report.

"Governments are paying attention to the quality of business regulation to make their economies more competitive and encourage entrepreneurs. This is always important, but especially during these difficult times."

It takes five days to start a business in Saudi Arabia, six days in Qatar, seven days in Egypt, nine days in Bahrain and Lebanon, 13 days in Jordan and 15 days in the UAE, while it takes just a day to do the same in New Zealand, the report says.

"Although the UAE has done very well and there has been a marked improvement in business processes in the UAE over the past few years, there is more to be done," said Raju Menon, an investment adviseor and managing partner at Morison Menon Chartered Accountants.

"The UAE authorities need to reduce processes and lead time in setting up businesses in order to improve the ranking."

He said the World Bank report is quite elaborate, authentic and reflects the ground reality. "You might wonder how Saudi could be ahead of the UAE - which is probably the most business-friendly country in the region. In Saudi Arabia, Saudi nationals are partners of each business entity and they get things done quickly - much faster than here," Menon says.

However, there are hurdles in the process and often government policy decisions take time to be implemented, analysts say.

"The picture is not as rosy as it seems," Dr. Khalid Maniar, and investment adviser and managing partner at Howrath MAK, told Gulf News.

"The government policy decisions are not implemented immediately. For example, the elimination of the minimum capital requirement has not yet been fully implemented across the country.

"Besides, some of the free zones are adding more paperwork to make things more complicated. I think the officials at various levels take a long time to understand the government's policy decisions. That's why you see so much confusion among people on processes."

However, how could a country process a business application in a day?

Menon says that in countries like Singapore, an investor hires a law firm, a chartered accountancy or an investment adviser to handle the start-up or branch opening application.

"They do them in favour of the investors and the investors could get the permission the same day and start operating at the premises of the law firm or the chartered accountancy firm, without having to look for an office space," he says.