Tools for Analysing the Political, Legal and Regulatory ... - Business Environment Phils Tools for... · Tools for Analysing the Political, Legal and Regulatory Environment ... legal

Project No. 01.2467.7-001.00

Small and Medium Enterprise Development for

Sustainable Employment Program

(SMEDSEP)

Tools for Analysing

the Political, Legal and Regulatory Environment

for SMEs

December 2004

COOPERATION

Federal Republicof

Germany

Republic of the Philippines

Written by:

GTZ Research Fellow

Published by:

A DTI-TESDA-GTZ Program10th Floor, German Development Center,PDCP Bank Centre Building, V.A. Rufino cor. L.P. Leviste Streets,Salcedo Village, Makati City

|Ms. Martina Vahlhaus, Program Manager

Printed on:

Christof Gross

The Small and Medium Enterprise Development forSustainable Employment Program (SMEDSEP)

28 January 2005 - Makati City, Philippines

[email protected]

[email protected]

Tools for Analysing

the Political, Legal and Regulatory Environment

for SMEs

December 2004

FOREWORD Improving the Business Environment and Investment Climate for SMEs has become one of the most talked about development issues of recent times. This interest has been reflected in a spate of articles and conferences about the subject at international and regional level. Similarly, there are a number of highly-aggregated tools for measuring the status of individual countries, regions and even individual cities - Doing Business from the World Bank; Investment Climate Surveys and the World Competitiveness Ranking to name but a few. A working group of the International Donor Committee for Small Enterprise Development has been working for the last three years on identifying best practice. Despite such high profile efforts there remains, in our opinion, a gap on the level of practical, every day ‘how to’ tools and methodologies for practitioners faced with the task of consulting governments about how to improve their business or investment climates. This collection is a small effort on our part to go some way towards filling this gap by providing a collection of tools that have proved their use in our work promoting the business and investment climate in the Philippines. Whilst the tools presented here are neither comprehensive in their scope nor definitive in their content, they represent a starting point in the development of a better repertoire of tools in this area expanding and refining our intervention possibilities as consultants. We at GTZ/SMEDSEP* are happy (and not a little proud) to be able to share our knowledge in this way, and would be grateful to receive feedback and/or additions to the tools presented in this collection. In this first paper we focus on a narrow understanding of business environment of SME – specifically the political, legal and regulatory environment.

Martina Vahlhaus Program Manager SMEDSEP January 2005

*SMEDSEP is a technical cooperation program between the Republic of the Philippines and the Federal Republic of Germany being implemented jointly by the German Technical Cooperation (GTZ) for the German side and the Department of Trade and Industry (DTI) and the Technical Education and Skills Development Authority (TESDA) for the Philippine side.

2

1. Objective and target group of this paper This paper aims to describe the approach and tools used by GTZ for analyzing and identifying interventions for the improvement of the political, legal and regulatory business environment for small and medium businesses. The findings presented here are based on the experiences of the Philippine-German development cooperation project called “Small and Medium Enterprise Development for Sustainable Employment Program (SMEDSEP)” in its first year of implementation. An attempt is made to synthesize the approach taken into somewhat standardized and hopefully replicable tools in order to feed the knowledge generated by SMEDSEP into the knowledge management system of GTZ, to inform the work on similar approaches and to serve as an input to the wider donor community in its quest for improving the business environment for small and medium enterprises. Therefore, the main target audience consists of practitioners working with donor agencies, be it in the field, concerned with actual implementation questions or in headquarters, where the focus is on planning, monitoring and concept development. From our judgment, the relevance of this toolbox extends beyond a narrow SME perspective to include such topics as local and regional development, decentralization, good (regulatory) governance and administrative reform. Last but not least, we envision that members of international bodies such as the Committee of Donor Agencies for Small Enterprise Development might find the present work interesting in distilling what works and what does not. Finally, it should be stressed that this toolbox is intended to be a living document, in which further tools and experiences with them will be added as the program’s implementation unfolds. Admittedly, this is making a virtue of necessity as the program is still in its beginnings. Therefore, the foundation of this toolbox is laid by the analysis stage and the six main tools identified there. Despite this limitation, we still deem it useful to present these tools and their application according to our “guiding principles” to serve the above-mentioned users and functions.

The Small and MThe Philippine gov institutional proble Enterprises (SMEs license and regula services. The inves SMEDSEP goalThe overall goal o Visayas, in a way t SMEDSEP targeSMEs and micro-e SMEDSEP com1. Enhancement of2. Market developm3. Improvement of 4. Market developm Partners Government - Department of Tr- Technical Educat- Local Governmen

- at a glance -

edium Enterprise Development for Sustainable Employment Program (SMEDSEP) ernment increasingly regards SMEs as the driving force behind economic and social development. However, structural andms are hampering efficient and dynamic management at both national and regional level. The Small and Medium-size), are struggling with a multitude of economic-policy, legal and bureaucratic obstacles. Among these are cumbersome

tory procedures as well as insufficient access to markets, business services, training and upgrading and financial and credittment climate of the Philippines thus is not conducive to the full usage of entrepreneurial capacities of SMEs.

f the program is that state and private institutions shape the investment climate in the Philippines, and particularly in thehat enables the development and use of entrepreneurial potential and stimulates competition.

t group nterprises with growth potential

ponents SME policies, laws, and regulations, ent for services relevant to SMEs,

access to middle and long-term financial credit, and ent for Demand-Driven Technical Vocational Education and Training programs

Private Sector ade and Industry (DTI) - Local Business Development Service (BDS) Providers ion and Skills Development Authority (TESDA) - Private Banks t Units (LGUs) - Associations and Chambers

- Human Resource Development (HRD) Providers

- For further information, please visit our website at www.smedsep.ph -

3

http://www.smedsep.ph/

2. Introduction According to the Committee of Donor Agencies for Small Enterprise Development’s working group on enabling environment†, the business environment contains a broad range of elements among which the following are deemed most relevant for donor interventions: • Macroeconomic strategies – particularly those that influence the performance of

small enterprises • Governance issues – as they relate to the governance, enforcement and

promotion of the small and medium enterprise sector • Policy, legal and regulatory framework for small and medium enterprise activity • Organizational framework for the promotion, representation, monitoring and

review of small enterprises While there are certainly other elements of the business environment that can and do affect the performance of small and medium enterprises (e.g., infrastructure, access to financial services, quality of the labor force), the present paper focuses on policies, laws and regulations for two reasons. First, improving the legal and regulatory framework for the operation of small businesses is a rather recent innovation in donor interventions. Therefore we felt it was worthwhile to describe the SMEDSEP approach, its tools and the experiences made and lessons learned so far. This is to inform and support others faced with similar tasks and to provide an input to the donor discussion on the design and implementation of such interventions. Secondly, in light of the limited experiences made so far in this field, we assume there is a demand for concrete tools to provide some guiding in the process. Admittedly, the program has itself just started but the experiences made so far in the analysis stage seem already worth sharing. As a living document, this paper will evolve along with the program’s implementation and more tools will be added as further implementation stages unfold. The political, legal and regulatory situation for SME in the Philippines – in brief SME and their specific concerns have recently gained some prominence in the Philippines through policies such as the Magna Carta for Small Enterprises of 1997 (definition of SME and establishment of various government support services), the Barangay Micro Business Act of 2002 (encouraging micro enterprises to formally register by e.g. exempting them from taxes and minimum wage laws) and the SME Development Plan 2004 –2010 (calling for broad based support to foster competitiveness and growth of SME). Last but not least, president Gloria Macapagal Arroyo announced that her administration would seek to create one million new jobs a year by supporting entrepreneurs. These initiatives aim at improving SME performance at various levels and thus constitute the political framework in which SMEDSEP works to improve the business environment for SME. Nevertheless, SME are still faced with a number of tedious and cumbersome legal and regulatory procedures, which act as a drain on managerial time and productive usage of resources. Even worse, such an environment may work as a severe disincentive to register one’s business, which keeps entrepreneurs from availing of

† See Committee of Donor Agencies for Small Enterprise Development (DRAFT, April 2004): “Promoting practical frameworks for donor agencies in the reform of the business environment for small enterprise development – Proposals for the Committee of Donor Agencies for Small Enterprise Development presented by the Working Group on Enabling Environment”

4

various (government, financial) services and seriously biases official statistics and planning. An indication of the magnitude of this concern is given in table one below, which shows the strikingly large proportion of the informal economy in the Philippines, second only to Thailand in the region.

Country Year GNI per Capita (US$) Informal Economy (% GNI, 2003)

Population (millions)

AVERAGE 2004 5,464 24.3 139.5

Cambodia 2004 310 .. 13.4

China 2004 1,100 13.1 1,288.40

Hong Kong, China 2004 25,430 16.6 6.8

Indonesia 2004 810 19.4 214.5

Lao PDR 2004 320 .. 5.7

Malaysia 2004 3,780 31.1 24.8

Mongolia 2004 480 18.4 2.5

Papua New Guinea 2004 510 .. 5.5

Philippines 2004 1,080 43.4 81.5

Singapore 2004 21,230 13.1 4.3

Taiwan, China 2004 13,320 19.6 22.6

Thailand 2004 2,190 52.6 62

Vietnam 2004 480 15.6 81.3

Source: http://rru.worldbank.org/DoingBusiness/

Table 1: Economy Characteristics

In order to provide an example of the ineffective governance of the business sector, the procedure to start a business may serve as an illustration‡. Table two below shows the number of procedures, the total duration, the cost and minimum capital requirement it takes to start a business in the Philippines and places this in the regional comparative perspective.

