The easiest countries in which to start and operate a business aren’t necessarily the largest economies. Every year, the United Nations’ World Bank Group—an international financial institution that offers loans, grants, and other resources to low- and middle-income countries for capital programs—publishes the Doing Business 2020 report, which looks specifically at which country is best to start a small business in. The rankings examine 190 countries worldwide, based on 10 key indicators:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
If you’re starting a business and wondering about your overseas options, here’s a rundown of the top five countries where it’s easiest to do business in 2020, along with the reasons these nations lead the World Bank’s Doing Business 2020 list.
- Every year, the World Bank Group releases its “Doing Business” report, which ranks the best countries to do business in, based on 10 key indicators.
- In 2020, the top five countries best to start a business in were New Zealand, Singapore, Hong Kong (China), Denmark, and South Korea.
- According to the 2020 report, 115 countries made it easier to do business in the past year, although Sub-Saharan Africa and Latin America generally fall behind; no countries in Latin America make the top 50.
Top 5 International Countries To Start A Business In
1. New Zealand
For the fourth year in a row, New Zealand is the economy with the most business-friendly environment. The country earned top scores for “starting a business,” the indicator that looks at the number of steps entrepreneurs can expect to go through to start up and formally operate a business, plus the time and cost it takes to complete those steps. It also ranked first for the indicator on “getting credit,” which measures the strength of the country’s legal rights and depth of credit information.
The country also ranked well for registering property (second place) and protecting minority investors (third place). Thanks to a streamlined online process, starting a business in New Zealand only takes about half a day—the shortest time in the world.
Singapore has maintained a consistent ranking as the world’s second most business-friendly environment. Among the highlights, the country ranked second in terms of enforcing contracts and third for protecting minority investors. Singapore also ranked well for starting a business (fourth place) and dealing with construction permits (fifth place).
Recently, Singapore also simplified construction permits by improving its risk-based approach to inspections, improving the accessibility of soil information to the public, and making it easier to acquire a construction permit.
3. Hong Kong (China)
Hong Kong, a special administrative region considered part of China, has worked its way up the list in recent years. It was ranked first for dealing with construction permits, second for paying taxes, and third for the ease of getting electricity. Reforms over the last few years have made it easier to start a business by doing the following:
- Eliminating the requirement for a company seal
- Improving access to credit by using a modern collateral registry
- Making paying taxes easier and less costly for companies
- Making it simpler to get electricity by streamlining the process for reviewing connection applications and installing meters.
Denmark is the fourth-easiest country in which to do business. It ranked highest in trading across borders (first place), and achieved fourth place for dealing with construction permits, and sixth for resolving insolvency. The report notes that Denmark made dealing with construction permits cheaper by eliminating fees for building permits.
In addition, Denmark also recently “lowered its paid-in minimum capital requirement from 50,000 kroner ($7,470) to 40,000 kroner ($5,975) for domestic limited liability companies.”
5. South Korea
The Republic of Korea ranked first in enforcing contracts and second in getting electricity. Other areas of strength included: getting electricity (second place) and enforcing contracts (second place). In recent years, the country has made advancements that have made transferring property easier and strengthened minority investor protections.
Overall, in Korea, it only takes 13 days to get electricity, while getting a road maintenance contract takes as little as 161 days. It’s all about efficiency in this island nation: it is also the fastest economy to award public contracts in just four months after communicating the opportunity for the bid, collecting the bids, opening and evaluating them, and finally signing the contract and authorizing the beginning of the work.
The Bottom Line
These five countries listed are the easiest places in the world to do business, according to the World Bank’s Doing Business 2020 report. The report also notes that worldwide, 115 economies made it easier to do business in the past year with the most notable improvements coming from Saudi Arabia, Jordan, and Togo. By region, Sub-Saharan Africa and Latin America still fall behind on their ease of doing business; in fact, no countries in Latin America make the top 50.
Rounding out the top 10 on the list of countries best to do business in are the following countries:
- United States (sixth)
- Georgia (seventh)
- United Kingdom (eighth)
- Norway (ninth)
- Sweden (10th)
Falling at the other end of the spectrum are Libya (186th), Yemen (187th), Venezuela (188th), Eritrea (189th), and Somalia (190th).
Entrepreneurs play a vital role in any economy. Individual economies can strengthen investor confidence and growth by implementing measures that make it easier for entrepreneurs to do business. From the entrepreneur’s standpoint, starting any business is challenging enough. It can make sense to consider these countries, which makes starting and operating a business a little easier.