Competitive council sets stretch target (Malaya Business Insight)

After languishing in ranking in the International Finance Corp. (IFC) Doing Business Report for seven years, the government-private sector National Competitiveness Council (NCC) is determined to leapfrog the Philippine ranking, albeit by some kind of miracle, 100 points within one year.

Guillermo Luz, NCC co-chair representing private sector, said the body has set a “stretch target” scenario of lifting the ranking of the Philippines from 138th out of the 185 countries in the 2013 IFC survey released in October to 38 by 2014 and a “leapfrog scenario” where the Philippines soars to 138 to 13 in a still unset date.

Luz said these targets are possible “if all recommendations and reforms are completed on the four big impact indicators by July 1 next year.” The IFC culls data until May each year before the report is issued in October.

The scenarios set by the NCC also assumes everything remains constant in other countries, meaning the 184 countries with which the Philippines is compared remained static from 2013 ranking.

The four big impact indicators where the Philippines needs serious overhaul are starting a business, getting credit, protecting investors and resolving insolvency.

One singular reform cuts across and would address all four: automation.

For starting a business, NCC is recommending for the reduction in the number of days and number of steps in applying for business permits from 36 to 6 and from 16 to 3, respectively by implementing online registration through the Securities and Exchange Commission (SEC), local government units, the Social Security System, Philippine Business Registry, Philhealth, Pag-IBIG etc.

Luz said the government through Congress and SEC should consider removing the minimum paid capital in setting up a business.

Luz also said the NCC is pushing for the creation of a Credit Information Index that would set up a mechanism that will improve access to credit information as well as the Legal Rights Index where laws on protecting legal rights of creditors would be reviewed.

The NCC also pushes for the review of the Corporate Code of the Philippines to protect investors on the extent of disclosure, director liability, and shareholder suits among others.

However, NCC also has set a “low hanging” fruit scenario where the ranking improves 27 notches to 109 in 2014 from 136 in the 2012 report.

The IFC has criticized the Philippines for being “very good in dribbling” and not really making a basket when it comes to doing business but its senior program manager Hans Shrader said one single reform, the Philippine Business Registry, would have a huge impact on the ranking.

Shrader also said implementation, not mere passing a law, would make a significant dent to investors when measuring doing business in a country.

The Philippines fell in its ranking from the 2012 report in seven of the 10 indicators – starting a business (161), getting electricity (57), registering property (122), getting credit (129), protecting investors (128), paying taxes (143) and enforcing contracts (111). It improved in dealing with construction permits but still a poor 100th; trading across borders (53) and resolving insolvency 165.

Shrader said the Philippines’ ranking has virtually stood still from 2005 to 2012.

In the 2013 report, the Philippines were in the company of countries like Ecuador, Sierra Leone, Tajikistan and Madagascar in poor raking.

“We have to get out of that neighbourhood,” Luz said.

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