Businesses in the Philippines enjoy operating in a strong regulatory environment but are most bogged down by inefficient government support services, the World Bank's new Business Ready report launched on Oct. 3 showed.
In the inaugural report that assessed business climate in its pilot 50 countries, the Philippines scored 70.68 in regulatory framework quality out of a possible highest score of 100, landing at 16th place within the second quintile or upper 40 percent of participating economies.
In terms of public services that governments provide so businesses can easily comply with regulations, the Philippines scored 50.8 -- its lowest, even as the country's score in this pillar still belonged to third quintile or upper 60 percent of the 50 economies at 24th position.
The Philippines scored a higher 57.95 in operational efficiency, although at 36th spot landed in the fourth quintile or the lower 40 percent of the countries covered by the successor to the Washington-based lender's annual Doing Business report, which stopped publication after the 2020 edition due to controversies.
The Philippines' scores in the Business Ready report's three pillars followed the global trend observed by the World Bank.
"Nearly all 50 economies assessed this year perform better on their regulatory framework than they do on the public services they provide to ease compliance by businesses. Such implementation gaps keep businesses, workers, and society as a whole from reaping the full benefits of a healthy business climate," the World Bank noted.
In particular, the Philippines posted the highest scores in the areas of labor (75.54), international trade (71.47), and utility services (66.47) -- areas where "the economy implemented all the measured good practices in terms of labor inspectorates, providing electronic systems and interoperability of services for international trade operations, and providing transparent information (connection requirements, tariffs, complaint mechanisms) for water and electricity," the World Bank said.
On the other hand, the country's scores were the lowest in business insolvency (45.51), business entry (48.49), as well as market competition (50.13). "Within these areas, the [Philippine] economy does not provide interconnection of e-case management system in liquidation and reorganization, and lags in terms of exchange of company information for business entry and in university-industry collaboration to promote technology transfer," the World Bank explained.
The Philippines' other scores were 62.88 in dispute resolution; 60.7 in financial services; 60.27 in business location; and 56.66 in taxation.
The Business Ready report measured 1,200 indicators across 10 categories for every economy.
It no longer focused on country rankings, unlike the previous Doing Business reports.
Back in 2018, the Philippines' departments of Finance (DOF) and Trade and Industry (DTI) asked the World Bank to review the Philippines' score in the Doing Business 2019 report released that year as they claimed that there were "grossly inaccurate and understated findings" in the "getting credit" indicator.
The DOF and the DTI back then said they had "strong objections" to the World Bank report, whose alleged inaccuracy offset increases in other indicators, such that the ranking fell despite gaining a slightly higher score.
The World Bank targets to expand the number of countries this new report covers up to 180 by 2026.
"Richer economies do tend to be more business-ready, but economies need not be rich to have a good business environment. Our analysis finds that low- and middle-income economies can also achieve a strong business-enabling climate," Norman Loayza, director of the World Bank's Indicators Group that led the Business Ready project, said in a statement.
"With economic growth being slowed by demography, debt, and discord, progress will come only through the ingenuity of private enterprise. That depends on conducive conditions -- an investment climate that facilitates the economic miracles that entrepreneurs make when they are given half a chance, miracles that are badly needed today," the World Bank Group's chief economist and senior vice president for development economics Indermit Gill said.