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Thailand slides in global ranks
Poor scores for credit, starting a business

Published: 29/10/2015 at 03:25 AM

Newspaper section: Business

Thailand's global ranking for the ease of doing business has fallen three places to 49th mainly due to lower scores associated with starting a business and getting credit, according to the World Bank's latest report.

Asean neighbour Singapore has maintained its top position in the "Doing Business 2016: Measuring Quality and Efficiency" survey of 189 countries.

Thailand has zero coverage of its adult population in a public credit registry, while the National Credit Bureau's coverage is low, said Ulrich Zachau, the bank's Bangkok-based country director for Southeast Asia.

Financial institutions hesitate to provide credit to individuals or small companies because there is no formal credit registry run by the public sector, while decisions on obtaining bank loans are not transparent because of the absence of a credit registry, he said.

"If you have no effective credit registry and relatively low coverage of the credit bureau, that means it is more difficult for small and medium enterprises to get credit," said Mr Zachau.

"Also, the legal rights of people who apply for credit and get credit are low compared with other countries."

Thailand is ranked 97th in terms of getting credit, down from 89th last year. Its credit bureau coverage is recorded at 60.2% of the adult population.

Setting up a public credit registry from scratch and improving credit bureau coverage are areas that Thailand should address, said Mr Zachau.

He said it takes 27 and a half days to start a business in Thailand compared with the average of fewer than 20 days. The country is ranked 96th for starting a business, down from 75th last year.

Thailand's score for dealing with construction permits also declined to 39th from last year's sixth position.

Tax laws and implementation of tax filing and online taxation are some of the main factors influencing Thailand's score for paying taxes, said Mr Zachau. Its ranking fell to 70th, down from last year's 62nd position.

Getting electricity is the best area for Thailand this year, with businesses able to gain easy and relatively cheap access to utilities. The country is ranked 11th, up one place from last year.

"There are still things that can be done, but in particular the strength of minority investor protection is relatively strong," said Mr Zachau.

"Thailand is an attractive place to do business for Thai and foreign investors."

Charl Kengchon, Kasikorn Research Center's managing director, said the difficulty in obtaining bank loans was in accordance with the economic cycle because banks have become more cautious about providing loans.

If the World Bank views that current loan expansion is low, it should also accept that demand for lending is not high, he said.

Most economists tend to focus more on how to strengthen Thailand's competitiveness in the medium and long term rather than immediate concerns reflected through the World Bank's report, said Mr Charl.

Issues influencing Thailand's competitiveness include debates on joining the Trans-Pacific Partnership, infrastructure investment, improvement of skilled labour and solving the labour shortage, he said.

Thailand's 49th place gives it third position among its Asean peers, behind Singapore and Malaysia (18th). Only these three Asean countries are ranked among the world's top 50 performers for the ease of doing business.

Malaysia's strengths are in the areas of starting a business (14th), dealing with construction permits (15th), getting credit (28th), protecting minority investors (fourth) and paying taxes (31st).

For the 10th consecutive year, Singapore is ranked the best country in the world for doing business. New Zealand, Denmark, South Korea and Hong Kong were ranked from second to fifth respectively.

www.bangkokpost.com/business/news/747000/thailand-slides-in-global-ranks