Main­land in mid­dle in re­port by World Bank

In­ef­fi­cien­cies in con­struc­tion per­mit process hu‘ Ca he­li­imni­a­nar­taedn

China Daily (Canada) - - ACROSSAMERICAS - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa. com

When com­bined with Hong Kong, the main­land’s econ­omy has one of the top five business-friendly reg­u­la­tory en­vi­ron­ments among close to 200 of the world’s economies, ac­cord­ing to a World Bank Group re­port.

On its own, the Chi­nese main­land places in the mid­dle of the re­port’s global rank­ings due in part to in­ef­fi­cien­cies in ob­tain­ing con­struc­tion per­mits.

Main­land/ Hong Kong SAR placed third in the over­all rank­ings be­hind New Zealand at No two and first-place Sin­ga­pore. The US placed sev­enth.

The an­nual World Bank Group re­port re­leased on Wed­nes­day an­a­lyzes reg­u­la­tions that ap­ply to an econ­omy’s busi­nesses in 10 cat­e­gories in­clud­ing trad­ing across bor­ders, pay­ing taxes, and re­solv­ing in­sol­vency. This year’s re­port an­a­lyzed 189 economies in the world.

The re­port -- Do­ing Business 2015: Go­ing Beyond Ef­fi­ciency -- found that gov­ern­ments around the world are im­prov­ing the reg­u­la­tory en­vi­ron­ment for small and medium-sized en­ter­prises. Lo­cal en­trepreneurs in the East Asia and Pa­cific re­gion con­tinue to see im­prove­ments in the business en­vi­ron­ment as the re­gion’s economies made 24 reg­u­la­tory re­forms in the past year, the re­port said.

The re­port was coau­thored by Rita Ra­malho and Char­lotte Nan Jiang of the World Bank.

Nan Jiang said the main­land en­hanced its elec­tronic fil­ing and pay­ment sys­tems to make pay­ing taxes eas­ier and less costly. It also made business in­cor­po­ra­tion less ex­pen­sive.

“China elim­i­nated the min­i­mum cap­i­tal re­quire­ment of 30,000 yuan ($4,906). It also ended the re­quire­ment that com­pa­nies ob­tain a cap­i­tal ver­i­fi­ca­tion re­port from an au­dit­ing firm. This re­duced the com­plex­ity of start­ing a business and also al­lowed com­pa­nies to de­vote those funds to the business,” she told China Daily.

She said one area that the main­land needs to im­prove is in ob­tain­ing con­struc­tion per­mits.

“We found that in Shang­hai it took a company on av­er­age of 274 days to build a ware­house and in Beijing it was 208 days,” she said. “In the East Asia and Pa­cific re­gion the av­er­age time to build a ware­house was 134 days.”

She said the cost of com­plet­ing that ware­house in the main­land rep­re­sented about 7.6 per­cent of the build­ing’s value as op­posed to 2.1 per­cent of build­ing value in the East Asia and Pa­cific re­gion. “Not only does it take longer to build the ware­house in the main­land, it also costs more,” she added.

The re­port has a cat­e­gory on ob­tain­ing credit, which in­cludes scor­ing the le­gal rights of bor­row­ers

Crhti‘ n he

tk min­i­mum cap­i­tal re­quire­ment of 30,000 yuan ($4,906). It also ended the re­quire­ment that com­pa­nies ob­tain a cap­i­tal ver­i­fi­ca­tion re­port from an au­dit­ing firm. This re­duced the com­plex­ity of start­ing a business and also al­lowed com­pa­nies to de­vote those funds to the business.” NAN JIANG RE­PORT CO-AU­THOR

and lenders and the avail­abil­ity and depth of credit in­for­ma­tion. On its own, the main­land’s rank­ing was 71st in the world and 23rd with Hong Kong.

Nan Jiang noted that the main­land didn’t even have a credit reg­istry with ba­sic in­for­ma­tion un­til eight years ago. The main­land’s credit reg­istry doesn’t in­clude in­for­ma­tion on po­ten­tial bor­row­ers from util­i­ties and re­tail­ers that one can find in credit re­ports in the US and other ad­vanced economies, she said.

Kevin Gal­lagher, codi­rec­tor of the Global Eco­nomic Gov­er­nance Ini­tia­tive at the Fred­er­ick S. Pardee School of Global Stud­ies at Bos­ton Univer­sity, said it’s dif­fi­cult for small and medium-sized busi­nesses to get ac­cess to credit in the main­land.

The main­land re­mains an at­trac­tive place for many busi­nesses, Gal­lagher said.

“As far as I can tell China is still the No 1 des­ti­na­tion for com­pa­nies out­side of the West,” he said. “You have to be care­ful with rank­ings like this be­cause they tend to view any reg­u­la­tion or law as a hin­drance to business and that is not al­ways the case.”

Ju­dith Dean, a pro­fes­sor of in­ter­na­tional eco­nomics at the in­ter­na­tional business school at Bran­deis Univer­sity in Waltham, Mas­sachusetts, said that over the past decade some business fi­nanc­ing has be­come avail­able, but there is still very lit­tle lo­cal fi­nanc­ing avail­able for the pri­vate sec­tor.

“This is partly due to a legacy where the bank­ing sys­tem geared fi­nance largely to­ward state-owned en­ter­prises,’’ she told China Daily in an email. “While re­form has taken place, there is still a long way to go.”

The World Bank’s Nan Jiang said Sin­ga­pore’s top rank­ing is due mainly to the coun­try’s con­sis­tency when it comes to reg­u­la­tions.

“Sin­ga­pore scores well in all of the cat­e­gories as its worst rank­ing is 24th (in reg­is­ter­ing prop­erty). This shows that a com­pre­hen­sive ap­proach to the reg­u­la­tory en­vi­ron­ment prob­a­bly works best,” she said.

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