The Philippines improved its performance in the World Bank’s Ease of Doing Business 2015 report, despite the negative impact of the truck ban in Manila on the country’s rankings.
In the Ease of Doing Business 2015 report, the Philippines ranked 95th out of 189 countries, a considerable jump from last year’s ranking of 108th overall.
“In the Philippines improvements in resolving insolvency, getting electricity, registering property and paying taxes enhanced the country’s ranking from 108 in 2014 to 95 in 2015,” the World Bank said.
“Measured against global best practice or distance to frontier [DTF] in business regulations, the country’s performance [62.08] puts the Philippines in the same range as Vietnam [64.42] and Indonesia [59.15],” it added.
The Doing Business report has 10 indicators: 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.
This year the Philippines ranked high, 16th out of 189, in getting electricity; and ranked 50th out of 189 in resolving insolvency.
Despite being ranked relatively high at 65th out of 189 in trading across borders, the World Bank noted that the imposition of the truck ban was having a reverse impact on the country’s performance in this indicator.
The change, the bank said, “was making it more difficult to do business” in the country. The truck ban, however, has recently been lifted by the City of Manila, and this has improved the flow of goods nationwide.
“In the Philippines trading across borders became more difficult because of a new city ordinance restricting truck traffic in Manila,” the report stated.
Another problem area cited is in the area of starting a business, where the country was ranked 161st out of 189 and protecting minority shareholders, 154th out of 189.
The report also showed that the Philippine ranking in other areas was still above 100. These areas are paying taxes, where the country ranked 127th out of 189; dealing with construction permits, 124th; registering property, 108th; and getting credit, 104th.
The World Bank said the indicator sets for three of the 10 topics are being expanded in this year’s report, while five indicators will be expanded in the 2016 report.
Further, the ease of doing business ranking is now based on the DTF score. This measure shows how close each economy is to global best practices in business regulation.
This means that a higher score indicates a more efficient business environment and stronger legal institutions.
The World Bank also said for the first time, Doing Business collected data for a second city in the 11 economies with a population of more than 100 million.
These economies are Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the US.
The report found that differences between cities are common in indicators measuring the steps, time, and cost to complete regulatory transactions where local agencies play a larger role.
The report finds that Singapore tops the global ranking on the ease of doing business. Joining it on the list of the top-10 economies with the most business-friendly regulatory environments are New Zealand; Hong Kong SAR, China; Denmark; the Republic of Korea; Norway; the US; the United Kingdom; Finland; and Australia.
Despite the improvement, the Philippines only ranked fifth in the Asean, behind Vietnam, which is at 78th place; Thailand, 26th; Malaysia, 18th; and Singapore, first.
National Competitiveness Council Chairman for the Private Sector Guillermo Luz said the Philippines could have fared better than the 13-spot jump had the World Bank communicated the new changes in the methodology sooner.
“We could have done better than 95; we have been submitting data since January of the year and we only found out a few days ago of the changes and the new steps placed in the indicators,” Luz said in an interview with reporters after the presentation of the rankings, explaining the drop in some indicators of the report.
According to the World Bank, the DTF calculation allows users to see the gap between a particular economy’s performance and the best performance at any point in time.
“In this year’s Doing Business, we revised some indicators to include more consideration of their quality,” said Motoo Konishi, Philippines country director of the World Bank, in response to the adjusted evaluation system.
The truck ban pulled down the country’s ranking in the trading-across-borders indicator, from 2014’s 42nd to the 65th spot this year.
Hans Shrader, senior program manager for trade and competitiveness of the the World Bank Group, said areas that need improvement are reducing procedures in business registration, expanding reforms in getting construction permits, getting credit, protecting minority investor and enforcing contracts.
The annual World Bank Group flagship Doing Business report analyzes regulations that apply to an economy’s small- and medium-sized businesses during their lifecycle, including start-up and operations, trading across borders, paying taxes and resolving insolvency.
According to the World Bank, the Philippines has gained 53 spots in the Doing Business report since 2011.
(Cai U. Ordinario & Catherine N. Pillas)