The authority on red tape

If red tape is reduced to a minimum, and government applications and processes become efficient, we as consultants/representatives will no longer be needed there. If we lose our jobs because of that positive reason, I will honestly be very happy because I hate that part of our job.

It’s so easy to hate that job. Government agencies have a checklist of requirements that we ask our clients to prepare documents for. After all the trouble, at the tail end, the government personnel will ask for some redundant, unnecessary additional document, affidavit, certification, or what have you. When we go back to the client to tell them this status and still more requirements, they naturally get mad. But we in turn cannot get mad because we need to politely explain to the government and meekly request for consideration even if our ears are red with contained agitation and anger. Especially for our firm, which has an unbroken policy of only above-board dealings, we just need to grin until it hurts.

So this new Ease of Doing Business legislation or Republic Act 11032 was just signed into law on May 28. It sets its sights on this problematic, historical and institutional red tape and creates the Ease of Doing Business and Anti-Red Tape Advisory Council composed of the Trade and Industry Secretary, the Director General of the Anti-Red Tape Authority, a representative of the Department of Information and Communications Technology (DICT), a representative of the Department of Finance (DOF), and two representatives from the private sector. The President will appoint each council member for a three-year term.

I know it looks like there is a high risk that the Ease of Doing Business and Anti-Red Tape Advisory Council can suffer from red tape too. But they deserve all the chances to make a difference. Can they make a difference if they do not have the power to penalize red tape? More on that later.

Why do we need the Ease of Doing Business and Anti-Red Tape Advisory Council when the thrust as indicated in the new law is to automate the business permitting and licensing system? It’s because applying in a Business One Stop Shop (BOSS) or submitting online applications is not the end, but only the start of the process. So when you follow up your application, you are back in the grind again. And if we are expecting a fully automated process for government, that may at least be a lifetime away.

For now, let me tell my readers, and the soon-to-be-created Ease of Doing Business and Anti-Red Tape Advisory Council, if sharing the following observations would be helpful, using the LGUs’ practices as examples of what really goes on. (My apologies to the guilty LGUs, or bato-bato sa langit...)

1. When you open a business or renew your business permit every January, you need to get a mayor’s permit. That’s familiar. But you will need to get as well from more than half a dozen windows and lines these different permits, one after the other, and in this order: first, barangay clearance, then insurance, occupancy permit next, then fire safety certificate, locational clearance next, then sanitary permit…

2. You will need to get a Public Liability Insurance for accidental death or bodily harm, as well as damage to property. One can make a case about one thousand and one risks that require insurance, but for business operations run inside peaceful air-conditioned offices in commercial buildings or condominiums, I can only relate to the necessity of fire insurance and the like. But for third party liability – I mean, the office does not have four wheels that drives around and can hit people, cars, or street poles. Insurance is required, fine, but that is not the worst of it.

3. Many would require you to get insurance only from their accredited insurance companies that of course will charge a higher premium. If there are benefits, it’s not to the applicant. To the Bureau of Local Government Finance’s (BLGF) credit, they came out with a circular that labelled this as an illegal practice. Whether the autonomous LGU will listen is an entirely different story. We need to add that some LGUs have accredited suppliers of fire extinguishers too. Why the accreditation and compelled endorsement? Maybe they vouch for the quality of the items because they tested them?

4. If barangay clearance is required because you are in that specific barangay, why do you need a separate locational clearance? Could it be because you may be absent-minded about your business address and you may accidentally set up in a different location? If you need to get a permit before you can do renovations inside the office, why submit an “affidavit of no renovations” when applying for renewal of mayor’s permit? Impressive, isn’t it?

5. Some issues can be greater irritants than others, like when some LGUs change your classification without basis. When holding companies (owner of the shares) are classified as finance companies; regional headquarters as consultants; gyms, which are service-oriented, are treated as amusement places (maybe those going to the gym merely watch others exercising like watching a movie, which can also be true, by the way); etc. The point is, even if you point to a ruling by the BLGF, you may still need to go to court because of LGU “bully” autonomy. Some even tried the policy of simply collecting at least 120 percent of what was paid in the previous year. The BLGF caught up with this blatant illegal practice but exception through misguided LGU autonomy is still there.

So the above list is incomplete and is just on the LGU. There are a hundred other government agencies. It’s not hard to see that the hands of the new Ease of Doing Business and Anti-Red Tape Advisory Council will be full. They do not have powers to punish and that is a key challenge. Whether government agencies can change behavior in the name of cooperation and the greater good is the big question. The Ease of Doing Business Law of 2018 may not be a perfect law, but it certainly is a good start. May God bless those that will implement this new law with this – tenacity.

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Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He is the Chairman of the Tax Committee, and the Vice Chairman of EMERGE (Educated Marginalized Entrepreneurs Resource Generation) program, of the Management Association of the Philippines (MAP). Email your comments and questions to [email protected]. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.