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Trading across borders spot takes big plunge

The Philippines’ rank in trading across borders took a big dip while the biggest improvement was in enforcing contracts.

The Philippines dropped eight spots to 103rd out of 189 economies in the latest World Bank (WB) Ease of Doing Business Report 2016.

The Washington-based lender’s latest report, “Ease of Doing Business: Measuring Regulatory Quality and Efficiency,” showed that the Philippines  slid from its 95th spot in 2015.

But the national government claimed the report had become “unreliable” due to continuous changes made to its methodology over the past years.

The annual report measures regulatory quality and efficiency based on 10 detailed diagnostics, or pillars, applied to regulations concerning ease of doing business in the life cycle of a business. These pillars are 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.

The WB said indicators for the pillars “have been revamped to increase their relevance.”

Trading across borders

Among the areas where the Philippines saw the biggest drop in rank was in trading across borders, from 95th to 65th place.

In the WB report, it takes four days and 9 hours to complete an export cycle, an improvement from the 15 days in the previous report. Of the total, 72 hours are spent in documentary compliance, 42 hours in border compliance, and four hours in domestic transport.

Export costs total US$890 per container from $755 per container in the previous report. Of the total, documentary compliance accounted for $53, border compliance $456, and domestic transport $381.

For imports, the report said it now takes seven days and two hours to complete an importation. This is likewise faster than the 15 days in the previous report. Of the total, 96 hours are spent in documentary compliance, 72 hours in border compliance, and four hours in domestic transport.

The latest cost of importing a container is higher at $1,011 from the previous $915. Of the latest total, importers spend $50 on documentary compliance, $580 on border compliance, and $381 on domestic transport.


Among the 10 pillars, the country showed improvement under three—construction permits, where it moved to 99th from 124th; paying taxes to 126th from 127th; and enforcing contracts to 14th from 124th, the biggest growth registered.

Under the other seven pillars, the Philippines posted declines ranging from just one spot to as many as 30 places. In starting a business, the country fell to 165th from 161st, getting electricity to 19th from 16th, registering property to 112th from 108th, protecting minority investors to 155th from 154th, getting credit to 109th from 104th, and resolving insolvency to 53rd from 50th.

National Competitiveness Council (NCC) private sector co-chairman Guillermo Luz questioned the WB report, saying it has undergone methodological changes in four of the last five years, “making it confusing and unreliable for measuring change.”

“Despite our efforts to introduce reform projects to improve the ease of doing business in the Philippines, IFC (International Finance Corporation) shows different sets of scores and rankings every year due to a change in methodology,” Luz said, adding that “changes are applied retroactively so even prior years’ results are changed without our knowledge.”

“This makes it difficult to tell whether we are on the right track or not using this instrument. It has become unreliable.”

WB senior vice president and chief economist Kaushik Basu noted in the report that “given the importance of Doing Business and the responsibility that comes with it, and also in the light of the 2013 report of the Independent Panel in Doing Business… it was decided that we would use two years to revise and improve the measurement of the ease of doing business in different economies.”

“This is the second and last year of this major revision exercise and that gives this year’s report a special significance,” Basu added.

NCC said its efforts for business easing have gained steady improvements by streamlining processes and introducing reforms across a wide range of the indicators. It noted two significant reforms that were launched to impact the starting a business indicator.

“The process to start a business was made simpler and easier as businesses will now just have to go through 6 steps and 8 days, down from the previous process of 16 steps and 34 days,” NCC said.

In line with this, the Quezon City local government unit has set up an online portal to facilitate business registration. A total of 13,182 of filings at the Securities and Exchange Commission are now processed in one day. Likewise, filings have increased by 24% for the period April-September 2015 with 12,312 business registrations vis-a-vis 9,912 in the same period last year, NCC noted.

The other significant reform implemented this year falls under the category of paying taxes. E-government initiatives have been created which offer accessible and convenient online transactions for payroll-related payments to the government’s health care program PhilHealth and housing program Pag-IBIG.

“On-going initiatives are also being reinforced to further increase court efficiency and transparency,” NCC said. The E-Court system is now providing ease of access to court employees and judges to enable them to improve their control over their time and activities in relation to the cases they handle. It also allows the public to monitor the progress of cases handled in Quezon City, the local government unit used by the IFC in its study.

Luz also questioned the relevance of the diagnostic tool moving forward.

“We have done so much to improve doing business in the Philippines. However, the Doing Business Report doesn’t capture these initiatives and the constant methodology change and recalculation of ranking every year is of no help. We need consistency in the diagnostic tool to monitor ourselves, and better measure our performance. We recognize we need to continue introducing reforms and improvements in the ease of doing business and will continue to do so. Continuous improvement will take place through high levels of collaboration and cooperation across government agencies and between the public and private sectors.”

Meanwhile, despite the drop in the country’s latest ranking, it has jumped 45 places up in the last five years, NCC noted.

Among Association of Southeast Asian Nations countries, the Philippines ranked sixth behind Singapore (still 1st), Malaysia (still 18th), Thailand (to 49th from 26th), Brunei (84th from 101st), and Vietnam (90th from 78th), and is ahead of Indonesia (109th from 114th), Cambodia (127th from 135th), Laos (134th from 148th), and Myanmar (167th from 177th).

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