Red tape and over-regulation have been the perennial problems in doing business in the Philippines. For local businesses, it is a source of stress and an unnecessary obstacle that erodes productivity. For foreign investors, it is reason enough for them to invest in Singapore and Malaysia rather than the Philippines. So severe is our red tape that for the year 2019 (evaluation period 2018), the World Bank ranked the Philippines 124th out of 190 countries in terms of ease in doing business. Within ASEAN, the Philippines was only better than Cambodia, Myanmar, and Laos.
Through Republic Act 11032 of 2018, the Duterte administration created the Anti-Red Tape Authority (ARTA), a new agency under the Department of Trade and Industry. It commenced operations in August 2019. Jeramiah Belgica was appointed ARTA’s first Director General. Belgica is an accomplished lawyer who previously served in the Presidential Anti-Organized Crime Commission. He is also a religious pastor for the Lord’s Vineyard Covenant Church.
I recently attended a meeting where Mr. Belgica appraised the European Chamber of Commerce about ARTA’s purpose and its first year accomplishments.
At the heart of ARTA’s mission are two basic mandates. The first is to assist both national government agencies and local government units (LGUs) in streamlining their operations, re-engineering their procedures and digitizing their regulatory management systems. This involves intense training and systems modernization. The second involves enforcement oversight. ARTA has the power to impose reforms, set deadlines and penalize whole agencies and their officials for non-compliance.
Last March, ARTA issued a memorandum to all government agencies prescribing the maximum allowable time to process transactions. Processing of simple transactions like drivers licenses, passports, and business permits should not take longer than three working days. Complex transactions like engineering permits should not take longer than seven working days. And processing of highly complex transactions like financial assessments should not exceed 20 working days. Agencies that do not comply with these parameters are subject to punitive sanctions.
Further, ARTA now requires all government agencies to physically and electronically post, in a conspicuous location, what it calls a “Citizens Charter.” The Citizen’s Charter serves as the public guide in dealing with the said government agency. It specifies the checklist of documentary requirements for each permit, the steps to final approval, the people responsible for each step, the maximum time for processing and the fees involved. The Citizens Charter makes dealings with the government transparent. It negates the need for fixers and removes the opportunity for extortion. It gives bureaucrats no reason to ask for more documentary requirements than what is in the list. It sets the expectation on how long one must wait for the process.
The Citizen’s Charter is a binding social pact between government and the public. Government agencies face punitive consequences should they deviate from the standards set in the Citizen’s Charter. The public can file their complaints through email@example.com.
Now, what happens if a particular government agency fails to approve or decide upon an application within the prescribed time? According to ARTA’s directive, said application is automatically deemed approved. This applies to such permits, as those from the Securities and Exchange Commission, the Land Transportation Franchising and Regulatory Board, the Food and Drug Administration, among others.
Last February, ARTA, through the office of the President, issued an administrative order to promote efficiency in all government processes. In particular, it required all LGUs to fully automate their business processing and licensing systems within a three year period. It also required them to establish a Business One Stop Shop (BOSS) whereby all permits are digitally processed in one venue. Many LGUs, particularly those in Metro Manila, already have their BOSS in place. LGUs in the provinces have yet to catch up.
The recent work from home phenomenon has hastened government’s migration to a fully digitized platform.
Through ARTA’s initiative, government agencies were recently instructed to accept digital copies of applications, reports, and supporting documents. They were also instructed to accept e-signatures and electronic payments. Unless expressly required by law, documents no longer need to be notarized. Data sharing is now encouraged among government agencies to avoid redundant submission of documents. Notifications and publications are also encouraged to be done online or through e-mail, no longer via slow mail.
ARTA recently launched a self-challenging program called the National Effort for the Harmonization of Efficient Measures of Inter-related Agencies (NEHEMIA). NEHEMIA calls for a 52% reduction in time, cost, procedures and requirements in all government processes within 52 weeks. The entire cabinet is participating in NEHEMIA and the Cabinet Secretaries themselves have committed to spearhead the reforms within their respective offices.
The telecommunication industry will be the testing ground for NEHEMIA. As we all know, securing permits for the construction of cellular towers is a long, tedious process that involves 13 permits, 86 documentary requirements, and an average of 241 days to complete. NEHEMIA’s package of efficiency programs aims to reduce this to eight permits, 35 documentary requirements and 16 days processing time.
Numerous unnecessary requirements have already been eliminated such as Home Owner’s Consent, the approval of the Sangunian Panglungsod and the clearance for high restrictions from the Civil Aviation Authority of the Philippines (in non-critical zones), among others.
Next in ARTA’s agenda are programs to shorten the regulatory requirements in the housing and construction industry, food and pharmaceuticals, and power and energy sectors.
One year into their operation and we are already feeling ARTA’s impact. In the 2020 survey of the World Bank, the Philippines was one of the most improved countries, jumping 29 places from 124th to 95th place.
There is a long way to go before government agencies and LGU’s become fully digitized, simplified and efficient. But unlike years past where government agencies were left to their own devices, this time, ARTA is there to guide, teach and push reforms forward.
Should ARTA live up to its promises, it can be the most significant legacy left by the Duterte administration. Expectations could not be any higher.
Andrew J. Masigan is an economist