GUILLERMO M. LUZ Co-Chairman, National Competitiveness Council

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1 GUILLERMO M. LUZ Co-Chairman, National Competitiveness Council

2

3 2013 REPORT SUMMARY

4 COUNTRIES EASE OF DOING BUSINESS REPORT Philippines vs ASEAN 2013 (185 economies) Adjusted 2012 (183 economies) 2011 (183 economies) 2010 (183 economies) 2009 (181 economies) SINGAPORE MALAYSIA THAILAND BRUNEI DARUSSALAM VIETNAM INDONESIA CAMBODIA PHILIPPINES LAOS

5 OUR NEIGHBORS IN THE 2012 and 2013 REPORT COUNTRY 2012 RANKING COUNTRY 2013 RANKING Ecuador 130 India 132 West Bank and Gaza (Middle 131 Cambodia 133 East) India 132 Tanzania 134 Nigeria 133 West Bank and Gaza 135 Syrian Arab Rep (Middle 134 Lesotho 136 East) Sudan (Sub-Saharan Africa) 135 Ukraine 137 Philippines 136 Philippines 138 Madagascar (Sub-Saharan 137 Ecuador 139 Africa) Cambodia 138 Sierra Leone 140 Mozambique (Sub- Saharan Africa) Micronesia (Pacific) 140 Madagascar 142 Croatia (Eastern Europe) 141 Sudan 143 Moldova (Eastern Europe) 142 Syrian Arab republic Tajikistan 141

6 Indicators EASE OF DOING BUSINESS REPORT PHILIPPINE GLOBAL RANKING 2013 (185 economies) Adjusted 2012 (183 economies) 2011 (183 economies) 2010 (183 economies) 2009 (181 economies) Over-all ranking Starting a business Dealing w/ construction permits Getting electricity Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading across borders Enforcing contracts Resolving Insolvency

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8 ASSUMPTIONS : Starting point is No. 138 in October 23, 2012 (as reported in DB Report 2013) Reforms must be completed, implemented and with measurable results by 1 July 2013 to qualify for DB Report 2014

9 Summary Indicator Indicator Rank (2013) Target Indicator Ranking (2014) Indicator Ranking Variance New World Ranking, single variable (basis: 138) Starting A Business* Dealing with Construction Permits Getting Electricity Registering Property Getting Credit* Protecting Investors* Paying Taxes Trading Across Borders Enforcing Contracts Resolving Insolvency* World Ranking Variance

10 2013 Ease of Doing Business Ranking WORLD RANKING OF ASEAN COUNTRIES PER INDICATOR Country Starting a Business Dealing w/ Construction Permits Getting Electricity Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Resolving Insolvency Singapore Malaysia Thailand Brunei Vietnam Indonesia Cambodia Philippines Laos

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12 ASEAN Countries Singapore World Ranking # of Procedures Time (days) Cost (% per capita) Paid-in Min. Capital Ease of starting a business Malaysia * Thailand Laos Vietnam Brunei Darussalam Indonesia Philippines Cambodia

13 Score Simulation per Indicator Starting a Business 2013 Report 2014 Report Movement/ Change in rank Number of Days days Number of Steps steps Min Paid In Capital Effect in indicator ranking Effect in world ranking Recommendation Reduce number of days Reduce number of steps Implement Online Business Registration Consider removing Min. Paid in Capital Agency SEC, QC, SSS, PBR, BIR, Philhealth, Pag-ibig SEC/Congress

14 Dealing With Construction Permits ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of income per capita) dealing with licenses (percentile) Singapore Thailand * Vietnam Indonesia Laos Brunei Darussalam Philippines Malaysia Cambodia

15 Score Simulation per Indicator Dealing with Construction Permits 2013 Report 2014 Report Movement/ Change in rank Number of Days same Number of Steps steps Effect in indicator ranking Effect in world ranking Recommendation Reduce the number of Steps Note: Biggest factor is cost Agency QC, BFP, Registry of Deeds, Maynilad, Telephone Co.

