Surprisingly, the weakest performance this year is in the Trading Across Borders category.
The recently released 2016 edition of the World Bank’s 13th annual Doing Business survey shows Taiwan (or “Taiwan, China” as the World Bank insists on calling it) doing rather well, ranking in 11th place out of the 189 economies included. But Taiwan has still found it impossible to break into the very top ranks of the survey, which continues to be dominated by such countries as first-place Singapore, followed in order by New Zealand, Denmark, Korea, and Hong Kong.
One of the special characteristics of Doing Business is that it seeks to improve its methodology each year, adapting to what it judges to be significant trends in the marketplace. As a result, however, the country rankings that were originally announced for the previous year’s survey always need to be recalculated according to the new parameters. Last year, for example, it appeared that Taiwan had fallen to 19th place after ranking as number 16 for 2014. But the newly announced adjusted scores for last year have moved Taiwan up to 11th place – the same as for 2016.
To better assess the degree of progress an economy is making, Doing Business in recent years has introduced a measure called “distance to the frontier” (DTF), which benchmarks economies according to how far away they are from the best global performance for various indicators. In this respect as well, Taiwan appears to have plateaued. For 2016 its DTF index is 80.55 out of a perfect 100, just barely above the previous year’s 80.53.
Compared with other international competitiveness surveys, Doing Business tends to address more specific and practical issues. The defined purpose of the exercise is to “shed light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with regulations.” The survey “measures and tracks changes in regulations affecting 11 areas in the lifecycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and labor market regulation.”
At the same, the World Bank notes the limitations of the Doing Business methodology. The report explains that the survey does not look at a number of areas that are also important to business, including an economy’s proximity to large markets, the quality of infrastructure services other than those related to cross-border trade and power supply, the transparency of government procurement, macroeconomic conditions, and the underlying strength of relevant institutions.
Once again, the category in which Taiwan performed the best was Getting Electricity, measuring the number and cost of procedures needed to get a warehouse connected to electrical power by the local utility – as well as the transparency of the billing system. Taiwan was ranked in second place worldwide, surpassed only by Korea.
Surprisingly for a country that is so heavily reliant on international trade, the category in which Taiwan obtained its lowest rank (number 65) was Trading Across Borders. This section, based on information collected from local freight forwarders, customs brokers, and traders, analyzes the time and cost associated with the logistics of importing and exporting goods. Within the Asian region, Taiwan’s DTF score of 80.11 was exceeded by Korea (92.48), Singapore (89.35), Hong Kong (87.76), Malaysia (86.74), and Japan (85.9).
Another area of relative weakness was Getting Credit, in which Taiwan stood in 59th place. The category evaluates the availability of credit information and the extent to which collateral and bankruptcy laws facilitate access to credit. Among those scoring higher than Taiwan with regard to the strength of legal rights for borrowers and lenders were Singapore, Hong Kong, Malaysia, and Korea.
Following publication of Doing Business each year, Taiwan’s National Development Council under the Executive Yuan studies the report and works with relevant government agencies on ways to remedy perceived shortcomings in regulatory procedures. Like AmCham Taipei’s annual Taiwan White Paper, Doing Business provides the government with valuable reference material on how to implement improvements in the business climate.