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Business Registration Process Quality and Management Survey

National Competitiveness Council in partnership with Ateneo School of Government

TABLE OF CONTENTS

Title Page
Table of Contents 1
List of Tables and Charts 2
Executive Summary 3

I. Introduction 4

a. Objectives 4-5
b. Scope and Limitations of the Study 6-6

II. Review of Relevant Literature and Study 6-8

III. Survey Methodology 8-12


a. Study Areas
b. Study Population
c. Sampling
d. Data Collection
e. Factors and Indicators
f. Data Analysis

IV. Survey Results and Discussion 12-44


a. Business Permit Renewal 12-33
b. New Business Permit 33-44

V. Conclusions 44-46

VI. Recommendations 47-54

Annexes

ANNEX A: Cross tabulation of the Availability of Information regarding Requirements and Process
Flows to the Length of Days in Acquiring Business Permits
ANNEX B: Cross tabulation of the Size of Business Based on Assets to the Cost of Application
Fees
ANNEX C: Business Requirement Most Costly
ANNEX D: Cross tabulation of the Length od Days in Acquiring Business Permit to the Level of
Satisfaction with the Business Registration Process
ANNEX E: Cross tabulation of the Amount Spent on Application Fees to the Level of Satisfaction
with the Cost of Application Fees and Taxes
ANNEX F: Cross tabulation of the Size of Business based on Assets to the Over-all Performance
of the Business Permit and Licensing System
Annex G – R: Average Registration Processing Time of Needed Requirements and Clearances in
Cities of Metro Manila

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

List of Charts and Graphs

BUSINESS PERMIT RENEWAL


Figure 1: Position of respondents in their respective companies
Figure 2: Type of Industry
Figure 3: Length of operation in Metro Manila
Figure 4: Type of Business
Figure 5: Form of business ownership
Figure 6: Membership in local/foreign chamber
Figure 7: Business size based on assets
Figure 8: Length of time needed to acquire renewal permits
Figure 9: Availability of information regarding requirements and process flow
Figure 10: Clarity of information regarding requirements and process flow
Figure 11: Requirements that are difficult to obtain for renewal businesses
Figure 12: Problems encountered during registration (Percentage)
Figure 13: Cost of application fees
Figure 14: Percentage of respondents who perceive the cost of fees as reasonable
Figure 15: Consultation with business sector regarding registration reforms
Figure 16: Improvements in the registration system for renewal permit registrants

NEW BUSINESS PERMITS


Figure 17: Position of respondents in their respective companies
Figure 18: Type of Industry
Figure 19: Form of business ownership
Figure 20: Requirements that are difficult to obtain for renewal businesses
Figure 21: Problems encountered during registration (Percentage)
Figure 22: Cost of application fees
Figure 23: Percentage of respondents who perceive the cost of fees as reasonable

Figure 24: Over-all Framework for the Performance Measurement System

List of Tables

Table 1 Sample Size Per City/Municipality


Table 2 Number of Establishments and Sample Size for Applicants of Renewal Permits and New Permits
Table 3 Length of time needed to acquire business permits in the city with Row and Column Total %
Table 4 Length of Time per Requirement based on Frequency of Responses
Table 5 Comparative Registration Processing Time of needed Requirements and Clearances
Table 6 Respondents’ reactions to attitudinal statements regarding business climate and characteristics of
LG staff
Table 7 Satisfaction Rate of Respondents on Business Registration Process and Cost of Fees and Taxes
Table 8 Over-all Performance of the Business Permit and Licensing Systems in the LGU
Table 9 Length of time needed to acquire new permits
Table 10 Length of Time per Requirement based on Frequency of Responses (New Businesses)
Table 11 Respondent’s ratings on services provided by LGUs during registration (Percentage)
Table 12 Satisfaction Rate of Respondents on Business Registration Process and Cost of Fees and Taxes
Table 13 Over-all Performance of the Business Permits and Licensing Systems in the LGU
Table 14 Citizens’ Indicators
Table 15 Employees’ Indicators
Table 16 Financial Indicators
Table 17 Examples of Computational Rules

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Executive Summary

Philippines ranked 144 globally, in terms of ease in doing business in 2010. This gave a
quite negative impression in the country because of the slow progress of the business
transactions and related procedures done with the LGUs and national agencies in terms
of length of time, steps, signatories, costs and other indicators related therein. There
seems to be a broad unanimity that the process of applying for a business renewal
registration is a long, difficult, and tedious process. Moreover, starting a business in a
Philippine city takes on average 18 procedures and 35 days, and costs 27% of income
per capita. This is the same time as in China— which ranks 100 of 178 economies on
the time to start a business—and a similar cost to that in Fiji, ranked 97 in the cost to
start a business. The number of procedures compares to Brazil and is only 2 procedures
fewer than in Equatorial Guinea, the country with most procedures to start a business.
Yet, there are wide differences in the procedures, time and money an entrepreneur has
to spend to complete the process across Philippine cities. The main reason: different
procedures and practices at the local government level, different performance of local
branches of national agencies, as well as variations in local taxes and fees.

Many studies were conducted focusing on the delightful break in terms of the cut in
processing time, reducing the number of steps and lowering the bureaucratic costs.
However, minimal attention has been given in assessing the level of satisfaction of
businessmen in terms of the business registration process and quality of services
provided by LGUs. This study that was derived from a cross-sectional survey of
purposively selected businessmen from seventeen cities of Metro Manila focused on
getting the level of satisfaction and experience of respondents in the business
registration process and management, which have been analyzed and interpreted in
order to draw the conclusions of the study.

The figures and tables presented in this report will validate the fact that, indeed, pursuing
the streamlining of the BPLOs can make an LGU more business and investment friendly,
thereby improving its chances of becoming more competitive as a location of choice for
entrepreneurial initiatives. However, there are some further improvements that need to
be realized, in this light, recommendations were indicated at the end of the study.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

I. Introduction

Business permit registration is the first step that every businessman has to take in order
to establish and operate a business in a particular area. It is therefore the first interaction
between the businessmen and the LGUs and as such, is a crucial factor in building a
strong relationship between the private and public sectors.

In most LGUs in the country, business owners are burdened and dissatisfied by the long,
confusing and inefficient processes of renewing the Mayors business permit. This
situation has become an additional disincentive to new entrepreneurs and investors to
locate their businesses in the Philippines. The bad performers among the LGUs have a
competitive disadvantage against those with streamlined BPLOs. Cumbersome BPLOs
also encourages the proliferation of the so-called underground enterprises in these
areas. As a result, these LGUs are in turn losing out in their bid to generate higher
revenues from this particular local government income source. Clearly, a bigger revenue
collection can be translated by LGUs to improved delivery of basic services for their
constituencies.

In order to provide better services to the business sector, LGUs have strived in recent
years to improve their business registration systems. These improvements include
establishing one-stop-shops, decreasing the number of steps in the application and
others which aims to make registering businesses easier.

The National Competitiveness Council commissioned the Ateneo School of Government


to conduct a research study that would assess the perception of businessmen regarding
business permit registration processes in Metro Manila. The research study, Business
Registration Process Quality and Management Survey, aims to describe the experiences
of businessmen and evaluate their satisfaction with the current registration systems
implemented in the LGUs.

Through the survey, the Ateneo School of Government aims to describe the
performance of different LGUs in terms of business registration processes from the
viewpoint of their major stakeholder; the business sector. It also aims to validate if the
improvements in the registration systems being undertaken by different LGUs are being
felt by the businessmen. Based on the results of the survey, the School also aims to
recommend specific improvements in the business permits and licensing system of
LGUs.

A. Objectives

1) Know the business community’s perception regarding the business


registration processes in different LGUs within Metro Manila;
2) Identify the problems and challenges faced by investors and businesses in
dealing with
different LGUs;

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

3) Describe the performance of different LGUs, in terms of their business


registration systems, and compare these to other cities and municipalities
within Metro Manila,
4) Assess how satisfied businessmen are with the performance of LGUs that
have streamlined their business permits and licensing systems;
5) Recommend specific improvements in the business permits and licensing
systems of LGUs.

B. Scope and Limitations of the Study

The study was focused on the objective of the study, which is to determine the business
community’s perception regarding the business registration processes in different LGUs
within Metro Manila.

The scope of the study revolved first on identifying profiles of the respondents who gave
their views and experiences about the phenomenon. The study employed highly
quantitative design which is solely based on a scientific positivist approach where hard
data are construed to verify an existence.

The study was conducted only in Metro Manila and as such only reflects the perception
of the businessmen that have establishments in the nation’s capital. Businessmen
registering in the provinces and in other regions therefore may have different
experiences. It is limited to respondents in Metropolitan Manila thus; there are no
assumptions about the totality of the perception on business registration process quality
and management in the whole country.

Since the research is a perception study, some of the data gathered may be subjective
and might differ from person to person. Data for the length of time it takes to acquire a
business permit for example is based on estimates of the respondents and may not be
that accurate. These limits the findings of the study and leave gray areas that need to be
explored by future studies.

The study methodology has limitations. Other areas important to business such as an
economy’s proximity to large markets, the quality of its infrastructure services (other than
those related to trading across borders), the security of property from theft and looting,
the transparency of government procurement, macroeconomic conditions or the
underlying strength of institutions, are not studied directly. To make the data comparable
across economies, the indicators refer to a specific type of business, as ngenerally
classified by the DTI, operating in the seventeen cities of Metropolitan Manila. Because
standard assumptions are used in the data collection, comparisons and benchmarks are
valid across economies. The data not only highlight the extent of obstacles and
dilemmas encountered by the new and renewal applicants; they also help identify the
source of those obstacles. Furthermore, data also provides some picture on the
improvements in some cities like Manila, Mandaluyong, Marikina and Quezon City. The
study provides a description on the performance of the LGUs in each city. The

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

processes and transactions of respondents in the national agencies in getting other


requirements for business permits were also described in the study but were given
minimal attention.

C. Definition of Terms

Business registration process

 In this study, business registration process refers to the application process


for new or renewal business permits in the different LGUs.

