Red tape stifles Sri Lanka’s business confidence

Feb 13, 2007 (AFP) – High taxes and rigid labour laws are weighing on business confidence in troubled Sri Lanka, which is one of the worst places to do business in South Asia, a new World Bank study says.

An upsurge in violence over the past year alone has killed more than 4,000 people, leaving a February 2002 truce in tatters.

According to Sri Lanka’s Central Bank the conflict has cut at least two percentage points off economic growth each year over the last three decades. The research ranks 175 countries around the world on trade, taxation, business start-up costs, labour laws and legal procedures.

Sri Lanka retained its 89th spot in the “Doing Business 2007” report, which was released on Tuesday.

Some South Asian neighbours did better in their overall rankings, with the Maldives in 53rd place, Pakistan ranked 74th and Bangladesh listed 88th.

Sri Lanka however, scored well above Nepal (100th), India (134th), Bhutan (138th) and Afghanistan (162nd).

The authors also ranked countries in individual problem areas.

Sri Lanka was ranked as the 98th most expensive country in the world to employ workers, as restrictive labour laws make it costly to dismiss staff.