World-Class on Paper, Stuck at the Window: B-READY, the CMCI, and the Distance Between a Reform and a Receipt in Ease of Doing Business
The government, under laws and its implementing rules and regulations, promises businesses a business permit within three steps. In practice, clerks at the window can still send you home on day twelve, asking for one more signature from one more office that closes at noon, or for requirements you must get from the same officer you are asking for the permit. Both things are true at once, and the space between them is where most of our reform energy quietly disappears.
This gap between what is stated in the regulations and what is practiced in the real world was evident in my experience when I conducted a business permitting streamlining workshop for the province of Ilocos Sur. The difference between law and practice lay in the perspectives of local government units. The standard takes the client’s perspective, with the three steps defined as the three touchpoints between the entire LGU and the client. On the other hand, the LGU only considers the touchpoints between the client and the Business Permits and Licensing Office. In discussions with Ilocos Sur municipalities, entrepreneurs seeking business permits averaged 35 interactions or touchpoints. Again, this counts every time the entrepreneur meets with any LGU office or processes any requirement for the business permit. Why did it take, on average, 35 steps when the standard is only three? One reason is asking for requirements that the LGU already has. Another is different payment windows for different requirements. These are easy problems that will mean the world to business owners. By simply integrating payment systems across LGUs and other relevant agencies, such as the Bureau of Fire Protection, business owners can pay once instead of multiple times. Regarding the requirements, if the LGU already has a copy, such as a prior-year business permit official receipt, it is a matter of coordination and systematic record management to eliminate burdensome requirements.
That gap, between the rule as written and the transaction as lived, is not a detail. It is the single most important thing to understand about why the Philippines keeps passing serious reforms yet still feels like nothing changed. We are, by a growing body of evidence, genuinely world-class at writing the rules. We are mediocre, and in one crucial dimension, getting worse, at delivering them at the counter. I have spent a good part of my public-administration work standing on the delivery side of that gap, reconstructing permits from the applicant’s chair rather than the org chart, and the distance is always wider than the ordinance admits.
The country that reformed on paper
Start with the scoreboard, because for once it is unusually honest about the problem. The World Bank retired its old Doing Business rankings in 2021 and replaced them with Business Ready, or B-READY, a framework that scores each economy on three separate pillars: the Regulatory Framework, the Public Services that support it, and the Operational Efficiency with which the two combine in actual practice. The design itself is the interesting part. The old index largely asked what the rules said. The new one deliberately separates what the rules say from what firms actually experience.
That separation is exactly where the Philippine story splits in two.
In the latest 2025 B-READY report, which assessed 101 economies, the Philippines scored 73.86 on the Regulatory Framework pillar, good for 26th place. On paper, our rules sit comfortably in the top third of the world. Then look at the other end of the same country. On Operational Efficiency, the pillar that measures how the rules and services actually function for a firm on the ground, the Philippines scored 51.45 and ranked 80th out of 101. Public Services landed in the middle, 51st. The country is near the top of the class in design and near the bottom in delivery, and these are not two countries. They are the same one, measured on the same day by the same people.
It gets sharper when you watch the trend. In the first B-READY edition in 2024, which covered 50 economies, the Philippines ranked 36th on Operational Efficiency. A year later, against a wider field, it sat at 80th. Some of that is the larger comparison set, and it would be dishonest to pretend otherwise. Not all of it. The uncomfortable reading is that as more economies got measured on what actually happens to firms, ours did not hold its place. A ranking can slip because the field has grown. It can also slip because everyone else is closing their own gap faster than we are closing ours.
What B-READY actually measures, and why the split matters
The reason the pillar split is so useful is that it refuses to let a good legal framework launder a bad lived experience. B-READY collects two kinds of information for each of its ten business-lifecycle topics. It gathers the rules as they are written from expert consultations. It also gathers data from practice as firms encounter it, from those same experts and from the World Bank’s firm-level Enterprise Surveys. A country can therefore post a strong score on the rules and a weak score on the practice, and the report will show you both rather than averaging them into a comforting single number.
That refusal to average is the whole point. A single blended score would have let a 26th-place framework quietly carry an 80th-place counter, and the country would have congratulated itself on a number that no actual entrepreneur ever experiences. By keeping the two apart, B-READY turns a ranking into a diagnosis. It says, in effect, that the binding constraint is not the absence of good policy. The policy is there. The constraint is the machinery that is supposed to turn policy into a service at a counter, on a Tuesday, for a person who took the morning off work to be there.