Local business permit

 A permit issued by the LGU through the Mayor, who has jurisdiction over the
intended place of the business. It authorizes the business to operate in the
locality.

New business permit


 A type of business permit issued by the LGU for businesses that are just
starting and would like to operate in the particular LGUs.

Renewal business permit


 The renewal business permit is issued by the LGU to businesses that are
already established but would like to continue operating in a particular area.
Business permits are renewed annually.

II. Review of Relevant Literature

Various studies have already been done to assess business permits and licensing
systems in the country. An example of this is the World Bank’s Doing Business project, a
report on the effectiveness of business regulations in 183 countries. Working on the
fundamental premise that economic activity requires good rules, Doing Business
measured business regulations and implementation based on 10 indicator sets. These
indicator sets are starting a business, dealing with construction permits, employing
workers, registering property, getting credit, protecting investors, paying taxes, trading
across borders, enforcing contracts and closing a business.

In the Doing Business 2010 report, the Philippines ranked 144 out of 183 countries
based on the 10 indicators studied. This ranking gives us an idea of how we stand in
terms of having a business-friendly environment for investors.

The findings of the Doing Business report regarding one of its indicators, ‘Starting a
Business’, would be helpful in providing a background for the study. The report

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

researched on the business registration process in the country and found out that in the
City of Manila, businesses have to go through 15 procedures and wait for 52 days
before acquiring a business permit. This result is relatively higher than the average
number of procedures and days needed to start a business in the East and Asia Pacific
region. The cost of starting a business, computed as a percentage of the economy’s
income per capita, is also relatively higher compared to the cost of starting a business in
the region.

While Doing Business is important in gauging the country’s competitiveness as


compared to other countries, there are also studies that focused more on the challenges
of implementing business registration processes within the Philippine context.

The handbook Good Practices: Streamlining Business Registration in Local Government


Units, published by the Bureau of Small and Medium Enterprise Development (BSMED),
German Technical Cooperation – Small and Medium Enterprise Development for
Sustainable Employment Program (GTZ –SMEDSEP) and The Asia Foundation (TAF) in
cooperation with DTI; is one such example. The handbook gave an overview of the
problems faced by applicants during business registration. These problems were
identified as difficulties in procedures, requirements, customer orientation and proximity
of offices. More than listing the problems however, the handbook also provided solutions
to these problems by sharing good practices done by different LGUs to improve their
business registration processes.

But does improving one’s business registration process really encourage more
businessmen to register in LGUs? A reference document entitled, Streamlining the
Business Permit and Licensing System, published by the Private Sector Promotion
Program of SMEDSEP in July 2008, seems to prove this. Results of a study in Iloilo City
showed that 53% more businessmen renewed their permits after the LGUs streamlined
their BPLS.

The studies mentioned above tackled regulations, procedures and challenges of the
business registration processes. Combined, they give us an idea of why there is a need
to streamline BPLS in LGUs. Based on these observations therefore, the next step is to
develop and implement projects that would improve the business registration system in
different areas across the country.

Answering this need for improving BPLS, are several international organizations who
worked with local institutions and LGUs to streamline business registration processes.
One such initiative is the cooperation between the International Finance Corporation and
the Ateneo School of Government. The Regulatory Simplification Project was conducted
in 2008 at the local government units of Manila, Mandaluyong, Marikina and Quezon
City. The project aimed to streamline business registration processes by training the
municipal staff and developing a new process design for the BPLS of the four LGUs.

With various regulatory assessments, process recommendations and actual streamlining


already undertaken to improve business registration processes; the final step is to
validate if the projects initiated by the different institutions are indeed successful from the
viewpoint of the businessmen. In this light, this research could be seen as an effort to

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

evaluate if the improvements that were implemented by LGUs do indeed satisfy the
major stakeholder they wish to serve: the business community.

III. Survey Methodology

A. Study Areas

For the business registration process quality and management survey, the researchers
included seventeen cities in the National Capital Region. These are as follows:

Caloocan Navotas
Las Piñas Parañaque
Makati Pasay
Malabon Pasig
Mandaluyong Pateros
Manila Quezon City
Marikina San Juan
Muntinlupa Taguig
Valenzuela

The study was conducted only in Metro Manila in the hope to recommend any
improvements in the business registration process quality and management along the
Nation’s Capital Region. In addition, this study will only give generalizations to the
experience and satisfaction of businessmen in Metro Manila. Businessmen registering in
the provinces and in other regions therefore may have different experiences. However,
this pioneering attempt could be used as a reference for the future similar researches in
other regions.

B. Study Population

The study population for the survey was new and renewal business establishments in
Metro Manila. Respondents were asked about their experiences on the business
registration process, cost of fees and application and other issues imperative on their
transactions with Local Government Units.

C. Sampling

The sample design adapted was a two – stage stratified cluster design. At the first stage,
the sample per area was chosen, and the 17 cities were used as primary sampling units.
At the second stage, respondents within those areas were selected, depending on the
type of business permits they applied for. The business establishments were used as the
secondary sampling units.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

The identification of the sample size for the study was determined based on the
population number of business establishments determined in the 2009 figures.

1. Sample Size

The number of establishments was based on data provided by each of the 17 local
government units in Metro Manila for the year 2009. Based on the data gathered, there
is a total of 271,999 business establishments in Metro Manila for 2009. The researchers
used the Sloven’s formula to determine the ideal sample size of the respondents out of a
population for this study.

N= N/ [1+(N)(e)(e)]

Where n is the sample size, N is the population and e is the margin of error involved.
The researcher decided to set the 0.10 margin of error or 90% level of confidence.
Based on the formula, the total sample size for the survey is 399 respondents. These
respondents are distributed across the seventeen cities and are proportional to the total
number of business establishments in each of the cities. However, the sample size was
increased in some cities where there are only a few respondents in order to describe the
experiences of businessmen in those areas more effective

Table 1 Sample Size Per City/Municipality


Total Number of
Sample Size per
Cities Establishments for
City
2009
Caloocan 20,246 29
Las Piñas 8,305 12
Makati 31,392 46
Malabon 2,188 3
Mandaluyong 13,599 20
Manila 44,362 65
Marikina 16,967 25
Muntinlupa 13,176 19
Navotas 2,804 5
Parañaque 12,143 18
Pasay 10,918 16
Pasig 20,245 30
Pateros 1,880 3
Quezon City 42,849 63
San Juan 6,391 9
Taguig 15,705 23
Valenzuela 8,829 13
TOTAL 271,999 399

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Based on data gathered from the LGUs, the number of establishments registered per
city was also broken down to the number of registered renewal and new permit
applicants. Sample sizes for these categories were proportional to the percentage of
renewal and new permit applicants to the total population. The additional respondents
for the survey were included under new permit applicants.

Table 2 Number of Establishments and Sample Size for Applicants of Renewal


Permits and New Permits

Number of Sample Size Total


Number of
Renewal for New Additional Number of
Sample Size for New Permit
Permit Permits Respondents Respondents
Cities Renewal Registrants
Registrants (Based on for New for New
Applicants per City
per City Sloven’s Permit Permits
(2009)
(2009) Formula)
Caloocan 18,606 27 1,640 2 3 5
Las Piñas 6,229 9 2,076 3 2 5
Makati 27,245 40 4,147 6 0 6
Malabon 1,252 2 936 1 4 5
Mandaluyong 11,132 16 2,467 4 0 4
Manila 35,310 52 9,052 13 0 13
Marikina 13,908 21 3,059 4 0 4
Muntinlupa 11,410 17 1,766 2 3 5
Navotas 2,723 4 81 1 4 5
Parañaque 10,023 15 2,120 3 2 5
Pasay 8,390 12 2,528 4 0 4
Pasig 16,765 25 3,480 5 0 5
Pateros 1,000 2 880 1 4 5
Quezon City 31,654 47 11,195 16 0 16
San Juan 5,859 8 532 1 4 5
Taguig 8,828 13 6,877 10 0 10
Valenzuela 8,413 12 416 1 2 3
TOTAL 218,747 322 53,252 77 28 105
The total sample size of the survey therefore is 427 respondents with 322 respondents
for renewal business permit applications and a total of 105 respondents for new
business permit applications.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

D. Data Collection

The data collection for the survey started on the third week of February 2010 and ended
on May 2010. In selecting respondents for renewal permit applicants, field researchers
visited the districts in each of the cities and surveyed the business establishments within
the area. The researchers, with the help of NCC, also distributed survey forms via email
to members of different local and foreign chambers.

For new permit applicants, the researchers selected respondents from the 2010 list of
establishments provided by the local government units.

Data collection is completed, with 100% response rate. The researchers have surveyed
a total of 427 respondents with 322 respondents came from renewal permit applicants
and 105 respondents from new permit applicants.

E. Factors and Indicators

The perception of businessmen regarding the performance of LGUs was described in


terms of business-related procedures, cost of application/renewal fees and other issues.
Listed below are the indicators for the study.

Factors Indicators
Business-Related Length of time needed to acquire permits
Procedures Clarity of information regarding process
Ease of business-related procedures
Quality of service provided by LGUs
Overall cost of applying for business permits
Cost of Application/Renewal
Cost of requirement fees
Fees
Additional costs
Consultation with private sector regarding reforms
Other Issues Satisfaction of businessmen in business-related procedures
and cost of fees
Overall performance of the LGU’s business registration
system

The length of time needed to acquire permits was based on estimates of the respondents.
For renewal permit, this refers to the amount of time that was spent from the time they got an
application form in their LGUs to the time they acquired their business permits.

Clarity of information was based on the availability of information regarding requirements and
process flow and if respondents clearly understood the instructions. Ease of business-related
procedures on the other hand, refers to the experiences of the respondents during

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

registration and aims to find out if they encountered difficulties along the way. The quality of
service refers to the assistance and services provided by the LGU staff during the
registration process.

Cost of application and renewal fees include the cost of different requirements, overall cost
of application fees and additional costs in processing.

Under other issues, the survey aimed to find out if the business sector was properly
consulted regarding reforms in business permits and licensing systems. Renewal applicants
were also asked if they felt improvements in the current system as compared to the previous
years.

