Cutting Red Tape

There was an interesting article written by Peter Wallace that appeared in a recent issue of a national newspaper. It was about the length of time it takes to get a permit to start a business in the Philippines compared with other countries.

Citing a study, he said it takes only two days in Australia but 40 days in the Philippines to get approval to do business.

If this is true, we need to reduce the number of days considerably. We cannot attract more investors if we make it very difficult for them to setup their business. Too many people have to sign permits in many offices. And papers could take many days to process. Also, procedures keep on changing.

Even Filipino businessmen have to wait a long time. Foreigners have to wait longer.

The requirement to get a lot of officials to sign should be reduced to erase the belief that it is difficult to do business in the Philippines . (And once the business is operating, the difficulty often continues.)

This would require the cooperation and coordination of the local and national governments. The proposed government re-engineering should help reduce the number of officials who have to sign papers needed for starting a business.

Cutting red tape can do a lot to promote economic growth. This means that if we improve our procedures and make it a lot easier and quicker to do business, we can promote investments and growth. Policy changes are, therefore, as important as improving our infrastructures, the supply of manpower and other inputs to production.

What we should realize is that cutting red tape will not entail costs. It is immune to the budget deficit problem. In fact, the two can go together. Reduction in the number of employees in government could lessen the red tape.