'Doing Business 2009', a study by World Bank's private sector financier, International Finance Corporation, said Sri Lanka strengthened the rights of creditors with a new company law.
"When a company goes into liquidation, the claims of its secured creditors are no longer Frozen," an IFC statement said.
"Secured creditors now have the right during liquidation to seize or attach their collateral or appoint a receiver."
Sri Lanka's Credit Information Bureau had also started an online system for uploading credit information and eliminated minimum thresholds on loans recorded.
The 'Doing Business 2009' study covered the 12-month period ending June 2007.
It examined the ease of starting a business, paying taxes, getting construction permits, employing workers, getting credit, registering property, investor protection, cross-border trade, enforcing contracts and closing a business.
"South Asian countries are increasingly committed to agendas for business-friendly reforms," Sabine Hertveldt, a coauthor of the report said.
"They are also getting inspiration from other economies that have made regulatory reforms and by benchmarking local best practices."Singapore led the global rankings on the overall regulatory ease of doing business for a third consecutive year. New Zealand was runner-up, and the United States, third.
"Economies need rules that are efficient, easy to use, and accessible to all who use them," says Michael Klein, World Bank and IFC's vice president for financial and private sector development.
"Otherwise, businesses get trapped in the unregulated, informal economy where they have less access to finance and hire fewer workers, and where workers lack the protection of labor law."
Among regions, Eastern Europe and Central Asia led in reforms of business regulation for a fifth consecutive year, with more than 90 percent of its countries making improvements, the IFC said.
East Asia and the Pacific was second, with China leading the way by making make it easier to access credit, pay taxes, and enforce contracts; the Middle East and North Africa tied at second.
Sri Lanka however scored badly in taxation, with a legitimate business having to make 62 payments, compared to one in the Maldives, South Asia's richest economy.
Sri Lanka's effective tax rate was found to be 63.7 percent compared to 9.1 percent for Maldives, 28.9 percent for Pakistan and was found to be only second to India.
The IFC study said Bangladesh slashed property registration by half, and simplified business start-up. Bhutan has made contract enforcement through the courts easier.
India continued to make import and export procedures easier. No reforms were recorded in Pakistan this year.
The top 10 economies for reforms of business regulations were Azerbaijan, Albania, the Kyrgyz Republic, Belarus, Senegal, Burkina Faso, Botswana, Colombia, the Dominican Republic, and Egypt.