Freeman Cebu Business

LGUs: Spoiling investors' appetite

FULL DISCLOSURE - Fidel O. Abalos -

While the United States of America (USA) could be on the road to recovery, a significant number of countries in Europe are still in shamble. Therefore, the world isn’t yet economically off the hook. Thus, it is a no-brainer that our country’s leaders are trying to squeeze every juice of idea from their heads just to find ways to keep our noses above water. Accordingly, we are focusing on encouraging investments (as one of those ways) in the country, both foreign and domestic.

Realistically, augmenting investments, whether foreign or domestic, is a tall order. To recall, in October last year, the World Bank released a “doing business” survey ranking the Philippines 136th among 183 economies. The report assesses regulations affecting domestic firms and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders.

The 2012 Doing Business Report, which covered regulations measured from June 2010 through May 2011 showed “that governments in 125 economies out of 183 measured implemented a total of 245 business regulatory reforms — 13 percent more reforms than in the previous year".

The same survey revealed that Singapore, for many years now, remained in the top position as the world’s friendliest to do business in, followed by Hong Kong and New Zealand. Rounding up the top 10 were the USA, Denmark, Norway, United Kingdom, South Korea, Iceland and Ireland.

Notably though, the same survey revealed that some countries have improved significantly. For one, Morocco “improved its business regulation the most compared to other global economies, climbing 21 places to 94, by simplifying the construction permitting process, easing the administrative burden of tax compliance, and providing greater protections to minority shareholders”. Consequently, they are able to corner huge investments, both foreign and domestic.

Just like Morocco, if we are intending to corner huge foreign investments, we should think twice. As the survey revealed, our neighboring Asian countries fared better than us in terms of ranking. Thailand was ranked 17th, Malaysia was 18th, Japan was 20th, Taiwan was 25th, Brunei was 83rd, China was 91st, Vietnam was 98th and Indonesia was 129th. If there is any consolation, we are just a little better than then war-ravaged countries of Cambodia at 138th, Lao PDR at 165th and Timor-Leste at 168th.

Sarcastically, other countries in Africa which are considered among the least developed in the world even outranked the Philippines. Specifically, Sudan (which recently went to an agonizing civil war and had to suffer the consequences of catastrophic divisiveness into the North and South) even placed 135th or a rank higher than us.

If we go deeper into this survey, we will find out that Singapore, New Zealand and Denmark were consistently on top. Philippines? Well, we are so consistent in the 130s and, worst, we slid from 133rd in 2007, 134th last year and 136th this year. In topping the survey, the World Bank gave Singapore’s “one-stop-shop” significant credit. The ease by which prospective investors can obtain their business permits and licenses through this “one-stop-shop” earned them the honor as the world’s business friendliest.

To arrest this continuing slide, the Department of Trade and Industry (DTI) recently launched a "one-stop" registration program for would-be entrepreneurs. The first Philippine Business Registry (PBR) station was opened at the DTI’s Metro Manila office. They emphatically announced that more will be opened soon starting March 1 this year.

As an essential element of the 2011-2016 Philippine Development Plan (PDP), the PBR is aimed at improving the local business environment. In a statement from Malacañang, "The launch of the [PBR] represents a significant stride in our administration’s continuing efforts to streamline government processes and reduce red tape." “Furthermore, this system means a level playing field for investors and entrepreneurs, and both SMEs (small and medium enterprises) and corporations will find that it is now easier to set up shop in the Philippines," it stressed.

Originally scheduled last year, the PBR system, seeks to reduce red tape by allowing an applicant immediate access to five agencies: the Department of Trade and Industry (DTI), Bureau of Internal Revenue (BIR), Social Security System (SSS), Philippine Health Insurance Corp. (Philhealth) and the Home Development Mutual Fund (Pag-IBIG).

Likewise, the Securities and Exchange Commission (SEC), through Chairman Teresita J. Herbosa, made it clear too that "Next month, the SEC will have a DTI (PBR) kiosk in our premises, so even if you are a sole proprietorship, a corporation, [or] partnership ... you can get your SSS, BIR, Philhealth, and Pag-IBIG employer numbers in one place."

As envisioned, the process, which can be done at PBR stations or online, will take just 30 minutes instead of days.

However, unknown to most of us, we already have our own “one-stop-shop” so to speak. In 1992, R.A. 7470, otherwise known as the “National Economic Research and Business Assistance Center (NERBAC) of the Philippines Act of 1992” was enacted. Aside from providing prospective entrepreneurs/investors (both local and foreign) with the basic information on various business options that are open to them in accordance with the investment priorities of the Government, NERBAC (which is placed under the Department of Trade and Industry), is likewise tasked to provide a one-stop action center which shall facilitate the processing and documentation of all paper requirements necessary for the establishment of business enterprises in the country.

In fact, in Cebu, after hibernating for fourteen years, DTI-7 finally made NERBAC services available to prospective investors in 2006. Though running on a limited budget, the center has somehow made some investors’ lives a bit easier. Other national government agencies were there too to provide assistance.

Though our own center may not be that perfect, the fact is, like Singapore we have provided an avenue for prospective investors to go to. While this may not be enough to get the same ranking as Singapore, 136th may seem unjustifiable. Let us not deceive ourselves, however. We truly deserve this rank. Truth to tell, in the permit and licensing process, it is not the national agencies that gave investors a lot of headaches but the local government units (LGUs). Particularly, on the building permit processing alone, the red tapes are just too much to bear. 

Though still to be probed, foreign and local investors’ perception are unfortunately formed and is pulling us down. Even if we put PBR stations in every city and municipality, this will never change. Just like NERBAC, a PBR station’s role is to facilitate not interfere in LGUs affairs.

Indeed, change is necessary and requires a sense of urgency. We all have to change while prospective investors are still losing their appetite. Procrastinate, they will soon vomit.   

For your comments and suggestions, please email to [email protected].








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