New ease-of-doing-business law welcome but not a cure-all

THE signing of the Ease of Doing Business Act (EODB) by President Rodrigo Duterte on Monday was met with wide approval by the business community and government agencies concerned with trade and investment, which is how it should have been received. The measure is long overdue, and should vastly improve the currently arduous process of setting up or expanding a business in the Philippines.

Those who are rightly encouraged by the implementation of the new law, however, should not count on it alone to attract new business to the Philippines, despite its being a a longstanding disadvantage in order to bring one key aspect of the investment climate here up to a nominal standard. The real value of the EODB, if anything, will be to free investment and business advocates to focus on improving the Philippines’ competitiveness in other more substantial ways.

an amended version of the Anti-Red Tape Act of 2007, and requires government agencies to streamline business registra types of transactions: Three working days for simple transactions, seven working days for complex transactions, and 20 working days for highly technical transactions.

The particulars of what constitutes a simple, complex, or highly technical transaction are likely to be set forth in the Implementing Rules and Regulations (IRR) that must now be created in order to put the new law into action.

Local government units, where most of the activity involving business registrations and permit processes takes place, are mandated by the new law to set up “one-stop shops” for business registrations requirements, including the centralization of barangay (village) permits and clear business application forms to further reduce time and paperwork involved in the process.

Again, all of these provisions were sorely needed, and Practices” adopted in August of last year, all the improvements will do is raise the Philippines to a standard shared by more competitive regional neighbors.

The report notes that the Philippines currently has the third-slowest business registration process among Asean member nations at 28 days, ahead of only Laos (67 days) and Cambodia (99 days). In terms of the number of procedures involved, the Philippines is the worst, with 16 steps involved in a typical business registration; Indonesia and Myanmar are next with 11 apiece, while Singapore leads the region in all respects, requiring only three procedures and two-and-a-half days to complete a business registration.

- cedures and 19 total days’ processing time to be achieved by 2020. Under the EODB, the Philippines will not quite match neighbors namely Malaysia, Thailand and Vietnam.

Put another way, the EODB will, for business investors weighing choices among Asean destinations, allow them to consider business registration requirements as part of the category of “all things being equal,” and make decisions based on other, more important factors, such as the tax structure, the cost and reliability of energy, infrastructure, attractiveness of the local market, and so on.

The EODB was a good start, but there is much that remains to be done to improve the Philippines’ competitiveness and overall business climate, not just for offshore investors, but also for the vast ecosystem of small and medium business entrepreneurs among our own population. We urge our leaders to keep up the momentum toward constant improvement the enactment of the EODB represents.