DTI, DOF seek review of World Bank report

MANILA, Philippines — The Department of Trade and Industry (DTI) and Department of Finance (DOF) want the World Bank to review the drop in the Philippines’ ranking in the Ease of Doing Business 2019 report.

“We demand that the World Bank review the Philippines’ rating, and make a correction immediately given our country’s increases in the Ease of Doing Business (EODB) scores, which was, unfortunately, offset by the grossly inaccurate and understated findings in the getting credit indicator of the report,” the DTI and DOF said in a joint statement.

Despite the lower overall ranking, the Philippines’ EODB score improved by 1.36 points to 57.68 out of 100 this year from last year’s 56.32.

A higher score means the economy is close to global best practices in terms of business regulation.

“This correction should be done soon as the report could unduly compromise the Philippines’ standing among the investment community and negatively impact the country’s development, considering that this document is widely used as a reference by investors and survey organizations. As a highly respected institution, the World Bank has a responsibility to ensure that an economy is not unduly disadvantaged and that its report reflect the realities on the ground,” the two agencies said.

DOF Secretary Carlos Dominguez has urged Mara Warwick, World Bank country director for Brunei, Malaysia, the Philippines and Thailand, to challenge parts of the data and methodology used in arriving at the Philippines’ ranking.

In particular, Dominguez questioned the information used by the World Bank’s survey team on the Philippines’ credit information database.

He said the World Bank team failed to gather correct information as it only collected data from the BAP Credit Bureau Inc., which has the smallest database of 1.7 million borrower-entrepreneurs.

Had the survey team included data from other credit bureaus such as the TransUnion Information Solutions Inc. and Microfinance Information Data Sharing Inc., he said the Philippines would have exceeded the minimum five percent of the adult population benchmark for the credit information index under the getting credit indicator of the report.

“The World Bank’s methodology in coming up with the report prescribes that the data should have been gathered from the largest credit bureau. The major credit bureaus with high coverage were included in the previous year’s survey. Having these inadvertently carved out in the 2019 survey begs the question on how the Philippines’ results could be a correct representation of its 2019 ranking,” Dominguez said.

The DTI and DOF said the drop in the score in the getting credit indicator was the reason for the Philippines’ low overall EODB score and decline in the overall ranking.

Based on DTI’s simulation, if the getting credit score is adjusted, or remained the same as last year, the Philippines’ EODB score for the 2019 report should be at least 60 instead of 57.68, and the country’s rank would be in the range of 101st to 108th and not 124th.

While the DTI and DOF want a correction in the Philippines’ results, both agencies recognized there are still areas for improvement in the country’s access to credit information.

In particular, the agencies said borrowers must have the right to access their data, while banks and financial institutions must have online access to credit information, and credit scores should be offered as a value added service. 

In addition, positive and negative credit information must be reported and the credit registry must have data from retailers, utility companies and telecommunication companies.

 For the World Bank’s Doing Business 2020 report which would be released next year, the DTI and DOF would be employing a two-pronged strategy of pursuing regulatory reforms such as streamlining of processes, repeal of outdated or redundant and obsolete rules and regulations that create undue regulatory burden and implement an effective communication campaign.

The DTI and DOF likewise intend to work with other agencies concerned to launch an aggressive communication campaign in the next three months for regulatory reforms agencies have started to implement to be credited in the next Ease of Doing Business report.

“We must also conduct a massive information campaign on the recently enacted EODB or Efficient Government Service Delivery Act, and the Personal Property Security Act which are expected to directly impact the competitiveness ranking,” the agencies said.

Signed into law by President Duterte in May, Republic Act 11032 or the EODB Act of 2018 is expected to address bureaucratic red tape in government as it provides required processing time for government transactions, particularly three days for simple transaction, seven days for complex transactions, and 20 for highly technical transactions.