Despite global survey results, government official says PHL is business-friendly

Despite a global survey of foreign investors saying that doing business in the Philippines is difficult, a government official promoting investments insists the country is business-friendly.   Department of Trade and Industry (DTI) Undersecretary Cristino Panlilio told GMA News Online that the country remains competitive in attracting foreign investors amid a recent global survey that ranked it among the 10 worst countries to do business.   In a report of news network CNBC last month, the Philippines was ranked fourth among the top 10 worst countries to do business, citing unstable legal system, threats of violence and bureaucratic red tape. In 2010, it said the country attracted only 2.5 percent or $1.7 billion of the $76.5 billion of foreign direct investments (FDIs) that flowed to ASEAN.   Panlilio, also managing director of the Board of Investments (BOI), said foreign investors must first consider the Philippines’ above-average credit ratings, stable banking system and brisk trading across borders, instead of basing their investment decisions on global surveys.   He said he advised investors not to dwell too much on “peripheral, superficial” surveys but on the country's solid macroeconomic fundamentals. “If an investor is dead serious in investing and if there’s a strong demand for his products, I believe he will endure all the procedures and ensure that his project take off.”   The BOI, which promotes investment in the country, has a primer on doing business for local and foreign investors. A guide for prospective investors on sound investment decisions, the primer includes the country's laws, rules, regulations and policies that govern required procedures.   Francis Chua, president of Philippine Chamber of Commerce and Industy (PCCI), told GMA News Online that his advice to investors is “look at the figures, do not listen to hearsay.”   Chua said foreign investors should also consider that Filpinos are among the world's best work force. “They are diligent, friendly and hardworking.” He also said the country has natural resources like gold, copper and nickel, as well as marine resources and a potential market of 100 million people.   PCCI is the country's largest organization of business and industry chambers. It promotes and supports the drive for globally competitive enterprises in partnership with the government, local chambers and other business organizations.   Surveys as benchmark But Peter Perfecto, executive director of the Makati Business Club (MBC), told GMA News Online that the government should not entirely dismiss the global surveys. “We should continue to benchmark ourselves against these international rankings.”  MBC is composed of senior business executives from the country's largest corporations. Perfecto said the MBC agrees with the government on considering the country’s solid macro-economic fundamentals. “But we encourage the government not to dismiss the surveys as they also reflect the perceptions of business leaders from various countries, including those where investments come from.”   He said the National Competitive Council (NCC) has been doing its job by addressing the country’s weaknesses based on international surveys. A public-private task force that aims to improve the country’s competitiveness, the NCC focuses on such areas as anti-corruption, governance, judiciary, infrastructure, energy, education and human resources.   “The Aquino administration's economic team has made progress in creating the conditions for more FDIs,” he said. “But addressing our weaknesses based on the global rankings will advance that progress and attract even more FDIs.”   World Bank data show that the Philippines reached its highest FDIs in 2006 and 2007 of nearly $3 billion and its lowest of $1.54 billion in 2008 because of global financial crisis. But it recovered in 2009 with $1.95 billion.   Ease of doing business   Based on Doing Business 2012: Doing Business in a Transparent World, a joint publication of the World Bank and the International Finance Corp., the Philippines ranked 136th  in ease of doing business out 183 economies compared with its neighbors like Singapore which ranked first, Thailand placed 17th  and Malaysia, 18th.     The report takes the perspective of domestic, mainly smaller companies, and measures the regulations that apply to them. It ranks economies based on 10 areas of regulation— starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.   It indicates that doing business in the Philippines remains difficult despite some reforms. It improved slighty on only three areas – getting electricity, trading across borders and enforcing contracts. In seven areas, however, the country ranked among the lowest in the world. In starting a business, for example, the country requires 15 procedures which take at least 35 days to complete compared to only 5 procedures in OECD countries which can be finished  in 13 days.   OECD means Organization of Economic Cooperation and Development which is composed of 34 countries led by the United States, United Kingdom, France, Germany, Canada and Japan.   Doing Business 2012 benchmarks the regulations that enhance business activity and those that make it difficult. It believes that economic activity requires good rules that establish and clarify property rights, reduce the cost of resolving disputes, increase the predictability of economic interactions and provide contractual partners with certainty and protection against abuse.   Start infrastructure projects   Perfecto said the government must now implement infrastructure projects such as roads, seaports and airports to help improve the investment environment and look into doing business, anti-corruption, tourism, education and judiciary.   Corruption, inefficient government bureaucracy and inadequate infrastructure have remained the top three problems of doing business in the Philippines, according to the Global Competitiveness Report of the MBC and the World Economic Forum (WEF), which was released in September. The report interviewed 90 Philippine business leaders on their opinions based on the WEF Executive Opinion Survey in the last four years.   Meanwhile, Panlilio said registering business names is now faster with applications done in minutes. A nationwide program to improve licensing of businesses is ongoing. Further, he said the DTI will soon adopt internationally-accepted standards of management systems and establish a culture of excellence between the public and private sectors.   Panlilio admits that the country has image problems.  “What is being magnified by media in the international community is negative news while there are so many good news about the Philippines which are not being picked up by both international and local media,” he said.   He said a perception problem exists in the eyes of the global community. “But we’re doing our best to ease that perception. That we are a business-friendly country.”   Some foreign investors are put off by the country's high power costs and inadequate infrastructure. “We need to seriously address such complaints in the long-term while ramping up our international marketing that the Philippines remains one of the best places to do business,” he said. - OMG, GMA News