Country Year Number of procedures Time (days) Cost (% of income per

capita)Min. capital (% of income

per capita)AVERAGE 2004 8 52 48.3 100.5

Cambodia 2004 11 94 480.1 394

China 2004 12 41 14.5 1,104.20

Hong Kong, China 2004 5 11 3.4 0

Indonesia 2004 12 151 130.7 125.6

Lao PDR 2004 9 198 18.5 28.5

Malaysia 2004 9 30 25.1 0

Mongolia 2004 8 20 8.1 182.1

Papua New Guinea 2004 8 56 30.7 0

Philippines 2004 11 50 19.5 2.2

Singapore 2004 7 8 1.2 0

Taiwan, China 2004 8 48 6.3 224.7

Thailand 2004 8 33 6.7 0

Vietnam 2004 11 56 28.6 0

Source: http://rru.worldbank.org/DoingBusiness/

Table 2: Starting a Business

‡ The survey examined commercial or industrial firms with up to 50 employees and start-up capital of 10 times the economy's per-capita GNI (Gross National Income). It counted all procedures (defined as a legal requirement that involves a separate interaction between the firm and an outside entity -- officials, notaries, etc) required to register a firm. Data also include screening procedures by a set of overseeing government entities, tax- and labor-related registration procedures, health and safety procedures, and environment-related procedures. For more details on the methodology please refer to http://rru.worldbank.org/DoingBusiness/Methodology/StartingBusiness.aspx

5

Although the Philippines is not substantially worse than other economies in the

s into account the

is worrying to see that on average about a fourth of all enterprises rank these

ovides three rationales for tackling

(1) the share of the informal economy in the Philippines is the second largest in

region when it comes to starting a business, the shining examples of Hong Kong and Singapore demonstrate that there is much room for improvement. While table two above presents the ‘official’ process, in that it takeprocedures, duration and cost as mandated by the respective laws and regulations, the relevance of this assessment can be greatly increased by also including the business perspective on government effectiveness. Table three below is based on data generated by the World Bank’s Investment Climate Survey Online§ and gives some information on where the business sector sees major or very severe obstacles when interacting with the public sector.

tax administration

customs and trade regulations

labor regulations

licensing and operating permits

econnomic & regulatory policy uncertainty

corruption

anti-competitive/ informal practices

Efficiency of government in delivering services

Officials' interpretation of laws

33.97%

24.93%

Source: Adapted from Worldbank, Investment Climate Survey Online, Philippines 2003

business obstaclePercentage of surveyed firms rating their interaction with

government in this field as a major obstacle or very severe obstacle to

their business

25.14%

21.66%

24.71%

13.52%

29.50%

35.17%

24.27%

Table 3: Government as a

Itgovernance issues as major problems. According to this survey, corruption and inefficient delivery of government services are the most pronounced government failures in the business sector’s dealings with the authorities. This very much points to the fact that it is not just the procedures, which an enterprise has to go through as stipulated by laws and regulations but also (and maybe even more so) the way these transactions are administered and carried out. In conclusion, the brief discussion above prpolicies, laws and regulations in order to improve the business environment for micro, small and medium enterprises in the Philippines:

the region, which may at least in part be due to the business unfriendly regulatory environment,

§ Investment Climate Assessments (ICAs) look in detail at factors constraining the effective functioning of product markets, financial and non-financial factor markets, and infrastructure services, including, in particular, weaknesses in an economy’s legal, regulatory and institutional framework. ICAs also provide the tools and analytical framework to identify reform priorities in a country’s investment climate, by linking constraints to firm-level costs and productivity. Underpinning all ICAs is a standard core Productivity and Investment Climate Survey (PICS) instrument, which allows the identification of existing conditions, the benchmarking of conditions to monitor changes over time, and the analysis of the impact of these conditions on firm-level performance. ICAs further employ a common structure and methodology to facilitate comparability between countries.

6

(2) there is a wide discrepancy between actual and available best practice government-private sector interaction,

(3) the implementation of laws and regulation is plagued with inefficiencies, corruption and unnecessary costs to businesses.

There is thus an undebatable need for reform. While many improvements seem to be desirable, SMEDSEP focuses on those elements, which it can support given its financial and time constraints. By supporting the streamlining of business registration procedures and informing the national policy dialogue, the program aims at reducing uncertainty and opportunity for corruption (on the local level) as well as improving governance and government efficiency. In what follows, the program’s guiding principles that shape its approach as well as the tools proper will be presented. 3. The SMEDSEP approach towards improving policies,

laws and regulations This paper introduces the tools that are used in SMEDSEP’s approach to improve policies, laws and regulations. In doing so, it answers the question “What has been done?”. Equally important, however, seems to be the question “How has it been done?” because being knowledgeable about a tool is a necessary but not sufficient precondition for successful implementation. Therefore, we have tried to distill the following ‘guiding principles’ for SMEDSEP’s interventions:

- Usage of a comprehensive approach towards improving the business

environment. While the starting point for the improvement of the business environment is the local government unit (LGU), laws and regulations on the national level will be addressed simultaneously in order to safeguard coherence. On the one hand, the responsiveness of local authorities to business needs and the rules and regulations set locally as well as the way they are implemented contribute to the cost of doing business. LGUs thus impact substantially on local business establishments in the Philippines. Therefore, some interventions focus on the local level in order to achieve quick demonstration results (bottom-up strategy). On the other hand, national counterparts are also essential as they shape the broader legal and regulatory setting, which is beyond the influence of LGUs. With the understanding and reputation gained at local levels, the program can therefore inform the national policy dialogue and support reforms (top-down strategy).

- Process orientation. Ongoing evaluation and fine-tuning is vital to impact. Rather than rolling out a pre-determined plan, constant adjustment and (re)orientation towards “doable” reforms provide the intervention with the necessary flexibility to address problems as they emerge.

- Identification of the energy for change. Instead of targeting theoretically desirable optimizations and pushing them against huge resistance, it is much more promising to go with the flow – and to adjust or withdraw if such a flow is absent. Therefore one criterion in the selection of possible interventions is the degree of commitment by specific leaders or organizations – whether directly observable or perceived.

- Introduction/promotion of competition. On the municipality level, this is done by presenting (parts of) the bi-annual city competitiveness survey of the Asian Institute of Management, which is supported by GTZ. On the national

7

level, regional benchmarking is encouraged by using data e.g. from the World Bank’s doing business database (http://rru.worldbank.org/DoingBusiness/). Furthermore, competing for the programs support and consulting services is also encouraged.

With these guiding principles constituting the mindset of SMEDSEP, the program has to face the following challenges:

• The major challenge in setting up a program to promote the private sector in the Philippines lies in the definition of the respective roles for the private sector and in particular the public one. Although a general understanding appears to exist that the private sector is a prime engine to promote development via investment and employment, massive state interference to “support” the private sector is still a popular idea, especially with bureaucrats. In their attempt to create jobs and to promote the economy, policy makers and government bureaucrats/administrators think about how their departments can increase the funding and services especially to the “poor and help seeking” SME. It is thus very difficult to communicate that subsidized state interventions disturbe or even destroy otherwise viable markets for all sorts of services. Concepts and approaches to withdraw the state from direct provision of finance and services and instead to focus on creating an enabling environment for private provision of such services therefore meet hefty resistance. To make matters worse, there is a lack of common understanding among national authorities about what constitutes SME and their problems. Last but not least, conflicting interests (e.g. between tax cuts to promote SME and revenue targets) have to be balanced.

• In order to influence the national policy agenda, demand and pressure for reforms must be built up by local stakeholders. On behalf of SMEDSEP this requires a long-term commitment so as to establish stable alliances, to raise awareness and to inform the debate. Building good relationships with possible promoters of change is crucial to gain acceptance as any sustainable change must be built up internally following a shared vision. Besides, profound knowledge of the situation must be acquired over time and communicated to interested parties. Therewith credibility will increase and facilitating reform proposals becomes feasible.

• Laws and regulations might be established with the best purpose in mind but at the same time can contradict or confuse existing legislature. Moreover, the process of drafting laws is often neither inclusive nor participatory thus constraining information and awareness. Another consequence of this is that ownership outside the drafting body is often weak and therefore implementation remains the major obstacle. Despite strong recent decentralization efforts, funding and knowledge on the ground remains insufficient. Combined with lack of coordination (e.g. between national and local government agencies), incompetence and corruption, this constitutes a formidable impediment to establishing a business environment that is conducive to SME growth and competitiveness.

8

http://rru.worldbank.org/DoingBusiness/

4. Tools for improving the business environment In the matrix below, you find the respective tools and resources of the analysis stage of SMEDSEP. Each tool is organized by title, objective, methodology, requirements, lessons learned and resources. The requirements will give some approximation of the costs involved (international and local consultants [IC and LC] in person days [PDs] and operating costs).The resources are added to supplement the tools and encompass documents such as terms of reference (TOR), documentations, visualizations, invitation letters etc. Needless to say, these resources should serve as samples and examples and would have to be adapted (or replaced) in other contexts.

Interventions to Improve the Business Environment Implementation Stage

Tool Resources

A.1 Benchmarking city competitiveness in partnership with local academe

A.1.1 TOR/Contract

A.2 Focus Group Discussion (FGD) on LGU governance

A.2.1 TOR

A.2.2 Sample invitation letter

A.2.3 Sample press release

A.2.4 Process visualization

A.3 Analysis of national policy framework for SMEs

A.3.1 TOR

A.3.2 Executive summary

A.4 FGD on national policy framework for SMEs

A.4.1 TOR

A.4.2 Discussion Questions


A.4.4 FGD documentation

A.5 Regional SME Studies A.5.1 TOR


A. Analysis

A.6 Survey of business registration procedures

A.6.1 TOR


A.6.3 Business registration

process visualization

9

Tool A.1 Benchmarking City Competitiveness in partnership with

local academe

Objective (what for?)

