NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group (TCF-WG) DAVID L. BALANGUE Private Sector Champion, NCC-TCF 25 October 2007

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group GOOD NEWS ü Muntinlupa City – steady rise in business permits and local taxes from 2003 after reducing the number of steps in business permit process ü Ormoc City – 85% increase in income from business permits from Ph. P 23. 067 M (2005) to Ph. P 42. 667 M (2006) after streamlining its business permit/license process ü Marikina City – Businessmen are pleased with the convenience and speed of the Marikina Business One Stop Shop (BOSS) ü Cabuyao – revenue rose to Ph. P 189. 95 M (2005) from Ph. P 5. 34 M (1995) brought by the efficiency of its BOSS ü Application of the One-day registration process: SSS (employer registration), BIR (TIN and VAT) and Philhealth ü DTI shortened processing time for business name registration from 1 week to 1 day ü … and the number is increasing… the list is expanding

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group PRIORITY AGENDA PROJECTS • ACR-ICard 1. Improve the procedures for implementation the entry and • Ease of Visa exit of Application business persons (Private Sector Partners: Foreign Chambers, MBC and PCCI) • Modernization of the Immigration Law STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED Validity period extended from 1 yr to 5 yrs Comparable with ASEAN • Pre-approved Visa Upon Arrival-MOA between BOI and BI signed last 25 April 2007 (good for 30 days) • Pro-Investment Visa – BI released MC No. MCL 07 -001 last 1 August 2007 (good for 6 months extendible to a max of 3 yrs) Bills filed in both Houses

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group PRIORITY AGENDA PROJECTS 2. Enhance the • X-ray machines for inspection procedures of goods for the entry (import/export) and exit of goods (Private Sector Partners: PUCI, Philexport) • National Single Electronic Window (NSEW) STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED • Deployed to all major ports • BOC reduced the fees for the use of the X-ray machines ($5 for 20 TEU and $10 for 40 TEU). Comparable with ASEAN • 1 st National Single Window Summit last 78 August last 2007 • On-going pilot testing of import clearance processes. • Pilot NSEW linkage with Korea and Thailand to be conducted in the 4 th Qtr of 2007

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group PRIORITY AGENDA • 3. Improve Processes in Business Operation (Starting A • Business, Registering Property, and Securing Licenses) (Private Sector Partners: PCCI, MAP, AIM, GTZ, IFC-WB) PROJECTS STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED Consistency of Business Rules at the National and Local Levels Finished road tour activities for 20 LGUs; on-going consolidation/ assessment of data and submission of preliminary reports to the participating LGUs Top 1/3 of WB Simplification of Procedures • Anti-Red Tape Measures • already implemented by NGAs/LGUs • PBR Kick-off event on 30 August; on-going system design development • One Stop Shop • Strengthening of the NERBAC in the regions • Investor issues and Concerns (I/C) Handling • NCC-TCF Private Sector Co-Champion for I/C handling • Dealing with Licenses • Investment Ombudsman • IPU Network Doing Business Survey • Costs of Starting a Business • Protecting Investors • Closing a Business

NATIONAL COMPETITIVENESS COUNCIL Step Procedures (Starting a Business per WB Doing Business Survey 2008) Time to Agency Commitments Transaction Complete and Flows Working Group Costs Agency (Pre-Summit Workshop last 19 October 2007) Impact on the number of days 1 Obtain bank certificate of deposit of paid-in capital 1 day 1 2 Verify the availability of the company name with the SEC 1 day SEC 1 3 Register incorporation with the SEC 3 days SEC deduction of 1 day 2 4 Obtain Community Tax Certificate 1 day LGU 1 5 Apply for a Barangay Clearance 2 days LGU 6 Obtains mayor's permit/municipal license to operate at the Licensing Section of the Mayor's Office 11 days LGU For review and further study under Project 3. 1 of NCC-TCF in coordination with IFC-WB, AIM and the respective LGUs 7 Receive inspection from the Mayor's Office 5 days LGU 8 Buy inspection books of account at bookstore 1 day BIR 9 Register for VAT 2 days BIR 10 Payment of documentary stamp taxes 1 day BIR 11 Obtain the Authority to print receipt/invoices with the BIR 1 day BIR 1 12 Print receipts and invoices at the print shops accredited by the BIR 14 days BIR Accredited Printers 0 13 Submit receipts and invoices to the BIR for approval, have receipts/invoices and books of accounts stamped by BIR 1 day BIR 1 14 Register with the SSS 1 week SSS 15 Register with Philippine Health Insurance Company (PHIC) 1 week PHIC 15 TOTAL (per Doing Business 2008) 58 days 2 11 5 For review and further streamlining. However, the 14 days allocated for step 12 can already be removed in the list Already implementing the 1 - day processing (SSS, Philhealth and Pag-ibig) which will be eliminated when connected to PBR Target without the PBR 1 2 1 1 1 31 days

NATIONAL COMPETITIVENESS COUNCIL Typical Process on how a businessman register his Business From To 12 days (Streamlined) USING PBR 9 days DTI SEC = 3 days CDA 3 days (Target) Source: PBR-Project Management Unit xx days 20 days 5 days 1 day 1 day 5 days 0 day

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group PRIORITY AGENDA PROJECTS STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED 4. Institutionalize the regulatory impact assessment (RIA) on existing/new government requirements • Initial implementation of RIA in selected NGAs On-going review and preparation of conceptual framework Improvements on • Costs of Starting a Business • Dealing with Licenses • Protecting Investors • Paying Taxes (Private Sector Partners: AIM, ADB, GTZ) • Enforcing Contracts • Closing a Business 5. Streamlining • Harmonization of incentives of incentive package benefits (Private Sector Partners: PCCI, MBC, Foreign Chambers, IFC-WB) NCC/IFC conducted roundtable discussions that brought together the thought leaders from the private sector and academe. Total Package

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group MOVING FORWARD 1. Improve the procedures for the entry and exit of business persons § § Passage of the Immigration Bill into Law Monitoring and further enhancement of the Pre-Approved Visa Upon Arrival and Pro-Investment Visa. 2. Enhance the procedures for the entry and exit of goods § § Full implementation of the guidelines for X-Ray machines Expedite the implementation of the NSEW

NATIONAL COMPETITIVENESS COUNCIL Transaction Costs and Flows Working Group MOVING FORWARD 3. Improve process in business operation (Starting a Business, Registering Property, and Securing Licenses) § § Adoption of best practices from the IFC/WB study in the NGAs/LGUs PBR Implementation IPU Network linking with NERBAC Operationalization of the NCC-TCF Private Sector Co-Champion and the Office of Investment Ombudsman (OIO) 4. Institutionalize the regulatory impact assessment (RIA) on existing new government requirements § Development and implementation of the RIA Work plan 5. Streamlining of Incentive Benefits § § Review/approval of draft Framework of Incentives to be done by appropriate private & public sector agency/s Recommend amendments on the harmonization of incentives

NATIONAL COMPETITIVENESS COUNCIL ATIONAL OMPETITIVENESS OUNCIL Transaction Costs and Flows Working Group THANK YOU