More risks than ease to do business in the Phl

There is no dearth of proposed legislations that were pushed in Congresses past to promote “ease of doing business” in the Philippines. In fact and in truth, many of these measures have been approved into law and are being enforced already.

The latest of these is Republic Act (RA) No. 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018. Called for short as Ease of Doing Business Law, it intended to make the process of setting up and starting a business in the Philippines easier for investors. Precisely, the goal is to increase the country’s competitiveness and attractiveness to foreign investors.

Signed into law by former president Rodrigo Duterte, RA 11032 created for this purpose the Anti-Red Tape Authority (ARTA) to implement and oversee a national policy on red tape. RA 11032 essentially is a revamped version of RA 9485, or the Anti-Red Tape Act of 2007. While most of RA 9485 remained intact, RA 11032 expanded its coverage.

The ARTA was further mandated to implement various reform initiatives to combat red tape in frontline services in all government offices, agencies, local government units (LGUs), including every single office, agency and government-owned and controlled corporation (GOCC) as well as consular offices and Philippine embassies abroad.

Despite this widened coverage for the ARTA to ensure effective implementation of the Ease of Doing Business Law at the Executive branch, there are other activities that cause equally damaging delays, if not bottlenecks and disincentives to prospective investors. And these are also happening in the offices, activities and processes being done at the two other co-equal branches of the government, namely, the Legislative and the Judiciary.

Worse, the same nightmares of doing business happen also to many private companies and corporations that get into business with the government.

Take the situation of Comelec Chairman George Garcia who has to put up with politics-driven bidding war on the new automated election system (AES) being readied for use in the May 2025 elections. The poll body is being dragged by rivals of Smartmatic, which is participating again in the Comelec public bidding for the new AES. Thus, the promoted commitment of Chairman Garcia to a transparent and fair bidding process might be gone even before the process begins.

For obvious reasons, there have been strong sentiments publicly declared to exclude Smartmatic from participation again in the new AES bidding of the Comelec and allow the other vendors to bid. Politically, these are the external pressures on the poll body.

Another government agency, the Land Transportation Office (LTO), has been dragged to court for several years already on the dispute of two information technology (IT) providers. Its new IT provider, a German-led joint venture Dermalog Identification System and Holy Family Printing Corp., installed LTO’s Land Transport Management System (LTMS).

As designed, the LTMS should improve the services to the public transacting official business with the LTO, from drivers’ licenses to car plates. However, there is a pushback from the LTO coming from the direction of the previous IT provider. Appointed in July this year to head the LTO, assistant secretary Vigor Mendoza finds himself caught in the middle of the two feuding IT providers.

The government is not alone in dealing with such risks, other than ease of doing business.

Institutional reputation of integrity in doing business could not be quantified nor measured in terms of pesos. But it is very much valued and protected zealously in every private business and industry entity. Thus, the reputation and image that have been built through the years are sacrosanct to any private sector corporate body.

Businessman-industrialist Andrew Tan, who heads his family-owned MegaWorld Corp., did not know what hit him. Suddenly out of the blue, one of the country’s biggest real estate developers was slapped with a court order. A Quezon City Regional Trial Court issued a freeze order on MegaWorld assets in five projects they are currently undertaking.

The court order was issued based on a suit filed by construction firm DATEM Inc., one of Megaworld’s contractors, in its five ongoing projects. In its lawsuit, DATEM asked the court to collect alleged unpaid dues from Megaworld. In the order, the court directed Megaworld to set aside nearly P900 million as a counter-bond to cover the potential obligation claimed by DATEM.

The lawsuit came even while there were ongoing negotiations between representatives of the two parties. The negotiations dealt with the notice served by Megaworld to DATEM for its alleged failure to meet their contractual deadline to finish the project on time. As the president, chairman and chief executive officer of Megaworld, Tan could only sigh in disbelief that a minute portion of their operations in the Philippines would derail their other business ventures across the world.

Aside from several “new city” projects emerging out of condominium, hotels and resorts it built, Tan’s Megaworld diversified into other ventures. Through Tan’s brandy-producing company Emperador, he acquired Presidente Brandy, Mexico’s biggest brandy company. Tan previously bought Fundador of Spain, regarded as the largest brandy company in the world. In both countries, Tan has raised our country’s flag in these entities that Megaworld owns outside the Philippines.

Jess Varela, director-general of the International Chamber of Commerce-Philippines, empathized with Tan’s laments. “Datem could have opted to go to arbitration whereby both parties can thresh out claims and counter-claims outside of the courtroom, rendering a more neutral space for negotiations,” Varela pointed out.

And just yesterday after their sectoral meeting at Malacañang, Finance Secretary Benjamin Diokno announced President Ferdinand “Bongbong” Marcos Jr. and his Cabinet approved 179 infrastructure and other government projects, one third of which are up for Public-Private Partnership (PPP). Anyone interested?