São Paulo – Report Doing Business 2010, disclosed by the World Bank last week, which measures the facility to do business in 183 countries, informs that the Middle East and North Africa were the regions that most promoted economic reforms in the period from June 2008 to May 2009, the 12 months analysed in the study.
Under subtitle Reforming Through Difficult Times, in reference to the international financial crisis, the world shows that there have been changes to provide incentives to entrepreneurship in 17 of the 19 economies researched in both regions.
Saudi Arabia, in 13th in the global ranking, is the Arab country in the best position. In the previous report, the Saudis were in the 15th position. The expansion took place, according to the World Bank, due to the creation of a kind of "one stop shop" to open businesses and also to the simplification of the issuing of licenses for construction.
In an Economist Intelligence Unit (EIU) study of the World Bank figures, Saudi Arabia rose from the 38th position in the 2007 report to the 13th position in the last edition and the local government has established as a target reaching the top 10 among the easiest nations in which to do business. In this respect, the most meaningful change up to now, according to the EIU, was the end of a minimum volume of compulsory capital to open a business.
The United Arab Emirates rose from 47th to 33rd in the last study and is among the 10 countries in the world that promoted most reforms in the period researched. The country, as is the case with Saudi Arabia, has eliminated the minimum capital necessary to open a company and simplified the process for registration.
According to the EIU, the Emirates have also simplified the process to obtain licenses to build and the bureaucracy imposed on foreign trade. The country is currently considered the fifth cheapest in the world for the import and export of products in containers.
EIU also points out, however, that the Emirates still have problems with regard to the protection of investment, compliancy of contracts and in procedures to close a company. The difficulty in guaranteeing compliancy of a contract is also identified in Saudi Arabia. Both countries, however, are well positioned with regard to the ease of registering property and to taxes, which are in general lower in the Gulf.
Egypt, which rose from the 116th to the 106th position, is also among the nations that promoted reforms in the period analysed. According to the World Bank, Colombia and Egypt were the countries that promoted favourable changes in the business environment over the last four years.
The report shows that Egypt has become cheaper for the opening of companies, simplifying the issuing of authorisations for construction, expanding the information available in the private credit bureau and established special courts for commercial disputes. On the opposite direction, according to the EIU, the country’s performance is weak in areas like paying taxes and, despite the reforms, in the obtaining of permits to build and comply with contracts.
According to the World Bank study, Jordan has simplified investment for the opening of companies and payment of taxes, has lowered taxes on real-estate transfer, has made great legal reforms and simplified foreign trade. Yemen, which was considered the country where opening a business is fastest, continued promoting improvement in this area, expanding the access to credit and simplifying the foreign trade using electronic services.
The report also includes Algeria, which has improved its construction license issuing system, reduced the cost of real-estate transfer, lowered taxes levied on companies and granted greater efficiency to the Judiciary system. EIU points out, however, that despite the changes, due to the great bureaucracy, Algeria is still in the last place among the countries in the Middle East and North Africa with regard to tax payment.
The World Bank study also shows that Morocco has established a private system for protection of credit and Tunisia has expanded the protection to investment and simplified foreign trade procedures.
"Economies in the Middle East and North Africa are reforming at an impressive rate," said Dahlia Khalifa, one of the authors of the report, according to the report, in the World Bank 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," he added.
Doing Business evaluates reforms in 10 areas, among them establishing a business, foreign trade, paying taxes and the closing of a company. It does not, however, analyse all aspects related to the business environment of a country, like safety, macroeconomic stability, corruption, professional training and solidity of the financial system.
Competitiveness
Some of these matters are considered in the Global Competitiveness Report also disclosed last week by the World Economic Forum (WEF). The WEF points out that several countries in the Middle East and North Africa are in the top half of the world competitiveness raining, and pays special attention to Qatar, Tunisia, Saudi Arabia and the Emirates.
In the WEF list, Qatar is the first in the MENA region and occupies the 22nd place in global terms, the Emirates comes right after, in the 23rd position, Saudi Arabia is in the 28th and Tunisia is in the 40th. Just for comparison, Brazil, which climbed eight positions in the last edition, reaching the 56th position, despite being one of the 10 main economies in the world.
*Translated by Mark Ament
