The business environment is one of the most important variables in a strong economic situation. It is imperative for a place to be primed for the rise of enterprises. This means the locations need to be safe and must have the infrastructure in place to make a business grow.
Creating a positive business environment is the long-term goal of developing countries because it is the chief draw for foreign investors. The moment they feel that a location is safe, they automatically recognize the various potentials for success. Likewise, a strong business environment encourages entrepreneurial pursuits which allow for new business models and opportunities to thrive, as well as provide people with more employment options to choose from.
The Asia Pacific Region Is Cultivating the Right Business Environment
The Legatum Institute, a global think tank and educational charity based in London, lauds the Asia Pacific Region for rising as a leader in business environment.The 2018 Legatum Prosperity Index shows that this region is the runaway winner in the game, edging out Africa, which comes at a close second by a whole point in the chart.
For anybody who has visited countries in the Asia Pacific, this is no surprise as small businesses can be found anywhere and they thrive despite the thick concentration of similar operations in their respective locations.
What’s more, it is not just the small businesses that continue to grow; chain stores steadily proliferate as well. In Japan, nobody can get enough of the different convenience stores that can be found there. In fact, it is not uncommon to see multiple convenience stores from the same chain in the same block. This is called the dominant strategy, which strengthens the brand by preventing rivals from easily moving into the area.
All of these are possible because nations in the region have studied the wide range of factors that drive a positive business environment.
What are these factors?
The Drivers of a Flourishing Business Environment
1. Improved processes in procuring business requirements
Programs that make it easy for entrepreneurs to apply for licenses and other business essentials have certainly been encouraging. Not only that, cheaper fees, and in some cases, free-of-charge services are contributors as well.
2. High-quality logistics services
Asian countries, particularly Taiwan, Singapore, Japan, and South Korea, support the growing number of home-based and family-owned operations through reliable and affordable shipping or delivery services.
With top-notch logistical assistance, obtaining quality products straight from the sources and delivering goods to customers are a breeze to accomplish. Likewise, these create smart marketing opportunities for businesses to boost sales and lock in customer engagement.
3. Nationwide electricity
Very few locations in the region are without electricity. On the other hand, remote places that electrical companies do not reach are typically provided with systems that will allow them to take advantage of solar or geothermal energy so households can power basic appliances and operate home-based businesses, such as a neighborhood convenience store or a food stand.
4. Investor protection
The implementation of laws protecting intellectual property is strict in many parts around Asia. India, for example, climbed up the Legatum Prosperity Index for Business Environment due to the improvement in intellectual property rights.
5. Labor market flexibility
SMEs and multinational corporations in the region are focusing more on training workers instead of having stringent requirements for employment.
For example, in the Philippines, the large and ever-growing IT-BPO industry hires according to written and interview examinations and not merely by educational attainment and previous work experience. Training is provided to all who pass the examination afterwards. This effectively addresses the issue of brain drain for the industry because it accepts anyone who can perform the work and bears the responsibility of making people fit for their job.
6. Better education
Improvements to the quality and accessibility of education have been made in the developing nations of the Asia Pacific. These have created a larger and deeper pool of skilful and hardworking people to fill positions in new international companies brought to the region.
7. Internet infrastructure
The availability and affordability of Internet connections boost entrepreneurial pursuits. Many countries in Asia have really speedy Internet service.
Thanks to this, it is no issue for a stay-at-home mom to sell her handmade products in the digital market and reach customers from the opposite side of the globe.
It is also possible to operate a company without having a physical office. Employees can work at home and submit their output online. This reduces the cost of operations without affecting productivity.
Identifying these drivers correctly and making them work is the reason for the success of most Asia Pacific nations in cultivating a positive business environment.
Hopefully, the “fallers” identified in the index, as well as those taking a while to recover from political and military unrest, will take a cue and soon develop a climate where locals and foreign investors together can start and develop successful businesses.