Maldives plunges three position down from the recent report on “Doing Business 2016”, published annually by the World Bank. Doing Business 2016 is an annual report investigating the regulations that enhances business activity and those that constrain it.
The report provides quantitative indicators covering 10 areas of business environment in 189 economies. Those 10 areas are: 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. Contrary to previous years, labor market regulation indicators are not included in this year’s aggregate ease of doing business ranking.
The ease of doing business reviews and ranks various economies based on regulations imposed on small to medium-sized businesses through their life cycle. While ease of doing business compares economies from one another; the distance to frontier score (another indicator) benchmarks economies with respect to regulatory best practice, showing the absolute distance to the best performance on each Doing Business indicator.
Singapore topped as the undisputed champion for 10 years in the ease of doing business ranking, followed by New Zealand and Denmark.
The report indicated Maldives as an upper middle income economy with a GNI per capita of $7290. Maldives dropped its position from 125 in 2015 to 128 in 2016, slightly affecting distance to frontier from 55.05 in 2015 to 55.04 in 2016. When compared across years, the distance to frontier score shows how much the regulatory environment for local entrepreneurs in an economy has changed over time in absolute terms, while the ease of doing business ranking can show only how much the regulatory environment has changed relative to that in other economies.
An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier.
Starting a business is comparable to 2010. Getting credit, protecting minority investors, paying taxes and resolving insolvency had methodology changes in 2014 and thus are only comparable to 2013. Dealing with construction permits, registering property, trading across borders, enforcing contracts and getting electricity had methodology changes in 2015 and thus are only comparable to 2014.
Empirical research indicates certain areas that could influence the fall in Doing Business ranking, especially to Maldives. For instance, the duration of court procedures and optimal level of social protection are a few to name.
