PH ranks 78th in best countries to start online business

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Despite the claim of the government that various efforts such as the passage of the law on Ease of Doing Business have reduced the processing time and curbed corrupt bureaucratic practices in the country, the Philippines is still way behind other countries when putting up an online venture. 

This is according to a new study, which showed that the country was at the 78th spot in the list of best countries to start an online business.

The report, conducted by the website bestaccountingsoftware.com, found that the majority of countries most suited to starting an online business are located in Europe.

“Joined by the US, Canada, and Singapore, these countries provide an all-around great starting point for your next business venture – but, the ‘perks’ of these locations tend to be met with a higher corporate tax rate,” it said.

Top 10 countries to set up an online business

  1. Denmark
  2. Switzerland
  3. The Netherlands
  4. United States
  5. Norway
  6. Sweden
  7. Singapore
  8. Germany
  9. Canada
  10. Luxembourg

Worst 10 countries to set up online business

  1. Haiti
  2. Venezuela
  3. Uganda
  4. Angola
  5. Zambia
  6. Pakistan
  7. Cambodia
  8. Nepal
  9. Bangladesh
  10. Tajikistan

Top Performers in Each Category

  • Best for Mobile Internet Speed – United Arab Emirates: With average speeds of 129.61 Mbps, the UAE enjoys mobile internet that’s over 4% faster than second-place China (the only other country to exceed 100 Mbps).
  • Best for Fixed Broadband – Singapore: The city-state is the only country to exceed 200 Mbps for its fixed broadband speeds, enjoying average rates of 229.42Mbps. This is almost 20% faster than second-place Romania (188.85 Mbps).
  • Best for Fixed Broadband Subscriptions – France: Thanks to over 45 percent of the population having a fixed broadband connection, France takes the top spot here. In fact, all of the countries with subscription figures over 40 percent of the population are located in Europe. These include Switzerland, Denmark, the Netherlands, Norway, Germany, and Malta.
  • Best for Internet Users – United Arab Emirates, Bahrain, and Kuwait: Similar to social media users, the UAE and Kuwait come out on top along with Bahrain, with 99% of their population using the internet.
  • Best for Social Media Users – United Arab Emirates/Kuwait: With 99% of the population using social media, the UAE clinches the top spot again but it is also joined by Kuwait in this category. As of January 2020, the UAE was recorded as having 9.73 million social media users and Kuwait 4.2 million.
  • Best for Secure Internet Servers – Denmark: As the only country in our study to exceed 200,000 servers per one million people, Denmark is the clear winner here with over 277,000 per one million. An impressive statistic, especially considering the country’s small size.
  • Best for Online Purchases/Paying Bills Online – Norway: 89% of Norwegians use the Internet for online purchases or paying bills, closely followed by 88% in fellow Nordic countries, Denmark and Finland.
  • Best for Low Corporate Tax Rates – United Arab Emirates and Bahrain: With corporate tax rates of 0 percent, the UAE and Bahrain offer clear benefits for many businesses. It’s worth noting that Bahrain has no taxes on income, sales, capital gains, or estates with the exception of oil and gas trades. In the UAE, each jurisdiction is able to levy corporate taxes of up to 55% on any business, but, in practice, it is mostly levied on foreign banks and petroleum companies.
  • Best for Gross National Income – Switzerland: Switzerland ranked the best for GNI per capita with a value of $85,500 in 2019, $3,000 more than second-place Norway and almost $85,000 more than bottom-placed Uganda.
  • Best for Individuals with a Finance Account – Denmark: Every country within the top 20 has over 90% of its population using a financial account, but Denmark outdoes them all with a score of 99.92%.
  • Best for Payment Processing Providers – A large number of countries scored full points for having access to 7/7 of the payment processing providers we researched. These were Australia, Austria, Belgium, Canada, Germany, Ireland, Italy, the Netherlands, Spain, the United Kingdom, and the United States. Only Iran has zero coverage.
  • Best for Economic Freedom – Singapore: The Lion City enjoys great economic freedom and performs well in all of the categories covered here – property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, and financial freedom.
  • Best for Business Start-Up Procedures – New Zealand and Georgia: With just one procedure required to register your business in New Zealand and Georgia, these two countries offer a stress-free, speedy entry into the market. This is in stark contrast to bottom-placed Venezuela where 20 procedures are needed before you can get started (hence why it takes over 7 months to get going here).
  • Best for Days Required to Start a Business – New Zealand and Georgia: Thanks to there only being one procedure necessary for business start-ups, it’s no surprise that New Zealand and Georgia are also the quickest places to establish a business. Here, you could be up and running in just one day.
  • Best for Cost of Start-Up Business Procedures – Ireland, UK, and Slovenia: Based on the percentage of GNI it costs to start up a business, Ireland, the UK, and Slovenia are best at just 0.1%. Unsurprisingly, with its lengthy procedures, Venezuela ranks worst in this category, costing 211.8% of GNI.
  • Best for Time Zones – Most of Europe and Central Africa: The most “popular” time zone is UTC +1 and includes 44 countries worldwide, providing great multinational connections.
  • Best for Logistics Performance – Germany: According to the World Bank’s Logistic Performance Index, Germany is the best in the world. It outperforms the average scores across all of the other high-income countries, boasting great infrastructure, timeliness, competence, international connections, ease of customs, and tracking and tracing.
  • Best for Postal Efficiency – Switzerland: With full marks for postal efficiency, Switzerland comes out on top yet again. Measured on reliability, reach, relevance, and resilience, Switzerland has dominated the index since it began in 2017.
  • Best for Co-work spaces – United States: As previously mentioned, the US boasts a far greater number of co-work spaces than any other country. With over 2,400, the opportunity to find a suitable office space and to network with fellow entrepreneurs is vast.
  • Best for Digital Skills – Finland: Many online businesses rely on key skills, from basic coding to general computer skills. According to World Bank data, Finland has the most digitally skilled workers, scoring 5.83 out of 7.

