Business climate change – Kommersant

The World Bank (WB) has published a methodology for a new rating to assess the business and investment climate in various countries. The project, called Business Ready, is intended to replace the previously well-known Doing Business rating, the publication of which was stopped in September 2021 amid a scandal with overestimation and underestimation for certain countries. Now the WB is expanding the set of parameters for assessing the business climate, promising to take into account the results of business and expert surveys, and is also refusing to calculate estimates for a conditional “model company”.

The World Bank will resume the publication of the business and investment climate rating – Business Ready will replace the previous Doing Business. On Tuesday, the bank published the methodology for the new rating. The first report on 54 economies is promised in the spring of 2024. The new rating will assess not only the overall level of pressure on business, but also the quality of regulation and provision of public services throughout the entire life cycle of the company. “This will allow us to present a more detailed assessment of the actions of governments in creating a favorable regulatory environment in a positive way,” the WB noted. Both the requirements enshrined in legislative acts and the practice of law enforcement will be evaluated.

Recall that the publication of Doing Business, the first issue of which took place in 2004, was stopped in September 2021, after the results of the WB internal investigation were published. It showed a deliberate and incorrect improvement in the rankings of China in 2018 and Saudi Arabia in 2020. Also in 2020, Azerbaijan’s assessments were allowed to deteriorate. In particular, it was about the recognition by the bank’s employees of certain reforms (often this happened with a delay).

Now the bank promises to avoid conflicts of interest, and the rules for compiling the rating include a ban on accepting any instructions from national governments or other external parties. It is explained that a typical conflict of interest may arise in the case of “generous gifts and entertainment from the government of the country during the mission”, as well as in situations of interaction with environment or people that can influence the career of bank representatives.

The new methodology, developed after the revision of the old one by external experts, will be “more balanced and transparent”, and the approach to assessing regulation will become “pragmatic”, the WB notes. The assessment of the country for each of the parameters will depend on the degree of lagging behind the best practices and will include three groups of indicators – regulatory requirements, public services, the effectiveness of the process as a whole (for example, the time and cost of registering a business or the costs of litigation).

Ten groups of criteria will remain in the rating, but their content will change. Now it is: starting a business, locating it, utilities, labor, financial services, international trade, taxation, dispute resolution, market competition, bankruptcy.

The biggest change will be in the data collection process, which will now use in-country business surveys as well as consultations with regulatory experts. This should give a broader assessment of the business climate – previously, metrics were calculated for a conditional company that was engaged in a certain type of business and carried out certain deliveries (case study format). Surveys should take into account the impact of regulation on businesses of different sizes and from different cities (previously, for Russia there were only Moscow and St. Petersburg). Also, companies must represent different sectors of the economy and ownership structures (domestic or foreign organization). It should be noted that in Russia, such surveys (which will now include a block of questionnaires for the new rating) were last conducted in 2019.

Tatyana Edovina