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Korea Takes 5th Place at Doing Business 2015
Business Environment
Korea Takes 5th Place at Doing Business 2015
  • By matthew
  • December 9, 2014, 03:51
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Korea ranked fifth out of 189 countries in Doing Business 2015's Ease of doing business ranking, released by the World Bank in October, following Singapore, New Zealand, Hong Kong, and Denmark. Korea was not found on the top 10 list in the assessment until 2010, but rose to the seventh spot last year.

The assessments in the Doing Business 2015 report are made by combining the qualitative assessment of 10 different categories, from business startups to liquidity. Both the related legal framework and surveys of businessmen in each country are both taken into consideration when running a Case Scenario that is commonly assigned to every country.

Korea jumped up in rank in five categories from a year earlier. The country stayed the same rank in two others, and dropped in three such as Registering Property and Getting Credit.

Specifically, the country moved up in the five topics of Starting a Business (from 34th to 17th), Dealing with Construction Permits (18th to 12th), Getting Electricity (2nd to 1st), Protecting Minority Investors (52nd to 21st), and Resolving Insolvency (15th to 5th). It remained in the same place in Paying Taxes (25th) and Trading Across Borders (3rd), while dropping in Registering Property (75th to 79th), Getting Credit (13th to 36th), and Enforcing Contracts (2nd to 4th).

Korea’s ranking went up from sixth to second and then to first among G20 countries in 2010, 2013, and 2014. During the same period, its ranking among OECD member countries changed from 12th to fourth and then to third.

In Starting a Business, the country reached a new high this year. This can be attributed to the Small and Medium Business Administration’s efforts to help business founders. The agency unveiled an advanced online incorporation system in February 2010. The number of businesses starting online is on the rise these days. It remained at 1,005 in 2010 but increased to 1,673 and 2,403 in the following years and amounted to 3,021 last year. Their ratio to the total went up from 1.67 percent to 4 percent between 2010 and 2013, too.

A Small and Medium Business Administration representative pointed out, “We have made efforts to enhance the convenience for users of the online system, while connecting the system to the related government departments to solve the problems that needed visits to the related government department.”

In Trading Across Borders, Korea topped the list for six consecutive years in a group of 71 large-population countries with at least 13 million people, and was second only to Singapore and Hong Kong in overall rankings including city states and smaller countries. “Korea’s customs administration has been improved over and over, and its trade conditions are well-received by many around the world nowadays,” the Korea Customs Service explained. The World Bank is planning to promote its UNI-PASS e-customs system and Single Window one-stop customs clearance procedure as best practice cases next year.

Complementing its ease of trading across borders is Korea's quickly-growing network of Free Trade Agreements (FTAs). As of this year, Korea has FTAs with 36 percent of the world's population and access to 62 percent of the global GDP. These agreements also include both the European Union and the United States, making Korea the only Asian nation to have free access to both markets simultaneously.

In Getting Electricity, Korea outperformed Iceland to hold the top spot. It ranked first in the number of procedures (three steps) and length of time (18 days) taken until power supply though placed at 20th when it comes to the cost (41.1 percent of income per capita). While not the absolute cheapest in the world, electricity costs only US$82 per megawatt hour, while the OECD average is US$122/MWh. It is much higher in Japan, at US$194/MWh, but lower in the US at US$67/MWh. Other utilities are quite afforable as well. Water, for instance, is only US$0.58/m3. In the US, water is US$1.30/m3, while in Germany it is US$2.91/m3, according to Global Water Intelligence.