Border red tape slows economy

Doing business in Samoa is becoming harder, a study has found, as the country’s economy the high cost of complying with regulations and red tape at the border holds back its international trade. 

The World Bank’s Doing Business: 2020 Report (an annual comparison of global economies first launched in 2002) ranks Samoa the 98th best country in the world for doing business out of 190 states surveyed.

For the 2019 edition of the report, Samoa ranked 90th. It scored most poorly on the cost of complying with customs and port requirements for importing and exporting goods, for which it ranked 158th out of 190 countries surveyed and significantly lower than its Pacific neighbours. 

While the time it took to comply with regulations to export goods out of Samoa by obtaining and having documents processed was comparable to or lower than the regional average, the costs of complying with border processing regulation fees were significantly higher, the Bank found. 

Fees associated with exporting goods in ways that comply with border regulations at a port in Samoa, the Bank found, came at an average of US$1400: that compared to a regional average of just over US$380 and US$135 in high-income O.E.C.D. economies. 

The costs of importing goods was similarly significantly higher in Samoa. The cost of complying with regulations such as customs inspections and other border clearance fees was listed at $US900

The regional average was half that cost at US$422; in high-income countries the cost was less than $100. 

The cost of complying with importation documentary requirements was also significantly higher at $230 compared to $108 for the region and US$23 for high-income countries. 

Overall, on trade and its costs alone, Samoa was ranked the world’s 154th worst country for trading costs. 

While its island geography is often invoked when the Government discusses the economic challenges of the future, the Bank found trade out of Samoa significantly harder than several Pacific neighbours which earned higher rankings such as the Marshall Islands (76), Papua New Guinea (125) and Palau (139). 

The analysis comes as Samoa tries to continue growth in its export sectors. 

During the last five years the exports of Samoa have increased at an annualized rate of 2.9%, from $60.1M in 2012 to $65.5M in 2017.

In June this year an A.N.Z. economist predicted Samoa would soon return to economic growth about two per cent after this year, following the completion of infrastructure projects. 

But the Bank outlined other barriers to economic growth.

Resolving insolvency, an indicator on which Samoa was ranked 140th, was another area in which Samoa’s economy compared unfavourably. 

Minority investors in companies that went insolvent claimed back an average of just 18.5 cents on the dollar compared to a regional average of 35.5 cents. 

However, Samoa did score highly for the ease of starting a business. 

On average the total number of days for entrepreneurs to register a new company was listed at nine days, compared to 25 days for the region and a comparable number to high-income countries. 

The ease for individuals to obtain and access credit and for corporations to reliably access consumer credit data was also assessed poorly. 

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