- benchmarking the competitiveness of cities to allow comparison among them and over time

- measurement of “drivers of competitiveness” to identify strengths and weaknesses

Methodology (what, how and with whom?)

- the cities were ranked according to seven “drivers” (dynamism of local economy, human resources and training, responsiveness of local government, quality of life, infrastructure, linkages and accessibility, cost of doing business)

- each driver encompasses qualitative and quantitative indicators, totaling 70, drawing on discussion rounds and available statistical data

- In each participating city, partnership with the local academe was sought

- The overall effort was coordinated by a well established academic authority in the country

- The findings were presented in a national conference and a road show in the participating cities

Requirements* (which inputs?)

Personnel: 1-2 LC with 5-10 PDs per city and 2-3 LC with 30-45 PDs for the national coordination, report writing, presentation road show etc. Operations: venues for city conferences and national conference, meals, traveling, printing/publishing, road show Total time frame: 6 months

Lessons Learned

• Partnering with an established and well-connected academic institution proved to be very beneficial. The “brand name” served as a door opener among policy makers

• A risk connected to this strong position was the tendency of the partner to pursue its own (promotion) agenda instead of identifying with the program’s intentions.

• Ensure that the project has access to the raw data behind the research project

Resources A.1.1 TOR/Contract

*[IC=International Consultant, LC=Local Consultant, PDs=person days]

Back to the toolbox

10

TOOL A.1 Benchmarking City Competitiveness in partnership with

local academe

Ressource No.

A.1.1

Title

TOR/Contract

Back to Tool A.1

TERMS OF REFERENCE

Title: Philippine Cities Competitiveness Ratings Project 2003 Background/Rationale: The City Competitiveness Program (CCP) of the Asian Institute of Management Policy Center was established in 1997 with the end goal of helping Philippine urban centers cultivate competitive industries, promote healthy communities, and maximize the competitiveness potential of Philippine cities. It is envisioned to become a convergence point for principal actors in city development to discuss issues pertaining to the governance of city development, and more importantly, to provide a venue for multi-sectoral dialogue, research and consultation that would assess the competitiveness and over-all development performance of emerging cities. The PHILIPPINE CITIES COMPETITIVENESS RATINGS PROJECT (PCCRP), the major project of the CCP, has been conceived to look at the ability of leading and emerging Philippine cities to nurture healthy businesses and communities. Cities are rated according to the following “competitiveness drivers” where each driver is composed of several indicators:

Cost of doing business Infrastructure adequacy and quality Human resource endowment and training Linkages to major urban and growth centers Quality of life Responsiveness of local governance Dynamism of local economy

Last 1999, the Policy Center completed a competitiveness ranking of ten emerging Philippine Cities vis-à-vis national and international standards. The results of the study were presented in an international conference with the end goal of assisting national and local governments in the preparation of development plans, and to also link investors with potential partners and businesses. Furthermore, the Policy Center released a formal and academic research summary and a more condensed magazine publication for public dissemination. The study succeeded in producing an objective benchmark of the strengths and weaknesses of each city and providing local businessmen and government leaders a policy framework from which to improve the business and human environment in each urban area. In 2001 the Policy Center started another round of competitiveness ratings. The rating was done in partnership with the Department of Trade and Industry with the aim of promoting an improved investment climate in each city. The ratings were based on both quantitative and perception-based data. This was done by gathering existing government data and conducting surveys to the local businessmen. The number of cities was increased to thirty- three (33) cities using an improved set of indicators. Cities were divided according to the size of their population (Metro, mid-sized, small).

11

The results of the study were presented in a conference spearheaded by the DTI Secretary in April 2002. The top three cities per category were recognized during the conference. Mayors or their representatives and various members from non-government organizations, local and foreign business associations, and academic institutions were among the attendees in the conference. Afterwards, road shows to the top cities were organized to present the results to local business groups and non-governmental organizations for a more in-depth discussion on the local issues and how to capitalize on their local advantages. A magazine summarizing the study and focusing on the best practices of the participating cities is currently being published. This year, another round of survey among selected key cities across the Philippines will be conducted. A new feature in this year’s survey will be training/human resources development for workers, including labor relations, productivity and standards.The AIM Policy Center proposes to TESDA-GTZ Project to fund the component in the Visayas. Two other donor organizations, namely ILO and the Asia Foundation, will also partially shoulder the cost of implementing this nationwide study. Objectives: The Philippines is confronted with rapid urbanization and migration in Metro Manila due to the dearth of economic opportunities in rural areas. If these economic opportunities were spread across the country, this problem could be alleviated. However, how capable are other urban areas in nurturing healthy businesses and communities?

The PCCRP is one way in which this could be measured. The primary objective of the PCCRP is to assess the strengths and weaknesses of the cities’ local economic and political systems insofar as their ability to uplift business and human lives are concerned. The policy objective for conducting the study is to encourage local government leaders to understand that with the decentralization espoused by the Local Government Code, their roles must shift from being mere service providers to economic managers. The study attempts to recognize and analyze the best practices in overall economic management by local government units. Local governments are now not only more aware of their evolving role in their city’s economic development, but can isolate which issues require more attention. Local governance can become more effective, strategic and focused. Aside from updating its city- profile database, the Policy Center will utilize the wealth of information collected to organize a national presentation of findings to aid local government leaders apply the lessons learned from well-managed cities. With a more enhanced and competitive business environment (including demand-driven TVET programs), the local government will be able to encourage more investors and generate more job opportunities. This could accelerate and sustain the growth of Small and Medium Enterprises (SMEs) and consequently enable the poor to participate in this growth. The ratings have already sparked a new plane of healthy competition among cities since several cities located in the same sub-regional clusters were deliberately included in the sample.

Mechanics: The Asian Institute of Management Policy Center will be the lead organization to conduct the Philippine Cities Competitiveness Ratings Project 2003. The Policy Center will tap its existing partners such as the League of Cities and other relevant local institutions. Different local Chambers of Commerce and Industries will also take part in the study. The Policy Center will be working closely with the different academic partners scattered across the Philippines that have worked for the previous ratings. Quantitative and qualitative indicators shall once again be utilized – the quantitative data will be sourced from existing government data, while the qualitative data will be perception-oriented, based on the projections of businessmen on revenues, quality of life, and growth in investments in relation to ease of doing business, quality of infrastructure, and other related factors.

12

About thirty quantitative indicators will be used, e.g., cost of power for industrial use, average household income, number of banks, life expectancy, among others. Other indicators will be taken from a survey to be administered to businessmen in the cities. For the 2003 edition, the research sample will cover fifty (50) cities from the 2002’s thirty-three (33). There are twelve (12) metro cities, thirteen (13) mid-sized cities, and twenty-five (25) small cities. Geographically, there are twenty- three (22) cities from Luzon, eleven (11) cities from the Visayas, and seventeen (17) cities from Mindanao. All the cities will be assigned to the different academic partners based on geographic location. Academic Partners will be responsible for disseminating and tallying the survey from businessmen and administering focused group discussions (FGD). They will then provide a city-level analysis based on the survey results and FGD. The Policy Center, being the lead research organization for the study, will be gathering city-level quantitative data in each city and will be the central coordinating office between the academic and institutional partners. They will also be responsible for the nationwide data analysis, processing, and final report drafting.

The results of the study will be released to the public. A national presentation of findings will be organized to inform local government officials, non-governmental organizations, the academe, and business groups. All forms of media will be invited to this event and will be given press kits. A formal and academic research summary and a magazine-type publication highlighting the best practices of the top cities will be released also. The magazine will be distributed to the participating cities’ local government and business organizations, academe, media, non-governmental organizations, and the like.

Expected Outputs: The project is expected to deliver the following

• The 2003 Philippine Competitiveness of Cities Report • National Presentation of Findings • City Magazine

Timeframe: The project will take six months to complete. June Orientation of Academic Partners

Distribution of Survey Forms July Finish Quantitative Data Gathering August-September

Finish Tally of Survey Forms Finish City Level Analysis

October Finish draft report November National Presentation of Findings

Preparation for Magazine

Back to Tool A.1

13

Tool A.2 Focus Group Discussion (FGD) on LGU governance


- validation of the findings of the competitiveness survey (see Tool A.1)

- prioritization of possible improvements - presentation and discussion of the recommendations with local

government representatives


- presentation of the overall survey findings and the city’s competitiveness

- discussion of selected indicators from the drivers “cost of doing business” and “responsiveness of local government”

- seeking consensus on priority issues for improvement - developing recommendations - presentation of the recommendations by one participating

entrepreneur to local government representatives in a second (afternoon) session

- documentation of main findings of overall process (in all cities) - participants: local entrepreneurs, academic partner as resource

person, moderator.


Personnel: 1-2 LC with 1 PD per city and 10 PDs for the overall process Operations: venues, meals, traveling

Lessons Learned

• The planned approach to make local governments commit to some reform on the spot proved to be too ambitious. Instead, it was decided to conduct the full series of FGD, distill common problems and then offer service packages based on international best practice.

• A strong focus on relevant indicators seems advisable because attention is otherwise easily distracted to secondary drivers and indicators

• While local authorities do have some discretion over regulatory processes, national regulations are at least equally important so that findings regarding the latter have to be fed in a broader reform debate.

• An unintentional impact was the interest, which was created by the presentation of the ranking. Overall, local government members were very receptive to benchmarking with other cities.

