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Philippines

Ease of Doing Business:Competitiveness (PH0044)

Overview

At-a-Glance

Action Plan: Philippines 2017-2019 Action Plan (Updated)

Action Plan Cycle: 2017

Status: Inactive

Institutions

Lead Institution: National Competitiveness Council (NCC)

Support Institution(s): Department of Trade and Industry, Department of Interior and Local Government, Department of Public Works and Highways, Department of Finance, Department of Justice, Supreme Court, Securities and Exchange Commission, Bureau of Internal Revenue, Social Security System, Home Development Mutual Fund, Philippine Health Insurance Corporation, Bureau of Customs, Land registration Authority, Credit Information Corporation, Bangko Sentral ng Pilipinas, Bureau of Fire Protection, Landbank of the Philippines, Development Bank of the Philippines, Export Development Council, Quezon City Local Government, Senate of the Philippines, House of Representatives., MERALCO, Manila Water, Philippine Stock Exchange, Philippine Ports Authority, ACCRALAW, Bankers Association of the Philippines, Shareholders Association of the Philippines, Philippine Chamber of Commerce and Industry, AO 38 Taskforce, NCC Working Groups (composed of government, business, academics and community groups).

Policy Areas

Legislation & Regulation, Private Sector, Public Participation

IRM Review

IRM Report: Philippines Design and Implementation Report 2017-2019

Starred: Pending IRM Review

Early Results: Marginal

Design i

Verifiable: Yes

Relevant to OGP Values: Civic Participation

Potential Impact:

Implementation i

Completion:

Description

What is the public problem that the commitment will address?: Inefficient turnaround in the delivery of government services due to the cumbersome procedures and requirements for business related transactions; What is the commitment?: To improve the ease the doing business in the Philippines; How will the commitment contribute to solve the public problem?: The Ease of Doing Business (EODB) Gameplan for Competitiveness is a benchmarking strategy designed by the National Competitiveness Council in consultation with all key stakeholders in both the government and private sector to improve the business enabling environment and improve the Philippines’ ranking in all ten (10) indicators and the overall ranking in the Doing Business (DB) Report published by the World Bank – International Finance Corporation (WB-IFC). Specifically, this initiative aims to: • Implement in coordination with concerned agencies various reform initiatives geared towards the streamlining of regulatory procedures and simplifying the requirements for business related transactions; • Expedite transactions in government and make it more efficient at the national and local levels; • Promote transparency in government and reduce red tape; • Include annual reform targets in the performancebased incentive system of all agencies concerned; and • Make the Philippines as one of the priority investment hub in Asia Pacific Region. Through the years, the EODB Taskforce, created by Administrative Order No. 38, has been actively participating in working towards improving the ease of doing business in the country. The Philippines have already gained a total of 49 notches, the biggest gain in ASEAN since 2011.; Why is this commitment relevant to OGP values?: Civic Participation – In order to achieve seamless government service delivery and enhance administrative governance, it is necessary to strengthen the civil service and fully engage and empower citizens. Consultations with the private sector is also a key aspect in the reform process to ease doing business. To this end, the NCC has provided an effective communication platform through the EODB Taskforce that allows regular consultations between the public and private sector, making the latter a vital part of the reform process. • Public Accountability – For the past five years, the Philippines has performed remarkably in various global competitiveness reports specifically in the DB Report of WB-IFC. The government, through the NCC and the EODB Taskforce (an inter-agency taskforce created to initiate, implement and monitor ease of doing business reforms in the Philippines) have implemented and institutionalized different reforms (regulatory and administrative) in each line agency to improve the ease of starting, operating, growing, to closing a business. • Technology and Innovation - This initiative is also relevant to OGP as it promotes technology and innovation in streamlining processes and implementing doing business reforms in the country.; Additional information: This is in line with Chapter 5 of the Philippine Development Plan 2017-2022 on Ensuring People-Centered, Clean, and Efficient Governance.

IRM Midterm Status Summary

2A. Improve Ease of Doing Business

Commitment text from the action plan:

“To improve the ease the doing business in the Philippines.”

 

Milestones:

  1. "3 competitiveness policies issued within prescribed time
  2. 10 validation workshops conducted
  3. Reform inventory submitted to WB-IFC
  4. 10 monitored EODB reforms
  5. Bring the Philippines to the top third ranking in the EODB Survey
  6. 10 Multi-stakeholders Group Meetings conducted"

Editorial Note: For the complete text of this commitment, please see Philippines’ action plan at https://www.opengovpartnership.org/wp-content/uploads/2018/06/Philippines_-Action-Plan_2017-2019_updated.pdf

Context and Objectives (Commitment Design)

The commitment aimed to improve the standing of the Philippines in the World Bank’s Ease of Doing Business (EODB) survey [18] through streamlining of processes, transparency measures, and performance incentives.

