[TYPE THE COMPANY NAME]
Differences and Similarities in Macroeconomic Indicators
and Ease of Doing Business in Philippines and Russia: A
Report on the Entrance of Procter & Gamble
Assignment
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Table of Contents
Introduction ..................................................................................................................................... 3
Introduction to Selected Countries.................................................................................................. 3
Comparison of Macro- Economic Indictors ................................................................................... 4
1. Growth Rate of GDP ............................................................................................................ 4
2. Inflation Rate ....................................................................................................................... 4
3. Unemployment rate .............................................................................................................. 5
Entrepreneurial Landscape of Russia .......................................................................................... 5
Entrepreneurial Landscape of Philippines................................................................................... 6
Ease of Business Rankings ............................................................................................................. 8
Ease of Business in Russia .......................................................................................................... 8
Ease of Business in Philippines................................................................................................... 8
Comparison of Ease of Business ................................................................................................. 9
Conclusion .................................................................................................................................... 10
References ..................................................................................................................................... 10
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Introduction
This report addressed the feasibility analysis for opening an international expansion of consumer
manufacturing goods. The countries selected for comparison are Russia and Philippines, situated
in two regions of Asia, with large magnitude of difference in geographical and monetary
volumes. Both countries have their own strengths and weaknesses for opening new businesses of
foreign subsidiaries. This report compares and contrasts the entrepreneurial opportunities for a
leading UK based multinational Procter & Gamble for its new manufacturing plants of
detergents and washing powder in the designated economies of Russia and Philippines. Doing
Business report for 2018 is used to measures features of economy and rank countries on the basis
of ease of starting a business. The report in particular discuss the differences and similarities in
the “Ease of doing business” indices and fluctuations in the macroeconomic indicators of the
countries including GDP growth rates, inflation and unemployment rates for the period of 2015
to 2018, which could be obtained from the IMF database.
Introduction to Selected Countries
The Philippines is a in Southeast Asian nation, which is located in the west part of Pacific Ocean.
This archipelago comprised on nearly 7,106 islands situated in linkage with huge numbers of
water bodies in Southeast Asia. Proximate nations incorporate Vietnam, Taiwan, and Indonesia.
The Philippine’s topography based on rocky areas with limited beach fronts. The republic
administration framework with presidential form of government is prevailing in the country.
Moreover, the Philippines is the member country of the ‘Association of Southeast Asian Nations
(ASEAN)’ and ‘Asia-Pacific Economic Cooperation (APEC)’ (HKTDC Research 2017).
On the other hand, Russia that is situated in north part of Eurasia is one of the leading global
countries. The geology is differing and incorporates marvellous forests, Siberian tundra plateau,
and mountains along the South fringes. Presidential form of government found in political
structure with autonomous bodies to control business activities. Russia has progressed from
middle income group economy to a upper income group economy in which numerous public
sector firms become privatized and more liberty is awarded to the growth of private sector
(World Bank, 2017). Russia is an individual and leading member of the “Asia-Pacific Economic
Cooperation (APEC) and the Eurasian Economic Union (EAEU)” (HKTDC Research, 2018).
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Comparison of Macro- Economic Indictors
Source: IMF Data 2018
The economic indicators shown above compare the GDP, inflation rates, and unemployment
rates for Russia and Philippines (IMF Data, 2018).
1. Growth Rate of GDP
In the period of 2015-2019, Philippines have shown a phenomenal and stable GDP growth rate
that varies from 6% to 6.6%m whereas Russia has shown a increase in growth rate from -2.5% to
1.78%. In 2016, the GDP growth rate for Philippines was an impressive 6.8% and the forecast
for 2018 shows the continuation of this increase in GDP. According to World Bank(2017),
Though currently, Philippines has a status of lower middle income country with significant
income gap from other ASEAN counties but the sustenance of current economic growth will
assist the country to gain status of upper-middle income nation by the year 2022.
Moreover, volume of change in growth rate is low for Russia but change in GDP is faster than
Philippines.
