Bhutan is on the right track t, o im­prove busi­ness cli­mate,

Business Bhutan - - Front Page -

World Bank res­i­dent rep­re­sen­ta­tive for Bhutan and se­nior coun­try econ­o­mist, Yoichiro Ishi­hara talks to Busi­ness Bhutan re­porter Lucky Wangmo about the coun­try’s rank­ing in the ease of do­ing busi­ness, hin­drances to in­vest­ment cli­mate and how far Bhutan has come.

Q. What is Do­ing Busi­ness?

A. The World Bank launched the Do­ing Busi­ness (DB) project in 2002. DB looks at do­mes­tic small and medium-size com­pa­nies and mea­sures the reg­u­la­tions and their en­force­ment across through their life cy­cle in 190 coun­tries. By gath­er­ing and an­a­lyz­ing com­pre­hen­sive

quan­ti­ta­tive data to com­pare busi­ness reg­u­la­tion en­vi­ron­ments across economies and over time, Do­ing Busi­ness en­cour­ages economies to­wards more ef­fi­cient reg­u­la­tion and of­fers mea­sur­able bench­marks for re­form.

Q. In Do­ing Busi­ness 2018, Bhutan’s global rank slipped to 75 from 71 in DB2016 and 73 in DB2017. What are key find­ings for Bhutan in Do­ing Busi­ness 2018?

Al­though Bhutan’s global rank­ing slightly de­clined, Do­ing Busi­ness 2018 shows that Bhutan is on the right track to im­prove busi­ness cli­mate for three rea­sons: Firstly, Bhutan main­tained the top po­si­tion in South Asia. Se­condly, Bhutan’s score on the dis­tance to fron­tier im­proved from 65.2 in DB2017 to 66.3 in DB2018. The dis­tance to fron­tier score (0100) cap­tures the gap be­tween an econ­omy’s per­for­mance and a mea­sure of best prac­tice across the en­tire sam­ple of 41 in­di­ca­tors for 10 Do­ing Busi­ness top­ics to fron­tier score. Thirdly, the im­prove­ment in the dis­tance to fron­tier score re­flects four re­forms since last year. Th­ese re­forms are (a) start­ing a busi­ness, (b) ac­cess to credit in­for­ma­tion, (c) mi­nor­ity in­vestor pro­tec­tion, and (d) en­forc­ing contracts. Four re­forms are the largest num­ber of re­forms in Bhutan in the past 10 years.

Q. The main bot­tle­necks to in­vest­ment cli­mate in Bhutan have been iden­ti­fied as lack of fund­ing, lack of ac­cess to skilled la­bor and mar­ket. How has Bhutan done with re­gard to this in the last three years? Are th­ese the rea­sons that it has slipped in the ease of do­ing busi­ness rank­ing?

The World Bank launched the In­vest­ment Cli­mate As­sess­ment (ICA) in Septem­ber 2017 based on the 2015 En­ter­prise Sur­vey. The ICA found that ac­cess to fi­nance, skilled la­bor and mar­kets are the three most bind­ing con­straints to pri­vate sec­tor devel­op­ment. Bhutan has made progress to ad­dress th­ese con­straints. For ex­am­ple, on ac­cess to fi­nance, Do­ing Busi­ness 2018 rec­og­nizes that Bhutan im­proved ac­cess to credit in­for­ma­tion by begin­ning to dis­trib­ute cus­tomer pay­ment data from two of the util­ity com­pa­nies. The World Bank sup­ported this ef­fort through the Sec­ond Fis­cal Sus­tain­abil­ity and In­vest­ment Cli­mate Devel­op­ment Pol­icy Credit.

Q. What can Bhutan do to pro­mote a con­ducive en­vi­ron­ment for in­vest­ments and en­trepreneurs?

Once again, Bhutan is on the right track to im­prove busi­ness cli­mate. Go­ing back to DB and fo­cus­ing on a big pic­ture, Bhutan ranked 126th and the dis­tance to fron­tier score was 56.4 in DB2010. In DB2018, Bhutan ranked 75th and the dis­tance to fron­tier score in­creased to 66.3. It is crit­i­cal to main­tain this mo­men­tum. More specif­i­cally, I would strongly sug­gest ac­cel­er­at­ing im­ple­men­ta­tions of re­forms in the 2017 Eco­nomic Devel­op­ment Pol­icy. In­creas­ing pri­vate sec­tor growth and com­pet­i­tive­ness is one of three key re­sults ar­eas of the 2014 Coun­try Part­ner­ship Strat­egy be­tween the World Bank Group and the Royal Govern­ment of Bhutan. The World Bank Group re­mains com­mit­ted to sup­port­ing this area through pol­icy re­forms and their im­ple­men­ta­tion, tech­ni­cal as­sis­tance and an­a­lyt­i­cal work.

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