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Doing Business in the Philippines - A brief history
• The Philippines was first included in the global Doing Business series in 2004.
• Quezon City represents the Philippines in the global study.
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• Quezon City represents the Philippines in the global study.
• Doing Business in the Philippines 2011 is the second subnational report of the Doing Business series in the Philippines. The first subnational report was released in 2008.
What does Doing Business measure?
Doing Business indicators:
� Focus on regulations relevant to the life cycle of a small to medium-sized domestic business in the largest business city
� Are built on standardized case scenarios
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� The objective: efficient regulations, accessible to all, and simple to implement
DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets.
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Doing Business indicators – 11 areas of business regulation (9 included in the ranking)
Start-up Expansion Operations Closing� Starting a
business
Minimum capital requirement,
procedures, time and cost
� Registering property
Procedures, time and cost
� Getting credit
Credit information systems
Movable collateral laws
� Protecting investors
� Dealing with construction permits
Procedures, time and cost
� Paying taxes
Payments, time and Total Tax Rate
� Trading across
� Closing a business
Time, cost and recovery rate
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� Protecting investors
Disclosure and liability in related party transactions
� Enforcing contracts
Procedures, time and cost to resolve a commercial dispute
� Trading across borders
Documents, time and cost
� Getting electricity (annex I)
Procedures, time and cost
� Employing workers (annex II)
Property rightsInvestor protectionAccess to credit
Entry Administrative burden Flexibility in hiring
Recovery rateReallocation of assets
Doing Business - Philippine Ranking
TopicDoing Business 2010 Rank
Doing Business 2011 Rank
Change in Rank
Global Rank 146 148 - 2
Starting a Business 162 156 + 6
Dealing with
Construction Permits124 156 - 32
Registering Property 102 102 No change
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Registering Property 102 102 No change
Getting Credit 125 128 - 3
Protecting Investors 131 132 - 1
Paying Taxes 133 124 + 9
Trading Across Borders 68 61 + 7
Enforcing Contracts 118 118 No change
Closing a Business 153 153 No change
Closer to an apples-to-apples comparison
Expands Doing Business beyond the largest business city
Captures local differences in regulations or enforcement
Gives specific locations an opportunity to tell their story and
Why expand Doing Business to the subnational level?
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Gives specific locations an opportunity to tell their story and
provides a tool for locations to compete globally
Provides information on good practices within the same country
that can be easily replicated
Goals of the Doing Business subnational report
� Provide information that can be reviewed, debated and measured.
� To create friendly competition to reform.
� To motivate reformers by showing that with the adoption and efficient implementation of simple reforms, specific locations can
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become more competitive nationally and internationally.
� To support broader policy reform through dialogue and advocacy with national and local government and the private sector.
� To measure progress over time by repeating the benchmarking to capture improve performance spurred by the competition created by the initial benchmarking.
Doing Business in the Philippines 2011 covers 25 cities
Doing Business in the Philippines 2011 updates 2008 data and expands the analysis to 25 cities. The study measures national and local regulations across the country in 3 areas of the life of a business:
1. starting a business 2. dealing with construction permits
Luzon: Batangas City, Caloocan, Las Piñas, Makati, Malabon, Mandaluyong, Manila, Marikina, Muntinlupa, Navotas, Parañaque, Pasay, Pasig, Quezon City, San Juan, Taguig,
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3. registering property
Second in a series of reports undertaken in partnership with the Asian Institute of Management Policy Center
Data collected with the help of more than 500 private sector contributors and public sector officials
Valenzuela
Visayas: Cebu City, Iloilo City, Lapu-Lapu, Mandaue
Mindanao: Cagayan de Oro, Davao City, General Santos, Zamboanga City
65% of cities benchmarked reformed from 2008 to 2010
Key Findings:
• Computerization and multiple service providers make it easier to do business, lower transaction costs and increase transparency across the Philippines.
Doing Business in the Philippines 2011 - Key findings
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Philippines.
• The high number of procedures continues to be a challenge for entrepreneurs.
• Wide variation in local business regulation across the country points to ample room for further business reforms.
• National level business reforms are needed for more results.
• Cities can learn from the existing good practices of their peers and become more competitive nationally and globally.
