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Thursday, May 5, 2011

Opening up a business in Mati: an experience that discredits (or is credited to) Peter Wallace’s kiss

Rewind July, 2004. Peter Wallace, an Australian business consultant residing in the Philippines and Managing Director of the Wallace Forum, several years ago released a report entitled KISS (Keep it Simple Stupid). This is a critique of the process of opening up a business in the Philippines.

Although he compared the Philippines as better than the Democratic Republic of Congo in terms of the number of days it takes to open up a business (215), it definitely is way behind Australia’s record (2 days). The country's average is 40 days and can be much more as Wallace wrote. The report basically expands on the World Bank’s work which links excessive government intervention to slow economic growth.

I do agree with such claims, the statistics presented by Wallace is reason enough. Because of the delays caused by some unnecessary processes in business registration, several businessmen may hesitate to do business in the country. Thus, hindering investment into our country and obviously worsens our employment problems and thus slows the economy.

Times have changed I guess.

Fast Forward to February 2011. My hometown, Mati has just been recently declared (again) as a city based on a Supreme Court reversal. I’ve been in and out of the town for several years now, not knowing when and how (and where) to settle down for good with my wife. I have decided to stay (again) for good in the town (city, I mean) last May, then another consultancy project came last October which brought me to General Santos City.

However, I’m back here again, and this time I have decided to symbolically settle down in this promising place by registering my consultancy practice as a business here. Having read Wallace’s KISS report a long time ago, I tried to test if it still is true today here in Mati.

First Stop: Business Name Registration at the Department of Trade and Industry. This would have just taken less than an hour (they have a computerized system). However, I went into the provincial office of DTI in the afternoon and they told me that their cut off time for the day’s transaction is at 12 noon so mine is considered as the next day’s transaction, so my Certificate of Business Name Registration will be released the next day. Fair enough because I still have to get the checklist of requirements for the next step, the Mayor’s Permit.

Next Stop: Getting the Mayor’s Permit. Following is a list of requirements I have to comply before the city permits me to operate my business here (for sole proprietorship):

•Duly accomplished Application for Business Permit
•Current year Business Community Tax
•Certificate of Business Name Registration (from DTI)
•Barangay Clearance
•Police Clearance

That’s 5 requirements and takes note that I have already started finishing one (the DTI Certification). The Business Community Tax took me around 15 minutes to get (including the waiting at the line). The Police Clearance took around 15 minutes too. It’s a bit longer (almost an hour) for the Barangay Clearance.

Afterward, it took me one whole day the next day to pay the necessary payments and fill up the Application for Business Permit Form which should be signed by the different city offices (City Engineer, City Environment, City Planning, City Treasurer, Fire Department, City Health, and the Business Permit and Licensing Office). Thank God I have several friends at the City Hall: I would have suffered the same fate as Wallace’s friend who got lost in the maze of offices and hallways.

Wheew! That’s almost two days of coming and going and I finally got my Mayor’s Permit.

Last Stop: Certificate of Registration from the Bureau of Internal Revenue. Following are the requirements for this particular registration:

•3 copies of Duly Accomplished Form 1901 (Application for Registration for Self Employed and Mixed Income Individuals)
•Registration fee (Php 500.00) to be paid at Land Bank using Form 0605 (Payment Form)
•2 photocopies of Marriage Contract (Birth Certificate for Single Applicants)
•2 photocopies of DTI Certificate of Business Name Registration
•Certification fee and Documentary Stamp (Php 115.00)

The BIR process took less than a day. I guess much has really changed since Peter Wallace’s report.

But wait! There’s one more step.


Ultimate Step: Authority to Print Receipts and Invoices. Here are the requirements for this:

•Dully Accomplished Form 1906 (Application For Authority to Print Receipts and Invoices)
•Job Order (from a BIR accredited printer that you have contracted to print your receipts)
•Final and Clear Sample of Receipts and Invoices (from the accredited printer)
•BIR Certificate of Registration (the one given to me after I have accomplished the Form 1901)
•Proof of Payment of Registration (The Php 500.00 paid to Land Bank with Form 0605)

I was a bit relieved when the printer told me that they will help me in following up my Authority to Print. All I have to do is drop by the printing press and pick up my documents and the receipts after a minimum of three weeks. Huh! Wait. Did I hear it right? Yup, three weeks.

Ok, three weeks, that’s 21 days right plus I have already consumed 2 days for the mayor’s permit plus the 1 day for the BIR registration, that’s 24 days. Not bad. 7 years ago it would have been almost twice that long.

As Wallace has reported, Pakistan’s computerization and streamlining of business registration, shortened the time of starting business in that country from 53 days to 22 days. Maybe the Philippines has done something aside from just talk about it for the past seven years (take note: that’s from 40 days to 24 days). Or maybe it’s geographical, Mati maybe an exception. Maybe the city government learned something from Wallace’s KISS 7 years ago. Or maybe (Wallace would have said) I’m just lucky.

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