Philippines Strengthens Business Regulations in 2010-11 by Adopting New Insolvency Law, Needs Better Reform Implementation

October 19, 2011

Manila, Philippines, October 20, 2011—The Philippines strengthened business regulations in 2010 - 11 by adopting a new insolvency law which provides a legal framework for liquidation and reorganization of financially distressed companies, a new report from IFC and the World Bank shows. Globally, Singapore and Hong Kong SAR (China) provide the friendliest regulatory environments for local entrepreneurs. China has advanced the most in rank over the past six years within East Asia and the Pacific region.

Released today, Doing Business 2012: Doing Business in a More Transparent World assesses regulations affecting domestic firms and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency, and trading across borders. This year, the rankings on ease of doing business have expanded to include indicators on getting electricity.  The report finds that getting an electrical connection is most efficient in Iceland; Germany; Taiwan, China; Hong Kong, China; and Singapore.

“While the Philippines has passed several laws and initiated programs to improve its regulatory environment, it is imperative that implementation has to happen more quickly and in full,” said Jesse Ang, IFC Resident Representative in the Philippines. “In particular, improvements such as setting up the Credit Information Corporation and fully operating the Philippine Business Registry, have to be sped up to make a real difference for domestic entrepreneurs.”

Previous year’s rankings were back-calculated by the report to account for the addition of new indicators, data corrections, and methodology changes in existing indicators so as to provide a meaningful comparison with the new rankings. With these adjustments, the Philippines’ ranking remained virtually unchanged at 136 among 183 economies after 134 last year.

The Philippines adopted a new insolvency law, the Financial Rehabilitation and Insolvency Act, which provides a legal framework for liquidation and reorganization of financially distressed companies.

“This is a very significant reform that will help improve the investment climate in the Philippines,” said World Bank Acting Country Director Chiyo Kanda. “Accelerating reforms to further simplify requirements for opening and closing a business will unleash the power of small and medium enterprises to create more jobs, thus lessening poverty in the country.” 

Fourteen of the region’s 24 economies improved business regulations in the past year. The Solomon Islands, Tonga, Vanuatu, and Malaysia improved in three or more areas measured by Doing Business. Malaysia rose five places in the global ranking, to 18, by implementing regulatory reforms—including a new one-stop shop for start-ups, computerization of commercial courts, and improved insolvency proceedings. Brunei Darussalam’s rank climbed to 83, partly because the country made it easier for businesses to get an electrical connection.

About the Doing Business report series
Doing Business analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and resolving insolvency. The aggregate ease of doing business rankings are based on 10 indicators and cover 183 economies. Previous year’s rankings are back-calculated to account for the addition of new indicator(s), data corrections, and methodology changes in existing indicators so as to provide a meaningful comparison with the new rankings.  Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, the level of skills, or the strength of financial systems. Its findings have stimulated policy debates in more than 80 economies and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies.

About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world.

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