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tax filing system and reducing some tax rates, it’s also made it easier to pay taxes, although it did introduce a new form
to complete when paying capital gains tax. Panama made it easier for companies to access credit by widening the range of assets they can use as collateral, and permitting some non-ju- dicial enforcement of collateral.
Overall, fully half the countries in the region enacted at least one regulatory reform that made it easier to do business; there were a total of 29 such reforms. Colombia, whose ease of doing business ranking is number one throughout the LAC, has instituted 29 such reforms since 2005, followed by Mexico and Guatemala, with 21 and 20, respectively.
During the year 2013-14, Jamaica, the Dominican Republic, and Trinidad and Tobago each implemented three reforms; during this period, Trinidad and Tobago was one of the world’s 10 most improved economies in terms of ease of doing business.
While Colombia and Peru stand as success stories, other large economies in the region perform surprisingly poorly. Brazil, for instance, ranked 120th in 2015, up slightly from 123rd in 2014. Daniel Lemaitre, a political analyst with Global Risk Insights, notes that “Brazil would immediately turn heads if it adopted a more business-friendly and simpler tax structure. So far, its recent tax reforms have not proved deep enough to attract business or create general confidence in the Brazilian investment climate.
GETTING EASIER ... SLOWLY
A report from the Federal Reserve Bank of St. Louis calls do- ing business in Latin America “challenging,” particularly for those accustomed to starting and running a company in the
United States and Canada. It takes more time and money to navigate regulations, get permits, gain access to electricity, and to enforce the payment of a debt. However, as the report points out, several countries in the region, most notably Chile and Panama, have “significantly improved their busi- ness climates in the past few years.”
Argentina, Brazil, Paraguay, Uruguay, and Venezuela belong to the sub-regional trading bloc MERCOSUR, similar to NAFTA. It is not comprehensive, though, which means that even within MERCOSUR, cross-bor- der shipments still require a high degree of expertise. Another area crying out for regulatory reform is contract enforcement. Mexico, the LAC economy with the best DTF score in this area, requires the completion of 38 dif- ferent forms in a process that can take just over a year
While there are certainly some challenges ahead for any com- pany that elects to open shop in the LAC region, the potential benefits of an enthusiastic and low-cost workforce combined with governments anxious to attract and keep new investment are compelling. And while the initial objective of establishing a presence in the region might be to serve or supply foreign markets, the region itself also holds great potential as a consumer marketplace as the workforce acclimates to steady employment and income, growing into a powerful middle class with spending power and upward aspirations.
STARTING A BUSINESS 110
Dealing w/Construction Permits 103
Getting Electricity 79
Registering Property 118
Getting Credit 87
Protecting Minority Investors 104
Paying Taxes 121
Trading Across Borders 103
Enforcing Contracts 103
Resolving Insolvency 106
Source: World Bank Group, Doing Business 2016 (Latin America & Caribbean, LAC)
Note: The rankings are benchmarked to June 2015 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities.
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