For anyone who works in Philippine governance, that diagnosis should feel familiar, because it is the same split we keep rediscovering under different names: the ordinance versus the office, the memo versus the mandate, the reform on the wall versus the queue in front of it.
A gap that is structural, not uniquely Filipino
It would be easy, and wrong, to treat this as a Philippine character flaw. The gap between stringent rules and weak enforcement is one of the most well-documented patterns in development economics, and naming it correctly is the first step toward addressing it.
The clearest statement of it comes from Mary Hallward-Driemeier and Lant Pritchett, whose 2015 paper in the Journal of Economic Perspectives compared the World Bank’s expert-reported regulatory timelines with what firms in the Enterprise Surveys said actually happened to them. Their finding was that the relationship between the two is, in their words, “neither one for one, nor linear.” The official time to clear a process and the real time a firm experiences are only loosely connected. Where the state writes demanding rules but lacks the capacity or will to apply them uniformly, business stops running on rules and starts running on deals. Each transaction is negotiated individually, and the outcome depends on who you are and who you know.
This is the deeper meaning of an 80th-place finish in operational efficiency. It is not merely slowness. It is discretion. When the published process and the real process diverge, the difference is filled by someone’s judgment at a window, and discretion is the soil in which both inefficiency and corruption grow. The two are not even separable in practice. A delay creates a point of contact, a point of contact creates a chance to ask for something, and the thing asked for might be another document, another trip, or a quiet accommodation. A reform that tightens the rule without closing the discretion does not remove the problem. It can even relocate it somewhere harder to see, from the counter to the back office, from the fee schedule to the fixer.
The law’s promise: 3-7-20 and the zero-contact window
We have, to our credit, already written the rule that is supposed to kill that discretion. Republic Act 11032, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, sets a hard processing standard for every government office to meet: three working days for simple transactions, seven for complex ones, and twenty for highly technical ones. It mandates a zero-contact policy once an application is filed, so the applicant and the approving officer do not have to negotiate across a counter. It provides that applications left unacted upon within the prescribed period are deemed approved. It requires every agency to publish a Citizen’s Charter listing exactly what is required for a transaction and how long it may take. It created the Anti-Red Tape Authority to enforce all of this.
Read on its own, RA 11032 is a genuinely good law. It is precisely the kind of framework that earns a 26th-place finish in B-READY. The 3-7-20 standard is a clean, legible promise, and the deemed-approved provision is a genuinely clever piece of design, since it seeks to turn bureaucratic silence into a default in the applicant’s favor. The trouble is that a promise written into statute and a promise honored at a municipal window are different objects, and the law cannot by itself guarantee the second. A deadline only bites if someone measures it, and most applicants have no way to prove the day the clock started.
In the regulatory simplification workshops I conducted through the Local Government Academy of the Department of the Interior and Local Government in 2023 for second-class to third-class municipalities across the Visayas and Mindanao, implementing a zero-contact policy proved nearly impossible, since it requires a Business One Stop Shop system, which LGUs do not have the capacity to implement. The institutional knowledge of retaining old regulatory requirements that the new law has already removed is not easy to change. It requires a budget for training, retraining, and even more retraining, a luxury these municipalities do not have. While there is support from the national government, such as the BOSS software from DICT, it is still proving too difficult to implement, given the constraints faced by LGUs.
Measuring the transaction from the applicant’s side
Here is where the method matters, because you cannot close a gap you refuse to measure honestly. Most official accounts of a permit are written from the agency’s side: the steps the office believes it performs, the fees it believes it charges, the days it believes it takes. The trouble is that this is the de jure process describing itself. It cannot see its own gap.
The instrument I have found most useful in this work does the opposite. It reconstructs the transaction from the applicant’s chair, one task at a time, from the first form to the released permit. For every step, it records the mundane things the ordinance never counts: the travel time between one window and the next, the waiting time in each line, the transaction time at each counter, the number of separate visits, and every signature the applicant actually had to chase. Do that honestly, and a permit that the ordinance describes in three neat steps can resolve into dozens of real ones, because the process table counts the trips and the queues that the flowchart pretends away. That is the origin of the pattern I keep meeting in the field: three steps on paper, many times that in reality. The number is not an indictment of any one mayor. It is what a process looks like when it is measured from the side that has to live it.
