Introduction

The Philippines had been housing tons of problems for the past years.
Poverty, which is amongst these problems, never cease despite the best
efforts of the government. Businesses had pushed their efforts in making the
economy grow so that poverty could be relieved.
However, many factors limit the business here in the Philippines. Many
of which held us back for many years.
According to various sources, the top problematic factors in doing
business in the Philippines are the following: Corruption, Inefficient
Government Bureaucracy, Inadequate supply of Infrastructure, Policy
instability, Access to Financing, Tax Regulations, Crime and Theft, Tax rates,
Government instability/coups, Restrictive Labor Regulations, Poor Public
Health, Poor work ethics, Inadequately Educated labor force, Foreign
Currency Regulations, and Inflation.
According to the Global Competitiveness Report of World Economic
Forum (WEF) for 2007-2008, the Philippines ranked 71 out of the 131
countries/economies. We are far behind of our neighboring countries like
Korea that ranked 13, Taiwan that ranked 14, rank 21 for Malaysia, and rank
28 for Thailand.
Also, according to the report, the top problematic factors in doing
business in the Philippines are: Corruption with 22.3%, Inadequate supply of
Infrastructure with 17.8%, Policy instability with15.2%, and Inefficient
Government Bureaucracy, Government instability/coups, Tax rates, Tax
Regulations with 14.8%, 9.6%, 4.6%, and 3.6% respectively. With the
bottom factors of: access to financing with 3.30%, restrictive labor
regulations with 3.60%, crime and theft is 2.30%, poor work ethic in
national labor force with 1.30%, inflation with 1.10%, inadequately educated
workforce having 0.70%, and foreign currency regulations is 0.50%.
Moreover, the same report for the years 2013-2014 and 20142015(Fig. 1), the corruption still tops the charts, meaning that corruption
still lingers in our society and is still trying to pull us down.
Furthermore, based on the same report for 2014-2015, Philippines still
show to be lagging behind other developing country. Although we can see

the rise on our competitiveness, still, it is negligible compared to other

countries.

of

We can also see in the

graph that we are ahead
our time in

the start of the 2000s, the suddenly, we feel behind, starting from the
governance of former president Gloria Macapagal Arroyo up to the beginning
of the presidency of President Benigno Aquino III.
Although our government is really trying hard to push the boundaries
of business, they still cannot eradicate these hindrances. This only proves
their ineffectiveness in matters like this.
Corruption have been tormenting us for millennias, many leaders had
promised its complete extermination, but still, not even a dozen had been
apprehended. In reality, it only worsened, crippling down to barangays and
different sectors of our government.
What would our pag-asa ng bayan do to solve this? Are they aware
of their countries struggles? Can they identify the top problematic factors for
doing business in the Philippines?
To know the top problematic factors for doing business in the
Philippines based on the Bagong Nayon II National High School grade 10
students, we take 100 respondents to answer a questionnaire and ask them
to select their top picks.

Fig.1
WEF report for 2013-2014 and
2014-2015

Data Analysis

Problematic factors for doing business in the Philippines

Foreign Currency Regulations

Inflation

Corruption
100

50

Inadequately Educated work force

Inefficient Government Bureaucracy

Inadequate supply of infrastructure

Policy Instability

0
Poor work ethic in national labor force

Access to financing

Poor public health

Tax regulations

Restrictive labor regulations

Crime and Theft

Government instability/coups
Tax rates

Out of the 100 respondents, here are the graphs of the results:

Problematic factors for doing business in the Philippines

Foreign Currency Regulations

Inflation

Inadequately Educated work force

Poor work ethic in national labor force

Poor public health

Restrictive labor regulations

Government instability/coups

Tax rates

Crime and Theft

Tax regulations

Access to financing

Policy Instability

Inadequate supply of infrastructure

Inefficient Government Bureaucracy

Corruption
0

10

20

30

40

50

60

70

80

90

As we can see in the graphs, WEF report seems to match with the
students response. Over 10.14% of the votes were for the corruption, only
followed by poor public health with 9.52%. This means that our pag-asa ng
bayan seems to be aware of the present situation of our country.
We can see that there are sudden drops in our radar chart especially in
government instability/coups and foreign currency regulations. Again, theres
a match, both the WEF and the survey suggest that foreign currency is not
much of a problem.
Overall, the survey seems to tie up neatly with the WEF reports.
Corruption is still on top and its pretty unsurprisingly true.