Red tape in the conduct of business and the delivery of services was a problem that experts considered a key hindrance to improving the Philippines’ competitiveness. [19] The goal to improve the country’s competitiveness, along with cultivating a culture of excellence in public service and improved public-private sector collaboration, was considered a strategy to propel growth and economic development through increased private sector investment and business activities. [20]

Improved EODB standing was crucial in increasing private sector investments through efficient frontline services, especially those involving business transactions. Specifically, the commitment targeted passing competitiveness policies, undertaking and monitoring reform measures, and conducting multisectoral dialogues to pursue the Philippines’ Ease of Doing Business (EODB) “Game plan for Competitiveness,” which is a multisectoral plan on enabling a business environment and improving the Philippines’ EODB ranking. Beginning in June 2016, the Duterte administration continued reforms under Game plan 4.0. [21]  

The relevance of the commitment to OGP values was generally weak. However, given the consultative approach to reform the policies and the establishment of multisectoral engagement on business and competitiveness issues, the commitment was considered relevant to civic participation.

As designed, it is possible to verify the milestones under this commitment to some extent. For example, it is possible to broadly identify competitiveness policies passed, validation workshops conducted, a reform inventory submitted, and EODB reforms monitored. However, the commitment’s design did not specify the particular content and scope of the policies, workshops, reforms, and inventories. 

In general, an improved EODB standing could be viewed as a positive development in terms of improved economic competitiveness, specifically improvement of efficiency in frontline services that could attract more investment. However, because other factors come into play in generating new investments, with the EODB standing being just one of many factors, the potential impact of this commitment in general was assessed as minor, an incremental positive step.

Commitment Implementation

This commitment’s implementation was substantial. The government’s end-of-term self-assessment report [22] states that the main result of implementation was the passage of the “Republic Act No. 11032” about “the Ease of Doing Business and Efficient Government Service Delivery Act of 2018” (milestone 1). The Act was signed into law on 28 May 2018. Two other policies – amendments to the Corporation Code and the Security Transaction Bill – were  pending approval at the end of the implementation period.

The government completed 10 monitored EODB reforms (milestone 4), [23] validation workshops (milestone 2), and 10 multi-stakeholder group meetings (milestone 6). The IRM did not find evidence on the progress of milestone 3. This commitment did not bring the Philippines to the top-third ranking in the EODB Survey (milestone 5). Beginning with a ranking of 99 out of 190 countries in the 2017 EODB Survey, the Philippines regressed over the course of 2017 and 2018, but received a ranking of 95 in the 2020 Survey. [24] The Philippines showed improvement in reducing barriers for domestic companies, easing access to construction permits, and strengthening minority investor protections. [25]

Although the commitment was substantially implemented, it only resulted in marginal changes to open government practices. This is in part due to shortcomings in commitment design outlined in the design section above. The creation of opportunities for participation through validation workshops and the multistakeholder meetings resulted in a marginal change to open government practices. However, the government has not provided evidence of how CSOs helped in the construction of new policies or how their inputs were taken into consideration during related decision-making processes.

Next steps

The IRM shared the following recommendations with stakeholders during the prepublication review period for the design section of this report. They are included below for public record. [26]

The IRM does not recommend that this commitment be carried forward into future action plans in its current form.

If reformulated, PH-OGP could identify specific challenges and gaps in improving the Philippines’ standing on EODB and address more explicitly and specifically how the commitment is written and designed. The proponents may opt to address the following question: What are the key reforms on competitiveness that are most challenging and that can be more advanced through OGP values (civic participation, access to information or public accountability)? Milestones, hence, should be tied to how these values can be used for this specific strategic goal. For example, one of the areas the government could consider is improved transparency and red tape reduction in associated processes.

[18] The 10 areas measured by the EODB survey are 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.
[19] World Bank. 2010. Doing Business in the Philippines 2011: Comparing Business Regulations in 25 Cities and 183 Economies. Washington, DC.
[20] Executive Order No. 44, June 2011.
[21] World Bank. n.d. “Business Reforms in Philippines.” Available at: http://www.doingbusiness.org/reforms/overview/economy/philippines.
[22] End-of-Term report, p. 45-48
[23] End-of-Term report, p. 47.
[24] “Doing Business 2017: Equal Opportunity for All,” Washington, DC: World Bank (2017); “Doing Business 2018,” Washington, DC: World Bank (2018); “Doing Business 2019,” Washington, DC: World Bank (2019); “Doing Business 2020,” Washington, DC: World Bank (2020).
[25] The Philippines ranks 95th globally, an improvement in comparison with the 2019 ranking. Check https://www.doingbusiness.org/en/data/exploreeconomies/philippines# 
[26] See the Philippines 2019-2021 IRM Design Report for the most recent commitment analysis and recommendations.

Commitments

Open Government Partnership