Ease of doing business in PH

The party’s over.

After a long holiday break, it’s back to the grind for the country’s businesses and workforce.

According to the survey conducted by Social Weather Stations from Dec. 11 to 16, nine out of 10 Filipinos (or 94 percent of our countrymen) look to 2014 with hope, rather than with fear.

A sense of optimism seems to prevail among our people despite the natural and manmade calamities we went through last year.

Depending on your perspective or attitude toward life, this feeling may be interpreted either as proof of the Filipinos’ resiliency to adverse conditions or simply a silent wish that the Fates will spare us from similar troubles in the future.

For entrepreneurs, there is reason to feel confident that the business environment this year may be conducive to healthy competition.

Last October, the International Finance Corp., the World Bank’s private investment arm, reported that, based on its study of 189 economies, the Philippines ranked among the top 10 economies that made the biggest improvement in business regulation in 2013.

The report, which is on its 11th edition, “analyzes regulations that apply to an economy’s businesses during life cycle, including startup and operations, trading across borders, paying taxes, and resolving insolvency.”

Regulations

The “ease of doing business” review showed the Philippines jumping 30 notches to 108 from its 2012 rank of 138.

The upgrade resulted from three factors: the introduction of a fully operational online filing and payment system that made tax compliance easier; simplified occupancy clearances eased construction projects; and new regulations guarantee borrowers’ right to access their data in the country’s largest credit bureau.

Understandably, the administration gushed over the report. It described the improved ranking as an affirmation of the effectiveness of the economic measures put in place by the government.

For some quarters, however, the favorable report is nothing to crow about since we are way, way below the economies with the most business-friendly regulatory environments.

The top 10 economies are Singapore, Hong Kong, China, New Zealand, United States, Denmark, Malaysia, South Korea, Georgia, Norway and the United Kingdom.

Two countries in the list—Singapore and Malaysia—are members of Asean. Both are former British colonies that have retained one of the notable features of Her Majesty’s colonial rule: an efficient career civil service system. This partly explains why they are on the honor roll.

Improvements

Until the martial law regime politicized the system, we had something similar. The civil service then was staffed by men and women who looked to government service as a badge of honor, not an opportunity to make money at the expense of the people they are supposed to serve.

That’s water under the bridge now. We have to live with (or suffer) the bureaucracy that’s in place.

Let’s look at the improved ranking in the ease of doing business here as a victory, no matter how minor it may be. Two of the regulatory measures that led to the upgrade had been the subject of discussion for many years.

The idea of an online tax filing and payment system dates back to the administration of President Fidel Ramos. The creation of a national credit bureau, which has been in the legislative pipeline for so many years, came to fruition only during the term of President Gloria Macapagal-Arroyo.

The legislative frameworks needed to implement these projects had to squeeze their way in Congress. The lawmakers did not find anything “sexy” or worth their time (read: profitable) with these measures so they took their time in deliberating on them.

There are several bills pending in Congress that seek to ease doing business in our country. The petitions of business organizations, including foreign chambers of commerce, for their immediate enactment have remained unheeded.

Local units

A pain in the neck for entrepreneurs or small business enterprises that the government seems to have overlooked is the abusive exercise of regulatory authority by some local government officials.

Under the Local Government Code, local government units, including barangays, have the power to enact ordinances that will regulate the operation of businesses within their territorial jurisdictions.

In line with this authority, they can impose fees and charges for revenue and regulatory purposes.

What was originally conceived as a means by which local government units can independently raise funds to sustain their activities has, for some governors, mayors and even barangay leaders, become an opportunity for extortion or ego trip.

It is common knowledge in highly urbanized cities that, for example, no construction or excavation permit for high rise buildings will be issued unless the developer “donates” to the mayor’s charity (himself) a substantial amount of money.

You want to put up a factory that can employ, say, 50 employees? The governor will be happy to expedite matters on condition that you engage the services of his favorite construction company or reserve one-half of the workforce to his supporters.

In the name of local autonomy, local government officials impose additional conditions on franchises or authorizations earlier issued by the national government. For the right amount of arguments, however, these conditions can be quickly waived.

Given these conditions, it should not come as a surprise that our country is hardly in the crosshairs of foreign investors.

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