Washington, DC — Morocco was the top reformer in the region on the ease of doing business in the Middle East and North Africa in 2005-2006,   according   to  a  new  report  by  the  World  Bank  and  the International Finance Corporation (IFC). Morocco cut the cost of starting a business, complying with tax regulations, and doing property transfers, all measures  that can help support job creation-an urgent challenge across the whole  region.  Egypt,  a  global  top-10  reformer  in last year's report, continued  to  reform but at a slower pace. Seventeen regulatory reforms-in 10  economies in the region-reduced the time, cost, and hassle required for businesses  to  comply  with  legal  and administrative requirements.  More countries  in the region are reforming compared with last year.  The region ranks  fourth  in  the world on the pace of reform, up two places from last year.

Doing  Business  2007:  How to Reform, covering   175 economies, finds that the top 10 global reformers are, in order, Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania. Reformers simplified business  regulations,  strengthened  property  rights,  eased tax burdens, increased  access  to  credit,  and  reduced  the  cost  of  exporting  and importing.  Algeria,  Egypt,  Israel,  Jordan, Kuwait, Saudi Arabia, Syria, Tunisia,  and  Yemen,  each  implemented at least one reform. There were no reforms in Iran, Iraq, Lebanon, or the West Bank and Gaza.

Doing  Business  2007  also  ranks  175  economies  on  the  ease  of doing business-covering 20 more economies than last year's report. The top-ranked countries  in  the  region  are  Israel (26), Saudi Arabia (39), and Kuwait (45).

The  top  30  economies in the world, in order, are Singapore, New Zealand, the  United States, Canada, Hong Kong (China), the United Kingdom, Denmark, Australia,  Norway,  Ireland, Japan, Iceland, Sweden, Finland, Switzerland, Lithuania,   Estonia,   Thailand,   Puerto   Rico,  Belgium,  Germany,  the Netherlands,  Korea,  Latvia,  Malaysia,  Israel,  St.  Lucia, Chile, South Africa, and Austria.

The  rankings  track  indicators  of  the  time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure. They  do  not  track  variables  such  as  macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.

Morocco,  the  region's  top  reformer,  improved  in three of the 10 areas studied by Doing Business. It reduced the minimum capital required to start a  new  business  from  100,000 to 10,000 dirham. It also eased transfer of property  by  cutting the transfer tax from 5 percent to 2.5 percent of the property's  value  and  simplified  its tax rules by combining multiple tax regulations into one source, making compliance easier.

Other notable reforms in the region:

• Israel permitted a private credit bureau to start operations and now it is among the top 10 in credit information coverage globally, easing access to credit. The bureau offers credit histories on all Israeli adults, an increase from 0.7 percent only a year ago. Israel also cut corporate and VAT taxes for businesses and increased investor protections by tightening approval requirements for related-party transactions.

• Egypt continued reforming with improvements to new company start-up and tax administration. It cut registration fees for new businesses, reducing the cost by 40 percent  and implemented a flat 20 percent corporate income tax rate.

• Algeria instructed banks and financial institutions to report unpaid credits and loans to the public credit registry, increasing available information about potential borrowers. It also reduced the corporate income tax rate from 30 percent to 25 percent.

• Syria modernized its trade administration. Traders can now submit customs declarations electronically, cutting the time to clear customs from eight days to seven days for imports and three days to one day for exports. Syria also decreased the cost to register a new company by 40 percent through a reduced stamp duty.

• Saudi Arabia simplified the process for registering a new company. The changes decreased business start-up time by almost a month (from 64 to 39 days).

• Yemen reduced its sales tax from 10 percent to 5 percent for most products.

• Tunisia increased investor protections by opening the books of the company to shareholders, strengthening auditor responsibility, and prohibiting company loans to company insiders.

• Jordan improved port efficiency at Aqaba. Vessel turnaround time dropped from eight days to a few hours, and congestion surcharges were canceled. This represents a US$120 million savings to the Jordanian economy.

• Kuwait sped property registration by increasing staff at the registry. Time to transfer real estate titles dropped from 75 to 55 days.

• Djibouti, already one of the lowest in the Doing Business rankings, made it even more difficult to do business. It limited the availability of fixed-term contracts for workers and capped their duration to 12 months, with one possible renewal.

"More progress is sorely needed. Middle Eastern and North African countries would  greatly  benefit  from new enterprises and jobs, which can come with more  business-friendly  regulations,"  said  Michael Klein, World Bank-IFC vice  president  for financial and private sector development and IFC chief economist.

The  report  finds  that the region is not reforming in the areas producing the  greatest  obstacles  to  business:   high  licensing  requirements and inefficient  courts.  For  example,  in  Iran, complying with the licensing requirements  for  a  simple construction project takes two years and costs six  times  the  average  worker's  annual salary. In Djibouti, resolving a simple  commercial  dispute  in  the  courts takes three years and costs 27 percent of the value of the claim.

Doing  Business  allows policymakers to compare regulatory performance with other  countries,  learn  from  best  practices  globally,  and  prioritize reforms. "The annual Doing Business updates have already had an impact. The analysis  has  inspired  and informed at least 48 reforms around the world. The  lesson-what  gets measured gets done," said Caralee McLiesh, an author of the report.

Globally,  the  most popular reform in 2005-2006 was easing the regulations of business start-up. Forty-three countries simplified procedures, reducing costs  and  delays.  The  second  most  popular  reform-implemented  in  31 countries-was  reducing  tax  rates and the administrative hassle of paying taxes.

Whatever  reformers  do,  they  should  always  ask  the question, Who will benefit the most? If reforms are seen to benefit only foreign investors, or 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," said Simeon Djankov, an author of the report.