Rankings, ratings and rantings

“We demand that the World Bank (WB) review the Philippines’ rating, and make a correction immediately given our country’s increases in the Ease of Doing Business (EODB) scores, which was, unfortunately, offset by the grossly inaccurate and understated findings in the Getting Credit indicator of the Report.
This correction should be done soon as the Report could unduly compromise the Philippines’ standing among the investment community and negatively impact the country’s development, considering that this document is widely used as a reference by investors and survey organizations. As a highly respected institution, the World Bank has a responsibility to ensure that an economy is not unduly disadvantaged and that its report reflect the realities on the ground.”

— DTI-DoF Joint Statement
(dti.gov.ph)

Strong words, “We demand…that (you, WB), make a correction immediately…” How can the WB correct what has already been released to the world — that the Philippines is now 124^th out of the 190 economies tracked for “ease of doing business,” down 11 places from 113^th last year? It is akin to the irreverence and temerity of asking a professor to change one’s grades in university. It is just not done.
With the yearly WB-DB rankings on 190 economies, global competition is created and self-regulated, while locally, “job creation is one of the transformational gains that countries and communities can achieve when the private sector is allowed to flourish. Fair, efficient and transparent rules, which Doing Business promotes, improve governance and tackle corruption,” Kristalina Georgieva, WB Chief Executive Officer professed (worldbank.org. Oct. 31, 2017).
Yet it is not the first time the Philippines has questioned the WB-DB report. In November 2015, the Finance department wrote the World Bank to express “grave concerns” on the 2016 report’s “glaring flaws and inconsistencies” as the country’s rank fell to 103^rd spot from an adjusted 97^th place. This, the department had argued, did not reflect improvements in terms of business facilitation (BusinessWorld, Oct. 31, 2018). Then-National Competitiveness Council (NCC) Chairman Guillermo Luz pointed out that the report failed to accurately reflect some of the ongoing changes due to reforms in business regulations announced earlier that year (Rappler, Oct. 28, 2015).
“The WB-DB only aims to show how easy or difficult it is for a local entrepreneur to open and run small to medium enterprises (SMEs) when complying with relevant regulations. It does not measure all aspects of the business environment including macroeconomic stability, proximity to markets and regulations specific to foreign investment or financial markets,” stressed Roberto Galang, then-operations officer at IFC (Ibid.).
Ok, WB, you are saying it’s only micro, but there are macro effects that drag down the perception about the economy, the DTI- DoF complained in their joint statement about the 2019 DB Report. Only last October, the WB, in its biannual Philippines Economic Update, said it expects Philippine gross domestic product (GDP) to grow 6.5% this year, down from a 6.7% April projection and 2017’s actual 6.7%; 2019 and 2020 forecasts are at 6.7% and 6.6%, respectively (BusinessWorld, Oct. 5, 2018). WB forecasts match the International Monetary Fund’s 6.5% and 6.7% for 2018 and 2019, respectively. The Asian Development Bank has a slightly lower estimate of 6.4% for this year, but has the same 2019 projection of 6.7% (Ibid.).
The government’s original annual GDP growth target until 2022 was at 7-8%, revised to 6.5%, 6.7% and 6.6% updated forecasts for 2018, 2019 and 2020 (Ibid.). The economy has to be looking good to foreign investors, but more than that, and first of all, it has to be good for, and by local businesses, especially the micro, small and medium enterprises, which are 99.57% (911,768) of the 915,726 total business enterprises operating in the Philippines as of 2016 (dti.gov.ph, Nov. 11, 2018).
And so it was salt to the wounds of government when the Doing Business Report 2019 showed the plight of Philippine businesses in the present environment. Why, DTI Secretary and National Competitiveness Council (NCC) chair Ramon Lopez had just boasted in June last year that the country aims to move up within the top 20 global rankings in the WB Doing Business by 2020 (The Philippine Star, June 28, 2017). “The vision is to be one of the best, not only for ranking purposes but to really make it easy for both local and foreign businesses, especially micro, small and medium enterprises to register their businesses and get necessary permits,” Lopez said (Ibid.).
Whether or not the WB-DB Report is flawed as the DTI-DoF angrily complains is not the point. Sec. Lopez himself said that the ranking is only secondary to actually creating the environment here that will attract both local and foreign businesses. How can we then make a tantrum about technicalities on scope and methodology, and about cut-offs on recognition and inclusion of efforts already made on improving ourselves? Will Republic Act No. 11032, or The Ease of Doing Business and Efficient Government Service Delivery Act of 2018, amending the Anti-Red Tape Act (ARTA) of 2007, ease doing business in the country? (BusinessWorld, July 3, 2018). Is it implemented and working?
It is not yet felt. Or will efforts ever be felt, before opportunistic bureaucrats and some crafty lawyers find ways around it? We have good laws, but the implementation is the problem. And peculiarly, we find some technicalities to slap “guilty” on what may be innocent mistakes, or wash “not guilty” on blatant wrongdoing, depending on whether he/she would be friend or foe. And in character, we are protesting some technicalities on the WB Doing Business 2019 Ranking.
Have we protested that the Philippines is number 111, or 64^th most corrupt among 175 countries, according to the 2017 Corruption Perceptions Index (CPI) reported by Transparency International? We were ranked 101 in 2016 after improving (being less corrupt) by 3 points in 2015, before Pres. Rodrigo Duterte’s term commenced.
In the 2018 World Competitiveness Rankings, the Philippines fell by nine places to 50^th among 63 countries in a survey report by the Switzerland-based business school International Institute for Management Development (IMD, and the Asian Institute of Management (CNN Philippines, May 25, 2018).
Enough of ranting against rankings and ratings. Isn’t it clear something positive must be done about improving our business environment — like seriously implementing beautifully crafted but inutile reforms?
Just do it.
 
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
ahcylagan@yahoo.com