PH protests WB’s...

addressed to Ms. Mara K. Warwick, WB Group country director for Brunei, Malaysia, the Philippines and Thailand, East Asia and Pacific, challenged the data used in the report and its methodology.

The Philippines’ drastic slide in the rankings was attributed mainly to the country’s Getting Credit indicator, he noted.

Dominguez pointed out the WB’s team failed to gather correct information on the Philippines’ credit information database as it collected data from only one private sector credit bureau – the BAP Credit Bureau, which has the smallest database of 1.7 million borrower-entrepreneurs. It should have collected data from other credit bureaus such as the Microfinance Information Data Sharing, Inc. and the TransUnion Information Solutions, Inc., which of which have an aggregate database of 13.7 million borrower-entrepreneurs and were included in previous year’s survey.

“Having these inadvertently carved out in the 2019 survey begs the question of how the Philippines’ results could be a correct representation of its 2019 ranking,” said Dominguez.

Had the survey team gathered information from the right respondents, the Philippines would have exceeded the minimum 5 percent of the adult population benchmark for the credit information index under the Getting Credit indicator of the Report. Instead, the country’s Getting Credit score significantly fell from 30 to 5, pulling down the country’s overall ranking from 113 in 2018 to 124 in 2019.

“It is ironic that the Philippines’ Getting Credit score slumped from 30 points in the 2018 survey to only 5 points in the 2019 survey when credit is growing year-on-year by 19 percent mostly to micro, small and medium enterprises, the highest among the ASEAN 5,” Dominguez said.

“This is regrettable considering the significant headway made by the Philippines on the other indicators. The Philippines registered a +1.36 increase in the Ease of Doing Business (EODB) score at 57.68 yet received a lower ranking,” the joint statement added.

According to the DOF and DTI secretaries, the report if left uncorrected, 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.

While the World Bank has taken governments to task by fostering an enabling environment characterized by efficient business regulations, so must the World Bank exercise responsibility and greater transparency in its methodology, Dominguez said.

Unfortunately, this drop in the EODB Score reflected a 42-notch slide in the Getting credit ranking, with the Philippines now at the bottom tier at 184/190 (from 142). This is the reason for the Philippines very low overall EODB score of 57.68, and contributed to the steep decline in the country’s overall ranking of 124 (2019), from 113 (2018).

In contrast, the Philippine government stressed that the rest of the DB 2019 report for the Philippines showed the country posting increases in the EODB scores on 7 out of 10 indicators, namely: (1) starting a business, (2) dealing with construction permits, (3) getting electricity, (4) registering property, (5) protecting minority investors, (6) paying taxes, and (7) protecting minority investors, while it retained previous scores on two indicators, namely: (1) enforcing contracts and (2) resolving insolvency.

The DTI has been monitoring the Distance to Frontier (renamed as EODB) scores because these scores benchmark economies with respect to regulatory best practices. The DTF/ EODB scores assess the absolute level of regulatory performance over time, and measures the distance of each economy to the “frontier.” An economy’s distance to frontier is reflected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier.

Since the start of the Duterte administration, government agencies have been hard at work in implementing initiatives to increase the country’s competitiveness.

Both Dominguez and Lopez said the Philippines EODB was on the right track, and expect upward trajectory in competitiveness ranking.

The DTI and DOF, in coordination with other agencies concerned, will launch an aggressive communication campaign in the next three months so that the planned regulatory reforms that the agencies have started to implement will be credited in the 2020 DB report cycle.