The satisfaction of businessmen regarding the business registration process, cost of fees
and taxes and the overall performance of the LGU were also assessed.

IV. Survey Results and Discussion

This part of the report presents the data derived from the cross-sectional survey of
businessmen from sixteen cities and one municipality In Metro Manila, aimed to assess
the experiences of respondents in the business registration process and management,
which have been analyzed and interpreted in order to draw the conclusions of the study.

The discussion in this section will be divided into two main parts:

1. Findings for Business Permit Renewal


2. Findings for New Business Permit.

Charts and tables were provided in the discussion of findings order to give a clearly
describe results and analyze the data derived from the survey. Some tables could also
be seen in the annex for additional reference.

A. FINDINGS FOR BUSINESS PERMIT RENEWAL

1. Demographic characteristics of the respondents and business profile

The demographic characteristics of the respondents and their business profile was
assessed in this study in order to get basic information such as the position of
respondents in the businesses, length of operation in Metro Manila, Types of Industry
and other information relevant in capturing clear picture about the socio-demographic
characteristics of the respondents and of their businesses.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 1: Position in the Company


Owner 130
Co-owner 38
Proprietor 3
Operator 3
Employee 40
Supervisor 7
Manager 23
Salesclerk 7
Accountant 27
Secretary 25
Executive Director 1
Not Stated 18

0 20 40 60 80 100 120 140

Majority or 40.4% of the surveyed respondents who registered for business permit
renewals are owners of their businesses or companies. Twelve percent (12%) of
respondents surveyed are also co-owners of business establishments while 12.4% of
respondents on the other hand, are employees. The high percentage of owners in the
survey may be an indication that owners of businesses are directly involved in the
registration of their permits and constantly interacts with the LGUs in renewing permits.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 2: Type of Industry


Manufacturing 8
Electricity, Gas and Water 35
Construction 7
Wholesale and Retail Trade 88
Hotels and Restaurants 68
Distribution and Logistics Services 1
Service Provider 2
Call Center and Service (IT/ BPO) 2
Health and Social Work 7
Education 13
Real Estate and Rental Business 17
Finance and Insurance 11
Transport, Storage and Communications 18
Salon 13
Repair Shop 4
Bakery 11
Internet Café 10
Laundry Shop 6
Not stated 1

0 20 40 60 80 100

Majority of the respondents surveyed are from the wholesale and retail trade industry
(27.3%), hotels and restaurants industry (21.1%) and electricity, gas and water industry
(10.9%) (See Annex 2: Figure 2). This is reflective of the results of the 2008 Micro, Small
and Medium Enterprises (MSME) statistics from the National Statistics Office which
shows that in Metro Manila, majority of the business establishments belong to the
wholesale and retail trade industry (47.7%) and hotels and restaurants industry (11.9%).

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 3: Length of operation in Metro Manila


1-10 178
11-20 69
21-30 32
31-40 16
41-50 8
51-60 10
61-70 4
71-80 4
81-90
91-100 years
more than 100 years 1

0 50 100 150 200

In terms of the number of years operating the business, majority or 55% of the
businesses studied in the survey have been operating in Metro Manila for 1 to 10 years
while 22% had been running for 11-20 years.

The types of businesses that are predominant in Metropolitan Manila were also explored
in this study. Ninety one percent (91%) of the surveyed business establishments are
locally-owned and 71% are categorized under single proprietorship. Those types of
businesses under foreign ownership and cooperative formed a negligible percentage,
2% and 4% respectively.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 5: Form of Business Ownership

Corporation
Partnership 6%
19% Cooperative
4%

Single
Proprietorship
71%

On the other hand, the prevalent form of business ownership of the respondents was
also assessed in this survey. Majority of respondents (71%) are single proprietors while
19% are partnerships, a small percentage (6%) of respondents are corporations and
cooperatives (4%).

Furthermore, among the businesses surveyed, only 4% are members of local and
foreign chambers. They were intentionally included in the study to find out the
perceptions and experiences of medium and large companies in registering businesses
because their inputs are substantial in evaluating the satisfaction rate of big companies
to encourage more investors to place businesses in Nation’s capital region.

Majority (35.71%) of the companies who are members of local or foreign chambers
could be found in Makati City. The businesses were members of the American Chamber,
Supply Chain Management Association of the Philippines (SCMAP), People
Management Association of the Philippines (PMAP), Philippine Healthcare Association
of the Philippines (PHAP), Philippine Chamber of Commerce and Industry (PCCI) and
Makati Business Club (MBC).

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 7: Size of Business


(Based on Assets)
18%
Micro (Total assets less
9% than or equal to P
3,000,000)
2%
Small (Total assets of P
3,000,001 to
P15,000,000)
Medium (Total assets
of P 15,000,001 to P
100,000,000)
Large (Total assets
above P100,000,000)
71%

The findings of the distribution of businesses in terms of business size based on assets
can be considered reflective of the results of the 2008 MSME statistics. The 2008 MSME
Statistics show that 86% of business establishments in Metro Manila were micro
businesses. Reflective with it, majority of respondents (71%) can be classified under
micro businesses with total assets less than or equal to P3,000,000. Among the
businesses surveyed, 18% could be categorized as small businesses, 9% are medium
businesses and 2% large businesses

2. Business Related Procedures

The Philippines ranked 144 globally, in terms of ease in doing business in 2010. This
gave quite a negative impression in the country because of the slow progress of the
business transactions and related procedures done with the LGUs and national agencies
in terms of length of time, steps, signatories, costs and other indicators related therein.
Nonetheless, majority comply with it because they believe it is necessary for regulation
in running a business.

It is also noted that due to the differences in the operational set-up of local governments,
there seems to be a perception that some LGUs are more organized than the others. In
this study, a procedure or process is defined as any interaction of the buyer or the seller,
their agents (if an agent is legally or in practice required) or the property with external
parties, including government agencies, inspectors, notaries and lawyers. Interactions
between company officers and employees are not considered.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

This section expounds on the procedures done in business renewal registration. The
questionnaire survey findings also raise several questions about the specific problems
they have encountered in processing all the requirements and clearances?: “What are
the requirements, factors and processes that hinders businessmen in obtaining business
permit easily?”, “How will the LGUs be able to address it?”, and “What could be the
effects or repercussions of those identified problems to the perceived satisfaction of the
respondents?”. The succeeding discussions will provide analyses from the responses of
the respondents.

a. Length of Business Permit Registration and Processing Time

The time involved in the process is one of the reasons that turn off registrants. It should
be noted that the range of time involved goes to a low of one (1) week to a high of eight
(8) weeks. The measure captures the duration from the time of application to
accomplishing all the requirements and clearances in the LGUs until getting the
business permit. This study assessed the intervening factors which could have affected
the longer time of acquiring business permits.

To have an average viewpoint, we can assume that not all registrants diligently pursued
their registration from day one; this could be one of the intervening factors. It is possible
that some deferred the instruction on when to return thus leaving their process hanging.
Other confounding variables could be the lack of knowledge with regards to the
requirements needed which brought by modifications in the system and the transaction
costs involved might significantly differ from person to person and from the type of
business being applied. In addition with this, long queue could be another intervening
factor. But all these reasons implicate the business process quality and management in
the respective Local Government Units of cities. In this section, the researchers produce
cross tabulations and examine correlations in each variable to be able to analyze if there
are direct relationships or not with each of the aforesaid variable.

In terms of length of time to acquire business permits, respondents provided estimates


on how long it took them to acquire a renewal permit from the time they got an
application form in the LGU to the time they received their business permits.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Table 3: Length of time needed to acquire business permits in the city with Row and Column Total %

Number of days to

Muntinlupa
Manadaluy

Valenzuela
Paranaque
Las Pinas
Caloocan

San Juan
Marikina
Malabon

Navotas

Column
Quezon
Pateros

Total %
acquire a

TOTAL
Taguig
Manila
Makati

Pasay

Pasig

City
ong
business permit
in the
city/municipality
Less than a day
1-3 days 6 4 8 9 6 2 2 1 1 1 40 12.42
Row % 0 0 15 0 0 10 20 22.5 0 15 0 5 0 5 2.5 2.5 2.5 100
4-6 days 13 3 3 6 2 3 2 2 1 1 1 37 11.49
Row % 35.14 8.11 8.11 0 16.22 5.41 8.11 5.41 0 0 0 0 0 5.41 2.70 2.70 2.70 100
7 days 7 2 11 1 3 9 6 4 3 2 1 6 7 3 65 20.19
Row % 10.77 3.08 16.92 1.54 4.62 13.85 9.23 6.15 4.62 3.08 1.54 9.23 0 10.77 0 0 4.62 100
14 days 1 4 1 6 8 2 1 1 2 7 1 8 2 3 5 52 16.15
Row % 1.19 0 7.69 1.19 11.54 15.38 3.85 1.19 1.19 3.85 13.56 1.19 0 15.38 3.85 5.77 9.62 100
21 days 2 1 1 1 2 2 9 2.8
Row % 22.22 11.11 0 0 0 11.11 0 0 0 0 11.11 22.22 0 22.22 0 0 0 100
One Month 3 3 9 1 19 2 1 5 3 11 1 16 1 7 2 84 26.09
Row % 3.57 3.57 10.71 0 1.19 22.62 2.38 1.19 0 5.95 3.57 13.1 1.19 19 1.19 8.33 2.38 100
2-3 months 1 4 7 3 1 9 3 1 29 9.01
Row % 3.45 0 13.79 0 0 24.14 0 0 0 0 0 10.34 3.45 31.03 10.34 3.45 0 100
more than 3
3 2 1 6 1.86
months
Row % 0 0 50 0 0 33.33 0 0 0 0 0 0 0 16.67 0 0 0 100
TOTAL 27 9 40 2 16 52 21 17 4 15 12 25 2 47 8 13 12 322 100
Row Total % 8.39 2.80 12.42 0.06 4.97 16.15 6.52 5.28 1.24 4.66 3.73 7.76 0.06 14.60 2.48 4.04 3.73 100

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Table 3 presents the Length of Time needed to acquire business permits in each city
with Row and Column Total percentage. Majority of respondents in cities of Manila,
Pasig, Quezon and Pateros said that it took one month to acquire their business permits
which account 36.54%, 44%, 34.04% and 50% respectively. On the other hand,
Mandaluyong, Pasay and Valenzuela have an average of 14 days in accomplishing their
registration in LGUs as according to 45% of the respondents. Businessmen in Makati,
Malabon, Marikina and Navotas said that they consumed one week in processing their
applications and getting the permit. The rest of the cities took only 4-6 days in acquiring
the permit, while respondents from Muntinlupa (52.94%) and Paranaque (40%) shows
satisfaction with the length of transaction time in the LGUs as they exclaimed that they
only spent 1-3 days in securing the business permit.

