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Philippines

Improve the ease of doing business (PH0038)

Overview

At-a-Glance

Action Plan: Philippines National Action Plan 2015 – 2017

Action Plan Cycle: 2015

Status: Inactive

Institutions

Lead Institution: National Competitiveness Council (NCC)

Support Institution(s): Department of Trade and Industry

Policy Areas

Private Sector

IRM Review

IRM Report: Philippines End-of-Term Report 2015-2017

Starred: No

Early Results: Marginal Marginal

Design i

Verifiable: No

Relevant to OGP Values: Not Relevant

Potential Impact:

Implementation i

Completion:

Description

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.

IRM Midterm Status Summary

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

IRM End of Term Status Summary

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 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. 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.]

Philippines's Commitments

  1. Civil society participation to improve LGU service delivery

    PH0042, 2017, Capacity Building

  2. Engage communities in the fight against corruption, criminality and illegal drugs

    PH0043, 2017, Capacity Building

  3. Ease of Doing Business:Competitiveness

    PH0044, 2017, Legislation & Regulation

  4. Ease of doing business: Philippines’ Anti-Red Tape Challenge)

    PH0045, 2017, Capacity Building

  5. Citizen Participatory Audit)

    PH0046, 2017, Audits and Controls

  6. 8888 Citizens’ Complaint Center

    PH0047, 2017, Public Participation

  7. Government feedback mechanism

    PH0048, 2017, Capacity Building

  8. Access to Information Legislation

    PH0049, 2017, Capacity Building

  9. E-Participation through the National Government Portal

    PH0050, 2017, Citizenship and Immigration

  10. Open Budget Index and Budget Reform Bill

    PH0051, 2017, E-Government

  11. Philippine Extractive Industries Transparency Initiative

    PH0052, 2017, Beneficial Ownership

  12. Institutional Mechanisms for Disaster Response

    PH0053, 2017, E-Government

  13. Shelter Development for Informal Settler Families

    PH0054, 2017, E-Government

  14. Open Local Legislative Processes

    PH0055, 2017, E-Government

  15. Law on ATI

    PH0029, 2015, Right to Information

  16. Transparency of local govs plans and budgets

    PH0030, 2015, Fiscal Transparency

  17. Open Data

    PH0031, 2015, Open Data

  18. Extractive Industries' Transparency

    PH0032, 2015, Extractive Industries

  19. CSO engagement in public audit

    PH0033, 2015,

  20. Civic enagement in local budget planning

    PH0034, 2015, Participation in Budget Processes

  21. Civic Enagement in Local Budget Planning – Community Capacity-Building

    PH0035, 2015, Capacity Building

  22. Improving public service delivery

    PH0036, 2015, Public Participation

  23. Improving local govs' performance

    PH0037, 2015, Capacity Building

  24. Improve the ease of doing business

    PH0038, 2015, Private Sector

  25. local government competitiveness

    PH0039, 2015, Capacity Building

  26. Public and private sector dialogue

    PH0040, 2015, Private Sector

  27. Improving corporate accountability

    PH0041, 2015, Private Sector

  28. Sustain transparency in national government plans and budgets

    PH0020, 2013, E-Government

  29. Support for the passage of legislations on access to information and protection of whistleblowers

    PH0021, 2013, Legislation & Regulation

  30. Engage civil society in public audit

    PH0022, 2013, Public Participation

  31. Enhance performance benchmarks for local governance

    PH0023, 2013, Capacity Building

  32. Enhance the government procurement system

    PH0024, 2013, E-Government

  33. Strengthen grassroots participation in local planning and budgeting

    PH0025, 2013, Participation in Budget Processes

  34. Provide more accessible government data in a single portal and open format

    PH0026, 2013, E-Government

  35. Starred commitment Initiate fiscal transparency in the extractive industry

    PH0027, 2013, Extractive Industries

  36. Starred commitment Improve the ease of doing business

    PH0028, 2013, Private Sector

  37. Disclose Executive Budgets

    PH0001, 2011, Fiscal Transparency

  38. Access to Information Initiative

    PH0002, 2011, Right to Information

  39. Broader CSO Engagement

    PH0003, 2011, OGP

  40. Participatory Budget Roadmap

    PH0004, 2011, Participation in Budget Processes

  41. Local Poverty Reduction

    PH0005, 2011, Subnational

  42. Empowerment Fund

    PH0006, 2011, Capacity Building

  43. Social Audit

    PH0007, 2011, Public Participation

  44. Results-Based Performance

    PH0008, 2011, Capacity Building

  45. Performance-Based Budgeting

    PH0009, 2011, Capacity Building

  46. Citizen’s Charters

    PH0010, 2011, Capacity Building

  47. Internal Audit

    PH0011, 2011, Audits and Controls

  48. Single Portal for Information

    PH0012, 2011, E-Government

  49. Integrated Financial Management System

    PH0013, 2011, E-Government

  50. Electronic Bidding

    PH0014, 2011, E-Government

  51. Procurement Cards

    PH0015, 2011, Open Contracting and Procurement

  52. Manpower Information System

    PH0016, 2011, E-Government

  53. Expand the National Household Targeting System (NHTS)

    PH0017, 2011, Public Participation

  54. e-TAILS

    PH0018, 2011, E-Government

  55. Budget ng Bayan

    PH0019, 2011, Fiscal Transparency