the philippines’ performance in doing business 2008 kim s. jacinto-henares september 26, 2007
Post on 14-Jan-2016
44 Views
Preview:
DESCRIPTION
TRANSCRIPT
The Philippines’ Performance in Doing Business 2008
Kim S. Jacinto-HenaresSeptember 26, 2007
2
IFC and the World Bank: Part of the World Bank Group
IFC and the World Bank: Part of the World Bank Group
International Bank for Reconstruction and
Development (IBRD orWorld Bank), 1945
International Development Association, 1960
Multilateral Investment Guarantee Agency, 1988
IFC is owned by its 179 member countries, which collectively determine policies.
International Centre for Settlement of
Investment Disputes, 1966
International Finance Corporation
3
Doing Business project
• Starting a business
• Dealing with licenses
• Employing workers
• Registering property
• Enforcing contracts
• Getting credit
• Trading across borders
• Protecting investors
• Paying taxes
• Closing a business
2006 2007 2008
www.doingbusiness.org
• Update of 2006
• Add 20 countries
• Update of 2007
• 3 new countries
10 topics 178 economies
4
What is the Doing Business report?
• Presents quantitative indicators, empirical data set on business regulations & their enforcement
• Highlights the extent of obstacles to doing business
• Helps identifies the source of those obstacles• Helps identifies what reforms are needed and
provides advice on how to start the process • Highlights best practices in how to reform• An objective benchmark against which to
measure regulatory performance in comparison to other economies
5
Doing Business indicators measure
• Degree of regulation (e.g. no. of procedures to start a business or register commercial property)
• Regulatory outcomes (e.g. time & cost to enforce a contract, go through bankruptcy or trade across borders)
• Extent of legal protections of property (e.g. protections of investors against looting by company directors or the range of assets that can be used as collateral)
• Flexibility of employment regulation
• Tax burden on businesses
6
What Doing Business indicators don’t measure
• Macroeconomic policy
• Currency volatility
• Ease of access to markets
• Proximity to large markets
• Quality of infrastructure services (other than those related to ‘Trading across borders’)
• Investor perceptions
• Crime rate
• Security of property from theft & looting
• Transparency of government procurement
• Bribes
• Underlying strength of institutions
7
Doing Business 2008 Overall Ranking
TopicPhils
RankingWorld’s Best
Ease of doing business 133 Singapore
Trading across borders 57 Singapore
Dealing with licenses 77 St. Vincent & the Grenadines
Registering property 86 New Zealand
Getting credit 97 United Kingdom
Enforcing contracts 113 Hong Kong, China
Employing workers 122 United States
Paying taxes 126 Maldives
Protecting investors 141 New Zealand
Starting a business 144 Australia
Closing a business 147 Japan
Overall Doing Business ranking is based on an
average of the averages of the 10 topics.
Ranking on each topic is the simple average of
rankings on its component indicators.
8
3-year Philippines performanceReforms have started
but need to be accelerated & fully
implemented.
2005-2007: Ranking Per Topic
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
2005 2006 2007
Year
Ra
nk
Starting a business
Dealing with licenses
Employing workers
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
Philippines Doing Business Overall Ranking
114.0
116.0
118.0
120.0
122.0
124.0
126.0
128.0
130.0
132.0
134.0
2005 2006 2007
Ease of Doing Business
9
Starting a business: entry regulation
Measures the challenges of launching a business in the Philippines. Records all procedures that are officially required for an entrepreneur to start up and formally operate a general commercial business. Both pre- and postincorporation procedures are recorded, including official correspondence or transactions with public agencies.
Indicator
Procedures (number) 15
Time (days) 58
Cost (% of income per capita)
26.8
Min. Capital (% of income per capita)
6.9
Rank 144
Rank
0
20
40
60
80
100
120
140
160
2005 2006 2007
Rank
Starting a Business
0
10
20
30
40
50
60
70
2005 2006 2007
Procedures (number)
Time (days)
Cost (% of income per capita)
Min. capital (% of income per
capita
Procedures
Time
Cost
Min. capital
10
Dealing with licenses: operations regulations
Measures the requirements for ongoing operations in the Philippines.Records all procedures that are officially required for a business in
the construction industry to build a standardized warehouse.
