EDITORIAL - Tough place for business

A year and a half into a new administration, it has become harder to do business in this country. This is according to the latest Doing Business Report prepared annually by the World Bank, which showed the Philippines slipping two notches from its ranking in the previous year.

The country is now ranked 136th among 183 economies in ease of doing business – and the study does not even factor in corruption or security, which are major problem areas in the Philippines. What the report takes into consideration are trading across borders, enforcing contracts, and access to electricity – three areas where the World Bank said the Philippines showed improvement.

But no significant improvement was noted in the seven other indicators: ease of starting a business, obtaining construction permits, getting credit, registering property, paying taxes, protecting investors, and resolving insolvency. The World Bank pointed out that making it easier to start or close a business could “unleash the power” of small and medium enterprises to create jobs and ease poverty.

In Asia, the Philippines lagged behind Singapore, ranked the world’s most business-friendly economy for the sixth consecutive year. Hong Kong followed while South Korea ranked eighth. In Southeast Asia, the Philippines also lagged behind Thailand, which placed 17th; Malaysia ranked 18th and Brunei was at 83rd. Even Vietnam rated higher at 98th while Indonesia ranked 129th.

The rankings track levels of foreign direct investments in the region, with the Philippines lagging behind most of its neighbors in attracting FDI. Surely among the contributing factors are the 10 indicators in the Doing Business Report, which have long been cited as disincentives by investors who are already in the Philippines.

Some reforms have been implemented in the past year, including the adoption of the Financial Rehabilitation and Insolvency Act. But many other things need to be done if the Philippines wants to catch up with the rest of the region and other developing countries. Bangladesh rated better than the Philippines at 122nd place. Nigeria ranked 133rd while Sudan was a notch ahead at 135th.

A slip of even two notches should be worrisome for a country that has been referred to as Asia’s laggard. The needed reforms do not require constitutional amendments and are not impossible to implement.