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Follow on Google News | Kuwait’s rank in terms of ease of doing business has dropped by 7 points in 2015Expanding the private sector and amending banking and labour laws are crucial reforms for business in Kuwait
The report stated that the Ease of Doing Business rankings, published every year by the World Bank, measures how easy or difficult it is for a citizen of a country to start and run a small- or medium-sized enterprise, while following the relevant local regulations. Kuwait, which has a per capita income of USD 47,639, falls in the High Income category among the 189 economies that were considered for the 2015 rankings. Table 1: Kuwait Ease of Doing Business and Starting a Business, 2014-15 Rankings Year: 2014 and 2015 Ease of Doing Business Rank: 79 and 86 Overall DTF:63.05 and 63.11 Rank: 146 and 150 Distance to Frontier (DTF):70.91 and 71.3 Procedures (number): 12 and 12 Time (days): 32 and 31 Cost (% of income per capita):1.1 and 1.9 Paid-in min.capital (% of income per capita): 77.9 and 74 Source: World Bank doingbusiness.org The above table indicates that Kuwait’s rank has dropped by 7 points. Ranking of economies is determined by arranging the list of economies in accordance with their distance to frontier (DTF) scores, which benchmarks economies with respect to regulatory practice, and shows the absolute distance to the best performance in each Doing Business indicator. Distance to frontier score is measured on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. Kuwait’s DTF score has improved marginally during the last five years. Among the GCC peers, Kuwait is the lowest ranked in both Doing Business and Starting a Business. The country has the highest number of procedures (12), compared to Oman (5) and UAE (6), and the longest time duration to complete the procedures (31), compared to Oman (7) and UAE (8). In terms of costs required, Kuwait (1.9%) fares reasonably well compared to UAE (6.3%) and Qatar (5.2%), and is worse off in the paid-in-minimum- Table 2: Comparison with GCC peers Economy:UAE,Qatar,Saudi Arabia,Oman,Bahrain,Kuwait 2015 DB Rank:22,50,49,66,53,86 Starting a business 2015 rank:58,103,109,123,131,150 DTF:76.81,69.96,69.99,66.39,69,63.11 Procedures:6,8,9,5,7,12 Time (days): Cost (%)**:6.3,5.2,4.0,2.4,0.8,1.9 Cost (USD):*,*,1,026,605,231,832 Paid-in Min. Capital (%)**:0.0,62.6,0.0,206.3,192.2,74.0 Ease of starting a business (DTF):89.97,83.14,82.71,79.29,76.92,71.3 Source: World Bank doingbusiness.org, * - Calculations based on business spending details; ** - As a % of income per capita The report added that in Kuwait, an entrepreneur has to deal with 11 government interfaces to start a business, while other GCC peers have interfaces ranging from 4 to 7. The number of interfaces has a visible correlation with the number of days to complete the procedure of setting up a business. In Kuwait, the registration process involves registering with five different government agencies, the most in the GCC. Reserving a unique company name takes a day in Kuwait and UAE, whereas in Saudi Arabia and Qatar, the process is completed online. The process in Kuwait also involves receiving inspection of company premises by the Municipality, something which is unique to Kuwait (in the GCC), and takes up to 5 days. There are many areas where reforms can be implemented readily, but the government’s vision for reform is constrained by social factors, as the public sector employs more than 80% of the national population. Any attempt at reforms may involve reorganizing and restructuring to remove redundancies, which may affect the workforce. Another issue is the lack of a large domestic market, unlike Saudi Arabia and UAE, which may dampen entrepreneurs’ There are a lot of inter-connected issues that need to be dealt with to improve the overall experience of setting up a business in the country. For example, starting a business would involve improving conditions for foreign investments into Kuwait (for e.g. foreign technology transfer is needed in several areas for Kuwaiti companies, particularly SMEs, to thrive), and to develop the current skill level of the workforce. To make any progress, the government would need to focus on expanding the private sector, and amending banking and labour laws, for the same. About Marmore Established in 2010, Marmore is a research subsidiary of Markaz, an investment bank and asset management firm that celebrated 40 years of business in 2014. Marmore caters to the growing research and information needs of organizations in the MENA region. The company publishes reports and conducts research on demand. For further information, please contact: Osama Al Musallam Senior Communications Officer Media & Communications Department Kuwait Financial Centre S.A.K. "Markaz" Tel: +965 2224 8000 ext 1819 Dir: +965 2224 8075 Fax: +965 2249 8740 Email: omusallam@markaz.com Web: Markaz.com End
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