KATHMANDU, OCTOBER 25, 2016 – Nepal ranks at 107 on the World Bank’s Doing Business 2017 report compared to 99 last year. The main reasons behind the drop are a decline in Nepal’s business regulatory environment and data revisions.  Nonetheless, Nepal ranks second highest in South Asia after Bhutan (73) and ahead of Sri Lanka (110).

On the distance to frontier metric, Nepal’s score went down from 59.36 in Doing Business 2016 to 58.88 in Doing Business 2017, using a comparable methodology. This indicates a widening gap between Nepal’s regulatory environment and global best practices. More specifically, Doing Business finds Nepal made dealing with construction permits more difficult by increasing the cost of obtaining a building permit in 2015/16. However, on the positive side, Nepal also made exporting and importing easier by implementing ASYCUDA World, an electronic data interchange system.

According to a press release issued by the World Bank, Nepal has recently made progress in institutional reforms on several fronts that will take some time to be reflected in international rankings, including the Doing Business report.

“For example, the government has commissioned a Cloud Infrastructure, introduced Public Key Infrastructure for Digital Signature and is close to launching an online registration and approval system for Foreign Direct Investment,” said Takuya Kamata, the World Bank’s Country Manager for Nepal.  “Wider public uptake of these systems can help ensure that these positive developments are captured in future rankings,” he said.

Nepal’s drop in ranking was partially offset by changes in methodology. For the first time, the report includes a gender dimension in three sets of indicators: Starting a Business, Registering Property and Enforcing Contracts.  The Paying Taxes indicator set has been expanded to cover post-filing processes, such as tax audits and VAT refund.