Left behind

You know the country is in trouble when it is beaten by Rwanda in terms of ease in doing business.

Go over the “Doing Business 2009” report and weep. The Philippines was outranked not only by Rwanda, which was one place ahead at 139, but also by the West Bank and Gaza (131) and Syria (137).

The annual report, which saw the Philippines sliding a couple of notches down from 133rd place last year, covered 181 countries and was prepared by the World Bank and the International Finance Corp.

Even close to home, far from the conflict zones of the Middle East and Africa, we fared badly. Perennial overachiever Singapore retained its rating as the best place in the world for doing business. Hong Kong also stayed at fourth place. But Thailand has zoomed to 13th place, just behind Japan, while Malaysians at 20th, ahead of Switzerland and South Korea (23rd).

The next Asian country is farther down the list at 58th place: Mongolia. But it rated higher than Taiwan which placed 61st. China was lower down at 83rd, but still ahead of Brunei (88th).

Another of our close rivals in economic development, Vietnam, ranked way ahead of us at 92 , but then we already know that this country is sprinting ahead of us in many things including foreign direct investments, tourism and food production.

In this part of the world, Nepal is ahead of us at 121st place. Bhutan ranked 124 and Indonesia 129. Even Cambodia has jumped ahead of us at 135th place. We were ahead only of Laos (165 ) and East Timor (170).

We were beaten even by Croatia, Nicaragua, Bangladesh, Uganda, Ethiopia, and Bosnia and Herzegovina. At least we’re still ahead of Iraq (152), Zimbabwe (158), Afghanistan (162), and the year’s tail-ender, the Congo Democratic Republic. But even Iraq and Afghanistan may soon close in on us.

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The World Bank’s country director, Bert Hofman, said that while the Philippines was cutting red tape and taking steps to encourage business, other countries were doing more.

Other quarters have made similar observations. Global competitiveness is weak in this country. There is no sense that we are pitted against the world; there is no sense of urgency in aiming for world-class excellence.

With a tenth of our population working overseas, we should have a better appreciation of the forces of globalization. Instead we cannot even anticipate global trends that can affect the labor market or prepare our workers for stiff competition posed by migrant workers from other developing economies.

So now we have a glut of 400,000 nurses who cannot find jobs even in their own country because many of our hospitals were forced to shut down in recent years for lack of health professionals, and those that survived cannot afford new hires.

We might soon be faced with a glut of cooks and workers in the hotel service industry. Culinary schools are mushrooming all over the country, mirroring the explosion of nursing schools just a few years ago.

Some of those aspiring chefs may want to start their own food business. But if the Doing Business 2009 report is any indication, starting a business in this country can be such a hassle budding entrepreneurs can quickly be discouraged.

The report measured the ease of doing business using the following indicators: the time it takes to start a business (four days in Singapore, 52 in the Philippines) as well as the ease in obtaining construction permits, hiring workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

Let’s compare ourselves only with our closest rivals. Thailand beat us in all indicators. Vietnam beat us in everything except protecting investors, paying taxes and trading across borders.

I know several foreign investors who decided to set up their Asian office in Bangkok after comparing Thai business requirements with those of the Philippines. And of course everyone wants to set up shop in China. 

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Why can the Thais and Vietnamese, and now even the Cambodians, create a better business environment than us?

Our policy makers should know well enough how much even seemingly minor red tape can matter in making business decisions. Regular surveys now track the ease of doing business in cities and municipalities in the Philippines. It’s not sheer luck that has made Taguig City the new boom area in Metro Manila. From infrastructure to business requirements, the city is business-friendly, with the least red tape.

Red tape is the bureaucratic hoi polloi’s version of multimillion-peso commissions in the higher levels of government. For too long the wheels of the Philippine bureaucracy have turned faster with grease money. The political will to stop red tape simply is not there. Penny-ante “fixers” cannot be stopped when agency heads themselves are earning so much more from corruption. And the agency heads cannot be stopped when the highest officials of the land themselves are accused of plunder.

Cleansing has to start from the top. When public officials are convicted for misappropriating over P2 million while the big fish who pocket $2 million or who can afford to dangle a P200-million bribe are allowed to retire in peace, the anti-graft effort is nothing but tokenism – something that looks good in an official report, which can be presented to Washington and other foreign governments so they will give the Philippines more development aid. 

Without leadership by example, red tape will never be cut, and there will be little change in the way we do business.

Our country will continue plunging into the sinkhole, behind the rest of Asia, behind the rest of the world.