Doing Business 2007: India and Pakistan are top reformers in South Asia

By Vijay Kumar

Doing business became easier in India and Pakistan in 2005-2006, according to a new report by the World Bank and the International Finance Corporation (IFC)

India implemented reforms to simplify business registration, cross-border trade, and payment of taxes, as well as easing access to credit and strengthening investor protection. Although the reforms improved India's ranking over last year's, it still ranks relatively low at 134 and lies 41 places after China-which is reforming at a faster pace than India.

Top 10 reformers

Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania.

Top ranked countries in our region

Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), and India (134). Bhutan (138) and Afghanistan (162) are ranked lowest in the region.

The top 30 economies in the world

Singapore, New Zealand, the United States, Canada, Hong Kong(China), the United Kingdom, Denmark, Australia, Norway, Ireland, Japan, Iceland, Sweden, Finland, Switzerland, Lithuania, Estonia, Thailand, Puerto Rico, Belgium, Germany, the Netherlands, Korea, Latvia, Malaysia, Israel, St. Lucia, Chile, South Africa, and Austria.

How India improved

India cut the time to start a business from 71to 25 days and reduced the corporate income tax rate from 36.59 percent to 33.66 percent. A Supreme Court decision made enforcing collateral simpler-easing access to credit. New risk management procedures in customs lowered import time by two days and exports by nine days. And reforms to stock exchange rules toughened investor protections.

Who will benefit?

Whatever reformers do, they should always ask the question, Who will benefit the most? If reforms are seen to benefit only foreign investors, or large investors, or bureaucrats-turned-investors, they reduce the legitimacy of the government.

"Reforms should ease the burden on all businesses: small and large, domestic and foreign, rural and urban. This way there is no need to guess where the next boom in jobs will come from. Any business will have the opportunity to thrive," Simeon Djankov, one of the authors of the report.