2. Inflation Rate
Inflation rate in Philippines increased from 1.4% to 4.1% in period of 2015 to 2016. Similarly,
the percent change for inflation in Russia was negative, since it has decreased phenomenally
from 15.5% to 2.7%, shows rapid economic growth. The consumer price index gas been
improved and the value of Rouble become strong as a result of the positive economic incentives
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of Russia (Stronsky, &Sokolowsky, 2017). The decline in corporate tax rate also added
positively in this rapid decline in inflation rates.
3. Unemployment rate
As far as unemployment rate is concerned, Philippines shows an improvement from 6.2% to
5.5%, whereas, unemployment rate in Russia remained nearly same at 5.5% in the period of four
years from 2015 to 2018. Therefore, unemployment rate in Russia did not show any considerable
change and the economy needs more robust growth to decline this unemployment rate (World
Bank, 2018).
Entrepreneurial Landscape of Russia
As per the Ease of Doing Business report of World Bank, the business landscape of Russia is
transforming to0wards private sector economy. Russia was a standout amongst the most
enhanced nations in the most recent Ease of Doing Business report (2018). Russia came 92nd out
of 189 countries, climbing 19 spots above the main BRIC economy countries. In principle, this
implies it is simpler to set up new businesses in Russia than like in any of the other BRIC
economies (Moise, & Sorescu, 2013). BRIC economic block comprised on the most emerging/
driving developing business sector nations that includes Russia and additionally incorporates
China, India and Brazil. What is maybe most encouraging about Russia's improvement is its
execution in the region of "composed help" offered to business people (HKTDC Research,
2018). From the ascent of business start-ups to committed modern industry parks, there is all that
could possibly be needed to rank Russia above all else the 20 nations.
Russia has faced GDP decline for the years 2015 and 2016 consecutively, but the economy has
been observed as gathering momentum for growth in the year 2017 (Stronsky, &Sokolowsky,
2017). The increase in trade with the European countries and positive foreign relationships with
the countries in Asia, improvement in oil prices, and internal political stability of Russia has
played an important rile (Word Bank 2017). The impact of strengthening economy and strong
currency value provide Russian a leading status in the emerging countries group BRIC. The
consumer markets of Russia become a major attraction for foreign investors and multinational
businesses. The GDP growth rate of 1.5% in 2017 and the expected growth rate of 1.72% in
2018 showed this confidence of investors and consumers in Russian market.
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The role of Russian government is also vital in stimulating investment through diversification of
economy. Large number and different forms of incentives are provided to foreign and local
investors to develop new technologies, products, and services in the fields of energy efficiency,
space technology, engineering, medicine, consumer products, and IT sectors (Mendoza, et al
2015). The important incentives in this regard exemptions from corporate tax/ VAT/ property
tax, reduction in rates of social contribution, and a R&D activities investments lead to 150%
costs deduction in taxes for companies. The status of Russia reflected in doing business 2018
report is shown below:
Source: Doing Business (2018)
The above summary shows that Russia stands 35th in 190 countries globally.
The distance to the best performing country or the frontiers measured by Doing Business is
calculated as 75.5 for Russia. This DTF of Russia is ahead of China (65.2), Brazil (56.45), and
Mexico (72.27).
Entrepreneurial Landscape of Philippines
Tending to broad poverty is the absolute most critical development challenge confronting the
Philippines. Not exclusively is neediness high when benchmarked against nations in Asia, yet
additionally the country experiencing moderate rate of poverty decline. While the Philippine
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economy has developed at a normal of 6 percent for the last four successive years (since 2015),
poverty occurrence stays over 20 percent of the population. Enterprises can give the arrangement
by making riches, employments, and social strengthening (Nation Master 2017). The important
indicator to progress after the GDP growth rate is high percentage of youth in population. The
future Procter & Gamble detergents and washing powder manufacturing business (CGMB) plant
will need large supply of workers , therefore, the population of Philippines with median age of
23 years , not only stand youngest in ASEAN countries, but also favourable to this future
venture. Moreover, the consu8mer spending will also get positively affected from the high
percentage of youth population in the country. Hence the future market demand in Philippines
will also match the targets of this CGMB. According to IMF Data (2018) reports, the spending
rations of young population are higher as compared to their saving ratios.
