The Philippines slipped in global competitiveness ranking to 126th this year from 121st in 2005, according to a survey of 175 countries by the World Bank.
The country failed to implement enough reforms to enhance its business climate since last year up to April 2006, and fell way behind Southeast Asian neighbors Thailand (18th), Malaysia (25th), Taiwan (47th) and Vietnam (104th). Only Indonesia got a worse rating of 135th, according to "Doing Business 2007: How to Reform," a joint research project of the World Bank and its private sector lending arm, International Finance Corp.
"The good news is that for this particular year, there were no regulations imposed that negatively affected the business climate," IFC country manager Vipul Bhagat said in a media briefing Wednesday. "The bad news is that no positive reforms were done either and thus the country slipped in its ranking this year," Bhagat added.
The study, the fourth in a series of annual World Bank-IFC reports investigating regulations that enhance business activity and those that constrain it, looked at how countries performed in 10 areas: starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.
The study showed that on a scale of one to 10, the Philippines scored only 3 in the index for legal rights protection and 3.3 in the index for investor protection. The country was also outranked in the legal protection index by Malaysia, Indonesia, Thailand and Vietnam, which scored 8.0, 5.0, 5.0 and 4.0, respectively. Malaysia, Thailand and Indonesia also scored higher in the investor protection index with respective ratings of 8.7, 6.0 and 5.3.
It was noted to be more cumbersome to start a business (taking 48 days), obtain a license to build a warehouse (197 days), register property (33 days) and enforce a contract (600 days) in the Philippines than in most of its peers across East Asia. Based on the study, it would take 11 procedures to start a new business in the country compared to only five in Hong Kong, six in Singapore, eight in Taiwan and Thailand and nine in Malaysia.
The Philippines rated high relative to other East Asian economies only in two benchmarks -- ease in trading across borders and enforcement of commercial contracts. The report showed that it takes 10 days to import in the Philippines and 18 to export, beaten only by Singapore, China and Taiwan. But what was not included in the report was the significant progress made in fiscal reforms that, in turn, greatly reduced macroeconomic risks, said World Bank country director Joachim von Amsberg.
"Economic performance has been relatively strong which has increased investor confidence. This situation has created the breathing space to now focus on the microeconomic constraints to investment," Amsberg said. "If the Philippines can effectively address the myriad macroeconomic constraints faced by investors, large and small, it can reach its potential for rapid development," he said.
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