WELCOME MESSAGE OF SECRETARY RAMON M. LOPEZ
ARTA Summit
18 December 2019
As delivered
Acknowledgments
Ladies and gentlemen, good morning!
Unang una bilib po ako sa inyo. Nandito pa kayo at di pa kayo nagki-Christmas party. This is the week for Christmas parties, but we were reminded by the Civil Service Commission that we have to do our party outside the office hours.
Since 2012, the former National Competitiveness Council had a “tradition” of organizing a yearly Ease of Doing Business (or EODB) event aimed at assessing the progress of the Philippines in the World Bank’s annual Doing Business (DB) Reports. These events also sought the commitment of all concerned agencies, Quezon City, also as our representative City and also the private sector to push for reform measures that will improve our ranking in the succeeding Ease of Doing Business reforms.
It’s good to see that the Anti-Red Tape Authority (or ARTA), under Director General Jeremiah Belgica, is continuing the tradition of gathering all of you who have a role in making the country more competitive.
We need to remember that as our country’s doing business ranking moves up, our competitiveness likewise improves. This helps us attract more investments, leads to the creation of more jobs and employment, and enables our people to achieve a better, more prosperous life. I am confident that ARTA will lead us effectively in this matter.
President Rodrigo Roa Duterte has also spoken constantly about how he doesn’t want to give our people a hard time by lining up in long queues at government offices. He doesn’t want them going back and forth in government offices to fulfill requirements. Promoting these reforms will fulfill the President’s promise of Tapang at Malasakit through a government that is responsive to the people’s needs.
Transition from DB 2020 to DB 2021
Let also point out that this year is different from the past EODB Summits and Forums in three ways. First, it is held during the days of Advent leading to Christmas, which is a time for giving and sharing. We can say the forum is akin to Advent as we prepare for greater achievements in the Doing Business 2021 cycle. Thus, the presence of everyone here is significant as we work together under the baton of ARTA to ensure that the environment for investments through easier and more business-friendly procedures and legal structures are in place.
Second, this year’s EODB Forum is different because of the good news. To reiterate, the Philippines moved up 29 notches. It is the biggest jump for the Philippines and the top 3 in the world. This ranking improved from 124th to 95th place among 190 economies.
This would not have been possible without all your help. For example, our partner in private sector also:
- TransUnion and the credit bureaus for providing the true credit information ecosystem to the World Bank, which recognized the mistake they committed in the previous year’s downgrading of the Philippines of the scores in Getting Credit;
- The timely passage of the Revised Corporation Code by Congress and the quick issuance of the Memorandum Circular on related party transaction and the removal of the paid in capital by the Securities and Exchange Commission (SEC);
- The reforms done by the Bureau of Internal Revenue (BIR) in simplifying corporate income tax return forms, as well as the Social Security System (SSS) electronic contribution system were recognized for the topic on Paying Taxes; and,
- The streamlined process for obtaining an occupancy certificate in Quezon City.
Third, this year is different because we clearly recognize that reforms in doing business is not the sole responsibility of the Executive branch of government. As we witnessed last year, both Congress and the Judiciary play crucial roles in the country’s quest to be competitive. Later, we will listen to the leaders of Congress and the Judiciary and we will further strengthen our partnerships with them.
To give us a broader perspective, we should know that the difference in an entrepreneur’s experience in top and bottom performing economies is discernible in almost all EODB topics. For example, it takes nearly six times longer on average to start a business in the economies ranked in the bottom 50 than it does in the top 20. Transferring property in the 20 top economies requires less than two weeks compared to about three months in the bottom 50.
Obtaining an electricity connection in the average bottom 50 economies takes twice that it takes in the average top 20 economies. Moreover, the cost of such a connection is 44 times higher when expressed as share of income per capita. Meanwhile, commercial dispute resolution lasts 2.1 years in economies ranking in the bottom 50 compared to 1.1 years in the top 20. Lastly, in the top 20, 83% of the adult population on average is covered by either a credit bureau or registry, whereas in the bottom 50, the average coverage is only at 10%.
