Middle East states fared poorly in a new edition of a survey that measures their business friendliness. The World Bank's annual Doing Business 2013 report saw most countries in the region fall in global rankings.
The region has been disrupted by the Arab Spring revolution and civil wars in a number of countries that has delayed reform, disrupted economies and soured business sentiment among entrepreneurs and foreign investors.
Of the 17 Arab countries measured by the World Bank, 14 saw their rankings fall, with 7 states posting a double-digit decline in their rankings.
Saudi Arabia saw its ranking fall 10 places from 12th place globally in 2012 to 22 in this year's ranking.
Still, that's enough for the Kingdom to retain its place as the number one place to do business in the region.
The Doing Business survey focuses on quantitative indicators on business regulations and the protection of property rights across 185 economies, and is widely regarded as a benchmark survey of business friendliness of countries.
The study is aimed at 11 areas of the life of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers.
"Earlier editions of the Doing Business report highlighted substantial efforts by governments in the Middle East and North Africa to improve business regulation for local entrepreneurs," notes the Bank in the report.
"But the reform momentum has slowed since the beginning of the Arab Spring in January 2011, as some countries have entered a complex process of transition to more democratic forms of governance."
New governments in places like Egypt, Tunisia, Libya and Yemen are struggling to find a foothold and right the economic ship before embarking on complex regulatory, legal and business reforms.
Case in point is Egypt which was often lauded in previous editions of the World Bank survey.
While Egypt is the top improver in the Middle East and North Africa since 2005, its improvement was concentrated in the years before 2009, the World Bank says.
"In the past four years there was no visible improvement in the areas measured by Doing Business. Regionally, there was less focus on reforming business regulation in the past year than in any previous year covered by Doing Business, with only 11% of economies implementing at least two regulatory reforms."
Still, Egypt managed to improve its ranking marginally from 110 in 2012 to 109 -- a remarkable achievement given the momentous but tough challenges the country has faced over the past 18 months.
UAE LEADS
The UAE was the region's most improved economy in terms of regulation, rising seven places to clinch 26th most business-friendly country in the world, beating the likes of Switzerland, Netherlands, France and Spain. The Bank lauded the UAE for improved process efficiency in areas such as utility, in registering property, but the emirate fared poorly in facilitating shareholders' suits.
"Firms in the United Arab Emirates face the lightest administrative burden in paying taxes. They must make only 4 payments a year and spend 12 hours doing so," notes the bank.
Indeed, Gulf states dominated the category, with Saudi Arabia and Qatar emerging as the second and third easiest countries to file taxes in the world. Bahrain was seventh and Oman tenth in the world in the tax category.
"Thanks to improvements in electronic systems for filing and paying social security contributions, Saudi Arabia this year ranks among the 10 economies with the fewest payments and lowest tax compliance time."
It helps that the Gulf states don't impose income taxes.
The UAE is also the fifth easiest country to trade with. Its global competitors Singapore and Hong Kong were ranked first and second, suggesting that the UAE is catching up with other global hubs.
Here's how some of the other countries improved or made more difficult their business processes:
Algeria improved access to credit information by eliminating the minimum threshold for loans to be included in the database.
The Islamic Republic of Iran made starting a business more difficult by requiring company founders to obtain a criminal record clearance to register a new company.
Iran strengthened investor protections by requiring greater immediate disclosure of related-party transactions.
Morocco made starting a business easier by eliminating the minimum capital requirement for limited liability companies.
Morocco also made registering property more costly by increasing property registration fees.
Oman improved access to credit information by guaranteeing borrowers' right to inspect their personal data.
Oman also reduced the maximum number of working days per week and increased the paid annual leave applicable for employees with one-year of service.
Qatar reduced the time to export and import by introducing a new online portal allowing electronic submission of customs declarations for clearance at the Doha seaport.
Saudi Arabia made getting electricity more expensive by increasing the connection fees.
Saudi Arabia also made paying taxes easier for companies by introducing online filing and payment systems for social security contributions.
The Kingdom made enforcing contracts easier by expanding the computerization of its courts and introducing an electronic filing system.
West Bank and Gaza made transferring property more costly by increasing the property transfer fee.
West Bank and Gaza also improved access to credit information by guaranteeing borrowers' right to inspect their personal data.
Globally, the first eight most business-friendly nations retained their rankings in 2013. Singapore emerged as the easiest country to do business in, followed by Hong Kong, New Zealand, United States, Denmark, United Kingdom and South Korea. Georgia and Australia made it to the top 10, while Iceland and Ireland slid out of the top 10 as the two European economies bore the brunt of the continent's debt crisis.
© alifarabia.com 2012
