Middle Eastern nations continue to discourage investment and thwart small and medium sized businesses with heavy legal burdens and piecemeal reforms, a new World Bank report has revealed.
The Washington-based organization’s annual Doing Business report provides a global ranking of the investment climates in 155 nations based on key business regulations and reforms undertaken.
Entrepreneurs trying to open up or run businesses in the region are challenged by regulatory obstacles every step of the way. In Syria for instance, it takes 63 days, 18 documents, and 47 signatures from the time imported goods arrive at the port until they reach the factory gate. In Oman, it takes seven years to close an insolvent company.
In keeping with its neighbors, Lebanon generally scored poorly across the board, with an investment climate hampered by time consuming red tape, high costs and an inadequate judicial sector.
The report found that the cost to start a new business in Lebanon amounts to 110.6% of annual income per capita – the third highest rate in the region after the Occupied Palestinian Territories and Yemen.
It takes 275 days to obtain a license in the industrial sector to build a warehouse in Lebanon, after Syria (134 days) and Jordan (122 days), although on a much-needed up note, the cost of obtaining licenses in Lebanon are less than the average regional ratio: 214.6% of income per capita, compared to the regional average of 469.7%.
Lebanon’s judicial sector fared the worst in the region with regards to business, requiring over 2 years (721 days) to enforce a contract. Tunisia was the most efficient globally in this sector, requiring only 27 days.
“I am not surprised – these results seem to reflect reality,” Samih Barbir, former chairman and manager of the Investment Development Authority of Lebanon, commented. “But political stability will lead to progress on all these fronts. We’ve been talking about introducing reform measures for the past 10-15 years, but nothing has been done about it. Once you have reached a broad understanding that investments lead to prosperity and growth, and you reach some kind of political stability in this country, then reforms will take place. But before the Mehlis report comes out, we won’t see any of this. And once the report does come out, we need to see what repercussions it will have locally and regionally, before we can start talking about reforms again.”
