World Bank: Egypt, Indonesia and Turkey are Large Emerging Markets Group Having Quick Business Reforms

Istanbul, Turkey | October 03, 2007 by D-8 Secretariat

Business reform in Egypt, Indonesia, and Turkey means more businesses have been created, according to “Doing Business 2008,” the fifth in an annual report series issued by the World Bank and International Finance Corporation (IFC) on Sept. 26, 2007.

According to the report, countries within Eastern Europe and the former Soviet Union saw the most reforms in 2006-07, along with a large group of emerging markets, including China and India. Large emerging markets are implementing reforms quickly; Turkey, China, Egypt, India, Indonesia and Vietnam all have improved the ease of doing business.

The report revealed that Turkey was a more reformist country than many developed and industrialized countries. Reforms, particularly in the last two or three years, have simplified doing business in Turkey and improved investment conditions. “As a result, capital flow to Turkey has accelerated,” said the report.

Turkey cut its corporate income tax from 30 percent to 20 percent and introduced electronic customs procedures by implementing a customs modernization project, reducing the processing time for exports by six days and imports by 10 days.

The time necessary for establishing a business in Turkey declined to six days, the same as the US, with six bureaucratic processes, thanks to the latest reforms; processing time is 47 days in Spain, 20 days in Switzerland and 13 days in England.

The report also emphasized that if Turkey keeps the reform process on track, it will become one of the world’s most attractive countries in terms of business and investment.

In the report Egypt tops the list of reformers that are making it easier to do business. Egypt greatly improved its position in the global rankings on the ease of doing business, with reforms in five of the 10 areas studied by the report. And for the second year running, Singapore tops the aggregate rankings on the ease of doing business. Turkey is in 57th place and Egypt is 126th.

Besides Egypt, the other top 10 business reform countries are, in order, Croatia, Ghana, FYR Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China and Bulgaria. The countries made it simpler to start a business and also strengthened property rights, enhanced investor protections, increased access to credit, eased tax burdens and expedited trade while reducing costs. In all 200 reforms in 98 economies were introduced between April 2006 and June 2007.

“The report finds that equity returns are highest in countries that are reforming the most,” said Michael Klein, World Bank/IFC vice president for financial and private sector development. “Investors are looking for upside potential, and they find it in economies that are reforming — regardless of their starting point,” he added.

Eastern Europe and central Asia, as a region, surpassed East Asia this year in the ease of doing business ratings. Several of the region’s countries have even passed many economies of Western Europe on this score.

Doing Business 2008 ranks 178 economies on the ease of doing business. The rankings are based on 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation and closure. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions or crime rates.

The International Organization of Employers (IOE) welcomed the launch of the 2008 report. “Employers congratulate the World Bank and the Doing Business team for creating a reform movement that has already begun to increase development and improve people’s lives,” said IOE President Abraham Katz. “The reports identify the areas where reform is needed, and most importantly, provide the incentives for governments to act.”

D-8 Secretary General, Dr. Dipo Alam is pleased with this WB’s report, and believes that D-8 economic cooperation has greater prospect to develop, if the reforms will be well continued. In fact, after series of working visit to OIC and IDB in Jeddah, D-8 Organisation was invited by Inter-American Development Bank and IFAD, and the Secretary General will continue his visit to Washinton D.C. on October 18-19, 2007 to attend the Migrant Workers and Remittances Conference. There he will also visit officials of the World Bank to address and discuss potential cooperation.

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