Doing business in Costa Rica has never been so easy, according to a new survey from the World Bank.
Costa Rica’s ease of doing business ranking leaped an impressive 21 spots on the 2016 Doing Business report from the World Bank, released Tuesday. Costa Rica’s rank reached 58th out of the 189 countries surveyed for the 2016 report compared to 79th in 2015. The biggest strides came in access to credit, ease in paying taxes, and access to electricity.
“This is a good moment for Costa Rica to celebrate and reflect on what they need to do to keep moving forward,” World Bank Country Director for Central America Humberto López told The Tico Times.
López said that Costa Rica’s jump in the rankings was significant but noted that the country has been making strides to improve its business climate for several years. During the last five years Costa Rica has been the country to implement the most regulatory reforms in the region — 13 — followed by Jamaica (12), Mexico (12), Colombia (9), and Panama (9).
The single largest area of improvement for Costa Rica in the new report was in access to credit. Costa Rica rocketed to 7th in the world in the 2016 report compared to 90th in 2015. The World Bank report noted that a new secured transaction law broadens the kinds of assets that could be used as collateral, among other reforms.
Everyone’s favorite thing — paying taxes — got easier too, according to the report. Costa Rica implemented an electronic filing system for income and sales tax in 2014 but continued efforts to promote it for corporate income tax and general sales tax.
Access to electricity also saw improvement. The World Bank noted that a business can get electricity faster than in Sweden now that the wait has dropped from 55 days to 45.
That is not to say that Costa Rica doesn’t have room to improve. López said that some categories — like access to credit and electricity — are critical to a business and that improvements in those areas can buoy a country’s rankings. Despite strong showing in some areas, the actual category for starting a business fell five points to 121st in 2016 compared to 116th in 2015, more than any other category for Costa Rica on the Doing Business report.
“The report showed us that there were advances but also much work ahead,” said Ronald Jiménez, president of the Union of Private-Sector Chambers and Associations, in a statement. The business group listed infrastructure, red tape and utility rates among its top concerns.
López said that the next major hurdle for Costa Rica is actually an old one: the fiscal deficit. The World Bank economist said that if Costa Rica wants to keep enjoying the gains seen in the last several years in the survey, addressing the deficit will require fiscal reform. Costa Rica’s fiscal deficit is set to reach 6.9 percent of gross domestic product during the next budget cycle – 0.5 percent higher than in 2015. The country’s total debt is equivalent to 49 percent of the GDP.
Singapore retained its top spot in the rankings, followed by New Zealand (2), Denmark (3), South Korea (4), Hong Kong (5), United Kingdom (6), United States (7), Sweden (8), Norway (9) and Finland (10).
The Latin American and Caribbean countries with the worst scores were Bolivia (157), Haiti (182) and Venezuela (186).
Correction: This article originally reported Humberto López’s title as “Chief Economist for Central America.” He is Country Director for Central America.