Too many requirements to start a business
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Davao, General Santos and Valenzuela each leads one area measured by Doing Business 2011
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19 business reforms since 2008 made it easier to do business in the Philippines
City or departmental reforms Implementation of national reforms
Starting a business
Dealing with construction permits
Registering property
Starting a business
Dealing with construction permits
Registering property
Caloocan �������� ��������
Cebu City �������� �������� ��������
Davao City �������� �������� ��������
Las Piñas
Makati
Malabon ��������
Mandaluyong ��������
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Mandaluyong ��������
Mandaue ��������
Manila ��������
Marikina
Muntinlupa
Navotas ��������
Parañaque ��������
Pasay �������� ��������
Quezon City ��������
San Juan ��������
Taguig
Valenzuela �������� ��������
Easier business entry means more new firms: evidence from empirical research
MexicoImpact of the reduction of registration procedures through the introduction of One-Stop Shops and the elimination of federally required procedures
� Increase in the number of new firms of about 6%� Increase in employment by 2.6%� Consumer Price Index decrease by 1% due to competitive pressures of new
Why business regulation reform matters
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� Consumer Price Index decrease by 1% due to competitive pressures of new entrants
ColombiaImpact of the introduction of One-Stop Shops in 6 cities:
� Increase of 5.2% in the number of new firms
IndiaImpact of the elimination of License Raj in 16 states over 64 industries:
� Increase in the number of new firms by 6%
Starting a Business
• Records all procedures that are officially required for an entrepreneur to start up and formally operate a commercial business, including:
• Incorporation and registration with the Securities and Exchange Commission (SEC);
• Obtaining the local business permit (mayor’s permit);
Doing Business 2011 - Starting a Business
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• Obtaining the local business permit (mayor’s permit);• Obtaining clearances from the Bureau of Fire Protection (BFP);• Tax registration with the Bureau of Internal Revenue (BIR); and• Social security registration with the Social Security System
(SSS) and Philippine Health Insurance Corporation (PhilHealth).
• Sub-indicators consist of procedure, time, cost, and minimum paid-in capital.
Too many requirements to start a business
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Starting a business - what to reform
1. Simplify business permit requirements.
• Streamline application by eliminating unnecessary certificates, permits, and clearances.
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• Classify businesses in terms of risk and remove/minimize inspections for low-risk businesses.
Starting a business - what to reform
2. Create a central office able to issue all regist ration requirements.
• Integrate corporate registration with tax registration, social services registration, and local government
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social services registration, and local government business registration through the Philippine Business Registry (PBR).
• Good practice: File and Pay -- One time assessment and one time payment,
• Consolidate procedures for the issuance of the business permits at the local government level.
ProcedureTime (days) Cost (PHP)
Fastest Slowest Average Lowest Highest Average
Obtain the authority to print receipts and invoices from the 1 3 1 no cost no cost no cost
Starting a Business - what to reform
3. Eliminate the registration of books and receipts at the Bureau of Internal Revenue (BIR).
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receipts and invoices from the BIR
1 3 1 no cost no cost no cost
Print receipts and invoices at the print shops 3 14 7 1,200 4,000 2,934
Have books of accounts and Printer’s Certificate of Delivery (PCD) stamped by the BIR
1 1 1 no cost no cost no cost
Starting a Business - Impact
Reform Results: Quezon and Manila
Days Steps Interface Registration Change Savings
Manila 19 to 1 4 to 2 15 to 2 10.6K to 12.8K +20%
4.00 M
USD
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Quezon 11 to 1 6 to 2 28 to 2 9.9K to 13.1K +32%
1.92 M
USD
Dealing with Construction Permits
• Measures the procedures, time, and cost to build a standardized commercial warehouse, hook it up to basic utilities, and formally register it.
These include:• Obtaining the locational clearance from the City Planning and
Doing Business 2011 - Dealing with Construction Permits
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• Obtaining the locational clearance from the City Planning and Development Office (CPDO);
• Obtaining the building permit and ancillary permits from the Office of the Building Official (OBO);
• Obtaining the Fire Safety Evaluation Clearance (FSEC) and Fire Safety Inspection Certificate (FSIC) from the Bureau of Fire Protection (BFP);
• Obtaining the Certificate of Occupancy and Certificate of Final Electrical Inspection from the OBO;
• Obtaining electricity, water, and telephone connections from utilities.
Majority of permit requirements during pre- and post-construction phases
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Dealing with construction permits - what to reform
1. Introduce risk-based approvals.
• Complex and risky structures should have stricter standards for security and control. Simple low-risk buildings should have easier compliance rules.
• Smart regulations help ensure safety while encouraging
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• Smart regulations help ensure safety while encouraging efficiency.
• Revise the rules on the Fire and Life Safety Assessment Report and sanitary inspections to adjust to the risk factors and enforcement constraints of every city.
