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Registering a business: Soon to be a walk in the park?

MANILA, Philippines—How easy is it for an entrepreneur to register his or her business in these islands?

The answer to this will determine in part how many of the million new entrepreneurs we want to emerge will actually come forward and deliver the income and jobs our country direly needs for economic self-reliance.

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At first look, registration is a trivial step—actually only a paper chase—among the many stages of the business lifecycle. But it is a crucial first step that, going awry, can nip a promising business in the bud.

If the government cannot pave the way for a hassle-free registration of a newbie enterprise, how can it facilitate the delivery of financial, marketing, technical and other services an enterprise needs in its growth and expansion stage?

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Securing licenses

Apparently, the more industrialized a country is the easier it is for its entrepreneurs to secure business licenses.

Businessmen in Australia register their businesses in two steps, taking two days max.

In Singapore, it takes an average of 30 minutes to complete the registration process online.

In the Philippines, alas, a registrant—until lately—used to go through 18 steps, which could stretch through a processing and waiting period of 58 days!

Small wonder many businessmen prefer to operate “underground” and out of government’s line of vision. True, the obvious “benefit” for some may be “exemption” from taxes. Unfortunately, this also implies being excluded from many government incentives and support services, including low-interest loans.

In a forum on “MSME burning issues and concerns: pole-vaulting with the Philippine MSME Development Plan” held on August 4 at UP Institute for Small-Scale Industries, reforms in the business registration process were among various improvements in business environment reported by Usec Merly Cruz of the Department of Trade and Industry.

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Business environment

An enabling business environment—in terms of supportive policies, laws, regulations and systems—is basic to a vibrant entrepreneurship culture.  It does not only encourage more new businesses to emerge but helps ensure sustainability and growth of existing ones. This is why fostering a business-friendly environment enjoys top priority in the national “Micro, Small and Medium Enterprise Development Plan, 2011-2016.”

In recent years, the DTI in cooperation with LGUs, was able to streamline the issuance of mayor’s permit in many cities and municipalities and to install internal monitoring systems to allow LGUs to implement streamlined business processes.

Muntinlupa City is exemplary of an LGU that has successfully eliminated cumbersome registration procedures and requirements. The two-time “Most Business-Friendly City” awardee of the Philippine Chamber of Commerce and Industry reduced its 14-step business renewal process to 12 steps in 2003 and down further to six steps in 2006.

It did this by deleting from the process those agencies that merely noted down the applicant business’ basic data. These include the Zoning Office, City Health Office, Fire Department, Lake Management Office, and the Public Employment Service Office.

The City’s Business Licensing Office simply forwards to these offices with the data required.

Ormoc City pulled a similar feat. In 2005, it conducted a time and motion study which led to the streamlining of its business licensing and registration system in 2006. This resulted in the reduction of the cycle from 14 to 5 steps for business renewal and 17 to 10 for first-time business registration. Short cuts were made possible by merging the Fire Department’s assessment of fees with that of the Business Permits and Licensing Office. Clearances for land tax and water sections were no longer a requirement.

Pre-registration and early certification were implemented in Ormoc as well. Businesses were allowed to secure clearances from local government and national government units prior to the business renewal period. All this resulted in the cutting down of the process from 17 to 2 days.

The effects

These measures did not go unrewarded for the two cities.

In Muntinlupa City, there was a steady increase of businesses registered from the time the simplified rules were enforced. A corresponding rise in revenues from business registration and business taxes was another reward.

The salutary outcome for Ormoc City: business renewals increased from 2,475 in 2005 to 2,779 in 2006. There was also an 86-percent increase in income from business permits in roughly the same periods.

In Quezon City and Makati City, approval of an application for business permit is automatic. Right then and there, an applicant gets his temporary license. All he has to do is to wait in his office for representatives from various government units to come around and inspect his workplace.

Another boon to businesses seeking renewal of their licenses is the business one-stop shop where all signatories representing different departments and offices involved in registration gather together in one location. Usually mounted during the annual business renewal period from January 2 to 20, the event enables registrants to be done in 15 minutes to an hour.

In Cabuyao, General Santos, Ormoc and Iligan, the desks of signatories are arranged sequentially, following the movement of the papers.  Veritably a walk in the park for businessmen!

‘Recipe book’

These and other improvements of business registration at local level have been documented in a handbook published by DTI in 2006. “Streamlining Business Registration in LGUs: Six Good practices” is a “recipe book” to motivate local governments to streamline their respective business permit and licensing systems. A newer version of the publication was released in 2008 entitled “Simplifying Business Permit and Licensing Process of Local Governments,” which provides step-by-step procedures for improving registration and licensing procedures.

The model streamlined process being prescribed consists of five steps and can be completed within the day.

Needless to say, if other LGUs adopted these prescriptions, they would be on their way to being another business-friendly city or municipality.  And they would have begun to spread the sunshine all around. A thriving business community means more jobs for their constituency, more income to pump into the local market economy, and more tax revenues for the local and national coffers.

Improvements in the business registration process is only one among a number of opportunities expected to stimulate growth of the micro, small and medium enterprise sector, as discussed during the UP ISSI forum.

Various speakers presented inroads accomplished and planned from other major areas for development laid out in the MSME Development Plan, namely: access to financing, access to markets, and productivity and efficiency.

Specific small enterprise promotion programs discussed during the forum were: Philippine Center for Entrepreneurship’s Go Negosyo program, the DTI’s One-Town-One-Product program, Small Business Corporation’s SME Unified Lending Opportunities for National Growth (Sulong) program, DTI’s Rural Micro-Enterprise Promotion Program, DoST’s Small Enterprise Technology Upgrading and Manufacturing Productivity Extension Programs, the UP ISSI and Serdef’s Human Capability Building Programs, the National Wages & Productivity Commission’s Productivity through Workplace Values program. The Legislative agenda for MSMEs was also discussed.

For more small business features, case stories, business primers, and other articles, check out the Serdef website at www.serdef.org.

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TAGS: Business, Entrepreneurship, local governments, Philippines, registration
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