GUILLERMO M. LUZ Co-Chairman, National Competitiveness Council
2013 REPORT SUMMARY
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 1 1 1 1 1 MALAYSIA 12 14 23 23 20 THAILAND 18 17 16 12 13 BRUNEI DARUSSALAM 79 83 86 96 88 VIETNAM 99 99 90 93 92 INDONESIA 128 130 126 122 129 CAMBODIA 133 141 138 145 135 PHILIPPINES 138 136 134 144 140 LAOS 163 166 163 167 ------
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 144 139 Tajikistan 141
Indicators EASE OF DOING BUSINESS REPORT 2009 2013 PHILIPPINE GLOBAL RANKING 2013 (185 economies) Adjusted 2012 (183 economies) 2011 (183 economies) 2010 (183 economies) 2009 (181 economies) Over-all ranking 138 136 134 144 140 Starting a business 161 158 155 162 155 Dealing w/ construction permits 100 101 98 111 105 Getting electricity 57 53 57 - - Employing Workers - - 115 126 Registering Property 122 120 109 102 97 Getting Credit 129 127 116 127 123 Protecting Investors 128 124 131 132 126 Paying Taxes 143 136 127 135 129 Trading across borders 53 56 54 68 58 Enforcing contracts 111 109 114 118 114 Resolving Insolvency 165 166 161 153 151
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
Summary Indicator Indicator Rank (2013) Target Indicator Ranking (2014) Indicator Ranking Variance New World Ranking, single variable (basis: 138) Starting A Business* 161 19 +142 117 +21 Dealing with Construction Permits 100 17 +83 127 +11 Getting Electricity 57 34 +23 134 +4 Registering Property 122 21 +101 126 +12 Getting Credit* 129 1 +128 109 +29 Protecting Investors* 128 6 +122 112 +26 Paying Taxes 143 70 +73 131 +7 Trading Across Borders 53 3 +50 128 +10 Enforcing Contracts 111 37 +74 130 +8 Resolving Insolvency* 165 58 +107 117 +21 World Ranking Variance
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 1 4 2 5 36 12 2 5 1 12 2 Malaysia 12 54 96 28 33 1 4 15 11 33 49 Thailand 18 85 16 10 26 70 13 96 20 23 58 Brunei 79 135 43 29 115 129 117 22 40 158 46 Vietnam 99 108 28 155 48 40 169 138 74 44 149 Indonesia 128 166 75 147 98 129 49 131 37 144 148 Cambodia 133 175 149 132 115 53 82 66 118 142 152 Philippines 138 161 100 57 122 129 128 143 53 111 165 Laos 163 81 87 138 74 167 184 126 160 114 185
ASEAN Countries Singapore World Ranking # of Procedures Time (days) Cost (% per capita) Paid-in Min. Capital Ease of starting a business 4 3 3 0.6-0.03 Malaysia * 54 3 6 15.1 0.0 0.31 Thailand Laos Vietnam Brunei Darussalam Indonesia 85 4 29 6.7 0.0 0.42 81 6 92 7.1-0.41 108 10 34 8.7-0.49 135 15 101 10.7-0.60 166 9 47 22.7 42.0 0.76 Philippines 161 16 36 18.1 4.8 0.75 Cambodia 175 9 85 100.5 28.5 0.84
Score Simulation per Indicator Starting a Business 2013 Report 2014 Report Movement/ Change in rank Number of Days 36 6-30 days Number of Steps 16 3-13 steps Min Paid In Capital 4.8 0 Effect in indicator ranking 161 19 142 Effect in world ranking 138 117 21 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
Dealing With Construction Permits ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of income per capita) dealing with licenses (percentile) Singapore 2 11 26 16.7 0.09 Thailand * 16 8 157 9.2 0.19 Vietnam 28 11 110 67.3 0.27 Indonesia 75 13 158 95.0 0.45 Laos 87 23 108 48.6 0.47 Brunei Darussalam 43 22 95 4.0 0.35 Philippines 100 29 84 103.0 0.52 Malaysia 96 37 140 17.5 0.50 Cambodia 149 21 652 36.9 0.69
Score Simulation per Indicator Dealing with Construction Permits 2013 Report 2014 Report Movement/ Change in rank Number of Days 84 84 same Number of Steps 30 8-22 steps Effect in indicator ranking 100 17 83 Effect in world ranking 138 127 11 Recommendation Reduce the number of Steps Note: Biggest factor is cost Agency QC, BFP, Registry of Deeds, Maynilad, Telephone Co.
