Business Permit and Licensing System (BPLS) Reforms
City Government of Legazpi

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
The City Government is besieged with the challenge of increasing its revenues to improve the delivery of its multi-sectoral services, while simultaneously creating an environment favorable to private investment and local economic development. Red tape, coupled with graft and corruption, among others, are key deterrents among prospective investors in the Philippines, more so on the local level. The public sectorcoupled with national government issuances, underscored the need for the City Government to make the regulatory requirements less burdensome, further streamlining business procedures. In Legazpi City and prior to the initiative, businessmen had to comply with the following long list of requirements in securing business permits: (1) notarized application form in four (4) copies; (2) barangay clearance where the business is located; (3) community tax certificate; (4) locational clearance; (5) assessor's clearance; (6) health clearance; (7) health card; (8) sanitary permit; (9) fire safety clearance; (10) industrial safety clearance and occupancy permit (for newly constructed/renovated building); (11) realty tax clearance; (12) assessment & payment of fees; (13) contract of lease or authority from the owner (if building is rented); and (14) other applicable requirements of national agencies, such as Social Security System clearance, Bureau of Internal Revenue clearance, Technical Education Skills Development Authority accreditation, Department of Health clearance, Department of Transportation Registration, among others. Due to the lengthy and tedious process, businessmen-clients often experienced the frustration of having to line up and wait for hoursin different government offices concerned. At times, they even have to go back the next day when the signing authority is not available, or submit additional documents required by the concerned Office. It took around seven (7) to fifteen (15) days before a businessman can secure a license to operate (i.e., Mayor's Permit), thereby enticing fixers, usually from the City Government, to facilitate processing.

B. Strategic Approach

 2. What was the solution?
Initiative: Business Permit and Licensing System Reforms Description: Simplifying regulatory processes in securing business (Mayor's) permit through the establishment of BOSS (Business-One-Stop-Shop)and development of database computer system to create a "business-friendly" LGU. The City Government of Legazpiinitiated to streamline the processing of business permits/licenses. The City spearheaded initiatives to streamline and improve the processing and issuance of permits not only by key agencies but other departments involved in the process as well. Through the efforts of frontline service providers, inputs were generated from concerned sectors that led to the proposal to create a One-Stop Shop on permits/licenses issuance. As a result, concerned offices/agencies have undertaken measures to expedite the issuance of permits. Initial step was the information/dissemination campaign, through the conduct of Orientation forum last December 2010, attended by 75% of the invited businessmen-clients. Also the City Government made use of innovative technologies such as the Unified Land Information System and the Geographic Information System (GIS) as among its strategies to widen its tax base and improve the tax collection efficiency, with specific reference to the actual number of taxable properties (per Assessor's official records) and economic activities. The City Government believes that this will not only improve the revenue generation but also enhance the quality of local governance, service delivery and protect the environment. Through the initiative, there was a reduction of documentary requirements, compliance monitoring of business establishments and address vital issues such as, additional requirements aside from the basic requirements as specified on the application form, and settlement of delinquent accounts prior to issuance of Mayor's permit, that affect the climate for economic growth and investment promotion.

