Opposition Uses Report to Call for Reform of Bureaucracy

September 22, 2006

Costa Rica’s slipping ranking in a World Bank report on regulatory costs of doing business prompted opposition leader Otto Guevara to point a finger at the Arias administration this week for allowing complex bureaucratic processes to stifle business.

Guevara, the Libertarian Movement party leader, was referring to the World Bank “Doing Business 2007” report, which was released Sept. 6. The report ranks 175 countries for the regulatory costs they present to businesses. The report ranked Costa Rica as 105th, a slip from its 2005 ranking as 99th. Costa Rica is trailing behind other Central American countries such as Nicaragua, El Salvador and Panama.

The study reports that in the past year, Costa Rica put up more regulatory barriers to starting a business.

“Entrepreneurs can expect to go through 11 steps to launch a business over 77 days on average, at a cost equal to 23.5% of gross national income per capita,” the report said.

Costa Rica also placed below the Latin America average when it came to procedures to obtain a license or permit, and difficulty of hiring workers.

Though Costa Rica ranked as high as 33rd for obtaining credit, and made significant improvements in enforcing contracts, it ranked as low as 160th for paying taxes and 156th for protecting investors.

“The study shows that Costa Rica, in the last year, did no reforms to improve the business sector, rather it increased the regulations in various institutions that make free trade more expensive and that discourage investment,” Guevara said in a statement.

 

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