RECOMMENDATIONS Improving the Business Enterprise Inspection System:

Background of the Project Purpose: Identify needed reforms to reduce the cost of doing business and improve the competitiveness of LGUS Focus: Inspection System Legal Basis – ordinance or law Procedure – manner, requirements, forms, frequency Fees – reasonableness and basis

Inspections I.Business registration-linked (BR linked) Inspections Commencement Renewal II. Non-BR linked Inspections (NBR) Construction

BR-linked Inspections Zoning Fire Health and Sanitation Building Radial Distance

Summary of Findings Different Inspection Models  Pre-business Inspection  Post-business Permit Inspection  Hybrid Inspection Systems Legal Basis  Conflicts and lack of local ordinance Fees  Bases used differ  No logical relation  Duplication of fees or imposition of similar fees

Summary of Findings Duplicate Inspections Dispensable Inspections Lack of clear basis for categorization of businesses for the purpose of determining whether or not they will be subjected to actual inspection Procedure for Inspection  Prior Notice not always given  Checklists not always provided and used  Immediate and categorical report of findings not assured  Clear procedure to contest adverse findings not always provided

RECOMMENDATIONS Coverage: 1. Process Improvements 2. Statutory/Legal 3. Institutional Development Measures 4. Fee Rationalization 5. Streamlining

Process Improvement Timing of Inspections Prior disclosure of inspection standards Prior notice of inspection Use of inspection checklist Prompt notification of results Clear remedies with specific timeframes

Legal Basis Fire Code Amendments Building Code Amendments Issuance of Appropriate Ordinances

Institutional Development Qualification of Inspectors Provision of facilities  Vehicles for inspection  Use of computerized system/automation  Linking of data bases across the various LGU sections conducting inspections Development of Inspection Manuals/Manual of Operations Setting up a Dispute Resolution Mechanism (particularly to address disputes on adverse findings, imposition of penalties, etc.) Information dissemination

Fee Rationalization Benchmarking  type of business  classification of the LGU  location of LGU Basis for benchmarking  Total fees  Types of fees  Amount of fee per type of fee *Assistance of DILG may be indispensable*

Fee Rationalization Factors to be Considered in Imposition of Fees  Cost to conduct inspection  Risk profile of the business  Size of the business  Revenue, number of clients, number of staff, area of business premises  Other relevant consideration such as—  Impact of the business to the general public/environment

Streamlining Elimination of duplicate inspection Elimination of unnecessary inspection (and corresponding elimination of the related inspection fee)  Risk-based inspection  Adoption of formal criteria for determining risk classification of various businesses for each type of risk  Joint inspection teams

Implementation I. National Level  Statutory amendment  Nationwide benchmarking II. Local Level A. Short Term B. Medium Term C. Long Term

Implementation: National Level Benchmarking Project  Data gathering  Data summary  Data analysis  Reporting and Recommendation  Dissemination and Operationalization Statutory/IRR Amendments  Amendments to the Fire Code  Classification of businesses according to risk classification  Elimination of firs inspection within one (1) year from the issuance of an Occupancy Permit unless renovations were made  Assessment and collection of Fire Code-related fees through the LGUs but subject to strict remittance deadlines and appropriate consequences in case of late remittance  Timing of fire inspection

Implementation: National Level  Amendment to the Building Code IRR  Annual inspection: scope/rationalization of fees  Annual building inspection vs. per occupant inspection  Timing of inspection  Amendment of the Local Government Code  Provided for staggered schedule for renewal of business licenses  Allow the adoption of risk-based classification of business To serve as basis for elimination of certain inspections To serve as basis for risk-based fees  Sanitary Code  Staggered expiration of Sanitary Permits (instead of simultaneous termination on 31 December of each year)

Implementation: LGU Level Requisite: Profiling of registered business – to enable the LGU to know how to prioritize activities during implementation stage Short Term (1-2 years) 1. Development of checklists and forms 2. Address the manner of conducting inspections – adoption og an inspection ordinance 3. Information dissemination 4. Elimination of duplicate or unnecessary inspection 5. Fee evaluation a. to eliminate duplicate or similar fees b. match the description of the fees with the actual purpose of the fees c. align with available benchmarks

Implementation by the LGUs Short Term to Medium Term (includes implementation in phases which will take up to 4 years to complete) Requisite: Development of a criteria to be used in assessing risk (for each type of risk) a. Adoption of risk-ba sed fees b. Adoption of risk-based inspection c. Revision of ordinances to reflect the foregoing