Obtaining an NBI clearance may be needed for many things in the Philippines, among them renewing your passport or owning a firearm. The process however, can be incredibly long and tedious. Having a red flag or a hit, as how the bureau calls it, can lead to severe delays and difficulties. In most cases, the hit is caused by a system error, wherein another profile exists with the same name and a previous criminal record. This leads to days of added work as an agent is onboarded to verify your true profile. This, and many other similar processes in the Philippines are inefficiencies much often overlooked that directly lead to a loss in productivity of the average Filipino. Ultimately, such affects the domestic GDP (gross domestic product).
For nearly two decades, the government of the Philippines has attempted to establish a national ID system. Attempts have faced opposition on constitutional and privacy grounds. Former President Fidel Ramos first attempted in 1996 with Administrative Order No.308 to establish a National Computerized Identification System but was stopped by the Supreme Court on the ground that legislative approval was required. Executive Order No. 420 followed in 2005 and required all government-related entities to combine their ID systems. While privacy concerns remained, the order eventually gave rise to what we know today now as UMID.
Currently, identification in local transactions in the Philippines requires at least two government-issued ID cards that bear the photo of the cardholder. Often, however, merchants and even government institutions get confused by the seemingly endless list of allowed identifications cards. UMID attempted to put a stop to that and combine applications for government institutions but so far, has only been able to cover less than 8 percent of the population. According to users on Reddit, the issuance of UMID cards currently takes at least six months.
In 2014, the House of Representatives passed Bill No. 5020—An Act Establishing the Filipino National Identification System. It is now awaiting approval by the Senate.
Few grasp the potential advantages and long-term benefits of having a resilient national ID system. Most Filipinos have never owned or experienced the benefits of applying for a loan within minutes or applying for government documents online. Take a look at India for example. The government implemented a national ID database called “Aadhaar,” the Hindi word for “foundation,” with a lot of opposition. Now, when you walk into a phone shop, you have two options to apply for a new phone plan. One way requires a wad of documents, multiple signatures, plenty of patience, and often weeks to go through “know-your-customer” procedures. The second way is magically simple: the person rests a finger on an inch-wide scanner, and if the print matches the identity the customer is claiming, the system downloads the information it needs from the authorities and activates the phone plan within minutes.
The system that was set up in 2009 to distribute direct welfare payments is now tapped into by private companies and its open-access nature allows a wide array of useful applications to shorten identification procedures for Indians. Reports suggest that the system already saved the government more than $5 billion and finds widespread use in phone shops, insurance offices, banks and other sellers of regulated products.
A system similar to Aadhaar in the Philippines could even store bank statements, medical records, birth certificates, or tax filings. Such a system could allow a lender to have access to anything stored in a database under the applicant’s name, such as bank statements, utility bills insurance policies, university diplomas, and more. This combines a proven legal identity with lots of data and would allow a lender to make an almost instant decision to grant or deny a loan or credit card. While the benefits for the consumer could be great, the economic benefits could far outweigh those for the end-customer. Financial institutions could lend against projected cashflows proven by tax returns or bank statements, instead of lending against assets, as is currently the norm in the Philippines. It would also push borrowers into the formal economy, away from informal lenders offering exorbitant rates to compensate for the high risk they are taking.
Card systems will always be prone to swifty copycats along Recto Avenue, but fingerprint scanners could solve both this problem and allow easier identifications. Privacy concerns will remain, as proper data storage and handling are no small feat to achieve in today’s interconnected world. However, what’s more important than privacy concerns is a commitment by the government to either focus on the new Filipino National ID currently pending approval by the Senate or explore new options that go beyond the intended use of existing IDs in the Philippines and perhaps do away with the tedious process of obtaining an NBI clearance.
Moritz Gastl is the managing director of MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.