NZ easiest place to do business, says World Bank

12.40pm - UPDATE

Washington - New Zealand tops a list of world economies in terms of ease of doing business, a report from the World Bank says.

The Doing Business in 2005 report highlighted registering property and getting credit as two aspects which are easy to achieve in NZ.

The other countries in the top five are the United States, Singapore, Hong Kong/China and Australia.

Economic Development Minister Jim Anderton said today the survey showed the Government's "pro-active business development policies" had made a positive difference.

"We are now the best country in the world in which to run a business, according to the World Bank," he said in a statement.

"This is a huge reality check for National and ACT. What part of the success of this government's hands-on partnership with business do they not understand? Even the World Bank is applauding the result."

Slovakia and Colombia were praised as the world's biggest reformers over the past year, creating electronic one-stop shops for new businesses, shrinking regulatory delays by weeks, improving credit registries, and increasing the flexibility of labour laws.

The report, co-sponsored by the World Bank and International Finance Corporation, the private sector lending arm of the World Bank Group, finds that such reforms, while often simple, can help create job opportunities for women and young people, encourage businesses to move into the formal economy, and promote economic growth.

However it says: "Being in the top 20 on the ease of doing business does not mean zero regulation. Few would argue it's every business for itself in New Zealand."

The report, which benchmarks regulatory performance and reforms in 145 nations, finds that poor nations still make it twice as hard as rich nations for businesses to thrive.

Overall, rich countries undertook three times as many investment climate reforms as poor countries last year.

European nations were especially active in enacting reforms.

"Poor countries that desperately need new enterprises and jobs risk falling even further behind rich ones who are simplifying regulation and making their investment climates more business friendly," said Michael Klein, World Bank/IFC vice president for private sector development and IFC chief economist.

On average, it takes a business in a rich nation six procedures, 8 per cent of income per capita, and 27 days to get started; in a poor or lower-middle-income economy, the same process takes 11 procedures, 122 per cent of income per capita, and 59 days. In more than a dozen poor countries, registering a new business takes more than 100 days.

"This year, Doing Business gives policymakers an even more powerful tool for measuring regulatory performance in comparison to other countries, learning from best practices globally, and prioritizing reforms," said Simeon Djankov, an author of the report.

For example, this year's report catalogues wide variances in hiring and severance costs across countries and shows that high severance costs can discourage job creation.

The report also shows that poor regulation of bankruptcy can cause business loans to dry up: in 50 countries, creditors can expect to recover less than 20 cents on the dollar when a business goes bankrupt.

Doing Business in 2005: Removing Obstacles to Growth, overview