Sri Lanka's business confidence stifled by taxes: Report
High taxes and red tape are eroding confidence in Sri Lanka, one of the worst places to do business in South Asia, a study by the International Finance Corporation (IFC) showed on Wednesday.
By Agencies |
COLOMBO: High taxes and red tape are eroding confidence in Sri Lanka, one of the worst places to do business in South Asia, a study by the International Finance Corporation (IFC) showed on Wednesday.
The research which ranked 178 countries around the world on trade, taxation, business start-up costs, labour laws and legal procedures placed Sri Lanka at 101, a worsening of its position from 89th in the past two years.
Some South Asian neighbours did better in their overall rankings, with the Maldives ranked 60 and Pakistan 76.
Sri Lanka however, scored ahead of Bangladesh (107), Nepal (111), Bhutan (119), India (120) and Afghanistan (159) in the "Doing Business 2008" report by the IFC, a World Bank member that promotes private sector investment in developing countries.
"The obstacles to doing business in Sri Lanka are linked to the licensing and tax procedures regimes," Melissa Johns, Investment Policy Specialist in the Doing Business team told AFP.
The report authors also ranked countries in individual problem areas. Sri Lanka was the 111th most expensive country in the world to employ workers, as restrictive labour laws make it costly to dismiss staff. Companies must pay 169 weeks of salary to lay off a worker.
"These rules hit businesses at the worst possible time-when layoffs are needed because of falling demand for their products," the authors said. "High firing costs scare employers away from creating jobs."
Sri Lanka came 158th for its tax environment, the worst ranking in South Asia, with firms having to set aside 64 percent of their profits to pay taxes.
The tax burden for firms in neighbouring Maldives is nine percent and in India 71 percent.
Sri Lanka was also ranked 97th in terms of allowing firms to access credit from banks.
And Colombo slumped to 133 from 90 last year for "enforcing contracts", one of the world's top 10 worst performers. It takes 1,318 days and 40 procedures to enforce a contract.
Resolving a simple business dispute through Sri Lankan courts takes about four years, the 10th longest in the world.
When it comes to winding up a business, Sri Lanka ranked 39th. Creditors spend on average two years to recover their money and only get 45 cents on the dollar.
However, Sri Lanka made the most progress in South Asia to start a business and to trade across borders. It has introduced electronic submission of customs declarations, cutting the time for trading by seven days.
The research which ranked 178 countries around the world on trade, taxation, business start-up costs, labour laws and legal procedures placed Sri Lanka at 101, a worsening of its position from 89th in the past two years.
Some South Asian neighbours did better in their overall rankings, with the Maldives ranked 60 and Pakistan 76.
Sri Lanka however, scored ahead of Bangladesh (107), Nepal (111), Bhutan (119), India (120) and Afghanistan (159) in the "Doing Business 2008" report by the IFC, a World Bank member that promotes private sector investment in developing countries.
"The obstacles to doing business in Sri Lanka are linked to the licensing and tax procedures regimes," Melissa Johns, Investment Policy Specialist in the Doing Business team told AFP.
The report authors also ranked countries in individual problem areas. Sri Lanka was the 111th most expensive country in the world to employ workers, as restrictive labour laws make it costly to dismiss staff. Companies must pay 169 weeks of salary to lay off a worker.
ADVERTISEMENT
"These rules hit businesses at the worst possible time-when layoffs are needed because of falling demand for their products," the authors said. "High firing costs scare employers away from creating jobs."
Sri Lanka came 158th for its tax environment, the worst ranking in South Asia, with firms having to set aside 64 percent of their profits to pay taxes.
The tax burden for firms in neighbouring Maldives is nine percent and in India 71 percent.
Sri Lanka was also ranked 97th in terms of allowing firms to access credit from banks.
ADVERTISEMENT
And Colombo slumped to 133 from 90 last year for "enforcing contracts", one of the world's top 10 worst performers. It takes 1,318 days and 40 procedures to enforce a contract.
Resolving a simple business dispute through Sri Lankan courts takes about four years, the 10th longest in the world.
ADVERTISEMENT
When it comes to winding up a business, Sri Lanka ranked 39th. Creditors spend on average two years to recover their money and only get 45 cents on the dollar.
However, Sri Lanka made the most progress in South Asia to start a business and to trade across borders. It has introduced electronic submission of customs declarations, cutting the time for trading by seven days.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
