Statement by Secretary Ramon M. Lopez
Department of Trade and Industry
Delivered during the Press Briefing on the World Bank Doing Business 2020 Report held October 24,2019| Meeting room 1, Delegation Bldg., PICC, Pasay City
I have good news for you today.
The World Bank has just released its Doing Business 2020 report which shows our country’s remarkable improvement relative to ease of doing business (EODB). The Philippines’ EODB score increased from 57.68 to 62.8 (+5.12) this year which translates to a sharp improvement in our rank from 124th to 95th place among 190 economies. This is a “long jump” of 29 notches.
Our double-digit improvement is even made more significant given the following facts:
- The Philippines was cited by the World Bank as one of 42 economies which implemented regulatory reforms (in more than three topics) which resulted in significant improvements in EODB scores
- The Philippines is one of the Top Three high jumpers among the 190 economies covered by the WB study. In terms of rank, the Philippines is the 3rd highest, next only to Togo (+40), and Saudi Arabia (+30), as we share the same spot with Jordan which also increased by +29 notches.
- Among ASEAN, the Philippines’ recorded the highest improvement, both in rank and EODB score, followed by Myanmar which rose from 171st to 165th (+6 notches), and its EODB score from 44.72 to 46.8 (+2.08)
- The last time the Philippines ranked 95th — the highest spot we held, so far—-was in the year 2014. This DB 2020 cycle increase remains the highest recorded (annual) improvement of the country since 2010
GO TEAM PHILIPPINES
In pursuing ease of doing business, DTI adopted a formula of [whole of government approach + public-private sector partnership] which we now see is a winning formula. Team Philippines works. The judiciary, legislative, and executive branches, in partnership with the private sector, committed to a deliberate, methodical execution of a sound and clear strategy towards competitiveness. Today, we see the fruits of our labor.
May I take THIS opportunity to recognize our partners from both government and the business community who made the +29 notches possible. Congratulations for your dedication, patriotism, and hard work. In particular:
- starting a business – SEC, BIR (DOF), LGU-QC, Pag-IBIG, PhilHealth, SSS
- dealing with construction permits – LGU-QC
- getting electricity - MERALCO
- registering property - LRA, LGU-QC
- getting credit – CIC, and private sector organizations like TransUnion, BAP Credit Inc., CRIF, Compuscan
- protecting minority investors - SEC
- paying taxes-BIR, SSS, PhilHealth and Pag-IBIG
- trading across borders - BOC (DOF)
- enforcing contracts - SEC, Supreme Court
- resolving insolvency - Supreme Court
- logistics services sector
The road to 95 was challenging much like climbing Mount Everest. We worked fast, and scaled UP our reform initiatives. For the DB 2020 cycle, team Philippines submitted 53 reforms/data correction requests to the World Bank. All 11 data correction requests were considered but only 9/42 reforms were accepted.
Today is a time for thanks. For recognition. For Celebration.
REPORTING THE RESULTS
The Philippines performed best in three topics: Getting Credit (from EODB score of 5.0 to 40.00); Protecting Minority Investors (from EODB score 43.33 to 60.00) and Dealing with Construction permits (from 68.58 to 70.00)
[IN TERMS OF RANK: Getting Credit (from 184th to 132nd); Protecting Minority Investors (from 132nd to 72nd); and Dealing with Construction Permits (from 94th to 85th)]
We also registered higher scores in Paying Taxes (72.6 from 71.8), and slightly higher scores on Enforcing contracts (46 from 45.96) and Registering property (57.6 from 57.56), but still our ranking declined because other countries moved faster in these areas.
On paying taxes – the WB recognized the efforts of the LGU-QC, as verified with the respondents that payments for local Business tax and community tax are paid together. Also, the BIR, which under the TRAIN law simplified the income tax returns for corporations which reduced The number of hours in the preparation and filing of corporate income tax from 38 to 24 hours.
On enforcing contracts, we Thank the Supreme Court, particularly the Office of the Court Administrator Midas Marquez, for the effort —-and the speed of action —- on the reforms to reduce the time and cost of resolving a standardized commercial dispute. Immediately, the Supreme Court increased the threshold for small claims cases filed before the Metropolitan Trial Courts from PHP 300,000 to PHP 400,000. The WB team acknowledged this reform however, there was not enough time to assess impact of the Revised Rules of Procedure for Small Claims Cases on the standardized commercial dispute. THIS, we believe Will have an impact in the next cycle of the DB 2021, together with the Court’s E-library
On Registering Property, private sector experts confirmed that, as of May 1, 2019, the Land Registration Authority (LRA), Register of Deeds, had implemented a comprehensive and functional database to check for encumbrances. The electronic database was implemented following LRA’s initiative to digitize all land titles. When a background check of a property is required, LRA can now use the property number to search the title and obtain information of all encumbrances, caveats, charges or privileges affecting the registered property. As per the Registering Property indicator methodology, a score of one point is given to an economy where the agency in charge of registering immovable property has implemented a comprehensive and functional database to check for encumbrances, covering most of the properties registered in the largest business city of this economy. This database should include information on all encumbrances, caveats, charges or privileges affecting a registered property.
