• Country not moving fast enough in race for reform as competitive economies forge ahead 
• SL implemented highest number of reforms in South Asia since 2012Pakistan among top 10 global improvers that executed 48 reforms in total  
• Gender included into evaluation for first time, top spot goes to New Zealand

Despite Sri Lanka making progress in two reform areas, this was not enough to stop a decline in the country’s overall rank from 109 in 2016 to 110 in 2017 in the latest ease of doing business index released by the World Bank yesterday as competitive peer economies pushed ahead faster.  

The World Bank Sri Lanka office, releasing a statement on Wednesday, noted that Sri Lanka had slipped in the rankings by just one rung, which was not necessarily an indicator that the country has “slipped down in rank, but is more a reflection that other peer economies have undertaken a larger number of reforms in the business environment during the same period.” 

The two key reforms implemented by Sri Lanka in 2016 that are covered by the Doing Business report are under the categories of Starting a Business and Protecting Minority Investors. 

 “Simplified processes will reduce the cost of doing business and can help to unleash entrepreneurship, which is needed to boost the economy,” said World Bank Country Director for Sri Lanka and the Maldives Idah Pswarayi-Riddihough. 

“While Sri Lanka has taken positive steps in reforms, much needs to be done to enable the private sector to grow and provide equal opportunities for all.”

A total of 11 reforms, making it easier to do business, were implemented by five of eight economies in South Asia in the past year. This is significantly higher than the region’s annual average of nine reforms over the past five years. Pakistan is among the top 10 global improvers. Over the past 12 months, it implemented a total of three reforms and saw its ranking progress from 148 to 144.

India also implemented reforms across multiple areas. In the past five years, Sri Lanka has implemented the highest number of Doing Business reforms in the region, with 12 reforms in total, followed by India with 10.

Titled ‘Doing Business 2017: Equal Opportunity for All’, the report covers 190 economies and captures data revisions compared to the previous year. Paying Taxes, Gender Dimension and Protection of Minority Investors are new adjustments reflected in country rankings.

The Paying Taxes indicator is expanded this year to include post-filing processes—the processes that occur after a firm complies with its regular tax obligations. In particular, the indicator now measures the time it takes to comply with and obtain a value added tax (VAT) refund and comply with and complete a corporate income tax audit.

Brunei Darussalam, Kazakhstan, Kenya, Belarus, Indonesia, Serbia, Georgia, Pakistan, the United Arab Emirates and Bahrain were the most improved economies in 2015/16 in areas tracked by Doing Business. Together, these 10 top improvers implemented 48 regulatory reforms making it easier to do business.

In its global country rankings of business efficiency, Doing Business 2017 awarded its coveted top spot to New Zealand while Singapore ranks second, followed by Denmark, Hong Kong SAR, China, South Korea, Norway, the United Kingdom, the United States, Sweden and the former Yugoslav Republic of Macedonia.

Economies in all regions are implementing reforms easing the process of doing business, but Europe and Central Asia continue to be the regions with the highest share of economies implementing at least one reform—96% of economies in these regions have implemented at least one business regulatory reform, the report said. 

For the first time this year, Doing Business adds gender components to three indicators. The Starting a Business indicator now measures gender-specific procedures such as documents or permissions required to leave the home for work, obtain national identification or own a business. The Registering Property indicator now measures whether unmarried men and women—as well as married men and women—have equal ownership rights to property. The Enforcing Contracts indicator now measures whether a woman’s testimony carries the same evidentiary weight in court as a man’s.

Three questions in the Protecting Minority Investors indicator are revised to measure whether all members must consent to add a new member, whether a management deadlock breaking mechanism exists and whether members meet at least once a year in limited companies.

The report cites research that demonstrates that better performance in Doing Business is, on average, associated with lower levels of income inequality, thereby reducing poverty and boosting shared prosperity.

Govt. to borrow $ 75 m for social safety nets project 

The Government has decided to borrow $ 75 million from the International Development Association of the World Bank to build a unified social registry that aims to bring all of Sri Lanka’s fragmented and varied welfare systems under one framework and make them more effective. 

According to reports on the Social Safety Nets Project available on the World Bank website, the development objective of the project is to improve the equity, efficiency and transparency of Sri Lanka’s social safety net programs for the benefit of the poor and vulnerable. The funds will be borrowed by the Finance Ministry and the project has three components. 

“The first two components will follow a results-based financing modality with disbursements made upon achievement of specific results measured by Disbursement Linked Indicators (DLIs). The eligible expenditures will be cash transfers paid by the Ministry of Social Services and Welfare to eligible beneficiaries,” the documents said.

“The third component will finance technical assistance to strengthen the Government’s capacity to achieve the DLI targets, conduct monitoring and planning and provide for incremental operating costs.” 

The design of the new social safety net system is presently being overseen by the Department of Project Management and Monitoring (DPMM) on behalf of the Ministry of Finance (MoF). The DPMM oversees the implementation of development projects and programs in Sri Lanka, ensures directions made by the Subcommittee on Economic Affairs are carried out and is responsible for the monitoring and evaluation (M&E) of projects.

The legal foundation for the reform is the Welfare Benefits Act (2002), which was made effective on 15 February 2016. The Act creates a WBB under the Ministry of Finance. The Board will be comprised of a Commissioner of Welfare Benefits and four other members, appointed by the MoF in consultation with the Constitutional Council. The Board is appointed for a renewable term of three years.

The project will be implemented by the Finance Ministry. Welfare programs carried out by the Government have been largely viewed by experts as being ineffective in reaching the poorest sections of society and have called for a stronger data-driven approach to poverty relegated policymaking.