MANILA, Philippines - The Philippines loses at least P140 billion in annual opportunity cost due to cumbersome, outdated and complex business regulations for starting business, according to the World Bank.
In the Philippine Economic Update, October 2015 report, the World Bank said lost productive time translates to an estimated annual opportunity cost of at least P100 billion annually in the form of forgone income, taxes, and spending.
Opportunity cost of around P40 billion could likewise arise from discouraged Filipinos who could have started a business, if only the cost was reasonable.
This translates to foregone employment of around 60,000, which is equivalent to about five percent of new labor force entrants every year.
“These are the true costs of complex business regulations. Reforms to reduce these costs would free up substantial resources to make growth more inclusive,” Karl Kendrick Chua, Philippine country economist of the World Bank, said.
The cost on small firms in starting a business is very high. New business applicants have to pay legitimate fees of up 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,” Chua added.
Business reports they need to pay bribes to obtain various permits and services. As the business finally gets on the ground, numerous annual regulatory and tax requirements are needed, which could take from days to years.