29 July 2019 – As the main agency mandated by the Ease of Doing Business Law to oversee and implement a national policy on ease of doing business, the Anti-Red Tape Authority (ARTA) strongly supports the President’s unyielding resolve, as evidenced in his most recent State of the Nation Address, to curb red tape in the country.

In line with this mandate, ARTA likewise seeks to improve the global economic competitiveness of the Philippines, particularly its competitiveness ranking in the World Bank – International Finance Corporation (IFC)’s Doing Business Report. To this end, ARTA has been actively engaging concerned government agencies and private sectors with the common goal of easing business processes in the country and, in effect, improve the performance of the Philippines in the said report.

The Doing Business Report annually ranks countries according to their business-friendliness based on 10 identified indicators. A high ranking is usually favored by investors as this generally reflects an environment conducive to business. In the 2019 report, the Philippines slipped 11 notches from 113th to 124th out of 190 economies. While the country improved its ranking in seven indicators, it had a great drop in the other three, the most drastic being in the Getting Credit indicator.

With a score of 5.00 out of 100, the Philippines ranked 184th in the said indicator due to an apparent oversight in the collection of data on the country’s credit information database. This is a 42-point rank decrease from the Philippines performance in 2018 for which the Department of Trade and Industry (DTI) and the Department of Finance (DOF) issued a joint-official statement objecting the results.

In this upcoming DB Cycle, ARTA will ensure that all our reforms and initiatives will count.

The Getting Credit indicator examines two key issues in an economy’s credit system, namely: (1) strength of credit reporting systems and (2) effectiveness of collateral and bankruptcy laws in facilitating lending.

In an effort to rectify the continuous decline in ranking in this particular sector, the government formed a Taskforce on Getting Credit composed of the following agencies: Bankers Association of the Philippines – Credit Bureau Inc., TransUnion Information Solutions, Inc., Microfinance Information Data Sharing Inc., CIBI Information, Inc., Compuscan Philippines, Inc., CRIF Corporation, Credit Information Corporation, Department of Finance (DOF), Bangko Sentral ng Pilipinas (BSP), and the Land Registration Authority (LRA). These agencies are tasked to oversee the following key reforms for getting credit: (1) updating data on credit registry and credit bureau coverage; (2) implementing the Credit Information System; (3) signing of the Personal Property Security Act of 2018’s IRR; and (4) setting up a collateral registry.

In this regard, we call on all government agencies concerned to fast-track its initiatives and to fulfill their respective roles in the said matter. ARTA is committed to ensuring that robust efforts are done in the critical programs to ease doing business in the country. You have an opportunity to help us increase our country’s global competitiveness rankings.

We commend and thank the Department of Finance in particular for actively supporting and helping in our Getting Credit reforms. Nonetheless, ARTA strongly urges DOF to expedite the signing of the Implementing Rules and Regulations of R.A. 11057 or the Personal Property Security Act (PPSA) of 2018.

Under the PPSA, any property other than land or real estate is considered personal property or movable asset. These would include farming equipment and machineries used in a business operation, crops or produce, warehouse inventory and receipts, accounts receivable and intangibles like intellectual property. This law would give small enterprises ready access to credit even those without a real property to be used as loan collateral.

The full implementation of the said law, together with the collateral registry will directly affect the Strength of Legal Rights Index of the Getting Credit indicator, which could possibly help us climb by 183 notches from Rank 184 to Rank 1.

It is also critical that the PPSA together with the registry be fully operational within this year. The consequence of further delaying the reform could mean the difference between a better score in the DB rankings or being stuck in the same place with all other initiatives wasted.

Ultimately, however, beyond the rankings and the score we need to significantly improve our services to the people. After all, this is the main goal of ARTA, to ensure that these reforms not only count in the survey but are felt by everyone. So along with our partners in the EODB task force, we urge you to take part in our plight. Together, we can surely create a better quality of life for the Filipino people.

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