Friday, October 02, 2009

Doing Business 2010

World Bank Publications brings us Doing Business in 2010: Reforming Through Difficult Times. This year’s Annual Report (now on its 7th) investigates the regulations that serve as enhancers and constraints to growth of business activities in over 183 economies.

This year’s top reformer jumping from the 143rd spot to 67th is a country that relies on subsistence agriculture and known as The Land of a Thousand Hills, Rwanda. It implemented reforms which was able to reduce start-up business procedures from 8 to 3 thereby cutting the processing time from 14 to 2 days. Rwanda also improved regulations to facilitate easy access to credit through the enforcement of 2 laws which allowed a wider range of assets to be used as collateral and made out-of-court enforcement of movable collateral available to secured creditors. Trading across borders was improved through longer operating hours and less complicated documentary requirements. Significant reforms in registering property and paying taxes reduced transaction time by 255 days.

Where does this leave the Philippines?

Pegged against our ASEAN counterparts, we ranked 7th. (See Table 1 below). For two years in a row we’ve been huddling with Cambodia among the bottom 50 on the list of the rated economies. We’ve managed to consistently position ourselves among economies where doing business is difficult

Table 1. Rankings on the Ease of Doing Business in 183 Economies

Country 2010

Singapore 1
Thailand 12
Malaysia 23
Vietnam 93
Brunei Darussalam 96
Indonesia 122
Philippines 144
Cambodia 145
Lao PDR 167
Myanmar not rated

A Closer Look at the Key Indicators

The Philippines implemented three (3) positive reforms which acted as enablers for ease in getting credit (new credit information act that regulated the operations and services of a credit information system), for paying taxes (corporate income tax cut from a rate of 35 percent to 30 percent) and for closing a business (promotion of reorganization procedures). Despite so, we registered negative changes in our rank status for all the indicators included in the report. (See Table 2).

Table 2. Ease of Doing Business, ranking by topic

Ease of… Doing Business Change in
2010 Rank 2009 Rank Rank
Doing Business 144 141 -3
Starting a Business 162 155 -7
Dealing with Construction Permit 111 106 -5
Employing Workers 115 114 -1
Registering Property 102 101 -1
Getting Credit 127 125 -2
Protecting Investors 132 127 -5
Paying Taxes 135 126 -9
Trading Across Borders 68 66 -2
Enforcing Contracts 118 116 -2
Closing a Business 153 153 0

Aside from Trading Across Borders where we got a double-digit mark, we have consistently been earning triple digits in all the other indicators. Several key cities in the country have started to take specific actions to ease business licensing procedures. Yet, our country landed on the 162nd spot (out of 183!) for Ease of Starting a Business, down from 155th the previous year.

7th among the ASEAN, 144th among 183 economies.

I don’t much about  the whys and the how comes. I’m pretty sure though, that it is a depressing story of “because” and “if onlys”. Nonetheless useful information if you go by the learn-from-your-mistakes strategy of doing things. Are our legislators really serious about instituting useful and positive reforms? Or are we becoming too comfortable with the way things are that we no longer see the point in changing things? What’s next for the Philippines?

Doing Business in 2010 is available at $35.00 from the World Bank Publications. Order your copy here.

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