LGUs remain woefully behind on digitalization of business permitting years after EODB Law enacted

MANILA - Starting and sustaining a business isn’t easy, but the Ease of Doing Business Act is supposed to address some of the more painful bureaucratic pain points of entrepreneurship.

However, as the lead agency tasked to implement the EODB found out, trying to make doing business easier is easier said than done.

The EODB law mandates the creation of the Electronic Business One Stop Shop (eBOSS). This is supposed to automate business permitting and licensing systems allowing LGUs to issue tax bills, order of payments, permits, licenses and clearances and accept applications and payments electronically.

But as of March 2022, only 31 percent of LGUs have or are close to having their eBOSS operations set up for faster business permitting.

Only 13 percent of the Philippines’ 1,634 LGUs have it up and running.

Why ‘ease of doing business’ matters.

Renz Siron is a small business owner who sells animal feeds in San Fernando Pampanga. The business employs other members of his family.

Business has been picking up and he is working toward becoming a government supplier.

Before this, he was an OFW in Saudi Arabia. From 2012 to 2015, he tried to set up a business in the Philippines so that he could leave his job in Riyadh. The problem was he just could not get a business permit.

“Pabalik balik ako ng abroad. Pag mag-o-open ako dito, di ako makaka-ano, makakuha. Babalik na naman ako ng abroad, iipon na naman, babalik dito, magnenegosyo. Di ka makakuha ng permit, balik ka naman don,” Siron said.

(I went abroad several times. I tried to open a business here, but I couldn’t get a permit. I would go back abroad, save more money, come back here and set up a business. But again I’m unable to get a permit so I have to go back there.)

Siron shared it took him three tries as well as a move into a different LGU before he was finally able to set up a business that allowed him to stay at home.

“First time naming mag ayos, talagang dumaan kami ng butas ng karayom. talagang nag palakad kami, naglagay kami, para makuha lang namin yung pinakamababang bayad na permit,” he revealed.

(The first time that everything went well, we really had to go through the eye of the needle, we got fixers, we bribed just so we could get the permit with the lowest cost.)

His business is now located in San Fernando, Pampanga, where he has been operating for the last 5 years.

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Siron said getting permits has become easier since then. Waiting time has been reduced from 1 week to 2 days and regular inspections are conducted, eliminating the need for scheduled visits for verification.

If things had not improved, Siron said he probably would have given up. New entrepreneurs would likely get discouraged as well, he said.

“Siguro hindi na, hindi na siguro, kasi pahirapan eh. Kung ganyan din ang mangyayari ba’t pa ako magbubukas ng negosyo kung mahihirapan ako kumuha ng permit diba?”

(Maybe not, not anymore, because it’s difficult. If that’s what’s going to happen why should I even open a business if it is difficult to get a permit, right?)

Mirco, small, and medium enterprises like Siron’s make up for over 99 percent of all registered businesses in the Philippines, accounting for 65 percent of employment.

Many of these MSMEs, like Siron, have no staff dedicated to complying with permits and other regulatory requirements.

While securing permits has become easier since the establishment of the Anti-Red Tape Authority, the eBOSS aims to further make doing business easier with applications for permits conveniently done online.

“Siguro pagka online na, siguro mga 10 minutes, 20 minutes tapos na yon.”

(If done online, maybe it will only take 10 or 20 minutes to finish.)

Republic Act 11032 in 2018, also known as the Ease of Doing Business Law, requires all LGUs, cities and municipalities, to automate their business permitting and licensing systems through the setup of an eBOSS.

This would allow LGUs to issue tax bills, order of payments, permits, licenses and clearances and accept applications and payments electronically.

The law’s deadline for 100 percent compliance was June 17, 2021.

But as of March 10 this year, only 219 LGUs have fully automated eBOSS setups, while another 287 have partially automated eBOSS. That means that out of 1,634 total LGUs across the Philippines, only 13 percent are fully compliant with the law, and those partially compliant LGUs are just 31 percent of the total.

ARTA Director General Secretary Ernesto Perez said they are pursuing a carrot instead of a stick approach to help more LGUs comply. He explained many LGUs are facing significant challenges preventing them from getting up to speed such as the lack of infrastructure and connectivity.

“The focus is really on the enabling and capacitating side. Bigyan natin ng pagkakataon (Let’s give them time), “ Perez said.

One strategy is the launch of new awards for fully compliant LGUs last March, where ARTA partnered with the government of the United Kingdom for the Philippine Good Regulatory Principles Recognition and Awards Program. The winners for Year 1 will be known in November.

ARTA is also enticing LGUs with the prospect of increased revenues. The agency said its data shows that LGU revenues increased after their eBOSS became fully operational.

“Of the 17 cities and municipalities in NCR, only 5 have fully set up and operationalized an eBOSS. And these are the cities of Muntinlupa, Paranaque, Valenzuela, Manila, and Quezon City. The common denominator of all these cities that have complied is that they have increased substantially their number of business registrations, and increased revenue collections,” Perez said.

Data collected in 2021 and 2022 show the increments for compliant cities amount to hundreds of millions of pesos in added revenues. The data, however, is a bit skewed as the time frame of the data collected coincides with the reopening of the economy from pandemic-related mobility restrictions.

Aside from rewards, ARTA is also addressing the many hurdles LGUs have cited as reasons for their non-compliance. It has partnered with the Department of Information and Communications Technology, which has developed software for eBOSS operations, which LGUs can adopt free of charge, perfect for LGUs that can’t afford to buy their own.

