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IFC, the private sector arm of the World Bank Group, and the Colombo Municipal Council have signed a memorandum of understanding to simplify business licensing processes in Colombo, Sri Lanka. This is part of an initiative led by IFC Advisory Services in the region – the South Asia Enterprise Development Facility – to make it easier for companies and small enterprises in the country to obtain licenses and permits for starting a business.

Gilles Galludec, IFC’s country manager for Sri Lanka and Maldives, who signed the agreement on behalf of IFC-SEDF, says, “IFC has a strong track record in working with governments and municipalities to simplify business regulations. We are happy to use our global expertise to help Colombo improve its business environment.”

He also notes that the partnership between IFC-SEDF and the council will create positive, long-term economic benefits within the municipality, and that the program will be replicated in other municipalities.

IFC-SEDF, under its Business Enabling Environment programme, will support the simplification of business licensing as a key way to help reform the investment climate in Sri Lanka.

According to the World Bank Group’s ‘Doing Business “indicators, obtaining licenses and permits to start a business in Colombo takes more than 160 days and involves 17 procedures. The Sri Lankan government recognizes the serious constraints this poses to the country’s business environment. The lengthy process undermines ongoing efforts to promote small and medium enterprises, private investment, and private sector development. The Colombo Municipal Council and new enterprises would benefit if business registration procedures are streamlined.

The council has been a strong driver of this project. It has shown a vision for creating an enabling environment in which businesses grow and prosper in Colombo. The simplification process will make a vital change in the way SMEs take part in the formal business sector. Simplification will make business processes more efficient, increase client satisfaction, and contribute to a more positive work environment for municipal employees.

“IFC will help us eliminate activities of little value, while adding value by making improvements in cost, time, and quality of services. An increase in business licensing and participation in the formal economy may result in an increase in the tax base, leading to more revenues for the municipality. In short, simplification of business regulations can benefit municipalities as well as the private sector,” explains NS Jayasundara, deputy municipal commissioner for the Colombo Municipal Council.

The project includes three phases. Phase 1 will involve needs assessment, diagnostics, and gathering of baseline data and legal and regulatory evaluation. Phase 2 will detail regulatory and process reform recommendations and provide the design for the final phase of the project.

Phase 3 will implement reforms in regulations and processes as well as carry out training, capacity building, and institutional and process changes.