A new way to improve Philippine competitiveness

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MIKE WOOTTON

MIKE WOOTTON

So the National Competitiveness Council is going to propose rescinding about 4,000 irrelevant laws and regulations in order to make doing business easier. Well, that must surely be a step in the right direction.

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I hadn’t realized until recently that the Council was, in fact, concerned more with national competitiveness than domestic competition. It is, in fact, not a new body, having been established in 2006 as the Public-Private Sector Task Force on Philippine Competitiveness, renamed and restructured in 2011.

There can be little question that something needs to be done. RA 9485, the Anti Red Tape Act, doesn’t seem to have had much of an impact since its inception in 2007. Here we are in 2016 and there have been two statutory initiatives to try to make things easier, which have been around for 9 or 10 years and the requirements of the bureaucracy just seem to be getting even more byzantine.

Of course, it takes a while to issue the Implementing Rules and Regulations for these initiatives, and that is ironic in itself when the objective is to make things quicker and simpler.

The problem, to my way of thinking, is not that more regulations are required; there need to be fewer, and indeed the announcement on the plan to rescind 4,000 is a good thing. But people need to be empowered and to think for themselves in many of these bureaucratic matters—in other words, the application of common sense. To have absolute reliance on the wording and the legal meaning and interpretation of regulations in what is a second language for most people is surely an approach designed to fail. This must be why there is such dependence on lawyers and legal interpretations. Perhaps, it’s not so much that people don’t actually get the idea or the concept. It’s that they are uncomfortable with their own understanding of the actual requirements of the regulations to the point at which they just don’t know what to do, so let’s just stick with a literal interpretation—or ask a lawyer.

Asking a lawyer is fine, so long as you can properly understand their advice and take a view on it, but many people feel that to be outside their position in society. It is not a lawyer’s role in the Philippines to advise based on pragmatism and common sense, they are to try to interpret the law or regulations in order to satisfy a particular purpose and defeat any potential challenges. Thus, the non-senior bureaucrats [and possibly even some senior ones]are caught between struggling to understand the wording and more importantly, the intended meaning of regulations or taking legal advice, which given the nature of the legal profession will tend to be conservative and subjective.

This, when combined with a society which has a massive deficit of trust of one’s fellowmen does not create an environment which will make the Philippines more competitive internationally. A major disincentive to investment in the Philippines are the bureaucratic hurdles, there can be no question about that. Not only is this a major disincentive to investment, it is a massive demotivator to Filipinos. The awful “requirements” are just too difficult to meet, so better, unless totally essential, just not to bother trying.

So what to do about this major impediment to economic development? Rather than focusing on the regulations themselves, perhaps, some time and effort should be spent looking at the societal barriers to the efficient implementation of those regulations that are required. The ability of midlevel bureaucrats to fully comprehend the words as they are written [in a foreign language]and frequently in a complicated and ambiguous quasi legal sort of way. Much of the stuff is difficult to interpret even for a native English speaker. The administrators need to be made more confident in their own interpretation of the rules and their intent and thus, unleash a more pragmatic common-sense approach and encourage greater competitiveness, as well as helping to release the massive latent entrepreneurial aspirations of so many Filipinos. Of course, there is more to be done in order to wean administrators away from their dependence on lawyers and problems in understanding things written in an overly complicated way, the education system needs to improve and society as a whole needs to become more trusting.

Mike can be contacted at mawootton@gmail.com.

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