Figure 8: Length of time needed to acquire renewal permits


90
80 84
70 77
60 65
61
50
40
30 35
20
10
0
Less than a week One week Two-three One month More than one
weeks month

N= 322 as a total population (renewal)

Figure 8 summarizes the length of time needed to acquire business permit. Data shows
that (26%) took one month in Metro Manila to complete the registration process and get
the permit, 24% on the other hand said that they were able to acquire permits in less
than a week while 20% stated that they were able to get permits in a week’s time. The
respondents explained that the length of time in acquiring business permits is affected
by long processing time, too many steps and requirements and slow and unorganized
services.

In terms of the long processing time, some respondents admitted that they have
incomplete requirements and had to go back and forth between agencies and LGUs to
complete their requirements. This makes the registration process longer. Some
respondents also do not go through all the procedures continuously, stopping for
example to do other matters. This may mean that some of the respondents may have
themselves caused the delay in the processing of their business permits, albeit not also
a significant number to conclude as a confounding variable to the length of transaction

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

time with the Local Government units. However, this could indicate the performance of
the LGU in terms of proper dissemination of information regarding the requirements
needed and process flows.

In this viewpoint, the researchers cross tabulated the length of days in acquiring
business permit and the availability of information to find out if there is direct relationship
between these two variables. The null hypothesis was constructed as: there is no
relationship between the length of days in acquiring business permit and the availability
of information regarding requirements and process flow in securing business permit. The
decision is to reject the null hypothesis since 178.66 > 40.11. It can be concluded that
there is a direct relationship between the length of days in acquiring business permits
and availability of information regarding requirements and process flows. The length of
days in acquiring business permits is dependent on the availability of information
regarding requirements and process flows (See Annex-A).

Another problem they have encountered is the too many requirements from national
agencies (Fire Inspection Certificate from Bureau of Fire Protections, SSS Clearance,
BIR Registration and PhilHealth Registration) and difficulties in securing those
requirements, they have explained that securing clearances from the national agencies
is much harder because the offices of national agencies are located far away from each
other. The completion of both processes require the visit to at least two different area
offices, LGUs and BIR, making it inconvenient as registrants have to go to two different
areas or even more within the LGU office. Furthermore, the long queues brought by
centralized processing of LGUs and other government offices. The concept of
centralization here, mean that there is a very limited area for getting the registration and
other transactions.

Another complaint is that some LGU/BIR staff is inefficient. This may mean that
respondents observed that these staff are not working fast or are not facilitative and may
actually be slowing down the process. As to the part of the process where these
difficulties are actually encountered, most respondents replied during application,
assessment and evaluation parts. For practical purposes, these form the general parts of
registration and therefore we can safely conclude that there is a general sense of
difficulty being encountered in every step of the registration.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

b. Information Regarding Requirements and Process Flow

In terms of the information regarding requirements and registration processes, 68% of


respondents surveyed (from renewal), stated that there was enough information about
business permit applications in their LGU.

Two hundred sixty nine (269) or 83.54% of respondents surveyed, also said that
instructions for renewal permit applications were posted on the business permits and
licensing offices (BPLOs) of their respective LGUs.

In terms of the clarity of instructions regarding requirements and process flow, 77% of all
respondents surveyed stated that the instructions about business permit applications
were clear.

When asked however whether they know if there is a citizen’s charter in their LGUs
where processes for securing business permits were indicated, 60.87% of the
respondents stated that they have no knowledge of a citizen’s charter in their LGUs
39.13% claimed that they know about it. For those who said that they knew about the
citizen’s charter in their LGUs, 55.56% stated that the steps indicated in the citizen’s
charter are being followed by the LGUs.1

c. Ease of Business Related Procedures

Table 4: Length of Time per Requirement based on Frequency of Responses

Length of Percentage of
Requirements
Time Respondents
A. REQUIREMENTS OBTAINED FROM NATIONAL
AGENCIES
SSS Clearance
Highest Frequency 1-3 Days 69.6%
Lowest Frequency 5-6 Hours 1%
Fire Inspection Certificate
Highest Frequency 7-9 Days 32%
Lowest Frequency 3 months 0.4%
BIR: Filing of Income Tax Return and Financial Statements
Highest Frequency 4-6 Days 25.5%
Lowest Frequency 1-2 Months 1%

1
Citizens Charter – an official document, a service standard or a pledge that communicate. Describes a step
by step procedure for availing a particular service and the guaranteed performance level that they may
expect for the service (Retrieved from http//www.toledocity.gov.ph, May 2010).

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National Competitiveness Council in partnership with Ateneo School of Government

Requirements that are Specific Per Industry Ease of Business Related


BFAD Procedures was analyzed
Highest Frequency 1 month 55.60% through the number of
Lowest Frequency 10 to 15 days 44.40% days that the respondents
Police Clearance spent to process all the
Highest Frequency 1-3 Days 71% requirements. Table 4
Lowest Frequency 3-4 Hours 6% shows the length of time
Motor Certificate (LTO)
spent per requirement
Highest Frequency 1-3 Days 65%
based on the frequency of
Lowest Frequency 4-6 Days 12%
responses of the
B. REQUIREMENTS OBTAINED FROM LOCAL
GOVERNMENTS businessmen surveyed.
City Engineer's Office Clearance For each requirement, the
Highest Frequency 1-3 Days 40% length of time with the
Lowest Frequency 10-12 Days 0.5% highest frequency of
Zoning/Locational Clearance responses and the lowest
Highest Frequency 1-2 Hours 47.4% frequency of responses
Lowest Frequency 4-6 days 2.4% were shown to provide a
Community Tax Certificate range of the time spent by
Highest Frequency 1-2 Hours 45.6% businessmen in acquiring
Lowest Frequency 3-4 Hours 4.9% these requirements.
Sanitary Permit
Highest Frequency 1-3 Days 35.6% Based on the length of
Lowest Frequency 1 month 1.0% time indicated by the
C. REQUIREMENTS OBTAINED FROM OTHER businessmen, the
INSTITUTIONS
requirements that could
Barangay Clearance
be attained in 1 to 2 hours
Highest Frequency 1-2 Hours 46%
are barangay clearance,
Lowest Frequency 4-6 Days 2%
Declaration of Gross Sales/ Receipts of Previous Year zoning or locational
Highest Frequency 1-3 Days 54.8% clearance and community
Lowest Frequency 2 months 0.6% tax certificate. Most of the
requirements such as
SSS clearance, Sanitary Permit, City Engineer’s Office Clearance and Declaration of
Gross Sales/Receipts of Previous Year can be attained in 1 to 3 days.

Requirements that take a long time to obtain are from the national agencies such as the
filing of income tax return and financial statements at the Bureau of Internal Revenue (4
to 6 days) and Fire Inspection Certificate which takes approximately 7 to 9 days. The
requirements that are specific per industry such as the Bureau of Food and Drugs
Certificate can also take a month to acquire.

To get a clear picture about the length of processing time in accomplishing each
requirement from the LGUs and National Agencies, the researchers produced a table of
comparative registration processing time and clearances in the seventeen cities of Metro
Manila (See Annex: Table 1).

According to the Doing Business 2008 report, “Business regulations and their
enforcement vary widely across Philippine cities. The Local Government Code of 1991
places business regulatory authority such as business permits, licenses and business

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

tax in the hands of local governments. While all local governments share the same legal
and institutional framework, they also interpret and implement national regulations
differently. Some local governments like Taguig and Marikina have used their authority
to simplify procedures and reduce regulatory costs for businesses—and other Philippine
cities could learn from their example”

Based on the results of the survey, statistics presented in Table 5 proves the significant
developments of 17 cities in Metropolitan Manila in terms of registration processing time
and clearances.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Table 5
Comparative Registration Processing Time of needed Requirements and Clearances (Renewal)

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Business Registration Process Quality and Management Survey
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There are three points that can be inferred from the data in Table 5: First, it can be gleaned that
the transaction time in getting pertinent requirements and clearances in Metro Manila has a
maximum of 10-12 days and least of 4-6 days; Second, compared to previous similar studies in
past years, the improvement of processing time of various requirements and clearances in all
cities significantly improved and speed up the process. Lastly, it can be surmised that the
introduction and utilization of the new system and reforms implemented in the BPLOs
contributed significantly in the simplification of procedures and speeding up the processing time
of needed requirements.

Figure 11: Requirements that are difficult to obtain for


Renewal Businesses
Barangay Clearance 31
Zoning or Locational Clearance 8
Community Tax Certificate 13
SSS Clearance 14
Sanitary Permit 39
Fire Inspection Certificate 113
City Engineer's Office Clearance 13
Declaration of Gross Sales/ Receipts of Previous
16
year
BIR (Annual Registration and Filing of ITR) 44
Requirements that are specific to industries 9
PAG-IBIG 6
Others 11
None 3

0 20 40 60 80 100 120

Figure 11 shows that the most difficult requirements to obtain for the respondents were fire
inspection certificate (35%), sanitary permit (12%) and BIR (11%). The most difficult
requirement to obtain according to the respondents is the fire inspection certificate (35%). As
Table 4 shows, the Fire Inspection Certificate takes the longest time to acquire falling in the
range of 13-15 days based on the experiences of businessmen.