Inference

First of all, lets find the root of the problem. You cant solve a problem
without knowing where it came from. If we observe all of the factors closely,
we can see that almost all of it is caused by a single word: Governance.
Governance is the root of all of these problems.
If there is good governance, there will be no corruption, no coups,
government would be doing well, and every have a job so there will be no
crime, all are well educated and healthy.
Politicians should stop being too political. Like what PNoy said, Kung
Walang Corrupt, Walang Mahirap. (If no one is corrupt, no one will be
poor). They should collaborate to eliminate corruption, not only focusing in
their own interest. They should do their job and do their best to fulfill it.
Our government is aware of it, so whats with the delay? Is corruption
too rampant? Or is that every member of the government conspires to hide
it? Or, it is a big syndicate that even the president can fight it? No matter
what it would be, it still looks like the next administration will again try to
combat it.
Corruption had been in the system for many years, when would be the
right time to eliminate it? We suffered enough for our mistakes, and our
awareness will be futile if we dont move for a change.
Also, our pag-asa ng bayan plays a vital part too. They will be the
future leaders of this nation, and they are bound to face the same challenges
in the future, unless a miracle would happen, and they are ought to face
these challenges face to face.
Kabataan should also be picky in voting for the next leaders, so they
would not experience our fate. Many of us vote for a leader, then instantly
regret it. Then rallies would happen and so on.

Recommendations

We have tons of recommendations starting by stating that Philippines

is improving. There are key drivers for this that we might like to look into
and enhance.

First of it is innovation, and we have the biggest capacity for

innovation.
We have institutions. We have less diversion of funds in these
institutions and we are less wasteful in our government spending.
Lastly, we have financial market development. We have available
financial services and venture capital.
If we focus on these, we might resolve problems similar to these.

However, there are key constraints too that is stopping us from

developing. The government should also look into it, and build plans to
better improve its condition.

Business costs of terrorism

Tuberculosis cases/100,000 pop
Number of procedures to start a business
Number of days to start a business
Burden of customs procedures
Imports as a percentage of GDP
Redundancy costs, weeks of salary

We know that the government is moving but they should be moving

faster. We are being left behind here.
For solid solutions, we have three highlights:
Reforming for Prosperity
Global recovery to date has to a large extent been driven by monetary
policy. To secure longterm growth, highquality job creation and sustained
prosperity will require decisionmakers to raise productivity and
competitiveness through structural reform. Progress on this score has been
uneven to date, in advanced and emerging economies alike.

Smart Investing
Smart investment in skills and innovation is a key to enhanced
productivity and competitiveness. It also supports more inclusive growth by
allowing everyone to contribute to and benefit from higher levels of
prosperity. Economies that consistently rank high in the competitiveness
rankings are those that are able to develop, attract and retain talent, and
constantly introduce new and higher valueadded products and services into t
he market.
PublicPrivate Collaboration
Effective collaboration between business, government and civil society
is a necessary prerequisite if reforms and investment are to raise
productivity and competitiveness. This calls for strong public and private
leadership, a clear vision and effective and ongoing communication to build
trust between all parties. It is therefore crucial to create mechanisms and
fora to promote dialogue.
In addition, suggested solutions include paying civil servants comparab
ly to the private sector, to reduce, depoliticize and professionalize the
bureaucracy and punish severely public officials proven to be corrupt.
Strengthening of the Ombudsman and lifestyle checks of officials with
fiduciary and procurement responsibilities are a good beginning but
clearly have been short of the effort needed to end corruption.
You have to incentivize good behavior and at the same time punish ba
d behavior. We lack incentives for good behavior in public service.
Gilbert Teodoro, The Philippine Daily Inquirer, May 9, 2010
Government processes should be simplified, streamlined, and privatize
d to reduce the cost of bureaucracy as well as opportunities for corruption by
underpaid civil servants. The total number of government employees can
be reduced through voluntary retirement incentives, performance reviews,
and layoffs. Past plans to do so have often failed because of resistance from
government employees.
Government agencies should only be headed by qualified, adequatelypaid technocrats. Patronage politics makes government less efficient and
prone to policy reversals when administrations change. There are more
political appointees in the Philippine government than in the US federal