Getting Electricity ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of income per capita) getting electricity (percentile) Singapore 5 4 36 28.6 0.06 Thailand * 10 4 35 75.3 0.10 Malaysia 28 5 46 53.9 0.19 Brunei Darussalam 29 5 56 40.6 0.21 Vietnam 155 6 115 1,988.3 0.69 Indonesia 147 6 108 1,243.7 0.64 Philippines 57 5 50 833.3 0.36 Cambodia 132 4 183 2,802.0 0.59 Laos 138 5 134 2,130.5 0.62
Score Simulation per Indicator Getting Electricity 2013 Report 2014 Report Movement/ Change in rank Number of Steps 5 4 1 Number of Days 50 35 15 Effect in indicator ranking 57 34 23 Effect in world ranking 138 134 4 Recommendation Reduce number of steps Reduce number days Agency QC, Meralco
Registering Property ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of property value) registering property (percentile) Singapore* 36 5 21 2.9 0.27 Thailand 26 2 2 6.3 0.22 Vietnam 48 4 57 0.6 0.30 Malaysia 33 5 14 3.3 0.24 Laos 74 5 98 1.1 0.43 Indonesia 98 6 22 10.8 0.53 Brunei Darussalam 115 7 298 0.6 0.58 Cambodia 115 7 56 4.3 0.58 Philippines 122 8 39 4.8 0.59
Score Simulation per Indicator Registering Property 2013 Report 2014 Report Movement/ Change in rank Number of Days 39 5 34 Number of Steps 8 3 5 Effect in indicator ranking 122 21 101 Effect in world ranking 138 126 12 Recommendation Reduce Number of Days Reduce number of Steps Agency QC, LRA, BIR (Cert. authorizing registration),
Getting Credit ASEAN Countries World Ranking Credit Information Index Legal Rights Index Sum getting credit getting credit (percentile) Malaysia* 1 6 10 16 0.01 Singapore 12 4 10 14 0.12 Vietnam 40 4 8 12 0.28 Thailand 70 5 5 10 0.44 Cambodia 53 3 8 11 0.37 Brunei Darussalam 129-7 7 0.83 Indonesia 129 4 3 7 0.83 Philippines 129 3 4 7 0.83 Laos 167-4 4 0.95
Score Simulation per Indicator Getting Credit 2013 Report 2014 Report Movement/ Change in rank Credit Information Index (0-6) 3 6 + 3 Legal rights index (0-10) 4 10 + 6 Effect in indicator ranking 129 1 128 Effect in world ranking 138 109 29 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
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)
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) 2 10 9 9 9.33 0.01 4 10 9 7 8.67 0.02 13 10 7 6 7.67 0.08 49 10 5 3 6.00 0.37 82 5 9 2 5.33 0.53 117 4 2 8 4.67 0.69 128 2 3 8 4.33 0.75 169 6 1 2 3.00 0.95 184 2 1 2 1.67 1.00
Protecting Investors 2013 Report 2014 Report Extent of Disclosure Index (0-10) Extent of Director Liability (0-10) Score Simulation per Indicator 2 10 +8 2 7 +5 Shareholder suits index (0-10) 8 8 same Movement/ Change in rank Effect in indicator ranking 128 6 122 Effect in world ranking 138 112 26 Recommendation Review the Corporate Code of the Philippines (particularly on the above indices) Agency SEC, Congress
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)
Paying Taxes ASEAN Countries World Ranking Payments (number) Time (hours) Total tax rate (% profit) Ease of paying taxes (percentile) Singapore 5 5 82 27.6 0.09 Brunei Darussalam * 22 27 96 16.8 0.24 Malaysia 15 Cambodia 66 Thailand 96 Laos 126 Indonesia 131 13 133 24.5 0.21 40 173 22.5 0.41 22 264 37.6 0.51 34 362 33.3 0.61 51 259 34.5 0.62 Philippines 143 47 193 46.6 0.65 Vietnam 138 32 872 34.5 0.64
Score Simulation per Indicator Paying Taxes 2013 Report 2014 Report Movement/ Change in rank Time (no. of hours / year) 193 96-97 Number of Payments 47 27-20 Effect in indicator ranking 143 70 73 Effect in world ranking 138 131 7 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
Trading Across Borders ASEAN Countries Singapore* 1 4 5 456 4 4 439 0.01 Thailand 20 5 14 585 5 13 750 0.16 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 11 5 11 435 6 8 420 0.11 Brunei Darussalam 40 6 19 680 6 15 745 0.27 Indonesia 37 4 17 644 7 23 660 0.26 Philippines 53 7 15 585 8 14 660 0.30 Vietnam 74 6 21 610 8 21 600 0.35 Cambodia 118 9 22 755 10 26 900 0.56 Laos 160 10 26 2,140 10 26 2,125 0.79
