Administration officials and their supporters are challenging the revised methodology in the latest Doing Business study conducted by the World Bank Group, in which the Philippines fell six notches to 103rd place from the previous year. The ranking puts the country behind the four other founding members of the Association of Southeast Asian Nations plus Brunei and Vietnam.
World Bank officials acknowledged the reforms undertaken by the Philippines in the past year to make the country an easier place to do business. The problem, according to the WB, is that other countries did more.
Under the revised methodology, countries were rated based on the situation in major business centers. In the Philippines, Quezon City – the nation’s largest city – was the representative area. Philippine officials griped that the study failed to take into account the situation at the economic zones operated by the Philippine Export Zone Authority.
The economic zones, however, are still exceptions rather than the rule, and do not reflect the difficulties encountered by those doing business in Metro Manila and other areas where business activities are concentrated. Small and medium enterprises face the worst hurdles, with few incentives to get past red tape and layers of onerous and redundant fees, and with no breaks from complicated labor and tax regulations.
This environment can nip in the bud the enterprising spirit of ordinary Filipinos. It also deters foreign direct investment outside the economic zones, especially when other countries are implementing more reforms faster.
The Doing Business 2016 report rated 189 economies based on 10 criteria. The Philippines registered the biggest drop in starting a business, where it ranked 165th in the world, and in dealing with construction permits where it ranked 99th. Its ratings also fell in registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. The country showed an improvement only in getting electricity.
Singapore retained its No. 1 spot for the 10th straight year. New Zealand also held on to second place and is threatening to edge out Singapore. Following them are Denmark, South Korea, Hong Kong, the United Kingdom, the United States, Sweden, Norway and Finland. In Southeast Asia, Malaysia held on to the 18th spot.
The world’s top 20 economies for doing business compete with each other for inclusion in the top 10. Regardless of the methodology, they keep emerging as the easiest places for doing business. It is useful for critics of the World Bank report to bear this in mind. The nation must aim not just to do more by way of reforms but to accelerate faster than others.