Improve the Ease of Doing Business (PH0038)

Status quo - The milestone of this continuing commitment remains the same as the target end date was set in 2016. The next Doing Business Report has yet to be published in the fourth quarter of 2015. The Philippines' ranking has improved significantly since 2013, jumping 43 notches. Currently, the Philippines ranks 95th out of the 189 countries that were covered by the Doing Business survey. Main objective - The initiative aims to raise Philippine competitiveness rankings from the bottom third to the top third in the world by 2016. Relevance - This commitment is relevant in promoting transparency and efficiency in government doing business processes. This initiative is also relevant to OGP as it promotes technology and innovation in streamlining processes and implementing doing business reforms in the country. Ambition - Aside from improved ranking in the Doing Business Survey, the more important ambition in this commitment is institutionalizing efficiency in the business processes in the country.

For Commitment details, see https://www.opengovpartnership.org/documents/philippines-mid-term-progress-report-2015-2017.

10. Improve ease of doing business

Commitment Text:

Status quo or problem/issue to be addressed

The milestone of this continuing commitment remains the same as the target end date was set in 2016. The next Doing Business Report has yet to be published in the fourth quarter of 2015. The Philippines' ranking has improved significantly since 2013, jumping 43 notches. Currently, the Philippines ranks 95^th out of the 189 countries that were covered by the Doing Business survey.

Main Objective

The initiative aims to raise Philippine competitiveness rankings from the bottom third to the top third in the world by 2016. Brief Description of Commitment Gameplan on Competitiveness - Ease of Doing Business was created to initiate, implement, and monitor ease of doing business reforms, and the inclusion of the reform targets in the performance-based incentive system of all government agencies concerned with business-process related services.

OGP challenge addressed by the commitment Improving Public Services

Relevance: This commitment is relevant in promoting transparency and efficiency in government doing business processes. This initiative is also relevant to OGP as it promotes technology and innovation in streamlining processes and implementing doing business reforms in the country.

Ambition: Aside from improved ranking in the Doing Business Survey, the more important ambition in this commitment is institutionalizing efficiency in the business processes in the country.

Responsible institution: National Competitiveness Council (NCC)

Supporting institution(s): Department of Trade and Industry

Start date: 1 July 2013

End date: 31 October 2016

Commitment Aim

Small and medium-sized enterprises (SMEs) in the Philippines have found it difficult to grow due to the discouraging processes facing would-be entrepreneurs. This commitment built on the 2012 Game Plan for Competitiveness, which was crafted in response to the country’s poor performance on the World Bank’s Ease of Doing Business Survey.[Note: Ease of Doing Business Survey is a survey on competitiveness conducted by the World Bank. The Philippines has jumped from 144th in 2010 to 108th in 2014-2015 in the Ease of Doing Business Index. The top third of the ranking is 1st-63rd place.] In order to boost the Philippine’s ranking, this commitment aimed to streamline and simplify government processes across ten areas measured by the survey.[Note: These areas include: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.] This includes reforms that address issues such as starting a business and paying taxes.

Status

Midterm: Substantial

At the midterm, substantial progress had been made in terms of developing more streamlined business processes, however the overall commitment objective of achieving a top third ranking had not been achieved. Instead, the Philippines fell six ranks to 103 out of 189 countries in the 2016 Ease of Doing Business Survey.[Note: Doing Business 2016: The Philippines https://bit.ly/2HYfEKv. ] The target was not achieved for three main reasons: (1) the survey methodology was changed, (2) public awareness of the reform initiative was lacking, and (3) the support and commitment of a few agencies did not materialize.[Note: Focus Group Discussion, National Competitive Council (NCC) Staff. Held on 12 October 2016 at NCC Office, Makati City.] The National Competitiveness Council (NCC), the lead implementing agency for this commitment, reported substantial progress[Note: The following were listed in the Official Gazette of the Philippines on Ease of Doing Business Report which also notes a change in rating due to change in the methodology: How to start a business: No. of steps increased from 15 to 16 and No. of days reduced from 35 to 34; Dealing with construction permits: No. of steps reduced from 25 to 24 and No. of days increased from 77 to 94; Getting an electricity connection: No. of steps reduced from 5 to 4 and No. of days remains at 42; Registering property: No. of steps is 9 and No. of days is 35 (Note: These figures cannot be compared with the 2014 set of indicators due to changes in methodology); Getting credit information: Depth of credit information index is 5 and Strength of legal rights index is 3 (Note: These figures cannot be compared with the 2014 set of indicators due to changes in methodology); Protecting investors: Extent of Conflict of Interest Regulation index is 4/10 and Extent Shareholder Governance index is 4.33/10 (Note: These figures cannot be compared with the 2014 set of indicators due to changes in methodology); Paying taxes: No. of payments remains at 36 and No. of hours to prepare and file returns and pay taxes remains at 193; Trading across borders: No. of documents to export remains at 6, No. of days to export remains at 15, No. of documents to import remains at 7, No. of days to import remains at 14; Enforcing contracts (through our courts): No. of steps remains at 37 and No. of days remains at 842; Resolving insolvency (filing for bankruptcy and shutting down a company): Recovery rate (cents per $) is at 21.24, Strength of Insolvency Framework is at 14.5/16 (Note: These figures cannot be compared with the 2014 set of indicators due to changes in methodology). (Official Gazette of the Philippines, Ease of Doing Business – Gameplan for Competitveness, accessed on November 13, 2016, http://www.gov.ph/governance/wp-content/uploads/2015/08/Q1-Q2-2015-EASE.pdf. ] in streamlining business processes, despite this not being reflected in the country’s ranking.

