China Leads Region in Making Regulatory Environment for Local Firms More Business-Friendly

A new report from IFC and the World Bank finds that China advanced the most among countries in the East Asia and the Pacific region in making its regulatory environment more business-friendly over the past six years, and is among the top 15 worldwide.

The report released today, Doing Business 2012: Doing Business in a More Transparent World, assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, trading across borders, and resolving insolvency. This year, the rankings on ease of doing business have expanded to include indicators on getting electricity.

Singapore topped the rankings on ease of doing business for the sixth straight year. Hong Kong SAR, China, held onto the second spot—in part by introducing an online system for company registration and making it easier to secure an electricity connection.

A new measure shows how economies changed their regulations to make them more business-friendly over the past six years. China stands out globally and in the region for advances made in making regulations more favorable for local business. China implemented policy changes across nine areas of business regulation in the years since 2005. The changes included a new company law in 2005, a new credit registry in 2006 and, in 2007, the first bankruptcy law regulating the bankruptcy of private enterprises since 1949. Today, China's credit bureau covers over 80 percent of adults. China ranks 91 out of 183 in the global ranking on ease of doing business.

Over the past six years, 22 economies in East Asia and the Pacific have made their regulatory environment more business-friendly. "Making business regulation more transparent and efficient increases opportunities for economic growth," said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group. "In East Asia and the Pacific, businesses have benefited from the region’s broad and sustained regulatory reforms."

New data show that the majority of economies in the region make it easy for entrepreneurs to access information on business regulations. In the region, two-thirds of the economies have put documentation requirements for traders in public notices or online. "Effective use of information technology can make things easier for entrepreneurs and increase transparency," said Sylvia Solf, lead author of the report. Over the past year, Hong Kong SAR, China; Malaysia; the Solomon Islands; Taiwan, China; Tonga; and Vanuatu have all used new technologies to simplify business start-up, made it easier to register property, or modernized the court system.