Ease of doing business

In the Doing Business 2015 report for the Philippines released by the World Bank Group released late last year, the country ranked 95th in terms of ease of doing business. Malaysia was 18th on the list, Thailand 26th, Vietnam 78th, Indonesia 114th, and Lao PDR 148th.

Meanwhile, in terms of ease of starting a business, we are worse at 161st (out of 189 countries being ranked). We are at the bottom of the pit in the region, with Malaysia 13, Thailand ranking 25, Vietnam 125, Lao 154, and Indonesia 155.

The Philippines also ranked as follows in various categories: dealing with construction permits (124), resolving insolvency (50), enforcing contracts (124), getting electricity (16), registering property (108), getting credit (104), protecting minority investors (154), and paying taxes (127).

In the Doing Business 2015 survey, the Philippines fared better, with a rank of 154 in terms of starting a business. The number of procedures remained at 16 but the number of days it takes slightly went down from 36 to 34.

When it comes to dealing with construction permits and registering property, our country went down a notch, from 123 to 124 in rank, and from 107 to 108, respectively. In the area of securing credit, our rank worsened, dropping us from 99 to 104. Same with protection to minority investors, where our rank saw a decline from 143 to 154. Even in terms of paying tax, we were worse as a country, with our rank sliding from 121 to 127.

Another interesting thing to note is that our cost to import and to export per container has increased significantly. Cost to import went up from $660 per container to $915 per container while cost to export also increased from $585 to $755.

But one bright note in the World Bank report is that it is easy to get electricity in the Philippines. Our country ranked 16th, as against Malaysia’s 27th, Indonesia’s 78th, Lao’s 128th, and Vietnam’s 135. Only Thailand was better than us at 12th place. According to the report, it takes around 49 calendar days to obtain an electricity connection with Meralco.

On the ease of registering property, Thailand was better at 28th spot, Vietnam 33rd, Malaysia 75th, Lao 77th, and us, 108th. Indonesia was 117 in the ranking.

So what is the administrative burden of complying with taxes in the Philippines? According to the WB report, on the average, firms make 36 payments per year, spend 193 hours a year filing, preparing and paying taxes amounting to 42.5 percent of profit.

In the area of ease of enforcing contracts, the Philippines is also close to the bottom with a rank of 124. Thailand ranked 25th, Malaysia 29th, Vietnam 47th, Lao 99th, and Indonesia 172nd.

The total time it takes to file an action for enforcement of contract up to enforcement of judgment is 842 days, compared to an East Asia and Pacific regional average of 554. Trial and judgment alone takes 580 days or roughly two years.

It is not surprising that Singapore retained its number one spot overall in the Doing Business report. In terms of starting a business, it still ranked 6th. Everything in Singapore is conducive to doing business. Even their tax rates are very attractive.

A number of our local government agencies have announced various programs to improve the ease of doing business and we are looking forward to how this would impact on the upcoming World Bank survey results.

Just recently, it was announced that the Securities and Exchange Commission (SEC)’s Integrated Business Registry System has made business registration easier and faster.

For the period April 15-30, 2015, the SEC was able to process and approve the registration of 84.22 percent of corporations within one business day (24 hours or less), while applications not needing secondary licenses have a success rate of 96.87 percent from. Incorporation at the SEC now includes registration with the social agencies (Pag-IBIG, PhilHealth, and the SSS) within a single step.

The number of steps and days to start a business has been reduced from 16 and 34 to 6 and 8, respectively.

It was reported that Shinhan Bank, a Korean bank, filed its application for a Manila Branch Office last May 6, 2015, and subsequently had its certificate of registration and URR approved, released, and claimed within one business day, on May 7. Shinhan Bank is one of the foreign banks allowed entry into the country following the further liberalization of entry of foreign banks in the country.

The SEC previously had a Green Lane Unit in late 2014 where most applications were approved within 1 business day. The IBRS ensures the single business day incorporation to include registration with the social agencies (Pag-IBIG, PhilHealth, and the SSS).

Online business attracting SMEs

E-commerce is slowly changing the landscape of the country’s small and medium enterprises, especially in the delivery private and public transport sector. One particular area is how these firms can quickly gather or replace their fleet of vehicles by the help of online shopping made easier by online vehicle ads platforms such as Carmudi Philippines, one of the country’s leading dedicated car buying and selling websites today.

Miggy Gozun, co-owner of Gozun Cars, a dealer of used vehicles based in Pampanga, said that online car classifieds have helped them increase their sales in just a short period of time and that they have seen a tremendous increase in their sales leads after putting their ads in a vertical car selling and buying site as compared to using different offline platform.

Many dealers who have posted in Carmudi and other online car buying and selling site have also received tremendous leads over the past few months. In the recent report from Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) and the Truck Manufacturers Association (TMA), last year vehicle car sales in the Philippines have grown by 30 percent with 234,747 units sold. While it is hard to track how online car ads have contributed to this record performance, it is safe to assume that the Internet has provided a platform where vehicle sellers and buyers meet.

Subir Lohani, managing director of Carmudi Philippines, explains that their website and apps have shortened the car buying process for many of their site visitors, as these allow one to easily narrow their search, compose their shortlist, and even negotiate when they use Carmudi’s platform.

Lohani explained that what actually takes weeks of rigorous surveying for a brand new or used vehicle- be it cars, motorcycles or commercial vehicles can now be done in as little as a few hours.

He also adds that on the side of the dealer, their website can help them clear their inventory fast without compromising their ROIs.

Today, there are several growing industries that require the service of vehicles. This includes the infrastructure sector, SMEs and public transport. –Mary Ann Ll. Reyes (The Philippine Star)

For comments, e-mail at maryannreyesphilstar@gmail.com