The 6 Key Reforms from the Ease of Doing Business Law in the Philippines
To boost global competitiveness and attract more local and foreign entrepreneurs, the government of the Philippines passed the Ease of Doing Business Act of 2018 (Republic Act 11032) on May 28, 2018. The new law aims to cut excessive red tape and make it easier to start and operate a business in the country. Chief among its reforms is the automation of business registration processes — where all business registration certificates, renewals, and permits are consolidated in a single, readily accessible online platform.
The Ease of Doing Business (EODB) Law also addresses corruption and accountability within the government. A zero-contact policy has been mandated, along with strict deadlines for government services and penalties for officials and employees who do not comply.
Here are the 6 key reforms from the legislation:
1. Expedited Business Permits and Licenses
The EODB Law aims to make business registration and permit renewals quicker and easier.
- Unified Application Form: Currently, extensive paperwork is required to begin a business. The Act mandates a single application for business permits and renewals, consolidating all the requirements and documentation into a single form.
- Preliminary Evaluation: To avoid delays, all business applications will receive a preliminary evaluation, allowing applicants to correct any deficiencies before submitting the actual application.
- Fewer Transactions: All related licenses, clearances, permits and authorizations will be issued concurrently with the business permit. All will be valid for one year.
- One-Stop-Shop: All agencies engaged in starting a business will be housed in one facility. This includes, but is not limited to, the treasury, business and licensing office, and zoning office.
2. Deadlines for Government Transactions
To ensure efficiency, all government agencies must complete transactions within the following mandatory time frames:
- Simple Transactions: Applications and requests that require only standard ministerial action shall be processed within 3 business days.
- Complex Transactions: Applications and requests that require resolution of complicated issues shall be processed within 7 business days.
- Highly Technical Transactions: Applications and requests that require highly technical or specialized knowledge shall be processed within 20 business days.
Any completed application will be automatically approved if an agency fails to process the application within the prescribed time frame.
3. Online Registration for Businesses
Automation of government services provides better efficiency and convenience. E-government also reduces corruption, according to the World Bank. The Department of Information and Communications Technology (DICT) has been charged with creating an online Central Business Portal through which all business permits and related licensing and authorizations can be completed.
All forms will be moved online and documents can be scanned and submitted electronically. Also, licenses and permits can be printed from home or office, and shall have the same authority as a hard copy. The DICT has three years to get all business services online.
4. Anti-Corruption Policy
Until all systems are brought online, the government will institute a zero-contact policy between business applicants and government employees. After the initial application filing and review, applicants will be identified by case number and deal with government functionaries anonymously.
5. Citizen’s Charter
To promote transparency and accountability, all NGAs and LGUs will create a Citizen’s Charter to be posted at the main entrance.
The Citizen’s Charter will outline the following:
- Complete checklist of requirements for each application or request
- Steps to obtain a particular service
- Person responsible for each step
- Maximum time to complete a request
- Documents required
- Fees required
- Procedure for filing complaints
To ensure compliance, the law prescribes administrative and criminal liability to officials and employees acting improperly. Violations include:
- refusal to accept an application
- imposition of requirements or fees not listed in the Citizen’s Charter
- collusion with fixers
- missed deadlines
Administrative penalties will apply to first offenses while second offenses will result in criminal liability.
Enforcement of the Ease of Doing Business Act
The Anti-Red Tape Authority (ARTA) is responsible for enforcing the Ease of Doing Business Law in the Philippines. It is currently training agencies to comply with the new law and resolving complaints. ARTA Director, General Ernesto V. Perez, said they have received 166 complaints to date, and have already resolved over 50 percent of cases. The complaints demonstrate public awareness of the bill’s mandate and help ARTA pinpoint government inefficiencies to streamline their procedures.
“We look forward to shaping the Philippines as a competitive landscape where businesses, foreign and local alike, from SMEs to large businesses, can thrive with the help of a government they could trust,” Director Perez said.
Increasing Global Competitiveness through the EODB
The Philippine government is committed to establishing a robust private sector, free of corruption and inefficiency. By the end of his presidency in 2022, Duterte aims to lift the Philippines to the top 20 percent of world economies in the World Bank’s Ease of Doing Business Report. The report measures how easy it is to start and operate a business in 190 countries. Currently, the Philippines stands in 124th place. Trade Secretary Ramon Lopez expects that the targeted reforms of the EODB Law will move the Philippines up 30 places by next year’s report.