Thirteen percent (13%) of respondents on the other hand stated that they found requirements
from the BIR difficult to obtain. Of the 44 respondents who said that they had difficulties in
acquiring requirements for BIR, 72.27% or 34 respondents said that they found it difficult to
obtain the annual registration while the remaining 22.73% or 10 respondents said that they had
difficulties in filing their Income Tax Returns.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Aside from the fire inspection certificate and BIR, 12% of respondents found sanitary permits
difficult to obtain while 9.6% stated that they had difficulties in acquiring barangay clearances.
5% of respondents on the other hand stated that the declaration of gross sales was difficult to
comply with.

Responses from the open-ended question focusing on the difficulties they encountered upon
securing aforesaid permits were coded and grouped into themes. Top three reasons are
inspections not done immediately, especially for obtaining fire inspection certificates which
accounts 33.33% of the responses, long processing time with 25.44% and tedious payment
process with 8.6%. They also stated slow and unorganized services to the public, and the filling
out of multiple forms as causes of difficulties in obtaining requirements. Although most
requirements as discussed in the Length of Business Permit Registration and Processing Time
can be completed relatively quickly, the large number of them increases the hassle for
businesses and create opportunities for corruption resulting to high incidence of financial
corruption in the form of special payments and bribes to prompt securing of clearances.

Figure 12: Problems encountered during registration


(Percentage)
Steps/ procedures are difficult to follow 14.5
Too many signatories required 9.6
Signatories are not readily available 6.6
Too many requirements from national agencies 12.8
Difficulty in obtaining clearances from different
10.1
national agencies
Transaction time to process is too long 26.6
Forms are difficult to fill up 7
Forms are not readily available 4.9
Proliferation of illegal fixers 3.9

0 5 10 15 20 25 30

The most common problem in all cities which the respondents complain about is the long
transaction time to process business permits (26.6% of responses). The respondents also
stated that the steps and procedures for application are difficult to follow (14.5% of responses)
and that there are too many requirements from national agencies (12.8% of responses)

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

d. Quality of service provided by the LGUs

Business climate and characteristics of LGU staff were also assessed in this study to find out
the impressions of the registrants to the LGU staff in the hope to come up with any
improvements if there are negative feedbacks. The researchers utilized attitudinal statements in
this light with four-point scale.

In the questionnaire, respondents were asked to rate the LGUs’ performance in terms of
providing assistance and customer service for the businessmen. In order to determine the
perception of businessmen regarding quality of service, the researchers computed for the
percentage of respondents who rated the quality of service provided by the LGU as poor,
somewhat good, good and excellent.

Table 6
Respondents’ reactions to attitudinal statements regarding business climate and
characteristics of LG staff (Renewal applicants)

Poor: Somewhat Good: Good: Excellent


Wgtd.
Statement
: No : : No : Certain Intrstd
Means
LG Staff assist applicants during
39 160 435 232 2.7 Good
registration
LG staff deal with applicants in a
31 88 450 188 2.66 Good
friendly manner
LG staff were able to explain Somewhat
41 278 330 128 2.41
requirements and processes well Good
LG staff follow rules and
14 84 528 360 3.06 Good
guidelines in processing permits
BPLO has a lounge or waiting
1 88 555 376 3.17 Good
area for applicants
BPLO offers refreshments for
286 56 24 0 1.13 Poor
applicants

Over All Mean: 2.61 Good

Table 6 summarizes the results of the respondents’ reactions to the services provided by the
LGUs. In the questionnaire, respondents were asked to rate the LGUs’ performance in terms of
providing assistance and customer service for the businessmen. In order to determine the
perception of businessmen regarding quality of service, the researchers computed for the
percentage of respondents who rated the quality of service provided by the LGU as poor,
somewhat good, good and excellent.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

The results show that businessmen have a generally favorable response to the services
provided by the LGUs. From Table 2, it could be seen that most cities showed good
performance in terms of assisting applicants during registration, being friendly in dealing with
businessmen and following rules and guidelines in processing permits. In terms of explaining
requirements and processes however, the respondent only rated their performance as
somewhat good. As an overall result, the study yielded a favorable reaction from the
respondents with a total weighted mean average equivalent to 2.61, which means that the
respondents expressed a GOOD response to the characteristics of the LGU staff, based on the
range of means.

3. Cost of Fees and Taxes

Most respondents (73.29%) gave the minimum amount spent for registration as around less
than Php 10,000. This finding has a direct relationship with the size of business based on
assets. Cost of application fees is dependent to the size of business based on assets of the
respondents.

Respondents tried to recall the total amount they had spent for registration as some of them had
been in operation for some time now. There are many factors to consider in aggregating the
actual cost incurred by the respondents. For instance, some impliedly considered in their cost –
facilitation expense and early release through fixers, though they did not specify how much they
gave.

For renewal permits, 68% of the respondents said that these application fees were reasonable
while 32% stated that the cost of application fees for renewal permits were unreasonable.
Some of those who stated that the fees were unreasonable said that this is because they
believe that the price they paid was too high given that they are only small businesses and do
not earn as much. Moreover, those who stated that the fees were unreasonable explained that
this is because of the lack of transparency in financial reports and governance performance
reports. They also cited the tedious payment process and the high incidence of corruption in the
form of special payments and bribes. Moreover, there were additional fees which were solicited
according to the 17.70% of the respondents; these additional fees were intended for Mayor’s
permit, garbage disposal, special payments and red tape or informal payments. Although this
accounts small percentage, it should be given immediate action especially on the increasing
incidence of financial corruptions in the form of demands for special payments and bribes (red
tapes) to prompt clearances and approvals.

It is not however only the small businesses who seem to think that they paid too much for the
business permits. Thirty eight percent (38%) of respondents from the chambers also said that
the business tax and some of the required fees (ex. Garbage fee and engineering inspection
fees) they paid for were too high.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

With regards to the most costly requirements for renewal permits, 24% of respondents stated
that the Community Tax Certificate is the most costly requirement that they have to comply with.
This is followed by the Declaration of Gross Sales which 17% of respondents chose as the most
costly requirement and BIR Annual Registration with 12% of the responses (See Annex C).

4. Other Issues

Other Issues which were tackled in the study are the perceived improvements in the registration
system for renewal applications and the perceived satisfaction in business registration system.

When respondents were asked if the business sector was properly consulted regarding reforms
related to business permits and licenses, 59% of respondents for renewal permits stated that
they were consulted by the LGUs regarding business registration reforms

Renewal permit respondents were also asked if they felt improvements in the application
process for business permits compared to previous years. Fifty Eight percent (58%) of
respondents said that they have felt improvements while 42% said that there were no significant
improvements in the registration process

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Among those who said that there were improvements in the application for business permit
renewal, they said that these improvements are in terms of limiting the number of steps in
processing application for renewal (40.96%), limiting the processing time (28.19%) and ensuring
fast, efficient and convenient services to the applicants (9.57%).

Satisfaction in Business Registration System

The researchers used a four-point scale to assess the satisfaction rate of the respondents.
Respondents were asked to rate their satisfaction rate on the business registration process,
cost of fees and taxes and the over-all performance of the LGUs.

The results of the respondents’ reactions regarding satisfaction with business registration
system, using the four-point attitudinal statements patterned after the Rensis Likert scale could
be seen in Table 7. It can be gleaned from the data that the respondents were Somewhat
Satisfied with the Business registration process and cost of fees and taxes in the LGU which
have 2.8 and 2.74 WMA, respectively.

Table 7
Satisfaction Rate of Respondents on Business Registration Process and Cost of Fees
and Taxes

Dissatisfied Somewhat Satisfied Very WMA


Satisfied Satisfied

BUSINESS 43 112 432 316 2.8


REGISTRATION
PROCESS
COST OF FEES AND 64 84 387 348 2.74
TAXES

In terms with the satisfaction in business registration system, researchers constructed three
hypotheses to test the relationship with these variable to other variables in the study: (1) H0:
There is no relationship between the level of satisfaction with the business registration process
and the length of days in acquiring business permit; (2) H0: Respondent’s level of satisfaction
with the cost of application fees and taxes is independent with the amount spent on application
fees; (3) Respondents size of business based on assets is independent on the perceived over-
all performance of the business permit and licensing system. (See Annex D, E, and F)

For the first hypothesis, the decision is to reject the null hypothesis since 374.5 > 61.66. It can
be concluded that there is a direct relationship between the level of satisfaction with the
business registration process and length of days in acquiring business permits. The level of

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National Competitiveness Council in partnership with Ateneo School of Government

satisfaction with the business registration process of the respondents is dependent on the
length of days in acquiring business permit.

For the second hypothesis, the decision is to reject the null hypothesis since 250.69 > 61.66. It
can be concluded that there is a direct relationship between the level of satisfaction with the
cost of application fees and the amount spent on application fees. The level of satisfaction with
the cost of application fees and taxes is dependent on the amount spent on application fees.

For the third hypothesis, the decision is to reject the null hypothesis since 66.09 > 37.65. It can
be concluded that there is direct relationship between the over-all performance of the business
permit and licensing system to the size of business based on assets. The over-all performance
of the business permit and licensing system is dependent on the size of business based on
assets.

Table 8
Over-all Performance of the Business Permit and Licensing Systems in the LGU

Poor Somewhat Good Excellent WMA


Good
Over-all performance 37 102 489 284 2.83
of the Business
permit and Licensing
System

In the overall performance of the Business permit and licensing system, the study yielded a
favorable reaction from the respondents with a total weighted mean average equivalent to 2.83,
which means that the respondents expressed a Somewhat Good response to the performance
of the BPLOs and LGUs.

B. FINDINGS FOR NEW BUSINESS PERMITS

In terms of ease in starting a business, the Philippines now ranks 162nd out of 183 economies
studied worldwide, according to the most recent Doing Business 2010 report.

Based on the findings of the report, in order to start a business in the Philippines, a
businessman has to undergo 15 procedures and spend a total of 52 days. This number is
comparatively higher than neighboring countries such as Malaysia where a businessman can
start a business in 11 days and Thailand, in 32 days.

