Thursday, September 11, 2008

For a Colombo Reform Process

Finally, there's some good news on the reform front :
Sri Lanka has been rated the top South Asian reformer in an annual business regulation study by the World Bank group, with a new company law and credit information improvements boosting its scores. [link]
That's according to the World Bank's Doing Business Report 2009, an annual study which analyzes and ranks countries on easy it is to do business in countries are. The bad news of course, is there's still a long way to go. Although Sri Lanka is the top regional reformer for the last year, it still languishes in 102nd position globally and behind regional countries like Pakistan (rank 77) and Maldives (rank 69), south-asia's richest and most business friendly economy. India is further behind in 122nd position, but I think the study ignores the impact of SEZs and other regional disparities in terms of policy.

Sri Lanka does especially badly with regards to paying taxes with a total of 62 payments and a total tax rate of 63.7%, which frankly is insane. This ridiculously high number of interactions with the bureaucracy is one of the reasons for bribes and corruption in the public sector. Maldives, as LBO notes, only has to make 1 payment as opposed to our 62.

We also door horribly poorly when it comes to property registration, dealing with construction permits and enforcing contracts. Labour laws are inflexible as well, something that will really hurt Sri Lanka in a low-tariff, post-GSP world.

That said, it's great that we have done some reform in the past year. The type of reforms undertaken are just mainly improving legal framework rather than getting into more politically-explosive issues, which is, at least for the moment, a decent strategy. Another thing we can probably improve is trade facilitation, which will have enormous benefits without being a political hot-button issue.

I have been thinking for some time about, what I decided to call the Colombo Reform Process. The idea is kind of modeled similar to the Copenhagen Consensus. The idea is to bring together, perhaps bi-annually, bunch of experts (mostly economists) and get them to come up with the top 10 (or 20) reforms which Sri Lanka could peform and rank it according to effectiveness and political feasibility and produce a report. I think that could really speed things up.

But this is not something that I'm in a position to do at the moment, so here's a shoutout to all the policy people at IPS, Chamber of Commerce, and the likes -- try and do this!. It might just work.


N said...

Nice idea but why only economists though? I think you would need a much wider bunch of stakeholders to come up with any consensus that would actually be meaningful to the general population and be implementable in the real world.

Deane said...

Sure, but the ultimate cost benefit analysis is best done by economists. Too many NGOs, etc. would mean it's pointless again.

The point is there's probably a bunch of reforms out there which will have cross-party support and that doesn't need a lot of consensus building.