An expert in local governance said local government units should cut red tape to be more competitive in attracting businesses and to provide more employment opportunities to its people.

In a forum held during the opening of the grant competition Panibagong Paraan 2008  Federico Macaranas, executive director of the Asian Institute of Management Policy Center said that red tape has driven away investments in the local government units and has inhibited business growth and employment creation.

Red tape is a term used to describe unnecessary delays in transactions, mostly with the government, as a result of redundant procedures, and unnecessary paperwork.

Macaranas said that too much paperwork and redundant requirements have driven away investors and have eroded investor confidence because it opens more opportunities for corruption and bribery.

“Large number of steps and face-to-face interaction creates opportunities for corruption,” said Macaranas. “If there is a lot of face-to-face interaction, that’s when the drawers start opening.”

Macaranas added that some LGUs require investors to secure a barangay clearance even if the business has already been granted a city and national clearance. These procedures, he said, cause delays and additional cost for the investors.

Wanted: reforms

Red tape, Macaranas added, has also increased the cost of doing business and has pulled down the competitiveness of the country. Citing the World Bank-International Finance Corporation Doing Business Study 2008, Macaranas said its Asian neighbors have left behind the Philippines in terms of competitiveness.

The WB-IFC survey showed the Philippines ranked 133rd out of 178 countries in terms of the “ease of doing business” because of its failure to institute reforms in the bureaucracy.

However, he said the Philippines could have landed in the 118th spot if it was able to introduce reforms in three areas—starting a business, dealing with licenses and registration of properties.

“Minimizing the cost of doing business is a tiny part, but it is a good beginning,” he said.

Ormoc’s success

Maria Teresita Santiago, director of the Department of Trade and Industry’s One Stop Action Center said some LGUs have already reaped the benefits of reducing red tape. She cited the case of Ormoc City after it reduced the number of steps in applying for business permits.

Santiago said that Ormoc City’s income from business permits increased from 23 million in 2005 to 43 million in 2006 after it simplified the steps in securing a permit.

Other LGUs, Santiago added, has also implemented business one stop shop (BOSS) and computerization to avoid delays and minimize the cost of doing business

Less red tape, more businesses

Macaranas said the Philippines could learn from the success stories of other countries that experienced a growth in the number of businesses upon their introduction of measures that address red tape.

Saudi Arabia and Egypt, Macaranas said, had an 81 percent and 72 percent increase in the number of businesses after they introduced reforms.

He said other countries minimize red tape by cutting minimum capital requirement, introducing a one-stop shop for businesses, streamlining LGU procedures, and allowing online transactions with the government and introducing a single business identification number for incorporation and tax registration. (abs-cbnNEWS.com/Newsbreak)

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