- Annual index by TMF Group ranks 95 countries according to regulatory and compliance regimes
- Latin America is the most complex region for multinational companies to stay in compliance with corporate regulation and legislation, with five countries in the top 10, ahead of Asia with three
- Argentina named the most complex country to do business in from a regulatory and compliance perspective for the third year running
- Colombia, Mexico, Bolivia and Brazil join Argentina in the top 10
16 February 2016 – Latin America is the most complex region for multinational companies to stay in compliance with corporate regulation and legislation, according to TMF Group's Global Benchmark Complexity Index, as long-standing bureaucratic hurdles prove resistant to reform.
The far-reaching annual study by TMF Group, a global provider of high value business services to clients operating and investing internationally, has ranked 95 jurisdictions across Europe, the Middle East, Africa, Asia-Pacific and the Americas according to how complex they are to do business in from a regulatory and compliance perspective. View full report.
According to the index, five of the top 10 most complex countries hail from Latin America, with eight in the top 20. Argentina tops the ranking as the most complex country for the third year running, followed closely by Colombia (3rd), Mexico (6th), Bolivia (7th) and Brazil (10th).
Raimundo Diaz, Head of Americas at TMF Group, explains: "Whilst Latin America provides a wealth of opportunities for multinational enterprises, it is no surprise that the region has retained a strong presence in our complexity rankings this year, and will likely continue to do so for some time to come. There are shared characteristics which help explain these results including high levels of bureaucracy and limited investment in the necessary regulatory and compliance frameworks."
According to TMF experts, companies looking to invest and operate in Latin America can face significant amounts of red tape covering most business functions including health and safety, human resources and tax. This impact is multiplied by the need to adhere to laws which are often difficult to interpret and inconsistently applied.
"Ongoing political instability has also played a major role, as this has led to the significant delay of key pieces of legislation designed to simplify the business environment in some of these countries," added Mr. Diaz.
Argentina remains the world's most complex place to do business, according to TMF's rankings, though the recent election of President Mauricio Macri has fueled a renewed sense of optimism that badly-needed regulatory reforms are on the way. In the meantime, high levels of bureaucracy and a complicated legal and regulatory environment continue to pose challenges to those operating in Latin America's third largest economy.
"Despite the challenges, country-specific results within Latin America do vary widely. Whilst Argentina grabs the headline as the most complex, other countries have fared much better in our rankings, notably Uruguay, Ecuador and Chile. Chile, ranked 37th in our index, has one of the most pro-business governments in the region and has taken great strides in safeguarding an attractive political and business environment for multinationals," added Mr. Diaz.
Meanwhile, Brazil and Mexico, Latin America's two largest economies, continue to struggle with a highly complex business environment. Brazil, which improved from 2nd to 10th place in the rankings, has made progress towards prosecuting corruption and levelling the corporate playing field, though many long-standing bureaucratic hurdles and procedural bottlenecks remain. Mexico, which stays steady in 6th place, is currently implementing a series of broad economic reforms aimed at bolstering investment, though few improvements have been seen in the nation's difficult-to-navigate regulatory processes.
Colombia, which recently implemented a sweeping tax reform, moved from 21st to 3rd place in TMF's Complexity Index. New regulations add to procedural complexity while reducing certain investment incentives for new businesses.
At the other end of the spectrum, Ireland (95th) has been ranked as the least complex place to do business in from a regulatory and compliance perspective, largely to its common law framework, stable political environment, strong legal framework and pro-business attitude.
In terms of trending compliance topics over the course of 2015, whistleblowing tops the list and programs are increasingly being implemented by multinationals as they seek to raise their global corporate governance standards, identify weaknesses across their operations and address them effectively in order to protect shareholder value. Bribery and FCPA compliance have also risen in priority, replacing cyber security, as there is increased focus on managing business and reputational risk.
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