Tuesday, October 26, 2021

One Less Headache


Finally, the government signed into law the Ease of Doing Business Law, if we’re to use its short name. After years of pushing from the private sector, President Duterte affixed his signature into legislation that should allow for better and faster government services.


The law’s important points include predictable processing times for all government transactions, depending on the nature of the process (three, five or twenty working days depending on complexity); a more stringent monitoring and complaints process, with the eventual establishment of the Anti Red-Tape Authority; and stronger punishment for erring officials and their superiors, with repeat offenders (two strikes, in this case) facing criminal and administrative charges, as well as a perpetual ban from public office. The law now compels all government agencies, national and local, to implement these changes within the next few years.


This goes a long way to ensuring the Philippines ups, and keeps, its competitiveness compared to its regional neighbors. In the most recent Doing Business Survey conducted annually by the World Bank, the country saw a pretty significant drop in rankings—113th out of 190 countries. In several metrics, we have been woefully behind: when it comes to starting a business, we rank 173rd out of 190! From the perspective of starting a business, and provided it is properly implemented, this law should further empower entrepreneurs who are looking to now just make a living for their families, but also be of value to their communities and, ultimately, to global value chains.


From a supply chain perspective, this should enhance our ability to expand and build capacity. As I discussed in my last column, logistics companies—and, in turn, manufacturers and retailers—struggle to keep up with spikes in demand, especially during peak seasons. Say, when a company decides to establish a new facility, be it a distribution center or production plant, it takes up to six months for them to jump through hoops in government, both at the local and national level. Sure, expanding capacity is a long process, from the first steps of planning to finishing off construction. But any guarantee that this process would be shorter would mean one less headache for the supply chain manager: as soon as capacity is put in place, they can deploy faster, make better decisions, and be of more value to stakeholders across the supply chain—and in the boardroom.


This could also mean faster processing of government documents essential to supply chain. One can imagine the Ease of Doing Business Law would impact processing of LTO license applications and renewals—one less headache for one looking to employ new truck drivers, for example. Exporters and importers no longer have to wait days, if not weeks, for documents such as customs clearances, meaning their goods can get out of the ports and into production facilities or retail establishments faster. The law also mandates agencies not just to shorten processing time but also lessen human contact, in theory leading to less opportunities for corruption—again, one less headache.


Supply chain managers put a premium on predictability. On a human level, their jobs are already stressful as it is—the more complex their operations are, the more demanding the job is. It’s safe to say they’d rather focus on their key task—to shrink costs and increase value for all stakeholders, from company owners to suppliers to end customers—than to have to worry about whether they’ll wait longer than expected to renew their customs clearance. The Ease of Doing Business Law should add some degree of predictability, allowing for better planning and, ultimately, a better and more robust supply chain.


Of course, the ball now lies with the actual government agencies. While the window for implementing reforms is open until 2021, government is pushing for everyone to implement things as soon as possible. In the words of Senator Koko Pimentel at the Ease of Doing Business Summit two weeks ago, “the deadline was yesterday”. Fingers crossed these agencies are serious about implementing these reforms—and not just look for a way out so they remain comfortable where they are. If done right, this should go a long way in improving trust with relevant government agencies we deal with on a regular basis.


There is a school of thought that says people’s behavior is affected by the structures around it. I actually read this from a book on urbanism, but it applies equally to rules and regulations as it does to physical infrastructure. Can this law pave the way for a change of culture in inefficient government agencies? Can this law truly make us more competitive, allowing us to catch up, if not go ahead, with our regional neighbors? (We’re, on average, in the lower half of the ASEAN across the many parameters of the Doing Business Survey.) To echo what I said a few columns back, keep watch.


Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in-chief of the organization’s official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.



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