The Bahamas has scored well in a recent World Bank comparative study on ease of doing business internationally, ranking in the top third of the world's economies. However, the report did reveal some areas where the government needs to work on streamlining bureaucratic processes in order to further improve the economic climate.
The World Bank's "Doing Business 2009" report ranks 181 world economies based on 10 indicators of business regulation, including the time and cost required to meet government requirements in starting and operating a business, trading across borders, paying taxes and closing a business.
Released in mid-September, the report showed the Bahamas coming in 55th overall and fourth out of 15 countries in the Caribbean region, ranked just behind Saint Lucia, Puerto Rico and Antigua and Barbuda, and before Jamaica. This year was the first that the Bahamas was covered in the World Bank study.
Sylvia Solf, the lead author of the report, said that countries in the Caribbean and Latin America were increasingly committed to reform agendas.
"The region's most popular area for regulatory reform continues to be facilitating trade, followed by changes that make it easier to start a business," she said in a statement accompanying the report's release.
Significantly, the Bahamas performed strongly in both of these categories, ranking 45th overall and fifth in the region for ease of procedures to start a business, and 51st overall and fourth regionally for cross border trade.
In the category of starting a business, the Bahamas rated highly in the number of procedures needed to launch an enterprise, requiring just seven steps compared to the regional average of 9.7, and with the whole process taking 31 days as opposed to the overall Caribbean figure of 64.5.
The Bahamas also outshone its neighbours in the category of trading across borders, requiring six documents to either import or export a standard cargo, compared to the regional average of 7.4 and 6.9, respectively.
Apart from the category of closing a business, where the Bahamas scored 29th overall, the country's best performance was in ease of paying taxes, where it ranked 39th internationally and best in the Caribbean. Across the region, the Bahamas was a clear winner in terms of the time it takes to carry out tax payment procedures, at just 58 hours - a mere 60 minutes longer than the world's top-ranked country, Luxembourg.
Additionally, the Bahamas scored highly overall for the number of annual required tax payments, the total being 17. However, its ranking was dragged down somewhat by the high level of taxation levied on profits, 47% being the fourth highest rate in the Caribbean region.
While the Bahamas debuted strongly in the report, the country did not make any major reforms in the 12 months covered by the study. Regionally, it was not alone in this regard, as there were eight other Caribbean countries that also did not enact any reforms - Belize, Dominica, Grenada, Guyana, St Kitts and Nevis, St Lucia, Suriname and Trinidad and Tobago. The Dominican Republic led the region in terms of making business easier, implementing four major reforms during the year ending June 30, though this still left it in 97th place in the overall rankings.
The report highlights some areas where the Bahamas needs to boost its performance to facilitate business activity. Most significant of these is the process of registering property, where the country ranked 143rd overall and ninth in the Caribbean region. The Bahamas was rated one of the most expensive countries in the region in terms of tax charges as a percentage of the total value of a property, registering 12.5% - a long way behind Caribbean leader Puerto Rico, which levies a 1.5% fee. Moreover, the Bahamas scored in the lower half of the region for procedures required to register a property. With eight separate procedures, the country required just one step less than tail-enders Belize, Grenada, Puerto Rico and Trinidad and Tobago.
In two of the report's other nine categories, the Bahamas ranked above 100, landing at 104th for protecting investor rights and interest and at 120th for enforcing contracts.
Taken as a whole, the Bahamas' position on the World Bank's ease of doing business ladder indicates a relatively free and open economy. That said, the Bahamas still has some problems to address if it wants to improve its score while maintaining its reputation as a regional business hub. With other Caribbean countries stepping up the pace of reforms, the Bahamas risks falling in the rankings if it does not act to further reduce red tape and make doing business easier.