The Philippines dropped 6 places in the latest edition of the Doing Business 2016, a report issued by the World Bank. The Philippine economy ranks now in the 103rd place to do business, among 189 countries. This represents the biggest drop in East Asia & Pacific. This survey is the combined result of several indicators such as: starting a business, registering property, paying taxes, trading across borders, resolving insolvency, among others.
Philippines in ASEAN
While the most part of Southeast Asian economies have improved its business environment, Thailand, Malaysia and Philippines were the exceptions. Thailand dropped three places and Malaysia one.
In ASEAN, the Philippines occupies now the 6th position. This are not good news for an economy whose Foreign Direct Investment (FDI) levels already lag behind its neighbors. The boost of FDI was stated (several times) as being a top priority by Aquino administration.
To completely register a company, the number of steps remain unchanged – sixteen. However, and despite the decrease in the number of days to complete the incorporation (29), the country dropped to an undesirable 165th place in the starting a business indicator.
The overlap among governmental agencies is the main reason. There are several different procedures that must be simplified and standardized in order to simplify the “life” of small and medium entrepreneurs.
Imagine spending 193 hours per year to make an average of 36 payments. This is what companies in the Philippines have to face, at the same time that struggle with the highest corporate income tax in ASEAN – 30% based on net income or 2% minimum corporate tax rate based on gross income, whichever is higher.
This study, despite being a good business indicator, does not take into consideration topics such as macroeconomic or political stability. The Philippines remains an economy with a strong economic growth and excellent business opportunities derived from a growing and qualified middle class. The ASEAN economic integration (creating a single market of 650 million people) also opens excellent perspectives for this economy if seen as an opportunity and not as a threat.
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