Israel Climbs Five Spots in the World Bank’s Ease of Doing Business Index

Illustration | Flash 90

Israel climbed five spots on the 2019 Ease of Doing Business, Index published by the World Bank on Wednesday, from 54 to 49 out of 190 countries New Zealand is ranked first, followed by Singapore, Denmark, Hong Kong, and South Korea—just like last year. The United States fell from seventh to eighth. 

The Ease of Doing Business Index is an international indicator of how easy it is to do business in various countries, and has a significant interest on companies’ willingness to establish or develop businesses in various countries. Companies prefer to stay away from countries that rank low on the list, meaning that it is difficult to do business there. 

A look at the criteria on which the index is based reveals large discrepancies in various domains when it comes to government bureaucracy as it affects the marketplace. For example, on the index of insolvency proceedings (creditors’ ability to collect their debts), Israel ranks 29th. On the ease of starting a business, it is in 45th place; for receiving building permits, 41st place; for protection of minority investors, 23rd place. But when it comes to regulation and bureaucracy for obtaining credit Israel ranks 60th, and 64th for international trade. Israel drops even lower when it comes to the ease of connecting to the electricity grid (78), registering property (89), tax payments (90), and contract enforcement (90).

Israel fell eight places from last year for the ease of starting a business, five places for obtaining credit, seven places for protection of minority investors, four places for international trade, and one place for connecting to the electricity grid. The largest improvements were recorded in registering property and obtaining building permits, where Israel climbed 41 and 24 places, respectively. There were also improvements in tax payment bureaucracy (9 places) and contract enforcement (2 places).

In 2017, the Comptroller General was tasked with dealing with the Ease of Doing Business Index, after years in which Israel plummeted, from 29th place in 2009 to 54th place last year. In the wake of the recommendations submitted by the interministry committee to improve the businesses environment, convened by the Comptroller General, Roni Hizkiyahu, a committee of ministry directors general was formed in September 2018, with Hizkiyahu as its chair, and with representative of the Justice and Economic Affairs ministries, the Prime Minister’s Office, the Tax Authority, and the Budget Division of the Finance Ministry. The committee set up an interministry team to find ways to reduce the bureaucratic burden on the business sector. 

According to Finance Minister Moshe Kahlon, “our function as a state is to create a comfortable business environment that encourages growth. We set objectives for improving the business environment and I am delighted that we are meeting them successfully. The excellent growth data, the upgrade of Israel’s credit rating, and the low figures for unemployment prove that the Israeli economy is strong and that we are moving in the right direction. In order to ensure a comfortable business environment, we will continue the upward trend on the Ease of Doing Business index, which the committee headed by Comptroller General Roni Hizkiyahu is leading with success.”

Comptroller General Roni Hizkiyahu said that “the change of direction expresses the improvement that has taken place in the procedures of government ministries in recent years, including by instituting online procedures. For the first time, an agency was defined to coordinate the work to improve Israel’s standing on the index and stay in close contact with the World Bank on this topic. In 2018, working in tandem with the relevant government ministries, we made the World Bank aware of the data and steps taken in recent years in five of the 10 items on the index. In the coming year we will continue our work and focus on the other items on the index, and study options and ways to improve the processes measured even further and reduce the bureaucratic burden.”

According to the director general of the Justice Ministry, Emmy Palmor, “the improvement in the ranking for registration of property title is part of an overall planning and strategic process in the Justice Ministry, which has placed the emphasis on refining regulation and reducing bureaucracy, while making services accessible and shifting to online procedures, in order to benefit the Israeli economy and Israeli society. The Justice Ministry is continuing to work for regulatory improvements and in its other fields of responsibility as well—such as the registration of companies, intellectual property, insolvency, and more. I believe that in the future our achievements in these domains will be reflected on the international level as well.”

The article was published in Calcalist.