Indicator
Procedures (number) 21
Time (days) 177
Cost (% of income per capita)
75.9
Rank 77
Dealing with Licenses
0
50
100
150
200
250
2005 2006 2007
Procedures (number)
Time (days)
Cost (% of income per capita)
Procedures
Time
Cost
Rank
0
20
40
60
80
100
120
2005 2006 2007
Rank
11
Employing workers: labor regulation
Measures the regulation of employment, specifically as it affects the hiring and firing of workers and the rigidity of working hours (examines employment and social security laws).
Indicator
Difficulty of hiring index 56
Rigidity of hours index 20
Difficulty of hiring index 30
Rigidity of employment index
35
Non-wage labor cost 7.4
Firing cost 91.0
Rank 122
Each index takes values b/w 0 and 100, w/ higher values indicating more rigid
regulation.
Employing Workers
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2005 2006 2007
Difficulty of hiring index
Rigidity of hours index
Difficulty of firing index
Rigidity of employment index
Non-wage labor cost
Firing cost
Firing Cost
Difficulty of Hiring Index
Rigidity of employment Index
Rigidity of hours index
Difficulty of Firing Index
Non-wage Labor Cost
Rank
116.0
117.0
118.0
119.0
120.0
121.0
122.0
123.0
2005 2006 2007
Rank
12
Registering property: regulation of property transfers
Measures the ease of registering property based on a standard case of an entrepreneur who wants to purchase land and a building. Records the full sequence of procedures necessary to transfer the title from the seller to the buyer.
Indicator
Procedures (number) 8
Time (days) 33
Cost (% of property value)
4.2
Rank 86
Registering Property
0
5
10
15
20
25
30
35
2005 2006 2007
Procedures (number)
Time (days)
Cost (% of property value)
Procedures
Cost
Time
Rank
80
82
84
86
88
90
92
94
96
98
100
2005 2006 2007
Rank
13
Getting credit: credit information and legal rights
(1) Measures the legal rights of borrowers & lenders, describing how well collateral and bankruptcy laws facilitate lending. (2) Measures the sharing of credit information, specifically the coverage, scope, quality & accessibility of credit information available through public & private credit registries.
Indicator
Strength of legal rights index
3
Depth of credit info index 3
Public registry coverage 0.0
Private bureau coverage 5.5
Rank 97
Index ranges from 0 (weak legal rights) to 10 (strong legal rights).
Getting Credit
0
1
2
3
4
5
6
2005 2006 2007
Strength of legal rights index
Depth of credit info index
Public registry coverage
Private bureau coverage
Strength of legal rights index
Depth of credit info index
Public registry coverage
Private bureau coverage
Rank
93
94
95
96
97
98
99
100
101
102
2005 2006 2007
Rank
14
Protecting investors: corporate governance
Measures the strength of minority shareholder protections against directors’ misuse of corporate assets for personal gain.
Indicator
Extent of disclosure index 1
Extent of director liability index
2
Ease of shareholder suits index
8
Strength of investor protection index
3.7
Rank 141
Index ranges from 0 to 10, with higher vaues indicating more protections or
greater disclosure.
Protecting Investors
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2005 2006 2007
Extent of disclosure index
Extent of director liability index
Ease of shareholder suits index
Strength of investor protection
index
Ease of Shareholder Suits Index
Strength of Investor Protection Index
Extent of Director Liability Index
Extent of Disclosure Index
Rank
136.0
138.0
140.0
142.0
144.0
146.0
148.0
150.0
152.0
2005 2006 2007
Rank
15
Paying taxes: tax payable and compliance
Records the taxes and mandatory contributions that a company must pay or withold in a given year & the administrative costs of doing so. Measures all taxes & contributions that are government mandated, at any level, apply to the standardized business & have an impact in its income statements.