16 Getting Electricity ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of income per capita) getting electricity (percentile) Singapore Thailand * Malaysia Brunei Darussalam Vietnam , Indonesia , Philippines Cambodia , Laos ,

17 Score Simulation per Indicator Getting Electricity 2013 Report 2014 Report Movement/ Change in rank Number of Steps Number of Days Effect in indicator ranking Effect in world ranking Recommendation Reduce number of steps Reduce number days Agency QC, Meralco

18 Registering Property ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of property value) registering property (percentile) Singapore* Thailand Vietnam Malaysia Laos Indonesia Brunei Darussalam Cambodia Philippines

19 Score Simulation per Indicator Registering Property 2013 Report 2014 Report Movement/ Change in rank Number of Days Number of Steps Effect in indicator ranking Effect in world ranking Recommendation Reduce Number of Days Reduce number of Steps Agency QC, LRA, BIR (Cert. authorizing registration),

20 Getting Credit ASEAN Countries World Ranking Credit Information Index Legal Rights Index Sum getting credit getting credit (percentile) Malaysia* Singapore Vietnam Thailand Cambodia Brunei Darussalam Indonesia Philippines Laos

21 Score Simulation per Indicator Getting Credit 2013 Report 2014 Report Movement/ Change in rank Credit Information Index (0-6) Legal rights index (0-10) Effect in indicator ranking Effect in world ranking Recommendation Credit Information Index Set up a mechanism that will improve access to credit information Legal Rights Index Review laws on protecting legal rights of creditors Agency CIC, Supreme Court, Congress

22 Detailed Indices for further study **Credit Information Index Firms & individual data distributed?(yes) Positive & negative data distributed?(no) Registry distribute credit information from retailers, etc? (NO) More than 2 years of credit info distributed? (YES) Data on loans below 1% of income per capita distributed? (YES) Law guarantees borrowers to inspect data in registry?(no) **Legal Rights Index Can any business use movable assets as collateral? (YES) Does the law allow businesses to grant a non possessory security right? (NO) Does the law allow businesses to grant a non possessory security right in all of its assets? (NO) May security rights extend to future or after-acquired assets? (No) Is a general description of debts and obligations permitted in collateral agreements? (NO) Collateral registry in operation (NO) Secured creditors paid first outside insolvency procedure (Yes) Secured creditors are paid first when a business is liquidated. (NO) Secured creditors not subject to automatic stay/moratorium on enforcement procedures. (YES) Law allows parties to agree in collateral agreement. (YES)

23 Protecting Investors ASEAN Countries Singapore Malaysia Thailand * Indonesia Cambodia Brunei Darussalam Philippines Vietnam Laos World Ranking Disclosure Index Director Liability Index Shareholder Suits Index Investor Protection Index protecting investors (percentile)

24 Protecting Investors 2013 Report 2014 Report Extent of Disclosure Index (0-10) Extent of Director Liability (0-10) Score Simulation per Indicator Shareholder suits index (0-10) 8 8 same Movement/ Change in rank Effect in indicator ranking Effect in world ranking Recommendation Review the Corporate Code of the Philippines (particularly on the above indices) Agency SEC, Congress

25 Detailed Indices for further Study ***Extent of Disclosure: Corporate body providing approval for transactions (0-3) Disclosure of conflict of interest required? (0-2) Immediate disclosure of the transaction to the public/shareholders (0-2) Disclosure of the transaction in public periodic filings (2-2) External body to review transactions(0-1) **Director Liability Shareholders can sue directly or derivatively (1-1) Shareholders can hold Mr. James liable for the damage (0-2) Court can void transaction upon claim by a shareholder plaintiff (0-2) Mr. James pay damage upon claim by the shareholder plaintiff (1-1) Mr. James repays profits upon claim by the shareholder plaintiff (0-1) Fines and imprisonment can be applied against Mr. James (0-1) **Shareholder Suits Shareholders can inspect transaction documents before filing suit (1-1) Shareholders can request an inspector to investigate the transaction (1-2) Plaintiff can obtain any documents from the defendant and witness during trial (3-3) Plaintiff can request categories of documents from the defendant without identifying specific ones. (0-1) Plaintiff can directly question the defendant and witness during trial (2-2) Level of proof required for civil suits is lower than that of criminal cases (1-1)

26 Paying Taxes ASEAN Countries World Ranking Payments (number) Time (hours) Total tax rate (% profit) Ease of paying taxes (percentile) Singapore Brunei Darussalam * Malaysia 15 Cambodia 66 Thailand 96 Laos 126 Indonesia Philippines Vietnam

