Washington, DC — Doing  business  became  easier worldwide  in  2005/06, according to a new report by the World Bank and the International  Finance  Corporation  (IFC),  the  private sector arm of the World  Bank  Group.  Two  hundred  and  thirteen  regulatory reforms-in 112 economies-reduced  the time, cost, and hassle for businesses to comply with legal and administrative requirements. The report also finds that Africa is reforming and ranks the region's progress ahead of Asia, Latin America, and the Middle East.

Doing  Business  2007: How to Reform finds that the top-10 reformers on the ease  of  doing  business,  in  order, are Georgia, Romania, Mexico, China, Peru,  France,  Croatia,  Guatemala,  Ghana,  and  Tanzania. Thirteen other economies-Armenia, Australia, Bulgaria, Czech Republic, El Salvador, India, Israel, Latvia, Lithuania, Morocco, Nicaragua, Nigeria and Rwanda-had three or  more  reforms.  Reformers simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit, and reduced the cost of exporting and importing.

Doing  Business  2007  also  ranks  175  economies  on  the  ease  of doing business-covering  20  more  economies  than last year's report. 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 report points out that in many economies the costs of doing business are so prohibitive that most entrepreneurs are forced to operate outside the formal economy," said Paul Wolfowitz, President of the World Bank Group. "The report is a critical tool for developing countries to determine where more reforms are needed," he said.

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

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.

Georgia  was  the  top  reformer in 2005/06, improving in 6 of the 10 areas studied by Doing Business. It reduced the minimum capital required to start a  business,  sped  up  customs,  licensing, and court procedures, and made labor  regulation more flexible. Business registrations rose by 55% between 2005 and 2006. And unemployment has fallen by 2 percentage points.

China  and Eastern European countries were also active in enacting reforms. China  sped business entry, increased investor protections, and reduced red tape  in  trading  across borders. It also established a credit information registry  for  consumer  loans. Now banks can check credit histories of 340 million  citizens  before  extending  them  loans.  The  desire to join the European  Union  inspired  reformers in Bulgaria, Croatia, and Romania (the second-fastest  reformer). And regulatory competition in the enlarged union added to Latvia's momentum for reform.

For  the  first  time,  Africa makes the top-three among reforming regions, after  Eastern  Europe  and  the  OECD  countries.  Two-thirds  of  African countries  made  at least one reform, and Tanzania and Ghana rank among the top  10  reformers.  In Côte d'Ivoire registering property took 397 days in 2005.  Reforms  eliminated  a requirement to obtain governmental consent to transfer  property,  decreasing  the  time to 32 days. Burkina Faso cut the procedures  for  starting a business from 12 to 8 and the time from 45 days to 34. Madagascar reduced the minimum capital for start-ups from 10 million francs  to 2 million. Tanzania introduced electronic data interexchange and risk-based  inspections  at  customs.  The time to clear imports fell by 12 days. Gambia, Nigeria, and Tanzania reduced delays in the courts.

"Such  progress  is  sorely  needed.  African countries still have the most complex   business   regulations.  They  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. "Big improvements  are  possible. If an African country adopts the region's best practices  in  the  ten areas covered by Doing Business, it would rank 11th globally."

The  most  popular reform in 2005/06 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.