World Bank report examines foreign business formation

08/07/2010

A World Bank report has said that many countries are stifling the registration of foreign businesses and trade within their borders with excessive limits and out-dated laws.

The report, entitled Investing Across Borders 2010, pointed to Canada, France and Singapore as some of the most speedy places to set up companies, while Chile, Guatemala, and Peru have the most open economies in terms of investment restrictions.

Brazil, China and Indonesia, however, present some of the longest times to establish businesses, while many countries in the Middle East and North Africa are very restrictive on foreign equity ownership.

Janamitra Devan, Vice President of the World Bank's Financial and Private Sector Development, said the restrictive nations must look at how they can be more open to foreign companies.

“Foreign direct investment is critical for countries’ development, especially in times of economic crisis," he said.

"It brings new and more committed capital, introduces new technologies and management styles, helps create jobs, and stimulates competition to bring down local prices and improve people’s access to goods and services."

The report examines the laws, regulations, and practices impacting foreign direct investment (FDI) in 87 economies. Parameters of judgement included investment across sectors, access to industrial land, starting local businesses and arbitration of commercial disputes.

The report confirmed that most of the 87 territories in the survey were hampered in foreign investment due to FDI-specific restrictions caused by high incidences of corruption, political risk and weak governance structures.