Resources A.2.1 TOR

A.2.2 Sample invitation letter

A.2.3 Sample press release


*[IC=International Consultant, LC=Local Consultant, PDs=person days] Back to the toolbox

14


Ressource no. A.2.1

Title

TOR

Back to Tool A.2

Focus Group Discussions in Eight Visayan Cities: Probing into the Details of the

Philippine Cities Competitiveness Ranking Project 2003 Background The 2003 Philippine Cities Competitiveness Ratings Project (PCCRP) undertaken by the Asian Institute of Management (AIM) was aimed to look at the ability of leading and emerging Philippine cities to nurture healthy businesses and communities according to competitiveness drivers which include, among others, the Cost of Doing Business, Responsiveness of Local Governance, Dynamism of Local Economy and Human Resource Endowment and Training. The AIM’s study covered 50 cities, 8 of which are located in the three pilot provinces of SMEDSEP. The PCCRP used ranking and scoring methods in estimating the cities’ competitiveness. The cities were then compared among one another, grouped in three categories (small, mid-sized and metro), and ranked according to how they fared in each competitiveness driver. The proposed project will draw from the wealth of information generated from the 2003 PCCRP and it will cover eight Visayan cities included in the recently completed competitiveness project Tasks • Provide explanations to the scores gained by each of the eight Visayan cities covered

in the 2003 PCCRP for the following competitiveness driver:

1. COST OF DOING BUSINESS • Informal fees (bribes) in the city are non-existent. • Local minimum wage.

2. DYNAMISM OF LOCAL ECONOMY

• In general, the city's regulatory environment (such as licensing procedures and fees, taxes, and other regulatory requirements) is conducive to business.

• In my city, access to financing for private businesses is readily available.

3. LINKAGES AND ACCESSIBILITY • In my city, the availability of support services, such as advice on product or

process development, marketing, and business strategy making, is readily available.

• The level of services provided by national agencies is very good.

4. HUMAN RESOURCE AND TRAINING (15 Indicators) • Skilled labor needed by my company is available in the city. • IT training programs available in the city equip students with needed IT skills

15

5. RESPONSIVENESS OF LGU (12 Indicators) • Securing a business permit is simple and efficient. • The city government is honest and transparent in its dealings. • Policies and regulation in the city are reflective of business needs. • The local government holds regular forums to elicit opinions of its constituents. • Business taxes imposed by the city are reasonable. • The city's master development plan is appropriate to business sectors' needs. • Land-use regulations, such as zoning, are reasonable and flexible.

• Determine areas/indicators in the above-mentioned list where improvements or further

enhancement are needed for each city • Identify measures which can be undertaken to address areas for improvement among the

selected indicators and prioritize these measures according to criteria (to be identified and agreed on by the stakeholders during the FGD);

• Recommend measures to improve such indicators by citing good practices observed/carried out by other cities (even outside the Visayan zone).

Methodology The project, as proposed, will use focus group discussion as its main methodology and it will be undertaken in eight selected local government units. The FGDs will highlight the findings of the Philippine Cities Competitiveness Ranking Project 2003 and it will identify the strengths, weaknesses, and areas for improvement in each LGU. Each FGD will last approximately three to four hours and it will be comprised of 10 individuals coming from different sectors of the local community. Target participants include seven owners and/or managers of small and medium enterprises, two representatives from the local academe, and one representative from the civil society. Validation meetings with local executives of each LGU shall be undertaken after each FGD. For flexibility in terms of arranging schedules with LGUs, local business people, representatives from the academe and civil society, one FGD will be scheduled per week. This will also allow AIM to process the information gathered immediately and at the same time provide ample time for the preparation for the next FGD. Expected Output A written report per city will be prepared which will include the following:

• Demographic data and economic profile; • Description of the city’s rank in the 2003 PCCRP; • Details/explanations of scores gained on the above-mentioned drivers and its

indicators; • Details/explanations on indicator no. 8 focusing on business regulatory environment; • Discussion on the cities’ regulatory environment in terms of licensing procedures and

fees, taxes, and other regulatory requirements based on the proceedings of the focus group discussions;

• Recommendations/solutions to areas where improvements are needed on the above-mentioned drivers, including a selection of recommended measures prioritized by the stakeholders;

The report will also include documentation of the actual focus group discussions and an assessment of the project implementation. Timeframe The Project is expected to be completed in 4 months.

Back to Tool A.2

16


Ressource no. A.2.2

Title

Sample invitation letter

Back to Tool A.2

Dear ___, The 2003 Philippine Cities Competitiveness Ratings Project conducted by the Asian Institute of Management ranked your city 7th under the Small Cities Category based on several indicators which contribute to the ability of cities to nurture healthy businesses and communities. The study was partially funded by the German Technical Cooperation (GTZ). In relation to this, the SMEDSEP (a Philippine-German Technical Cooperation Program between the DTI/TESDA and the GTZ) is probing into the results of the survey especially in the areas of Responsiveness of Local Government Units (LGU) and the Cost of Doing Business. Because we value your feedback and recommendations, may we invite you to actively participate in a Focus Group Discussion (FGD) on October 8 at 8:30 AM to 12:00 NN at __________________. The FGD will focus on the following:

• Business registration/licensing in your city in terms of requirements, fees, and time • City policy or ordinance that is restrictive or facilitative of the growth of business • City master plan/zoning • Local business taxes • Transparency/Honesty of the city in its dealings • Favors/Informal fees given to local employees to facilitate issuance of certain

permits/licenses/certification We wish to elicit specific issues on the above-mentioned indicators and recommend solutions to improve them. The recommendations shall then be prioritized according to the needs of the private sector. The results of the FGD will also be presented to the City Mayor. GTZ will later on propose which areas will be assisted in order to contribute to the enhancement of the city’s enabling environment for businesses specifically SMEs. We hope you confirm your participation in our FGD. Ms. _____ shall call your office soon for confirmation/follow up. Thank you and best regards. Sincerely,

Back to Tool A.2

17


Ressource no. A.2.3

Title

Sample press release

Back to Tool A.2

SMEDSEP Press Release Focus Group Discussion San Carlos August 20, 2004 Unified Chamber of Commerce of San Carlos to be founded after Focus Group Discussion “The joining of hands between the Filipino-Chinese Chamber of Commerce & Industry of San Carlos and other interested businesses in a united San Carlos Chamber of Commerce is an encouraging signal in the pursuit to strengthen the local business environment” said Martina Vahlhaus, program manager of SMEDSEP, after a focus group discussion with local entrepreneurs here on Friday. The Small and Medium Enterprise Development for Sustainable Employment Program (SMEDSEP), a Philippine-German development cooperation project jointly implemented by DTI, TESDA and GTZ, aims to improve the business environment for SME in selected cities in the Visayas. It therefore invites entrepreneurs to discuss the Asian Institute of Management’s “Philippine Cities Competitiveness Ranking Project”, which ranks 50 Philippine cities according to seven competitiveness drivers, and to share their viewpoints on the most urgent problems. The focus group discussions then produce recommendations on how to improve the local business environment and present them to LGU officials. Focusing on measures that are locally viable, Mr. Dickson Yu of FCCC&I and Anacleto Villarente of the San Carlos Development Board, Inc. declared their willingness to establish a body that would represent the San Carlos business community with one voice on pressing issues such as the power crisis. In the afternoon’s briefing session for Hon. Mayor Eugenio Jose V. Lacson and his aides from city hall, Mayor Lacson welcomed San Carlos‘ good performance in the AIM survey and expressed his readiness to support the streamlining of business registration processes. He would host national agencies involved in the process and inform the public about their registration requirements beforehand. This hands-on attitude was highly appreciated as it will spare businesses substantial travel expenses when implemented as early as next year. Other recommendations included to check the possibility of further devolvement of regulatory powers to the LGU and stronger private sector participation in the cities development council. The next FGDs will be held in the cities of Cadiz on September 10, and Mandaue on September 17.

- Please refer to the attached program description as background information -

Back to Tool A.2

18


Ressource no. A.2.4

Title

Process visualization

Back to Tool A.2

AIM Policy Center

City Competitiveness Project (PCCRP)

SMEDSEP Framework

Discussion of selected

indicators from the PCCRP with

SME

Prioritization of recommendations

to improve the business

environment by SME

Presentation/Discussion of the recommendations

with the LGU

After the eight FDG, GTZ offers its service packages

FOCUS GROUP DISCUSSION(in eight cities in the Visayas)

Fostering Competitiveness by benchmarking, establishing priority action and implementing it

Back to Tool A.2

19

Tool A.3 Analysis of national policy framework for MSMEs


- stocktaking and evaluation of national MSME promotion policies, laws and regulations

- stocktaking and evaluation of other policies, laws and regulations that affect MSMEs


- literature review of relevant laws and studies/publications from donors, government, private sector organizations, investment firms, academe etc.

- incorporation of outcomes from the respective FGDs (see Tool A.4)

- report writing and circulation


Personnel: 1-2 LC with 10-15 PDs Operations: Printing/publishing

Lessons Learned

Resources A.3.1 TOR



20


Ressource no. A.3.1

Title

TOR

Back to Tool A.3

REVIEW OF EXISTING POLICIES AND LAWS AFFECTING MSMES IN THE PHILIPPINES

Analytical Framework and Methodology If firms were of similar sizes, there would be no reason for studying MSMEs. They would be expected to receive more or less the same treatment as all other firms from regulatory bodies, financial agencies, legal and fiscal agencies, etc. But since firms are not of the same size, there may exist a bias (usually negative) in the treatment they receive from both government and private sectors. And the smaller the size, the greater may be the bias. The bias often stems from diseconomies attributed to size. Following are some examples of such size-related diseconomies.

1. Registration/setting up business: Due to their small size, the cost of registering MSMEs or setting them up, as a percentage of their output or sales, would tend to be higher than that of large firms. Moreover, due to their inexperience and lack of a specialized section to handle registration or the setting up of a business, small firms tend to take a longer time to assemble documents and other forms required by the registering agency.