End of term: Substantial

This commitment’s completion by the end-of-term remains substantial, though additional progress was made during the second year of implementation. The ranking of the Philippines improved in the 2017 Ease of Doing Business Survey to 99 out of the 190 countries. This is lower than the 2015 ranking (95 out of 190), but according to interviews this could be due to the change in the survey methodology.[Note: Focus Group Discussion, National Competitive Council (NCC) Staff. Held on 12 October 2016 at NCC Office, Makati City.] It is worth noting that the Philippines has already moved 49 spots since its ranking in 2011.

Beginning June 2016, the Duterte administration continued reforms under Gameplan 4.0. The NCC made starting a business easier in 2016 by streamlining communications between the Securities and Exchange Commission and the Social Security System, thereby expediting the process of issuing an employer registration number.[Note: Doing Business: Business Reforms in Philippines http://www.doingbusiness.org/reforms/overview/economy/philippines. ] In 2017, the NCC increased the transparency of its building regulations, thereby making it easier to deal with construction permits.[Note: Ibid.] Additionally, the NCC made paying taxes easier by allowing health contributions, corporate income tax, and VAT returns to be completed online.[Note: Ibid. ]

The NCC also shared conduct of validation workshops that finalized targets for implementing agencies under the Gameplan 4.0 and ensured they were delivered on.[Note: National Competitiveness Council, response to the questionnaire of the IRM Researcher for the End of Term Report. Sent on October 6, 2017.] The NCC composed six reforms and 11 updates across all ten indicators measured in the World Bank’s Doing Business Report.[Note: Ibid.] These reforms were presented in the ‘5th Doing Business Summit’ convened by NCC in June 2017.

The end-of-term self-assessment report also reports the institutionalization of the Ease of Doing Business (EODB) inter-agency task force that has been overseeing and monitoring the EODB commitments of concerned agencies. The reform targets of relevant agencies have also been incorporated in the performance-based incentive system, according to the PH-OGP’s End of Term Self-Assessment Report.[Note: PH-OGP. End of Term Self-Assessment Report. October 2017.]

Did It Open Government?

Access to Information: Did not change

Civic Participation: Marginal (Private sector participation)

Public Accountability: Marginal

The commitment facilitated private sector participation in OGP as a key stakeholder for achieving open government reforms in this area. Through the implementation of this commitment, the business sector was represented in the task force and was involved in the implementation of its key activities. According to the NCC, the taskforce has become “an effective communication platform that allows regular consultations between the public and private sector, making the latter a vital part of the reform process.”[Note: National Competitiveness Council, response to the questionnaire of the IRM Researcher for the End of Term Report. Sent on October 6, 2017.] However, this space is limited to the private sector and has not been opened up to ordinary citizens.

The commitment also indirectly contributed to public accountability as it facilitated stakeholder monitoring of the concerned implementing government agencies’ actions in improving the country’s competitiveness, such as the use of technology and innovation in streamlining processes and implementing doing business reforms in the country.

Carried Forward?

The commitment will be carried forward in the national action plan. It will support the Duterte administration’s ten point socioeconomic agenda, which aims to improve the ease of doing business. The target deliverables include the implementation of the new Gameplan on Competitiveness: Ease of Doing Business and “Project Repeal: The Philippines’ Red Tape Challenge,” which aims to cut red tape in frontline agencies.[Note: PH-OGP 4th National Action Plan 2017-2019. June 30, 2017.]