An open and competitive business environment is the basis for innovation, job creation, and rising standards of living. Unfortunately, the heavy hand of government regulation often hinders private enterprise and the competitive process.

As we saw in an earlier webpost, a recent report from the World Bank found that the Western developed nations are far from being models of free-market economies. But in most instances, the government barriers to opening, registering, operating, and closing businesses are far higher in the other parts of the world.

Doing Business, 2009—the World Bank report—details reductions in government regulation of business, especially in Asia, Africa, and Latin America in the last several years. Nonetheless, what the data show is just how much these governments continue to impose very high costs on business activity.

The full report covers a total of 181 economies. In this post, we review the World Bank’s findings about government business regulations in a selected group of countries in Asia. The table shows how these countries rate in terms of business start-ups, property registration, and closing costs. 

Singapore is the most business-friendly country not only in Asia, but globally, the World Bank said. Start-ups, for example, cost as little as they do in the United States as a percent of per capita income, But the process is more efficient, requiring fewer steps—just three—than anywhere in the world except Sweden and less time—a mere 2.8 days— than all nations. In terms of the ease and cost of registering a property, Singapore also compares favorably to much of the West as well as to the rest of Asia. But the area in which national regulations really shine vis-à-vis the region and the world is in the costs Singapore imposes when a business closes. The net assets from the closing or sale of a business are the financial means to start new enterprises and alternative employment. This investment capital is reduced to the extent that it is taxed by government. Singapore takes the least in the world of this money.

The most costly country in Asia for doing business because of government regulation is Indonesia, where, for example, regulatory start-up costs are more than 100 times that of Singapore (and the U.S.) And while the expanding economy of India has a reputation as a more business-friendly environment than that of Indonesia, the data suggest otherwise: India remains one of the most expensive for opening, registering, and closing businesses. Elsewhere in Asia, by most of the World Bank’s benchmarks, the industrial giant of Japan is only marginally friendlier to business than the still-emerging economy of mainland China.

In our next post on the cost of doing business around the world, we will examine the business environment created by regulation in Africa.
 

Bookmark this article: