Doing business report 2014: SVG and others

Fri Mar 28, 2013

EDITOR:

INTRODUCTION

The 2014 Doing Business Report, authored by the World Bank (WB) and the International Finance Corporation (IFC) was recently published. It assesses “the ease of doing business” in 189 countries globally.{{more}} St Vincent and the Grenadines is ranked sixth in the Caribbean (CARICOM plus Dominican Republic and Puerto Rico) and 82nd globally. The assessment is made on the basis of several indicators, namely: the business environment, starting a business; dealing with construction permits; getting electricity; registering property; getting credit; protecting investors; paying taxes; trading across borders; enforcing contracts; and resolving insolvency. Within these indicators there are sub-categories of assessment.

Overall, St Vincent and the Grenadines’ ranking of 82nd globally out of 189 countries is better than the overall regional ranking of 90 in terms of “the ease of doing business.” In the Caribbean region, five countries are better ranked: Puerto Rico (ranked 40 globally), St Lucia (64th), Trinidad and Tobago (66th), Antigua-Barbuda (71st), and Dominica (77th). However, in some very critical areas of doing business, St Vincent and the Grenadines is ranked much higher, commendably.

Let us take a few examples of a higher ranking for specific indicators for St Vincent and the Grenadines:

(1) Days taken to start a business: St Vincent and the Grenadines is ranked third in the region behind Puerto Rico and Jamaica. It takes 10 days to start a business in St Vincent and the Grenadines. In Puerto Rico and Jamaica it takes six days.

(2) Ease in dealing with construction permits: St Vincent and the Grenadines is ranked first in the region and sixth in the world. It takes 112 days in St Vincent and the Grenadines.

(3) Ease in getting electricity: St Vincent and the Grenadines is ranked fourth in the region and 25th globally.

(4) Protecting investors: St Vincent and the Grenadines is ranked third in the region and 34th globally. The regional average is 67th in the world. Trinidad and Tobago is ranked 22nd, and Barbados, 170th.

(5) Ease of paying taxes: St Vincent and the Grenadines is ranked third regionally and 72nd globally. St Lucia is ranked first regionally and 45th globally.

(6) Ease of trading across borders: St Vincent and the Grenadines is third in the region and 38th globally. Barbados is first in region and 30th globally.

+ Cost to export (US$ per container): St Vincent and the Grenadines is first in the region with a cost of US $585. The regional average is US $1,030. The Latin American average is US $1,454; for the rich OECD countries, the average cost is US $1,070.

+ Cost to import (US $ per container): St. Vincent and the Grenadines is fourth in the region at US $1,425. Trinidad and Tobago is first in the region at US $1,260. Regional average is US $1,729.

(7) Ease of enforcing contracts: St Vincent and the Grenadines is third in the region and 90th globally. The regional average is 123rd globally.

What are some of the areas which cause St Vincent and the Grenadines’ ranking, overall, not to be better-placed? These include:

(1) Ease of registering property: St Vincent and the Grenadines is ranked ninth in the region and 153rd globally. The regional average is 143rd in global ranking.

(2) Ease of resolving insolvency: St Vincent and the Grenadines (along with St Kitts-Nevis, Grenada, and Haiti) are ranked last in the region and 189th globally. Barbados is ranked first in the region and 28th globally. This ranking of St Vincent and the Grenadines is misleading in that St Vincent and the Grenadines has exactly the same Insolvency Law as Barbados; in 2007, St Vincent and the Grenadines passed the Barbados statute. St Vincent and the Grenadines has the poor ranking here because the law has not been operationalised in practice.

(3) Ease of getting credit: St Vincent and the Grenadines is ranked eighth regionally and 130th globally. The regional average is 101st, globally. Trinidad and Tobago is ranked first in the region and 28th globally.

COMMENT

Clearly, the difficulties in getting credit, in registering property, and in resolving insolvency cause St Vincent and the Grenadines to have a less favourable ranking than otherwise would have been the case. In the first two of these areas, the private sector itself is the source of the real difficulties. The banks and other financial institutions put too many road blocks in the way of potential borrowers/investors; that’s well known. In the case of registering properties, the financial institutions and the lawyers are large responsible for the difficulties. Admittedly, the State has to modernise the system of land registration, which it is now computerising, but even with the out-moded system which exists, financial institutions and lawyers are the big bottlenecks. Ensuring the full operationalisation of the “insolvency law” is the job of the State and the lawyers.

It is to be noted that on the other indicators, St Vincent and the Grenadines is doing pretty well, although, of course, there is always room for improvement.

Incidentally, the right-wing ideologues ought to be ashamed of their prattlings about St Vincent and the Grenadines under the ULP government being hostile to investors and private property. Note the high ranking of St Vincent and the Grenadines on “the protecting of investors.”

HANS KING