Commentary: Overcoming challenges in doing business in the Philippines

Republic Act No. 11032, also known as the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018,” which amends Republic Act No. 9485 or the “Anti-Red Tape Act of 2007,” is a significant step towards improving government efficiency. The law aims to streamline the procedures for the issuance of local business licenses, clearances and permits through a unified business application form, establishment of the business one stop shop, automation business permit and licensing systems and reducing over-all processing time, among others. 

Based on the Doing Business Report 2018 of the World Bank Group, the rank of the Philippines declined from 99th to 113th among 190 countries in terms of ease of doing business. In the ASEAN Region, the Philippines lags behind Singapore, Malaysia, Thailand, Indonesia, Brunei, Vietnam and the regional average for East Asia and the Pacific while the Philippines advances from Cambodia, Lao PDR and Myanmar. 

Creating a stable foundation

Efficient and effective regulation is one of the foundations for economic reform and development. In view of the drop of our ranking in terms of ease of doing business, the timing of this enactment is opportune to address the policy and regulatory challenges in the Philippines, such as, but not limited to preventing corruption and cutting red tape in the government.

Although this is a highly laudable law, strict compliance and monitoring are much needed for its successful implementation. This is where the Anti-Red Tape Authority plays a vital role. 

Under the law, the Anti-Red Tape Authority (ARTA) is an agency under the Office of the President that will monitor compliance of agencies, and implement and oversee national policy on anti-red tape and ease of doing business. It can also initiate investigation, motu propio or upon receipt of a complaint, and assist complainants in filing necessary cases with the Civil Service Commission, the Ombudsman and other appropriate courts. The ARTA is headed by a director general, who is appointed by the President of the Philippines and composed of three deputy director generals. 

A new body called the Ease of Doing Business and Anti-Red Tape Advisory Council is also created, which is composed of the secretary of the Department of Trade and Industry as chairperson, the director general of the ARTA as vice-chairperson, the secretaries of the Department of Information and Communications Technology, Department of Interior and Local Government and Department of Finance and two representatives from the private sector as members. The seven-member council will serve as the policy and advisory body to the ARTA in terms of formulation of policies and programs that will continuously enhance and improve the country’s competitiveness and ease of doing business. 

As the government is given six months to assemble the ARTA, its composition is as important as its function to ensure that there is no conflict of interest and undue influence in all government offices and agencies including local government units, government-owned or controlled corporations and other government instrumentalities.

Enhancing the role of technology in the public sector 

The law provides three years for the transition from manual to software-enabled business-related transactions. The DICT is mandated to ensure that all municipalities and provinces classified as third, fourth, fifth and sixth class are provided with appropriate equipment and connectivity, information and communications technology platform, training and capability building for the establishment of the business one stop shop (BOSS).

The DICT is also given one year to set up and manage the Philippine Business Databank which seeks to provide national government agencies and local government units with access to data and information of registered business entities for purposes of verifying the validity, existence of and other relevant information pertaining to business entities. In addition, the DICT shall also establish and operate a Central Business Portal as a platform in receiving applications and capturing application data involving business-related transactions.

As the delivery of public and social services become increasingly dependent on efficient information and communications networks, the cooperation of both public and private sectors assumes a vital role in ensuring that much-needed ICT infrastructures are established, operated and well-maintained. The government, especially the DICT, would need the help of private sectors with much more technological capacities to develop the necessary software and technology-neutral platforms and secure web-based infrastructure that is accessible to the public. Given this rigid timeline, it remains to be seen if the government will be as effective and efficient as envisioned by the law.

Philippines: Up for the challenge

By 2020, the goal of the Philippines is to attract foreign investments by reaching the top 20 ranking in the Ease of Doing Business measure of the World Bank. To achieve this big jump, the government must be able to implement significant and sustained changes not just in automating processes but also managing the transformation of their people to a less bureaucratic and citizen centered operations. 

More than the ranking itself, ultimate challenge for government is to make these significant reforms felt by the public as its paramount stakeholder. 

Atty. Hannah Viola is a fellow at Stratbase ADR Institute, a partner of Philstar.com. She is also a convenor and legal counsel at CitizenWatch Philippines.