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St. Lucia., November 28, 2006
– The Organization of Eastern Caribbean States (OECS)
vary significantly in the ease of doing business, according to
Doing Business 2007: Organization of Eastern Caribbean States,
a new report launched today in St. Lucia by the World Bank Group. The report finds that St. Lucia ranks first among OECS member countries on the overall ease of doing business, followed by, in order, Antigua and Barbuda, St. Vincent and the Grenadines, Dominica, Grenada, and St. Kitts and Nevis.
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Where is it easy to do business in the OECS - and where not?
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Economy OECS ranking Global ranking
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St. Lucia 1 27
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Antigua & Barbuda 2 33
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St. Vincent & the Grenadines 3 44
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Dominica 4 72
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Grenada 5 73
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St. Kitts and Nevis 6 85
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Note:
Rankings on the ease of doing business are the average of the country rankings on the 10 topics covered by
Doing Business
. The rankings for all economies are benchmarked to April 2006.
Source: Doing Business
database.
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Prepared by the World Bank and the International Finance Corporation with support from the United States Agency for International Development, the report tracks the time, cost, and problems a business faces to comply with legal and administrative requirements in startup, operation, trade, taxation, and closure. (It does not track such variables as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.) The OECS countries perform well on the ease of starting a business, dealing with licenses, and the strength of investor protections. But they fall behind on the ease of getting credit, enforcing contracts, and closing a business. Results vary for trading across borders, registering property, and paying taxes.
The report finds that OECS countries are moving towards greater integration among themselves and in the context of the Caribbean single market economy. OECS countries have already harmonized several areas of business regulations, including business startup, legal rights of borrowers and lenders, bankruptcy procedures, and contract enforcement. Yet differences arise in how this harmonized legislation is implemented in each jurisdiction. Starting a business in St. Vincent and the Grenadines takes 12 days, compared to 57 days in St. Kitts and Nevis for example. All OECS countries rank in the top half of the 175 economies covered in the global
Doing Business 2007: How to Reform
report that the World Bank Group released in September. But where they rank varies significantly: St. Lucia ranks 27th while St. Kitts and Nevis is 85th.
The variation in performance is even greater where regulation has not been harmonized. For example, St. Vincent and the Grenadines is the world’s top performer on the construction license indicator—it takes 74 days to obtain a warehouse construction license and costs 10.6 percent of income per capita. Compare that to 195 days in Dominica or 34.9 percent of income per capita in St. Lucia. OECS countries can learn from each other as well as from other Caribbean countries and small states.
The greatest remaining obstacles for OECS countries are lack of credit information and inefficient courts. For example, no OECS country has a functioning and comprehensive credit bureau, and this limits entrepreneurs’ access to credit. Also, it takes 681 days to enforce a simple contract through the courts in Dominica, compared to 109 days in New Zealand the global leader.
“Some reforms are underway, but more are needed if the OECS countries want to keep up with the rest of the world,” said Simeon Djankov, head of the
Doing Business
project, a joint unit of the World Bank and IFC. “Whatever reformers do, they should always ask, ‘Who will benefit the most?’ If reforms are seen to benefit only foreign investors, large investors, or bureaucrats-turned-investors, they reduce the legitimacy of the government. Reforms should ease the burden on all businesses: small and large, domestic and foreign, rural and urban. This way there is no need to guess where the next boom in jobs will come from. Any business will have the opportunity to thrive.”
Globally, 213 regulatory reforms were introduced in 112 economies in the period January 2005 and April 2006. Of these, 18 took place in small states. The reforms led to simpler business regulations, stronger property rights, lighter tax burdens and easier tax administration, improved access to credit, and lower costs of cross-border trade for entrepreneurs worldwide. Only two of these reforms were in OECS countries, both in Antigua and Barbuda: these improved regulations for registering a new business and reduced tax rates. Other reforms are ongoing in OECS countries, including the introduction of electronic systems at customs.
Doing Business
allows policy makers to compare regulatory performance with other countries, learn from best practices globally, and prioritize reforms. The annual
Doing Business
global reports
have already had an impact. The analysis has inspired and informed at least 48 reforms around the world. A key lesson is that what gets measured gets done. And as the news about reforms spreads, there will be increasing interest in replicating success stories across the OECS.
For press interviews or more information, please contact:
Nadine Ghannam, Media & Marketing Advisor, World Bank/IFC: Tel: (202) 458-0482 - Cell: (202) 361-7798 - Email:
nsghannam@ifc.org
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