The Philippines continues to be a difficult place to do business in, especially for small and medium enterprises (SMEs), according to the World Bank.
The World Bank estimated that small businesses are slapped with legitimate fees equivalent to 17 percent to 36 percent of per-capita income, or around P21,000 to P45,000 when starting a business.
Apart from high fees, lost time due to cumbersome requirements and high fees cost SMEs and the government some P100 billion annually in foregone income, taxes and spending.
“Business regulations have long been a cumbersome process. They limit the growth of innovative entrepreneurship and investments, contribute to large-scale informality, and hence, prevent the country from creating more and better jobs and reducing poverty at a faster rate,” World Bank Philippines senior country economist Karl Kendrick Chua said in a news statement.
The World Bank also said that because of the difficulties in putting up a business, some entrepreneurs forego their plans to put up their own companies.
The bank estimated that around P40 billion worth of opportunity can arise from discouraged Filipinos who could have started a business if only the cost was reasonable.
This translates to foregone employment of around 60,000, which is equivalent to about 5 percent of new labor-force entrants every year.
“These are the true costs of complex business regulations. Reforms to reduce these costs would free up substantial resources to make growth more inclusive,” Chua said.
To address these concerns, the World Bank urged the national government to fully implement the Philippine business registry and regulatory simplification at the local government unit (LGU) level.
The bank also said there is a need to reduce the frequency of renewing government licenses, permits and, clearances for employment purposes, as well as the adoption of a risk-based approach for issuing these permits.
Further, there is a need to lower export transaction costs to assist small export businesses in selling their wares abroad.
Reducing export transaction costs means enhancing and implementing the National Single Window and eliminating redundant or inefficient export steps.
The bank also said there is a need to establish and publish clear performance standards and creating a national trade web site to disseminate information on these standards.
These were findings and recommendations from the Philippine Economic Update (PEU) report that provides an update on key economic and social developments, and policies over the past six months.
The update also presents findings from recent World Bank studies on the Philippines. The PEU places them in a longer term and global context, and assesses the implications of these developments and policies on the outlook for the Philippines.
The update’s coverage ranges from the macroeconomy and financial markets to indicators of human welfare and development.
1 comment
this is very accurate, sa caloocan pa lang, ang laki-laki nang mga binabawas. mas malaki compared to manila. ano bang mayroon sa caloocan at napakamahal magsimula? prime ba yan?