Update for 2023: As predicted, Singapore lost its first place spot to New Zealand soon after we published this article. You might be interested in reading our list of countries that could be the next Singapore.
For the past decade, Singapore has led the world in being the best place for business. Consistently ranked as 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: Measuring Regulatory Quality and Efficiency”, Singapore is still crowned king based on 10 factors measured across all aspects of doing business.
Other countries are hot on its heels though. 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”?
To grasp the true meaning of the rankings, having a clear definition of the phrase “best for business” is essential.
A high ease of doing business ranking means the regulatory environment is more conducive toward starting and running local firms, according to the report.
The rankings wouldn’t be very useful if a quantifiable comparison wasn’t available. They’re determined by giving a score on 10 topics and taking the total distance to frontier (DTF) with equal weight on all topics.
- 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
You can read more about the World Bank’s methods over at the Doing Business website.
Will Singapore Stay in the Lead?
A deeper analysis of the year-on-year change shows Singapore is still number one. They saw an accelerating percentage increase for 3 out of 10 factors.
Yet when it comes to the rankings of the 10 topics themselves, it’s clear Singapore is losing its lead.
Singapore’s percentage points are on the rise. However, competitors are moving even faster with the city-state’s rank falling in 4 out of 10 factors
New Zealand is less than a full percentage point behind Singapore. But Singapore still has a few advantages over other nations.
One key characteristic of Singapore’s business environment is the ease of enforcing a contract. Singapore holds 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 important things Singapore and its government can do to keep its lead.
First of all, there’s a very strong correlation between the nations which improved most on the 10 topics and the number of regulatory reforms those countries had in any given year. Myanmar is praised with its 45 reforms made during the previous year.
Second, Singapore had absolutely no reforms 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 Singapore must put forth greater effort toward making reforms. Namely, they must improve the processes of registering property, getting credit, and trading across borders.
For example, in terms of registering property, one outstanding aspect of leader New Zealand was its advancements made in digitizing property management.
New Zealand allows online registration of property transfers. Customers can fill their applications online through the land registry’s web portal. Afterwards, lawyers are immediately able to process them.
Singapore can’t be complacent if they truly wish to keep their place as the best country for business. They must continue improving their business environment to stay in first place.
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