Doing business difficult in Philippines, study says

THE Philippines, already at the bottom of the list, fell two places further to rank 136th out of 183 countries in the world in ease of doing business during the first year of the Aquino administration, the World Bank and the International Finance Corp. said in a joint report Thursday.

The report, Doing Business 2012: Doing Business in a More Transparent World, says the Philippines made modest gains—including its adoption of an insolvency law—but its overall ranking still fell from 134th place.

Singapore led overall in ease of doing business, followed by Hong Kong, New Zealand, the United States and Denmark.

Hans Shrader, International Finance Corp.’s senior operations officer in Manila, says the Philippines was outpaced by its neighbors in improving the overall climate for local entrepreneurs.

“The Philippines is slower than its neighbors in terms of reforms. We have not been as fast. Other countries have reformed faster,” Shrader said.

He says the measurement for the 2012 report took place in the new administration, “But it is just a representation of the efforts that have been made in the last two or three years.”

The new report covered data on regulations measured from June 2010 through May 2011.

Jesse Ang, the IFC’s resident representative in the Philippines, says the country needs further improvements in governance to kick-start reforms.

“The key to the Philippines is really governance, because it is the root cause of the problems that we have,” he said.

“While the Philippines has passed several laws and initiated programs to improve its regulatory environment, it is imperative that implementation has to happen more quickly and in full.

“In particular, improvements such as setting up the Credit Information Corporation and fully operating the Philippine Business Registry, have to be sped up to make a real difference for domestic entrepreneurs.”

Seven of the Philippines’ neighbors ranked in the top 25, with Singapore and Hong Kong topping the list at No. 1 and 2. Korea ranked eighth, Thailand 17th, Malaysia 18th, Japan 20th, and Taiwan 25th.

Also ranking ahead of the Philippines were Brunei (83rd), China (91st), Vietnam (98th) and Indonesia (129th).

The report analyzed the regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and resolving insolvency. This year, the rankings on ease of doing business have expanded to include indicators on getting electricity.

In the 2012 edition of the report, Quezon City instead of Manila represented the Philippines for being home to the largest population of businesses. A new methodology also resulted in the revision of the country’s ranking in 2011 from 148th to 134th.

Guillermo Luz, co-chairman of the National Competitiveness Council, says that despite the slip in the country’s ranking, they are looking at catapulting the Philippines to the Top 50 by 2015.

“The stretched target for us is that we want to be up above 50 by 2015. This means 10 to 20 jumps a year,” he said.

To do that, Luz says, there’s a need to simplify business processes such as reducing the number of steps and signatures needed to start a business.

“This is a multi-year effort on the part of the public and private sectors,” he said.

“This requires multiple reforms. We need to do it in a sustained fashion and quickly.”

The latest report shows that 14 of the 24 Asia-Pacific economies improved their business regulations in the past year.

Malaysia, in particular, rose five places to 18 by implementing regulatory reforms, including a new one-stop shop for start-ups, computerization of commercial courts, and improved insolvency proceedings. -Roderick T. dela Cruz, Manila Standard Today