Indicator
Payments (number per year)
47
Time (hours per year)
195
Total tax rate (% of profit)
52.8
Rank 126
Paying Taxes
0.0
50.0
100.0
150.0
200.0
250.0
2005 2006 2007
Payments (No. per year)
Time (Hrs. per year)
Profit tax (%)
Labor tax and contributions (%)
Other taxes (%)
Total tax rate (% of profit)
Other TaxesLabor Tax and Contributions
Payments
Total Tax Rate
Time
Rank
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2005 2006 2007
Rank
16
Trading across borders: importing & exporting
Compiles procedural requirements for trading a standard shipment of goods by ocean transport. Every official procedure involved is recorded – starting from the final contractual agreement between the two parties, and ending with the delivery of the goods.
Indicator
Documents to export (number)
8
Time to export (days) 17
Cost to export (US$ per container)
800
Documents to import (number)
8
Time to import (days) 18
Cost to import (US$ per container)
800
Rank 57
Trading Across Borders
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1400.0
2005 2006 2007
Documents to export (No.)
Time to export (days)
Cost to export (US$ percontainer)
Documents to import (No.)
Time to import (days)
Cost to import (US$ percontainer)
Cost: export & Import
Rank
54.0
55.0
56.0
57.0
58.0
59.0
60.0
61.0
62.0
63.0
64.0
2005 2006 2007
Rank
17
Enforcing contracts: court efficiency
Measures the efficiency of the judicial system in resolving commercial dispute.
Indicator
Procedures (number) 37
Time (days) 842
Cost (% of claim) 26.0
Rank 113
Enforcing Contracts
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
2005 2006 2007
Procedures (number)
Time (days)
Cost (% of claim)
Time
Procedures Cost
Rank
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2005 2006 2007
Rank
18
Closing a business: bankruptcy
Identifies weaknesses in the bankruptcy law as well as the main procedural & administrative bottlenecks in the bankruptcy process.
Indicator
Time (years) 5.7
Cost (% of estate) 38.0
Recovery rate (cents on the dollar)
4.2
Rank 147
Rank
141.0
142.0
143.0
144.0
145.0
146.0
147.0
148.0
2005 2006 2007
Rank
Closing a Business
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2005 2006 2007
Time (years)
Cost (% of estate)
Recovery rate (cents on thedollar)
Cost
Time
Recovery Rate
19
Philippines Reform
1. Starting a business – entry regulation2. Registering property – property registration3. Getting credit – access to credit
1. Dealing with licenses – operations regulation2. Trading across borders – importing &
exporting
1. Protecting investors – corporate governance2. Closing a business - bankruptcy
1. Paying taxes – tax payable & compliance2. Enforcing contracts – court efficiency3. Employing workers – labor regulation
Get basics right
Fully implement quick wins
Build on strategic priorities
Remain opportunistic
20
Philippines Reform: (1) Get basics right – TARGET NOW
• Cut the minimum capital req’t• Introduce a one-stop shop (e.g.
merge procedures, delegate tax registration to company registrar)
• Allow online start-up
• Simplify & lower fees• Introduce fast-track procedures• Make the registry electronic• Make the use of notaries optional
• Expand the range of information available in credit registries
• Eliminate legal obstacles to sharing credit information
• Allow all types of assets to be used as collateral
• Establish unified registries for all collaterals
• Phils Business Registry (DTI, NCC)
• SEC & BIR data exchange (pre-registered TIN) (SEC, BIR)
• Anti-Red Tape Law (June 2007) (ARTTF, PAGC)
• One Time Tax Transaction (ONETT) project (BIR)
• LAMP2 project* (DENR)• Land Administration and
Reform Act (LARA) bill; LEDAC priority*
• Credit Information System (CIS) bill; LEDAC priority
Starting a business
Registering property
Getting credit
Successful reformsPhils reform pipeline
*medium-long term reform executive action
Immediate/ short-term reforms; high impact.
