Doing business in Phl anything but easy

The election is nearing fever-pitch. Therefore, expect some politicians to be trading barbs again.  The same politicians who for decades have made so much promises but with less accomplishments. The same politicians whose actions are more geared towards enhancing their staying power. The same politicians who are making most of their constituents their perpetual parasites.

So that, before their useless altercations heat up, let us look into some facts that shall mean a lot to us, as a country, moving forward.  For one, whether we like it or not, it is still a fact that our domestic laws will still have huge influences in our economic progress.  Interestingly, the result of the 2019 “doing business” survey conducted by the World Bank will have something to convey. Surveyed until May, 2018, the economies were compared and ranked in “10 areas of the life of the business”. These were 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.

While, to some, these are just numbers, to those who are so concerned about the country’s competitiveness, these numbers speak volumes.  For one, after going down by 18 ranks from 2015 to 2018 globally (that is from rank no. 95 down to 113), we were pushed further to the cellar at 124th in the 2019 survey. To some, they may say, so what?

The truth is, this is one of the most important surveys in the globe.  Consistently topped by either New Zealand or Singapore, the investors in the entire world are looking at this survey for investment decision purposes.  In fact, being on top is the very reason why Singapore, despite its limited size, is attracting a lot of foreign investors all over the globe and is cornering the biggest chunk of Foreign Direct Investments (FDIs) among member states of the ASEAN.

Thus, if we make an attempt to understand our performance, then we must try to understand the survey results.  First and foremost, the result of this survey can be well understood by analyzing our performance as far as attracting FDIs is concern.  You may not be aware of it but we are among the laggards in the ASEAN in this respect.  Historical data will help us sort this out.  As reported by the World Bank, since 1952 until 2012, “Singapore accounts for more than half of total FDIs to the whole region at 52%.  Thailand ranks 2nd with 13%, followed closely by Indonesia at 3rd with 11%, at 4th is Malaysia with 10%, Viet Nam (the once war-torn country) ranks 5th with 8%, and the Philippines is 6th with a miserable 3%”.  Until today, Singapore remains on top.

More importantly, this performance directly correlates with our performance in the WB’s “doing business” surveys.  For instance, in the same survey, when compared against ASEAN countries, from fifth overall in 2015, we are now seventh (no. 124).  Singapore (no.2) remained on top among ASEAN member countries, followed by Malaysia (no. 15), Thailand (no. 27), Brunei (no. 55), Viet Nam (no. 69) and Indonesia (no. 73).  Being far 7th among ASEAN member countries and no. 124 globally simply mean that it is really difficult to do business in the country.  Thus, foreign investors are discouraged to invest.

Knowing this fact, we might consider instead a vigorous promotion of small and medium enterprises (SMEs) to create more jobs. Yet, we are not seriously going for it.  Why?  The common grievances – difficulties in obtaining permits and licenses.  For one, we start with the Barangay.  This first stop alone is frustrating.  Some Barangay captains are not up to the task.  They are not always in their offices.  Since some of them are working, they only report after office hours.  Consequently, “trying-hard” businessmen had to shell out more for their employees’ overtime pays just to get the Barangay permits.  Worse, some mayors are even trying to close legitimate businesses.

Sadly, in “starting a business” category, this attitude was well captured as we were ranked 166th or among the bottom 24 economies included in the survey.  Among ASEAN nations, we were just no. 9.

Therefore, what is really more important now is for our politicians to listen to some business groups’ venerable plea to ease constitutional restrictions on foreign ownership in certain industries. This move though is not a panacea.  Remember, these disgusting attitudes of some of our local government executives have nothing to do with our constitution.  It simply means, there is, either too much red tape or power play for money.  This alone shall push us to the bottom.  Thus, less attractive to both foreign and local investors.  The good thing is, its election time.  We can certainly do something about it.