With the increasing number of online businesses being set up in the Philippines lately—over 75,000 registered with the Department of Trade and Industry as of September 2020—you’d think the country has huge e-commerce potential. But why did a US study rank the Philippines 78th out of 99 countries when it comes to setting up an online business?

Best Accounting Software, a firm that reviews and rates the financial softwares of small and medium enterprises, only came up with a 34.34  overall score for the Philippines, with 100 as the highest score.

Based on the rankings, the top five countries to best set up an online business are Denmark, Switzerland, the Netherlands, the United States and Norway. On the other hand, the lowest ranked countries are Haiti, Venezuela, Uganda, Angola and Zambia.

Here’s why the Philippines got a low ranking: poor internet, poor broadband connectivity and poor internet security.

The metrics measured Internet Coverage and Penetration based on the following indicators: mobile internet speed (17.83 Mbps, 7.47 overall score), broadband internet speed (27.07 Mbps, 9.85 overall score), and number of fixed broadband subscriptions (3.87 people per 100 population). 

Other indicators include internet users (67 percent of the population, 57.33 overall score), social media users (67 percent of the population, 65.69 overall score), and online purchases and online bills payment  (9.9 percent of the population, 10.11 overall score). When it comes to secure internet servers, the country rated 111 people per one million population, for a  0.05 overall score—the lowest performance for this category among ASEAN countries included in the ranking.

In terms of Country Wealth and Ease of Process, the factors include corporate tax rate (30 percent—the highest among ranked ASEAN countries—14.29 overall score), gross national income (GNI) per capita ($3,850, 3.62 overall score), individuals with a finance account (34.5 percent of the population, 16.8 overall score), and economic freedom (61.21 overall score).

It also takes 13 procedures or 33 days to register a business in the Philippines—the highest, once again, among ranked ASEAN countries—with costs reaching 23.33 percent of the GNI. The country has 237 co-work spaces and a digital skills score of 77.22, the second and third highest among ASEAN nations, respectively. 

Logistics performance also scored 39.53 overall based on efficiency of clearance process, quality of trade and transport-related infrastructure, ease of arranging priced shipments, competence of logistics services, ability to track and trace consignments, and timeliness of shipments. Meanwhile postal development garnered a 37.93 overall score based on the reliability, accessibility, relevance and innovativeness of the country’s postal service.

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