Ease of Doing Business

Income category: Lower middle income
Population: 83,054,478
GNI per capita (US$): 1,300.00
Informal economy estimate (% GNP): 43.4

Ease of.                             2006 rank       2005 rank     Change in rank

Doing Business                    126                 121                  -5

Starting a Business              108                  99                   -9

Dealing with Licenses           113                 112                  -1

Employing Workers              118                 118                   0

Registering Property             98                   91                   -7

Getting Credit                     10                   96                   -5

Protecting Investors           151                 151                    0

Paying Taxes                     106                  96                   -10

Trading Across Borders        63                   61                    -2

Enforcing Contracts            59                    50                    -9

Closing a Business              147                  143                   -4

Starting a Business (2006)

The challenges of launching a business in Philippines are shown below. Entrepreneurs can expect to go through 11 steps to launch a business over 48 days on average, at a cost equal to 18.7% of gross national income (GNI) per capita. They must deposit at least 1.8% of GNI per capita in a bank to obtain a business registration number.

Indicator                                               Philippines        Region              OECD

Procedures (number)                            11                    8.2                   6.2

Time (days)                                          48                    46.3                 16.6

Cost (% of income per capita) 18.7                 42.8                 5.3

Dealing with Licenses (2006)

The steps, time, and costs of complying with licensing and permit requirements for ongoing operations in Philippines are shown below. It takes 23 steps and 197 days to complete the process, and costs 113.43% of income per capita.

Indicator                                           Philippines        Region              OECD

Procedures (number)                            23                    17.6                14.0

Time (days)                                        197                  147.4               149.5

Cost (% of income per capita)               113.4               207.2               72.0

Employing Workers (2006)

The difficulties that employers in Philippines face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the three indices.

Registering Property (2006)

The ease with which businesses can secure rights to property is measured below. In Philippines it takes 8 steps and 33 days to register property. The cost to register property there is 5.7% of overall property value.

Indicator                                   Philippines                   Region               OECD

Procedures (number)                      8                             4.2                   4.7

Time (days)                                  33                            85.8                 31.8

Cost (% of income per capita)         5.7                           4.0                   4.3

Getting Credit (2006)

Measures on credit information sharing and the legal rights of borrowers and lenders in Philippines are shown below. The Legal Rights Index ranges from 0-10, with higher scores indicating that those laws are better designed to expand access to credit. The Credit Information Index measures the scope, access and quality of credit information available through public registries or private bureaus. It ranges from 0-6, with higher values indicating that more credit information is available from a public registry or private bureau.

Indicator                                             Philippines              Region             OECD

Legal Rights Index                                      3                      5.0                   6.3

Credit Information Index                              3                      1.9                   5.0

Public registry coverage (% adults)               0.0                   3.2                   8.4

Private bureau coverage (% adults)              4.8                   10.1                 60.8

Protecting Investors (2006)

The indicators below describe three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index), shareholders' ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index) and Strength of Investor Protection Index. The indexes vary between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection. With this rating, let the investor in the Philippines companies beware.

Indicator                                   Philippines        Region              OECD

Disclosure Index                               1                5.2                   6.3

Director Liability Index                       2                4.4                   5.0

Shareholder Suits Index                    7                6.1                   6.6

Investor Protection Index                3.3              5.2                    6.0

Paying Taxes (2006)

The effective tax that a medium size company in Philippines must pay or withhold within a year is shown below. Entrepreneurs there must make 59 payments, spend 94 hours, and pay 52.98% of gross profit in taxes.

Indicator                            Philippines                     Region             OECD

Disclosure Index                       1                             5.2                   6.3

Director Liability Index               2                             4.4                   5.0

Shareholder Suits Index            7                              6.1                  6.6

Investor Protection Index        3.3                             5.2                  6.0

Trading Across Borders (2006)

The costs and procedures involved in importing and exporting a standardized shipment of goods in Philippines are detailed under this topic. Every official procedure involved is recorded - starting from the final contractual agreement between the two parties, and ending with the delivery of the goods. The Philippines ranking is reasonably high though not as high as 2005 in some areas. But all in all the efficiency is improving from what I have observed, though the survey does not reflect it.

Indicator                                          Philippines            Region               OECD

Documents for export (number)              6                      6.9                   4.8

Time for export (days)                          18                     23.9                 10.5

Cost to export (US$ per container)        1,336                  885                  811

Documents for import (number)              7                       9.3                   5.9

Time for import (days)                          20                     25.9                 12.2

Cost to import (US$ per container)       1,336                  1,037                883

Enforcing Contracts (2006)

The ease or difficulty of enforcing commercial contracts in Philippines is measured below. It takes 25 steps and 600 days to enforce contracts there. The cost of enforcing contracts is 15.96% of debt.

Indicator                                             Philippines        Region              OECD

Procedures (number)                              25                  31.5                 22.2

Time (days)                                          600                 477.3               351.2

Cost (% of income per capita)                16.0                 52.7                 11.2

Closing a Business (2006)

The time and cost required to resolve bankruptcies is shown below. In Philippines, the process takes 5.67 years and costs 38.00% of the estate value. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is 4.03.

Indicator                                      Philippines             Region                  OECD

Time (years)                                   5.7                      2.4                      1.4

Cost (% of estate)                          38.0                    23.2                     7.1

Recovery rate (cents on the dollar)    4.0                     27.5                      74.0