Doing Business 2019: Behind the Numbers
Doing business within a particular region can be a very positive, profitable experience. Alternatively, it can be fraught with lengthy, profit-eating procedures and complex business regulations when you choose the wrong foreign location.
This is why the World Bank’s Doing Business 2019 rankings receive so much attention annually. Their study objectively measures how easily a foreign company can establish and operate within a locale, based on business regulations.
Their analysis includes 190 economies and selected cities. However, some consistently rise to the top. Here’s why.
New Zealand ranked first in the Doing Business report for the past three years. The reasons for this ranking are simple – they make it easy for companies to invest and create profitable businesses in their country.
For instance, New Zealand has a highly beneficial policy which simplifies business and property registration, plus companies can easily access credit. Host countries expect these conveniences; however, not all regions offer this level of accessibility when expanding internationally. This can seriously degrade profits and make it much more difficult to achieve corporate goals.
Additionally, New Zealand offers an open, transparent administration, advantageous tax policies and investment incentives. This creates a business climate suitable for multinationals.
As well, the country has a highly-educated workforce and English is their official language. Finding staff that blends into the host country’s corporate culture is a much quicker and less costly undertaking.
Singapore held second place for the past three years in the World Bank Doing Business report. They also make it easy to start a business and to perform basic business duties, such as paying taxes.
Singapore also ranks very highly due to their efficient regulatory system, ease of border and export compliance, access to Asian and global markets, and technological expertise. The country also has an advantageous tax system and offers many incentives, especially for R&D and technology.
English is the most widely spoken language used in business and most Singaporeans are bilingual. The country offers a near crime-free environment and a government with very little corruption.
Denmark ranked third for the past three years in the World Bank Doing Business report. The country ranks first for ease of export compliance and fourth for ease of obtaining construction permits. They have a highly-educated workforce, excellent infrastructure and well-established connections to EU and global marketplaces.
More than 86 percent of Danes speak English fluently, which is an obvious advantage for English-language businesses expanding internationally. Operating in a common language can eliminate trade, local, and regional government challenges for quick, seamless integration into a new community.
Denmark’s tax rate is also well below other EU countries and those of many countries around the globe. Employers in Denmark also pay the world’s lowest social contributions and offer Northern Europe’s most competitive salary levels for professionals.
Hong Kong & South Korea
Both encourage foreign investment through regulatory efficiency. Hong Kong ranks first for ease of paying taxes and obtaining construction permits. South Korea ranks second for acquiring electricity and enforcing contracts through the courts.
These countries also offer attractive investment incentives, especially for hi-tech and R&D. South Korea offers special incentives to qualifying SMEs. Both offer advantageous tax regimes and access to Asian and global markets which creates favorable environments for foreign business and trade.
Georgia ranked sixth in the Doing Business 2019 report. Their ranking has steadily risen since 2016, because they country is highly-invested in attracting foreign business.
The country ranked second for ease of starting a business. They also ranked highly for protecting investor rights and legal enforcement of contracts.
Georgia also offers a highly-competitive corporate tax rate of 15%, far less than the European average of 22.5%. The maximum property tax is 1% and import taxes range between 0% and 12%.
Income is taxed at a flat rate of 20%, up to GEL 3 million. As well, Georgia does not charge payroll, social security, capital gains, wealth or inheritance taxes.
One Step Further
It is important to realize the World Bank Doing Business report only provides an overview of business regulations. While this is certainly valuable information, it does provide the full picture. Even if a country ranks highly, it does not mean it is the best choice for your business.
Each country, and sometimes region or locale, offers specific incentives. These may be based on your industry, how your investment improves employment, infrastructure, innovation, the environment or other relevant factors.
Additionally, some countries offer specific incentives to SMEs, while others favor large investments. Some locations may not offer the supply chain, natural resources and talent pool your business needs either, while others could offer untapped potential.
The Doing Business rankings do offer a valuable overview of business regulations, but your company will also face cultural challenges. Nothing beats regional knowledge and local business savvy for reliable, actionable, in-country information.
Clearly, expanding your company overseas is a significant undertaking and not one that should be based on a single report. Blueback Global offers in-depth regional research and in-country experts to help you correctly identify your ideal region.
Once you zero in on your expansion area, let us help you establish an entity, manage your global payroll, accounting and reporting, and ensure statutory compliance. We also provide immigration support as well as in-country recruitment and hiring services.
Blueback Global will carefully examine your company’s needs, explore country options, and help you identify what is best for your business. Let us mitigate risk and help you overcome your multinational business challenges. Contact us for a free consultation.