With this mind, how do we fare? By World Bank’s count, in the Philippines it takes 13 steps and 33 days to start your business. I tell you we are seeing greater improvement this year. It just needed catch the deadline during the survey of World Bank this year. So many of these reforms will be felt early next year.
From 13 steps and 33 days our ambition and we are all working on simplifying reforms and automating hopefully all of those from end to end we will experience only within a day. If not within one hour as we automate end to end process especially for example in starting a business. So, from 33 days to one day or one hour. I just gave you not to pre-empt other presentation.
Each of the government agencies end to end from DTI. Sa DTI walang problema eight minutes lang kasi automated na. SEC is undergoing now a change in the form and lesser information fields and once automated they can also have the eight-minute kind of registration.
Of course, in the LGUs we’ve seen example of also eight minutes by making other requirements post registration. And in the BIR we have indication that they have also simplified and they are now automating and they will connect to the Central Business Portal that being worked on by the DICT working with the rest of the agency. So, it’s a whole-of-nation approach that will really make this a reality. We’ve been mentioning this as a goal since last year so we’re getting there.
Other scores, nine steps and more than a month to register your property; 2.6 years to resolve commercial disputes; and, our credit bureau’s coverage is only eight percent.
As evidenced by the World Bank’s report, we’ve accomplished a lot—but we still have a lot to do. Though we’ve already achieved a major victory with our “long jump” in our EODB ranking, we need to boost and sustain our efforts.
We mentioned earlier a jump from 124 to 95th. So now, we are talking of the road to 70 and then the road to 50 and then the road to 40.
As we start our forum, let me share with you my thoughts about how the Philippine government can further accelerate the accomplishments noted in the 2020 report. These are not new but are lessons from recent competitiveness literature such as the World Economic Forum and the World Bank’s DB Reports.
Lesson #1: Embracing a forward-thinking mindset
While this forum will emphasize what we need to do for DB 2021, let us focus and embrace the future. Let us not forget that many of the projects that we need to implement have a long developmental period. Having a clear three-year planning horizon with achievable targets—bearing in mind our development plan at the start of the administration—will help us devote resources to our projects.
In addition, I would say that we also need EODB promotional facilitative kind of mindset. Instead of being a regulatory mindset, the mindset of the past is one that is lacking in trust but the mindset of today or the future is one that would be promotional with controls to follow.
Let’s say if you are just simply registering, why not just fill up the form then submit rather than fill up, assess, go back, fill up again, assess, go back and before you gain that approval. After all what assessment they are doing. So, the mindset is one that should just register, fill up, submit and your registered. And other requirements those that can be adapted post-registration should be the norm. It should be required after the registration. So that’s the mindset that we should have. That’s really a promotional not a regulatory mindset. And therefore, there is automaticity in approval because you are simply registering.
Lesson #2: Make technology an integral part of policy and our solution
In the DB 2020 study, an interesting point was mentioned: economies that score highest on the EODB share several common features—including the widespread use of electronic systems.
Specifically, all the 20 top-ranking economies have online business incorporation processes, have electronic tax filing platforms, and allow online procedures related to party transfers.
Moreover, 11 economies have electronic procedures for construction permits while 14 of the 20 top performing economies have a unified collateral registry. This is also one project under the LRA. In the implementation of the Property Securities Act or the Movable Collateral Act.
With the Fourth Industrial Revolution upon us, we need to promote the widespread use of electronic systems and online platforms to comply with regulatory requirements. So, the process is streamline first then automate.
In the latest DB 2020 report, the Philippines has the greatest number of procedures in Starting a Business, Dealing with Construction Permits, and Registering Property in ASEAN.
The only way the government can comply with the “No Contact Policy” is through automation and the development of online platforms. Promoting technology integration will improve productivity, raise competitiveness, increase investments and eventually create jobs and reduce poverty.
