For the past decade, Singapore has led the world in being the best country for business. Consistently being ranked number one, the country boasts impressive conditions which most nations are still working towards.
Here’s an analysis of the key success factors leading up to this result. We’ll also cover the areas Singapore should improve if they want to extend their rule over the world for another decade.
According to the World Bank’s “Doing Business 2016: Measuring Regulatory Quality and Efficiency” , Singapore is still crowned as king because of 10 factors measured across all aspects of doing business.
However, other countries are hot on its heel. Singapore’s closest competitor, New Zealand, is actually besting them in 3 out of 10 factors. New Zealand ties with Singapore in yet another category.
What Makes a Country “Best for Business”?
In order to grasp the true meaning of the rankings, a clear definition of the phrase is essential. According to the report, a “high ease of doing business ranking” means that the regulatory environment is more conducive toward starting and running local firms.
The rankings would not be applicable if a quantifiable comparison system was not available. The rankings are determined by giving a score on 10 topics and taking the total distance to frontier (DTF), with equal weight on all 10 topics.
These 10 topics are measuring the conductivity of the regulatory environment with respect to (in no particular order):
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
Readers may read up more on the methods at the “Doing Business” website.
Will Singapore Stay in the Lead?
A deeper analysis of the year-on-year change shows Singapore it is still number one. The city-state had an accelerating percentage increase for 3 of 10 factors.
Yet when it comes to the rankings of the 10 topics themselves, it’s clear Singapore is losing its lead. Its percentage points are on the rise. However, those of other countries are rising even faster with Singapore falling in rank in 4 out of 10 factors.
New Zealand is less than a full percentage point behind Singapore, in fact. But Singapore still has a few advantages of its competitors.
One key characteristic Singapore’s business environment is the ease of enforcing a contract. Singapore has the world record for resolving a commercial dispute at 150 days. The costs are only 25.8% the value of the claim on average.
A major aspect of Singapore’s court system is the use of technology to automate some parts. Litigants can submit claims, pay court fees, and even serve summons online.
Keeping Singapore the Best Country for Business
The report indicates two things Singapore can do to keep its lead.
First of all, there is a very strong correlation between the countries that improved the most on the 10 topics and the number of regulatory reforms that those countries had in any year. Myanmar is mentioned here with 45 reforms made the previous year.
Second, Singapore had absolutely no reforms made last year. This is in contrast to New Zealand and Denmark, its closest competitors. Both implemented one reform each.
Comparison across the 10 topics reveals that Singapore will have to put a lot of effort into making reforms. Namely, they must improve the processes of registering property, getting credit, and trading across borders. These are the areas Singapore’s closest competitors are catching up in.
For example, in terms of registering property, one of the key outstanding aspect of the leader, New Zealand, was the advancement it has made in terms of digitizing property management. New Zealand allows online registration of property transfers. Customers can fill their applications online through the land registry’s web portal. Lawyers are immediately able to process them.
Singapore must not be complacent if they truly wish to keep their place as the best country for business. They must continuously improve their business environment to stay in the lead.
EDITOR’S UPDATE FOR 2017: Singapore lost its first place spot to New Zealand this year. You might want to see our article about countries which could be the next Singapore.
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