Productive Time Lost to High Cost of Doing Business in Ph

The high cost of starting and maintaining a business in the Philippines has resulted to lost productive time, which translates to an annual opportunity cost of more than P100 billion in the form of foregone income, taxes, and spending, the World Bank said.

In a Special Focus section in the World Bank’s Philippine Economic Update, the multilateral bank agency said that business regulations have long been a cumbersome process in the Philippines, posing obstacles to the development of micro, small, and medium enterprises (MSMEs) and job creation.

The World Bank said that one particular concern is the high cost imposed on MSMEs in starting and maintaining a business.  

“They not only have to pay for legitimate fees equivalent to 17 to 36 percent of per capita income (P21,000 to P45,000), they also spend a considerable amount of time moving from one agency to another and waiting in line to process their documents, often resulting in significant loss of productive time and income,” the report said.

“In some instances, businesses report that they need to pay bribes or give gifts to obtain various permits and government services,” it added.

The agency said that aside from the more than P100 billion estimated total opportunity cost from productive days lost annually, opportunity cost  of around P40 billion can also arise from discouraged Filipinos who could have started a business if only the cost was reasonable.  

The World Bank said that this translates to foregone employment of 62,179, or about five percent of new labor force entrants annually.

The multilateral bank agency said that simplifying and streamlining the business registration process in the Philippines would not only support job generation, but also improve transparency and accountability in the government.  

source:  Malaya Insights