Painless business permits

I could understand why Iloilo City Mayor Jed Patrick Mabilog, who is among the most business-friendly mayors I’ve known, was unhappy with my recent piece citing results of the 2011 “Doing Business” report of the International Finance Corporation (IFC). That report found his city taking the longest time to process new business permits among 25 Philippine cities rated (with General Santos City doing it fastest). But the good mayor need not fret; that IFC report is based on early 2010 data not yet reflecting improvements he had introduced since taking the helm in July 2010. I’m pretty sure that the next IFC report would show Iloilo City jumping toward the top of the list, together with two other cities assisted by the Investment Enabling Environment Project (INVEST, for short) of the US Agency for International Development (USAID).

The INVEST project, under USAID’s Cities Development Initiative (CDI), aims to boost local and foreign investments in the country by cutting red tape and lowering transaction costs in setting up businesses. CDI is premised on the belief that the development of the regional cities will in turn spur the development of the rural economies surrounding them, to which they are inextricably linked. Batangas City, Cagayan de Oro and Iloilo City have been the initial focus cities of CDI, and INVEST is helping them streamline business registration processes and improve their investment planning and promotion. Among other things, the project has provided the cities technical guidance toward eliminating bureaucratic obstacles in their business permit and licensing system (BPLS), thereby lowering the cost of doing business in these areas and making them attractive to investments.

INVEST found Mayor Jed a proactive partner for instituting such reforms. A pioneering feat Iloilo City is proud of is how it has made possible for business renewals registration to be done online. The declaration of gross receipts is submitted online, from which is determined the amount of tax and fees to be paid, with the tax order of payment e-mailed to the applicant. The applicant then goes to the City Hall to make the payment and obtain the Mayor’s Permit via a special lane, all within 15-30 minutes. Around 400 applicants have used the online registration option as of Jan. 15, 2014. In the months ahead, payments online via credit cards and through automated teller machines will be made possible. Batangas City is piloting a similar web-based registration system with some 100 pre-selected business taxpayers, and Cagayan de Oro will soon follow suit.

For new business applicants, major changes introduced have also dramatically shortened processing times and reduced the steps needed to obtain their permit. Before, various city departments such as the City Planning and Development Office and the City Environment and Natural Resources Office required separate forms for securing zoning and environmental clearances, taking three to five days to complete. In 2010, the Department of Interior and Local Government and the Department of Trade and Industry mandated the use of a Unified Application Form in applying for and renewing business permits.

By 2013, the three CDI cities had further improved on the unified form. Batangas City eliminated the need to fill up and submit an application form for both new and renewal applicants. The renewal applicants only need to provide their tax identification number with the required barangay clearance and a copy of the Income Tax Return. Information provided in previous years are retrieved by the Business Permits and Licensing Office staff from a consolidated database, and used to print the form for the applicant’s signature. For new applicants, the required information and support documents are obtained and encoded through an interview. Cagayan de Oro similarly simplified the DILG-DTI unified form into only three fields to be filled up—business name, business permit number and the applicant’s signature. Iloilo City no longer requires the unified application form for business renewals, with applicants only having to submit the declaration of gross receipts, which as mentioned above, may be obtained and submitted online.

The three cities also drastically reduced the number of signatories required for getting the business permit. Iloilo City and Cagayan de Oro both require only one signature, from about 13-14 prior to the reforms. Clearance requirements from national government agencies such as the Social Security System and PhilHealth have also been streamlined. Starting 2013, SSS began providing city governments with a list of noncomplying members, eliminating the tedious process of getting a clearance from their offices; PhilHealth will do the same in 2014. Apart from the computerization of the BPLS, other key measures include business one-stop-shops, streamlined inspection systems, strengthening the cities’ investment offices, and engaging the business sector, academe and other local agencies and organizations to support investment promotion and reform initiatives in the respective cities.

As a result of all these, and largely because of automation improvements, processes in the three cities could be completed in about two hours or less for walk-in applicants beginning in 2014 (except for the last day of securing permits—for understandable reasons). For online registrants from Iloilo City and Batangas City, the process is much faster, with payment at the City Hall taking only minutes.

A business-friendly city is a progressive city. Here’s hoping that the fever catches on.

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