Government Service: A “Signature industry” Duterte will change

red_tape_philippines

Beware bureaucrats! Change is coming your way!

What is the signature industry?

It is not uncommon to hear the rants and raves of people, frustrated about how long it takes for government to process an application. Whether it is a business permit, license, passport, clearance, certification, loans and claims from SSS, Pag-Ibig, Philhealth, etc., it’s the same old problem.

Forms, forms and more forms, and at the end of each form:“signatures”

Each signature costs money; the more signatures, the more “grease money” needed. This is why one of the biggest “underground” businesses (where even Kim Henares showed her professional impotence) in the Philippine government is the “Signature Industry”.

Why is this happening?

The signature industry flourishes in developing countries like the Philippines where patronage politics plays an important role. This is why, as the political scientist Prof. D.S. Jones(2007) observed: “To expedite otherwise protracted procedures, and to obtain a registration, license or permit, or to pass an inspection test (which could be refused or failed for a purely technical or minor reason), a private business may have little choice but to resort to bribe”. 1

Bribery becomes a tool to cut short the bureaucracy. This confirms what Kaufmann (1997) years before claimed, that “a central theme of the “grease-the-wheels” argument is that bribery can be an efficient way of getting around burdensome regulations and ineffective legal systems.2 Many businessmen have no other recourse than to bribe their way to get things done.

Thus, bribery to get signatures has become the normal way of doing business in the Philippines.

The inefficient bureaucracy doesn’t make sense, especially in today’s computer age, where it is frustrating to see the blatant inefficiency of government services. A government agency will require you to go to another government agency for a document needed to process your request, only for you to find out that you need another document from a separate government agency for that one piece of paper.

Sh…

Similar observations

According to Boo Chanco, a Philippine Star business columnist: “The quality of government’s front line services is still quite third world. DFA can’t issue passports until three weeks after application, and the lines for that NBI clearance can snake quite a bit even as applicants fall in line way before the malls open for business. There is no concept of service… neither the bureaucrats nor the government’s computer systems are up to the challenge…”

“…Start off with a computer system that works across government agencies. Maybe we do need that proposed cabinet level department for communication and information technology to orchestrate the effort. Every top bureaucrat seems to want his own computer system, possibly because the money involved in acquiring hardware and software can be significant and so could commissions.“ 3

Millions of Filipinos can easily relate to Chanco’s observations and experiences.

According to Peruvian economist Hernando de Soto (1989), “It is no surprise that bureaucracy and corruption go hand in hand.” He argues that “this is not due to culture but rather to political structure.”

What de Soto said about Peru holds true for many developing world states, especially ours: 4

“There appears to be a tradition among our country’s lawmakers of using the law to redistribute wealth rather than to help create it… A state which does not realize that wealth and resources can grow and be promoted by an appropriate system of institutions, and that even the humblest members of the population can generate wealth, finds direct redistribution the only acceptable approach.”4

The Anti-Red Tape Act of 2007 (Republic Act No. 9485)

Addressing the issue of an inefficient bureaucracy is not new.

“The Anti-red Tape Law in the Philippines was already existing and effective since 2007, yet many Filipinos are not aware of this law. Although this act is a directive to the government agencies and their officers, the public should also be aware of it so that they may learn what available rights and privileges they have when they do transactions with the government.” 5

Instead of making us aware so we can benefit from this law, the government does little to promote the spirit of the law. In fact, their actuations seem to achieve the opposite.

Negative effects of the Signature Industry

Because the signature industry impedes government efficiency, we have corruption, poverty, social inequalities, social injustices, lack of jobs, underemployment, inadequate housing, lousy infrastructure (roads and bridges), low foreign direct investments, poor educational institutions, and mismatched skills training. On top of these, we have shady deals between government and private companies, poor rural agricultural production, and the very high costs of basic utilities: energy, water, and communications services.

Notice anything? These industries are owned by a few oligarchs protected by corrupt politicians.

Change is coming!