This is also the precise variable that B-READY’s Operational Efficiency pillar exists to catch and that most local scorecards miss. It is the difference between asking an office what it does and asking an applicant what happened to them.
What the CMCI can see, and what it cannot
If RA 11032 is the national promise, the closest thing we have to a measure of whether localities keep it is the Cities and Municipalities Competitiveness Index, run by the Department of Trade and Industry through the Regional Competitiveness Committees. The CMCI ranks more than a thousand local government units each year across five pillars: Economic Dynamism, Government Efficiency, Infrastructure, Resiliency, and Innovation. The Government Efficiency pillar addresses our problem, as it seeks to capture the quality of local governance, including how an LGU handles business processes.
The CMCI is one of the more quietly valuable instruments in Philippine public administration, and recent scholarship has begun treating it as a genuine governance tool rather than a pageant. A 2026 study in a peer-reviewed journal argues that CMCI indicators can guide LGUs in building resilience and innovation into their development planning, suggesting the index is starting to shape behavior rather than just rank it. An index that changes what mayors do is worth far more than one that only tells them where they are placed.
Here, intellectual honesty matters because the CMCI has a structural limit that bears directly on our question. Much of its data is self-reported by the LGUs themselves, then validated. That makes it excellent at measuring what a local government has put in place: an online portal, a one-stop shop, a streamlined ordinance. It is far weaker at measuring what a citizen actually experiences at the window, which is the precise variable B-READY’s operational efficiency pillar exists to catch. An LGU can score well for having built the machinery, even if the machinery still grinds for the person standing in front of it. The index can see the door. It cannot always see whether the door opens, how long the person waited on the other side, or whether they were quietly told to come back with something extra.
So we are left with two instruments that, between them, frame the gap without fully closing it. RA 11032 sets the de jure promise. The CMCI mostly measures whether the apparatus to keep that promise exists. Neither reliably measures the de facto thing that actually decides whether a small entrepreneur gives up: the lived transaction, end to end, including the steps no ordinance admits to.
Where the value leaks
This is where I find the public-administration question more useful than the competitiveness one. The competitiveness frame asks how we rank. The administration frame asks a better question, the one I keep returning to in all of this work: when a reform is announced, where does the value actually end up?
When the published process is clean but the real process is opaque, the gap between them has a price, and someone collects it. Sometimes it is collected in time, but the extra trips and lost workdays fall hardest on the smallest firms with the least slack. Sometimes it is collected in cash through the fixer, who knows which window moves, and the informal payment that greases it. Sometimes it is collected in exclusion, in the would-be entrepreneur who looks at the real cost of formalizing and decides to stay informal, or not to start at all. In every version, the value the reform was supposed to create for the firm leaks out to whoever controls the discretion in the gap.
In the tourism industry, travel agencies are paid to make bookings and provide travel-related services for a fee. Imagine someone like me, who does not have any prior experience booking flights to a foreign country, much less booking tours abroad. A travel agency can do that for me with much more efficiency and a guarantee that I won’t spend on something I don’t need. In every service process, there are always inefficiencies where leakage happens. This is different from tangible products, where you can automate manufacturing. In services that deal with people, decisions and uncontrollable factors lead to inefficiencies. In government services, like business permitting, there’s always going to be confusion about the requirements and the process that needs to go through specific windows. There’s always inefficiency, which means an entrepreneur’s additional funds go to the administrative process rather than to building the business when registering.
In the doctoral public administration classes I’ve had in the past few semesters, I’ve spoken with various local government officials. We are wondering: what if, as in the tourism industry, there were business consultants acting like travel agencies? For a fee, they can help entrepreneurs process their business permits, determine the requirements, and guide them through the process in the most efficient manner. You might say this is the definition of a fixer, but this so-called business consultant can be very different, because they are sanctioned by the local government executives. This means that all payments made by entrepreneurs seeking their services will be issued receipts by the local government.
This way, it can create more jobs, make the process more efficient, and help small entrepreneurs. The local government can further amplify its policy by supporting informal micro businesses, the informal ones we see on the streets, for them to have free business permitting services subsidized by the government, with certain exemptions until they reach growth or capitalization targets. That way, it can boost the local economy and formalize all businesses within a certain locality.
The inefficiency gap, usually framed as corruption, is also why the smallest businesses, the ones national policy most wants to formalize, are the ones least served by reform-on-paper. A large firm can afford a liaison officer whose entire job is to absorb the friction. A sari-sari store owner or a first-time food entrepreneur cannot. The de jure reform is formally available to everyone and, in practice, captured by those who can pay to convert it into a de facto outcome. A reform that is equal on paper and unequal at the window is not a neutral failure. It is regressive, and it taxes exactly the people it was written to help.