OUR DATA CHALLENGE
Same time last year, the DOF and DTI Secretaries jointly issued a statement where we posed a data challenge. We expressed, our country’s strong objections on the drastic slide in the 2019 DB report which show a drop in the ranking by 11 notches from 113 (2018) to 124 (2019). This was attributed mainly to the country’s dismal performance in the “Getting Credit” indicator. We said that the World Bank has gotten that one wrong. This was regrettable considering the significant headway made by the Philippines on the other indicators.
While no mention of this data challenge was made in the DB 2020 report, we are “relieved” that a more realistic assessment of the Philippines’ credit Information ecosystem has been reflected in the World bank report. We thank all the credit bureaus who met with the World Bank team early this year, to validate the data submitted by government. Because of your support, the Philippines’ rank in Getting Credit rose from 184/190 countries to 132/190—-increasing by 52 notches.
Let me assure you that the ARTA/DOF-SEC/DTI team are all behind you in your quest to promote financial inclusion. We recognize the need to continue the work. We have to:
Expand the coverage of distributed credit information of Transunion to firms not only individuals
Pursue Data exchange between credit bureaus and SSS, GSIS, and utility companies and retailers
Fully utilize the credit Information system
But addressing the Depth of Credit Information Index is only half the story. The Anti-Red Tape Authority (ARTA), now needs to ensure the Strength of Legal Rights Index and work with DOF for the immediate issuance of the Implementing Rules and Regulations for the Personal Property Security Act of 2018, and for the Land Registration authority to embark on a collateral registry
THE ROLE OF LEGISLATION
Special thanks are in order to our senators and congressmen for enacting laws which contributed to our achievement today.
The Revised Corporation Code removed the minimum paid in capital, and allowed the SEC to issue regulations on related party transactions. The World Bank recognized the Philippines’ efforts to strengthen minority investor protection by requiring greater disclosure of transaction with interested parties and enhancing director liability for transactions with interested parties. With the enactment of the Revised Corporation Code in February 2019, the Securities and Exchange Commission issued Memorandum Circulars on Related Party Transactions which dramatically increased the EODB scores on the topic from 43.33 to 60.00, and more significantly raised sharply the Philippine rank from 132nd to 72nd.
LADIES AND GENTLEMEN,
Much like a climb to Mount Everest, we need to prepare for the next base camp. The target in the PDP for 2020 is top 40%, which would be around rank 76.
We need to unite and be prepared to Institute “game-changers” that will enable enterprises to become more competitive and the country more attractive to investors, whether local and foreign. We need to implement BOLDER and SMARTER reforms that will reflect a future-ready Philippines.
The DB 2020 study mentioned interesting points that we can consider:
Economies that score highest on the ease of doing business share several common features including the widespread use of electronic systems. All of the 20 top-ranking economies have online business incorporation processes, have electronic tax filing platforms, and allow online procedures related to party transfers. Moreover, 11 economies have electronic procedures for construction permitting.. Fourteen of the 20 top performance have a unified collateral registry...
As the ARTA prepares for DB 2021, we are looking at the following priorities:
- Philippines Business Portal (i.e. Online, One form, One number, end-to-end mobile registration) —- c/o DICT, ARTA, DOF, LGU QC and all agencies involved in business registration
- Online Corporate registration system- c/o SEC and DICT
- Unified Employee Reporting System for Social Security Agencies c/o DICT, SSS, PhilHealth, Pag-IBIG
- Property Registration Portal c/o DICT, LRA, BIR and other agencies involved in the property registration portal
- Modern Collateral Registry (pursuant to Personal Property Security Act) c/o LRA
We celebrate the fact that the Philippines is now one of the top 100 most competitive countries in the World—And we are on an Upward trajectory. we need to further speed UP and scale UP the reforms to remain in this path.
Let us be reminded that many of our reforms require gestation. But we are confident that soon they will bear fruit. Automation, strict implementation of RA 11032, New regulations are underway.
While not all reforms were accepted by the WB in THIS cycle, we are counting on the newly established Anti Red Tape Authority (ARTA) to ensure that the agencies continue the DB reforms already initiated. These reforms must create a positive impact on our stakeholders. We know That we are measured not by what we do, or what we have accomplished, but whether the reforms created a positive experience for our Citizens.
Today, we must celebrate THIS win.
Tomorrow, we continue the work we started, with speed, and with scale.
Maraming salamat po!♦
Date of Release: 24 October 2019
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