Telecommunications and internet services are expensive, weak and slow compared to our Asian neighbors. The signature industry continues to protect them from a fair competitive market economy. We have allowed the creation of a nation of “rent-seekers”. 6

In a political economy like the Philippines, rent-seekers bribe government for protection, exclusivity and monopoly of public services. The citizens are forced to use their service because nobody else is allowed to offer them, and because the law makes sure that you cannot. Just like owning a toll gateway, where everyone who passes through has to pay a fee and there is no other way to get through. The utility businesses are the favorite choices of these rent-seekers.

Towards a solution

Recently, President elect Rodrigo Duterte declared an all-out war against red tape. The common complaint of businessmen is the delayed release and approval of permits that could take months, if not years. “That’s what investors don’t like. I’ll just give you 60 days. Act on the papers, 60 days. If you complete action on the papers in 72 days, you cannot release the paper anymore just like [in] Davao [City]. You have to forward it to the executive secretary and he will ask you why it took several days,” Duterte said. 7

In Davao City, processing of government documents is limited to 72 hours. Any delays have to be explained to the Office of the Mayor. Duterte also said he would also get rid of any redundancies in government offices, reconfiguring the system so that only 5 or 7 signatures are required for a permit to be issued.” 7

Simplifying the bureaucracy in the government is a simple exercise in common sense. However, decades of money-making schemes concocted by top and mid-level government officials are deeply entrenched, making it difficult for them to let go of their easy-money schemes. An industry that humongous would affect the income streams of scores of government officials and employees who have been enjoying these perks for decades. The eradication of the “signature industry” will automatically give the people the quality government services they justly deserve.

And to think: we taxpayers are the ones who pay for the salaries of these public servants who lord it over us.

Never mind. Your days are numbered. Change is really coming!

It is my dream that one day, I can walk into a government office or agency, get what I need without lining up for hours, and walk out in a jiffy, absolutely delighted that the government people, who spend my tax money and whose bosses I elected into office, served me well.

Citations:

1. Jones, David S. (2007) Regulatory reform and bureaucracy in Southeast Asia: Variations and consequences.International Public Management Review. 8(2) Retrieved from
http://journals.sfu.ca/ipmr/index.php/ipmr/article/viewFile/35/35

2. Kaufmann, D. (1997) Corruption: The Facts. Foreign Policy, summer edition, p.2 Retrieve from http://www1.worldbank.org/publicsector/anticorrupt/fp_summer97.pdf

3. Chanco, B.(2013, Feb. 20) Gov’t front line services must improve. Philippine Star. Retrieved from
http://www.philstar.com/business/2013/02/20/910824/govt-front-line-services-must-improve

4. de Soto, H. (1989) The Other Path: The Economic Answer to Terrorism, New York, NY: Basic Books, p191. Retrieved from http://www.thepowerofthepoor.com/concepts/c7.php

5. Abrugar, V. (2016, May 4). The Anti-red Tape Law in the Philippines: What You Should Know. BusinessTips.ph. Retrieved from http://businesstips.ph/the-anti-red-tape-law-in-the-philippines-what-you-should-know/

6. Krueger, A. (1974). “The Political Economy of the Rent-Seeking Society”. American Economic Review 64 (3): 291–303

7. Ranada, P. (2016, Jan. 15). Duterte to businessmen: Davao City is my Exhibit A. Rappler. Retrieved from http://www.rappler.com/nation/politics/elections/2016/119074-rodrigo-duterte-davao-city-exhibit-a

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About Carlo de Leon

I am a marketing consultant, entrepreneur and executive director of an NGO. I have extensive experience in advertising, product management, media, and general management. I love art, graphic design, philosophy, theology, and history. I continue to study these subjects to enjoy my intellectual and artistic pursuits.

13 Comments on “Government Service: A “Signature industry” Duterte will change”

  1. I am an OFW, and, I have been a victim of the: “Signature Industry”, in my renewal of my passport.

    I believe that our politics is full of :cheating; patronage politics; violence; etc…it is because those who are followers of any politician, who wins; get the “juicy positions” in the government. They make it their business the :”signature industry”. They grow rich in bribes, while in government service/positions.

