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What the EDB report means

Bhutan’s ease of doing business ranking has been falling over the years. But what does it really mean?

A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. The rankings are determined by sorting the aggregate scores on 10 parameters, each consisting of several indicators.

There have been reforms to create conducive business environment in the country. There was even political pledge to take the country’s ranking to the top 50. Going by the current ranking, however – 81 out of 190 economies – doing business is becoming difficult in Bhutan.

Bhutan is no more the best place to do business in South Asia. India tops the regional ranking at 77th, up from 100. Bhutan is second in the region with Sri Lanka ranking 100, Nepal 110, Pakistan 136 and the Maldives 139. Afghanistan (167) and Bangladesh (176) are the lowest ranked economies in the region when it comes to doing business.

According to the World Bank, ease of doing business does not measure the full range of factors, policies and institutions that affect the quality of an economy’s business environment or national competitiveness. It does not capture aspects of macroeconomic stability, development of the financial system, market size, the incidence of bribery and corruption, or the quality of the labour force, for instance.

For many the report does not mean anything at all. Others care little.

But consideration and measurement of some of the factors tell us about the opportunities and scope of our actions to improve the status quo. For an economy to flourish, development of small and medium-sized enterprises is critically important. And for that to happen it is important to have effective rules in place that are easy to follow and understand. Reducing corruption and removing unnecessary red tape should be at the front and centre of the initiatives to make business environment conducive for Bhutanese entrepreneurs.

It is thus important to bring ease of doing business in the right perspective. When the environment to do business is not conducive, economy cannot grow. When the economic growth is stunted, employment creation is at a minimum. That is exactly the problem facing the nation today – rising youth unemployment.

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