In a move to address problems in new business permit registration, cities in Metro Manila have
started to streamline their business permits and licensing systems in order to attract more
investors in their areas. Streamlining efforts include the installments of one stop shops and
computerization of business registration in order to provide faster service to businesses that
are starting out.

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Business Registration Process Quality and Management Survey
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The findings discussed in this section describe the current experiences of new business
registrants and aims to identify key areas that need to be improved upon. The results of the
survey also aim to show the satisfaction of businessmen with regards to the current business
permit registration system.

1. Demographic Characteristics and Business Profiles of Respondents

Majority or 64% of the respondents were owners of the business establishments surveyed
while 10% were employee of the business establishments. This is an indication of owner’s
higher participation sample in the direct transaction with the Local Government Units in terms
of processing their registrations.

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Business Registration Process Quality and Management Survey
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The most predominant types of industry were from the Hotel and Restaurants industry with
37% total of responses while 27 % are from the Wholesale and Retail Trade and Hotels and
Restaurants which both account 40% of the total responses. The category included other type
of businesses such as salons, repair shops, laundry shops, internet cafes, employment
agencies and air conditioning services that got 10% total of responses.

All of the respondents for new businesses were local businesses. On the other hand, eighty
percent (80%) were single proprietors, 15% were partnerships, 3% were cooperatives and 2%
were corporations.

Most of the respondents for new permits were micro businesses (95%) while 5% of
respondents were small businesses. The researchers strived to get respondents from medium
and large companies but most of these stated that they outsource the registration of business
permits and hire accountants from other companies to register for them. When asked if the
researchers could get the contact numbers of their accountants in other companies for the
purpose of the study, most of the businesses declined.

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2. Business Related Procedures

When entrepreneurs draw up a business plan and try to get under way, the first hurdles they
face are the procedures required to incorporate and register the new firm before they can legally
operate. Economies differ greatly in how they regulate the entry of new businesses. In some the
process is straightforward and affordable. In others, the procedures are so burdensome that
entrepreneurs may have to bribe officials to speed up the process or may decide to run their
business informally. Analysis shows that burdensome entry regulations do not increase the
quality of products, make work safer or reduce pollution. Instead, they constrain private
investment; push more people into the informal economy; increase consumer prices and fuel
corruption (Doing a Business, 2010).

Yet, there are wide differences in the procedures, time and money an entrepreneur has to
spend to complete the process across Philippine cities. The main reason: different procedures
and practices at the local government level, different performance of local branches of national
agencies, as well as variations in local taxes and fees. Entry requirements are easiest in Taguig
and relatively difficult in San Juan (Doing a Business, 2008).

The performance of the LGUs in each city of Nation’s Capital Region were studied based on
perception of the businessmen. The processes and transactions of respondents in the national
agencies in getting other requirements for business permits were also tackled in the study but
were given minimal attention.

a. Length of Time Needed to Acquire New Permits

Table 9: Length of time needed to acquire new permits


TOTAL

Less Two- More


than a One Three One Two Three than 3
week week Weeks Month Months Months Months
Caloocan 1 4 5
Las Pinas 3 2 5
Makati 1 3 2 6
Malabon 1 1 2 1 5
Manadaluyong 1 1 2 4
Manila 2 1 1 7 1 1 13
Marikina 2 1 1 4
Muntinlupa 1 3 1 5

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Navotas 3 2 5
Paranaque 3 1 1 5
Pasay 2 2 4
Pasig 2 2 1 5
Pateros 2 1 2 5
Quezon City 2 10 1 2 1 16
san Juan 1 1 1 2 5
Taguig 6 3 1 10
Valenzuela 1 1 1 3
TOTAL 5 11 41 32 11 4 1 105

Thirty-nine percent (39%) of respondents were able to process all the requirements needed in
two to three weeks,. A large percentage of respondents however (30%) were able to acquire
new permits in one month, while 15% were able to acquire new permits in two months or more.
The findings show that majority of the respondents were able to acquire new permits in two
weeks to one month.

Based on the findings, most of the respondents from Las Pinas (60%), Muntinlupa (60%),
Navotas (60%), Paranaque (60%), Quezon City (62.5%), and Taguig (60%) were able to get
new permits in two to three weeks.

Most of the respondents from Caloocan (80%) and Manila (54%) were able to acquire permits
in one month. In the case of Marikina, half or 50% of the respondents stated that they were
able to register their new businesses in a week’s time. Once the businesses have already paid
for the order for payment, they are already considered registered under the system and as
such are allowed to operate. Actual business permits and plates in Marikina however are
delivered door-to-door and the delivery time may take from one week to two months according
to respondents. For the purpose of this study, the delivery time was not included in the length
of time, since the businesses are already considered registered and are allowed to operate
while waiting for their business permits to arrive.

b. Information Regarding Requirements and Process Flow

In terms of the information regarding requirements and registration processes, 96% of


respondents surveyed for new permits stated that there was enough information about
business permit applications in their LGU. A high percentage of the respondents (95%) also
stated that the requirements were posted on the Business Permits and Licensing Offices.

The clarity of instructions regarding requirements and process flow during the application and
processing of business permits most (92%) of all respondents surveyed stated that the
instructions about business permit applications were clear.

When asked however whether they know if there is a citizen’s charter in their LGUs where
processes for securing business permits were indicated, 69% of the respondents stated that
they knew about the citizen’s charter in their LGUs while 31% claimed that they did not know

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

about it. For those who knew about the citizen’s charter in their LGUs, 81.6% stated that the
steps indicated in the citizen’s charter are being followed by the LGUs.

Ease of Business Related Procedures

Ease of Business Related Procedures was analyzed through the number of days that the
respondents spent to process all the requirements. Table 10 shows the length of time spent per
requirement based on the frequency of responses of the businessmen surveyed. For each
requirement, the length of time with the highest frequency of responses and the lowest
frequency of responses were shown to provide a range of the time spent by businessmen in
acquiring these requirements.

Table 10: Length of Time per Requirement based on Frequency of Responses (New
Businesses)

Percentage of
Requirements Length of Time
Respondents
A. REQUIREMENTS OBTAINED FROM NATIONAL AGENCIES
DTI Registration
Highest Frequency 1-3 days 40%
Lowest Frequency 7-9 days 1%
SEC Registration
Highest Frequency 1-2 Hours 37%
Lowest Frequency 7-9 Days 5%
SSS Clearance
Highest Frequency 1-3 Days 57%
Lowest Frequency 7-9 Days 2%
Fire Inspection Certificate
Highest Frequency 7-9 Days 38%
Lowest Frequency 1-2 Hours 3%
B. REQUIREMENTS OBTAINED FROM LOCAL GOVERNMENTS
Zoning/Locational Clearance
Highest Frequency 1-3 Days 45%
Lowest Frequency 3-4 Hours 4%
Community Tax Certificate
Highest Frequency 1-2 Hours 45.6%
Lowest Frequency 3-4 Hours 4.9%
Sanitary Permit/City Health Office Clearance
Highest Frequency 1-3 Days 39%
Lowest Frequency 10-12 Days 2%
City Engineer's Office Clearance
Highest Frequency 7-9 Days 39%
Lowest Frequency 13-15 Days 11%
Building Permit

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Highest Frequency 1-3 Days 48%


Lowest Frequency 3-4 Hours 3%
Occupancy Permit
Highest Frequency 1-3 Days 52%
Lowest Frequency 7-9 Days 5%
Public Liability Insurance
Highest Frequency 4-6 Days 56%
Lowest Frequency 1-3 Days 44%
C. REQUIREMENTS OBTAINED FROM OTHER INSTITUTIONS
Barangay Clearance
Highest Frequency 1-2 Hours 47%
Lowest Frequency 3-4 Hours 4%
TCT or Lease of Contract of Site
Highest Frequency 1-3 Days 54%
Lowest Frequency 3-4 Hours 4%

Based on the length of time indicated by the respondents, the requirements that could easily be
attained in 1 to 2 hours are the barangay clearance, community tax certificate and SEC
registration.

Most of the other requirements such as the DTI registration, Zoning/Locational Clearance,
Lease of Contract of Site, Sanitary Permit, Building and Occupancy Permit can be attained in 1
to 3 days. In the case of the Zoning/Locational Clearance it is noticeable that it takes much
more time to acquire this requirement for new business registrants compared to renewal permit
registrants who can acquire the permit in 1 to 2 Hours. One explanation for this is that as new
business registrants, the LGUs still need to carefully examine whether the businesses follow
regulatory requirements.

Requirements that take a long time to obtain are the Fire Inspection Certificate and City
Engineer’s Office Clearance which can be acquired in 7 to 9 days. In some cities, new
businesses are also required to obtain the public liability insurance which takes 4 to 6 days
according to the respondents.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 20: Requirements that are difficult to obtain for New


Businesses
DTI Registration 5
Locational Clearance 1
TCT or Lease of Contract of Site 2
Building Permit 1
Occupancy Permit 1
City Health Office Clearance 8
City Engineer's Office Clearance 5
Fire Inspection Certificate 27
Requirements that are specific to the industry 3
Bureau of Internal Revenue (BIR) Registration 39
Social Security System (SSS) Clearance 3
none 10

0 5 10 15 20 25 30 35 40 45

Figure 20 shows the requirements for new business permits which the respondents found
difficult to obtain. Some of the requirements included in the list such as the BIR Registration and
SSS Clearance were requirements that could be attained after the registration of new business
permits. These are not pre-requirements for the business permit per se but are needed for
starting out a business.

Based on the results of the survey however, 37% of respondents found the BIR Registration as
the most difficult requirement to obtain. When asked why they found this requirement
particularly difficult, the respondents said that this is because of the tedious payment process,
red tape and many requirements needed to obtain it.

