N ATIONAL C OMPETITIVENESS C OUNCIL Transaction Costs and Flows Working Group (TCF-WG) DAVID L. BALANGUE Private Sector Champion, NCC-TCF 25 October 2007

N ATIONAL C OMPETITIVENESS C OUNCIL Muntinlupa City – steady rise in business permits and local taxes from 2003 after reducing the number of steps in business permit process Ormoc City – 85% increase in income from business permits from PhP M (2005) to PhP M (2006) after streamlining its business permit/license process Marikina City – Businessmen are pleased with the convenience and speed of the Marikina Business One Stop Shop (BOSS) Cabuyao – revenue rose to PhP189.95M (2005) from PhP5.34M (1995) brought by the efficiency of its BOSS Application of the One-day registration process: SSS (employer registration), BIR (TIN and VAT) and Philhealth DTI shortened processing time for business name registration from 1 week to 1 day … and the number is increasing… the list is expanding GOOD NEWS Transaction Costs and Flows Working Group

N ATIONAL C OMPETITIVENESS C OUNCIL PRIORITY AGENDA PROJECTS STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED (Private Sector Partners: Foreign Chambers, MBC and PCCI) 1.Improve the procedures for the entry and exit of business persons (Private Sector Partners: Foreign Chambers, MBC and PCCI) ACR-ICard implementation Validity period extended from 1 yr to 5 yrs Comparable with ASEAN Ease of Visa Application Pre-approved Visa Upon Arrival-MOA between BOI and BI signed last 25 April 2007 (good for 30 days) Pro-Investment Visa – BI released MC No. MCL last 1 August 2007 (good for 6 months extendible to a max of 3 yrs) Modernization of the Immigration Law Bills filed in both Houses Transaction Costs and Flows Working Group

N ATIONAL C OMPETITIVENESS C OUNCIL PRIORITY AGENDA PROJECTS STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED (Private Sector Partners: PUCI, Philexport) 2.Enhance the procedures for the entry and exit of goods (Private Sector Partners: PUCI, Philexport) X-ray machines for inspection of goods (import/export) Deployed to all major ports BOC reduced the fees for the use of the X-ray machines ($5 for 20 TEU and $10 for 40 TEU). Comparable with ASEAN National Single Electronic Window (NSEW) 1 st National Single Window Summit last 7- 8 August last 2007 On-going pilot testing of import clearance processes. Pilot NSEW linkage with Korea and Thailand to be conducted in the 4 th Qtr of 2007 Transaction Costs and Flows Working Group

N ATIONAL C OMPETITIVENESS C OUNCIL PRIORITY AGENDA PROJECTS STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED (Private Sector Partners: PCCI, MAP, AIM, GTZ, IFC-WB) 3.Improve Processes in Business Operation (Starting A Business, Registering Property, and Securing Licenses) (Private Sector Partners: PCCI, MAP, AIM, GTZ, IFC-WB) Consistency of Business Rules at the National and Local Levels Finished road tour activities for 20 LGUs; on-going consolidation/ assessment of data and submission of preliminary reports to the participating LGUs Top 1/3 of WB Doing Business Survey Costs of Starting a Business Dealing with Licenses Protecting Investors Closing a Business Simplification of Procedures Anti-Red Tape Measures already implemented by NGAs/LGUs PBR Kick-off event on 30 August; on-going system design development One Stop Shop Strengthening of the NERBAC in the regions Investor issues and Concerns (I/C) Handling NCC-TCF Private Sector Co-Champion for I/C handling Investment Ombudsman IPU Network Transaction Costs and Flows Working Group

