The Development Academy of the Philippines’ (DAP) Modernizing Government Regulations (MGR) Program formally launched its 2021 Regulatory Review on 6 October 2021 via Zoom.  The event was attended by 56 members and officers of private organizations/associations and officials from regulatory agencies involved in the prioritized government-to-government/agency-to-agency (G2G/A2A) and government-to-business (G2B) transactions.

This year, the MGR Program is focusing on the following transactions that are supportive of reviving the industries that were heavily affected by the current pandemic: a) G2G/A2A regulations affecting the streamlining of service processes; b) G2B regulations covering the digital economy; and c) G2B regulations covering food logistics.

DAP Study Team and participants during the 2021 MGR Regulatory Review Launch

During the Launch, the study team research fellows presented the sectoral background, initial regulatory issues and research questions of their respective industries through breakout groups. After the presentation, participants shared their comments and experiences on what regulations/processes contribute to the difficulty in compliance and high transaction cost. The activity also brought to fore initial recommendations on how to address said issues. Among the key issues that were validated and gathered during the activity were as follows:

a. G2G/A2A Regulations Affecting the Streamlining of Service Processes Non-submission of Citizen’s Charter compliance report of about 2,000 agencies, despite the existence of streamlining law – ARTA report

  • Regulations on procurement, PBB guidelines, financial and audit regulations, pandemic-related requirements of LGUs, regulations related to Data Privacy Act, and tax payment are perceived to hinder process performance and efficient delivery of services – DAP perception survey initial results
  • Inconsistent enforcement of regulations and unreasonable delays in the release of requested documents.
  • Inadequate personnel to process a transaction, unclear requirements, and difficulty in accessing the concerned agencies.
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b. G2B Regulations Covering Digital Economy

  • Application of traditional policies which do not reflect rapid changes, innovations and technology advancements to digital businesses due to prolonged process of law-making
  • Difficulty to regulate online businesses due to Department of Trade and Industry’s limited manpower and increasing number of unregistered and unscrupulous businesses online
  • Need for coordination and discussion between government agencies to adapt to changes involving government digitization and the shift to online G2B transactions (e.g., recognition and use of electronic signatures)
  • Inadequacies in our current laws on the liability of online buying and selling platforms to protect consumers
  • Possible challenges on implementing regulatory sandbox framework for financial technology innovations

c. G2B Regulations Covering Food Logistics

  • Overregulation of food manufacturing sector and agriculture and LGU restrictions on the delivery of produce during pandemic resulted to wasted produce.
  • Low productivity in provinces that were traditionally centers of productivity or food baskets.
  • Absence of standards/guidelines/regulations on importation non-traditional products (e.g., rabbit) and stringent requirements of Good Animal Husbandry Practices
  • High price of fruits and vegetables due to logistics problem, food safety and other regulatory measures
  • Difficulty in implementing viable recommendations of various researches (e.g., DAP Benchmarking Study on Regulatory Management) to effect regulatory reform in the sector
  • Additional cost and potential operations delay caused by changes in documentary requirements (e.g., Bureau of Animal Industry’s Certificate of Analysis annual submission compared to previous process of every five years)
  • Tedious and unwieldy end-to-end process of online payment, i.e., the need for traditional hard copy of receipts instead of electronic receipt
  • Difficulty in obtaining permits to transport livestock and poultry due to sudden change of area condition that gives inconsistent information and entails additional costs to companies.

Following the launch, the next step will be for the study teams to take a deep dive and prioritize issues gathered from the activity by conducting separate focus group discussions and industry dialogues with the participants from the public and private sectors.

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The Development Academy of the Philippines (DAP), through its Modernizing Government Regulations (MGR) Program, completed the Capability Development Assistance on Regulatory Impact Assessment (RIA) for the Intramuros Administration (IA) which commenced on 15 September with the conduct of a Basic Course on RIA and culminated with the conduct of an Advanced Course on RIA on 7 October 2021.

