Express May 6 2015
The Business Environment in the Caribbean
The uncertainties that currently characterize the global economy in the context of
declining oil prices, volatility in exchange rates and uneven global growth have
focused attention on increasing countries’ economic resilience and
competitiveness. In this context, one of the most important bases for balanced
and sustainable growth remains the development and promotion of a business
friendly environment. This is especially so for developing countries which are
characterized by underdeveloped markets and weak legal, institutional and
governance systems which hinder the development of the private sector and by
extension robust and sustainable economic growth.
Some of the most important factors which Caribbean businesses have flagged
consistently as problem areas include inefficiency of the government
bureaucracy, corruption and relatively poor work ethic and/or inadequately
trained workforce which leads to low labour productivity. Some jurisdictions in
the Caribbean (The Global Competitivness Report 2014-2015) also cited crime,
inadequate infrastructure, high tax rates and problems with financing. This
implies action on a number of fronts to improve the business environment in the
Caribbean to enable businesses in the region to compete on a more equal footing
with their counterparts located in other parts of the world.
The World Bank’s Doing Business Report 2015 which ranks 189 countries on a
range of attributes important to successful business operations, indicates that the
region still has substantial room for improvement in its business environment.
The region did not perform well relative to some of the more successful
economies in a few areas but did particularly bad in areas such as registering
property, getting credit, enforcing contracts, protecting investors and resolving
insolvencies (See Table 1). This is not surprising given that businessmen in the
region have always complained about the cumbersome nature of their national
bureaucratic processes. They complain that these processes are unnecessarily
complicated with different parts of the process often controlled by a multiplicity
of different, poorly staffed agencies. This results in a convoluted and lengthy
process for business activities which requires approvals or assistance from the
State. They also complain about a lack of transparency and inconsistency in the
application of standards and rules.
Express May 6 2015
These indicators seem to corroborate the findings of a survey of very large firms
by the CARICOM Secretariat in December 2009. The one exception in this regard
was the area of accessing financing which was not flagged as a binding constraint
by large firms that were surveyed. Since then the international financial crisis and
the failure of CL Financial is likely to have made financing more difficult in the
Region. Also, small and medium enterprises, especially those engaged in nontraditional business activity, are still disadvantaged in this area and very likely
contributed to the poor scores in the area of getting credit for many countries in
Table 1.
There have been some improvements in a few countries recently, most notably in
Jamaica and Trinidad and Tobago which improved by 27 and 12 places
respectively. In the case of Jamaica this was driven by significant improvement in
getting credit (GC) while the improvements in Trinidad and Tobago were driven
by significant improvements in starting a business (SB) and resolving insolvencies
(RI). Even in these countries. However, registering property (RP) and enforcing
contracts continue to be problem areas.
Table 1: The Business Environment in Caribbean Countries 2015
ECONOMY EDB EDB SB DL GE RP GC PI PT TAB EC
201 201
3
4
Antigua &
83
89 10 30 17 14 15 35 159 89 76
Barbuda
2
1
1
The
96
97 95 92 50 17 13 14 31 63 125
Bahamas
9
1
1
Barbados
103 106 94 14 11 14 11 17 92 38 160
7
8
4
6
7
Belize
119 118 14 69 54 12 16 16 61 91 170
8
0
0
9
Dominica
94
97 63 43 53 14 13 87 94 88 148
9
1
Grenada
125 126 80 40 77 12 13 14 106 51 144
8
1
1
Guyana
121 123 99 38 15 10 16 13 115 82 71
5
3
5
5
Haiti
181 180 18 13 94 17 17 18 142 142 89
DI
114
60
26
71
121
189
150
189
Express May 6 2015
Jamaica
85
58
8
20
2
26
St. Kitts &
Nevis
St. Lucia
120
121
87
16
11
1
10
95
100
72
39
23
St. Vincent
& the
Grenadines
Suriname
101
103
80
35
8
159
162
79
69
Trinidad
and Tobago
CARICOM
91
79
18
1
71
21
112
111
99
11
3
64
Costa Rica
78
83
52
46
DR
84
84
96
Mauritius
29
28
11
8
11
3
29
11
9
41
61
5
12
6
17
0
13
2
15
5
1
12
7
71
147 115 117
15
1
15
1
15
1
87
137
67
14
1
71
69
122 145 100
93
45
17
8
15
9
14
7
47
17
1
36
17
1
62
71
106 184 130
113
76
180
13
1
89
102
84
130 118
121
47
129
89
82
89
12
0
18
1
83
80
24
73
158
59
116 189
101 189
66
11
98 36 28 13 17 44 43
7
Singapore
1
1
6
2 11 24 17 3
5
1
1
19
Source: Doing Business 2015, World Bank
Notes: EDB denotes the ease of doing business, SB denotes starting abusiness, DL
denotes dealing with construction licenses, GE denotes getting electricity,
RP denotes registering property, GC denote getting credit, PI denotes
protecting minority investors, PT denotes paying taxes, TAB denotes trading
across borders, EC denotes enforcing contracts, RI denotes resolving
insolvency.
This implies that the legal/administrative framework for contract enforcement,
insolvencies and the protection of investors are unnecessarily complicated in
some areas but needs to be strengthened in other areas. Often, even if the legal
framework for these activities is clear and well developed, the problem lies in the
fact that the government agencies charged with administering these processes
are poorly financed and staffed. This situation therefore implies that action is
Express May 6 2015
required not only to rationalize and adequately fund state agencies charged with
regulating and supporting business activity but also to modernize the legislative
framework for business activity in the Caribbean. Many countries outside of the
region have made huge strides in improving their business environments by
leveraging information technology to make their interface with the business
community more centralized and user friendly. This is a strategy which can be
adopted by countries in the region to improve their business environments
relatively quickly without requiring huge inputs of human and financial capital in
countries where these resources are already severely constrained.
These and many more issues will be debated during the session entitled “Global
market risks – implications for the Caribbean”, at the 6th Biennial International
Business, Banking and Finance Conference (BBF6) on May 18, 2015 at the Hilton
Trinidad and Conference Centre, Port of Spain. For further information please
contact the Conference Secretariat at 465 0433 or [email protected].