 3. How did the initiative solve the problem and improve people’s lives?
Creative and innovative approaches to ensure successful implementation were the following: 1. Simplification regulatory procedure was adopted, which means: 1.1 No need for the notarization of the application form, saving the client around P 100.00 for notarial fee; 1.2 The application form is carbonized in four (4) copies, thus a savings of about P 2.00 per page, photocopying fee; 1.3 For outright issuance of business permit, only four (4) documents have to be submitted: filled-up application form, barangay clearance, community tax certificate and official receipts. From the initial ten (10) steps or more to seven (7) steps then five (5) steps down to only three (3) steps was the result of the enhanced simplification regulatory process; 1.4 A “backroom” process is initiated, i.e. the client does not have to go to different offices, pertinent clearances are being processed by the concerned office without the need for direct interaction with the client, thereby combating corruption; 1.5 Previously required documents such as the assessor’s clearance, realty tax clearance, National agency clearances were excluded from the list of requirements; 1.6 The practice of only one (1) signing authority and in his/her absence must assign a substitute to expedite the procedure; 1.7 Inspections are conducted periodically prior to renewal of business, known as the “post-audit scheme.” 1.8 Five-year validity of the locational/zoning clearance, (except for change in location, business/owner's name), which lessens processing time; 2. Staff of Business Permits and License Division coordinated with Shopping Mall Administrators to facilitate processing of permits within the mall area, reducing time allotted for securing permit and allowing them to focus instead on their business operations. 3. Coffee, biscuits and candies were offered for free while the permit is being processed. 4. Extension of deadline from January 20 to end of January without penalty. 5. To reduce waiting time, separate lanes were directed to cover “Express lane” (for 1-2 applications), “Bulk lane” (for three or more applications) and “Priority lane,” (for senior citizens, physically challenged and pregnant applicants). 6. Client can claim the permit within 30 minutes to 3 hours.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The City Government of Legazpi, with its goal to be a “business/investor friendly LGU,” introduced and improved its, “Business One-Stop Shop,” process.A Simplification Team was organized by the City Mayor, identifying each one's roles and responsibilities. Undertakings were: (1) series of brainstorming among stakeholders with the Chief Executive to garner support and cooperation and create a positive mindset and attitude within the workforce; (2) trainings on customer relations and IT literacy; and (3) launch of an aggressive campaign through media and local communications service-providers. An initial step to be undertaken by the client was around seven procedures. By 2010, a streamlining team was tasked to review and simplify front line service procedure; the initiative was known as, Business Permits and Licensing System Reforms. The original seven (7) steps were reduced to five (5)steps, eventually with the Regulatory-Simplification initiative, five (5) steps was again reduced to only three (3) steps. Activities of the reform program were: (1) coordination with DILG,DTI, business sector (through the local chamber of commerce and industry), media, frontline service providers on the reform system; (2) identification of key issues and the resources needed; (3) development of clear strategy; (4) assignment of roles and responsibilities to establish accountability mechanisms; (5) time and budgetary framework; (6) feedback mechanism/system evaluation and; (6) reward/commendation to the top ten early registrants. The City Government's citizen's charter is a commitment and pledge of the concerned Office to be more responsive to the demands of the public and become more accountable. A work-flow chart is posted on conspicuous areas where the public is informed on the processes, the officer-in-charge, the expected time of process/step completion and even the fees to be paid. Aiming to showcase a best practice model in Land Administration & Management reforms, the City Government has a working model of ETRACS and Geographic Information System (GIS) applications that have been used in planning, and hazard and risk assessments. Business permits, real property tax assessment and tax collection modules interconnect to land records management to enhance the standards of service delivery, increase land and property-based revenues and provide a platform for information sharing across concerned departments and units of the City Government.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
Stakeholders involved in the implementation were the national and local government agencies, the Department of Interior & Local Government (DILG), the Department of Trade & Industry (DTI), Bureau of Fire, the City Government departments/offices such as, Business Permit and Licensing Division/City Mayor's Office, City Planning and Development Office, City Engineer's Office, City Assessor's Office, City Treasurer's Office and City Health Office, Legazpi Tourism Stakeholders Development Council, Inc., the business sector, media and its frontline service providers.The private sector took the reins and steered the City toward a sustainable and profitable future. Government has a role to play but business will be the driver.The effort to build a lasting stability and equitable development for Legazpi City requires daily commitment of everyone concerned. Businessmen must be conscientious in their affairs and diligent in their payment of taxes, policymakers to be sensitive to what is truly needed and executives must be efficient in their daily governance, workers must be industrious and the ordinary citizens must be law-abiding in complying with even the most simple regulations.
 6. How was the strategy implemented and what resources were mobilized?
Technical resources were provided by the Business Permit & Licensing Division/City Mayor's Office, financial and human resources came from the City Government in the form of salaries and wages, mobility costs, documentation cost and hiring of additional Job-Order employees. The City Government of Legazpi submitted an application to the Innovation Support Fund (ISF) for small grant in 2007, to enhance its land records and management system. The grant and its counterpart funding was used to support the installation of the Tax Revenue Assessment and Collection System (TRACS) and establish connectivity between the local tax assessment and collection offices. After achieving the outputs under the small grant phase, the City Government was upscaled to the Programattic Grant phase amounting to P 4M, of which more than 25% is City's counterpart. Thus the City Government was able to establish the Enhanced Tax Revenue Assessment and Collection System (ETRACS).

