‘Flawed’ WB report a ‘disservice’ to PH

Finance Secretary Cesar V. Purisima raised “grave concerns” over the constant changes in the annual World Bank Doing Business Report, which he said was a “disservice” to countries like the Philippines obsessed with improving their competitiveness rankings.

In a five-page letter dated Nov. 5, Purisima told World Bank Group President Jim Yong Kim that the 2016 Doing Business Report “again brings to the fore its most glaring flaws and inconsistencies, doing member-countries like the Philippines a great disservice by damaging investor perceptions while at the same time serving as an unhelpful and unreliable basis for further improvement.”

The latest report showed the country slipped six spots to 103rd place from 97th last year.

In the annual report, countries are being ranked by the World Bank based on several indicators such as starting a business, getting construction permits, registering properties and paying taxes—hence serving as a gauge for investors to determine the ease of doing business in a country.

“The Philippines is keen to use competitiveness studies as tools for improvement, but reports like the Doing Business Report lose their utility and value if methodologies change almost yearly, and if they are inconsistent with majority of the other reports gauging improvement across a variety of indicators,” Purisima added.

In particular, Purisima slammed the annual World Bank report for providing “inaccurate” representation.

“For the Philippines, the report collects sample data from Quezon City only, as the most populous city. It disregards the fact that countries like the Philippines have islands of excellence such as those operated by the Philippine Economic Zone Authority [that] were precisely established in order for investors to easily do business in the Philippines,” Purisima explained.

The finance chief pointed out that “doing business in the Philippines, or in any country for that matter, is never homogenous.”

“Thus the report fails to provide an accurate representation of the country and is misleading to foreign investors who inadvertently use the report in their decision-making,” he said.

Also, Purisima complained about the report’s “erratic and unsound” methodology, which he claimed “damages the World Bank’s members.”

“For one, the sample data collected is not empirical data but based on surveys, whose respondents may not be up-to-date with reforms or active in the city under review. We have given the Doing Business team actual, empirical data to help them understand the procedures and regulations to the conduct of doing business in the sample city, but the Doing Business team discounted these,” Purisima said.

“There is also an over-reliance on looking at legislation as evidence of reforms, when in fact most of the effective reforms done in the Philippines have been administrative and executive in nature and do not even require congressional or presidential action,” he added.

According to Purisima, the changes in methodology, which are “done unilaterally and retroactively” each year, “defeat the purpose of the report as a helpful benchmark for improvement, as the baseline measures keep shifting.”

“That the Doing Business Report findings are also used by several other international indices makes for a troubling multiplier effect on investor perceptions for certain economies. Further, the negative perceptions caused by the published reports have already impacted both policy and investment decisions and cannot be undone by revisions in rank and score.