Sun | Nov 19, 2017

Editorial | A long way to go for business friendliness

Published:Monday | November 6, 2017 | 12:00 AM

If there are things for the Jamaican authorities to learn from the latest World Bank league table on the ease of doing business, it's how hard countries have to run just to stay in the same position and how much there is still to be done in the drive for global competitiveness. In other words, there can be no resting on laurels - if you presume to have them.

This year, in the Doing Business 2018 ranking, Jamaica stands 70th in the ranking of 190 nations, the best among insular Caribbean countries and 21 places better than its nearest Caribbean Community partner, St Lucia. Indeed, Jamaica increased its Distance to the Frontier (DTF) score - the average of the scores of the 10 variables on which countries are judged in the Doing Business index - by 0.57 points, to reach 67.27 of a possible 100.

Yet, Jamaica declined three places in the ranking, for a combined drop of six spots over the past two years, and reversing the trend of the prior period when gains were made on the back of an aggressive suite of reforms as part of the International Monetary Fund-backed economic programme. It isn't, however, that Jamaica has backslid. Rather, other countries have continued to innovate on their regulatory processes for business.

This matters. There are, admittedly, countries lower in the ranking that are in better economic shape than Jamaica. But by and large, there is a positive correlation between the ease with which people can start and conduct business, and the speed and certainty of the legal and regulatory environment in which they exist and good economic performance. Moreover, foreign investors look at and are often swayed by these indices.

In this regard, there are a number of areas on which we would urge the Government to pay attention, including one about which stakeholders have complained for decades and administrations have promised to resolve: the difficulty in acquiring construction permits. On this front, Jamaica is ranked 98th, down from 75th in last year's report and 72nd the year before that. The DTF score, at 71.15, has worsened marginally. Other countries have improved.

 

TIME IS MONEY

 

According to this report, it requires 19 steps towards gaining a construction permit, two more than previously, and the process can take up to 141.5 days - 12 days longer - or nine per cent more time than before. Time, as the saying goes, is money.

The time and cost to get electricity, though an area in which Jamaica improved in the ranking, is a matter with which no one can be satisfied. Jamaica's place on the league table is 91, 10 spots improved on last year's, whose ranking of 101 was a slide of 21 positions from 2016.

On that score, the recovery seems impressive. However, there are still seven procedures for acquiring electricity - in Italy, it is four, and Japan, three - and the process takes, on average, 95 days. However, the reliability of electricity supply and transparency of electricity tariffs are better.

Jamaica's legal system is notorious for the snail's pace at which it operates, often with negative impact on the resolution of business disputes, including the enforcement of contracts. Jamaica's place on the index with regard to this measure is 127, down 10 positions, although the estimated time for resolving a contract enforcement dispute is 105 days fewer than was reported in the two previous surveys. But it still requires 550 days to resolve such disputes, at a cost of around half of the claim.

Clearly, Jamaica still has much work to do to create a business-friendly environment.