Sri Lanka fails to maintain momentum in making climate easy for business

• Climbs just one spot to 99th place in latest WB’s Doing Business Index 2020
• Country score remains almost unchanged from last year’s index
• Sri Lanka made significant gains in previous index by progressing 11 notches

Sri Lanka remains stagnant in the World Bank (WB) Group’s Doing Business Index 2020, making a marginal improvement by one place to 99th position among 190 economies, as the business regulatory reform process came into a grinding halt during the review period. 

In comparison with Doing Business Index 2019, Sri Lanka’s overall score has improved marginally to 61.8 from 61.22 from a rating of 0 to 100 while the country’s ranking improved to 99th position from 100th position. 

The economies in South Asian sub-region have carried out 17 reforms to improve the business climate for domestic small and medium-sized enterprises during the period up to May this year. 

However, Sri Lanka along with few other nations, have failed to carry out any business reforms during the period. 

“Only half of the South Asia region’s economies carried out reforms in the past year. Afghanistan, Sri Lanka, Bhutan and Maldives did not make any regulatory changes,” the Doing Business 2020 pointed out.

Ranked at 164 out of 190 economies, Sri Lanka was one of worst in terms of enforcing contracts. According to the report, it takes 1, 318 days or 3.6 years on average to resolve a commercial dispute through a local first-instance court, while it takes only 120 days in Singapore and 1,101.6 days in South Asia. 

Sri Lanka was ranked at 142nd position with a score of 59.8 in terms of paying taxes mainly due to the number of tax payments and high tax rates. 

The number of tax payments was at 36 on average per annum in Sri Lanka compared 26.7 payments in South Asia and 10.3 in OECD economies. 

The total tax and contribution rate as a percentage of profit was recorded at 55.2 percent on average in Sri Lanka compared to 43.9 percent in South Asia and 39.9 percent in OECD countries. 

Sri Lanka also lagged behind in the registering property sub-index, which was mainly due to poor quality land administration.  The country was ranked 138 in the registering property sub-index with a score of 51.87. 

However, Sri Lanka made a notable improvement in terms of protecting minority shareholder rights in related-party transactions and in corporate governance. The country’s ranking in the sub-index rose by 10 spots to 28th place with a score of 72. 

The country’s ranking in the getting electricity sub-index, which measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse,  deteriorated to 89th position from  84th last year, as several countries made advancements in this segment. 

Similarly, Sri Lanka’s ranking in other sub-indices which include starting a business, dealing with construction permits, getting credit, trading across borders and resolving insolvency also fell as several other economies made progress surpassing Sri Lanka. 

In Doing Business Index 2019, Sri Lanka made significant progress by 11 notches to 100th place with the implementation of four key reforms to make it easier to do business in the country. 

This was also the third instance Sri Lanka was unable to carry out any business regulatory reforms since 2008 due to effects of the 51-day political impasse, Easter Sunday attacks and upcoming Presidential Elections, overshadowing the reform agenda.  

New Zealand topped the 2020 index with a score of 86.8, an increase of 0.21 points from 2019, followed by Singapore, Hong Kong, China, Denmark and South Korea.