Better business processes needed

THE GOVERNMENT was advised yesterday to further simplify business registration and tax payment processes to arrest the decline in the country’s competitiveness ranking recorded at the end of the previous administration.

The Philippines’ standing at 148th out of 183 economies in the Doing Business Report of the World Bank and International Finance Corp. should serve as a baseline for new officials to work on, speakers at the scorecard’s launch said.

This comes as data collected until June 2010 for eight indicators put the country two places down from its previous ranking in terms of how fast and cheap it was to get permits and enforce contracts.

The ranking again put the Philippines at eighth among nine Southeast Asian countries in the report, with Laos at the bottom in the region. Singapore topped the global ranking.

The country’s lower standing this year was largely due to a steep decline in scores for the ease of getting construction permits reportedly made difficult by new policies for electricity connections.

It also did worse this year in terms of the ease of accessing credit while performance in four indicators — registering property, protecting investors, enforcing contracts and closing a business — stagnated.

These prevented improvements in two areas — starting a business and trading across borders — to be reflected in the Philippines’ overall ranking.

“One hundred fourty-eighth is definitely not top of the class. It’s a tad less than last year’s. For the current administration, it’s a baseline,” World Bank Country Director Bert Hofman said at the press briefing.

“I’m very encouraged to hear that [the new administration] is taking this seriously. It’s particularly important in the Philippines because if you make it difficult for business, it hurts the small and medium enterprises (SMEs) the most. These create a lot of jobs and lot of those jobs are for poor people,” Mr. Hofman said.

The government would do well to follow through with plans to cut down the 15 procedures for starting a business to five, Mr. Hofman said, referring to the targets the Interior and Local Government and the Trade departments committed to in August.

The Philippines was particularly cited in the report for having among the most numerous procedures for starting a business. It takes 15 steps to register a firm here versus just an average of eight in the Asia-Pacific region.

This was despite moves to “set up a one-stop shop at the municipal level,” which improved the Philippines’ standing in this area by six notches to 156th.

“And it takes a long time to get value-added tax refunds for exporters. You don’t get paid in cash but in an IOU. That’s a big burden for SMEs that don’t get a lot of credit,” Mr. Hofman added.

One of the report’s authors, meanwhile, advised that the country’s procedures for getting construction permits should be streamlined. “This is an area with numerous agencies often not streamlined. In the Philippines, it takes 26 procedures and 196 days,” Karim Belyachi, a co-author, said via teleconference.

Both the application and inspection procedures should be addressed, Mr. Belyachi added.

These should ensure that the Philippines improves its standing next year, Mr. Hofman said. “We hope the Philippines will rise in the rankings next year,” he said.

Trade Undersecretary Cristino L. Panlilio similarly told reporters at the sidelines that an improvement is expected.  –JESSICA ANNE D. HERMOSA, Senior Reporter, Businessworld