Greece is the most complex country to do business in, according to a May 29 report by TMF Group, which also reveals that the pandemic and geopolitics are prompting firms to invest in countries with more complicated regulations.
Now in its 11th year, the professional services firm’s annual Global Business Complexity Index (GBCI) ranks 79 jurisdictions — which account for 93% of global GDP and 88% of net global FDI flows — based on the regulatory ease of setting up and operating in the country.
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After comparing 292 indicators, spanning incorporation timelines and how to open a bank account to tax processes and visa rules, the latest GBCI sees Greece move up one position to claim top stop following employment law changes and its government introducing on average one new business compliance requirement a week.
“Southern Europe and Latin America, which historically are politically quite connected, are fairly consistently the most complex places to do business,” Mark Weil, TMF Group’s chief executive officer, told fDi.
The two regions are home to nine of the 10 most complex countries in the 2024 index. In last year’s ranking, they collectively accounted for the entire top 10. “There is a significant regional pattern to business complexity suggesting entrenched attitudes to rules and regulation,” TMF Group stated in a note accompanying the 2024 GBCI’s release.
Last year’s index was topped by France, which drops to second place this year. Brazil, which was the most complex country in 2021 and 2022, now sits in seventh place.
Complex connector countries
One of the report’s key takeaways is the growing prevalence of so-called connector or bridge countries, which have growing economies and are attracting more FDI as firms shore up international value chains and operations to adapt to a fragmenting global economy.
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A combination of supply chain breakdowns during the pandemic, increased operating costs in historical outsourcing destinations, rising China-US tensions and tariffs, and conflicts leading to sanctions is prompting firms to mitigate these risks by adjusting their international footprints and investing in these intermediary jurisdictions that align with different trade blocs.
The trend is creating what Mr Weil calls “a double dose of complexity”. Not only do firms have more complicated international networks, but the five leading connector countries highlighted in the GBCI rank in the top third of most complex jurisdictions.
Among these five countries, which TMF group identified based on growing economic output and client demand, are Mexico (ranking fourth overall) which has benefited from US nearshoring, a surge in Chinese investment, and companies wanting to benefit from the US-Mexico-Canada Agreement.
Others include Indonesia (ranking 16th overall) and Vietnam (49th) which are benefitting from China+1 strategies. The latter’s appeal as a connector country grew further last year thanks to a new strategic partnership with the US which promotes trade and investment. Data from fDi Markets shows that announced FDI capex hit an all-time high in Indonesia last year, while Vietnam recorded its second highest number of FDI projects on record.
The final two connector countries are Morocco, which benefits from European nearshoring, and Poland (ranking 18th overall). The latter has “positioned itself as a link between Europe and the rest of the world”, states TMF’s report, highlighting its ability to win investment from both China and the US.
“More complex structures in more complex jurisdictions [is] the price of creating resilience against unpredictable political tensions,” the GBCI concludes.
At the bottom of the index are the Cayman Islands, Curacao, Denmark, Hong Kong, New Zealand, the Netherlands and the UK which, in order, are this year’s least complex countries. Meanwhile China rises to become the 11th most complex country while the US ranks 63rd.
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