    If we remove this “signature industry”; violence and cheating in politics, as well as patronage politics, will be reduced.

  2. To Mr. de Leon:
    This “signature business” you write about makes for a lengthy and, perhaps, an expensive process for businessmen.. who, by the way, pass all coasts to the end consumer. It is always the end consumer who pays for the product and all its attendant costs.. real and otherwise. Since the ‘change’ you speak of isn’t just ‘different signatures’, but a total overhaul of the current system, (as in ‘heads will roll’), all we can say is “..thanks, it is about time”…
    One other change we would like to see, however, is the ‘family ownership’ of many, perhaps all, government positions. Makati is the prime example. There is Vice-President and ex-Mayor Binay, the older; there are Senator Binay and Congress-woman Binay, the daughters…all three simultaneously sitting officials. There were, as well, Mayor Dr. Binay, the wife and ousted/ex-Mayor Binay, the younger. It is as if these positions were a family franchise that are handed down exclusively to its members. Another example is the ousted President and now Manila Mayor; his wife an ex-Senator; his two sons now sitting Senators, (though one is warming another seat in jail); and another city Mayor is somewhat related.. or so the story goes. To be sure there are many more such ‘franchises’ that does the country no good at all, and should be stopped. Once the ‘signature’ and the ‘political franchise’ businesses are ended, the Philippines would really look like a real contender for a spot in the new and emergent world economies. I’m just thinking aloud here, but don’t you think so?

    1. Dear Mr.Rieles,

      Your points are very good. The signature industry does increase the cost of doing business, therefore, higher prices for the end-user.

      A total revamp is necessary because the corruption is deeply entrenched, we need to reboot the entire system.

      I think political dynasties will still be around especially on an LGU level, however, enforcing proper policies can curtail if not eradicate the costly and inefficient bureaucracy. Ultimately, the boss of mayors and governors is the President.

      With regards to the rent-seekers, the political franchises will weaken as the new President promises an equal playing field so that other budding entrepreneurs can do businesses with less entry barriers.

  3. Bureaucracies force us to practice nonsense. And if you rehearse nonsense, you may one day find yourself the victim of it.

  4. The fastfood industry lives up to its name because of fear – the fear of becoming extinct. Competition is key.

    Rent seeking must be opened up to multiple players. Federalism may bring in competition among Federal States in services and ease of doing business.

    Yes I hope “change is coming” is not just another hyped up slogan like the one fed to us by the Yellow brand. Better days ahead… ?!?!?! Let’s see

    1. I agree. That’s exactly the idea behind it, though a lot of hard work ahead to get there, but we are on the right track.

  5. Duterte is completely off the mark. The signature industry exists because myriad silly rules ensure that it must exist. Telling the pen-pushers to sign faster solves nothing. Just delete the silly rules, and do things properly.

    Sadly, as I’ve said before, Duterte is a Filipino. He therefore cannot conceive of a world without silly rules.

  6. I would say, a major factor is that the bureaucracy is operated to facilitate regulatory capture. Look at Internet and electricity, for example. Also, as I said in Add’s article about transport, some rules are likely “cooked” to give business to certain people close to government, like the RHD to LHD converters. In a way, change should also occur with the business sector, since that seems to have undue influence over the government, instead of the citizens who both sectors should serve.

  7. I like this article as there’s a citation included.

    Miriam already cited this if she becomes president. I’ve read the Economic Provision of the 1987 Constitution. It seems it’s favoring only the oligarchs.

    excerpt:

    http://www.gov.ph/constitutions/1987-constitution/#article-xii

    SECTION 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.

    THIS: sixty per centum of whose capital is owned by such citizens.
    well it can be any citizen however, business wise, who are we to be partners by outside businessmen? of course they would always opt for the oligarchs. and not all Filipinos are businessmen per se.

    I agree with Miriam’s Constitution Reform. this includes find a balance between the nationalist provisions and the demand of globalization. nagpag-iiwanan na tayo dahil sa lumang saligang batas.

  8. Raise the salaries of dedicated government employees and fire all the fuckers who are only looking out for their best interests.

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