Source: Doing Business (2018)
The above summary shows that Philippines stand 113th in 190 countries globally. The distance to
the best performing country or the frontiers measured by Doing Business is calculated as 58.74
for Philippines. This DTF of Philippines is far below than Malaysia (78.43), Thailand (77.44),
and Indonesia (66.47). Thus, the performance of Philippines in DTF is measured quite lower
than that of other ASEAN nations.
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Ease of Business Rankings
According to Doing Business Report (2018), the major rankings found for both Russia and
Philippines on important indicators for starting a new business are shown in the figure below:
Ease of Business in Russia
The above shown rankings of doing business for Russia established some positive elements of
starting a new Procter & Gamble detergents and washing powder manufacturing business of
Procter & Gamble in Russia. The important elements considered for a manufacturing plant,
distribution and supply chain, and marketing consumer products in this manufacturing business
are getting electricity (10), registering property (12), and enforcing contracts (18). However, the
score on one of the most important indicator of easiness of business, the dealing with
construction permits (115) is quite low for Russia. The low score on construction permits shows
that more time and large number of procedures are involved in this aspect of business.
Nevertheless, starting of a business in Russia is also quite feasible due to the high score of 28 on
this ranking scale of 190 countries.
Ease of Business in Philippines
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Similarly, for Philippines, The above shown rankings of doing business established many
positive indicators of starting a new manufacturing plant and sales business of consumer goods.
The important elements considered for a manufacturing plant, distribution and supply chain, and
marketing consumer products in this manufacturing business are getting electricity (31),
registering property (114), and enforcing contracts (149) are quite low as compared to that of
Russia.
Comparison of Ease of Business
However, the score on one of the most important indicator of easiness of business, the dealing
with construction permits (101) is also quite low for Philippines but better than that of Russia.
The low score on all these indicators shows that more time and large number of procedures are
involved in these aspects of business in Philippines. Therefore, businesses face more difficulties
in absence of appropriate infrastructure, lengthy government approval procedures, and high rates
corruption (HKTDC Research, 2017). The country scored low on the other measures of success
also and ranked among the bottom fifty countries globally on most indicators. In this situation,
starting and business in Philippines secured 173rd position in 190m countries, i.e. in bottom 20
countries. On the other hand, Russia scored 28 in top 30 countries of the world. Hence, starting
of a business in Philippines is quite difficult due to the low ranks of the country on all major
indicators. Moreover, The Doing Business Report (2018) discussed that the construction rules of
buildings and government procedures made simple with online tax filing systems, and
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enforcement of latest information technology in public and private sector improves the rankings
of Philippines on ease of business scale. However, the present rankings of Philippines found very
low and non supportive of opening up a construction business in less time and less number of
procedures involvement is also not found in Philippines.
Conclusion
In conclusion, Russia is found more lucrative and feasible country to expand the Procter &
Gamble detergents and washing powder manufacturing business in Europe and East Asia.
Though, Philippines is also found attractive due to high GDP grower-t rate of above 6%, more
population of Youth, and prospects of becoming a upper-middle income country till 2025. On
the other hand, the positive GDP growth rates of Russia after recovering from negative GDP
growth and decline in inflation by more than 10% in four years tome shows that Russia has
strengthened the economy at much faster rate as compared to Philippines. However, the
construction permit is still a difficult task in Russia due to long procedures and strict building
and environment rules. The other factors such as getting electricity, starting a business, enforcing
contracts, and getting credit are also very important and Russia ranked in top 20 performer
countries on these indicators. Moreover, the decline in corporate tax rates, less VAT, and other
incentives provided by Russian government to boost the private sectors and attract the foreign
companies are also prevalent factors. Hence, on the bases of large sector economy with high
volume of businesses and large consumer market as compared to Philippines, the probability of
success for this Procter & Gamble detergents and washing powder manufacturing business are
expected high in Russia. The company should process the important information and start the
building procedures soon since construction permits will take more efforts in Russia.
References
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http://www.imf.org/external/ns/cs.aspx?id=28World Bank (2018), Doing Business
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APEC 2015, PIDAS, retrieved from
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