While ASEAN economies boast impressive growth overall, many businesses in the region have much room for improvement, according to The World Bank’s
2024 Business-Ready (B-Ready) report and a follow-up event recently at the Lee Kuan Yew School of Public Policy.
The B-Ready report is a marked improvement on the World Bank’s former Doing Business report. While Doing Business focused on the ease of doing business, B-Ready contextualises the regulatory burdens with a closer examination of the broader business and investment climates that affect a firm's life cycle.
Currently covering 50 economies, the B-Ready report is in the first phase of a three-year plan to expand to 180 by 2026. During the session’s panel discussion, Interim Director of the Asia Competitiveness Institute,
Adjunct Professor Paul Cheung, called it an “incisive reality check on a country and the region's competitors, to support business growth and improve our performance as a connected economy.”
Specifications of the report
The B-Ready framework assesses economies based on three pillars:
- Regulatory Framework, the rules and regulations that firms must follow,
- Public Services, the facilities and infrastructure that governments provide; and
- Operational Efficiency, how easily firms can comply with regulations and use public services.
Source: 2024 Business Ready (B-Ready) Report, World Bank
It gathers data from 2,750 experts in the private sector and 29,000 businesses to capture both de jure (regulatory) and de facto (actual practice) aspects of business operations, and uses approximately 1,200 indicators across ten key themes, such as: business entry, labour, financial services, international trade, dispute resolution, and business insolvency.
In addition, the B-Ready report considers three cross-cutting pillars: digital adoption, environmental sustainability, and gender equality — all crucial to creating modern and inclusive economies.
Source: 2024 Business Ready (B-Ready) Report, World Bank
The report also highlights what a higher or lower score on each of the ten dimensions would look like. For instance, poor business entry scores mean that it can take more than two months to register a new domestic company, while the highest scores might require only three days.
Implications of the report’s findings
In the report’s foreword, Chief Economist and Senior Vice President for Development Economics, World Bank Group, Indermit Singh Gill made two general observations:
- Economies tend to perform better at enacting regulations to improve the national business climate than they do in implementing those changes needed to secure actual progress. But as the quality of regulations improve, so does the ability to effect those changes.
- While richer economies tend to be more business-ready, a country does not need to be wealthy to create a good business environment. Among the 50 economies assessed this year, several developing economies rank among the top 10 in several categories, such as Rwanda, Colombia, and Georgia.
The report’s conclusion reveals that amongst ASEAN members, only Singapore qualifies as business-ready, scoring in the top 20 per cent in eight out of the ten topics. (For reference, no economy scored in the top 20th percentile across nine or ten topics.) This indicates that while ASEAN presents a relatively conducive business environment collectively, each individual economy has sizable room for improvement.
Source: Dr Norman Loayza, Director of the Global Indicators Group at the World Bank
Of the 38 low and middle-income economies assessed, 29 are present in the top 40th percentile in at least one B-Ready topic, which shows that strong performance is not confined to a small group of economies.
Unsurprisingly, market competition and business insolvency scored the lowest averages, signalling a need for significant reforms that can foster and enforce a fair and competitive environment, while having built-in mechanisms to deal with business failure and renewals.
Banding together to seize opportunities
The private sector is the engine of economic growth, and a good business environment is the ladder out of the “middle-income chart” that many countries seem to stagnate in. Private sector growth should benefit businesses, entrepreneurs, workers, and society; and business readiness should encompass social responsibility, inclusion, and sustainability.
However, Dr Norman Loayza, Director of the Global Indicators Group at the World Bank, stated that this doesn’t mean governments can be “hands off”. Instead, they should work hand in hand with businesses to "provide high quality regulations, provide well designed public services, and ensure that they are actually put into practice."
Business resilience was also stressed as a critical buffer against disruptive external factors that can affect the international system and pose risks to trade and investment. Mr Heng Peng Kwang, Executive Director of the Centre for the Future of Trade and Investment at the Singapore Business Federation, emphasised the need for resilient and adaptable businesses, and that “as global trade becomes more complex and unpredictable, we must adapt, innovate, and strengthen our business support systems to remain competitive.”
This sentiment is echoed by Mr Jimmy Koh, Managing Director and Head of Networking Partnerships and Strategic Marketing at UOB, who proclaimed that “the best of globalisation is behind us”. Koh also predicted that as manufacturing bases find new homes to relocate to in the next 30 years, ASEAN stands to be a key beneficiary.
There is therefore merit for ASEAN members to band together, Ms Ooi Huey Ting, Governing Council Member at the Singapore Institute of Directors, noted, as it’s “one of the fastest growing economic blocs in the world.” Ooi also underscored the importance of “fostering regional collaboration to collectively address common challenges, leverage complementary strengths, and accelerate growth across the region.”
Big potential, with bigger room for improvement
There’s nothing new about the need for governments and businesses to work closely if they want to boost the business ecosystem, but the B-Ready report introduces a more concrete pathway towards a business-friendly ASEAN.
World Bank’s B-Ready report is a tool that experts and policymakers can turn to for guidance on policy reforms or as a crucial roadmap to unlocking ASEAN’s full economic potential and reach a state where, as Dr Loayza said the close of the event, businesses are ready for shocks when they occur, but are also open to opportunities when they present themselves.