government. Political appointments are often made three or four levels

below department secretary. Only competent persons should be named to
important posts. Experienced bureaucrats with continuity should be used
more and paid fairly.
Government owned and controlled corporations (GOCCs) have long be
en criticized for creating red ink and being poorly managed. Many of their
directors and senior officers were appointed as political favors, and abuses
have often been reported in the press and investigated by Congress. The Nat
ional Food Authority (NFA) is at the top of the list for losing money, PhP
37 billion in 2008 and PhP 63 billion in 2009, and undermining the market
price for local rice farmers by subsidizing imported rice. A reform under
President Ramos requiring all departments to justify or close down GOCCs w
as not successful. Many of the reported 143 GOCCs need to be fiscalized,
rationalized, privatized, or closed. Abuses by GOCC managers in
procurement, salaries, bonuses, and other perquisites have received
considerable negative media attention. Such overspending took place while
the GOCCs reportedly still owe the national government some PhP 24 billion.
Smuggling is also a major concern to domestic and foreign business
because it weakens the domestic market for investors in manufacturing and
importers who pay the proper duties and taxes. Counterfeit copies of over
one hundred wellknown brand names are marketed in the Philippines, most i
mported with the cooperation of customs officials. Following loud complaints
from the legitimate business sector, residents have periodically established
special task forces against smuggling, e.g. in 2004 the National AntiSmuggling Task Force (NASTF), under former Defense Secretary Reyes,
and in 2006 the Presidential AntiSmuggling Group (PASG). The only lasting
solution, reform of the Bureau of Customs, has proven extremely difficult to
achieve.
Domestic automotive production has been undercut by smuggling. Con
siderably more vehicles are registered in the Philippines each year than are
manufactured and legally imported. The difference is comprised of a large
proportion of illegal imports, mostly of used vehicles, many having arrived
at special economic zones and some converted without adequate safety
inspections. For several years, some used vehicle importers, conspiring with l
ocal courts resisted and undermined national government policy in EO 156
to increase annual domestic automotive production and to eliminate used
car imports. Along with negligible job creation, the used vehicle sector also

negatively impacts on the governments import duty and excise tax revenue,
since minimum taxes are collected.
Imported oil smuggling increased after the 12% EVAT was applied to p
etroleum imports and sales. Huge illicit sums that otherwise could build
schools and provide better health care are being stolen through underdeclaration of oil import volumes. An industry association has estimated
annual public revenue losses at PhP 2530 billion a year in diesel and
Avturbo fuel alone. Incredibly, official statistics on oil imports declined in
several recent years when GDP grew substantially.
A program was initiated in 2008 to mark petroleum products, either im
ported or locally refined, that had paid correct taxes with a fluid that could
not be detected. Random testing was then made at various gas stations,
which, if found to be selling the unmarked product were to be investigated
for selling improperly taxed goods.
However, all reports of unmarked products, after being sent to the BOC
were referred to the Legal Division, where no action had been taken as of
August 2010. Even worse, the BOCs entire Run after the Smugglers (RATS)
program, which developed cases against more than 100 suspected smuggler
s over five years, did not win a single case, suggesting a severe lack of
political will to check smuggling.
China has been a source of many smuggled manufactured goods and f
ood products. Chinas statistics for exports to the Philippines are a multiple
of comparable Philippine data for imports from China. The Philippine Chinese
community, which has contributed many respectable hard working taipans to
Philippine commerce and industry, could do more to police its own ranks.
The Philippines does not adequately protect intellectual property rights
(IPR). While the countrys IPR law is fundamentally sound and
strengthened in 2003 with the Optical Media Act the sale of counterfeit
goods remains widespread because of inadequate enforcement and high
demand.
IPR cases move slowly through the courts and are subject to judicial irr
egularities. It can take 5 to 10 years for a simple indictment against a
person caught dealing in counterfeit items to be tried. An appeal can add
another 2 to 5 years. Consequently, there have been no convictions in the

Philippine courts for IPR offenses! This problem can be corrected if the
Supreme Court would enforce its rules for courts to expedite such cases.
Enforcement will be most effective when focused on cutting off the sup
ply of counterfeit goods by destroying illegal copying machines, confiscating
smuggled contraband from wholesalers, and successfully and quickly
prosecuting criminal offenders.
Continued or further deterioration of IPR protection could jeopardize th
e dutyfree Generalized System of Preferences (GSP) entry into the US
market of almost US$ 1 billion in annual exports, should the provisions of
Section 301 be applied. For many years, the Philippines have been on the US
Government Section 301 watch list of countries with inadequate IPR
enforcement.