Doing Business Getting Harder in Sri Lanka in 2015!
Limitations to freedom of contract and the lengthy times taken to resolve standardized disputes through the courts have made doing business harder in Sri Lanka next year, according to a global survey by the International Finance Corporation (IFC) and World Bank comparing 189 countries.
Sri Lanka dropped 14 notches from its 85th place in 2014 and ranked at 99th out of 189 countries in the 2015 Doing Business Report that is released Wednesday.
The report said it takes almost 4 years to resolve a standardized dispute through the courts in Sri Lanka and the slow contract resolution process frustrates freedom of contract.
“In Sri Lanka there are equally few limitations to freedom of contract, but resolving the standardized dispute through the courts takes 1,318 days – almost 4 years. Parties might be able to include a wide array of covenants in their agreements, but long enforcement times can nullify the utility of those covenants,” the 2015 Doing Business Report noted.
In Singapore, the best country to do business, the process takes only 21 days and Sri Lanka is the worst.
Sri Lanka also has made paying taxes more costly for companies by increasing the reduced corporate income tax rate for qualifying small and medium-size enterprises.
Sri Lanka’s distance to frontier (DTF) score, which indicates how far each economy is from the best performance achieved by any economy on the resolving insolvency indicators, declined marginally from 61.83% in 2014to 61.36% for next year. A score of 100 represents the frontier.
Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Economies are ranked on their ease of doing business, from 1-189. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.
Singapore ranked the easiest to do business in 2015 while New Zealand, Hong Kong, Denmark and South Korea rounded up the top five in that order. The United States ranked 7th.
In the South Asian region Nepal ranked at 108th place, Maldives 116th, Pakistan at 128th, India at 142nd, and Bangladesh at 173rd place.