Fixing the slide in 'Doing Business'

Aubyn Hill, financial Gleaner COLUMNIST

We hate bad news as a country, but as Jamaicans, we are doing far too little to cause a change in the commentary.

Last week, the negative news came from two bodies which are quite indifferent to our dislikes or likes.

The World Bank and its private-sector arm which invests equity and debt in commercial businesses, the International Finance Corporation, released their most recent study Doing Business 2014, which ranks 189 countries for ease of doing business using a range of 10 indicators.

The really bad news for us and our country is that Jamaica's ease of doing business, — 'ease', for the most part, is a misnomer — has slipped further and further behind over the last nine years.

In 2013, according to the report, we slipped another four places to 94th in the world. We ranked 43 in the 2006 report.

Some will take comfort in the fact that Jamaica had the highest number of reforms in the Caribbean region in the past year. Then again, only two other countries in the region, The Bahamas and Trinidad and Tobago, were named in the report as making regulatory changes.

The report also cited Jamaica for reducing the corporate income tax rate and adopting new legislation for credit information reporting and private credit bureaus.

Still, the discomfort is in the comparison. In a globalised world, it is how well we stack up against our competitor countries.

We stayed steady in the bad position of 168 when it comes to paying taxes — trading across borders we were 118, when it came to protecting investors we held on to the 80th spot, and in the vital area of dealing with construction permits, we held on to our 52nd position — the KSAC should note that 52nd place well, and take drastic steps to change it.

After so many years of talk, literally years, in terms of hours of talk, on the subject of making land titling and transfer much easier for every Jamaican, Jamaica slipped another 12 places from 102 to 114 in the rankings.

SO HOW DO WE IMPROVE?

We will begin to improve our ranking only when our business and political leaders begin to understand its importance and then take it seriously.

Do our leaders understand that many prospective investors research Jamaica through all sorts of sources in order to make an investment in our country?

Gone are the days when face-to-face meetings were invariably necessary to provide important influence on investment decisions. Today, the 'give consideration' decision is often made based on a faceless research report and one of the 'must-see' sources may be the World Bank's report on the ease of doing business in a particular country.

Jamaica has had another failing grade. The real tragedy is that the report reader will find an inglorious trend in which we are racing to the bottom.

So what should we do? And do we need the IMF's money, probably the only lender left which will lend Jamaica any cash, to effect these changes?

The wonderful answer to the second question is 'no'. Let us deal with some of what we need to do. It really is not hard if only our business and political leaders would spend some time reading important parts of these kinds of reports.

It is really unconscionable of us if we were to expect these readers to read all the pages of a report such as this.

Once the executive summary and the list of slippages and no-improvements are digested, then the leader — you pick the appropriate one — should discuss what is necessary to move Jamaica up the ladder, reject all performance-killing excuses, assign improvement responsibilities to named officials, establish a small but efficient monitoring group which will effect close monitoring of corrective activities, and set quite tight timelines to see tangible results.

One measurement criterion must be the positive responses from the Jamaican public to the stated changes.

Make every move very transparent and in the open. Use transparency and openness as tools of encouragement and performance-prodding instruments.

The World Bank report said that Jamaica made it harder to do business in Jamaica by increasing the transfer tax and stamp duty. Please be careful to understand that these are different from the property taxes. They are administrative taxes and instead of being increased, should at least be kept steady, or reduced, in order to encourage economic activity in a very stagnant economy

We can start the fix here, move to overhaul and put in a new and sensible bankruptcy law which will be akin to the ones that exist in the United States. Construction permits approval, trading across borders, especially within Caricom, and the arduous task of paying some taxes all scream for reform and/or change.

Think of how easily our Government could redirect many of our underemployed and possibly engaged but misdirected civil servants, coupled with performance-driven private-sector business practitioners, into efficient teams to change our moribund government activities that hinder business progress, and into efficient government operations to make our country a much easier and attractive place in which to do business.

KILLING THE MESSENGERS

Many people respond to my articles and I am pleased to say the overwhelming numbers of these responses are positive. Recently, I received a call from a former senior government official whose PNP credentials are without question, and a friend who is respected in the PNP intelligentsia, to ask me why I write only negative articles about the Government.

The call was ill-timed, in that, my most recent article, at the time, was in support of the Government and Finance Minister Dr Peter Phillips for passing the first IMF quarterly test and getting a rating-agency upgrade.

When I received news of our ninth consecutive annual slippage in the World Bank rating on doing business in Jamaica, I wondered in which world my reader and caller lives.

Clearly, that person sees no bias in his or her position towards the government of the favoured party, given the economic results over the past almost two years.

Bias, I suppose, like lady justice, is blind. Unlike lady justice, however, bias is patently unjust and, obviously, is hard to be seen in the self of an accusing possessor.

How I would love to write about Jamaica as I would about Singapore - number one on the World Bank's list, or any of the other nine countries which made up the top 10 such as Hong Kong, the United States, Denmark, Republic of Korea or Georgia.

Frankly, when — we all hope — Jamaica hits the top 50, all our media and this columnist will shout from every column inch, seminar room, and business conversation how we, as a country, have made a remarkable turnaround and is becoming a great place to do business.

My PNP caller-friend should encourage the party in government to lead the charge.

Aubyn Hill is the CEO of Corporate Strategies Limited and was an international banker for more than 25 years. Email: writerhill@gmail.comTwitter: @HillAubynFacebook: facebook.com/Corporate.Strategies.