One-fourth of the respondents or 25.7% on the other hand stated that the fire inspection
certificate is the most difficult requirement to obtain. Some of the respondents stated that this
was because inspections were not done immediately and that they had a lot of requirements to
comply with in order to obtain the fire clearance. 9.5% of respondents on the other hand said
that they didn’t experience any difficulties in acquiring requirements.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 21: Problems encountered in registering for new


business permits (Percentage)
Steps/procedures are difficult to follow 6.9

Forms are not readily available 5.9

Forms are difficult to fill up 1.5

Transaction time to process is too long 21.1


Difficulty in obtaining clearances from different
25
national agencies
Too many requirements from national agencies 30.4

Signatories are not readily available 7.8

Too many signatories required 6.4

Proliferation of illegal fixers 3.4

None 0.5

0 5 10 15 20 25 30 35

The most common problems experienced by businessmen in acquiring business permits are too
many requirements from national agencies (30.4% of responses), difficulty in obtaining
clearances from national agencies (25%) and transaction time to process is too long (21.1%).
This means that for most of the respondents, requirements from national agencies were the
most difficult to obtain.

Quality of Service Provided by the LGUs

The service provided by the local government staff were also assessed in this study to find out
the impressions of the registrants to the LG staff in the hope to come up with any improvements
if there are negative feedbacks. The researchers utilized attitudinal statements in this light with a
four-point scale. In the questionnaire, respondents were asked to rate the LGUs’ performance in
terms of providing assistance and customer service for the businessmen.

In order to determine the perception of businessmen regarding quality of service, the


researchers computed for the percentage of respondents who rated the quality of service
provided by the LGU as poor, somewhat good, good and excellent.

Table 11: Respondent’s ratings on services provided by LGUs during registration


(Percentage)

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Somewhat
Poor Good Excellent Interpretation
Good

LG Staff assist
applicants during 1% 20% 65% 14% Good
registration
LG staff deal with
applicants in a 7% 34% 50% 10% Good
friendly manner
LG staff were able to
explain requirements 5% 36% 51% 8% Good
and processes well
LG staff follow rules
and guidelines in 0% 18% 61% 21% Good
processing permits

The results show that businessmen have a generally favorable response to the services
provided by the LGUs. Table 10 shows that the staff in LGUs performed well in terms of
assisting applicants during registration, being friendly in dealing with businessmen, explaining
requirements and processes well and following rules and guidelines in processing permits.

3. Cost of Fees and Taxes

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Figure 22: Cost of Application Fees for New Permits

Less than Php 10,000 82

Php 10,001 to 20,000 18

Php 20,001 to Php 30,000 5

0 10 20 30 40 50 60 70 80 90

Majority or 78% of respondents spent less than Php 10,000 in applying for new business
permits. Since the cost of fees and taxes are based on business size, the findings reflect the
profile of the respondents which are mostly micro businesses.

For new permits, 86% of the respondents said that these application fees were reasonable while
14% stated that the cost of application fees for new permits were unreasonable. Some of those
who stated that the fees were unreasonable explained that they think the fees should not be that
high for new businesses since they’re just starting out and not yet earning profits. Some also
cited tape as a reason for perceiving the fees as unreasonable.
When asked if they paid for additional fees, 15% of respondents said that they did. These
additional fees were intended for the garbage disposal fee, notary, fire extinguisher, special
payments and red tape or informal payments.

4. Other Issues

In order to know the satisfaction rating of the respondents, the researchers gave corresponding
weights to the answers of respondents. These weights are: Dissatisfied (Weight: 1), Somewhat
Satisfied (Weight: 2), Satisfied (Weight: 3), Very Satisfied (Weight: 4). The researchers then
computed for the weighted means average to have an idea of how satisfied the new applicants
were with the business permit registration process and cost of fees and taxes.

Respondents gave the business registration process in Metro Manila an average rating of 2.81
which can be interpreted as somewhat satisfied. In terms of the cost of fees and taxes it is
noticeable that the average rating is quite lower at 2.35 and could be interpreted as somewhat
satisfied

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

Table 12
Satisfaction Rate of Respondents on Business Registration Process and Cost of Fees
and Taxes

Dissatisfied Somewhat Satisfied Very WMA Interpretati


Satisfied Satisfied on
BUSINESS Somewhat
REGISTRATION 2 66 156 72 2.81
PROCESS Satisfied
COST OF FEES Somewhat
AND TAXES
7 106 126 8 2.35
Satisfied

Table 13
Over-all Performance of the Business Permits and Licensing Systems in the LGU
Poor Somewhat Good Excellent WMA
Good
Over-all performance 0 36 222 52 2.95
of the Business
permit and Licensing
System

In the overall performance of the Business permit and licensing system, the study yielded a
somewhat favorable reaction from the respondents with a total weighted mean average
equivalent to 2.95, which means that the respondents rated the overall performance of the
business permits and licensing system in the LGUs as somewhat good.

V. Conclusions

Renewal Business Permits

1. The results of the survey show that majority of the respondents for renewal permits
(44%) were able to acquire business permits in one week or less. Cities such as
Muntinlupa, Marikina, Navotas and Caloocan performed well in terms of the length of
time it takes for businessmen to acquire renewal permits. For cities that have big

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

populations of business establishments like Manila and Quezon City however, it is


interesting to note that most respondents were able to acquire their business permits
in one month or more. This indicates that the volume of business permit registrants
in a particular area may have an effect on the length of time in acquiring permits.
Since the business permits and licensing offices in big cities had to accommodate
more businesses in a certain period of time (January) this may cause bottlenecks in
their processing time.

2. With regards to the availability of information regarding requirements and process


flow, most of the respondents stated that there was enough information regarding the
process flow and that the instructions were clear for them. Despite that, they still
mentioned difficulty in following steps and procedures as one of the main problems
they encountered during registration (See Figure 12). This may indicate that
processes and instructions on paper were clear but the implementation of these
processes may be difficult for the businessmen to follow.

3. In terms of their knowledge of the city’s citizen’s charter where services provided by
the LGU are indicated, most respondents for renewal stated that they weren’t aware
of the citizen’s charter in their LGUs. The LGUs therefore need to further disseminate
information about this in order to inform renewal registrants about the services they
offer.

4. The top three requirements which the respondents for renewal permits found difficult
to obtain were the Fire Inspection Certificate, BIR registration and filing of Income
Tax Returns and Sanitary Permit. The reasons for the difficulties according to the
respondents were the many documents and other requirements they had to comply
with in order to acquire clearances. Some of the respondents also said that
inspections were not done immediately which have caused delays in acquiring the
clearances they need.

5. Based on these findings, it is noticeable that the most difficult requirements to obtain
for renewal permits are from national agencies (e.g. Fire Inspection Certificate and
BIR). These may indicate that the problems and bottlenecks in the registration may
lie not on the registration processes of LGUs per se, but on the systems of the
national agencies. Based on these findings, there may be a need to further study the
processes of obtaining clearances from the different agencies involved.

6. In terms of the cost of fees and taxes, most respondents for renewal believed that the
fees they paid for were reasonable. For those who stated that the cost is
unreasonable however, they found the fees for renewal permits too expensive for the
size of their businesses. Some of the fees and taxes are computed based on the
incomes of the businesses and as such varies depending on the size of businesses
of the registrants. Some micro and small businesses therefore complain that the fees
they paid for are expensive given that their businesses are small and do not earn
that much. Further studies should be done to review the costs and bracketing of fees
and taxes for applicants of business permits.

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Business Registration Process Quality and Management Survey
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7. When asked whether they were consulted regarding reforms in the registration
process, majority or 59% of respondents stated that they were properly consulted
regarding planned reforms in the registration systems. This is a good indication that
the LGUs are reaching out to the businessmen and are constantly trying to improve
their systems to address registration problems. Despite that however a huge
percentage of respondents (41%) still stated that they weren’t consulted regarding
reforms. This shows that LGUs might need to implement a better feedback system in
order to have a better understanding of the needs of the businessmen.

8. Most of the respondents noticed improvements in the registration system for renewal
permits. These improvements are in terms of limiting the number of steps in
processing application, limiting the processing time and ensuring fast, efficient and
convenient services to the applicants. While majority of the respondents noticed
improvements in the system, a large percentage of respondents still weren’t able to
feel the effects of these improvements. The LGUs might therefore need to strengthen
the implementation of improvements in the system and disseminate more information
regarding new services available for registrants.

9. The data shows that most respondents were only somewhat satisfied with the
registration process and costs of fees and taxes. The respondents also rated the
overall performance of the LGUs as somewhat good. This means that based on the
perception of businessmen, there are still rooms for improvement in the LGUs. Most
respondents for renewal stated that they would like to see improvements in terms of
transaction time and procedures in acquiring renewal permits.

New Business Permits

1. The findings of the survey show that most respondents for new permits were able
to acquire new permits in two weeks to one month. The length of time may be
attributed to the number of requirements they had to comply with in order to get a
permit to operate. LGUs also check on new establishments more rigorously since
they’re new to the area.

2. The top three requirements which the respondents found difficult to obtain were
the BIR registration, Fire Inspection Certificate and Sanitary Permit. Although the
BIR registration is accomplished after the business permit, most of the
respondents complained about their difficulties in obtaining it. The reasons for the
difficulties according to the respondents were the many documents and other
requirements they had to comply with in order to acquire these clearances. Some
of the respondents also said that inspections (in the case of fire and sanitary

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

permits) were not done immediately which have caused delays in acquiring the
clearances they need.

Like in the case of renewal permit registrants, the requirements that are difficult
to obtain for new businesses are those coming from the national agencies. Two
out of the three requirements which they found difficult to obtain, (fire and
sanitary permit) also entails on-site inspection which may account for delays in
acquiring clearances especially if inspections were not done immediately.

3. On the problems encountered during business permit registration, respondents


for new permits said that there were too many requirements from national
agencies, they had difficulty obtaining clearances from national agencies and that
the transaction time to process is too long. Based on the answers of the
respondents it could be inferred that the problems and difficulties encountered
during registration may be attributed to the national agencies and not necessarily
on the LGUs.

