Qatar advances in World Bank’s Doing Business Index

Posted on : Thu, 27 Oct 2011

Qatar has risen in the annual business environment rankings compiled by the World Bank. The benchmark Doing Business report released last week ranked Qatar 36th in the world and third in the region, its best ever result.

A number of other countries in the MENA region have also improved their performance, notably Morocco. Overall, 13 MENA countries advanced in the index and only five fell, an encouraging sign that the business environment in the region is improving.

The World Bank’s assessment looks at dozens of indicators related to the ease of doing business spread across ten categories, ranging from starting a business through to resolving insolvencies. The indicators relate to objectively measurable factors such as the number, speed and cost of official procedures required in each area.

As well as changes in countries’ performance, the rankings are affected by regular refinements in the World Bank’s methodology, designed to make the rankings better reflect the issues that are relevant to businesses.

For example, the latest report modified the methodology for assessing the “Registering Property” category. This change boosted Qatar by 21 places to 37th in this area. In addition, a new category was added to reflect the ease and cost for companies of securing electricity supplies. Qatar ranks 18th in the world in this area on account of electricity subsidies.

Under the improved methodology, Qatar would have ranked 38th last year, rather than 50th. This means that most of Qatar’s improvement in ranking this year was a result of the new methodology.

It also gained two places through improved performance, particularly in the area of “Getting Credit”, formerly its weakest category. Qatar gained 40 places in Getting Credit as a result of the development of its national credit bureau, which is helping banks assess loan requests more rapidly and accurately. The bureau covered 32% of the adult population as of June 2011, according to the data used in the World Bank’s assessment.

Qatar’s strongest category remains “Paying Taxes”. It ranks 2nd in the world given its simple tax system and low rates—there are no personal taxes and foreign companies pay a flat 10% tax on locally sourced profits.

It also performs well in “Dealing with Construction Permits”, a critical area given the ongoing construction boom that is rapidly transforming Qatar’s industrial base, infrastructure and residential sector.

Qatar still ranks just below average in four areas, which means that there is plenty of room for future improvements in its ranking. Nonetheless, it is already ahead of some European countries such as Spain and Luxembourg.

Meanwhile, Saudi Arabia continues to lead the region in 12th place, as a result of concerted efforts over recent years to improve its performance on many of the indicators upon which the index is based.

On the other hand, Morocco is the most improved country in the world, rising 20 places to 94th, leaping ahead of four other MENA countries to make it the highest ranking non-GCC country, aside from Tunisia.

QNB Capital notes that while the Doing Business Index is an important benchmark, it is not designed to encapsulate all aspects of the business environment. It does not cover a number of key areas of interest to companies, such as market opportunities, the growth potential of an economy and the quality of the labour force.

There are other measures of the business environment which do consider some of these factors. One well regarded measure is the World Economic Forum’s Global Competitiveness Index, in which Qatar currently ranks 17th in the world.