* This is my article in
BusinessWorld last Thursday, November 04, 2015.
The most hard working, most efficient persons will not be
able to produce all the goods and services that they need for themselves and
their families. But there are always other people willing to produce these
things or render these services in exchange for money, useful goods, and
services.
On the macro level, no country or economy can prosper
quickly without trade. And that includes countries that incur frequent trade
deficits (in which their imports exceed their exports). Imported machines,
vehicles, and computers become inputs for several activities used for the
production of goods and services in the domestic economy.
Since trade is a very useful human endeavor, trade should
be left as free as possible, with the least or minimum regulations and taxation
by governments. The only traded goods that need heavy government regulations
and inspections are guns, ammunition, bombs, poisonous substances, and other
products harmful to public health and security.
In the Association of Southeast Asian Nations (ASEAN), a
handful of countries impose few trade regulations while the others, including
the Philippines, impose more.
Below is the result of the World Bank’s (WB) “Ease of
Doing Business 2015” Report on International trade.
Covering 189 countries, the report shows the global
rankings of ASEAN members. New comers to the ASEAN,
Cambodia-Laos-Myanmar-Vietnam (CLMV) were at the bottom.
Based on the report, it would take around three weeks for
an exporter to finally move his containers out of CLMV, versus less than one
week in Singapore and around two weeks for exporters in Malaysia and Thailand.
(See Table 1)
The Philippines was midway among the 10 countries in the
ASEAN in terms of global ranking, but the cost to export and import were
third-highest in the region, trailing Laos and Cambodia. That is not the right
way to treat our exporters and importers.
The WB recently released the “Ease of Doing Business
2016” Report. The categories in “Trading across borders” have changed from the
2015 Report.
Emphasis was given to time and cost to export and import
and hence, countries that are contiguous to each other in a single market
ranked high. Thus, those jointly occupying the #1 global rank are 17 countries
in the European Union (EU): Austria, Belgium, Croatia, Czech Republic, Denmark,
Estonia, France, Hungary, Italy, Luxembourg, Netherlands, Poland, Portugal,
Romania, Slovak Republic, Slovenia and Spain.
Why? For these countries to send their goods abroad, only
one hour is spent for documentary compliance, zero hours for border compliance,
only 2 hours for domestic transport, and so on.
Other industrial countries that rank high but not in the
top 30 are: South Korea, 31; US, 34; Germany, 35; UK, 38; Switzerland, 40;
Canada, 44; Hong Kong, 47; Japan, 52. For the ASEAN countries, here are the
numbers. (See Table 2)
We can interpret the above ranking like this: If those 17
EU countries were not included in the ranking and Singapore has dropped from #1
(rank in the 2015 Report) to 11th with South Korea the new #1, the following
would be the new global rank of the other 9 ASEAN countries out of 172
countries covered: Malaysia, 18th; Thailand, 25th; Philippines, 64th; Cambodia,
67th; Vietnam, 68th; Indonesia, 74th; Laos, 77th; Brunei, 90th; and Myanmar,
109th.
Under this formulation,not much has changed in the global
rank of the Philippines and other ASEAN countries compared to the 2015 Report.
The Philippines in particular needs to reduce the cost of
international trade. Philippine exporters pay the highest, at $456, in border
compliance and another $381 in domestic transport, among the ASEAN.
Our importers also pay the highest in border compliance,
at $580, and second highest (next to Cambodia) in domestic transport and pay
$381.
Trade is beautiful and useful.
Imposing higher costs owing to various government taxes through
fees and fines is unwise. Governments should allow trade to be as free and less
costly as possible.
Bienvenido S. Oplas, Jr. is President of Minimal
Government Thinkers, Inc., and a Fellow of the South East Asia Network for
Development (SEANET).
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See also:
BWorld 19, Taxation and regulations in PH mining industry, September 24, 2015
BWorld 20, DOE Circular to raise electricity prices, October 25, 2015
BWorld 21, More internet use means lesser corruption?, October 31, 2015
BWorld 22, WESM, PEMC and search for competitive electricity prices, November 05, 2015
