Doing business hardest in construction

DOING business remains tough in the Philippines and easier in its Asian neighbors Indonesia, Malaysia, Thailand and Vietnam, the latest report by World Bank (WB) subsidiary International Finance Corp.  (IFC) revealed.

The culprit is the construction sector, where the country’s ranking in terms of dealing with permits further dropped to 156 from 111 in 2009, and 105 in 2008, despite the fact that the number of days for processing permits was cut by nearly half from 203 days last year to 169 days.

However, the number of steps to get a permit increased by 2: from 24 last year to 26 this year. Likewise, the cost zoomed to 778.5 percent of income from 81.7 percent.

From the 133rd position in 2007, the Philippines’ overall ranking in doing business among 181 countries plunged to 140 in 2009 to 148 for 2011. The Philippines dropped two notches from its overall position for 2010 of 146.

Meanwhile, Vietnam zoomed 10 notches to 78 from 88 in the Doing Business 2010, the latest WB-IFC report.  

It is one of the 10 economies that improved the most in the ease of doing business after having enacted reforms in three areas: starting a business, dealing with construction permits and getting credit.

But the Philippines was also noted in the report when it “cut or simplified postregistration procedures [tax registration, social- security registration, licensing].”  This reform was also noted in Brazil, Cape Verde, Arab Republic of Egypt, Montenegro, Mozambique, Peru and Taiwan. “The Philippines introduced a one-stop shop for the municipal license and cut the inspection by the mayor’s office, reducing start-up time by 15 days.”

According to Karim Belayachi, coauthor of the “DB 2011: Making a Difference for Entrepreneurs,” streamlining of inspections in construction projects allowed Vietnam to leapfrog the Philippines.

Belayachi said the Philippine construction sector requires businesses to undergo 26 procedures with a delay of 169 days and costs more than 700 percent of income per capita, “Whereas in Vietnam, there are only 13 procedures and cost a 7th of that in the Philippines.”

Other Asian neighbors that have left the Philippines behind are Thailand (down to 19 from 11), Malaysia (up 21 from 23 in 2010), Indonesia (down to 121 from 115) and Taiwan (up to 33 from 34).

 Singapore and Hong Kong continued to occupy the first and second ranking, respectively, for two consecutive years.

 Still, WB country director for the Philippines Bert Hofman expressed optimism the country may rise next year “if the current government uses the results of this report as baseline and take these very seriously. . . .The Philippines slipped a tad less than last year. But reforms in simplifying business registration and trading across borders offer hope.”

He also banks on the promise of Trade Secretary Gregory Domingo of putting up more one-stop shops and reducing further to six the number of procedures in starting a business, currently at 15. –Dennis D. Estopace / Reporter, Businessmirror