Impact of Governance on Ease of Doing Business

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Ease of doing business index for 2016 ranks Sri Lanka at 107. It appears that Sri Lankan bureaucracy takes more time to get things done, in certain simple areas. This year’s report adds indicators of quality to four indicator sets: registering property (SL rank 153), dealing with construction permits(SL rank 77), getting electricity(SL rank 81) and enforcing contracts(SL rank 161). In addition, the trading across borders indicators (SL rank 90) have been revised to increase their relevance. The ‘❌’ marks below highlights unfavorable indicators for Sri Lanka compared to many countries.

TIME TAKEN FOR THESE ACTIVITIES
Starting a business ……….no of days.                             8✅
Dealing with Construction Permits ….. No of days  116

Getting electricity ….no of days.                                   100❌
Registering property….. No of days                                51❌
Paying taxes……time spent, hour per year.              167
Trading across borders ….time to export (days).      119❌
Trading across borders ….time to import (days).    130❌
Enforcing contracts…….time no of days.                 1318❌
Resolving insolvency …….time(years).                        1.7

COST
Starting a business …..cost %of income per Capita                18.7
Dealing with Construction Permits..% of warehouse value  0.2
Getting electricity ….cost %of income per Capita                829.5❌
Registering property….. Cost % of property value.                   5.1
Paying taxes……total tax rate % of profits.                               55.2❌
Trading across borders…..cost to export (USD)                       424❌
Trading across borders…..cost to import (USD).                     583❌
Enforcing contracts….. Cost % of claim.                                   22.8
Resolving insolvency …….cost % of estate.                                 10

Botswana Power Corporation made getting electricity easier by enforcing service delivery timelines for new connections and improving the stock of materials for connection works, and the World Bank is providing technical assistance under the tax reforms, trade facilitation, Information and Communication Technology and communications, among others to improve their ranking. Over the past five years 37 economies computerized their land registry and the time required to transfer property reduced by 38% since 2011. In those that did not, the time has decreased by only 7%. Kenya made property transfers faster by improving electronic document management at the land registry and introducing a unified form for registration. Many others have taken similar action to reduce time spent on these activities to improve ease of doing business in their respective countries. Enforcing a contract through courts can take less than 10 months in New Zealand, Norway and Rwanda but almost 4 years in Bangladesh, which is only slightly higher than Sri Lanka!

Locally, the CEB can cut the red tape and give electricity connections faster. Getting a simple preliminary inspection arranged by them takes over a 2-3 weeks! Use of technology can improve the process for registering property, paying taxes, in exports and imports at the customs/border. However, most of these departments prefer not to use technology to improve transparency due to their ability to earn “expediting or facilitation money”. Therefore, improving the DB index is going to be out of reach for a long time, until political will is demonstrated by a strong minded, knowledgeable minister. ……and that is a long shot in paradise island!

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About surenraj

“Views expressed are my own”
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