M. A. P. Insights
Much has been said about the difficulty of doing business in the Philippines, from the time it takes to incorporate a business to the complex maze of procedures we need to follow to get anything done, and the number of approvals needed to move anything.
During a forum on Ease of Doing Business, DTI Sec. Ramon Lopez highlighted key measures under the Ease of Doing Business Act, among which are:
• Single unified business application form at the local government level
• Business one-stop shop
• Automated, electronic systems
• Zero-contact policy
• Centralized Philippine Business Portal
• One-government approach
These are certainly welcome, and we await the IRR which is now with the President for signature.
In the MAP letter sent to DTI last October 2018, there were several areas of difficulty that members noted. What is striking about these is that many are implementation issues. As we have seen many times in the past, we have good laws and regulations, but implementation and execution are where the real test comes.
We took the liberty of suggesting to Sec. Lopez some of the learnings we have had:
• Ensure that new initiatives are fully tested. There have been many laudable initiatives that resulted in slower processes and much delay rather than speeding things up, because in the rush to implement, the system (both manual and computerized) was not fully tested. This is not something unique to the government. Many businesses fall into the same trap in the rush to beat competition in introducing new products, new services, or new features.
• Allow for a transition period. While better processes and increased computerization are very welcome, we need transition periods to allow for issues to surface and be ironed out, and to take into account the concerns of all stakeholders. For example, micro businesses are having difficulty complying with the SSS requirement for online reporting of contributions. Can they be allowed a longer period to comply, to be able to upgrade their infrastructure, or can there be alternatives designed for them? Difficulty in complying often leads to total non-compliance.
• Communicate extensively with the public using different media including social media which Filipinos are so fond of. For example, most citizens did not know that driver’s license applications or renewals could be scheduled online with the LTO, resulting in a low utilization rate for the online reservation system when it was implemented, and continued long lines in the regular lanes.
• Work with the private sector to ensure that the final rules and regulations do not overlook critical elements. While the government often involves the private sector in formulating laws and regulations, we are often “disinvited” once the laws are passed. But continuing involvement is often necessary to iron out the kinks in the processes.
• Related to this, Conduct post-implementation audits. We have often seen that while published turnaround time standards look very good, the actual times are well beyond what was promised. Again, this is something we also see in the private sector.
• Finally, who will oversee compliance by the various government agencies, particularly by the local governments? I think most of us have heard numerous stories of the difficulty of dealing with local government units. The maze of regulations, the number of permits, approvals, etc can be really daunting. Hopefully, the Ease of Doing Business Act, with its mandate of a business one stop shop, computerized processing and zero-contact can help resolve these issues. The PEZA zones, with their one-stop-shop approach, have proven this can be done.
We have come a long way, but we still have a long way to go, and can certainly aspire for more.
For example, the World Bank ranks New Zealand first among 190 countries in ease of doing business. In New Zealand, there is only one procedure to start a business, and it only takes half a day. We have cut our number from 16, but we still have 6. Regulations and legislation can be found online in official government websites.
Speaking of online, this is certainly one area which can facilitate ease of doing business, but it is one where much needs to be done to make the Philippines globally competitive.
Digital allows for faster transaction times, service on demand 24/7 across multiple channels, lower transaction costs, and easier processes.
As seen on e-commerce platforms, digital can stimulate the economy by enabling SMEs to reach a wider audience in a cost-effective manner. And digital tools like cashless payments allow automatic tracking and help small businesses to flourish even without complicated accounting systems, thus promoting inclusivity.
But in the World Digital Competitive Rankings of the Switzerland-based International Institute for Management Development, the Philippines ranked 56th out of 63 countries, dropping 10 places from 2017’s 46th spot. In the Asia Pacific, we are one of the worst ranked at 12 out of 14. Slow internet remains a big reason for the low rankings: we rank 61st in internet bandwidth speed, and 62nd in communication technology, out of 63 countries — almost dead last!
We need to improve not just our physical infrastructure — roads, bridges, airports — but our digital infrastructure, and upgrade our laws and regulations to keep up with technological advancement. New businesses or products using online or mobile media often cannot be launched due to the lack of governing regulations.
Perhaps the government needs to invest in training for its personnel to be able to properly regulate the new digital world, and beyond that, create an environment where science, technology and innovation can grow and flourish.
In this respect, we welcome the DTI’s push to create a nation of smarter, tech-savvy entrepreneurs, such as the transformation of the Philippine Trade Training Center into a Global MSME Academy which will include focus on digital technology, and the creation of platforms for small local businesses to be able to sell online.
The EODB Law, along with the government’s push towards digitalization, holds much promise for a much more competitive business environment, and we look forward to its successful implementation.
This article was lifted from the speech of Management Association of the Philippines (MAP) President Rizalina G. Mantaring at the January 30, 2019 EODB Forum.
Rizalina G. Mantaring is Chair of Sun Life Financial Philippine Holding Co., Inc. and former CEO and Country Head of Sun Life Financial Philippines.
Rizalina.Mantaring@sunlife.com
