"It marks the first time since 2005 that a South Asian economy has ranked so high."
The reforms cover the period from June 2011 to June 2012.
Sri Lanka has made starting a business easier by computerizing the registering for the Employees Provident Fund and Employees Trust Fund two retirement funds.
In registering property Sri Lanka has scored by starting an electronic system for land registry in the capital Colombo. In getting credit, a searcheable collateral registry has been established by the island's credit information bureau.
Trading across borders had been helped by implementing a global electronic data interchange system.
Sri Lanka was among 10 economies globally that has improved its ranking the most across three or more areas.
Singapore remained the easiest place in the world to do business, followed by Hong Kong, New Zealand and the United States.In South Asia Maldives was ranked 95, Pakistan 107, Nepal 108, Bangladesh 129, India 132, Bhutan 138 and Afghanistan 168.
Sri Lanka ranked 33 overall in starting a business, behind Afghanistan's 28. Sri Lanka had five steps to start a business compared to four in Afghanistan. Costs as a percentage of per capita income was also high in Sri Lanka.
Sri Lanka fared badly in dealing with construction permits with a rank of 112, compared to 19 for Maldives and 105 for Pakistan. There were also 17 procedures, compared with 8 for Maldives and 11 for Pakistan. Average time taken was 216 days.
Sri Lanka has been pushing hard to improve its ranking, led by the country's central bank. Both the provident fund and credit information bureau are connected to the monetary authority.