21
Property registration – doable administrative reforms
Procedures NameOrder
NrDuration
(days)End Day PHP
Preparation of the deed of sale and ratification by Notary Public 1 1 1 100
Obtain a certified true copy of latest tax declaration from the Assessor’s Office of Manila 2 1 2 10
Payment of Documentary Stamp Tax and Capital Gains Tax at an authorized bank 3 1 3 52,161
Obtain tax clearance (or Certificate Authorizing Registration) from the Bureau of Internal Revenue 4 14 17 0
Obtain a certificate of updated payments of Real Estate Taxes from the Treasurer’s Office of Manila 5 2 19 50
Payment of transfer tax at the Treasurer’s Office of Manila 6 1 20 26,081
Apply with the Assessor’s Office of Manila for the issuance of a new tax declaration over the building in the name of buyer 7 3 23 100
Apply for registration with the Register of Deeds of Manila 8 10 33 16,794
22
Philippines Reform: (2) Fully implement quick wins – TARGET NOW
• Reduce licensing req’ts• Make information easily
accessible• Introduce online license
applications• Curb inspections• Consolidate project clearances
• Limit physical inspections• Go online• Measure delays at the border• Shift from cutting tariffs to
cutting delays• Shorten inland delays
• One Time Tax Transaction (ONETT) project (BIR)
• National Single Electronic Window (BOC, NCC)
• Xray machines for import/export inspection (BOC, NCC)
• Strong Republic Nautical Highway (SRNH) (DPWH, NCC)
• Batangas-Clark-Subic Logistics Corridor (NCC)
• SLEX, STAR, LRT projects (NCC)
Dealing w licenses
Trading across borders
Successful reformsPhils reform pipeline
Short-medium term reforms;
medium impact.
23
Philippines Reform Agenda: (3) Build on strategic priorities – HIGH IMPACT
• Anti-trust bill; LEDAC priority• Good Corporate Governance
Training for BOD (BSP)
• Judicial Reform Support Project (JRSP) (SC)
• Open company activities to investor scrutiny
• Require disinterested shareholder approval
• Minimize dependence on the courts
• Shift power to creditors• Limit appeals• Introduce time limits• Use the internet to post
decisions & publicize auctions• Introduce floating charges• Develop the trustee
profession
Successful reformsPhils reform pipeline
Closing a business
Protecting investors
Medium-long term reforms; high impact.
24
Philippines Reform Agenda: (4) Remain opportunistic – MEDIUM IMPACT
• National Program Support for Tax Administration Reform (NPSTAR) (BIR)
• Judicial Reform Support Project (JRSP) (SC)
• Case management (SC)• Specialized commercial
courts
• Introduce online filling• Combine taxes• Simplify tax administration• Reduce tax rates and broaden
base
• Streamline appeals• Make the enforcement of
judgments faster & cheaper• Introduce e-courts
• Allow flexible working hours• Introduce apprentice wages• Lower dismissal costs• Raise & equalize mandatory
retirement ages
Enforcing contracts
Employing workers
Successful reformsPhils reform pipeline
Paying taxes
Long term reforms; medium
impact.
Doing Business 2008
September 26, 2007
26
Doing Business methodology - some basics
1. Gather all the relevant laws, regulations, decrees, fee schedules
2. Follow the entrepreneur from the beginning to the end of a transaction
3. Record every step of the process, and its time and cost4. The data set for all sets of indicators in Doing Business
2008 are for June 20075. The standardized survey uses a simple business case to
ensure comparability across countries and over time6. Assumptions about the legal form of the business, its size,
location and the nature of its operations7. Surveys are administered through local intermediaries
27
“The need to make assumptions”
‘Starting a Business’
• Considers SME (between 10 and 50 employees)• 100% domestically owned• Start-up capital of 10 times income per capita• Turnover of at least 100 times income per capita• Operates in country’s most populous city• Legal form: limited liability company (LLC)• Simple business operation – general commercial activity• Does not qualify for any special benefits• Does not own real estate• All requirements to incorporate and commence operations
are recorded
top related