MANILA, Philippines (2nd UPDATE) – The Philippines leapfrogged 30 notches in the global survey that measures how much red tape private businesses encounter when dealing with government, successfully bucking the trend after many years of decline.
According to the 2014 Doing Business survey released by the International Finance Corporation (IFC) on Tuesday, October 29, the Philippines ranked 108th out of 189 economies covered.
This is better than the government’s goal set in May to improve the country’s rank by 29 notches to 109th.
The Philippines ranked 138th in the 2013 edition, two notches below the 2012 data and 4 notches down from the 134th rank in 2011.
This is the biggest improvement for the Philippines in the annual survey’s 12-year history. The country ranked 6th highest in the ASEAN, and brought the Philippines ahead of Indonesia, which was at 120th.
A better overall ranking for the Philippines is dependent on how the processes that businessmen are faced with when transacting with the government are streamlined and simplified.
Challenges persist, however. The Philippines remains in the bottom half of the global ranking. The Aquino government aims to be in the top 60 by 2016.
Among world’s most improved
The overall 30-step leap made the Philippines “globally…among the 10 economies that improved the most in making regulation easier for businesses over the past year,” noted the IFC, the private sector arm of the World Bank.
The other top gainers were Ukraine, Rwanda, the Russian Federation, Kosovo, Djibouti, Côte d’Ivoire, Burundi, former Yugoslav Republic of Macedonia and Guatemala.
Regulatory reforms that helped improve the Philippines’ ranking were evident in the following 3 criteria:
One, the introduction of a fully operational online filing and payment system that made tax compliance easier for companies.
The government has aimed to reduce the number of steps to pay taxes to 14 from the previous 47. The survey showed it still takes 36 steps.
Two, the simplified occupancy clearances that eased construction permitting:
The government wanted to cut the steps to obtaining construction permits to just 12 from 29. The survey results showed it currently takes 25.
Three, the new regulations guaranteeing borrowers’ right to access their data in the country’s largest credit bureau.
These were some of the areas the government has created specialized teams for to address each of the 10 indicators on the difficulty or ease of doing business in the country that IFC is tracking.
The teams’ priorities were on indicators that have to do with starting a business, getting credit, protecting investors and resolving insolvency.
Starting a business
The Aquino government was keen on improving the number of steps it takes to start a business.
The sector that suffers the most from these long and complicated process is the SME sector, Guillermo Luz, co-chairman of the National Competitiveness Council (NCC) which helped improved the country’s ranking, previously said.
“The key measure is to look at how easy it is for small to medium enterprises (SMEs) to get started. Big companies have their consultants who can help them do that work. SME’s cannot afford [the same] so they need to do it themselves. If we make it easier for them, we make it easier for all,” Luz has said.
The specialized teams’ goal was to halve the previous 36 days to 16.
This was not achieved. A businessman still needs to wait 35 days to secure 15 permits before they can commence operations.
This pulled down the country’s overall rank.
Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises evaluates regulations affecting domestic firms and ranks the economies in 10 areas of business regulation.
Below were the rest of the criteria where the Philippines has yet to improve or where steps taken have yet to show substantial results.
Easiest places to do business
Singapore and Hong Kong remained in the list of 10 economies with the most business- friendly regulations in this edition of the global survey. (READ: World Bank: Singapore, HK best for business)
The others in the top 10 were New Zealand, the United States, Denmark, Malaysia, South Korea, Georgia, Norway, and the United Kingdom. (LIST: World’s best and worst places for business)
The IFC noted case studies on South Korea’s electronic court system for enforcing contracts, Malaysia’s electronic system for paying taxes, and Singapore’s single-window system for trading across borders.
China, which ranked 91 in 2013 edition, fell 5 notches to 96th place and was leapfrogged by Russia (92nd).
Myanmar made its debut, ranking 182nd. “For the first time, this year’s Doing Business report measures regulations in Myanmar, a country that has started to open up to the global economy after years of isolation,” Augusto Lopez-Claros, Director for Global Indicators and Analysis in World Bank said in a statement. – Rappler.com
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