THE “data irregularities” due to potential manipulation in the World Bank’s (WB) Doing Business report have tainted the credibility of the primary reference for global rankings in terms of ease of setting up businesses, a private sector leader said.
George T. Barcelon, Philippine Exporters Confederation Inc. (Philexport) chairman, noted that the WB’s decision to discontinue the Doing Business research was due to “undue influence” during the publishing of some of the reports.
“This has cast doubt on the credibility of its report,” Barcelon told the BusinessMirror.
The international financial institution, in a recent statement, revealed there were “data irregularities” in the Doing Business 2018 and 2020 reports that raised ethical issues, referring to the conduct of some officials while doing the research.
An external investigation concluded that former World Bank chief executive Kristalina Georgieva and former World Bank president Jim Yong Kim applied “undue pressure” to boost the data points of China.
“After reviewing all the information available to date on Doing Business, including the findings of past reviews, audits, and the report the Bank released today on behalf of the Board of Executive Directors, World Bank Group management has taken the decision to discontinue the Doing Business report,” WB said.
“The World Bank Group remains firmly committed to advancing the role of the private sector in development and providing support to governments to
design the regulatory environment that supports this. Going forward, we will be working on a new approach to assessing the business and investment climate,” it added.
The institution stressed that “trust” in the Doing Business research is crucial as many stakeholders—including the private sector, academe and journalists—use it as a reference.
As such, Barcelon said the WB should do a thorough review or even overhaul of the current methodologies. The new procedure should then be approved by all the member countries, he added.
Rizalina Mantaring, Management Association of the Philippines (MAP) national issues committee chairperson, said the findings of the investigation are “disturbing and a disappointment to countries like us which rely on the World Bank for guidance.”
“The World Bank acted correctly to discontinue the report until it can review its processes and institute appropriate safeguards or come up with a credible alternative, as its validity will now be questioned,” Mantaring told the BusinessMirror.
Makati Business Club Executive Director Francisco Alcuaz Jr., in an interview with the BusinessMirror, also pitched the inclusion of the impact of cutting red tape on sustainability and inclusivity in the new assessment metrics.
He said that the WB report might have been “too focused on EoDB [ease of doing business] at the expense of sustainability and inclusivity.”
In the current methodology, the international financial institution considers the following indicators: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
New, improved version
“We would welcome a new, improved version,” Alcuaz added.
The Anti-Red Tape Authority (Arta), for its part, said that it will continue its streamlining and automation efforts to improve the EoDB in the country even without the rankings.
“The work for government efficiency and the battle against bureaucratic red tape is much greater than what any survey or competition could ever quantify. Rather, Arta gives more premium on improving the customer experience of our stakeholders for every government process,” Arta Director General Jeremiah Belgica said in a statement over the weekend.
The Ease of Doing Business and Anti-Red Tape Advisory Council, along with private sector representatives, is set to meet today (September 20) to discuss further steps after the development.
Belgica said they are considering the possibility of producing a localized Doing Business ranking in the country “to nurture healthy competition and recognized good initiatives of local government units.”
The anti-red tape agency is also eyeing to launch a Report Card Survey, which seeks to measures the EoDB compliance of government agencies, this year.
The Philippines scored 62.8 in the last year’s Doing Business survey, which put the country at the 95th spot. This is an improvement from when the country ranked in 57.68 in 2019 and sat at 124th rank out of 190 countries.
EoDB is among the factors an investor looks at when deciding on a venture in a specific country. Ranking highly in the survey signals that the country’s regulatory environment is business-friendly.