Samoa leads Pacific region in ease of doing business
A new report from the World Bank that measures the ease of doing business, lists Samoa as providing the most business-friendly environment for local entrepreneurs in the Pacific region. It’s a far cry from the territory’s own reputation, which many companies established in American Samoa find obstructive and discouraging.
Released last week Tuesday, Oct. 23, Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises finds Samoa, Fiji, Tonga, and Vanuatu were the top performers for the Pacific.
Samoa leads the region in four of the 10 indicators, including starting a business, trading across borders, protecting investors, and registering property. Fiji made paying taxes less costly for companies by reducing the profit tax rate — though it also introduced a capital gains tax. At the same time, Fiji made obtaining a construction permit more expensive, and transferring property and starting a business more difficult.
American Samoa is not listed in the report. However, Samoa News asked David Robinson, chairman of the local Chamber of Commerce for his thoughts on the report. He noted, “In our case here in American Samoa it is not so much the ease or lack of ease of doing business, but it is the high costs that have to be considered and factored into a business plan in making the decision whether or not to establish a business."
“These costs are high corporate and personal taxes, high labor costs, very high utility costs, increasing ocean freight rates, seriously small domestic market, lack of competitive air freight services and a lack of available suitable land. "
“The absence of a government 3-5 year economic plan is also an impediment to new investment. These are all serious considerations for potential investors when we are pitching for their investment dollars as there are probably more attractive offers on their tables from our neighbors in the Pacific and parts of Asia.”
Two other factors that are main impediments to a ‘business-friendly’ environment in American Samoa, according to Robinson, are the Business License problem and the out dated rules and regulations that are still being used to assess new business requests.
For a business license, he said, “one of the main limitations in establishing a new business here has been the length of time it takes to obtain a Business License through the Department of Commerce, a process which can take up to twelve months. New legislation has just been prepared with input from the private and the public sectors which will dramatically improve the requirements and the time frame for the approval and issuance of licenses, but unfortunately time did not permit it to be reviewed by the Fono during it’s last session and it will now have to wait until the 2013 sessions for reviewal, and hopefully approval.”
With regard to new business and expansion of existing ones, Robinson noted, there are “out dated rules and regulations that are still used by some government departments when assessing requests. These rules and regulations might have been good 20-30 years ago but times have moved on in the commercial world and business needs to be able to move quickly once it has decided on a course of action and it has the appropriate level of funds in place to proceed. It does not want to get side tracked by out of mode regulations.”
The Doing Business 2013 report states that 23 economies in East Asia and the Pacific have made their regulatory environment more business-friendly since 2005. Singapore tops the global ranking on the ease of doing business for the seventh consecutive year, while Hong Kong SAR, China, holds onto the second spot, followed by New Zealand.
Australia is also among the top 10 in the global ranking on the ease of doing business.
It covers the period from June 2011 to June 2012 and uses data for indicators that measure regulation affecting ten key areas of the life cycle of local businesses.
The report finds that 11 of 24 economies in East Asia and the Pacific improved business regulations in the past year. China made the greatest progress in improving business regulations for local entrepreneurs, and Mongolia is the region’s top improver for the year.
“This year, Mongolia joined the global list of top 10 improvers for ease of doing business in the report, which uses data for indicators that measure regulation affecting 10 key areas of the life cycle of local businesses,” said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group. “Mongolia implemented reforms that cut regulatory hurdles and make it easier for firms to do business.”
The list of the ten economies with the most business-friendly regulations are, in this order: Singapore; Hong Kong SAR, China; New Zealand; the United States; Denmark; Norway; the United Kingdom; the Republic of Korea; Georgia; and Australia.
About the Doing Businessreport series
Doing Businessanalyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and protecting investors. The aggregate ease of doing business rankings are based on 10 indicators and cover 185 economies. Doing Business does not measure all aspects of the business environment that matter to firms and investors.
For example, it does not measure the quality of fiscal management, other aspects of macroeconomic stability, the level of skills in the labor force, or the resilience of financial systems. Its findings have stimulated policy debates worldwide and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies. This year’s report marks the 10th edition of the global Doing Business report series.
Source: Doing Business media release