THE downgrade in the credit rating of the United States has led all economies of the world to brace themselves for the likely impact of this unprecedented development. In the face of uncertainties resulting thereof, the Philippine economic leaders have reassured the citizenry of the presence of strong economic fundamentals in our economy that will drive it to overcome the likely consequential crisis. The general assurance is meant to provide a “feel good” message, and the emergent reaction seems to have become the feeling that everything will adjust in the face of adversity.

Focusing on how business is done could be a more specific way of knowing part of the peripherals of “strong economic fundamentals”.  Every year, the World Bank undertakes Doing Business Study among the world economies. Some of the top performers for 2011 are: Singapore, 1; Hong Kong, 2; New Zealand, 3; United Kingdom, 4; United States, 5; w Korea, 16; Japan, 18, Thailand, 19; Malaysia, 21; Vietnam, 78; China, 79; Indonesia, 121; and India, 134.

A closer look at the comparative rankings per category for 2010 and 2011 shows not much marked improvements that could drive the overall standing of the country upward. On three variables, the changes were negative and for the same number of variables, no changes were registered. Only three of the nine indices showed single digit increases.

The report further listed the significant “reforms” undertaken over the last three years. Below is a summary.

DB 2011:

✔ Starting a Business: Setting up of a one-stop shop at the municipal level made it easier and faster to register a new business.

✘ Dealing with Construction Permits: Permitting became more cumbersome through updated electricity connection costs.

✔ Trading Across Borders: Time and cost to trade are reduced by improving the electronic customs systems, such as adding functions as electronic payments and online submission of declarations.

DB 2010:

 ✔ Getting Credit: Access to credit was enhanced with a new credit information act that regulates the operations and services of a credit information system.

 ✔ Paying Taxes: The corporate-income tax rate was cut from 35 percent to 30 percent.

 ✔ Closing a Business: Reorganization procedures were promoted by introducing prepackaged reorganizations and regulating the receiver profession.

DB 2009:

  ✔ Trading Across Borders: The risk management and electronic data interchange systems for customs were upgraded, reducing the time to import by a day.

(Note - All statistics and related information on Doing Business Study are from the World Bank web site.)

While access to credit was reported to have been enhanced in 2010 due to the new credit information act that was legislated, the implementation of the said project has yet to happen as of this writing.

The study uses a simple method to calculate which economies improved the most on the ease of doing business. It selects the economies that reformed in 3 or more of the 9 topics included in this year’s ease of doing business ranking. The Philippines is not among those that registered significant improvements.

This reminds me of a brief encounter with a businessman who was seated next to me on a trip to Taipei not too long ago. He narrated that in his youth, he was sent by his government in the ‘60s to attend a conference in Manila. He stayed at a hotel along the boulevard where there was a good view of the Manila sunset. He was amazed at the hotel’s sliding glass doors that automatically opened and closed without the aid of a door man. He only had good words about his Filipino counterparts who were so intelligent and articulate in English. In the plane at the time, he encountered his first paper table napkin with the logo of Philippine Airlines. He even asked for extra napkins to be shown to his colleagues and friends back home. He was so proud to have been in the Philippines and how different it was from Taipei. He concluded his story by telling me that now, Taipei is still very different from the Philippines. His country has more than automatic sliding doors and paper napkins. What an irony, what a pity!