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HRH Prince Mohammed bin Salman bin Abdulaziz Al Saud
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Saudi Arabia most improved economy: World Bank

WASHINGTON, October 24, 2019

Saudi Arabia is the most improved economy with a total of eight reforms, said the World Bank in its Doing Business 2020, adding that with a reformist mindset, the Crown Prince has implemented  and  promoted  a  policy  of  featuring  the  Kingdom  as  an  open  world-class investment destination.

 The Kingdom’s “Vision 2030” plan for long-term development encompasses a variety of legal and structural reforms, the World Bank report said.

Doing Business has acknowledged the 10 economies that improved the most on the ease of doing business after implementing regulatory reforms. In Doing Business 2020, the 10 top improvers are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan,  Pakistan,  Kuwait,  China,  India,  and  Nigeria.

These  economies  implemented  a  total  of  59  regulatory  reforms  in  2018/19—accounting for one-fifth of all the reforms recorded worldwide. Their efforts focused primarily on the areas of starting a business, dealing with construction permits, and trading across borders.

Jordan and Kuwait are new additions to the list of 10 most improved economies. Nigeria appears as one of the top-10 improvers for the second time. India, which has conducted a remarkable reform effort, joins the list for the third year in a row. Previously, only Burundi, Colombia, Egypt, and Georgia featured on the list of 10 top improvers for three consecutive Doing Business cycles.

Bahrain implemented the highest number of regulatory reforms (nine), improving in almost every area measured by Doing Business. China and Saudi Arabia follow Bahrain with eight reforms each. One  may  wonder  what  underlying  factors  drive  economies  to  reform. The  drivers  can  be  either  political  or  economic  or  both.

The  economic  advancement  of  neighbouring  countries  is  also  an  important  motivational  factor. Research on the effects of market-liberalizing reforms in 144 economies over the period 1995–2006 finds that the most important factor in transmitting reforms between countries is their geographical and cultural proximity.

The  spillover  effect  is  magnified  when  more  countries  adopt  reforms that boost economic development. Furthermore, mass media coverage affects political decisions. A recent study finds that economies with higher  media  coverage  of  Doing  Business  tend  to  carry  out  more  business  regulatory reforms, with one- and two-year lags between media coverage and reform implementation.

Business regulatory reforms across the Gulf economies have been on a  steady  rise.  These  changes  are  motivated  in  part  by  the  urgent  need  for  economic  diversification.  Successful  reforms  in  neighbouring  states,  such as the United Arab Emirates, have also served as inspiration.

Doing  Business  2020  acknowledges  22  reforms  in  the  20  top-ranking  economies. Since 2003/04, the 20 best-performing economies have carried out a total of 464 regulatory changes, suggesting that even the gold standard setters have room to improve their business climates.

More than half of the economies in the top-20 cohort are from the OECD high-in-come group; however, the top-20 list also includes four economies from East Asia and the Pacific, two from Europe and Central Asia, as well as one  from  the  Mena region  and  one  from  Sub-Saharan  Africa. Conversely, most economies (12) in the bottom 20 are from the Sub-Saharan Africa region.

Encouragingly,  several  of  the  lowest-ranked  economies  are  actively  reforming in pursuit of a better business environment. Over the past year, Myanmar  introduced  substantial  improvements  in  five  areas  measured  by Doing Business—starting a business, dealing with construction permits, registering  property,  protecting  minority  investors,  and  enforcing  con-tracts. This ambitious reform program allowed the country to rise out of the  bottom 20 to a ranking of 165. In contrast to the economies ranked in the top 20, however, the bottom 20 implemented only 10 reforms in 2018/19.

Economies that score highest on the ease of doing business share several common features, including the widespread use of electronic systems. All of the 20 top-ranking economies have online business incorporation pro-cesses, have electronic tax filing platforms, and allow online procedures related  to  property  transfers.  Moreover,  11  economies  have  electronic  procedures for construction permitting. In general, the 20 top performers have sound business regulation with a high degree of transparency.

The average  scores  of  these  economies  are  12.2  (out  of  15)  on  the  building  quality control index, 7.2 (out of 8) on the reliability of supply and transparency  of  tariffs  index,  24.8  (out  of  30)  on  the  quality  of  land  administration index, and 13.2 (out of 18) on the quality of judicial processes index. Fourteen of the 20 top performers have a unified collateral registry, and 14 allow a viable business to continue operating as a going concern during insolvency proceedings.

The  difference  in  an  entrepreneur’s  experience  in  top-  and  bottom-performing economies is discernible in almost all Doing Business topics. For example, it takes nearly six times longer on average to start a business in the economies ranked in the bottom 50 than it does in the top 20. Transferring property in the 20 top economies requires less than two weeks,  compared  to  about  three  months  in  the  bottom  50.

Obtaining  an electricity connection in an average bottom-50 economy takes twice the  time  that  it  takes  in  an  average  top-20  economy;  the  cost  of  such  a  connection  is  44  times  higher  when  expressed  as  a  share  of  income  per capita.

Also, commercial dispute resolution lasts about 2.1 years in economies ranking in the bottom 50 compared to 1.1 years in the top 20. Notable differences between stronger and weaker performing economies are also evident in the quality of regulation and information. In the top 20, 83 per cent of the adult population on average is covered by either a credit bureau or registry, whereas in the bottom 50 the average cover-age is only at 10 per cent.

Ease of doing business score

The ease of doing business score measures an economy’s performance with respect  to  a  measure  of  regulatory  best  practice  across  the  entire  sample  of  41  indicators  for  10  Doing  Business  topics  (the  employing  workers  and  contracting  with  the  government  indicators  are  excluded).  For  starting  a  business, for example, Georgia and New Zealand have the lowest number of  procedures  required.

New  Zealand  also  holds  the  shortest  time  to  start a business (0.5 days), whereas Rwanda and Slovenia have the lowest cost. Australia, Colombia, and 118 other economies have no paid-in minimum capital requirement. – TradeArabia News Service


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