The UAE ranks as the third most competitive economy in the region after Qatar and Saudi Arabia, according to the latest study by the Dubai Chamber of Commerce and Industry.

Globally, the UAE ranks 27th out of 142 countries, below Switzerland (in first place), the United States (fifth), Qatar (14th) and Saudi Arabia (17th), but higher than other regional peers, such as Oman (32nd), Kuwait (34th), Bahrain (37th) and Egypt (94th), according to the Global Competitiveness Report of the World Economic Forum, or WEF.

The World Bank’s “Doing Business” 2012 report said the UAE advanced two places to 33 out of 183 countries compared to the rankings of the previous year, while the country ranks fifth in the world for trading across borders, sixth for registering property and seventh for paying taxes.

The UAE was in first place globally in efficiency of governmental fiscal policy issued by the International Institute of Management Development in Switzerland.

A recent Global Innovation Index 2012 released by Insead, an international business school, said Qatar and the UAE were leading the Middle East in overall innovation performance.

Also, in the Global Enabling Trade Report 2012 released by the WEF, the UAE was ranked first regionally and 11th globally in terms of in terms of the availability and quality of transport infrastructure. With this ranking, the UAE outperforms countries such as the US, Finland and Belgium.

According to the Dubai Chamber, the UAE’s legal and regulatory environment is more than adequate based on the World Bank’s 2011 World Governance Indicators. The UAE scored reasonably well compared to other countries in the region for its rule of law.

The study states that though general legal standards across the region have intensely improved during the last few years, the UAE’s regulatory quality is improving and showing an advancing trend in recent years.

The Dubai Chamber’s study said that the UAE government’s effectiveness is high and the overall freedom to conduct business is well-protected under the existing regulatory environment as the country’s tax regime, which is a major attraction for foreign investors, strengthens foreign direct investment inflows, as both income and sales taxes are non-existent.

The study points out that the UAE has long been an attractive investment destination. However, there are a number of challenges that need to be addressed.

According to the World Bank’s Doing Business 2012 report, there are aspects of the business regulatory environment that needs immediate attention, including resolving insolvency (ranked 155), contract enforcement (134), protecting investors (122) and getting credit (78). The inadequacies of the bankruptcy legislation remain a major challenge for the UAE.

According to the same report, the time taken to resolve bankruptcy is around 5.1 years, well above the regional average of 3.4 years and the average Organisation for Economic Cooperation and Development, or OECD, member countries’ experience of 1.7 years.

The recovery rate (at 11¢ in the US dollar) is low in comparison with the regional average of 29.7¢ and 68.2¢ for the average OECD countries, the study concluded.