Private firms say red tape is biggest hurdle to growth

MANILA, Philippines - Privately held businesses (PHBs) in the country identified red tape and regulations as the biggest roadblock to their growth here, an international survey reported yesterday.

The Grant Thornton International Business Report (IBR) released by Punongbayan & Araullo showed that 45 percent of the local respondents identified regulations and red tape as a road block for business growth.

For three years or since 2007, the major concern of local PHBs has been the lack of skilled work force but this has been overtaken by regulations/red tape.

According to the World Bank’s latest survey on the ease of doing business, the Philippines is one of the most difficult places in the world to do business – the country’s ranking dropped to 144 from the previous year’s 141 out of a total of 183 economies.

The survey showed, for example, that starting a business in the Philippines takes about 52 days, compared to only four days in top-ranked Singapore. Another survey conducted by the World Economic Forum regarding the competitiveness of 133 economies showed a similar trend, with respondents citing corruption and inefficient government bureaucracy as the top two most problematic factors in doing business in the Philippines .

“It’s a problem we have to hurdle if we want to keep attracting investors,” Marivic Españo, managing partner and CEO of P&A said.

“With the BPO industry, for example, the Philippines is still top-of-mind as a location for investors, but businesses are starting to complain about red tape and widespread corruption in government. The problem has to be addressed sooner rather than later, especially for such an industry that plays a big part in the growth of our economy,” she added.

At the same time, the report showed that Philippine based PHBs are more confident about access to finance this year.

Among the local business leaders surveyed, 55 percent believe finance will be ‘much more accessible’ or ‘more accessible’ in 2010, while 88 percent reported that their lenders are either ‘very supportive’ or ‘supportive’ of their businesses.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that in November last year, bank lending – including reverse repurchase agreements – increased by 2.6 percent year on year to P2.3 trillion. With the economy showing signs of recovering, lending activity is expected to gain momentum in 2010 as banks ease their lending policies.

“Even when the global economic crisis hit us last year, the attitude of Filipino business leaders regarding their access to finance and the support they got from their lenders was still more upbeat compared to the global average,” Españo said.