2. Financing: Banks and non-banks would tend to cater to bigger sizes of firms because of the higher administrative cost of processing a loan from an MSME than from a large firm. There is also a preconception that risk of default is higher the smaller the firm. Collateral, in the form of fixed assets and real estate, is much more difficult to come by for smaller than for larger firms. And since both banks and non-banks would ordinarily demand such collateral for a loan, small firms tend to be eased out of a loan.

3. Tariffs: The political economy of tariff-setting is such that it is subject to organized lobbying. Since MSMEs are too small and too numerous to form such lobbies, they tend to have higher tariffs than the larger firms who belong to industries that have greater political clout.

As a result of such size-related bias, MSMEs are often handicapped at various stages of their operations vis-à-vis large and very large firms (LEs and VLEs respectively). Government then may respond by reducing such a bias through the passage of laws or regulations catering to MSMEs, something the Philippine government has done in the past. But the sheer preponderance of the whole gamut of laws and regulations emanating from government makes the Philippines among the most regulated in Asia**. This implies that body of laws and regulations weighs down on Philippine firms. Given the size-related bias, some laws and regulations may be weighing down more on small firms. Worse, the laws and regulations passed purportedly for the benefit of MSMEs may be hampering their development instead of encouraging their growth and dynamism. Due to lack of studies on

** The GCR 2000/2001 reports that the burden of regulation in the country is only better than Bangladesh, India, China, Indonesia and Vietnam. Moreover, excessive regulation tends typically to result in corruption, and a World Bank survey (2004) reports that corruption is considered by about half of the firms surveyed as a “moderate to severe burden”.

21

the subject, it is not known to what extent such laws and regulations actually benefit (or worsen) the welfare of MSMEs. The objective of the present study is thus to evaluate existing laws and regulations that are relevant to the workings of MSMEs. It will entail an analysis of both national and local laws as well as of general laws (e.g. Investment Code) and regulations (e.g. tax laws, Customs practices) and laws and regulations specific to MSMEs (e.g. BMBE law, Magna Carta for Small Enterprises) with the end in view of determining whether these inhibit or enhance the growth of MSMEs. The analysis of laws concerning micro enterprises (MEs) will be made separately from those that impact small and medium enterprises (SMEs), except for those laws and regulations that are relevant to both. Such differential treatment is warranted by the fact that

1. laws and regulations may be more relevant to one rather than the other (e.g. BMBE law for MEs only)

2. the implementation of such laws and regulations is effectively limited to one rather than the other (minimum wage legislation implemented for larger SMEs but not for MEs; in fact the BMBE law exempts the latter from this).

Internal analysis of the intent and content of laws and regulations will first be undertaken. FGDs will then validate the conclusions reached by such internal analysis, as well as their effects on MSMEs. In what follows, we shall describe the areas of research that will be undertaken in the study.

Microenterprises (MEs): 1. Institutions and regulations: The recent passage of RA 9178 (otherwise

known as the BMBE law) is supposed to substantially reduce the red-tape involved in the registration and setting up of MEs. The BAMBE law will be analyzed for its content but more importantly, for the strengths and weaknesses of its current implementation.

2. Financing Policies: The passage of General Banking Law of 2000 as well as the recent deregulation of the financial system has greatly eased the availability and access to funds by MSMEs (Lamberte, 2000). This will be verified through the following: Literature review of financing to MEs Summary of the different types of financing possibilities for MEs. Data will be gathered from the banks and non-banks as a source of funds

for MSMEs, in order to present a consolidated report on all loans granted to MSMEs.

Central Bank circulars on lending to MEs and other regulations for and against financing of MEs

Interviews of officers of banks and non-banks involved in lending to MEs 3. Human resource development policies :

Review of available training and other skills-development programs available in government and private sector institutions for MEs.

Small and Medium Enterprises (SMEs) 1. Registration/setting up of business/ availment of incentives:

Review of relevant literature Analysis: The different steps and normal length of time required for

SMEs to register/setup of business/ avail of incentives from government 2. Financing Policies:

Analysis of content of requirements and regulations from the Magna Carta for Small Business

Evaluation of the lending programs to SMEs

22

Analysis of the content of General Banking Law and RA 8791 (Regulation of banks and quasi banks) as well as relevant Central Bank circulars on SME lending

Current financing possibilities to SMEs, including guarantees.

3. Fiscal policies Tax policies relevant to SMEs from the RA 8424 on “Amendments to the

National Internal Revenue Code”, RA 8761 (VAT) Other regulations that may be relevant to SMEs Local taxes

4. Trade policies Review of relevant literature effects of trade liberalization on SMEs. Analysis: Using database of the Tariff Commission, it will be shown

whether tariffs borne by SMEs on their imports are higher/lower than those borne by LEs.

Review of RA 8800 (Protection of Local Industries) and 8751 (Countervailing Duties) as well as regulations on dumping

Location of SMEs in Special Economic Zones Customs practices against SMEs Analysis of the Investment Code and how it relates to SMEs

5. Human resource development policies Review of labor policies affecting SMEs, including law on labor

contracting Implementation of labor laws and current practices relevant to SMEs Training and skills development and other HRD related services offered

by government agencies 6. Technology polices

Review of relevant literature, esp. WIPO “Intellectual Property Rights and Innovation in Small and Medium Sized Enterprises” ; international best-practices on technology development by SMEs

Analysis of patent law and the trend of application for patents by SMEs in the Philippines

7. Competition policies Review of literature on competition recently published Analysis of anti-competitive practices against SMEs esp. those relating to

business linkages

FGD/Validation of Policy Issues: Validation and consultation of policies and laws affecting the MSMEs will take two forms: consultation with regulatory officials and focused group discussions (FGD) with MSME representatives. The goal of the FGD is to gather the combined perception and suggestions of the cross-section of the MSMEs regarding legislations and policies affecting their businesses. Guide questions will focus on three areas: business environment, financial services, and business development services. There are aspects in these areas that are influenced by policy and institutional factors that are within the realm of public policy and will be the subject of inquiry during the FGD.

Business Environment: There are certain aspects of the business environment that are of particular relevance to SME competitiveness: those that affect market access, the cost of acquiring information, transactional efficiency and risk, and the fixed costs of doing business. Participants will be asked to react to regulations, laws and policies affecting (promoting or inhibiting) their operations.

Financial Services: SMEs often complain that their growth and competitiveness are constrained by a lack of access to financing and the high cost of credit. Participants will be asked to identify policies that affect MSMEs such as entry barriers, credit policies and the like. Analysis will look into adequacy of existing laws or the lack or need for a particular policy or in some cases, the inappropriateness of certain policies or regulations.

23

Business Development Services: Business development services include a wide variety of non-financial services such as human resource development specifically on technical vocational education and training, labor and management training; extension, consultancy, and counseling; marketing and information services; technology development and dissemination; and mechanisms to improve business linkages through subcontracting, franchising, and business clusters/integration. These services form an important part of the “market support structure” that helps build SME competitiveness.

Entrepreneur-Participants will be asked for their subjective evaluation of the different aspects of the institutional framework including general subjects such as security of property rights, predictability of rules and policies, reliability of the judiciary, problems with corruption and discretionary power in the bureaucracy, and disruptions due to changes in government.

Participants will be grouped by sector and geographical location, if appropriate. FGD discussion questions will be drafted after a more detailed discussion with the Client. They may incorporate the following: Barriers to entry and non-competitive behavior in markets where SMEs are potentially

competitive (e.g. capital adequacy, location, etc) Factors that discourage small enterprises from growing and becoming formal Policies that distort incentives and discriminate against small firms Government procurement procedures that discourage successful bidding by SMEs; Problems in regulatory requirements such as licensing and registration

The list of FGD participants and venue shall be discussed beforehand with the Client. It is suggested that microentreprises be put on a separate FGD session from SMEs for better management of discussions and to avoid a wide latitude of perspectives or concerns during the FGD. It is anticipated that there is a great discrepancy of concerns from microenterprises being non-formal and more mobile than the SMEs. During the FGD, a panel of government representatives will be made available to respond or clarify issues raised during the FGDs. Formulation of Policy Recommendations Obviously it will not be possible to cover the whole range of laws and regulations that may be relevant to SMEs given the time and financing of the project. Hence, the project is at best a ‘best-efforts’ attempt to cover those laws and regulations that are considered both by the researchers and the MSMEs themselves (validation through FGD) as most relevant to the small-firm sector. The end-product is a number of policy recommendations that are doable in the short and medium run (e.g. needing changes in curricula, circulars) and in the long-run (i.e. needing legislation; change of paradigm, etc). The study is expected to open up avenues of research on MSMEs that need to be undertaken in future.

Back to Tool A.3

24


Ressource no. A.3.2

Title

Executive Summary

Back to Tool A.3

Executive Summary

The study reviews the existing laws and policies affecting micro, small and medium enterprises in the Philippines. Why should micro-, small and medium enterprises (MSMEs) be singled out in a study of legal environments? After all, even large firms are subject to the same legal framework that makes the Philippines among the most regulated in Asia††. If firms were of similar sizes and if there were no economies or diseconomies due to size, there would be no reason to study MSMEs. But 99.7% of all firms in the Philippines belong to the MSME sector. More importantly size matters, and perhaps even more so in the field of bureaucratic rules and regulations. LEs have a greater say in the crafting of laws and institutions that affect them. Unlike small firms, their internal structure provides them specialized agents (e.g. accountants) that can handle the minutiae of bureaucratic rules and regulations. Moreover, transaction costs associated with rules weigh more heavily on the MSME than on the LE.

