Transparency and competitiveness

Transparency and competitiveness are two words that are not always closely linked to each other. However, in the context of the Philippines, one may actually lead to the other.  In various global competitiveness studies, the Philippines ranks low in the areas of Institution (e.g., transparency in decision-making, corruption, court delays, governance and budget processes) and Transaction Costs and Flows (e.g., bureaucracy, business permits and licensing, transactions with government agencies). Building up transparent procedures and streamlining processes may build up the country’s competitive position and in the process help us create a culture of competitiveness. That in turn should lead to a combination of better public services and greater attractiveness of the country to investors which should push development.

Over the last three months at the National Competitiveness Council, we have made some progress on several fronts in the governance, transparency, and transaction flows areas.

Performance Governance System. We have moved forward with plans to install a Balanced Scorecard management tool for national government agencies alongside the Department of Budget and Management’s OPIF and the Civil Service Commission’s performance monitoring systems. This is basically a strategic planning and management tool which enables agencies to post performance targets on their websites which then allows the public to assess their performance. This fosters both transparency and accountability of agencies.  Apart from posting their key performance targets and performance, these agencies participate in discussions with external review panels which we organize every semester to evaluate their progress and provide ideas on how to proceed.

Agencies such as the DPWH, DOTC, BIR, DOH, DepEd and PNP have entered the second stage. Others such as the DSWD, Development Academy of the Philippines, Civil Service Commission, Army, Navy, and Marina have entered the first stage. Once integrated with the DBM’s and the Civil Service Commission’s monitoring systems, all agencies will be more closely monitored in terms of performance and budget allocations for the year.

Budget Transparency. The DBM has also started posting online the budget allocations and releases for lump-sum disbursements for congressional districts and provinces for PDAF (pork barrel), Public Works, and Public School Buildings Programs. This will enable citizens and voters to see how funds are being allocated and released per district or province by a senator or congressman. All information is now available on www.dbm.gov.ph.

Transaction Costs and Flows. Because transaction flows and processes are too long and cumbersome, we have worked to streamline these processes. The DTI and the DILG have been streamlining the issuance of business permits and licenses at the local government level by adopting a unified or single form and reducing the number of steps, processing time, and number of signatories to obtain a business permit. A total of 480 cities and municipalities are covered by  this program, based on their high number of business establishments and high potential for generating new investments. Of these, 211 are scheduled for completion by end of this year; 126 have already completed all necessary steps while another 82 are currently undertaking programs to complete the streamlining.

The streamlining of business permits can represent a double win—for entrepreneurs and for local governments. As processes get simplified, more businesses can register their permits and LGUs can earn more revenue. Early assessments of some cities which have undergone the process indicate a 7 percent increase in revenues from permits in Lapu-Lapu City, Cebu; a 12.6 percent increase in San Fernando, Pampanga; and an 18 percent increase in Butuan City.

Philippine Business Registry.  Registering a new business can be a bit of a challenge. One needs to deal with the SEC, BIR, SSS, PhilHealth and Pag-Ibig. The DTI is now working with these agencies to create a Philippine Business Registry system which will automate the registration and issuances of business numbers of new enterprises and eventually facilitate the incorporation of new business enterprises. This system will start with single proprietorships then move to corporations and partnerships and eventually be linked up to cities and municipalities cited above for their local permits and licenses. At present, business names can be registered online through the DTI.

Integrity Initiative.  Finally, a private sector program known as the Integrity Initiative run by the Makati Business Club and the European Chamber of Commerce is gaining traction. It has started by getting over 550 companies to sign a pledge which outlines a code of conduct or behavior on integrity and ethics and, specifically, anti-corrupt practices. Eleven government departments have also signed the public version of this pledge. Over time, we hope to see more companies and government agencies sign the pledge and, more importantly, agree to only deal with those that have signed the pledge and made commitments to ethical and anti-corrupt behavior.

These may all sound like small, quiet steps, but they are nonetheless building blocks towards more transparency and a culture of competitiveness. As more people demand for more openness and simplification of procedures, I believe they will begin to trust transacting with government agencies more. As that trust builds up, I am confident that that will translate into more business activity and investments which hopefully will create a virtuous cycle that we see at work in other modernized societies.

The author, Guillermo M. Luz, is co-chairman of the National Competitiveness Council. For comments, please write gm.luz@competitiveness.org.ph.