Doing business in the Philippines

For the World Bank to say that doing business in the Philippines is about the same level of difficulty as doing business in Cambodia is an indictment. Of course it depends how you measure it and the World Bank has, as is to be expected, taken an intelligent view on its assessment method. I would however disagree with some of the World Bank’s assessments, particularly in the area of obtaining permits and approvals—here I suspect that the Philippines is significantly worse than its neighbors as well as more difficult than the World Bank survey shows.

What can be appreciated from a review of the Doing Business Report is that there are more procedures to go through in both Chad and Equatorial Guinea than there are in the Philippines—well some would say “well done the Philippines !”. But it’s an appalling performance for a country like the Philippines which has so much more capacity, so much more to offer than places like Chad and Equatorial Guinea. India was not so long ago noted as an astonishingly mindlessly bureaucratic place, but its now ahead of the Philippines in the rankings. Why oh why oh why must the Philippines continue to shoot itself in the foot. Philippine banks have good liquidity, but they put the money in Treasury bills—that doesn’t do much for the economy or the creation of jobs.

I frankly don’t understand why it needs to be so difficult to do business in the Philippines, but it undoubtedly is. It could be that there is just not enough work to go around. A population of 92 million does require lots of opportunities for productive employment, mechanization albeit the fashion in the advanced economies is not something that the Philippines needs. This country needs more real jobs. The way things are there seem to be more people checking what contributors to the economy are doing than there are actually contributing. Which may be why there are more procedures here than there are in Chad ??

There is something of an identity crisis about the Philippines. It is a less developed South East Asian nation, ranked inappropriately as a lower middle-income economy where many of the decision makers have been educated in the United States, with a consumer infrastructure with many similarities to the USA, and lots of mindsets that act as if the place is California. Well it’s not California, the Philippines is what it is— a place with stultifyingly tedious business processes and procedures, lots of nice people many of whom are skilled and well educated (and capable of lots more than they have the opportunity to do here at home), not enough proper jobs, an inadequate infrastructure, a reputation for corruption, lots of nice beaches which are difficult to get to, and where English is widely spoken. Let’s also not forget that it was once Asia’s economic tiger (back in the “bad old” days).

The Philippines can do much better if only there were investment in things that create real jobs appropriate to a place like the Philippines —mobilize the masses. The statistics show that there is more entrepreneurial activity in the Philippines than there is in say Malaysia, but the entrepreneurial activity cited is not creating useful jobs here it is reflective of desperation, there are not enough jobs so what other choice is there other than to try vending at the traffic lights or in the street.

The economy is underinvested, no doubt in part because it is such a challenge to invest because there are so many people who are just spinning wheels checking, checking and checking again what it is the investors’ plan to do. Get the money out of the T-bills, create more economy developing type jobs and there will be less people available to be gatekeepers. Worth a try perhaps . . . –Mike Wootton, Manila Times

Mike can be contacted at mawootton@gmail.com.