Manas Chakravarty: Why Iraq and Palau beat India

WATCHWORD

Do the FIIs really want to pour billions of dollars into a country that doesn't know how to do business? Or will they now sell frantically after reading the World Bank/International Finance Corporation's Doing Business in 2006 study, which ranks India a lowly 116 out of the 155 countries surveyed on the ease of doing business? We're not only behind every country in South Asia, but, amazingly, even Iraq, at number 114, beats us.

I'm sure the World Bank knows best, and if you look beyond the superficial matter of people being blown up by suicide bombers on a daily basis in Iraq, it is actually a better place for business than India.

Iraq beats India on three counts: dealing with licences, hiring and firing, and registering property, while India outranks Iraq when it comes to starting a business or getting credit. It's obvious that it's easier to fire a person in Iraq than in India""all an employer has to do in Iraq is aim that rocket-propelled grenade at his employee and fire.

Similarly, it's easy to guess why it's so difficult to start a business in Iraq""you have to bomb-proof your shop, buy insurance for your employees and pay protection money to the local Sunni, Shia, Kurdish and Al-Qaeda militias.

But it's a wonder how, apart from their core competence in suicide bombing, these people have so rapidly developed an expertise in licensing and registering property. Clearly, the US invasion has been a huge success.

Also, thanks to the methods mentioned above, Afghanistan ranks number 25 in the hiring and firing category, well above Iraq. That's undoubtedly an indication of the superior performance of the AK 47 over the rocket-propelled grenade when it comes to firing employees.

On the other hand, India is far above the Republic of Congo in the hiring and firing rankings, and that's because they need all hands for their booming business of massacring other tribes in the region, and business is so good that nobody wants to leave.

Afghanistan also ranks very high (no. 16) on the starting a business category, probably because I believe it's really easy to set up your own opium-processing plant at a logistically convenient place in that country in a matter of hours.

In contrast, Colombia is ranked no. 73 in that category, an indication that a cocaine factory is harder to set up than an opium business.

In South Asia, the best place to do business is Nepal, ranked 55. Obviously, the World Bank has inside information on how the Maoists love business.

Interestingly, at the top of the hire and fire list is a country called Palau, which I tried to locate on the map, with no success. The CIA Fact Book informs me that it's a chain of islands (population 20,000) somewhere in the Pacific off Micronesia, which is near Polynesia.

I believe the reason for its successful hire and fire policy lies in the fact that when an employee is fired from the coconut-selling business (which is the main industry), he promptly goes and sits under a nearby coconut tree and waits.

When the coconuts fall from the tree, he sets up his own business. And it's because of that waiting period between sitting under that tree and the coconut falling that Palau is ranked 39 and not 1 in the "starting a business" category.

Palau is also near the top of the list (no. 4) when it comes to registering property, because all you have to do is write your name on the coconut. But Saudi Arabia at number 3 beats it, because the penalty for not registering is death by stoning.

That's all I have time for""I have to catch the next flight to Palau, it's bound to be the hot new emerging market.