Doing Business 2012: Philippines Ranking Down

The World Bank in conjunction with the International Financial Corporation recently released Doing Business 2012

Doingbusiness.org attempts to measure how business friendly an economy is.

A fundamental premise of Doing Business is that economic activity requires good rules—rules that establish and clarify property rights and reduce the cost of resolving disputes; rules that increase the predictability of economic interactions and provide contractual partners with certainty and protection against abuse. The objective is regulations designed to be efficient, accessible to all and simple in their implementation. In some areas Doing Business gives higher scores for regulation providing stronger protection of investor rights, such as stricter disclosure requirements in related-party transactions.

Doing Business takes the perspective of domestic, primarily smaller companies and measures the regulations applying to them through their life cycle. This year’s report ranks economies on the basis of 10 areas of regulation—for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency (formerly closing a business). In addition, data are presented for regulations on employing workers.

Here is the current ranking:

Unfortunately the Philippine fell two notches from 134 last year to 136th. Notice how ‘unfriendly’ the domestic business environment has been. The other implication is that the local business environment has been uncompetitive and requires a high hurdle rate to attract investors, which why jobs are inadequate.

Here is the measure of progress by 183 nations monitored by the institution.

For the Philippines, there has hardly been any progress from 2005. This implies that the deluge of media based politicking has resulted to little progress.

The only reform, doingbusiness.org has identified is the passing of a law on ‘Resolving insolvency’. Yet we don’t even know how ‘fair’ or ‘equitable’ and enforceable this law is.

Finally here is overall scorecard. Except for trading across the borders (globally ranked 51st) and getting electricity (54), most of the other metrics has been dismal: starting a business (158), dealing with construction permits (102), registering property (117), getting credit (123), protecting investors (133), paying taxes (136), enforcing contract (112) and resolving insolvency (163).

If there is any important lesson that can be gleaned from the above is that the Philippines political economy remains firmly hamstrung or plagued by the lack of property rights. Obviously, this has been the result of excessive politicking or overdependence on political resolution of socio-economic problems.

Filipinos hardly realize that politicians don’t care about our property rights, what they care about is the usurpation and the expansion of their political control and the privileges that accompanies this.

We can fantasize about so and so politician delivering us from our economic woes. However, economic reality will only persistently frustrate us, because there are NO miracles from redistributionist policies.

Forcibly taking resources from Pedro’s pockets and to give to Juan is not only a ZERO sum activity that leads to a waste of resources, but importantly also promotes a culture of sloth and dependency, which politicians and their media accomplices has been perennially parroting—control here, control there and control everywhere. Yet the only thing that needs controlling should be their loquacious economically abstract 'noble' sounding mouths.

Progress would have to come from our respect for property rights which serves as the foundation for economic freedom. Ultimately the path to progress starts from us, and not from politicians-a reality which most can't comprehend.