In a year when Eastern Europe and the former Soviet republics totally trumped East Asia in dismantling business barriers, Singapore emerged for the second year running as the most business-friendly - but just barely.
Close behind in the World Bank's latest ranking of 178 economies on the ease of doing business are New Zealand, the US, Hong Kong and Denmark.
'Among the top-ranked countries, it's not much significant difference,' Justin Yap, an author of Doing Business 2008, told reporters in a video-conference from Washington, DC, yesterday.
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Doing Business 2008 report highlights
There's not too much that separates Singapore from New Zealand, he said, and if Singapore lets up on business reforms, 'it's quite possible that New Zealand could be tops again next year', as it was three years ago.
The joint annual study by the World Bank and the International Finance Corporation ranks economies on the ease of doing business via 10 indicators of business regulation. The measures track the time and cost to meet official requirements in business start-up, operation, trade and taxation, but do not reflect areas such as macroeconomic policy, infrastructure quality or investor perceptions.
The latest findings see Egypt, Croatia and Georgia among the top reformers for having done the most in the past 12 months to pave the path for business. China is also cited as 'a standout in regulatory reform', having introduced protection of private property rights and new bankruptcy laws.
Region-wide, Europe and Central Asia lead with the most reforms, while East Asia is second last, ahead of only Latin America and the Caribbean. It is now generally much easier to do business in Eastern Europe than in East Asia, even if the latter has five economies (Singapore, HK, Japan, Thailand and Malaysia) in the top 25. On the other hand, four East Asian economies - Indonesia, the Philippines, Cambodia and Laos - rank in the bottom third of the pile.
But, as the report emphasises, the rankings do not tell the whole story. The indicator covers only business regulation, and does not account for other factors that affect investor decisions, such as the country's proximity to large markets, macroeconomic conditions, or government procurement transparency.
'Still, a high ranking on the ease of doing business does mean that the government has created a regulatory environment conducive to operating a business,' the report says.
In the case of Singapore, 'it's just repeating a successful formula', Mr Yap said when asked what accounts for its top ranking this year. While there were few or no new reforms of late, many aspects of doing business were already very easy in Singapore, including 'efficient procedures, many of which can be done online'. Start-up costs are about the lowest anywhere at 0.8 per cent of income per capita (compared with, say, 190 per cent in Cambodia) and there is a high level of investor protection. Singapore is also one of the easiest places to hire and fire workers.
According to the study, equity returns are highest in countries that are reforming the most. In all, 200 reforms in 98 economies were introduced between April 2006 and June 2007, mostly to ease access to credit and to simplify business start-up. The previous period from January 2005 to April 2006 saw 213 reforms in 113 economies.
And as the rules and red tape get cut, more people are going into business worldwide - with some having become global leaders in their field, the report notes, citing Estonia's software firm Skype and Czech carmaker Skoda.
Next year, the study plans to add two new indicators: the cost of bribes and infrastructure quality.
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