World Bank sees Philippines reforms to boost doing business rank

MANILA, Philippines — The Philippines needs to shorten the period for the settlement of commercial disputes and improve the credit environment for businesses for it to advance further in the ease of doing business ranking, the World Bank said yesterday.

In a briefing on the results of its Ease of Doing Business Report 2020, World Bank analysts said the Philippines has significant room for making improvements on two indicators comprising these issues: enforcement of contracts and getting credit.

Analyst Maksim Iavorskyi noted that in the Philippines, it takes around 962 days to resolve a commercial dispute compared with the average in East Asia and the Pacific at around 580 days.

He said automating court procedures can enable the filing of complaints and expedite the resolution of disputes.

“The implementation of electronic courts, as we sometimes call them, makes it possible to file complaints electronically to courts. This is an area where the Philippines can move into because in the court automation index indicator, the Philippines has a score of zero,” he said.

On getting credit, analyst Viktoriya Ereshchenko said improving the credit environment for businesses in the country would entail increasing access to credit while protecting the rights of lenders by enabling more borrowers to secure loans.

“Another potential area of improvement for the Philippines is getting credit. There is indeed much room for improvement there especially on the rights of lenders with respect to security of transactions and quality of credit information.

The indicator for getting credit measures the presence of movable collateral laws and effectivity of reliable credit information systems.

The country’s ranking in the 2020 Ease of Doing Business report jumped 29 notches to 95 out of 190 economies in the world from the previous ranking of 124th. Its overall score went up to 62.8 this year from 57.68 previously.

The country improved its ranking under the getting credit indicator from 184th to 132nd; protecting minority investors from 132nd to 72nd; and dealing with construction permits from 94th to 85th.

The Department of Finance had noted that the enactment of Republic Act 11057 or the Personal Property Security Act (PPSA) would help propel the Philippines to a higher ranking in the business index for 2021.

Signed by President Duterte in August last year, RA 11057 aims to increase access to credit, particularly for MSMEs, farmers and fisherfolk, by establishing a unified and modern legal framework for securing obligations with personal property.

Under the law, these sectors will be allowed to secure loans from banks using non-traditional collateral, such as account receivables, inventory, negotiable instruments, electronic securities, crops, livestock, consumer goods, machinery, equipment as well as intellectual property rights.

The EODB report ranks economies based on the ease of doing business by looking at the following: starting a business; dealing with construction permits; getting electricity; registering property; getting credit; protecting minority investors; paying taxes; trading across borders; enforcing contracts; and resolving insolvency.