EDITORIAL - Another casualty of red tape

A new year dawns with the prospect of a power crisis this summer still not adequately addressed. A long-term solution  – the construction of new power plants to meet an ever-growing demand – should have been done a long time ago. But even with the urgency of the power situation these days, investors are reluctant to come in.

Among the reasons they have cited are red tape and corruption, starting from the process of securing construction permits. The complaint, aired as 2014 drew to a close, is not new. Several months ago, independent power producers cited the same problems. It takes from 150 to 169 signatures, the IPPs said, just to get going, and completing the process can take from four to five years.

Investors have been urging the government for a long time to streamline the processes and requirements for opening, operating and closing a business, including the rules for constructing or leasing offices. Many reforms can be implemented quickly without the need for legislation, which in itself can be a long-drawn-out process that can be tainted with corruption.

Yet the red tape has persisted, even under the administration that professes to follow the straight path or tuwid na daan. Much of the red tape can be traced to local governments all the way down to barangay offices. Local executives enjoy substantial independence under the law that devolved powers. Yet there are ways for the national government to encourage local executives, particularly administration allies, to cut red tape and fight corruption.

This should be among the priority goals this year of the administration. Compared with its neighbors, the Philippines continues to rate low in ease of doing business. This assessment is supported by the fact that the country attracts one of the lowest levels of foreign direct investments in Southeast Asia. More FDI is needed if the administration wants to create meaningful jobs and make growth inclusive.

Economic growth must be weaned away from dependence on the remittances of over 10 million Filipinos who have chosen to work overseas for lack of opportunities in their own country. Creating the jobs that will stop the Filipino diaspora will require hard work and a strong commitment to reforms all the way down to the smallest unit of government. Problems in the energy sector give urgency to the reforms.