The World Bank ranks the Philippines 95th in ease of doing business, 161st in starting a business, 124th in dealing with construction permits, 108th in registering property, 104th in getting credit, 127th in paying taxes, 124th in enforcing countries, 65th in trading across borders, and 50th in resolving insolvency.
Considering that there are 189 economies/countries in the world, the Philippine rankings are a disgrace. They put a lie to claims of Daang Matuwid. There is so much red tape and graft every time businessmen try to start a business or do business.
No wonder, among the six major Asean countries, the Philippines has received the smallest or lowest foreign direct investments—in amounts and as a percentage of GDP. It is bad to start a business in the Philippines. It is bad to do business in this country. Investors shy away.
The World Bank is usually sanguine in grading Philippine performance on the economic and social equity front. Such an attitude is not surprising.
The bank has had its own shortcomings. The bank wants to prop up the claims to little greatness by countries like the Philippines, thus boosting the egos of their leaders like President B.S. Aquino III, and boosting the bank’s own sense of achievement.
The World Bank actually failed to significantly reduce poverty. Solving the poor world’s biggest problem became the bank’s primary mission when President Robert McNamara assumed the World Bank presidency in 1968 shortly before America lost the Vietnam War.
If poverty was cut by half, credit goes, less to the World Bank but more to the determined efforts of countries like China and Indonesia to reduce their teeming masses of poor by frenetically pumping up their growth rates for an extended period.
From 1990, the percentage of poor of the total population in developing countries fell dramatically from 43 percent to 21 percent by 2010, five years ahead of schedule. China alone accounted for three-quarters of that great leap downward. Yearly, for more than ten years, the world’s second largest economy was growing by a least 10 percent. China is no stooge of the World Bank. In fact, China is putting up its own World Bank—the Asia Infrastructure Investment Bank.
In making projections for the Philippines, the Washington DC-based multilateral lender usually favors a higher rate than those projected by analysts of other banks and think tanks.
From 6.5 percent initially, the bank cut the Philippines’ expected economic growth to just 5.8 percent for 2015, after noticing a marked slowdown in the first half and government’s chronic under-spending of already allocated funds. The bank seems to buy the Aquino administration’s line that economic growth could be 7-8 percent per year during its tenure. In fact, the Philippines has been registering its slowest growth in the past three years, a flat 5 percent, with a three-year average of less than 6 percent growth.
And the World Bank honestly thinks the Philippines conditional cash transfer (CCT) program which now has an annual budget of over P60 billion and 4.2 million families enrolled, a huge success story.
It is one of the largest and best-targeted social safety net programs in the world, says the bank.
However, when it comes to grading Manila’s environment for ease of doing business, the World Bank has been rather harsh.
In the starting a business game, the Philippines has, in fact, deteriorated. Last year, it was ranked 154th. This year, the Philippines lost 11 rungs becoming the worst country in Asean for starting a business.
According to the World Bank Doing Business Report 2015, it takes 16 steps and 34 days to start a business in the Philippines.
In Malaysia, starting a business takes just three steps and 5.5 days, Thailand four steps and 27.5 days, and Vietnam 10 steps and 34 days. The best in the world is New Zealand where it takes only one step and half a day to start a business.
It is also very expensive to start a business in the Philippines. It takes 16.6 percent of the business’ income per capita, compared with 5.3 percent in Vietnam, 5.7 percent in Laos, 6.6 percent in Thailand, and 7.2 percent in Malaysia.
For a specific activity like getting a construction permit, the Philippines has also one of the worst regulations in the world. Getting a permit to build a house or a building takes 24 steps and 94 days (more than three months). That makes the Philippines 124th best in the world or 65th worst among 189 economies or countries.
In Hong Kong, which has the best system globally, getting a construction permit takes just five steps and one day. In Malaysia, getting a building permit takes 13 steps and 74 days; Thailand seven steps but 113 days; Vietnam 10 steps in 114 days. In the entire Asean, the Philippines has the worst red tape—24 steps to secure a construction permit. Our neighbors make do with half of the procedures.
In registering property, the Philippines (nine steps in 35 days) is worst in Asean. Indonesia takes five steps and 27.4 days to register property; Malaysia eight steps in 13.5 days; Vietnam four steps in 57 days; Laos five steps and 98 days; and Thailand, the best globally, two steps in two days.
In cost (as a percentage of the value of the property), it is 4.3 percent for the Philippines, 10.8 percent for Indonesia, 6.3 percent for Thailand, 3.3 percent for Malaysia, 1.1 percent for Laos, and 0.6 percent for Vietnam. It is generally expensive to register one’s property in the Philippines.
It is very expensive to export from the Philippines—$755 per container (up from $585 per container just last year), compared with Malaysia $525, Indonesia $571.8, Thailand $595, Vietnam $610, and Laos $1,950. Timor Leste has the lowest cost per container to export in the world, $410.
The cost to import into the Philippines is also very high, $915 per container. It is higher by 63 percent, at $560 in Malaysia, by 52.5 percent at $600 in Vietnam, 41 percent at $646.80 in Indonesia, 20 percent at $760 in Thailand, but cheaper by 52 percent at $1,910 in Laos.
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