Despite the country’s improvement in its ranking in the Doing Business report, there are still constraints that need to be addressed in order to help firms grow and generate jobs, according to the World Bank.
In the latest “Doing Business” report, the Philippines ranked 108th out of 189 economies in terms of improvement in business regulations. It jumped 30 notches from last year’s 138th ranking.
Gains were seen in the areas of resolving insolvency, getting credit, getting electricity, paying taxes, trading across borders, dealing with construction permits, and registering property.
However, declines were noted in the areas of starting a business (from 161th to 170th) and enforcing contracts (from 111th to 114th), while the protecting investors indicator remained at 128th.
“We know that we need to address the constraints that firms face, to help them grow and create jobs for the Filipino people,” according to Motoo Konishi, World Bank country director for the Philippine.
Konishi noted that over 95 percent of the labor force in the Philippines are either self-employed or work in micro, small and medium enterprises, adding that a vast majority of those working in these enterprises work in very small firms.
“The World Bank estimates that the Philippines needs to generate about 14.6 million jobs over the next four years. Creating an environment that helps micro and small enterprises to grow is essential to create jobs in the economy,” he said.
The World Bank country director mentioned that business registration and renewal of various permits remains an area that needs major improvements.
“We need an environment where various permits and licenses are rationalized, where compliance with rules and regulations does not create a huge burden, where rules and regulations are clear and transparent, where creditworthy firms can obtain financing even if they do not have real estate to offer as a collateral, and where disputes are resolved efficiently, fairly and at low cost,” he said.
Citing Malaysia, where one needs only six days and three steps to register a business, Konishi said that the Philippines still has to improve, wherein starting a business in the country should undergo 15 steps for 35 days.
The World Bank official mentioned that an effective electronic platform for business registration would not only reduce costs, and increase the speed of approval but improve transparency and accountability of the various agencies responsible for each step in business registration.
“Some legal acts need to be changed to bring them up to date with modern practices, shifting away from requirements for paper receipts and stamped books in the age of computers,” he suggested.
Meanwhile, Konishi said that the World Bank remains confident that the Philippines will continue the path of reform.
“We are confident that this momentum will be maintained because reforms are being pursued toward the creation of more and better jobs,” he added.