The present study therefore aims to evaluate the existing laws and regulations that are relevant to the workings of MSMEs. An analysis of the intent/content of national laws and local ordinances that affect the different areas of activitiy of MSMEs is first undertaken. This includes the department orders and memorandum circulars of departments, agencies, or branches of national government (e.g. Department of Trade and Industry, the Bangko Sentral ng Pilipinas, the Bureau of Internal Revenue) tasked with their implementation. Given the existing plethora of laws and policies, some judgment had to be made with regard to the choice of laws and policies to be considered. Then effects of these laws and regulations on MSMEs are determined through the use of focused group discussions (FGDs) involving a number of micro, small and medium enterprise owners undertaken in two cities in the Visayas. Through such ‘voices from the ground’ we are able to present a number of doables – in the short, medium, and long term – that can subsequently be considered by policymakers in the formulation of policy towards MSMEs. Of the many findings of the study, two obstacles to growth stand out, namely the difficulties encountered by the microenterprises with regard to registering their business and the lack of access, particularly of SMEs, to finance. With regard to the first, an attempt was made by the government to encourage registration, particularly to make these microenterprises emerge from the informal economy, through the Barangay Micro Business Enterprise (BMBE) Act of 2002. However, the generous incentives, offered by the law to make microenterprises register, proved to be the very reason why government agencies tasked with implementing the law (particularly the Department of Finance and the local government unit) did not ease the burden of registration. Hence there was a low turnout in microenterprise registration, calling into question the usefulness of the Act in the first place. The second obstacle to growth was the continued lack of access of SMEs to finance, forcing them to rely on own-savings or the informal sources of credit. In spite of the reforms of the financial system, which may have increased the flow of credit somewhat, SMEs complained that banks still considered their projects in terms of bankability, rather than viability, leading †† The Global Competitive Report 2000/01 reports that the burden of regulation in the country is only better than Bangladesh, India, China, Indonesia and Vietnam.

25

them to rely mainly on collaterlal-lending. Even the special lending program of the government was generally judged to have been undercut in effectiveness due to limited funding as well as the conduit banks’ reliance on collateral.

In addition to the above findings, under fiscal policy, taxes (such as income tax, VAT, etc) did not seem to be significantly burdensome for MSMEs. However, they would benefit a lot from better information flows and assistance with regard to payment of their tax liabilities. This would even reduce the possibility of informal payments to government tax agents, hence would tend to reduce corruption. On the availment of incentives, the lack of regional offices of the BOI that could process their applications raised the cost for the SMEs to avail of such incentives. Moreover, the documentary requirements of incentive availment tend to discourage SMEs from availing of them in the first place. In terms of trade policy, the recent Trade Reform Policy undertaken by government liberalized many of the imported input requirements of SMEs, possibly leading to a growth in their exports. But among export-oriented SMEs, there is a consensus that government should subsidize the cost of fairs and exhibits during which they showcase their products and meet potential customers. However, Customs practices vis-à-vis SMEs could still prove to be a burden to them, e.g. through long delays in the clearing of imports. With regard to human resource (labor) development policy, MSMEs were found to have difficulties in meeting the minimum wage law requirements. The clamor is for a more productivity-based wage, including the use of piece-rate. Technology policy with reference to industry is mainly confused, due to the attempt by government to include as many sectors as possible in the Investment Priorities Plan which in turn allows firms to avail of incentives. Moreover there is a lack of a legal framework for competition policy in the country, but this lacuna does not seem to impose much of a burden on MSMEs.

Back to Tool A.3

26

Tool A.4 FGD on national policy framework for MSMEs


- determining the information status among micro and SME entrepreneurs concerning national policies, laws and regulations affecting their business

- learning about the impact of these policies, laws and regulations on MSMEs

- serving as an input to the study on the national policy framework for MSMEs (see Tool A.3)


- two separate FGD, one for SME and one for micro enterprises - determining the knowledge about policies, laws and regulations in

an open session - (for micro enterprises) splitting the group in formal and informal

sector to discuss the impact of policies, laws and regulations affecting them using guiding questions based on impact hypotheses from the study

- (for informal micro enterprises) determining what keeps them from formalizing

- (for SME) discussing the impact of policies, laws and regulations affecting them using guiding questions based on impact hypotheses from the study

- prioritizing the most severe obstacles - if possible, finding recommendations to tackle these obstacles - documentation of main findings of overall process (in all cities) - participants: micro and SME entrepreneurs of the formal and

informal sectors, consultant for the study on the national policy framework for MSMEs, moderator


Personnel: 1-2 LC (depending on whether a separate moderator is needed) with 1.5-2 PDs per city and 4 PDs for preparing the guiding questions, documenting and writing the overall report Operations: venue, meals, traveling

Lessons Learned

• the splitting of the micro entrepreneurs into formal and informal sectors can reveal additional information on what keeps them informal

• in certain specific cities, micro entrepreneurs might prefer to have the FGD in their local dialect

Resources A.4.1 TOR

A.4.2 Discussion Questions


A.4.4 FGD documentation


27


Ressource no. A.4.1

Title

TOR

Back to Tool A.4

FGD/Validation of Policy Issues: Validation and consultation of policies and laws affecting the MSMEs will take two forms: consultation with regulatory officials and focused group discussions (FGD) with MSME representatives. The goal of the FGD is to gather the combined perception and suggestions of the cross-section of the MSMEs regarding legislations and policies affecting their businesses. Guide questions will focus on three areas: business environment, financial services, and business development services. There are aspects in these areas that are influenced by policy and institutional factors that are within the realm of public policy and will be the subject of inquiry during the FGD.

Business Environment: There are certain aspects of the business environment that are of particular relevance to SME competitiveness: those that affect market access, the cost of acquiring information, transactional efficiency and risk, and the fixed costs of doing business. Participants will be asked to react to regulations, laws and policies affecting (promoting or inhibiting) their operations.

Financial Services: SMEs often complain that their growth and competitiveness

are constrained by a lack of access to financing and the high cost of credit. Participants will be asked to identify policies that affect MSMEs such as entry barriers, credit policies and the like. Analysis will look into adequacy of existing laws or the lack or need for a particular policy or in some cases, the inappropriateness of certain policies or regulations.

Business Development Services: Business development services include a wide

variety of non-financial services such as human resource development specifically on technical vocational education and training, labor and management training; extension, consultancy, and counseling; marketing and information services; technology development and dissemination; and mechanisms to improve business linkages through subcontracting, franchising, and business clusters/integration. These services form an important part of the “market support structure” that helps build SME competitiveness.

Entrepreneur-Participants will be asked for their subjective evaluation of the different aspects of the institutional framework including general subjects such as security of property rights, predictability of rules and policies, reliability of the judiciary, problems with corruption and discretionary power in the bureaucracy, and disruptions due to changes in government. Participants will be grouped by sector and geographical location, if appropriate. The list of FGD participants and venue shall be discussed beforehand with the Client.

FGD discussion questions will be drafted after a more detailed discussion with the Client. They may incorporate the following:

28

Barriers to entry and non-competitive behavior in markets where SMEs are potentially competitive (e.g. capital adequacy, location, etc)

Factors that discourage small enterprises from growing and becoming formal Policies that distort incentives and discriminate against small firms Government procurement procedures that discourage successful bidding by SMEs; Problems in regulatory requirements such as licensing and registration

It is suggested that microentreprises be put on a separate FGD session from SMEs for better management of discussions and to avoid a wide latitude of perspectives or concerns during the FGD. It is anticipated that there is a great discrepancy of concerns from microenterprises being non-formal and more mobile than the SMEs. During the FGD, a panel of government representatives will be made available to respond or clarify issues raised during the FGDs.

Back to Tool A.4

29


Ressource no. A.4.2

Title

Discussion Questions

Back to Tool A.4

Focus Group Discussion to Determine Impacts of Policies and Laws affecting MSMEs

Objectives: The Focus Group Discussion will gather the combined perception and suggestions of the cross-section of the MSMEs regarding legislations and policies affecting their businesses. Specifically, the FGD will attempt to:

determine the relevance of laws and regulations to MSMEs and how they impact on different areas/stages of their growth process;

reveal and clarify perspectives on problem definition and the factors important to solutions;

increase understanding of the problem and needs at all levels and policy areas; identify and increase understanding of opposing views (government and private

sector) that might be impacting communication and clouding decision-making ; discover high-leverage solutions, if any offered or revealed during discussions.

Process/Methodology:

Participants will be asked to reflect on the questions outline below, provide their own comments, listen to what the rest of the group have to say and react to their observations. The main purpose is to elicit ideas, insights and experiences in a social context where participants may stimulate each other and consider their own views along with the views of others.

Ideally, participants will be grouped by industry sector but the decision will come depending on the number and representations from each sector during the FGD conduct. The same will be done for the FGD for microenterprises. The FGD will be conducted for a whole day considering the number of policy areas to be discussed and explored. Process:

1. Participants will be divided according to industry group (i.e. IT, furnishings, food, etc.)

2. Each group will elect a discussion leader and a rapporteur. 3. Participants will consider and answer each of the guide questions. 4. Participants will use metacards for individual answers and pin them to the

brown sheets in the pin board. 5. The group leader or rapporteur (if different individuals) will report to the

plenary their discussions. Questions/clarifications maybe asked by facilitators and other groups

6. Outputs from each group will be summarized, presented and discussed in the big group.

30

Discussion Questions: 1. Support policies

a. What is your level of awareness and understanding of existing government support policies affecting your business?

b. Which policies, laws and regulations are relevant and hindering your business? 2. Permits: Did you have any problems with regard to:

a. registering your business? b. Getting/renewing your business permit? c. Getting your building occupancy permit? d. Getting your real property documents? e. Getting environmental compliance certificates? Are they required?

