Challenging still
ENTREPRENEURSHIP is a challenging vocation.
Every day the business environment is a volatile battlefield where wealth is created and destroyed; where new icons are minted and old ones brought low; and where new products and services are tested in an unforgiving marketplace.
Indeed, owning/running a business is difficult enough. It is even more challenging in the Philippine context—and it did not get any easier this year.
Thus declares the World Bank in its latest Ease of Doing Business report, which has become a globally recognized barometer of how accommodating countries are to the efforts of businessmen, especially entrepreneurs, in the small and medium enterprise (SME) sector. This year, the Philippines’ ranking slipped marginally from 97th spot to 103rd among 189 surveyed countries.
The report noted that a startup business person in the Philippines faces a total of 16 required procedures from government regulators, with the entire process taking an average of 29 days. In contrast, the report pointed out, our Asean neighbor, Singapore—which again topped the annual global ranking—requires only three steps for startups that take an average of two and a half days to complete.
But instead of vowing to take steps to improve the local environment, local policymakers met the results with howls of protest, citing the frequent changes in the World Bank survey’s methodology that saw the country slip by six places.
“It’s been difficult for us to make heads or tails of this diagnostic tool. It’s confusing the hell out of us,” complained National Competitive Council cochair Guillermo Luz as he questioned the reliability of the survey. “We have the numbers to show we’re improving, but it’s obviously not being picked up.”
Finance Secretary Cesar Purisima—the de facto head of the Aquino administration’s economic team—aired an even more stinging rebuke to the multilateral lending institution, saying in a statement that “erratic methodological changes year after year severely threatens the report’s credibility as a reliable global measure of competitiveness.”
Purisima also assailed World Bank bureaucrats “sitting in comfortable offices too far away to fully understand contexts and appreciate reforms being undertaken.”
Are the criticisms of the report justified, or are government leaders in denial about the difficulties that small entrepreneurs continue to face? After all, no disagreement was heard from them when these regular changes in methodology resulted in the Philippines showing improved rankings in previous years.
The World Bank has been transparent in the regular changes it makes in the methodology of its closely watched study. It includes explanatory notes stating that it continuously strives to improve the rankings by emphasizing new metrics that have become more relevant and removing those that no longer are. The goal is to come up every year with a tool that is more and more effective at pushing policymakers worldwide to make their national business environments friendlier for entrepreneurs who will, in turn, help boost economies by creating more jobs as their business ventures prosper.
But Philippine economic policymakers appear more concerned with being recognized for improvements implemented than being taken to task for aspects that continue to defy their efforts. Their reaction to being told that much work needs to be done is somehow reminiscent of the reaction of many Filipino politicians who lose at the polls: “They didn’t count the votes right! We wuz robbed!”
It’s fairly obvious that being an entrepreneur remains a difficult undertaking in the Philippines, whether one is a single proprietor or an owner of a midsized firm. SME owners continue to face official red tape as well as market challenges that prevent them from contributing to society through job generation at their fullest potential. Whether the Philippines’ ranking in the World Bank report dropped by six places or rose by six places, it will not change this reality on the ground.
Instead of complaining over a marginal decline in the rankings, economic policymakers can better serve their constituencies with introspection on how they can push growth by eliminating entrepreneurial roadblocks—and act on it. It will be good to shed the self-congratulatory pose and buckle down to work at defeating poverty through actual job creation.
