Bad for business

posted November 06, 2015 at 12:01 am
by  Tony Lopez
Finance Secretary Cesar Purisima has railed against the World Bank for downgrading the Philippines in the global ranking of doing business.  

The World Bank report is so damning it destroys the myth that the President BS Aquino government is good for business.   Good maybe for the big conglomerates and for powerful people like the President himself.   But for ordinary mortals like you and me, it’s bad.

The Philippines is a deteriorating place for doing business.  Its previous ranking in 2015, 97th, was already bad in the first place.  Out of 189 countries, being 97th  means the Philippines is below average. That’s bad because outside of Indonesia, of those below the Philippines in global rankings, most are countries you wouldn’t even pay attention to—from Africa and the sub-Saharan (one of the most improved regions for doing business). This year, the Philippines is ranked 103rd, down six notches and one of the worst rankings for a country with a big population (No. 12) and big economic size (No. 33).

The World Bank measures government regulations in 11 areas in the life of a business—starting a business, getting construction permits, getting electricity, registering property, getting loans, paying taxes, enforcing contracts, resolving insolvency, exporting and importing, dealing with workers, and protecting minority investors.

I have put up three small companies in the past 15 years. Doing it is an ordeal.   The premise seems to be that you are putting up a business because you are up to no good.  So  you are required to get all kinds of permits and licenses—all of which cost time, motion and money.

The government—the city or town, the Department of Trade and Industry, the Department of Interior and Local Government, and Securities and Exchange Commission, and the Bureau of Internal Revenue—demand from you   all kinds of credentials.      

Robbing a bank is a much easier enterprise, although bank robbers probably use their brains more often than do some members of the BS Aquino cabinet.    

Although against the law, bank robbery does not need so many signatures, so many permits, and so much paperwork. You just do it.  If you are caught,   pay a bribe.  If you are charged, pay a bribe.  If you are about to be convicted, pay a bribe. If you are convicted and are going to prison, pay a bribe so that your sentence is suspended, commuted, or not at all served. In jail,   you can always bribe your jailer to extend you certain courtesies. That is how corrupt the system has become.

That is why retired three- or four-star generals want to head the National Penitentiary.  There is so much business to be done there—on the side.

By the way, if the Supreme Court orders you to cut up your huge hacienda and distribute it to your 10,000 farmers and to compensate them as well, what do you do? 

Well, remove the sitting chief justice by bribing the senators who are members of the impeachment court.  Having removed the chief justice, President BS Aquino’s Cojuangco family has sold the Hacienda Luisita, in violation of the Supreme Court order. Now, that’s good business.

While you, the small businessman, seek a business permit, the DILG’s Fire Bureau demands to inspect your premises, if you have one (much business now is done online, without need for a formal office) and the LGU demands that you buy insurance (from them, of course).   What is the premise?   That you are putting up a business because you will burn it.   Actually, the fire inspector just wants to sell you fire extinguishers and the LGU licensing unit just wants to make a commission on the fire insurance.   They are not actually interested in your business nor are they interested that you succeed in it.  

“Negosyo or Bayan?” (Business or Country?)  In the movie, General Antonio Luna asks his colleagues those choices in the cabinet.  In today’s milieu, it is neither negosyo nor bayan. Government people don’t give a damn about your business. Nor do they give a damn about the country.  They just want to extort money from you, the small businessman, and enrich themselves.

DoF Chief Purisima thinks the Philippines was unfairly graded by the World Bank. 

 “The Philippines firmly believes that the Doing Business (DB) survey methodology of collecting sample data from only one or two cities makes it inappropriate to present the report as reflective of the state of doing business for an entire economy. This is considering that starting a business and registering property vary across cities, since local governments have varying procedures and processing times for the various activities involved therein,”  Purisima complained in a statement.

The Philippines has improved its act, he claimed. He related:

“In time for the 2016 report, the Philippines undertook game changing reforms last April to hasten the process of starting a business—reducing the process from 16 steps and 34 days to 6 steps and 8 days. E-government initiatives launched also last April reduced the number of payroll-related payments from 36 to 13, a marked improvement on the ‘Paying Taxes’ category.

“Reforms were also undertaken to shorten the number of steps and days to process construction permits and registering property, with the latter reduced to seven steps for the issuance of land titles. The same improvements were seen across other indicators, such as getting electricity (reduced to approximately 35 days).”

In rating the Philippines, the World Bank looked into the regulations of   one big city and the biggest city, Quezon City, where the red tape and graft are horrendous.

An MBA from Chicago, Purisima should be asked to put up a small business.   He is out of touch.

It is not true that starting a business takes only six steps and eight days.   Just to verify a business name alone takes 10 days.  Getting a business license, on paper, should take only one step.  In reality, it takes five signatures.  If you are getting a tax identification number and that TIN is registered in say, Trece Martires (Cavite), and you want to do business in Mandaluyong, you are to go personally to Trece Martires, which is more than 40 kms and three hours commute, to make the transfer request.   Even then, you have to wait seven days for the BIR to do it.  Cannot these things be done online?  No, said the BIR.

The BIR is one of the top three reasons why Filipinos or foreigners should not do business in the Philippines.

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Topics: Tony Lopez , Bad for business , Cesar Purisima
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