Nepal slips to 99 in ease of doing bizNepal has performed poorly in making things easier for entrepreneurs to do business in the country.
Nepal has performed poorly in making things easier for entrepreneurs to do business in the country. According to the World Bank Doing Business 2016 report released on Wednesday, Nepal has slipped five spots to the 99th position among the 189 countries surveyed for ease of doing business.
As a consolation, Nepal was placed second after Bhutan among South Asian countries. Bhutan came in the 71st place in the global rankings. According to the report, Nepal is ahead of India (at number 130), Pakistan (138), Bangladesh (174), Sri Lanka (107), Afghanistan (177) and Maldives (128).
The regional average score for South Asia is 128. In 2014, Nepal was placed in the 108th position, and in 2015, it came in the 94th position.
The doing business survey measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: Starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The data in Doing Business 2016 are current as of June 1, 2015.
The report showed that starting a business in Nepal requires seven procedures, takes 17 days and costs 28.40 percent of income per capita. Nepal stands at the 105th position in the global rankings with regard to the ease of starting a business.
Among the 10 areas of the life of a business, Nepal has shown improvement in only two indexes—dealing with construction permits and registering property.
The World Bank has ranked Nepal at number 78 on the ease of dealing with construction permits, up from 85 last year. Obtaining a construction permit in Nepal entails 10 procedures, takes 86 days and costs 8.30 percent of the warehouse value.
Nepal is ranked third after Pakistan and Sri Lanka in the South Asian region on the ease of dealing with construction permits.
The country has shown poor performance particularly in four indexes—resolving insolvency, getting credit, getting electricity and protecting minority investors. This has pulled Nepal down in the overall rankings, the report said.
Likewise, Nepal has slipped to 86 from 78 on the ease of resolving insolvency. According to the report, resolving insolvency in Nepal takes two years on average, and costs 9 percent of the debtor’s estate, with the most likely outcome being that the company will be sold as piecemeal sale. The average recovery rate is 41.50 cents on the dollar. Likewise, Nepal’s rank on the ease of getting credit dropped to 133 from 128 last year. In this index, Nepal ranks at the bottom of the list in South Asia.
Ease of getting electricity and protecting minority investors is another area making it difficult for entrepreneurs to do business in Nepal.
The World Bank’s report showed that globally Nepal stands at number 131 on the ease of getting electricity. In South Asia, Nepal ranks behind Bhutan, India and Sri Lanka in connecting a warehouse to electricity.
An entrepreneur has to follow five procedures and it takes 70 days to get electricity. The report, however, has not collected information about the difficulties that investors face due to power outages.
In terms of the country’s strength in protecting minority investors, Nepal ranks 57, down from 54 in last year.
Meanwhile, Nepal is ranked way down in the list in terms of enforcing contracts. The report has placed Nepal in the 152nd position among 189 countries. In Nepal, contract enforcement takes 910 days and costs 26.80 percent of the value of the claim.
Nepal stands at the 124th position on the ease of paying taxes. A firm in Nepal makes 34 tax payments annually, and spends 334 hours a year filing, preparing and paying taxes. It pays total taxes amounting to 29.50 percent of the profit, the global report said.
Likewise, Nepal stands at number 60 on the ease of trading across borders. In South Asia, Nepal is behind Bhutan (number 21) in making the process easier for traders.
The report showed that it takes 64 hours and 19 hours to fulfil the border and documentation compliance respectively to export goods from Nepal. For imports, the border and documentation compliance takes 30 hours and 48 hours respectively.