A trade war between the world’s two largest economy and an uncertain global economic situation has prompted countries across Asia to take numerous steps to entice foreign investment and businesses.
The 2020 World Bank Doing Business rankings, released last week, point to increased competition across the region and an easing of previously prohibitive regulations.
Singapore has for the second successive year been ranked No2 globally (after New Zealand) and it tops the Asia Pacific region.
With its business-friendly environment, world-class infrastructure and one of the better tax frameworks in the world, the city-state is considered the ideal place for investors to enhance their business and presence in Asia.
Enforcing contracts has been made easier with Singapore introducing a consolidated law on voluntary mediation. The country’s high ranking is also thanks to factors such as cross-border compliance. For example, export border compliance times in Singapore average just 10 hours.
But it’s the three biggest economies in Asia which have shown the most improvement in the top half of the rankings.
Despite its trade war and the troubles in Hong Kong, China has jumped 15 places from 46 to 31 in the Doing Business rankings, with Hong Kong Special Administrative Region (SAR) also improving its rank from No4 to No3.
The fact that the rankings are benchmarked to May 2019, before the fall-out of the trade war intensified and protests in Hong Kong began, would have had some impact.
But it has been China’s willingness in recent years to initiate reform in the 10 areas – each consisting of several indicators – captured by the DB report which have resulted in its move up the list.
India too is among the most improved economies for ease of doing business, moving up 14 places from 77 to 63 in 2020. This comes on the back of a 23-place jump between 2018 and 2019 from rank 100 to rank 77.
Japan’s significant move up – it has risen 10 places from 39 to 29 – has been a revelation to many and has simultaneously reinforced “Abenomics” domestically.
Prime Minister Shinzo Abe’s prescription of unprecedented monetary easing and government spending to tackle deflation in recent years have bought the government time to implement much-needed structural reforms.
The challenge for Japan to come close to its high ranking of 13 (in 2008) in the Doing Business table is long-term growth, which has proven difficult to achieve. The failure of the Trans-Pacific Partnership to get off the ground has hampered Abe’s goals.
Among high-income Asian economies in the top 10, South Korea, which has retained its No5 position on the table, is among 70 countries to have formed regulatory reform committees in the past 10 years that use the Doing Business indicators as a key input to inform their programs for improving the business environment.
Southeast Asian economies in the top tier for ease of doing business include Malaysia, which jumped three spots to be ranked 12 this year, and Thailand which moved up six places, from 27 to 21.
Malaysia’s steady rise in the rankings is attributable in the main to the Special Task Force to Facilitate Business (PEMUDAH).
Its members comprise senior government officials and private sector business leaders and they have initiated critical regulatory reforms within the Doing Business indicator areas.
PEMUDAH was restructured in 2019 with improvements in its functions, organisation and operation to expedite resolving of issues as well as to reinvigorate its membership with broader industry expertise.
Thailand’s significant move up the rankings is seen as a consequence of two big measures.
First, Bangkok made dealing with construction permits easier by introducing legislation requiring phased inspections during construction.
Secondly, measures have been put in place to protect minority investors against misuse of corporate assets by company directors, as well as to strengthen shareholder rights, governance safeguards and transparency.
Taiwan retained its 15th spot on the table in 2020 after having dropped two places last year largely due to a corporate income tax increase.
Towards the bottom half of the World Bank’s Doing Business rankings, Indonesia (73) saw no change and Vietnam dropped one spot from 69 to 70.
Cambodia’s ranking in the ease of doing business index has slipped four years in a row since 2016.
The Kingdom slipped six notches in the index, ranking 144th out of 190 countries with a score of 53.8, down from 138th for 2019 – at 54.8 points.
Brunei at 66 is down 11 places from the previous year, the slip thought to be at least partly a consequence of the simmering row over human rights in that country and its impact on investors’ outlook on governance issues and economic stability.
Bhutan (89) and Mongolia (81) too have dropped eight and seven places respectively from their 2019 DB rankings.
The positives in the lower half of countries ranked by the World Bank on Ease of Doing Business come from Nepal (ranked 94, up 16 places); Philippines (95, up 29); Pakistan (108, up 28); Myanmar (165, up six); Bangladesh (168, up eight).
DB rankings have become so central for economies across Asia to attract investment and businesses that even countries struggling in the lower reaches of the table are making consistent efforts to improve their position.
The Philippines, which bitterly contested its 124th rank in 2019 citing what it claimed were inaccurate and understated findings especially on the “getting credit” indicator, has enacted the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, which requires government agencies to process business transactions within three days.
It is significant too that apart from China and India, Myanmar and Bangladesh have been included in the bank’s “Top 20 Improvers in Doing Business 2020”.
Myanmar has been lauded for implementing five initiatives that enhanced its business environment.
These are – strengthened construction quality control in the city of Yangon; launching nationally an online company registry platform; making property registration quick by streamlining deed registration and appraisal; courts publishing performance measurement reports; enacting a new company law that strengthens minority investor protections, increases director liability and emphasises corporate transparency.
Bangladesh has drawn praise from the World Bank for making it easier for entrepreneurs to start a business, obtain an electrical connection and access credit.
DB rankings are determined by sorting the aggregate scores on 10 topics, each consisting of several indicators, giving equal weight to each topic.