Sri Lanka is one of the 29 economies in the world that improved the most in the ease of doing business, according to a new global survey by the International Finance Corporation (IFC) and World Bank comparing 189 countries.
Sri Lanka ranked 85th out of 189 countries surveyed in the Doing Business 2014 dropping two notches form the 2013 rank of 83.
However Sri Lanka's distance to frontier (DTF) measure, which indicates how far each economy is from the best performance achieved by any economy on the resolving insolvency indicators, improved by 0.96% from 60.87% in 2013 to 61.83% in 2014. A score of 100 represents the frontier.
The report "Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises" assesses regulations affecting domestic firms in 189 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders.
This year's report data cover regulations measured from June 2012 through May 2013.
The economies improved the most in the ease of doing business had in 2012-13 implemented regulatory reforms making it easier to do business in 3 or more of the 10 topics included in this year's ease of doing business ranking.
Sri Lanka made dealing with construction permits easier by eliminating the requirement to obtain a tax clearance and by reducing building permit fees. It streamlined procedures, reduced time for processing permit applications and reduced fees. Sri Lanka reduced the fee to obtain a construction permit by eliminating the development tax.
Sri Lanka made paying taxes easier for companies by introducing an electronic filing system for social security contributions. The country has introduced online platforms for filing and paying labor contributions, easing the administrative burden for businesses of complying with labor regulations.
However, as of 2012 most companies were not taking advantage of the electronic payment options.
Using a field experiment in Sri Lanka with one control and four treatment groups and offering incentives to informal firms to formalize, it has been found that providing information on registration or paying for it do not necessarily increase formalization.
These interventions had a low impact because many firms that did not register had informal leases or agreements and were not able to provide authorities with the required proof of ownership for the land where they operated.
Sri Lanka made trading across borders easier by introducing an electronic payment system for port services.
Sri Lanka made getting electricity easier by improving the utility’s internal workflow and by reducing the time required to process new applications for connections. Sri Lanka improved process efficiency by improving communications with contractors, improving introducing electronic document management systems and increasing staff and resources for inspections.
Sri Lanka's Ceylon Electricity Board introduced an electronic document management system that streamlined its internal workflow and cut the time to process new applications by 22 days.
Singapore ranked the easiest to do business in 2014 while Hong Kong, New Zealand, the US and Denmark rounded up the top five in that order. In the South Asian region Maldives ranked at 95th place, Pakistan at 110th, Nepal at 105th, Bangladesh at 130th, and India at 134th place.