Latin America Makes Strides in Ease of Doing Business

Most Latin American countries are steadily improving their regulatory frameworks to make conducting business easier, according to the World Bank’s 2013 Doing Business Report. The study rates 185 economies by 11 indicators and praised evidence of “a steady march from 2003 to 2012 toward better business regulation across the wide range of economies.” 

Overall, Latin American countries are making progress, but the region lags behind others and not a single Latin American country is included in the list’s top 30. Chile, previously the only Latin American country to break into the first 30,  now sits at number 37 on the list as other countries pushed ahead with reforms.

Countries that have achieved notable improvements include Peru (43) and Mexico (48), which jumped from the middle of the pack to the top 50 between the release of the 2006 report and the new 2013 report. The report also highlights three countries in the region that were notable for implementing successful reforms in recent years:

• As the report explains, Colombia jumped from sixty-sixth place in the 2006 report to forty-fifth place in the 2013 report. The Bank also published a case study on Colombia’s reform efforts which reports that although most of the regulatory reforms took place at the national level, as Colombia’s business environment continued to improve, “the reforms spilled over to the local level,” helping to create “a more solid foundation for private sector development.”

• Costa Rica, which sits at number 110 on the ranking, is the only Latin American country among the ten countries making the most improvements across three or more indicators. Costa Rica made notable progress in ease of starting a business, obtaining construction permits, and getting credit.
• At number 93 on the list, Guatemala is given special attention in the report because of its unique mix of policy successes and shortcomings. It is one of the world’s top three countries in terms of getting credit, registering property, and getting electricity but sits in the bottom three of the rankings when it comes to paying taxes, protecting investors, and ease of starting a business.

The report also noted that some Latin American countries are not implementing reforms at the same pace. Brazil, for instance, dropped two spots to 130 on the list. The report highlights the fact that Brazil now allows shareholders to rescind prejudicial-related party transactions. But Brazil’s ranking is hurt by complex legal requirements for basic business practices such as paying taxes (ranking at 156) and ease of starting a business (ranking at 121).

Access the regional reports for both Latin America and Caribbean states via the Doing Business page.

In other Latin American regulatory news:

• On October 21, Brazil’s tax authority announced a plan to crack down on tax evasion by luxury boat owners. 
• This week, Colombia’s Congress begins debating a major tax reform bill that alters tax levels on everything from consumer goods to pensions to incomes. Juan Ricardo Ortega, head of Colombia’s Domestic Taxes and Customs Office, commented on the bill, saying: “The reform’s not perfect, but it’s equitable. Many would like only the rich to pay taxes, but that’s unrealistic.”
• An International Business Review survey from Grant Thorton shows that 33 percent of Mexican businesspeople believe that excessive regulations and bureaucracy slow growth in the country, while 30 percent believe that the lack of long-term financing is the cause. The survey also found that Mexican businesspeople were the sixth most optimistic in the world about the global economy over the next year.