3. Availment of incentives: a. Are you registered with relevant national authorities? Why/not? b. If so, did you have any problems availing of incentives?

4. Finance: a. Can you easily borrow funds for financing your business? From banks? From

cooperatives? From NGOs? b. Do banks or non-banks still require land as collateral? Did you avail of any

guarantee? Where? Why/not? c. At what interest rates do you borrow? d. Have you ever raised funds via the stock exchange? Why/not? e. Do you think a credit investigating agency will ease the borrowing problems of SMEs?

5. Taxes/Infrastructure a. Which of the following taxes do you find a severe impediment to your business?

1. Income tax 2. VAT 3. Local taxes 4. Local charges: fire, garbage, etc. 5. Others: ______________

b. Which of the following infrastructure items do you consider a severe impediment to your business? 1. Roads 2. Shipping 3. Electricity 4. Telephone 5. Water 6. Others: _______________

6. Trade 1. Which of the following do you consider a severe impediment to your business?

a. Foreign exchange fluctuations b. Tariffs on your inputs: raw materials, intermediate goods, capital goods c. Quotas (or other Non Tariff Barriers, NTBs) on your inputs? d. Tariff on your exports e. Quotas (or other NTBs) on your exports f. Others: _______________

2. Do you consider your business adequately protected by the anti-dumping duties? Why/not?

3. Do you think you have adequate access to information relevant to technology and marketing? Why/not? How can it be improved?

7. Customs: a. Do you encounter any problems in clearing your imports? How many hours/days

does it take you? b. Do you encounter any problems in clearing your exports? How many hours/days

does it take you?

31

c. If you have to make informal payments, how much do you pay as a proportion of sales? i. For imports ii. For exports

8. Labor/Human Resource Development

a. Do you consider the minimum wage legislation (MWL) an impediment to your business?

b. Do you get investigated for MWL compliance? c. Do you have any problems with labor unions? Did you have any strikes/lock-outs?

How long did it last? What is your response? d. Do you consider the law on labor contracting an impediment to your business? e. Do you undertake training for your workers? What kind? How long?

9. Competition Policy a. Do you experience too much competition from local competitors? Foreign

competitors in the export market? b. Do you compete headlong with large enterprises? If so, do you think your strategy is

successful? Why/not? c. Do you experience any of the following? In what form?

1. Barrier to entry into the business 2. Uncompetitive behavior of other firms 3. Unfair government procurement procedures

d. Are there benefits to linkaging/networking within the industry? 10. For microenterprises:

1. Determine factors that allow or impede micro enterprises to graduate from the informal to the formal sector.

2. What is your level of awareness and understanding of existing government support policies affecting your business?

Back to Tool A.4

32


Ressource no. A.4.3

Title

Process visualization

Back to Tool A.4

Policies, laws and regulations

Research Verification

National AgenciesNational Agencies

Local Government Units (LGUs)Local Government Units (LGUs)

Policy dialogue,

Reform,

Implementation

Policy dialogue,

Reform,

ImplementationImproved Business

Environment for SME

Policies, laws and regulations

Research Verification

National AgenciesNational Agencies

Local Government Units (LGUs)Local Government Units (LGUs)

Policy dialogue,

Reform,

Implementation

Policy dialogue,

Reform,

ImplementationImproved Business

Environment for SME

Back to Tool A.4

33


Ressource no. A.4.4

Title

FGD documentation

Back to Tool A.4

GENERAL DISCUSSION RESULTS: There were 43 Micro enterprises (including 8 informal) and 25 SMEs altogether that attended the discussions in Cebu and Bacolod. Though separate in discussions, there are similarities of problems and issues in both areas: 1. Need for Simplified Business Registration and Licensing Both Bacolod and Cebu MSMEs pointed to licensing and regulatory permits to be too bureaucratic. According to them, registration and renewal of licenses to operate takes a long time to process. There are a lot of requirements and signatories from separate offices. A consistent recommendation from Cebu and Bacolod MSMEs is the creation of a one stop action center or help desks where all offices and agencies requiring permits and fees would be present. These centers, they say, would lessen bureaucracy and corruption, maximize time and catalyze growth for MSMEs. Creating a business handbook of policies and permits would also be beneficial especially for start- up businesses. 2. Need for Greater Access to Financing Starting-up, however, is not the top priority of MSMEs or of informal businesses. A greater issue is the lack of access to financing. Informal businesses hesitate to go formal because they have insufficient capital and their income is just ‘making ends meet’, they anticipate that they would not be able to pay government fees for registration as their capital is mostly tied up to operation. The formal MEs on the other hand claimed that their loan needs had grown beyond what available micro financing can provide but are still too small for commercial banks to acknowledge. SMEs couldn’t get enough funds for expansion because of collateral requirements and high interest rates of financial institutions, including Government Finance Institutions. According to these MSMEs, there are no venture capitals available for businesses to be encouraged to expand new or start-up businesses. Financing programs being implemented by the government are not sufficient and sometimes selective. Often, it takes too much time for an application to be processed, and in many cases, there are only limited resources to accommodate applicants, which lessened the overall impact on the industry.

3. Ineffective BMBE Law The BMBE Law was written primarily to encourage informal businesses to register through tax exemptions but it is virtually unknown to its target audience. Among all 43 MEs that participated, both in Bacolod and in Cebu, only 4 knew about the BMBE law. One of them was even deferred by the Bureau of Internal Revenues of tax incentives. This happened despite the sufficient documents provided and legitimate claims. The rest of the 43 participants have yet to hear or have not fully comprehended the provisions and significance of the BMBE law for their business.

4. Taxes

34

One of the priority issues among MSMEs are the inconsistencies and confusing tax charges on business. Participants claim they desire to help the nation by paying correct taxes. However, they cited three main reasons that poses difficulty for them. First, lack of information makes them vulnerable victims of corruption. Second, paying taxes again takes up much time and diminishes much-needed hours in the work place. Some MSMEs have resorted hiring lawyers, accountants or even agree with fixers to do this tiring process. Third is harassment from government employees. To quote one SME, ‘It seems that it is a greater sin to pay correct taxes than go under the table’. A frustrated businessman commented that ’If you are paying the right taxes, the government will give you a harder time while tax evaders, since [some of them] are unregistered, the government cannot run after them. They lamented that paying taxes are not worth it if services are not really being done.

5. Need for support in trade, marketing and customs policy Trade, marketing and customs policy were prioritized next. Support or subsidy to participation in trade fairs were the topic in Cebu while Bacolod was against smuggling and the high cost of shipping. Both cities, however, [in one way or another] agreed with the proposition of a single trade development plan. They said that the one product- one town- one million policy being initiated by the government should be highly encouraged and implemented. Cebu and Bacolod also agreed that government should help local businesses get international exposure by subsidizing if not helping them get sponsors to join trade fairs abroad.

6. Need for balanced labor law The minimum wage law among others was the topic of discussion in labor policies. Again, non-BMBE registered micro enterprises could not afford the standards given by their respective Regional Development Wage Board (RDWB). The BMBE law, with all its promise, is yet to be maximized because of minimum exposure. All industries agreed that productivity should also be seen as a qualifier for determining a salary cap. Though, productivity is mainly a management issue, the RDWB could shift rates from daily to hourly, or per industry standards. The diminishing level of skilled workers had also worried many SMEs. The academe, they say, is producing graduates that are lacking the proficiency needed by most industry makers. An eye-popper was given by a call center owner who observed that less than 5% of the total applicants in the call center industry were acceptable. English fluency was one of the main requirements they look for and most applicants lack them nowadays. Training geared for development both for the employees and for the employers would be beneficial.

7. Need to promote fair competition Knowledge about competition policies is minimal. Like the BMBE, most of the business people are uninformed if there are any policies applicable to them. They emphasized that policy, whether they exist or not, should encourage fair play among international and local businesses. They also stressed the foreign company-oriented economic zones. They pointed out that while government pulls international investments, they encourage locals to work abroad. Local businesses suffer the fallback of diminished workforce and Large Enterprise advantage. Instead of growing, they become static and are maintaining what they have left for their own.

Back to Tool A.4

35

Tool A.5 Regional SME Studies


- providing an overview on the situation of SME, largely for internal use and reference

- identification of the major players on the meso level (private and public)

- identification constraints and potentials SME are facing


- literature review - review of available statistical material - in depth interviews with the meso players (business associations,

public support institutions…)


Personnel: 1 LC per region/province of which one LC assumes the role of coordinator and writes the final report, 10 PDs per region (depending on the availability of information) and 5 PDs for the coordination and integration of the reports Operations: traveling, (hosting of interviewees)

Lessons Learned

• It is important to analyze and compare different sources of SME information as the mandates of certain agencies lead them to have different and/or biased information.

• Absence or lack of computerization can make it difficult to obtain data on SME.

