Arab World Makes Significant Regulatory Reforms

by Lorys Charalambous, Tax-News.com, Cyprus

13 November 2008

Doing business is becoming easier in most parts of the Arab World according to a report examining the business regulatory environment of 20 Arab economies.

According to the report, produced by the International Finance Corporation (IFC), Arab countries are increasing efforts to make their services more accessible and efficient. The report surveyed the ease of operating a private business from Arab countries and what benchmarks regulations, reforms and ‘good practices’ are in place.

The report shows that 13 Arab economies introduced 29 reforms between June 2007 and June 2008 in the areas measured by the IFC. The report has found that over the past five years, the most popular area of reform in the Arab World was business start-ups, with 10 economies reforming their practices. Getting credit information was the second most popular reform, followed by improvement in trade across borders. Multiple reforms also took place in investor protection, dealing with licenses, registering property and paying taxes.

Dahlia Khalifa, a co-author of the report, said: “Good rules that are efficient, transparent, and accessible make it easier, especially for small and medium enterprises, to do business in a fast-changing world. Otherwise, businesses can be trapped in the unregulated, informal economy, where they have less access to finance, hire fewer workers, and workers lack the protection of labor law. Arab economies recognize this and are taking action to reform their business regulatory environments.”

Initial results show that reforms lead to change on the ground. Six months after Egypt reformed its property registry, title registrations increased and related revenue rose by 39%. Commercial registrations in Oman increased by 93% over the past year after it implemented a one-stop shop for business start-ups. In Saudi Arabia, reducing minimum capital requirements led to an 81% increase in new company registrations.

Dr Hazem El Beblawi, advisor to the Arab Monetary Fund, said: “Regulatory reforms make it easier for local entrepreneurs to do business, and overall enhance business environments and regional competitiveness.”

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