ARTA is also helping LGUs and other government agencies with limited budgets by supplying computers and training, also free of charge. The agency is doing this through public-private partnerships.

It has partnered with the Aboitiz Group for ‘Pinas Bilis’, which offers training and other capacity-building forums for LGUs to streamline and digitalize their services. ARTA has also partnered with Meralco for ‘Paspas Pilipinas Paspas’ to provide 500 computers to LGUs, as well as training and capacity building.

• Meralco turns over 500 computers to ARTA to help LGUs digitalize

“It will require about 5 to 7 computers per LGU to set up and operationalize an eBOSS. So with that 500 computers to be donated, it can cover only 166 LGUs. But with the commitment from Meralco, and even from their sister companies perhaps, and I am hoping am very positive, we will cover all LGUs para wala nang excuse or rason ang mga LGU para hindi makapag-comply.”

What LGUs have to say

The City of San Fernando, Pampanga, is working toward 100 percent compliance with the EODB law. Its Licensing Officer Salvador Cariño said they are quite close and the only delay was caused by their decision to develop their eBOSS software in-house instead of picking up the DICT software.

He said the services offered by DICT did not match those required by the city. As the DICT did not provide the source code for the software, the LGU could not customize it.

“Ngayon we opt na mag-develop na lang ng in-house, para any time may bagong developments sa aming process, makakapag-adjust kami,” Cariño said.

(We opted to develop the software in-house so that if there are new developments in our process, we can adjust.)

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The Pampanga Chamber of Commerce and Industry says the province is very business-friendly.

“We are very lucky there in Pampanga. Kaya mabilis ang processing. Kaya ang pagpunta mo doon, they just compute it and everything, and in just a few hours you pay the fees for the business permit,” said Teresa David Carlos, president of the Pampanga Chamber.

In Pampanga, businesses and LGUs have been collaborating for decades on how to improve ease of doing business, and this has resulted in a vibrant local economy that is the envy of many LGUs in Luzon, she said.

ARTA data shows that Region 3, including Pampanga, have the most number of fully compliant LGUs.

Teresita Ngan Tian has had the opportunity to work with different LGUs in Metro Manila and other parts of the country. Her restaurant business is open to franchising and they assist new franchisees with their permits and licenses.

“Nakakawalang gana kasi yung processing takes time. And at the same time they still have to investigate your location, and still have to check on your papers. Eh kung bago kang negotiante, hindi ka pa sanay eh,” she said.

One LGU she has worked with has actually made some progress but still has yet to fully comply with the digitalization requirements of the EODB Law.

“That is why it takes time even to process your renewals, it takes days because they have to line up,” she said.

She noted this was particularly troublesome when COVID-19 hit.

“During the pandemic, people were lining up and we were supposed to go on social distancing. Even the seniors had to be there lining up, up to the end of the day.”

Willie Gaerlan is the Chief of the Business Permit and Licensing Office of Las Pinas City, which is still working on launching its eBOSS. He is asking business owners in the city for patience.

“Inuna muna kasi yung ano, yung fully electronic payment assessment sa real property tax (We prioritized the electronic payment assessment on real property tax),” said Gaerlan.

He said they have tapped a developer for the city's eBOSS app.

Expanding into smaller LGUs with no eBOSS capacity

Katrina Blanca has been running her furniture and interior design business Genteel Home out of Pampanga for 10 years now. She employs 31 people, and she is planning to add another 25 workers with expansion into NCR and La Union this year. Blanca said she hopes other LGUs in these areas will catch up with the EODB law.

“It will save a lot of my time, di ba?” Blanca said.

As an interior designer, Blanca has had the opportunity to work with a lot of LGUs for the processing of building permits and the like. Some LGUs do not list all of the requirements, which results in applicants having to come back, she said. But she praises one LGU she has worked with.

“But our favorite place that when we file it, is Valenzuela. Meron silang modern technology of doing that. They are practicing online. You just have to jot down your plans, and then automatic yung checking,” Blanca said.

Internet Connectivity

One key reason why LGUs say they have not complied with the 2018 EODB law is connectivity. Smaller LGUs far removed from business centers or geographically isolated by seas, mountains and the like do not have connectivity.

Perez said that during their inspection of Tawi-Tawi in the Bangsamoro Autonomous Region in Mindanao they found schools there never implemented online classes, because they had no internet connection at all.

To address this, ARTA has met with tower companies and telecoms firms to craft an agreement wherein LGUs will streamline bureaucratic bottlenecks to speed up infrastructure construction in exchange for the immediate provision of connectivity to their areas.

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The Philippine Chamber of Commerce and Industry says improved EODB and connectivity are vital for economic progress.

PCCI, President George Barcelon said they and other major business organizations have been calling for more urgency on both fronts.

“It is not moving as what we had hoped for. I would like to think that with President BBM [Ferdinand ‘Bongbong’ Marcos Jr] at the helm, and even in our priority laws, digitalization is top of the wish list. Having said that, we do acknowledge the fact that the DICT, hopefully, could prod the players to pick up the pace on the development of the broadband. Not only in the major cities, but really all over the country. I think that would really be important for us to have broad economic growth, and to sustain the inclusivity which we have talked about many times.”

Ease of doing business, or the lack thereof, has been a common complaint of foreign investors, not just local businesses. In fact, it was brought up during the Marcos administration’s recent investment roadshow to Europe, where foreign investors already present in the Philippines complained about the hassles of dealing with LGUs, customs, and other government agencies.

The Philippines has been a regular laggard in terms of foreign direct investment.