The Ease of Business Doing Index and Nepal
The Ease of Business Doing Index and Nepal

The Ease of Business Doing Index and Nepal

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The Doing Business Report is originally the product of Simeon Djankov and a team published in 2002. After the publication of a paper in a quarterly journal of economics it became very popular and well known because of its quantitative evidence and measurements. After that, the World Bank Group has elaborated it and published the business doing report covering 190 countries of the world for the first time in 2003. Since then every year the World Bank releases its Ease of Business Doing Report with the objective of measuring the costs to a business firm in 190 countries. This study of the World Bank has become one of the star knowledge products in the field of development of private businesses. This article presents the status of Nepal in The Ease of Business Doing Index.

Moreover, the report has become the base for several regulatory reforms in many developing nations. The study exhibits a comprehensive analysis of costs, requirements, and process of establishing a private business firm and starting a business in 190 nations of the world, and then based on the available situation it ranks every country from 1 to 190.  This study of the World Bank is widely used by academics, policy-maker think tanks, and politicians, experts of the development sector, journalists, researchers, and business communities all over the globe and has provided and guided different criteria for reform and improvements.

For countries like Nepal the Ease of Business Doing Report is one of the flagship knowledge stuffs as it presents a detailed analysis of different dimensions of private business development and gives them appropriate scores based on realistic existence. From the information and analysis of the report the policy-makers, politicians, and think tanks of the nation could reform different policy measures and invent new ideas to improve the overall scenario of business doing.

The very first Ease of Doing Business Report was published in September 2003 by the World Bank investigating the regulations that enhance business activities and those that contract it. This report had rated the United States, Singapore, Switzerland, Canada, and the Netherlands as the top 5 economies for doing business and Bangladesh, Haiti, and Mozambique vied for the lowest rating.

The country table reflecting business doing environment of Nepal in 2003/04 is shown by the following chart

 Business Doing Scenario of Nepal in 2003/4
The Ease of Business Doing Index and Nepal in 2003/04/Sources: https://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB04-FullReport.pdf)

The ranking of Nepal in Ease of Business Doing Report since 2010 to 2018 is shown by following graph;

 Business Doing Index of Nepal from 2010-2018
The Ease of Business Doing Index and Nepal (2010-2018)/Source: https://tradingeconomics.com/nepal/ease-of-doing-business

The Ease of Business Doing Report-2020

The World Bank had published its Ease of Business Doing Report, 2020 including the 10 different dimensions of private sector business development including the 12-months period ending May 1, 2019. As per the report, New Zealand ranked in 1st position whereas Somalis ranked in 190th position.

Key notes of report

  • Worldwide, 115 economies made it easier to do business.
  • The economies with the most notable improvement in Doing Business 2020 are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria.
  • Only two African economies rank in the top 50 on the ease of doing business; no Latin American economies rank in this group.
The Ease of Business Doing Meaning
Dimensions of Ease of Business Doing Index/Source: World Bank, 2020

Nepal ranked at 94th position out of 190 countries making an improvement of 16 places from its 110th position in 2018.

The graphics of the Ease of Business Doing Index and Nepal in 2020 are;

The Ease of Business Doing Index and Nepal's Dimensions
The Ease of Business Doing Index and Nepal/Source: World Bank, 2020
The Ease of Business Doing Index and Nepal
The Ease of Business Doing Index and Nepal/Source: World Bank, 2020

According to the World Bank’s Ease of Business Doing Report 2020, Nepal made noteworthy progress with different four reforms and made more difficulties in two criteria. This can be presented in the following table;

Reforms Made by Nepal in 2018/19

Table-I: Progressive Reforms and Restrictive Steps by Nepal in 2018/19

AreasProgressive ReformsAreasRestrictive Actions
Dealing with construction permitsNepal made dealing with construction permits easier and less costly by reducing fees for building permits and improving the online e-submissions platform.  Starting a business  Nepal made starting a business more difficult by requiring in-person follow-up for employee registration for social security.  
Getting credit  Nepal improved access to credit information by expanding the coverage of the credit bureau.  Registering property  Nepal made property registration more expensive by increasing the property transfer registration fee. Nepal also improved the quality of its land administration system by publishing official service standards for delivering updated cadastral maps.  
Trading across borders  Nepal reduced the time and cost to export and the time to import by opening the Integrated Check Post Birgunj at the Nepal–India border.    
Enforcing contracts  Nepal made enforcing contracts easier by adopting a new code of civil procedure that introduces time standards for key court events.    
Progressive Reforms and Restrictive Steps by Nepal in 2018/19

The report ranks countries in terms of DTF score. Here DTF score stands for Distance to Frontier score that indicates the gap of a particular economy from the best global practice of doing business. For example, Nepal’s DTF score in 2020 is 63.2. It means that Nepal’s business doing practice is 36.2 percentage points away from the best performance across all economies and across time.

The Position of Nepal in South Asia in 2019/20

Table-II: Position of Nepal in South Asia in Business Doing Index in 2020

Name of the CountriesRank in Ease of Business Doing
India63
Bhutan89
Nepal94
Sri Lanka99
Pakistan108
Bangladesh168
Afghanistan173
Position of Nepal in South Asia

From the table, we can see that Nepal has been ranked in third place out of the eight economies in South Asia. India is in the first place with its remarkable improvements from 2018, Bhutan in the second position and behind third rank Nepal there are four economies of South Asia like Sri Lanka, Pakistan, Bangladesh, and Afghanistan respectively.  

As per the report, India and Pakistan both got the place among the world’s top ten most improved economies. In totality, South Asia as a region has also achieved remarkable progress and improvement in different dimensions over one and a half decades of the study. However, the region and countries have a lot to do in comparison with the rest of the developed and well-framed nations and regions.

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