Red tape cost housing sector P142B in 2017

Red tape in the housing sector cost some P142 billion in 2017, which could have been larger if only the numbers could account for the precious time lost to unnecessary bureaucracy, according to the Anti-Red Tape Authority (Arta).

The Arta’s figure was based on a 2017 study of state-owned Development Academy of the Philippines (DAP).

As part of a wider regulatory review of various industries, the DAP study showed that a new business had to pay an average of P712,261 to secure all the necessary permits for business registration and actual housing development.

Upon reaching out to DAP for further information, the academy clarified that the figure only covered the cost to the private sector. It does not yet include costs paid by the government, such as administrative costs.

The Arta then multiplied this average cost to the widely accepted assumption that 200,000 housing units would be produced every year from 2012 to 2030. Based on 2017 costs, this amounted to P142 billion.

“We’re not taking into consideration the time that was wasted, [which] could have been productively used in other activities,” said Arta Director General Jeremiah Belgica at a briefing.“In my view, we really can’t assign a value [to time]. The presentation [of the data] is just to impress to us that we’re really wasting a lot of things when we’re not acting on red tape,” he added.

The DAP’s study, titled “Philippine Housing Industry Regulatory Review,” noted that the cost of securing permits varies from a case to case basis, with the cost becoming more expensive for cities and urbanized areas compared to rural areas.

DAP’s recommendations included setting up a one-stop shop for processing applications for housing projects. The application and payment for this should be done online, the state-owned firm said.

The briefing followed an event on Wednesday where the Arta formally took over the responsibility of preparing for the World Bank’s ease of doing business report.

The responsibility used to rest on the shoulders of the Department of Trade and Industry (DTI). Under the DTI, the country, represented by Quezon City, jumped 29 notches to rank 95th in the 2020 edition of the report, covering data from 2018 to 2019.

For the 2021 edition, the Arta targets to get the country to the 47th position, an ambitious goal that would require the government to streamline its operations.