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Other cities should follow QC’s lead in cutting red tape

FOR years, the National Competitiveness Council has moved heaven and earth to try to raise the Philippines’ profile in the “Doing Business” listing of the World Bank – the annual ranking of countries based on the “ease” of undertaking business procedures – with relative success.

The Doing Business 2018 report, published in November 2017, saw the Philippines recording a 14-point decline in its ranking to the 113th place. It has to be noted, however, that the 2018 and 2017 rankings are not comparable, given significant changes in methodology.

What really matters is the Philippines’ score and relative position versus its neighboring countries in Southeast Asia, as well as economies of similar size or level of development. In the 2018 report, the Philippines got a score of 58.74, up slightly from 58.32.

The study covered 11 areas of business regulation across 190 economies: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and labor market regulation.


The Philippines improved in the area of getting electricity, by reducing the time to get an electricity connection by “implementing a new asset management system and by creating a new scheduling and planning office.”

Also contributing to the higher score were improvements in the process of paying taxes and fees: “The Philippines made paying taxes easier by introducing a new electronic system for payment and collection of the housing development fund contributions.”

The Philippines, however, was below the average for the East Asia and Pacific region, 62.70, and trailed behind Indonesia, which got 66.47; Malaysia and Thailand were far ahead, with scores of 78.43 and 77.44, respectively.

One indicator where the Philippines was ahead of the region was in resolving insolvency, where the country ranked 59th overall with a score of 55.22, significantly above the average 40.78 for the East Asia and Pacific.

The next World Bank report should reflect further reforms undertaken by the Duterte administration, which has ordered local governments to replicate Davao City’s success in cutting red tape. When he was mayor of Davao City, President Rodrigo Duterte made sure all applications for permits were acted upon in three days, or else the city bureaucrat concerned would be asked to explain.

Last week, the National Competitiveness Council announced that it had addressed bottlenecks in a total of 10 processes, including starting a business or the incorporation process. Registration with the Securities and Exchange Commission has been cut to three steps from four and to three days from five.

As for local government permits like business and location clearance, the number of steps has been reduced to two from three, and the number of days to two from eight. For tax-related transactions, the number of steps has also been reduced to two from six and the processing time to eight days from 12 days.

The problem, however, is that the data pertains only to Quezon City, which was chosen by the government to be the representative city for the entire country.

This is well and good for ranking purposes. Eventually, however, other cities will have to step up their game. If Quezon City can cut red tape, then the rest of Metro Manila and other so-called “highly urbanized cities,” given their access to resources and technology, should be able to do the same.

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