Combating Red Tape

This article was originally published with The Manila Times on July, 25, 2019.

A lot has happened since my last column. A colleague and old friend, Atty. Jeremiah Belgica, was appointed Director General of the Anti-Red Tape Authority (ARTA), an agency created by law. That law, R.A. 11032 (the Ease of Doing Business and Efficient Delivery of Government Services Act), was one I helped craft through my work consulting for Rep. Bernadette Herrera-Dy and the topic of one of my previous columns here.

So one could see how fortuitous I found the situation. A law I helped write, an agency created, and a friend appointed, all to combat the various practices that make doing business in the Philippines so tedious and difficult.

What was one to do? We hit the ground running. In less than three weeks, we studied and deliberated the draft Implementing Rules and Regulations (IRR) of the law, and signed it last week with the Civil Service Commission and the Department of Trade and Industry. Kudos to those who worked on developing the IRR and have done a great job at it since the signing of the law just last year.

3-7-20
Per the law and the IRR, government services must now be rendered within a maximum of 3 days (simple transactions), 7 days (complex transactions), and 20 days (highly technical transactions). Failure to do so gives rise to hefty liabilities, starting at six months suspension for the first offense. If the first offense involves collusion with fixers, or if this was the second offense, the penalty is both administrative (dismissal from public service and perpetual disqualification from public office) and criminal (prison terms from one year to six years) plus a fine (half a million Pesos to two million Pesos).

Streamlining processes
It is now mandated that all government agencies undergo a ‘re-engineering’ process, involving cost analyses, time and motion studies, and overall evaluation of processes to identify areas which cause unnecessary delay and are potential red-tape avenues. This re-engineering process will be done with the ARTA, and focus on simplification of forms and documents, digitization and automation, and reductions in processing times and costs.

One such notable requirement is the mandate that a maximum of three signatories for any government document regarding a service or process to simplify the approvals process.

The watchdog
The ARTA serves both as adviser and enforcer. As the key governmental agency on bettering policy, process, and procedures, it recommends to other agencies and local government units (LGUs) on how to improve regulatory management and improve productivity and efficiency.

As watchdog, the ARTA also receives complaints from the general public on cases of red-tape, and through the complaint or on its own initiative, can investigate and even file the appropriate administrative or criminal cases against the erring official or employee.

Manila leading the way
The law and the IRR also mandate the creation of Business One-Stop Shops (BOSS) in LGUs. The BOSS is geared to place all of the receiving and evaluating offices in a single location, to lessen the time spent by the public in shifting documents from one place to another. Notably, by 2022, all LGUs have to automate their business permit and licensing systems.

The City of Manila took the lead on this, with the opening of their BOSS just the other day. There, applicants for Manila business permits present their documents and pay the fees, while their papers are assessed and evaluated by the different LGU offices, all in one place. Mayor Isko Moreno described the process as the papers move while the applicant sits and waits, not the other way around, as opposed to where the applicant goes to one office to get an approval and brings it to another office, and so on.

Improving doing business ranking
With the ARTA in place, it is hoped that the right processes and procedures are streamlined to better the Philippine’s rankings in the World Bank’s Doing Business Report, which assesses 11 key areas that affect a country’s performance. In the 2019 Report, the Philippines ranked 124th out of the 190 economies studied, dropping ranks compared to previous years. One major reason as to the fall in position is not necessarily a worsening of conditions in the Philippines, but rather the improvements in conditions in other countries.

Clearly, status quo is no longer an option. Excessive procedures and a snail-paced bureaucracy led to the sad state of our country’s business landscape, one that repeats year-after-year as licenses and permits are renewed. Now with the full implementation of R.A. 11032 and the signing and publication of the IRR, one can expect that the right reforms are fast approaching.

The author is Founder and CEO of Caucus, Inc., a multi-industry, multi-disciplinary management consultancy firm. He graduated MBA (De La Salle University), Juris Doctor (Far Eastern University), and Masters of Law in International Commercial Law (Honours, University of Nottingham, United Kingdom). He also studied Mandarin Chinese Language and Culture in Fuzhou, China, was a Chevening-HSBC UK Government Scholar, a Confucius Institute Scholar, an alumnus of the US State Department’s International Visitor Leadership Program, and a Fellow of the Asia Global Institute – University of Hong Kong. The author may be emailed at iap@caucusinc.com.