Dealing with construction permits - what to reform
City Procedure
Mandaue Mayor’s clearance from the City Mayor's Office (CMO)
Cebu Parking compliance from the City Mayor's Office (CMO)
Cagayan de Oro Submission of one set of building plans to CAO
Procedures that can be eliminated if risk-based app rovals are practiced.
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Cebu and General Santos Preliminary inspection from the OBO
Parañaque, Cebu City,
Lapu-Lapu, and Mandaue
Evaluation of architectural, civil, line and grade plans,
sanitary and plumbing plans, and electrical plans from the OBO
Pasig Environmental clearance from the City ENRO
Mandaluyong and Pasay Certificate of non-coverage from DENR
Muntinlupa Fault line survey report from Muntinlupa City Disaster Coordinating Council (MCDCC)
Iloilo City Special permit from the zoning board
San Juan Development permit from the city council
Dealing with construction permits - what to reform
2. Improve the efficiency of inspections.
• Change the current practice of conducting random inspections.
• Offices should conduct joint, simultaneous inspections for
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• Offices should conduct joint, simultaneous inspections for different requirements.
• There must be an adequate number of building officials who are properly trained to enforce National Building Code standards, and whose supervision and reporting lines are clear.
Dealing with Construction Permits - what to reform
2. Improve the efficiency of inspections.
Inspections are currently required for:
Locational clearance
Building permit (preliminary inspection and
inspection during construction)
Sanitary inspection certificate
Certificate of Final Electrical
Inspection
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inspection during construction)
Fire Safety Evaluation Clearance (FSEC)
Fire Safety Inspection Certificate (FSIC)
Certificate of Occupancy
Zoning and land use
compliance/Certificate of conformance
Inspection
Electricity connection
Water connection
Tax declaration of improvement
Fault line survey report (Muntinlupa
only)
Registering Property
• Records the sequence of procedures, time, and costs necessary for a business to purchase property from another business and to transfer the property title to the buyer’s name so that the property can be used as a guarantee in taking out loans or for sale to another firm.
Doing Business 2011 - Registering Property
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These include:
• Preparing the deed of sale and related documents;• Completing tax-related requirements at the BIR, City
Treasurer’s Office (CTO), and City Assessor’s Office (CAO);• Registering with the Register of Deeds.
Variation in time and cost to register property
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Fees Minimum (PHP)
Maximum(PHP)
Average(PHP)
Ave. cost as % of the average total cost
Notarized deed of sale
41,700 125,100 73,395 39%
Registering property - what to reform
1. Convert the stamp, transfer taxes and notary fee s into fixed fees.
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Documentary stamp tax and creditable withholding tax
62,550 62,550 62,550 33%
Transfer tax 13,761 34,402 26,907 14%
RD fees 20,726 24,322 22,930 12%
Procedure and Agency
Minimum (days)
Maximum (days)
Average (days)Ave. time as % of the average total time
Obtain CAR 5 25 15 41%
2. Introduce fast-track procedures.
Registering property - what to reform
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Obtain CAR from BIR
5 25 15 41%
Secure registration from RD
3 60 13 37%
List of documentary requirements Additional requirements by other cities
a. Copy of deed of absolute sale; Articles of incorporation of the buyer and by-laws;
b. Official receipt evidencing payment of transfer tax;
Certificate from the SEC that the articles of incorporation of the buyer have been registered.
c. Certificate Authorizing Registration (CAR) from
3. Standardize requirements at the Register of Deed s and the Land Registration Authority.
Registering property - what to reform
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c. Certificate Authorizing Registration (CAR) from the BIR, including official receipts for payment of DST and CWT;
d. Real property tax clearance from the City Treasurer’s Office;
e. Original copy of owner's duplicate of TCT (in the name of the seller);
f. Original or certified true copy of the latest tax declaration;
g. Notarized secretary's certificate containing resolution of the board of directors of the seller approving the sale;
h. Notarized secretary's certificate containing resolution of the board of directors of the buyer approving the sale;
i. Articles of incorporation of the buyer and by-laws.
CitiesProcessing time (days) of RD in 2008 (prior to computerization)
Processing time (days) of RD in 2010 (start of computerization)
Cebu 10 5
Davao 10 14
Lapu-Lapu 10 30
Las Piñas 14 14
Registering property - what to reform
4. Complete the Land Registration Authority compute rization project and monitor performance under the new syste m.
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Las Piñas 14 14
Makati 10 10
Mandaluyong 5 5
Marikina 10 10
Parañaque 14 14
Pasay 10 10
Pasig 10 10
Quezon 10 10
San Juan 3 3
Taguig 10 10
Thank youThank you
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