What will improve business climate in the Philippines?
The World Bank believes it has the answers. The Philippine Daily Inquirer's banner story today shows a list of measures the International Finance Corp., the private sector development arm of the World Bank, is urging the government to adopt. Do you agree with the IFC? It says the Philippines is weak especially in the areas of starting a business, property registration and ability to access credit. In a nutshell, IFC suggests that the government should:
enhance the government portal for business registration to include, among others, the health and insurance of employees
remove minimum capital requirements for setting up a business
reducing procedures to register properties, such as by eliminating the notarization requirements or allowing the registrar to notarize deeds
pass a law to establish a credit information bureau that will guard the payment history of potential borrowers
allow borrowers to inspect the business background of lenders
The proposal on the credit information bureau is particularly interesting because at the moment, lenders are keeping their own counsel on who is creditworthy or not. Why would they share that kind of information with their peers, no matter what they say publicly about "working together for the good of the industry." The absence of a good database on potential borrowers makes it easier or bad borrowers to get a loan and raises banks' past due loans.
Who is the end loser here? The banks to a certain extent because their image gets hurt, but more so good borrowers who get higher interest rates and a longer time to process loans because of more documentary requirements and credit history checking. At least, that's how bankers explain the situation.
Unfortunately, getting that reform done will depend on Congress, where the road to an important bill can twist and turn like a supertyphoon dancing with another supertyphoon.
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