PH Slips in WB's Ease of Doing Business Ranking
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72 BUSINESS PH slips in WB’s ease of doing business ranking The World Bank-International Finance Corporation’s (WB-IFC) “Doing Business 2018: Reforming to Create Jobs” ranked the Philippines 113th out of 190 countries from 99th in “Doing Business 2017: Equal Opportunity for All.” Its distance to frontier (DTF) score – measures the performance the countries covered by the report on each of the indicator – increased marginally to 58.74 from last year’s 58.32, on a 0-100 scale indicating the lowest performance to the frontier (best performance). ccording to the WB, the DTF score “aids in assessing the absolute level of regulatory performance and how it Aimproves over time.” On the other hand, the ranking on the ease of doing business complements the DTF score by providing information about a country’s performance in business regulations relative to the performance of other countries, the report explained. The doing business ranking was measured based on 10 indicators (see figure on 2018 Doing Business: Indicators). These indicators “focuses on key areas of interaction between the government and entrepreneurs, where policy makers and regulators can directly influence procedures to facilitate these interactions.” Based on the 2018 Doing Business report, New Zealand got the highest rank out of the 190 countries. This was followed by Singapore (2nd), Denmark (3rd), South Korea (4th), and Hong Kong (5th). The U.S. (6th), United Kingdom (7th), Norway (8th), Georgia (9th), and Sweden (10th) completed the list (see table on 2018 Doing Business Report: Top 10 Countries). The WB underscored that the country “is making steady Among 25 East Asia and Pacific countries included in progress in carrying out reforms that can make it easier for the report, the Philippines is outranked by 15 countries (see entrepreneurs to start and operate a business.” The WB table on 2018 Doing Business Report: East Asia and Pacific also saw the latest business reforms as a good point for Countries). Meanwhile, among Southeast Asian states, it the country’s improvement, but a faster pace of reforms is ranked 7th out of 11 countries covered by the report (see table highly suggested (see box on Business Reforms in the PH). on 2018 Doing Business Report: Southeast Asian states). The report lauded the country on the reforms introduced to The country performed well only on the paying taxes indicator, improve the investment environment – getting electricity, as well up by 10 notches, from 115th to 105th. However, it posted as paying taxes. However, it said that small- and medium-sized decrease on its rankings on the rest of the indicators (see table enterprises (SMEs) are hindered by challenges in the areas of starting on PH Performance in 2018 and 2017 Doing Business Report). a business, enforcing contracts, and protecting minority investors. Despite the results of the country’s performance on the The WB said the government improved the business climate indicators, the WB said that it is “not comparable (to the for SMEs by implementing 2 key reforms in the past year and previous year)” due to some refinements in methodology. this was helpful in alleviating poverty since SMEs are the backbone of the economy, supplying 90% of employment. Philippine ANALYST BUSINESS November-December 2017 73 BUSINESS 2018 DOING BUSINESS: INDICATORS Source: Doing Business database Note: Labor market regulation is not included in the ease of doing business ranking 2018 DOING BUSINESS REPORT: TOP 10 COUNTRIES COUNTRY 2018 2017 CHANGE New Zealand 1 1 = Singapore 2 2 = Denmark 3 3 = South Korea 4 5 +1 Hong Kong 5 4 -1 U.S. 6 8 +2 United Kingdom 7 7 = Norway 8 6 -2 Georgia 9 16 +7 Sweden 10 9 -1 Source: 2018 Doing Business Report 2018 DOING BUSINESS REPORT: EAST ASIA AND PACIFIC COUNTRIES RANK COUNTRY 2 Singapore 5 Hong Kong 15 Taiwan 24 Malaysia 26 Thailand 56 Brunei 62 Mongolia 68 Vietnam 72 Indonesia 78 China 87 Samoa 89 Tonga 90 Vanuatu 101 Fiji 109 Papua New Guinea 113 Philippines 116 Solomon Islands 130 Palau 135 Cambodia 141 Laos 149 Marshall Islands 155 Micronesia 157 Kiribati 171 Myanmar 178 Timor-Leste Source: 2018 Doing Business Report Philippine ANALYST BUSINESS November-December 2017 74 BUSINESS The Philippines ranked 113th out of 190 countries in the World Bank-International Finance Corporation’s 2018 Doing Business report. Its distance to frontier score,however, increased marginally to 58.74. 