27 Score Simulation per Indicator Paying Taxes 2013 Report 2014 Report Movement/ Change in rank Time (no. of hours / year) Number of Payments Effect in indicator ranking Effect in world ranking Recommendation Reduce time to 96 hours Reduce number of payments/procedures to 27 Note : largest effect comes from reducing the overall tax rate Agency BIR

28 Trading Across Borders ASEAN Countries Singapore* Thailand World Ranking Documents for export (number) Time for export (days) Cost to export (US$ per container) Documents for import (number) Time for import (days) Cost to import (US$ per container) trading across borders (percentile) Malaysia Brunei Darussalam Indonesia Philippines Vietnam Cambodia Laos , ,

29 Score Simulation per Indicator Trading Across Borders 2013 Report 2014 Report Documents to export (number) Time to Export (days) Documents to Import (number) Time to Import (days) Effect in indicator ranking Movement/ Change in rank Effect in world ranking Recommendation Streamlining of procedures Agency BOC, NSW

30 Enforcing Contracts ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of debt) enforcing contracts (percentile) Singapore Thailand Vietnam * Malaysia Laos Philippines Cambodia Brunei Darussalam Indonesia

31 Score Simulation per Indicator Enforcing Contracts 2013 Report 2014 Report Movement/ Change in rank Procedures (number) Time (Days) Effect in indicator ranking Effect in world ranking Recommendation Reduce procedures Reduce days / length of cases Note: largest impact will come from reduced costs of litigation Agency Supreme Court, DOJ

32 Resolving Insolvency ASEAN Countries World Ranking Time (years) Cost (% of estate) Recovery rate (cents on the dollar) Ease of closing a business (percentile) Singapore Thailand * Malaysia Brunei Darussalam Vietnam Indonesia Philippines Cambodia Laos 185 No practice No practice

33 Score Simulation per Indicator Resolving Insolvency 2013 report 2014 report Movement/ Change in rank Time (years) Cost (% of estate) Recovery Rate (cents per 4.9 $) Effect in indicator ranking Effect in world ranking Recommendation FRIA (IRR) Agency Supreme Court

34 Low Hanging Fruit Indicators Indicator (*) big impact indicators Indicator Rank (2012) Target Indicator Ranking (2014) Indicator Ranking Variance New World Ranking, single variable (basis: 136) Starting A Business* Dealing with Construction Permits Registering Property Getting Credit* Protecting Investors* Paying Taxes Resolving Insolvency* World Ranking Variance Note: target ranking for paying taxes and resolving insolvency can t be computed since no quantitative data is provided by concerned agencies.

35 Low Hanging Fruit scenario 2012 Report 2014 Report Change in World Rank NOTE: If all recommendations and reforms are completed at a moderate level ( i.e. not based on ASEAN benchmarks)on Starting a Business, Dealing with Construction Permits, Registering Property, Getting Credit, Protecting Investors, Paying Taxes and Resolving Insolvency by July

36 Big Impact Indicators Indicator Indicator Rank (2013) Target Indicator Ranking (2014) Indicator Ranking Variance New World Ranking, single variable (basis: 138) Starting A Business* Dealing with Construction Permits Getting Electricity Registering Property Getting Credit* Protecting Investors* Paying Taxes Trading Across Borders Enforcing Contracts Resolving Insolvency* World Ranking Variance

37 Stretch Target Scenario : Effects of 4 Big Impact Indicators 2013 Report 2014 Report Change in World Rank NOTE: If all recommendations and reforms are completed on the 4 identified Big Impact indicators by 1 July 2013

38 Leap Frog Scenario : Total Effect of All Indicators on World Ranking 2013 Report 20xx Report Change in World Rank NOTE: If ALL recommendations and reforms are completed on ALL indicators

39 RECOMMENDATIONS : Call meeting of concerned agencies to establish commitment to meet targets Regular reports to the Economic Cluster (e.g., once every 2 months) by the concerned agencies Set targets / KRAs as part of performance evaluation under PBB system

40 Sources: IFC 2012 Doing Business Report Web sources:

41 MARAMING SALAMAT PO!

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