Methodology and Sources

The research covered over 200 countries worldwide, before finally featuring a comprehensive analysis of 99 (all of the countries where full data was available).

The 20 categories covered and their sources were:

  • Mobile and Fixed Broadband Internet Speed – These two categories are taken from the Speedtest Global Index which compares internet speed data from around the world on a monthly basis. Data is provided from millions of tests taken by real people using Speedtest every month.
  • Fixed Broadband Subscriptions – This refers to the fixed number of subscriptions of high-speed access to the public internet per 100 people. It includes cable modem, DSL, fiber-to-the-home/building, other fixed (wired)-broadband subscriptions, satellite broadband, and terrestrial fixed wireless broadband.
  • Social Media Users – The number of people using social media sites by % of the population.
  • Secure Internet Servers – This category looked at the number of secure internet servers per 1 million people. Specifically, the number of publicly-trusted TLS/SSL certificates found in the Netcraft Secure Server Survey.
  • Corporate Tax Rate – Percentage of the corporate tax rate by country.
  • Gross National Income – GNI per capita converted into US Dollars. GNI is the sum of value added by all resident producers plus any product taxes not included in the valuation of output plus net receipts of primary income from abroad.
  • Individuals with a Finance Account – This is the number of people who own an account at a financial institution or with a mobile money service provider by % of the population from the age 15+.
  • Internet Users – Percentage of the population that uses the internet as of January 2020.
  • Time Zones – The number of countries that share the same time zone as the country in question – based on capital cities.
  • Logistics Performance Index (LPI) – This is measured on six factors, these are:
    • The efficiency of the clearance process (i.e. speed, simplicity, and predictability) by border control agencies;
    • Quality of trade and transport-related infrastructure (e.g. ports, railroads, roads);
    • Ease of arranging competitively priced shipments;
    • Competence and quality of logistics services (e.g. transport, operators, customs brokers);
    • Ability to track and trace consignments;
    • Timeliness of shipments in reaching destinations within the scheduled or expected delivery time.
  • Integrated Index for Postal Development – The (2IPD) focuses on four main factors of the postal service in each country: how reliable, the reach it is capable of, the relevance or intensity of demand, and resilience or capacity to innovate.
  • Co-work spaces – “Coworker” is a website that provides you with the number of co-worker spaces by country. Countries scored on the number of these places with desks available.
  • GCI Digital Skills – The Global Competitiveness Index addresses the level of digital skills a population has by country. To what extent does the active population possess sufficient digital skills (e.g. computer skills, basic coding, digital reading). Rated 1= not at all and 7=to a great extent.
  • Payment Processing Providers – Access to seven of the top payment service providers: 2checkout, Stripe, Paypal, Adyen, Braintree, WorldPay, and Shopify. One point for each.
  • Economic Freedom – This index focuses on 12 factors which are grouped into 4 broader categories:
    • Rule of Law (property rights, government integrity, judicial effectiveness)
    • Government Size (government spending, tax burden, fiscal health)
    • Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
    • Open Markets (trade freedom, investment freedom, financial freedom)
  • Business Start-up Procedures – The number of procedures it takes to start up a business by country, including obtaining permits and licenses and to complete all inscriptions, verifications, and notifications to start operations.
  • Days Required to Start a Business – The number of days needed to complete the procedures to legally operate a business. If a procedure can be fast-tracked with an additional cost, the fastest procedure is used for the data provided for that country.
  • Cost of Start-up Business Procedures – The cost to register a business by the percentage of gross national income (GNI) per capita.

For the final scores, each criterion was scored out of 100. Every country was given a point based on where it ranked between the highest-ranking and lowest-ranking countries. Countries with the best scores were given 100 points, while countries with the lowest scores were allocated zero points. All of the countries in between these two scores received a score on a percentile basis, depending on where they ranked. The final score was achieved by taking an average of the 20 categories.

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