4. The responses on the satisfaction in the business permit registration process,


indicated that the respondents are somewhat satisfied with the process. This
may be because of the improvements such as one-stop-shops being done in
some cities to streamline the process for new permits. Another factor which may
contribute to the satisfaction of new permit applicants is the fact that they can
register anytime during the year and as such may not have to register along with
too many other businesses. This is unlike the case for renewal permits, wherein
there is only a specific period for renewing businesses and registrants tend to
crowd business permits and licensing offices.

5. The cost of application fees however, the respondents for new permits gave a
lower average rating. One explanation for this is that some of the businesses
found the cost of fees too expensive given that they’re only starting out and not
yet earning profits.

Recommendations

There are a number of recommendations which came out of this study.. The recommendations
suggested here will require commitment, dedication, and a considerable amount of time,
energy, and resources for the LGUs concerned and for higher national agencies to consider in
policy formulation and deliberation for eventual implementation.

Improving the Registration Process for Renewal Permits:

1. Since the period for renewal of business permits is done only in a specific
period of time, businesses applying for renewal tend to crowd the LGUs in
January. This may contribute to long queues and delays in processing. It is
highly recommended that a year round registration period for renewal be
undertaken. This will spread out the volume of businessmen applying for
renewal and may reduce the length of queues in LGUs in January.

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

2. The respondents for renewal applicants also stated that they found some
requirements from national agencies difficult to obtain and lengthy and eats
much time. As such a study on the processes in obtaining clearances from
national agencies be made and therefore the appropriate streamlining should
be made. From this study the problems, bottlenecks and the mechanisms to
shorten national government processes and requirements are identified and
specific improvements in the systems are recommended.

3. Review existing policies and regulations in both national agencies and local
governments which affect business permit registration. From this review,
certain policies which may contribute to delays in business permit registration
and cause dissatisfaction among registrants (e.g. high cost of fees and taxes)
can be duly amended or replaced.

4. With regards to the awareness of businessmen about the citizen’s charter


and its importance in ensuring that a business friendly business registration is
made, LGUs need to disseminate more information about the charter in their
websites including all the other forms of media to create awareness about the
services provided by the LGU.

5. For businesses with multiple branches across Metro Manila, one of the main
problems they encountered was the different requirements and procedures
from each of the LGUs. This has caused some confusion on their part
because they had to obtain requirements from a particular LGU which they
didn’t need to obtain to apply for a permit in another LGU. The concerned
agencies in the business processing and licensing should at this point identify
which are the necessary requirements and procedures that are really needed
for renewing permits.

Improving the Registration Process for New Applicants

1. In terms of the cost of application fees we recommend to conduct a study on


the costs paid by applicants in registering for new permits. Some of the
respondents surveyed expressed dissatisfaction in terms of cost of fees
because they were only starting out and as such do not earn profits yet. The
recommended study could take a look at the costs of requirements and
assess which ones are the most burdensome for new businesses. Based on
the study, recommendations can also be made as to which fees could be
possibly waived for new businesses in order to encourage them to register for
business permits.

2. With regards to the availability of online application forms, the researchers


suggest for LGUs to disseminate more information that the application forms
for business permits can be downloaded through the LGU website. Most
respondents for new permits didn’t know that online application forms were

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Business Registration Process Quality and Management Survey
National Competitiveness Council in partnership with Ateneo School of Government

available and went directly to the LGUs to get application forms. The LGU
should take a proactive step in ensuring that a continuous and sustained
information dissemination campaign on the business registration application
process is provided to the appropriate stakeholders, particularly the business
community.

3. Some of the respondents who stated that fees were unreasonable said that
this was because they don’t see where their money goes in terms of services
provided by the LGU and other agencies they had to pay in order to acquire
business permits. They don’t feel the benefits or the returns to their
businesses of all the fees they paid for and as such found it unreasonable. In
this light we recommend for the LGUs to make businessmen aware of why
they had to pay certain requirements and what services and benefits they can
expect from the fees they paid for.

Others:

1. The transition from manual to computerized processing cannot be done


overnight. It requires hardware and software acquisition investments; the cost
implications however are relatively small compared to the potential
achievable gains6, personnel training and sufficient material time to install all
these inputs to a functional state. As such, it may make a lot of sense for
many LGUs to implement the proposed features of the improved process in
stages. Similarly, the effective and wide campaigning of automated business
registration should be done aggressively to all the stakeholders.

2. In order to have a more scientific approach in terms of the length of time to


acquire renewal and new permits, the School recommends that LGUs should
continue to improve business registration process through a yearly
performance evaluation of the reforms adopted and how these have
improved the delivery of services of the LGU service providers. Though
previous studies have already been done to map out the procedures, these
may be outdated already as LGUs strive to streamline their registration
processes. Researchers can also track the improvements implemented by
the LGUs through the years and from there describe how these
improvements have significantly increased business establishments
registering in their areas. A step is to ensure that the business sector is
consulted through regular dialogues as provided for by the Local Government
Code.

This perception survey establishes the baseline of the performance of the LGUs in terms of
securing a business permit and the factors that contribute to the ease of getting a business to
legitimately operate in a particular LGU.

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A framework for a more scientific process to measure the competitiveness of the business
process and licensing system is proposed using a Scheme for Performance Measurement
System at Local Government Units in the Metropolitan Manila

Such a measurement system would ultimately harmonize organizational strategies and


operations. This section has proposed a scheme for a performance indicator system that can
be used as a basis for establishing a practical system for measuring performance of local
government units .. This system is recommended to be applied in the validation phase to one
municipality and analyze the results if will show a promising directions for the use of such a
scheme.

Figure 24 shows the Over-all Framework for the Performance Measurement System.

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Business Registration Process Quality and Management Survey
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Business Registration Process Quality and Management Survey
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The architecture of the intended performance measurement system should reflect the
basic characteristics and needs of local municipalities and BPLOs. Municipal sectors
especially the BPLOs should be exposed to quality concepts and customer satisfaction
factors, and therefore, a measurement system, besides its basic function, should be
used as tool to foster the understanding of service quality in terms of business
registration process and quality management. Such a requirement calls for a
comprehensive and fair system for performance assessment, and yet computationally
direct and simple so that people can use it to add value. For example, the system should
link organizational goals with operational objectives, provide the ability to reflect the
differences among localities, integrate the interests of all beneficiaries of the municipal
system, and should be easily adopted to. As such, the main components of the system
is proposed with the following information groups:

1. Performance drivers group


2. Performance indicators group
3. Performance computation rules group

Performance drivers represent the factors that impact performance and reflect the
particularities and characteristics of each municipality and community. These might
include such factors as population size, types of provided services, size of business
based on assets, geographical area, type and count of businesses, availability of natural
resources, and availability of infrastructures.

Performance indicators group should bring together a balance of such factors that
harmonize the interests of all beneficiaries of a locality especially businessmen
including citizens (e.g., service quality indicators), employees (e.g., employee
satisfaction), the organization itself (e.g., financial sustainability), and regulatory issues
(e.g., compliance with local and regulations). Such indicators should reflect facts and
figures, avoiding the reliance on judgmental data or opinions.

Finally, performance computation rules should allow direct and easy-to-understand


ratios and formulae for quantifying performance and reflecting the effects of performance
drivers. Performance computation rules should enable the use of weights within each
performance indicators category and among these categories.

Based on the above measurement system framework, this section presents a set of
proposed basic performance indicators to generate overall performance indicators of
local government units.

a. Performance Indicators

Four major groups of basic municipal performance indicators are addressed here to
reflect the interest of all beneficiaries of municipality system, namely, the citizen, the
employee, the locality and BPLO itself, and the government that is overseeing the
overall performance of localities. All these proposed indicators have been compiled
based on the findings derived from the study.

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a.1 Citizens’ Indicators (Quality)

These measure important aspects of performance which are relevant to the quality of
provided services as perceived by service recipients, the external customer or the
citizen. These indicators are given in Table 14.

Table 14
Citizens’ Indicators

# Indicators
1 Number of Complaints
2 Speed of Addressing applicant’s complaints (days)
3 Percentage of Applicants receiving clear information about steps
and procedures in applying for business permits
4 Percentage of pesos spent on quality initiatives
relative to overall spending
5 Number of Days Spent on Processing Clearances and
Requirements from LGUs and national agencies
6 Waiting Time to release the business permit (days)
7 Waiting Time on entertaining each applicant by the LGUs and
national agencies

a.2 Employee Indicators

The researchers assume the need for measuring and evaluating the performance of
employees in a regular basis. The Findings obtained from the study regarding the quality
of services provided by LGUs and BPLOs requires further improvement. In this light, the
employee indicators measure important aspects of internal administration that impact the
satisfaction of the internal customer, the employee who delivers services to external
customers. Table 15 gives a proposed set of these indicators. As can be seen from the
definition of these indicators, one would need to quantify some indicators using a rating
system, for example, one might use a (0-10) scale system for assessing the
completeness of descriptions.

Table 15
Employees’ Indicators

# Indicators
1 # of annual employee complaints
2 Ratio of employees promoted / number of employees
3 Completeness of job descriptions
4 Degree of assigned responsibilities and authorities
5 Presence of employee performance indicators
6 Employee turnover (no. of layoffs or employee replacements per
year)
7 Percentage of employee-based decision making to total number of

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municipal council decisions


8 Average employee salary
9 Percentage of employee-based decision making to total number of
municipal council decisions

a.3 Financial Indicators

These measure an internal important function that is directly influencing financial stability
of a local government unit and ability to meet its commitments. Table 16 gives a
proposed set of these indicators.

Table 16
Financial Indicators

# Indicators
1 Ratio of revenues to expenditures
2 Ratio of salaries to total overheads
3 Ratio of quality costs to total expenditures
4 Ratio of planned revenues to actual revenues
5 Ratio of planned expenditures to actual expenditures
6 Monthly cash flow smoothness

b. Computational Rules

Computational rules basically determine how performance indicators will be computed


using raw process data and how the overall indicators will be computed using basic
indicators data. These rules deal with, for example, situations where a service is not
provided by a given local government unit, or when a given service in a particular area is
more important than the same service in a different area. These rules identify the relative
weights of the indicator groups in determining the overall indicator at given local
government unit.

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