Proven ways to increase ease of doing business in the Philippines

Historically, the Philippines has not always been considered to be a competitive economy in terms of attracting foreign direct investments (FDIs), especially when compared with most of its neighbors. 

However, things may be due for a change. The 2020 World Bank – Doing Business Report showed the country jumping 29 notches from the previous year, ranking 95th out of the 190 economies recognized by the World Bank. This is the best ranking the country has achieved since the report started being published in 2004. Nevertheless, while 95th place is surely better than 124th, there is still plenty of room for improvement.

The Philippines was able to make its recent gains partly by following in the footsteps of other countries that struggled with similar issues, broadly applying similar solutions to those that worked elsewhere. Though the comparative analysis of different economies has its limitations, the fact that the Philippines made gains in the 2020 World Bank rankings shows proof of concept that could be iterated further.

Below are four things that the National Government and private partner firms like Aboitiz InfraCapital are currently working on to further improve ease of doing business in the Philippines.

Improve communications infrastructure

It’s been a long time coming, but local policymakers are beginning to see digital infrastructure as a basic necessity rather than a privilege. Perhaps the biggest impetus for this change in perspective was the onset of the COVID-19 pandemic, which forced many traditional organizations to rethink their in-person processes.

The emergent necessities of social distancing have caused a dramatic improvement in Philippine internet speeds. Slow internet speeds — then the second slowest in Asia — coupled with low coverage and high connectivity costs, were previously commonly cited reasons for the lack of wider investment in the country. 

The need for high data bandwidths for teleconferencing and e-commerce during the COVID-19 lockdowns consequently incentivized the accelerated development of the country’s digital networks. . This led to a marked improvement in communications infrastructure throughout the country, likely preventing an even more catastrophic hit to the economy.

While the recent gains in average internet speeds and reliability have been commendable, it’s clear that more will have to be done, especially in parts of the country that have historically been at the periphery of development. Aboitiz InfraCapital is at the forefront of developing this vital network of communications infrastructure with its investments in small cell sites and common towers.

Increase access to basic utilities

The presence of running power and potable water are fundamental to creating a business-friendly environment, but neither of these are universal outside urban areas.

Access to affordable water and energy vastly improves the quality of life in communities by saving time, improving the community’s overall health, and enabling all kinds of businesses to flourish. Even while internet connections have correctly been recognized as a basic human right, it’s easy for more privileged Filipinos to forget that common access to basic utilities is not something afforded to all their countrymen. 

Aboitiz InfraCapital is doing its part in changing the status quo by leveraging its expertise in managing water infrastructure projects throughout the country. Provincial water utility projects like Balibago Waterworks and major sustainable water systems like Apo Agua Infrastructura, are providing  clean and reliable water to residents and locators all over the country.

Reduce red tape

Red tape has long been the bane of businesses in the Philippines. Not only does red tape slow down the pace of change and innovation, but it has also historically been an indicator of corruption. 

Businesses in areas overseen by the Philippine Economic Zone Authority, which are designed to have minimal red tape, overwhelmingly show better performance and have thus become a magnet for both foreign and local investment. All Aboitiz Infracapital economic estates are PEZA-registered zones, which have also become a definite boon to the economies of the cities where they are built.

However, the country’s unprecedented performance in the 2020 World Bank – Doing Business Report has been largely attributed to efforts by the Anti-Red Tape Authority (ARTA) to reduce red tape across the board, not just in special economic zones. That said, more could still be done to further reduce the burden that excessive regulation has on business activities.

Improve the enforcement of contracts and laws

While the Philippine justice system is not considered to be among the worst in the world, neither is it considered to be among the most exceptional and trustworthy. This has much to do with the glacial pace that has come to be associated with seeking justice through legal means. 

Major improvements are being eyed by the government to improve the relative slowness of court processes, which has historically been a major turn-off for investors. The government recognizes the fact that even without any corruption at play, a slow justice system emboldens malicious parties and effectively denies businesses and individuals adequate protection, effectively increasing the country’s investment risks.

The Philippines has done exceptionally well in moving to the middle of the pack when it comes to the ease of doing business. But there is much more we can do to move forward and make things even better. Thanks to the continuing work of the national government and firms like Aboitiz InfraCapital, the future looks to be brighter.