Regulatory curbs stifling growth in South Asia: WB

ISLAMABAD: The World Bank says though business regulatory environment in South Asia has improved over time, significant challenges remain that not only strife the growth and development of private enterprise, also prevent the regional countries from reaping the spillover benefits of large infrastructure projects like ‘Belt and Road Initiative’ of China.

The procedures for building projects in South Asia continue to be complicated and costly, involving licensing requirements from several different agencies and thus increasing opportunities for rent-seeking and corruption. Streamlining these procedures will also reduce the number of interactions with government officials, reducing opportunities for rent-seeking and corruption, says the World Bank report, ‘Business Regulations in South Asia and the Belt and Road Initiative’, released on Thursday.

Access to resources — land, finance, and electricity — remains a challenge across the region. In addition to poor-quality land administration, restrictions on foreign ownership of land also exist across South Asia. Similarly, access to finance is considered one of the biggest obstacles for business operation and growth in South Asian countries. Access to electricity, too, remains challenging in the South Asia region, with inadequate electricity supply and considerable disparities both within and across South Asian countries.

FDI involves multiple administrative approvals from the concerned domestic authorities, and these processes must be streamlined to make them less cumbersome for foreign investors.

Regulatory restrictions in the form of local content requirements and restrictions on currency convertibility and repatriation must be liberalised to incentivise foreign firms to operate in the region.

Streamlining procedures for paying taxes and, in general, limiting contact and interactions with government officials would go a long way toward reducing corruption, which various World Bank Enterprise Surveys have identified as a major impediment to the operation and growth of businesses in South Asia. The use of selective, limited, and direct procurement must be minimized to ensure competition and efficiency and curb corruption in procurement processes in countries across the region.

Dispute settlement practices must also be streamlined in the region’s countries, with a heavy emphasis on early settlement of disputes. At the moment, it takes between three and five years to resolve a commercial dispute, representing a huge deterrent to business in South Asia. Businesses in South Asian economies face a number of obstacles in exporting or importing goods and services, including tariffs, quotas, and a host of nontariff barriers that greatly increase the cost of or prevent trading altogether.