Closing the distance between a reform and a receipt
If the problem is the gap between rule and practice, then the work that matters is not another law. We are demonstrably good at laws. The work is the unglamorous business of implementation capacity at the counter: enough trained people, systems that actually talk to each other, an end-to-end process audited from the applicant’s side rather than the agency’s, and a measure of success defined as a permit in the citizen’s hand rather than a portal on the agency’s website.
I want to be careful about what the evidence does and does not support here. B-READY can show us that our operational efficiency lags our regulatory framework. It cannot, by itself, tell any single mayor which of his offices is the bottleneck. The CMCI can tell an LGU its ranking. It cannot fully tell that LGU what its own window feels like to a stranger. Closing the gap, therefore, starts with measuring the right thing, the lived transaction, and being willing to look at the number it returns, even when it embarrasses the org chart. The instinct to measure from the agency’s side is understandable and almost always wrong, because it produces a flattering number that no applicant recognizes.
There is proof that the gap can close when implementation is attacked directly. Under ARTA’s NEHEMIA streamlining program, the average permit processing time for shared telecommunications towers fell from 241 days to 16, a 93 percent drop, with the permits required cut from 13 to eight and documentary requirements from 86 to 35. Notice what was done there. It was not a new law. It was the unglamorous consolidation of requirements and agencies that RA 11032 had promised all along, applied to one sector at a time until the number moved.
The deeper point is almost philosophical, and it is the one I keep returning to in this work. A rule is a promise the state makes to a citizen. A reform that improves the rule but not the citizen’s experience of it has improved the promise without keeping it. That is not nothing, but it is not yet reform. It is reform on paper, waiting at the window for someone to make it real.
So the next time we celebrate a high ranking on the regulatory framework, the honest follow-up question is small and unforgiving. Can the person standing at the window feel it yet? Until the answer is yes, we have written a good law. We have not yet delivered one.
References for Further Reading
- World Bank, Business Ready (B-READY) 2024. The World Bank’s successor to Doing Business, scoring economies on three separate pillars (Regulatory Framework, Public Services, Operational Efficiency) across ten business-lifecycle topics. Its deliberate split between rules-as-written and practice-as-experienced is the analytical backbone of this piece.
- Louella Desiderio, “Philippines at midpoint of World Bank’s B-Ready report,” The Philippine Star, 24 January 2026. Reports the Philippines’ 2025 B-READY pillar scores, including the strong Regulatory Framework rank and the weak Operational Efficiency rank. The source for the specific pillar numbers that anchor the argument.
- Mary Hallward-Driemeier and Lant Pritchett, “How Business Is Done in the Developing World: Deals versus Rules,” Journal of Economic Perspectives 29(3), 2015, 121-140. The canonical study showing that official regulatory times and the times firms actually experience are only loosely related. It supplies the structural explanation for why a strong rule can coexist with a weak window.
- Implementing Rules and Regulations of Republic Act 11032, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 (Supreme Court E-Library). The legal text establishing the 3-7-20 processing standard, the zero-contact policy, deemed-approval, the Citizen’s Charter, and the Anti-Red Tape Authority. The de jure promise whose delivery this article interrogates.
- Cities and Municipalities Competitiveness Index, Department of Trade and Industry. The annual DTI index ranking Philippine LGUs across five pillars, including Government Efficiency. Discussed here both for what its Government Efficiency pillar captures and for the self-reporting limit that keeps it from fully measuring the lived transaction.
- Alvin Ang, Maire Carroline Magante, and Maria Isabella Militante, “The Philippine Cities and Municipalities Competitiveness Index (CMCI) as a Tool for Approaching Net-zero Targets,” Millennial Asia, 2026. A recent peer-reviewed analysis treating the CMCI as an actionable governance instrument for local planning, not merely a ranking. Cited as current evidence that the index is beginning to shape LGU behavior.
- Kris Crismundo, “PH cuts permit processing time by over 90% in key sectors –ARTA,” Philippine News Agency, 29 May 2025. Reports ARTA’s NEHEMIA program results, including the telecommunications tower permit reduction from 241 days to 16 and the cut in permits and documentary requirements. The verified proof point that the delivery gap closes when implementation is attacked sector by sector.