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The World Bank Group headquarters buildings in Washington, D.C. (Photo: AgnosticPreachersKid via Wikimedia Commons)

Philippines lags in Asian pace of reforms —WB poll

The Philippines slipped to 113th place out of 190 economies in the Doing Business Report 2018 of the World Bank from 99th place a year ago.

The latest WB report placed the country among those in the region which has the worst business climate as reforms instituted are not seen as moving fast enough.

The report showed that while the Philippines’ score improved marginally to 58.74 this year from 58.32 in the previous year, the country’s rank dropped by 14 places, reflecting that other economies had made larger improvements than the Philippines.

It was also noted that the impact of improvements introduced by the Duterte administration in the second half of 2016 may not have been fully experienced yet by the businessmen surveyed during the first five months of 2017, according to the Department of Trad and Industry (DTI).

Among the 10 Association of Southeast Asian Nations (Asean) members in the list, the Philippines’ ranking is only better than Cambodia at 135th, Lao PDR at 141st, and Myanmar at 171st.

Rankings of six other Asean countries are far better than the Philippines; Singapore at 2nd; Malaysia at 24th; Thailand at 26th; Brunei Darussalam at 56th; Vietnam at 68th; and Indonesia at 72nd.

In the report, the country’s distance to frontier (DTF) or its gap from the best performing economy increased by 0.42 percentage points to 58.74 from 58.32 in the previous year.

The WB report measures the ease of doing business in an economy using 11 indicator sets that matter for entrepreneurship including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and labor market regulation.

The report noted that the Philippines improve in terms of doing business in indicators such as getting electricity and paying taxes.

“The Philippines reduced the time to get an electricity connection by implementing a new asset management system and by creating a new scheduling and planning office,” the report read.

“The Philippines made paying taxes easier by introducing a new electronic system for payment and collection of housing development fund contributions,” the report said.

The country also improved its DTF on indicators such as starting a business, up by 0.02 percentage points; dealing with construction permits, up by 0.19 percentage points; and registering property, up by 0.01 percentage points.

Four indicators have stable DTF this year from the last report, which include getting credit, protecting minority investors, trading across borders, and enforcing contracts.

DTF on resolving insolvency indicator declined by 0.02 percentage points from last year.

The DTI said in a statement that the Duterte administration is reaffirming its commitment to accelerate the several reforms being undertaken to improve the ease of doing business.

The Philippines improved its ranking in one indicator, paying taxes (105th), but lagged in nine other indicators.

The Philippines’ ranking in the paying taxes indicator improved as a result of the Home Development Mutual Fund (Pag-IBIG) and Philippine Health Insurance Corporation (PhilHealth) setting up online electronic payments systems; however, the Bureau of Internal Revenue (BIR) still needs to make electronic payments available on a larger scale.

Reforms in some areas are not yet felt by business concerns, suggesting the need to improve the implementation of improvements in the system.

The World Bank recognized the reforms made in the getting electricity indicator. Although the ranking dropped, the Philippines’ score improved as a result of the establishment of an online scheduling and planning system between the electric utility company, Meralco, and Quezon City so that new connections could be made in a shorter span or an average of five days less per application.

In the last several years, Quezon City, by virtue of it being the largest city in the Philippines in terms of the number of registered business, has been selected as the city to be surveyed. The survey was conducted in January to May 2017. The findings are a result of a survey of roughly 150 consultants, lawyers, and businessmen.

There is also the need to pass new legislation and amendments to existing legislation covering a number of important indicators. In order to improve the country’s ranking, the government will undertake the following projects:

Amend the Corporation Code to allow for single person corporations and eliminate minimum capital requirements (although these capital requirements can be retained in other laws). The bill is now being deliberated in Congress;

The Securities and Exchange Commission (SEC) will shorten the incorporation process significantly and automate it to improve the Philippines’ performance in the “Starting a Business” indicator;

Pass the new Expanded Anti-Red Tape Act (SB 1311, HB 6579) in order to legislate time periods for the issuance of government permits and licenses. The publication of pre-requisite documents for licenses and permits would also become mandatory. The new Expanded Anti-Red Tape Act is expected to be passed soon by Congress;

The Philippine Business Registry, an online system for entrepreneurs to register corporations and single proprietorships and apply for licenses, will be operational this year. This will link the SEC and the Department of Trade and Industry (DTI) with the Bureau of Internal Revenue (BIR), Social Security System (SSS), PhilHealth, Pag-IBIG, and 1,634 local government units (cities and municipalities) nationwide. It will help streamline frontline government services by doing away with the repetitious process of having to fill up numerous forms and submitting the same official papers to different agencies;

The Philippine Business Data Bank, a database of all business enterprises being developed in a partnership between DTI, SEC, Department of Finance (DOF), Department of Interior and Local Government (DILG), Cooperative Development Authority (CDA), and Department of Information and Communications Technology (DICT), will enable government to verify the identity and licenses of corporations and single proprietorships bidding for government projects, supplies and services. This will speed up procurement processes. The general public will have access to the Philippine Business Data Bank. The creation of the Philippine Business Data Bank is a provision of RA 10644, the Go Negosyo Act;

Credit Information Corporation will set up an automated credit information system in accordance with RA 9510. This law requires financial institutions to submit credit information to the CIC, which will make the data available to all lenders. CIC will soon be privatized to ensure more efficient operations. This will improve the Philippines’ score for the “Getting Credit” indicator;

A Collateral Registry for real estate, machinery and movables is being set up in the Land Registration Authority (LRA). Inventory and other assets will soon be available for use as collateral. A draft bill known as the Secured Transactions Act is up for approval in Congress to provide the legal basis;

The National Single Window will be launched by the government on December 30 using the TradeNet platform to automate import and export application processes. Sixty-six import regulators and 10 economic zones will be linked to the Customs operations system. This will also be linked up with the Association of Southeast Asian Nations (ASEAN) Single Window. This should streamline customs procedures and improve the Philippines’ ranking in the “Trading Across Borders” indicator;

The Supreme Court will be completing its pilot e-Courts system, first in Quezon City, the local government unit under review by the World Bank for the EODB report, and eventually in other cities as well. This will improve the Philippines’ ranking in the “Enforcing Contracts” indicator;

A Joint Memorandum Circular between the DILG, DTI, DICT, Department of Public Works and Highways (DPWH), and National Competitiveness Council (NCC) for streamlining the process for construction permits is being finalized and will be ready for signing before the end of the year. Once implemented, this will improve the Philippines’ score in the “Dealing with Construction Permits” indicator. Implementation will take place first in Quezon City.

Improving ease of doing business in the Philippines is an endeavor that involves the Executive, Legislative, and Judicial branches of government. It is a whole-of-government effort, according to the DTI.

It added that as the Philippines belongs in a region of economies that are clocking in big gains in this area, the Duterte administration commits to strengthen its efforts to introduce reforms and streamline processes to spur this country forward and to improve its global ranking in Ease of Doing Business.

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