Ease of Doing Business: UAE among world’s Top 10 reformers
Staff Reporter khaleejtimes
Filed on October 26, 2016 | Last updated on October 26, 2016 at 07.30 am
Country retains its slot as the region’s top ranked economy.
The pace of business reforms in the Middle East and North Africa accelerated considerably in the past year, the World Bank Group’s annual ease of doing business report said.
Released today, ‘Doing Business 2017: Equal Opportunity for All’ finds that the UAE retained its position as the region’s top ranked economy, with a global ranking of 26, followed by Bahrain (63) and Oman (66).
Based on reforms undertaken, the UAE and Bahrain are also among the global top 10 improvers.
The report highlights that the UAE made dealing with construction permits easier by implementing risk-based inspections and streamlining the final joint inspection with the process of obtaining a completion certificate.
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“The United Arab Emirates also reduced the time required to obtain a new electricity connection by implementing a new program with strict deadlines for reviewing applications, carrying out inspections and installing meters,” it notes.
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Additionally, the UAE introduced compensation for power outages.
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The UAE also improved its performance on the building quality control index by increasing the transparency of building regulations, says the report.
Reforms undertaken by the UAE this year
Starting a business
The UAE made it easier to start a business by streamlining name reservation and articles of association notarization and merging registration procedures with the Ministry of Human Resources and General Pensions and Social Security Authority, it says.
Dealing with construction permits
The UAE made dealing with construction permits easier by implementing risk-based inspections and merging the final inspection into the process of obtaining a completion certificate.
The UAE reduced the time required to obtain a new electricity connection by implementing a new program with strict deadlines for reviewing applications, carrying out inspections and meter installations. The UAe also introduced compensation for power outages.
The UAE made registering property easier by increasing the transparency at its land registry.
Protecting minority investors
The UAE strengthened minority investor protections by increasing shareholder rights and role in major corporate decisions, clarifying ownership and control structures and requiring greater corporate transparency.
Labour market regulation
The UAE reduced the duration of a single fixed-term contract from 48 to 24 month.
The report highlights that 15 of the region’s 20 economies implemented a total of 35 reforms to facilitate the ease of doing business. This is a significant increase from the annual average of 19 reforms during the past five years.
“The acceleration of business reform activity in the Middle East and North Africa is noteworthy, considering the severity of challenges faced by many governments in the region,” said Rita Ramalho, Manager of the Doing Business project. “It is particularly encouraging to see economies in the region carry out reforms in the area of Getting Credit, which remains harder in the Middle East and North Africa than anywhere else in the world.”
Taking steps to strengthen the credit reporting system, Morocco, for example, began providing credit scores to help banks and other financial institutions assess the creditworthiness of borrowers. However, getting credit remains a major obstacle for entrepreneurs in the region as collateral regimes are highly restrictive.
The region also performs poorly in the area of Starting a Business. For example, starting a business in the region costs 26 per cent of income per capita on average, compared with 3 per cent in OECD high-income economies.
However, economies in the Middle East and North Africa region are taking steps to improve the process for startups and, in the past year, nine economies carried out reforms in the area of Starting a Business.
For the first time, the report includes a gender dimension in three indicators: Starting a Business, Registering Property and Enforcing Contracts. The report finds that the Middle East and North Africa fares poorly on the new gender measures, with 70 per cent of the region’s economies imposing more regulatory hurdles for women entrepreneurs than men.
For instance, in Saudi Arabia, three extra procedures are required for married women to start and operate a business. One requirement in Saudi Arabia is that married women must hire a man to manage the business.
The report also features an expanded Paying Taxes indicator, which now covers post-filing processes, such as tax audits and tax refunds. The economies of the Middle East and North Africa generally perform well in these new areas. A notable exception is Lebanon, where compliance time for a VAT refund is considerably high, taking 45 hours.
Bahrain implemented reforms in the areas of Starting a Business, Getting Credit and Trading Across Borders. It made the start-up process easier for entrepreneurs by drastically reducing the minimum capital requirement from 190 per cent of income per capita to 3 per cent.
Bahrain also improved access to credit information by legally guaranteeing borrowers’ right to inspect their own data, and made exporting easier by improving infrastructure and streamlining procedures at the King Fahad Causeway.
Improving global environment
A record 137 economies around the world have adopted key reforms that make it easier to start and operate small and medium-sized businesses, says Doing Business 2017: Equal Opportunity for All, the World Bank Group’s annual report on the ease of doing business.
The new report finds that developing countries carried out more than 75 per cent of the 283 reforms in the past year, with Sub-Saharan Africa accounting for over one-quarter of all reforms.
Global country rankings of business efficiency
Hong Kong SAR, China
Republic of Korea
Former Yugoslav Republic of Macedonia
The world’s top 10 improvers
United Arab Emirates (UAE)