• Focusing on promising SME sub-sectors helps focusing the study and makes it manageable

Resources A.5.1 TOR



36


Ressource no. A.5.1

Title

TOR

Back to Tool A.5

Back to Tool A.5

37


Ressource no. A.5.2

Title

Executive Summary

Back to Tool A.5

Back to Tool A.5

38

Tool A.6 Survey of business registration procedures


- understanding registration procedures and developing ideas on how to improve them

- serving as an input to the FGD on local governance (see Tool A.2)


- literature review (+ online city portals) - interviews with local government staff - description of all procedural steps, time spans and cost involved - flow charts for new and renewal registration - comparative tables displaying the procedures in different cities


Personnel: 1 LC per city with 2-5 PDs depending on the complexity of regulation and the availability of data, 1LC with 5-10 days for design and report writing Operations: traveling

Lessons Learned

• One has to be aware of the fact that information about business regulation from official sources can be markedly different from what entrepreneurs experience

Resources A.6.1 TOR


A.6.3 Business registration process visualization


39


Ressource no. A.6.1

Title

TOR

Back to Tool A.6

BACKGROUND: The target group of the Program is small and medium enterprises as well as micro enterprises with growth potential. The private sector, especially the SME sector, is increasingly regarded by the Philippine government as the driving force behind economic and social development in the country. But structural and institutional problems are hampering efficient and dynamic management at both national and regional level. Micro, small and medium-size enterprises (MSMEs) in particular are struggling with a multitude of economic-policy, legal and bureaucratic obstacles. One process that has to be looked into is the business registration procedures which have to be undertaken every year. The process appeared to be cumbersome as it involved various government agencies, and is seen to be a deterrent for growth. As part of the effort to improve business services to the MSMEs, a survey of business registration procedures of 3 key cities in the Visayas namely Bacolod, Cebu and Tacloban will be undertaken. The analysis and output is hoped to contribute to a greater understanding of government requirements for MSMEs, how they are used (e.g., do they use it for strategic purposes) and what benefit, if any, to both LGUs and the MSMEs is derived from information and fees from such registrations, as well as what are the areas where the registration process can be improved. Objectives/Consultant’s Duties/Tasks: The goal of the consultancy is to establish and understand the processes involved in the business registrations in the cities of Bacolod, Cebu and Tacloban. This will be carried out through the following objectives that the consultant will be guided with:

(1) Determine business registration procedures in the aforementioned sites including chronological steps, forms used, fees collected and duration of business registration;

(2) Assess whether there are any differences in the procedures between cities and identify advantages and disadvantages, if any of their approaches;

(3) Determine how information from business registration is stored, managed and used by the LGUs;

(4) Determine constraints and/or best practices, if any, in business registrations; (5) Provide recommendations that will contribute to improving services to the private

sector in terms of efficiency and information management. Expected Output:

40

The consultant shall provide: (a) Design for data gathering that will include discussions with the LGU officials and validation interviews with some business establishments in the cities and (b) Report of the results with analysis and recommendations. Timeframe: Design of data gathering 2 days Data gathering 15 days (3 days per site +

relevant gov’t agencies) Analysis and Report Writing 10 days Travels 3 days

---------- Total 30 days

Back to Tool A.6

41


Ressource no. A.6.2

Title

Executive Summary

Back to Tool A.6

EXECUTIVE SUMMARY To get a business or mayor’s permit, a new business establishment usually begins by filling out a business permit application form, which can sometimes be downloaded from an LGU website, while already having certain ‘pre-requisite’ requirements (e.g. registration with DTI for a business name). Once the form is filled out, the applicant undergoes assessment, usually in the form of an ‘interview’ with a business licensing officer from the LGU, to determine how much business tax should be levied on the applicant and to check if the applicant’s pre-requisite documents (business name registration, etc.) are intact. Afterwards, the applicant must obtain clearances from other local agencies: zoning, sanitary and health, fire safety, social security, etc. In most LGUs, this means that the new business establishment must undergo an ocular inspection, though this can take place either before or after a business permit is issued. Once all clearances are obtained, requirements are met, and taxes and fees are paid, the establishment may obtain its business permit from the office of the Mayor. In the business registration process, two offices are mainly involved: the Office of the City Treasurer, which is responsible for collecting business taxes; and the Office of the City Administrator, the branch of the Mayor’s office which is responsible for issuing business permits. From the survey conducted, certain crucial issues emerged, as well as best practices and areas for further improvement. In virtually all cities, LGUs cited the difficulty of establishments in meeting nationwide requirements like social security and health insurance as a key hindrance to business registration. Certainly this issue merits more discussion with the respective national agencies. The computerization of forms and information contained in those forms can be a powerful tool for speeding up the business registration process and for assisting LGUs in strategic and policy planning. Unfortunately, computerization has yet to take off in the LGUs, although in some cities advances have been made to easily retrieve and analyze data. It must be borne in mind, however, that whatever computerized system is installed in an LGU, it must be easy to maintain and must be customized to match the needs of the LGU, lest the system be rendered useless. Organizational development and skills upgrading is an aspect of concern to all LGUs. A critical part in the business regulatory process is when establishments are assessed or interviewed by LGU staff responsible for approving/disapproving permit applications and checking compliance with requirements; indeed, some cities are lax in implementing this part of the process. In some cases, it seems that business establishments can ask the LGU staff who assesses them to reconsider or forego certain requirements. Indeed, the employees who engage in this have a very influential role and the LGU must see to it that its staff, particularly those who play this ‘assessment role’ are well-skilled and trained. Organizational

42

development is also necessary for responding to the changes brought about by computerization (e.g. training staff to use the system). Overall, business regulatory processes need to be streamlined. This can be as simple as simplifying forms to make them more user-friendly; having the entire registration process take place in one floor to reduce time; making forms available for download on LGU websites so that applicants need not make a personal appearance at the LGU jut to get a form; or visibly posting updated business registration guidelines and business tax rates to make the processes less confusing and more transparent. Simplification is also needed, where new business establishments must reapply for a mayor’s business permit every quarter during their first year of operations. This is said to serve as a ‘trial period’ for establishments, yet perhaps this also acts as an unnecessary burden on both the establishment and the already encumbered Mayor’s office. Instead, cities might reconsider having business establishments pay their business taxes quarterly (instead of reapplying for a business permit quarterly); paying business taxes in four installments gives establishments some breathing space for meeting their obligations. Similarly, new business establishments can be given the flexibility to complete all business permit clearance requirements within a year, although this also depends on the discretion of the licensing officer. It remains to be seen, however, if giving establishments this allowance serves as a good incentive for them to cooperate and fulfill clearance obligations within the allotted time period. What SMEDSEP can do For SMEDSEP, specifically the ‘Enabling Environment’ component, there are a few specific, doable tasks that the program can execute. Indeed, in terms of making regulatory enhancements to the business registration process, SMEDSEP should not duplicate the efforts of LGUs, most of which are already working on improving these processes. Instead, SMEDSEP should consider developing aspects that LGUs are not directly tackling themselves. There are four general doable recommendations that SMEDSEP proposes: 1. Should the Republic Act 7160 be successfully amended to allow business establishments to renew their business permit applications year-round instead of just in January, SMEDSEP could help in its implementation by drafting implementing rules and regulations (IRR) and disseminating such information. 2. Assist in implementing the simplification and possible integration of Business Name Registration (BNR) at DTI and LGU compliance. This task would be much easier to do if establishments could simply register for a business name at their respective LGUs instead of making an extra trip to the DTI provincial office. 3. As regards regulatory compliance with specific agencies, SMEDSEP can create IRR to ensure compliance of small establishments in specific SME sub-sectors with designated agencies. 4. Business enterprises, especially those belonging to the micro category, complain about the high cost of business permit applications as it includes dues such as business taxes, fees for garbage, zoning, fire inspection, sanitary inspection and other charges. SMEDSEP could support the LGUs in coming up with an installment payment system (e.g. quarterly) for business permits. All of the above regulatory recommendations cannot be carried out by SMEDSEP on a provincial or municipality level; they must be undertaken with the support of national SME decision-makers, particularly those in DTI.

Back to Tool A.6

43


Ressource no. A.6.3

Title

Business registration process visualization

Back to Tool A.6

Tax Payer (TP) gets application form

from Checker

TP proceeds to One-Stop Shop to get other clearances from ff inspectors:

1. Fire & Safety Dept. 2. City Planning & Development

Office 3. City Health Office 4. Zoning (Mech. & Electrical)

Liaison Officerchecks if papers are complete then gives TP claim stub; tells TP to come back in 5 days.

Releasing Officergets papers from Liaison Officer and gives to Mayor for signing business permit.

TP claims business permit from CA; it is released with note “pending inspection”.

Inspection carried out; mechanical & electrical (M&E) billing is assessed and given to TP. Are there deficiencies that TP has to meet regarding inspection?

Inspectors give temporary clearances pending inspection

TP Pays Cashier business & real property tax, community tax & other clearances (sanitary, garbage, zoning, fire safety)

TP goes to Licensing Officer who evaluates & assesses business tax

TP goes to Real Property Tax assessor

TP goes back to LGU to pay M&E bill to Cashier.

Mayor sends a note giving TP 30 days grace period to comply with deficiencies.

No

Yes

Inspectors report deficiencies to Mayor’s office.

TP can still go back to LGU to pay M&E bill to Cashier.

Note: TP = Tax payer CA = Cashier M&E = Mechanical & Electrical

Back to Tool A.6

44

Deutsche Gesellschaft fürTechnische Zusammenarbeit

(GTZ) GmbH

Department of Tradeand Industry

Technical Education andSkills Development

Authority

GFA Management

PROGRAM MANAGEMENT

Training Services

Business and Financial Services

Martina Vahlhaus, Program Manager

Christian Widmann4th Floor, TESDA Central Office, East Service Road, Taguig, Metro Manila

�

�

10th Floor, German Development Center, PDCP Bank Centre Building,V.A. Rufino corner L.P. Leviste Streets, Salcedo Village, Makati City

+63 2 8123165 (local 46)SMEDSEP c/o GTZ-Office Manila, P.O. Box 2218 MCPO Makati City, Philippines

+63 2 8938297, 8405035, 8179095 (fax)

Markus Ehmann, Business Development ServicesHarald Neimeier, Financial Services

38 Acacia Street, Lahug, Cebu City, 6000+63 32 4122256, 2344494 (telefax)

�

�

�

�

�

�

�

�

[email protected]

[email protected]

[email protected]

Documents

Tools for Analysing the Political, Legal and Regulatory ... - Business Environment Phils Tools for... · Tools for Analysing the Political, Legal and Regulatory Environment ... legal