‘Doing Business in 2007: How to Reform’ has found that only India and Pakistan had introduced regulatory reforms to make it easier to engage in business, while new taxes including a new stamp duty made the hassle of doing business greater in Sri Lanka.

“No other South Asian economy improved its business regulations in 2005-2006, ranking the region last in the pace of reforms,” the World Bank said in a statement,

South Asia includes Maldive Islands - which was judged to be the easiest place to do business, Bangladesh, Nepal, Bhutan and Afghanistan - which was judged to be the worst place to do business in the region.

The report found that African nations were reforming faster than Asia, the Middle East or Latin America.

Sri Lanka retained the overall ranking of 89 in 2006 compared with 2005, out of 175 countries included in the report, but it lost places in many of the ten categories that the authors looked at, in ranking countries.

In ‘starting a business’ Sri Lanka lost five places to become 44, in ‘registering property’ it lost six places to 125, in ‘paying taxes’ one place to 157, ‘trading across borders’ it lost nine places to 199, in ‘enforcing contracts’ two places to 90 and ‘getting credit’ five places to 101.

Sri Lanka retained 98th place in ‘employing workers’ and managed to improve six places to 59 in ‘closing a business.’

The rankings track indicators of the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure.

They do not track variables such as market size, macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.

“Whatever reformers do, they should always ask the question, ‘Who will benefit the most?’ If reforms are seen to benefit only foreign investors, or large investors, or bureaucrats-turned-investors, they reduce the legitimacy of the government,” Simeon Djankov, an author of the report said.

“Reforms should ease the burden on all businesses: small and large, domestic and foreign, rural and urban. This way there is no need to guess where the next boom in jobs will come from. Any business will have the opportunity to thrive.”

In Sri Lanka a reformist government was thrown out of office in 2004, partly on accusations of favouring big business.

Since then restriction of foreign ownership of land, restrictions to international trade in goods and services including punitive taxes on motor cars and television programs have followed.

Sri Lanka was the first country in the region to liberalize in 1977, followed by further waves of rapid liberalization in 1990-3, 1995-8 and 2002-3.

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