The Finance and Trade Departments expressed their strong objections to the 2019 World Bank Doing Business report that showed a drop in the Philippines’ ranking by 11 notches from 113th in 2018 to 124th spot in 2019.
“We demand that the World Bank review the Philippines’ rating, and make a correction immediately given our country’s increases in the Ease of Doing Business scores, which was, unfortunately, offset by the grossly inaccurate and understated findings in the Getting Credit indicator of the report,” the departments said in a joint statement Thursday.
The two agencies said the correction should be done soon, as the report could unduly compromise the Philippines’ standing among the investment community and negatively impact on the country’s development.
They said the document was widely used as a reference by investors and survey organizations. They said as a highly respected institution, the World Bank had a responsibility to ensure that an economy was not unduly disadvantaged and that its report reflected the realities on the ground.
“The DoF has submitted a letter to the World Bank challenging the data used in the report. We believe that the World Bank has gotten this one wrong. This is regrettable considering the significant headway made by the Philippines on the other indicators,” they said.
They said that while the Philippines registered a +1.36 increase in the Ease of Doing Business score to 57.68, it still received a lower ranking.
“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,” they said.
The Philippines’ drastic slide in the rankings was attributed mainly to the country’s Getting Credit indicator where the EODB score significantly fell from 30 to 5, because of the failure of the World Bank’s survey team to gather the correct information on the country’s credit information database.
As a result, the country registered a substantial decrease in the credit bureau coverage (from 8 in 2018 to 2.7 in 2019), and reduced scores on depth of credit information (from 5 to 0).
“Considering that higher borrower coverage is associated with larger share of adults with credit cards and borrowing from financial institutions, we find the report grossly inaccurate and the coverage severely understated,” the departments said.
They said the Philippines should have obtained a higher score if the World Bank included data from all the credit bureaus”•the BAP Credit Bureau Inc., TransUnion Information Solutions Inc. and Microfinance Information Data Sharing Inc.
It obtained its data only from the BAP Credit Bureau Inc. which had the smallest database of 1.7 million borrower-entrepreneurs.
“The Philippines could easily have hurdled the 5-percent coverage, if the World Bank selected the largest credit bureau, as its methodology prescribed. The major credit bureaus with high coverage were included in previous year’s survey,” the two agencies.
“Moreover, 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,” the two departments 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 our 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],” they said.