Gameplan 4.0: Ease of Doing Business

THREE WEEKS ago, the then incoming Duterte administration held a business consultation in Davao City. It was the first time such a large consultation meeting took place ahead of a new administration’s assumption of office. It is a good practice which I understand may be conducted annually. The meeting, titled “Sulong Pilipinas,” provided an opportunity for business people to listen to the government’s new 10-point plan and make recommendations on actionable programs in a round of workshops.

Among the items that appeared high on the priority list of both the government and private sector was the matter of Ease of Doing Business. For many years, we have been entangled in so much red tape when it comes to securing permits or licenses from national government agencies or local government units. The problem is not unique to the Philippines. In fact, the World Bank and the International Finance Corporation (IFC) have been releasing the “Ease of Doing Business Report” for over 10 years. The study now covers 190 economies around the world.

The Philippines has traditionally ranked quite poorly in this report. In 2010, we ranked No. 148, deep in the bottom third of global rankings. Thus, we set a goal to move into the top third by 2016. In order to do that, we developed the “Gameplan for the Ease of Doing Business.” We also formed a task force composed of all agencies involved in the indicators being measured. The task force was formally established in 2012. Since then, we managed to rise to No. 95 in 2014, but slipped to No. 103 in 2015.

Though we have made some progress, clearly much more needs to be done. In this connection, I am pleased to report that the task force has completed this year’s round of reforms, known as Gameplan 4.0.

The first—and most visible—is in Starting a Business, or the process of incorporating a company. In 2010 this took 15 steps and 52 days. The process has been steadily cut to six steps and eight days; our goal is to reduce this to one day by going online.

Today’s process is partially automated. Instead of going to the Securities and Exchange Commission, Bureau of Internal Revenue, Social Security System, PhilHealth, and Pag-Ibig to register and obtain account numbers, the process has been automated at the SEC. All numbers can be generated in a single transaction at the SEC through the Integrated Business Registration System. The SEC rolled this out at its head office but has since expanded the service to three selected malls (SM Manila, SM North and Ali Mall) and its Central Luzon satellite office. Further expansion is underway in satellite offices and malls in the cities of Cebu and Davao. Our goal next year is to take this completely online, with satellite offices and kiosks providing additional support.

Incorporation also involves some local government processes such as obtaining City Hall permits and barangay permits. We have recommended that these be combined in a single location in City Hall and automated with online or mobile payments.

The second change is in obtaining construction permits. Using Quezon City as the example, processes between the office of the building official (which grants the permits) and the Bureau of Fire Protection (which issues the fire safety inspection certificate) are combined in the same office. By the way, businesses do not need to purchase the fire extinguishers referred to them by the fire department. The Department of Interior and Local Government has made the practice of referral subject to criminal prosecution. Moreover, the Building Code is now available for free online through the Department of Public Works and Highways website (www.dpwh.gov.ph).

The third change is in getting electricity connections. The certificate of electrical inspection can now be submitted by Meralco to City Hall, saving the applicant one trip to City Hall just to move paper around. The cost of security deposits has also been reduced.

The fourth change is in trading across borders, or the process of importing and exporting. This has been a problem area for us, causing our logistics performance index rank to drop by 14 notches in the last two years. One big culprit was the road ban, which caused port congestion and massive backlogs for shipments to clear. The new terminal appointment booking system should work, but real progress will only be felt through the Customs Modernization Act.

The fifth reform is taking place in the court system. World Bank-IFC analysis showed that relatively simply commercial disputes such as payment collection could take as long as 842 days. The Supreme Court has now introduced exclusive commercial courts on a pilot basis, changed small claims procedures, and installed e-courts, as well as an e-library. Those are designed to significantly shorten court cases.

The final two changes cover getting credit information and resolving insolvency. More information disclosures for positive and negative credit reports and simplification of rules for financial liquidation and suspension of payments should have a positive impact on doing business.

There are many more permits that businesses need to get from one government agency or another. Most are paper-based and manually processed. Our next step will definitely have to involve automation and online transactions. Only then will we be able to realize our dream of making the country more business-friendly.

Guillermo M. Luz (gm.luz@competitive.org.ph) is the private-sector cochair of the National Competitiveness Council (www.competitive.org.ph).