Kuwait surges 6 places, enters top 100 group at 96th position

World Bank releases ‘Doing Business -2018’ report

KUWAIT: World Bank released its latest ‘Doing Business - 2018’ report that measures the ease of doing business in 190 economies based on 11 business-related regulations. According to the report, a majority of the reforms carried out by the countries were focused on starting a business and getting credit followed by trading across borders. In terms of individual country rankings, the top three countries retained their rankings, i.e. New Zealand, Singapore and Denmark, while United States improved its ranking by 2 notches to reach the 6th spot. Within the top ten countries, Georgia made the biggest jump to reach the 9th rank from 16th last year after the country implemented the highest number of business regulation reforms since the inception of the Doing Business report. In terms of regional scores, the high income OECD countries topped the chart with the highest average score for ease of doing business followed by Europe & Central Asia and the East Asia & Pacific regions, respectively.

In terms of the pace of reforms on the regional level, the SubSaharan Africa region recorded the highest total number of reforms across all areas measured by the report. The region also had the highest impact of these reforms as compared to other regions globally, primarily due to the low base effect as the region ranked lowest in terms of average score for ease of doing business. In terms of most common topic of reform, the SubSaharan Africa region focused on starting a business and trading across borders.

In the MENA region, almost all the countries have seen a change in their ranks, with the only exception of Qatar that retained its 83rd rank. The biggest improvement was seen in Jordan that jumped 15 notches to reach 103rd spot while Tunisia recorded the biggest fall from the 77th position to 88th. According to World Bank, MENA countries have made 29 reforms over the last year and implemented a total of 292 reforms over the past 15 years. These reforms helped the region to bring down the average number of days to start a business from 43 days in 2003 to 17 days in the last year. That said, there is a wide variation between the ranks of individual countries in the region. We believe this can be attributed to the different governing styles, demographic structure as well as the wealth at the government’s disposal. The most common topic of reform for the MENA region was related to getting credit as compared to paying taxes for the high income OECD countries. The trend in the GCC rankings was mostly positive with three out of the six economies recording an improvement in their ranks. UAE continued to top the group with a rank of 21, jumping 5 places as compared to previous year. Bahrain along with Oman saw their ranks go down, although the countries maintained their relative rankings in the GCC. While Qatar’s ranking was the same as last year, the country made improvements related to credit information and trading across borders. Kuwait’s rank witnessed the biggest jump in the GCC and now ranks 96th as compared to 102nd last year. The region’s biggest economy, Saudi Arabia, also improved its rank by 2 notches to reach 92nd spot with a total of six reforms carried out in the last year. The Kingdom was among the top 20 reformers in the world during the last year and the 2nd best reformers in the high income and G20 countries.

GCC Highlights

The overall trend in the GCC remains positive with each economy making efforts on a number of fronts to improve their rankings. The six countries in the GCC adopted 15 reforms over the last year to improve the business climate. We believe that the GCC economies are at a crucial juncture in which oil prices are declining and non-oil sector needs a boost by private sector participation.

United Arab Emirates

The UAE continues to top the GCC with an overall rank of 21, jumping 5 spots as compared to the previous year. The country has been consistent with improvement and had seen a similar improvement in its rank in the 2015/16 report.

UAE made progress on one of the key long pending issues relating resolving insolvency by introducing the option of reorganization for commercial entities as an alternative to liquidation in order to save viable business with prospects of financial recovery. It also adopted global good practices in credit reporting after the credit bureau started giving consumer credit scores to banks and financial institutions to assess creditworthiness of borrowers.

Other reforms that helped the UAE improve its rank were related to getting construction permits and getting electricity. In the construction sector, the UAE reduced the time and cost to obtain a building permit by eliminating a procedure, while for getting electricity, the process was made easier by streamlining the connection process and eliminating interactions between customers and the utility to obtain external works.

Kuwait

The biggest jump in ease of doing business rank was recorded by Kuwait after the country surged 6 places and entered the top 100 group at the 96th position. Key improvements over the last year were related to starting a business and registering property. The country established a one-top shop and improved online registration for starting a business. For property registration, Kuwait slashed the number of days needed to register property to 35 days from 49 days and also improved the transparency of the land administration system.

Saudi Arabia

Saudi Arabia also improved its rank by 2 places to reach 92nd position after the Kingdom implemented the maximum number of reforms in the GCC. The six reforms carried out by the Kingdom were related to starting a business, registering property, protecting minority investors, paying taxes, trading across borders and enforcing contracts. The Kingdom was heavy on the use of technology by improving online systems for a majority of the reforms including starting a business, registering property, paying taxes and an electronic cases management system for the use of judges and lawyers, thereby making enforcing contracts easier. The Kingdom made starting a business easier by using an online system and merged name reservation and submission of article of association into one procedure, in addition to improving the online payment system by removing the need to pay fees in person. On protecting minority investors, the Kingdom increased shareholder rights and role in major decisions by clarifying ownership and control structures, requiring greater corporate transparency and regulating the disclosure of transactions with interested parties. In terms of external trade, the Kingdom made trading across border easier by cutting the time required for documentary compliance of exports and imports by reducing the number of documents required for customs clearance.

Qatar

Qatar’s rank remained unchanged from the previous year at the 83rd position with improvements particularly related to Getting credit and Trading Across Borders. Qatar improved access to credit information after it started providing consumer credit scores to banks, financial institutions and borrowers. It also made external trade easier by opening the new Hamad Port.

KAMCO Investment Research

Bahrain

Bahrain ranked 2nd in the GCC with an overall global rank of 66. The country lost 3 spots as compared to its previous ranking primarily due to reforms in relation to paying taxes. Bahrain introduced a new health care contribution that would be borne by the employer that made paying taxes more complicated.

Oman

Oman ranked third in the GCC and fourth in the MENA region on the Doing Business rankings. After improving 4 spots in the previous report, the Sultanate saw its ranking decline by 5 notches this year to reach the 71st position. The decline in Oman’s rank was primarily due to relative improvement in other countries’ rankings. Nevertheless, Oman made improvement in terms of trading across borders by enhancing its online single window system for exports and imports, and reduced the time required for documentary compliance to 7 hours for export and import documentation from 22 hours and 23 hours, respectively.