Score Simulation per Indicator Trading Across Borders 2013 Report 2014 Report Documents to export (number) 7 4-3 Time to Export (days) 15 5-10 Documents to Import (number) 8 4-4 Time to Import (days) 14 4-10 Effect in indicator ranking 53 3 50 Movement/ Change in rank Effect in world ranking 138 128 10 Recommendation Streamlining of procedures Agency BOC, NSW
Enforcing Contracts ASEAN Countries World Ranking Procedures (number) Time (days) Cost (% of debt) enforcing contracts (percentile) Singapore 12 21 150 25.8 0.14 Thailand 23 36 440 15.0 0.25 Vietnam * 44 34 400 29.0 0.33 Malaysia 33 29 425 27.5 0.28 Laos 114 42 443 31.6 0.56 Philippines 111 37 842 26.0 0.56 Cambodia 142 44 401 103.4 0.66 Brunei Darussalam 158 47 540 36.6 0.71 Indonesia 144 40 498 139.4 0.66
Score Simulation per Indicator Enforcing Contracts 2013 Report 2014 Report Movement/ Change in rank Procedures (number) 37 34-3 Time (Days) 842 400 442 Effect in indicator ranking 111 37 74 Effect in world ranking 138 130 8 Recommendation Reduce procedures Reduce days / length of cases Note: largest impact will come from reduced costs of litigation Agency Supreme Court, DOJ
Resolving Insolvency ASEAN Countries World Ranking Time (years) Cost (% of estate) Recovery rate (cents on the dollar) Ease of closing a business (percentile) Singapore 2 0.8 1 91.3 0.01 Thailand * 58 2.7 36 42.4 0.31 Malaysia 49 1.5 15 44.7 0.26 Brunei Darussalam 46 2.5 4 47.2 0.25 Vietnam 149 5.0 15 13.9 0.81 Indonesia 148 5.5 18 14.2 0.80 Philippines 165 5.7 38 4.9 0.89 Cambodia 152 6.0 15 12.8 0.82 Laos 185 No practice No practice - 1.00
Score Simulation per Indicator Resolving Insolvency 2013 report 2014 report Movement/ Change in rank Time (years) 5.7 2.7 3 Cost (% of estate) 38 36 2 Recovery Rate (cents per 4.9 $) 42.4 37.5 Effect in indicator ranking 165 58 107 Effect in world ranking 138 117 21 Recommendation FRIA (IRR) Agency Supreme Court
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* 158 150 +8 133 +3 Dealing with Construction Permits 102 88 +14 133 +3 Registering Property 117 96 +21 133 +3 Getting Credit* 126 78 +48 128 +8 Protecting Investors* 133 46 +87 124 +12 Paying Taxes 13 ----- ----- ------ ----- Resolving Insolvency* 163 ----- ----- ------ ----- 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.
Low Hanging Fruit scenario 2012 Report 2014 Report Change in World Rank 136 109 + 27 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 1. 2013.
Big Impact Indicators Indicator Indicator Rank (2013) Target Indicator Ranking (2014) Indicator Ranking Variance New World Ranking, single variable (basis: 138) Starting A Business* 161 19 +142 117 +21 Dealing with Construction Permits 100 17 +83 127 +11 Getting Electricity 57 34 +23 134 +4 Registering Property 122 21 +101 126 +12 Getting Credit* 129 1 +128 109 +29 Protecting Investors* 128 6 +122 112 +26 Paying Taxes 143 70 +73 131 +7 Trading Across Borders 53 3 +50 128 +10 Enforcing Contracts 111 37 +74 130 +8 Resolving Insolvency* 165 58 +107 117 +21 World Ranking Variance
Stretch Target Scenario : Effects of 4 Big Impact Indicators 2013 Report 2014 Report Change in World Rank 138 38 + 100 NOTE: If all recommendations and reforms are completed on the 4 identified Big Impact indicators by 1 July 2013
Leap Frog Scenario : Total Effect of All Indicators on World Ranking 2013 Report 20xx Report Change in World Rank 138 13 + 125 NOTE: If ALL recommendations and reforms are completed on ALL indicators
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
Sources: IFC 2012 Doing Business Report Web sources: http:// www.doingbusiness.org/reports/global-reports/doingbusiness-2012 http:// www.doingbusiness.org/methodology http:// www.doingbusiness.org/reforms/overview/economy/philippines http:// www.doingbusiness.org/rankings http:// www.doingbusiness.org/reforms/reform-simulator
MARAMING SALAMAT PO!