A few Local Government Units (LGUs) have already put up online registration systems, and several agencies currently have automation projects. The digital transformation of the Philippine government is underway and must be widened and further accelerated. So iniumpisahan na po ito kelangan lang bilisan.
Lesson #3: Formulate Customer-Friendly Regulations
There is no doubt that we need regulations. But in the Philippines, many regulators think that applicants will eventually cheat on the government. Ito na nga yung gusto nating palitan.
In the latest DB report, the World Bank emphasized that “at its core, regulation is freedom to do business.” We need to remember this point. In many instances, government’s tendency to overreach business leads entrepreneurs to resort to informal activities and rent-seeking behavior.
So lalo ng nagkakaroon ng mga opportunities or nali-link sila towards making lagay lagay. Let’s balance the regulatory aspect of governance with the need to be customer-friendly in formulating procedures.
Kaya nga precisely ito ‘yung priority ni Presidente in Ease of Doing Business. Alam niya pag ginawa talaga ang Ease of Doing Business mawawala ang corruption. Doon allergic ang ating Pangulo. So ngayon andyan po si DG Belgica sisiguraduhin niya na mawawala ang corruption at mawawala ang paghihirap sa gobyerno.
Lesson #4: Time is of the Essence
The country’s ranking at 95th places the country at 50% of the 190 economies in the survey. We are seventh in rank in ASEAN, besting only Cambodia, Lao PDR and Myanmar. We need to do better. The last SEA Games proved that if we put our heart into the goal of being competitive, we can do it.
During the last Cabinet meeting, Cabinet Secretary Karlo Nograles challenged us to be at the top 20% of countries or 4th in ASEAN. If you remember two years ago, ayun na ‘yung sinasabi nating dream or ambition top 20% so naa-align po tayo we’re getting there. So hopefully from 95th pupunta na tayo sa 47 masaya na tayo kahit 50th rank basta dumating lang tayo dun. So malapit na.
Lesson #5: Think of Whole-of-Government, Out-of-the Box Solutions
Agencies need to start looking at procedures in a government-wide perspective and not merely through its own lens only. In Starting a Business, registration in the past was done by SEC, BIR, the LGUs, and the social security agencies separately and on their own.
This was without really considering the business registration process as an integrated system covering many agencies. When we say integration, at least ma-integrate sila kahit online and each agency can still maintain that. But you know in other countries the best practices minsan isang agency lang talaga ang nire-registeran. And the necessary information is transmitted to the other concern agencies. Talagang napakasimple. And hopefully at least online in automating we still be able to do that and integrate all the different agencies and the processes. Simplified and integrated.
Government agencies should stop working in silos and need to start working together. This is happening already from sharing data to co-locating. Even as we do the automation meron pa rin tayong pina-project na National Business One Stop Shop e-explain po ni DG Jeremiah yan later. But really the end goal is that the automation.
The World Bank provides a rich source of best practices that the Philippine agencies can start studying and improving on. What’s more, agencies need to improve coordination and start tapping private sector resources, the academe, and even development partners to devise more efficient processes without comprising health, security, and environmental concerns.
Concluding Statement
To conclude, the ultimate ease of doing business for our people is that they can do this in the comfort of his or her home, or wherever they are, through their mobile phones. This is the epitome of the President’s vision of Tapang at Malasakit na ating gobyerno po ay talagang working the extra mile in really giving ease and comfort to our people.
I leave you with the wish that today’s forum will further strengthen our resolve to bring the Philippines closer to getting a gold medal in the ASEAN race. Magpadagdag na tayo sa 140+ na gold medal. And that hopefully have that biggest jump in ASEAN in the next round of survey.
We are confident that as we passed the EODB lead to ARTA. Our EODB reform shall be more intense and focused and accelerated. The Philippines shall soar even higher. Let me end with a fervent message of a happy and meaningful Christmas and a more progressive 2021 EODB cycle, inspired by our joint effort today as we map out our DB program as “One DB Team, One Government.”
Good morning to everyone and mabuhay tayong lahat!