Hong Kong still No 2 for ease of doing business

Singapore top of the heap yet again in annual review, while China languishes in 91st place

PUBLISHED : Wednesday, 24 October, 2012, 12:00am
UPDATED : Wednesday, 24 October, 2012, 9:31am

Hong Kong remains the second-best place in the world to do business, pipped again by Singapore, which for the seventh consecutive year topped a global survey of business-friendly economies.

China, the world's second-biggest economy, lagged in 91st place but was the most improved market in the Asia-Pacific region to do business.

The annual Doing Business survey, conducted since 2003 by the International Finance Corporation and the World Bank, compares the business and regulatory environment of 185 markets worldwide to assess how easy it is for local small- and medium-sized companies to do business.

It examines procedures for starting a business, getting bank loans or other credit, applying for an electricity supply, transferring properties and the ease of cross-border transactions.

"Singapore and Hong Kong remain the most business-friendly regulatory environments for local entrepreneurs globally," said Karim Belayachi, co-author of the report.

Belayachi said a good regulatory framework was essential for a healthy economy.

"Just as good rules are needed to allow traffic to flow in a city, they are also essential to allow businesses transactions to flow," Belayachi said. "If regulation is poorly designed, it can become an obstacle to doing business. If a red light lasts for an hour, for example, most people would run the red light, just as most businesses facing burdensome regulations will try to circumvent them to stay afloat."

In 2009 Hong Kong shortened the time needed to obtain a construction permit to 67 days, from 119, making it the most competitive in the survey

Mainland China ranks almost at the bottom in this category as it takes 28 procedures and 270 days to get a permit.

Hong Kong has also improved in others areas of business operations. It takes an average of just 41 days to obtain electricity, compared with 93 days in 2010. Companies on the mainland must wait 145 days.

Hong Kong still loses out to Singapore in areas such as registering property. In Hong Kong it takes 36 days, while in Singapore it's just 21 days. Hong Kong's export costs are also higher.

Christine Bowers, operations officer for the Pacific region of IFC, said the mainland had improved a lot in the past eight years. It had launched measures like a new company law in 2005 and a credit registry in 2006.

In 2007 it introduced its first bankruptcy law and property law. Last year China completed the first stage of a new building approval process.

Belayachi said the slowdown in China's economic growth would not necessarily affect regulatory reform but the government's priorities may change.