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Stalled

/ 12:18 AM November 04, 2014

The Philippines appears to have stalled in its quest to improve its business environment. After being hailed as the most-improved economy in the 2014 World Bank survey on the ease of doing business, the country’s ranking slipped in 2015 (under a new methodology). The findings, reported in the World Bank’s flagship publication “Doing Business 2015: Going Beyond Efficiency,” indicate how hard it is still for businesses to operate in the Philippines compared with more developed countries.

The publication is the multilateral agency’s 12th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. It looked into rules and regulations affecting 11 areas in the life of a business. Ten of these areas were evaluated in determining the 2015 rankings on the ease of doing business.

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The 2015 survey covered 189 economies worldwide. It found that entrepreneurs in 123 economies saw improvements in their local regulatory framework last year. Between June 2013 and June 2014, it documented 230 business reforms—145 of these were aimed at reducing the complexity and cost of complying with business regulations, 85 at strengthening legal institutions.

Sadly, none of these were in the Philippines. The fact is, in the 2015 survey’s 10 criteria, the Philippines’ ranking slid in eight and posted no change in two.

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In starting a business, the Philippines fell seven notches down—from 154th in 2014 to 161st because the country required 16 procedures that needed 34 days to finish. In developed economies, starting a business required only 4.8 procedures that took only 9.2 days to complete.

In dealing with construction permits, the Philippines required 24 procedures that get completed in 94 days. Developed economies belonging to the Organization for Economic Cooperation and Development (OECD) had only 11.9 procedures but these take nearly 150 days to complete. In this category, the Philippines ranked 124th from 123rd, because in 2014 it took less than 94 days to process construction permits. In registering property, the Philippines mandated nine procedures that took 35 days to complete, while developed economies required only 4.7 procedures that could be done in 24 days. Our ranking here also slid down a notch—to 108th from 107th.

In the area of getting credit, the Philippines ranked 104th down from 99th. This index measured in part the number of individuals and firms listed by a private credit bureau with information on their borrowing history from the past five years. The Philippines’ credit bureau coverage was just 11.3 percent as against OECD’s 67 percent. In the field of protecting minority investors, the Philippines’ ranking plunged 11 notches, the biggest drop—from 143rd to 154th. In this category, the Philippines was found to be weak in disclosure, director liability and governance structure.

In “paying taxes,” the Philippines fell 127th from 121st. The total number of payments per year here was 36 as against 11.8 in OECD. This included the total number of taxes and contributions paid by businesses, the payments ranging from income taxes to vehicle taxes, to environment taxes to VAT; to taxes on insurance contracts, payroll taxes and community tax certificates.

One category where the Philippines’ ranking stood unchanged was in “enforcing contracts”—at 124th exactly where we were in 2014. The time to resolve a dispute, counted from the moment the plaintiff files the lawsuit in court until payments (including both the days when actions take place and the waiting periods in between) was 842 days in the Philippines as against 539.5 days in developed economies.

The only areas where the Philippines ranked high were in getting electricity (16th), trading across borders (65th) and resolving corporate insolvency (50th).

The Philippines had its worst ranking at 161st out of 185 countries in the 2013 edition of the World Bank survey, which showed that starting a business in the Philippines was one of the most complicated in the world. The following year, the Philippines climbed 30 notches to finish at 108th, making it the most-improved business regulation environment among the 189 economies covered. With the big leap then, the government proclaimed that the Philippines should be in the top 63, or higher, by 2015.

Now it seems we need a lot more reforms to truly improve the business regulatory environment in our country and keep the economy soaring at record highs.

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TAGS: business, Doing Business 2015, economy, Philippines, ranking, survey, world bank
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