PH drops in ‘doing business’ ratings

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The Philippines is now the most difficult place to do business in the ASEAN region, largely due to the lag in the implementation of regulatory reforms

MANILA, Philippines (UPDATED) – The Philippines is now the most difficult place to do business in the ASEAN region, largely due to the lag in the implementation of regulatory reforms that local entrepreneurs need to do business better.

In the 2013 Doing Business survey that the International Finance Corporation’s (IFC) released on Tuesday, October 23, the Philippines’ ranking dropped to 138th out of 185 countries. This was two notches below the 2012 data and 4 notches down from the 134th rank in 2011. IFC is the private sector arm of the World Bank.

Below was how the Philippines fared in the 10 indicators that guage the ease of doing business in a country:

The country lagged behind all its ASEAN neighbors. Singapore topped the survey; Malaysia was ranked 12th; Thailand, 18th; Brunei Darussalam, 79th; Vietnam, 99th; Indonesia, 128th; and Cambodia, 133rd.

Regulatory framework pertains to policies or guidelines for getting credit, protecting investors, enforcing contracts and insolvency.

“The Philippines continues to improve its macroeconomic environment, but the implementation of necessary reforms to reduce the complexity and cost of doing business continues to lag, and needs higher prioritization to help assure more inclusive growth,” IFC Resident Representative Jesse Ang said in a statement.

“Areas for improvement include the implementation of the Philippines Business Registry, and strengthening of legal institutions, like the operation of the Credit Information Corporation,” he added.

IFC said completing business transaction in the Philippines requires “complex steps” that need to be undertaken over a number of days.

However, the World Bank unit said reforms have been implemented in select cities like Quezon City which instituted a Business One-Stop-Shop. The reform made processes simpler, faster and cheaper causing a 32% hike in new business registrations.

“We recognize the shortcomings we have in our business processes and are committed to improving these processes,” Guillermo Luz, co-chairman of the National Competitiveness Council said.

“We have designed a game plan to improve our ranking which has received the approval of the Economic Cluster. Our target of moving up to the top third in global rankings by end-2016, remains in place,” Luz said.

Economic zones

John Forbes of the American Chamber of Commerce’ (Amcham), cautioned that the survey did not take into consideration the opinions of firms, particularly those located in economic zones. 

Forbes, speaking to Rappler on the sidelines of the Punongbayan & Araullo CEO Business Forum on Tuesday, said firms located at the Philippine Economic Zone Authority (PEZA) facilities are very satisfied.

“It simply means we have to work harder, move twice as fast,” Forbes explained. He added that foreign investors doing business in PEZA face less of the challenges.

“The Doing Business Survey does not measure what most foreign investors are involved in. As you may know there are almost 300 export zones in the country for both manufacturing and IT, and they are not even included in the survey,” he added.

“I think PEZA and myself have pointed this out over the years but the survey is so broad around the world that I don’t think it’s going to change. I think people looking at the survey should be aware that companies have come and are still coming to the PEZA zones and are very, very satisfied with doing business,” he said.

Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises assessed regulations affecting domestic firms in 185 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders.

This year’s report data cover regulations measured from June 2011 through May 2012. The report marks the 10th edition of the Doing Business series. Over the past decade, these reports have recorded nearly 2,000 regulatory reforms implemented by 180 economies. –

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