Basic Course on RIA for the Intramuros Administration conducted on 15-17 & 20-24 September 2021
Advanced Course on RIA for the Intramuros Administration conducted on 28 September – 1&4-7 October 2021

With the primary objective of developing the capability of the IA key officers and technical staff to undertake RIA, the participants were able to perform RIA using various analytical methods and produce their agency’s Regulatory Impact Statement (RIS) for the following identified regulations:

  • Amendment to an existing regulation: Efficiency of the Processing of Building Permit for Intramuros Constructions through the City of Manila
  • Amendment to an existing regulation: Issuance of the IA Development Clearance (PD No. 1616 as amended and its IRR: Rule III, Section 1.3 and Rule VIII, Sections 2 and 5)
  • Proposed regulation: Pedestrianization of General Luna Street
  • Amendment to an existing regulation: Proposed online application of permit for photography and video in Intramuros (Section 6 of PD No. 1616)

As part of the commitment and advocacy of the DAP MGR Program for wider application of good regulatory practices, the DAP Project Team is offering to provide a sponsored RIA Clinic/follow-up assistance to help the IA enhance further the RIS produced during the training. Upon enhancement of output, the IA is encouraged to present their revised RIS to a panel composed of IA senior official(s) and DAP representatives to solicit further feedback.

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The World Bank’s Ease of Doing Business 2018 reported an improvement in the Philippines’ business regulations as it tightens the gap with global regulatory frontier. From its 58.32 score on the distance to frontier metric in Doing Business 2017, it rose to 58.74 as it enriched its electronic system for tax payment and collection, and reduced its processing time to get an electricity connection. Amidst the incremental enhancements, the report also narrated that an entrepreneur in Quezon City would require 16 procedures, 28 days, and cost around 16% of income per capita to incorporate a business, then pay 42.9% of its commercial profits in 20 different taxes and contributions to multiple agencies. This evidently describes how small and medium enterprises still face substantial regulatory burden to start and operate a business, and how cumbersome regulation is associated with lower productivity.

The Organization for Economic Co-operation and Development (OECD) notes that regulation, as one of the three key levers of state power, is of utmost importance in shaping the welfare of economies and societies. While regulations may be perceived as controls and barriers for compliance, it is the government’s necessary intervention for better competition and development of the country. However, much of the current regulations in the Philippines have stemmed from reactionary measures rather than instruments arising from a coherent government strategy, thereby much of its compounded nature increase compliance costs for businesses and lead to unnecessary burdensome complexities.

As the Philippine government aims to be more responsive to the changing needs of the citizenry and as it works to sustain the record high economic growth, there have been several efforts to reduce bureaucratic red tape in both social services and economic activities. The Development Academy of the Philippines (DAP) in partnership with the National Economic and Development Authority (NEDA) developed the Modernizing Government Regulations (MGR) Program aimed to examine the existing regulatory environments, determine how they affect the growth and operations of businesses, and develop proposals that would make those regulations more relevant and coherent.

It also hopes to develop an integrated business regulatory framework with a responsive, citizen-focused, systems and process-based Regulatory Management System that centers on horizontal governance. This follows the three stages of regulatory reform: de-regulation, regulatory quality improvement, and regulatory management; and uses the two tools in quality regulatory management system: regulatory impact assessment and cost compliance analysis.

The MGR Program is designed to support economic growth and make it more inclusive through an improved business climate with reduced regulatory cost and more transparent and relevant regulations. With the implementation of internationally recognized processes, systems, tools and methods for improving the quality of regulations or Good Regulatory Practices (GRP), it strives to form part of the Philippines’ regulatory reform that enhances the social fabric to ensure people-centered, clean and efficient governance laying down the foundation for inclusive growth, a high-trust society, and a globally competitive knowledge economy.

This in turn encourages the shift of business from the informal to the formal economy, supports the private sector to expand its economic activities, and attracts foreign direct investments. In the intention to streamline and decrease regulatory burden for all, smart regulation is in principle no regulation.