President Duterte signed last week Republic Act No. 11032, or the Ease of Doing Business Act, to introduce simplified requirements and streamlined procedures that, in his words, “will finally spare our people from the intolerable waiting time and long lines in frontline government agencies.”
The law cuts the processing time for government agencies and state-owned and -controlled corporations to three working days for simple transactions, seven days for complex transactions and 20 working days for highly technical transactions.
It also requires all local government units (LGUs) to come up with a unified business application form to streamline procedures for the issuance of business permits, clearances and other types of authorizations, and to set up one-stop shops to facilitate applications for business permits.
The law likewise created the Philippine Business Databank, which will give LGUs and national government agencies access to information to verify data about businesses.
It also established the Central Business Portal as a repository of all application data on business-related transactions. The Anti-Red Tape Authority, under the Office of the President, will serve as the key agency to implement the new law and monitor compliance.
This is a very timely law, considering that the Philippines’ ranking in the World Bank report on the ease of doing business slipped to 113th last year, from 99th in 2016, among the 190 countries surveyed. The report showed that across the Association of Southeast Asian Nations, the Philippines was outranked by Singapore (second overall), Malaysia and Thailand (26th), Brunei (56th), Vietnam (68th) and Indonesia (72nd).
In the ease of doing business indicators, the Philippines’ best ranking was 31st in getting electricity. It ranked 173rd in starting a business, 149th in enforcing contracts, 101st in dealing with construction permits, 114th in registering property, 142nd in getting credit, 146th in protecting minority investors, 105th in paying taxes, 99th in trading across borders, and 59th in resolving insolvency.
The World Bank cited the case of a potential software entrepreneur to illustrate how difficult it was to open a business in the Philippines: If she were a national of Canada, it would take just two procedures, one and a half days and less than 1 percent of income per capita (about 200 Canadian dollars or P8,300) to start her business in Toronto. She can perform these steps online from the comfort of her home.
However, if the same entrepreneur were a national of the Philippines, living in Quezon City, the business incorporation process would require 16 procedures, take 28 days and cost around 16 percent of income per capita. She would need to make 20 different tax and contribution payments and visit multiple agencies in person.
The Ease of Doing Business Act is a step in the right direction, as it will finally institutionalize transparency and accountability in government agencies and LGUs. Government officials or their representatives now face sanctions if they fail to act expeditiously on applications for business permits or other documents, or for simply failing to inform applicants about the missing requirements in their applications.
What is needed now is the political will to implement the law. A massive information campaign on the different provisions of the new law should be undertaken among personnel of such frontline agencies as the Bureaus of Internal Revenue, of Customs, and of Immigration, the Departments of Trade and Industry and of Labor and Employment, and the Board of Investments, among others, as well as the various LGUs.
Succeeding in this, the Philippines can easily jump to the top 20 percent of the 190 countries monitored annually by the World Bank on how friendly their economies are to investors. It’s time to address, for good, the perennial complaints about slow and inefficient government services for doing business in the country.