PH slips in World Bank's 'doing business' rankings

by Cathy Rose A. Garcia,

Posted at Oct 23 2012 10:52 AM | Updated as of Oct 24 2012 05:00 AM

MANILA, Philippines - For local entrepreneurs, doing business in the Philippines remains a long, slow and complicated process. The Philippines ranked 138 out of 185 countries in the World Bank and IFC's Doing Business 2013 report, slipping 2 notches from 136 ranking in the previous year. 

The report, "Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises," noted the Philippines did not implement any institutional or regulatory reforms to make it easier for small and medium enterprises to do business in the past year. 

PH slips in World Bank's 'doing business' rankings 1
Click image to enlarge.

Singapore topped the ranking of business-friendly economies. Among Asian countries, the Philippines ranked near the bottom of the list, ahead only of Micronesia (150), Laos (163) and Timor-Leste (169). 

Starting a business in the Philippines is one of the most complicated in the world, ranking 161 out of 185.

The Philippines continues to lag behind other countries, especially members of the Asia Pacific Economic Cooperation (APEC) which have showed the biggest improvements in starting a business between 2009 and 2012. 

"Consider the process for starting a business. In New Zealand it requires only 1 procedure and 1 day and costs 0.4% of income per capita; in the Philippines it takes 16 procedures and 36 days and costs 18.1% of income per capita," the report said.

While it takes 16 procedures for an entrepreneur to start a business in Manila, in Canada and New Zealand it only takes one day. The only countries that have more procedures than the Philippines are Equatorial Guinea with 18 and Venezuela with 17.

The Philippines is also one of the countries that make it difficult when it comes to securing construction permits, with 29 procedures that take an average of 84 days. Other countries that had more procedures are Russia with 42, Malaysia with 37 and India with 34. 

The report also showed the process of resolving insolvency in the Philippines is one of the  slowest and most expensive in the world (165 out of 185). The Philippines was ranked the fourth most difficult based on recovery rate (how many cents on the dollar creditors recover from an insolvent firm), as well as most expensive with costs reaching 38% of the estate value. 

The Doing Business report also showed it takes 5.7 years to resolve insolvency in the Philippines, making it one of the slowest in the world. Only Mauritania (8 years), Sao Tome and Principe and Angola (6.2 years) and Cambodia (6 years) took longer to resolve insolvency. 

On the other hand, the Philippines ranked as one of the countries that had the lowest cost per container for exporters at $585 per container. 

Overall, the World Bank said local entrepreneurs in developing countries are finding it easier to do business than at any time in the last 10 years. Since 2005, the average time to start a business has fallen from 50 days to 30. 

"Over the years, governments have made important strides to improve their business regulatory environment and to narrow the gap with global best practices," said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group, in a statement."While the reforms we measure provide only a partial picture of an economy’s business climate, they are crucial for key economic outcomes such as faster job growth and new business creation."

For the 7th year in a row, Singapore topped the global ranking on the ease of doing business. The top 10 with the most business-friendly regulation were Hong Kong SAR, China; New Zealand; the United States; Denmark; Norway; the United Kingdom; the Republic of Korea; Georgia; and Australia.