On May 28, 2018, President Duterte signed into law a landmark piece of business legislation, Republic Act RA 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act. It is supposed to cut red tape.
Have you ever applied for a business permit? If you did, you would know how difficult, time-consuming, and expensive it is.
In the entire Asia, the Philippines is one of the worst countries to do business and get a permit—113th out of 190 countries. The best are Canada and Singapore—10 minutes. In Manila, Jesus probably had a much easier time climbing Golgotha. At least after His ordeal, He went to Heaven. For us, it could be hell.
Especially at the local government and even national level—the mayors, the Securities and Exchange Commission (it takes at least two months to form a corporation), the Fire Department (they force you to buy overpriced fire extinguishers, which the law by the way now prohibits), and generally at the level of government employees—they look smiling and happy while giving you a runaround until you come to the realization that indeed, you must grease their palm. If you want to register your corporate name or brand with the Department of Trade, you cannot do it. You have to wait for days because DTI is not fully computerized.
To be fair, the red tape problem is not limited to the government.
Business corporations like banks are iconic in the way they invent requirements for businesses, especially if you are an SME. When seeking a bank loan, you are interviewed by two or three sets of bank loan officers. They ask who you are—your name (surname first, first name and mother’s surname). They ask who your mother is and what her name is (this is a form of discrimination, if you ask me).
They ask you to list down your bank accounts and state their balances (certified); your credit cards (and their credit limits), where have you lived in the past 30 or 50 years; who are the people whom they can contact to check your character (if you are an SME, you won’t be able to answer this question, so you give the name of your teacher, if you went to school, or your parish priest, if you attend mass).
They ask how much income you make and from what source. Of course, you don’t have much income; that is why you are borrowing a loan. They ask for a collateral (of course, you don’t have any, that is why you are borrowing a loan).
The banks ask who your wife is. If you are married, you must produce a marriage certificate and get her consent for you to get the loan. If you are separated and divorced, you must produce the document, like an annulment (did you know how tedious and expensive it is to obtain an annulment?). If you divorced abroad, you are counted as married locally and thus must obtain a waiver from your ex-spouse that she will not help herself to the loan proceeds.
You ask your bank officer why he asks so many vexing questions and require so many papers. He does not trust you, of course, although SMEs have a 98-percent paying record for their obligations. It is the big companies who are difficult to collect from.
Why so much paperwork in obtaining a loan? The banks blame the Bangko Sentral.
Back to RA 11032.
There are signs of red tape in the text of the law itself. The title is very long—10 words, when four words, East of Doing Business Act, or three words, Business Permit Law, would have been sufficient. So right away, the law is guilty of making false promises.
The law mandates the setting up of an Anti-Red Tape Authority.
Ordinarily, per the spirit of the law, all government agencies and government corporations must cut processing time for business permits, licenses, and clearances and all other kinds of authorizations to just three days for simple transactions, seven days for complex transactions, and 10 working days for highly technical transactions.
But the Anti-Red Tape Authority is given the longest time to manifest itself —six months. Why six months when there is already a law that created it, its composition is fixed by the law, and its budget is allotted, P300 million.
Under the new law, all government agencies including LGUs shall adopt a “zero-contact policy.” That means you do everything online. Says the law:
“No government officer or employee shall have any contact, in any manner, unless strictly necessary with any applicant or requesting party concerning an application or request. Once the Department of Information and Communications Technology (DICT) has completed a web-based software enabled business registration system that is acceptable to the public as mandated under Section 26 of this Act, all transactions shall coursed through such system.
“If the application or request for license, clearance, permit, certification or authorization shall require the approval of the local Sangguniang Bayan, Sangguniang Panlungsod, or the Sangguniang Panlalawigan as the case may be, the Sanggunian concerned shall be given a period of forty-five (45) working days to act on the application or request, which can be extended for another twenty (20) working days. If the local Sanggunian concerned has denied the application or request, the reason for the denial, as well as the remedial measures that may be taken by the applicant shall be cited by the concerned Sanggunian.
The number of signatories in any document shall be limited to a maximum of three (3) signatures which shall represent officers directly supervising the office or agency concerned: Provided, That in case the authorized signatory is on official business or official leave, an alternate shall be designated as signatory.
Electronic signatures or pre-signed license, clearance, permit, certification or authorization with adequate security and control mechanism may be used.
All government agencies covered shall, when applicable, develop electronic versions of licenses, clearances, permits, certifications or authorizations with the same level of authority as that of the signed hard copy, which may be printed by the applicants or requesting parties in the convenience of their offices.
A single or unified business application form shall be used in processing new applications for business permits and business renewals which consolidates all the information of the applicant or requesting party by various local government departments, such as, but not limited to, the local taxes and clearances, building clearance, sanitary permit, zoning clearance, and other specific LGU requirements, as the case may be, including the fire clearance from the Bureau of Fire Protection (BFP). The unified form shall be made available online using technology-neutral platforms such as, but not limited to, the central business portal of the city/municipality’s website and various channels for dissemination. Hard copies of the unified forms shall likewise be made available at all times in designated areas of the concerned office and/or agency.
A one-stop business facilitation service, called the business one stop shop, (BOSS) for the city/municipality’s business permitting and licensing system to receive and process manual and/or electronic submission of application for license, clearance, permit, certification or authorization shall be established within the cities/municipalities’ Negosyo Center as provided for under Republic Act No. 10644, otherwise known as the ‘Go Negosyo Act.’
There shall be a queuing mechanism in the BOSS to better manage the flow of applications among the LGUs’ departments receiving and processing applications. LGUs shall implement colocation of the offices of the treasury, business permits and licensing office, zoning office, including the BFP, and other relevant city/municipality offices/departments, among others, engaged in starting a business, dealing with construction permits.
Cities/Municipalities are mandated to automate their business permitting and licensing system or set up an electronic BOSS within a period of three (3) years upon the effectivity of this Act for a more efficient business registration processes. Cities/Municipalities with electronic BOSS shall develop electronic versions of licenses, clearances, permits, certifications or authorizations with the same level of authority, which may be printed by businesses in the convenience of their offices. The DICT shall make available to LGUs the software for the computerization of the business permit and licensing system. The DICT, DTI, and DILG, shall provide technical assistance in the planning and implementation of a computerized or software-enabled business permitting and licensing system.
To lessen the transaction requirements, other local clearances such as, but not limited to, sanitary permits, environmental and agricultural clearances shall be issued together with the business permit.”