City has boosted cross-border trade, protected small investors: World Bank

Hong Kong is the world's third-easiest place to do business as the city has strengthened minority investor protection and facilitated cross-border trading, according to the World Bank Group.

The Hong Kong government on Wednesday welcomed the World Bank's assessment and pledged to eliminate outdated or unnecessary business regulations, enhance regulatory efficiency and reduce compliance costs to further improve the ease of doing business in the city.

According to the World Bank's "Doing Business 2015" report, Hong Kong was ranked as the world's third most business-friendly regulatory environment after Singapore and New Zealand.

The survey analyzes 10 areas of regulations that apply to businesses over their life cycle, including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority interests, paying taxes, trading across borders, enforcing contracts and resolving insolvency. A total of 189 economies were covered in the poll.

Among the 10 indicators, Hong Kong ranks first in dealing with construction permits, second in both protecting minority investors and trading across borders, fourth in paying taxes, sixth in enforcing contracts and eighth in starting a business.

Hong Kong's aggregate score is slightly up to 84.97 this year - from 84.45 last year - indicating an improvement in our overall business environment. In comparison, Singapore's score this year is 88.27, down from 88.3 last year; and New Zealand's score is 86.91, up from 86.37 last year.

Hong Kong performs well in protecting minority investors and trading across borders, ranking second in the world in these areas. The city is also the easiest place in the world when it comes to dealing with construction permits," said Wendy Werner, the World Bank Group's trade and competitiveness manager in East Asia and the Pacific.

Hong Kong had strengthened minority investor protection by introducing requirements for directors to provide more detailed disclosure of conflicts of interest to the other board members. In March this year, the government launched the new Companies Ordinance that enforces more minority investor protection.

However, in the areas of registering property, getting credit and resolving insolvency, the city was ranked 96th, 23rd and 25th, indicating there's still room for improvement.

"In Hong Kong, it takes 35.5 days to register a property whereas the average number of days required among Organization and Economic Cooperation and Development members is 24. In this aspect, Hong Kong is lagging behind the other mature economies," the report's author Jiang Nan said.

"The city made starting a business more difficult by increasing the registration fee of HK$2,000 ($258). A leading economy like Hong Kong should continue to introduce regulatory reforms to further improve its world-class investment climate," Werner added.

Concerning the increase in business registration fees that has made starting a business more difficult, a Hong Kong government spokesman said the fees had just been reverted to normal levels in April this year.

"In fact, business registration fees have been frozen for the past 20 years. In light of the still unsteady economic environment, the government waived business registration fees during the financial year from April 1, 2013 to March 31 this year, as a one-off relief measure to help enterprises," the spokesman said.

The government will study the report carefully to identify scope for improvement, and continue to explore ways to improve the business environment by partnering with the business sector and other stakeholders, and reforming existing regulatory regimes to ensure that regulation is appropriate.

Contact the writers at oswald@chinadailyhk.com and amandahua@chinadailyhk.com

A view of Hong Kong's Victoria Harbour. The World Bank has praised Hong Kong for its facilitation in forming businesses, but people could still expect improvements in areas such as registering properties, securing credit and resolving insolvencies.   AFP

(HK Edition 10/30/2014 page8)