Gov’t revises target amid drop in EODB rank

The 14-notch drop in the country’s rating in the latest Ease of Doing Business (EODB) Report of the World Bank prompted the government to manage its expectations and lower its targets.

The government earlier targeted to bring the country to the top 20 economies in the World Bank’s EODB list by 2020.

However, with the latest report and amid tougher competition posed by other countries, Trade and Industry Secretary Ramon Lopez said the government had adjusted the target from “top 20 economies to the top 20 percent of the list” or within the bracket of the top 38 countries by 2020.

The Philippines suffered the biggest drop in its rating in the EODB report since 2012, falling 14 notches to No. 113 rank from 99th in the previous report.

The report surveys companies in the country’s largest business economy, which, in this case, is Quezon City.

EODB measures aspects of business regulations and their implications on business operations based on 10 indicators, including starting a business, enforcing contracts, dealing with construction permits.

While the EODB does not cover all issues relevant in making business decisions, “it does cover important areas that are under the control of policy makers,” the report read.

To address this, the government is implementing a set of changes, some of which would require amendments to critical laws such as the Corporation Code. Lopez said he expected the changes to be felt in three years.

When asked if the government was still keeping its target to be part of the top 20 economies in the report by 2020, Lopez said that the target was now “top 20 percent.”

“The top 20 percent is a more realistic target. At least before the Duterte administration ends its term, we should be hitting that number. [In] 2020, that’s the ambitious target. We’ll try to commit [to that], but at the latest [it should be hit] in 2022,” he said.

“There will be a set of survey starting January next year. All these reforms must be undertaken and felt by [investors]. Hopefully, we can get back the 14 notches that we lost,” he added.

The decline in ranking, which covered more or less the first year of the Duterte administration, reverses the country’s improvement in the ranks during the 2017 report that covered January to May 2016. In that EODB report, the Philippines moved up to 99th place from 103rd.

The country fell in its ranking in spite of a “marginal” improvement in its Distance to Frontier (DTF) score, which shows the gap of a country’s performance against the best global practice across 10 doing business indicator sets. The country scored 58.74 points, up from 58.32 points.

To leapfrog toward the top 38 economies means that the Philippines needs to jump at least 75 ranks from its current standing. A check at past ranks showed that the country took six years in order to move up 48 notches since 2011.

In the same breath, Lopez downplayed the importance of the ranking, noting that the government should focus on improving the DTF score instead. He said he wants to hit 70 points to over 80 points eventually, the latter being the range of scores for the report’s top 10 countries.

Nevertheless, the latest ranking went against the government’s expectations last year.

“The source of optimism at that time was all these reforms that have been started or about to start during the early start of the year. We were hoping all those reforms would be credited. Unfortunately, not all were considered,” he said.

Out of 17 recommendations submitted to the World Bank, he said only three were credited, namely reforms in getting electricity, and in paying taxes for PhilHealth and the Pag-IBIG fund through an electronic payment system.

Under current rules, Lopez said that submitted reforms should be felt by at least half of survey respondents in order to be deemed credited.