2018 DOING BUSINESS REPORT: SOUTHEAST ASIAN STATES RANK COUNTRY 2 Singapore 24 Malaysia 26 Thailand 56 Brunei 68 Vietnam 72 Indonesia 113 Philippines 135 Cambodia 141 Laos 171 Myanmar 178 Timor-Leste Source: 2018 Doing Business Report PH PERFORMANCE IN 2018 AND 2017 DOING BUSINESS REPORT INDICATORS 2018 2017 CHANGE Overall Ranking 113 99 -14 Starting a Business 173 171 -2 Dealing with Construction 101 85 -16 Permits Getting Electricity 31 22 -9 Registering Property 114 112 -2 Getting Credit 142 118 -24 Protecting Minority Investors 146 137 -9 Paying Taxes 105 115 +10 Trading Across Borders 99 95 -4 Enforcing Contracts 149 136 -13 Resolving Insolvency 59 56 -3 Source: 2018 Doing Business Report Among the 10 indicators measured in the report, the country performed well only on the paying taxes indicator. The Philippines is making steady progress in carrying out reforms that can make it easier for entrepreneurs to start and operate a business. Philippine ANALYST BUSINESS November-December 2017 75 BUSINESS BUSINESS REFORMS IN THE PHILIPPINES DB2018 Getting Electricity: 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. Paying Taxes: The Philippines made paying taxes easier by introducing a new electronic system for payment and collection of the housing development fund contributions. DB2017 Dealing with Construction Permits: The Philippines made dealing with construction permits easier by increasing the transparency of its building regulations. Paying Taxes: The Philippines made paying taxes easier by introducing an online system for filing and paying health contributions and by allowing for the online corporate income tax and VAT returns to be completed offline. DB2016 Starting a Business: The Philippines made starting a business easier by streamlining communications between the Securities and Exchange Commission and the Social Security System and thereby expediting the process of issuing an employer registration number. DB2015 Trading across Borders: In the Philippines trading across borders became more difficult because of a new city ordinance restricting truck traffic in Manila. DB2014 Dealing with Construction Permits: The Philippines made dealing with construction permits easier by eliminating the requirement to obtain a health certificate. Getting Credit: The Philippines improved access to credit information by beginning to distribute both positive and negative information and by enacting a data privacy act that guarantees borrowers’ right to access their data. Paying Taxes: The Philippines made paying taxes easier for companies by introducing an electronic filing and payment system for social security contributions. DB2012 Resolving Insolvency: The Philippines adopted a new insolvency law that provides a legal framework for liquidation and reorganization of financially distressed companies. DB2011 Starting a Business: The Philippines eased business startup by setting up a one-stop shop at the municipal level. Dealing with Construction Permits: The Philippines made construction permitting more cumbersome through updated electricity connection costs. Trading across Borders: The Philippines reduced the time and cost to trade by improving its electronic customs systems, adding such functions as electronic payments and online submission of declarations. DB2010 Getting Credit: The Philippines improved access to credit information through a new act regulating the operations and services of a credit information system. Paying Taxes: The Philippines made paying taxes less costly for companies by reducing the corporate income tax rate. Resolving Insolvency: The Philippines enhanced its insolvency process by promoting reorganization procedures through the introduction of prepackaged reorganizations and by establishing qualification requirements for receivers. DB2009 Trading across Borders: The Philippines reduced the time for importing by upgrading the risk-based inspection and electronic data interchange systems. DB2008 Starting a Business: The Philippines made starting a business more difficult by increasing the paid-in minimum capital requirement. Source: 2018 Doing Business Report Note: Doing business reform making it easier to do business. Change making it more difficult to do business. Philippine ANALYST BUSINESS November-December 2017 76 BUSINESS PH exports to EU seen to exceed $10 Bn in continue to increase by 38.41% to $4.62 billion from $3.32 billion 2017 last year. This makes the EU the 2nd biggest export destination for Philippine-made products next to Japan. Moreover, imports With 1H2017 shipments already totaled to $7.78 billion, from EU increased by 2.07% to $3.16 billion from $3.09 billion. As of 1H2017, major goods exported to the EU were: Philippine exports to European Union (EU) is expected to Electronic Products, $2.147 billion; Machinery and Transport exceed $10 billion this year. Equipment, $945.19 million; Coconut Oil, $435.69 million; Other Manufactured Goods, $187.29 million; and Tuna, $131.99 million. EU Ambassador to the Philippines Franz Jessen said