N ATIONAL C OMPETITIVENESS C OUNCIL Transaction Costs and Flows Working Group StepProcedures (Starting a Business per WB Doing Business Survey 2008) Time to Complete AgencyAgency Commitments (Pre-Summit Workshop last 19 October 2007) Impact on the number of days 1Obtain bank certificate of deposit of paid-in capital 1 day 1 2Verify the availability of the company name with the SEC 1 daySEC 1 3Register incorporation with the SEC3 daysSECdeduction of 1 day2 4Obtain Community Tax Certificate1 dayLGUFor review and further study under Project 3.1 of NCC-TCF in coordination with IFC-WB, AIM and the respective LGUs 1 5Apply for a Barangay Clearance2 daysLGU2 6Obtains mayor's permit/municipal license to operate at the Licensing Section of the Mayor's Office 11 daysLGU11 7Receive inspection from the Mayor's Office5 daysLGU5 8Buy inspection books of account at bookstore1 dayBIRFor review and further streamlining. However, the 14 days allocated for step 12 can already be removed in the list 1 9Register for VAT2 daysBIR2 10Payment of documentary stamp taxes1 dayBIR1 11Obtain the Authority to print receipt/invoices with the BIR 1 dayBIR1 12Print receipts and invoices at the print shops accredited by the BIR 14 daysBIR Accredited Printers 0 13Submit receipts and invoices to the BIR for approval, have receipts/invoices and books of accounts stamped by BIR 1 dayBIR1 14Register with the SSS1 weekSSSAlready implementing the 1- day processing (SSS, Philhealth and Pag-ibig) which will be eliminated when connected to PBR 1 15Register with Philippine Health Insurance Company (PHIC) 1 weekPHIC1 15TOTAL (per Doing Business 2008)58 daysTarget without the PBR31 days

N ATIONAL C OMPETITIVENESS C OUNCIL Typical Process on how a businessman register his Business From DTI SEC = 3 days CDA xx days20 days 5 days To 12 days (Streamlined) DTI SEC = 3 days CDA 1 day5 days 1 day 9 days USING PBR3 days1 day5 days0 day (Target) Source: PBR-Project Management Unit

N ATIONAL C OMPETITIVENESS C OUNCIL PRIORITY AGENDA PROJECTS STATUS and ACCOMPLISHMENTS METRICS / INDICATORS ADDRESSED (Private Sector Partners: AIM, ADB, GTZ) 4.Institutionalize the regulatory impact assessment (RIA) on existing/new government requirements (Private Sector Partners: AIM, ADB, GTZ) Initial implementation of RIA in selected NGAs On-going review and preparation of conceptual framework Improvements on Costs of Starting a Business Dealing with Licenses Protecting Investors Paying Taxes Enforcing Contracts Closing a Business (Private Sector Partners: PCCI, MBC, Foreign Chambers, IFC-WB) 5.Streamlining of incentive benefits (Private Sector Partners: PCCI, MBC, Foreign Chambers, IFC-WB) Harmonization of incentives package NCC/IFC conducted roundtable discussions that brought together the thought leaders from the private sector and academe. Total Package Transaction Costs and Flows Working Group

N ATIONAL C OMPETITIVENESS C OUNCIL MOVING FORWARD 1.Improve the procedures for the entry and exit of business persons  Passage of the Immigration Bill into Law  Monitoring and further enhancement of the Pre-Approved Visa Upon Arrival and Pro-Investment Visa. 2.Enhance the procedures for the entry and exit of goods  Full implementation of the guidelines for X-Ray machines  Expedite the implementation of the NSEW Transaction Costs and Flows Working Group

N ATIONAL C OMPETITIVENESS C OUNCIL MOVING FORWARD 3.Improve process in business operation (Starting a Business, Registering Property, and Securing Licenses)  Adoption of best practices from the IFC/WB study in the NGAs/LGUs  PBR Implementation  IPU Network linking with NERBAC  Operationalization of the NCC-TCF Private Sector Co-Champion and the Office of Investment Ombudsman (OIO) 4.Institutionalize the regulatory impact assessment (RIA) on existing new government requirements  Development and implementation of the RIA Work plan 5.Streamlining of Incentive Benefits  Review/approval of draft Framework of Incentives to be done by appropriate private & public sector agency/s  Recommend amendments on the harmonization of incentives Transaction Costs and Flows Working Group

N ATIONAL C OMPETITIVENESS C OUNCIL THANK YOU N ATIONAL C OMPETITIVENESS C OUNCIL Transaction Costs and Flows Working Group