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
Concrete outputs that contributed to the success of the initiative were: (1) efficiency of administrative processes brought about by the simplification procedure, providing for fast processing of business permits and facilitating revenue collection; (2) provision of consistent assessment that leads to accurate computation of business tax and related fees/charges; (3)accurate report and data bank generation of all business establishmentsand transactions. Data can be easily generated which is valuable in management decision-making, projection of revenues, monitoring of financial resources, monitoring delinquent taxpayers and even determining interest and surcharges; (4) eliminating the need to visit multiple offices tominimize red-tape, reduce administrative cost, save time and combatcorruption; and (5) gain of thrust and support among clients and the civil servants and improved public confidence in the City Government. One of the most evident positive results of the reform system was the alliance formed among the stakeholders to support the adaptation of the practice. There were exchange of knowledge, know-how, expertise and experience among frontline service providers with similar roles and responsibilities, fronting the same issues and challenges. Most importantly, competence, integrity, transparency and accountability remain to be the hallmarks of good governance and the key to the successful implementation of the reform package.

 8. What were the most successful outputs and why was the initiative effective?
After implementation of the initiative, BPLO periodically conducts needs assessment and feedback mechanism from the business sector. Suggestions and recommendations are taken into consideration and become a basis for further improving and enhancing the reform system. The City Government's citizen's charter is a commitment and pledge of the concerned City Offices to be more responsive to the demands of the public. A work-flow chart is posted on conspicuous area where the public is informed on the process, the officer-in-charge, the expected time and even the fees to be paid. All offices and employees concerned are held accountable and non-compliance with the provisions of the citizen's charter is a ground for suspension and even dismissal. The City is adopting the Strategic Performance Management System (SPMS), a monitoring compliant tool based on the Performance Governance System, introduced by the Institute Solidarity in Asia. This is a transformation from a mere transactional method to strategic breakthrough initiatives. It is an effective performance management system that will keep track of the progress of programs and projects, with coaching as direct intervention thus identifying bottlenecks and adopting strategies to ensure success in achieving the City Government's mandate, mission, goals and objectives. The SPMS also identifies areas for improvement within the organization and among individual employees, which ultimately strengthens a culture of performance and accountability. This is also a team approach to performance management whereby it encourages cooperation within the workplace since every individual performance matters and the achievements of the organization are results of combined efforts of all offices and employees. At the end of the rating period, employees with very satisfactory and excellent performance ratingswill be rewarded with performance-based bonus. Also, the existing digital data, through ETRACS, once updated, validated and geo-referenced can be transformed into tax maps that will show delinquencies in business tax, realty tax payments and/or discover new taxable real property units.

 9. What were the main obstacles encountered and how were they overcome?
As in most cases, there is always resistance to change. Skepticism was evident within the organization, but was overcome by the sustained prodding of the local chief executive and most importantly the community support, specifically the business sector as the project unfolds.From a transactional-passive atmosphere, the frontline teams had to be creative and exhibit quality service despite limited resources and operational capacities. Another problem encountered was the lack of technical expertise leading to unsystematic implementation. Common concern of the team was the need to harness information and technology competencies of all service providers, which was slowly addressed by its computerization program. The City Government of Legazpi continues to initiate a constructive dialogue with businessmenand addressvital issues that affect the climate for economic growth, investment and employment. The City Mayor strongly believes that the local business community can very well serve as the partner of his administration in steering the wheel for the City to follow the path towards an economically progressive future.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The initiative's highlighted breakthroughs are: 1. Incremental increase on the number of business establishments. Legazpi faces bright economic prospects with business investments coming in because of innovative programs that give investor a "friendly business climate." 2. Expanded delivery of social and economic services as a result of improved local revenue generation. The expenditures for socio-economic development programs increased by 9% from P 524,569,161.75 in 2010 to P 570,847,666.06 in 2011(source: City Accountant's Office); 3. Business taxes and fees jumped to 40% from P 81,939,125.56 in year 2010 to P 115,070,728.23 in year 2012. It has an average of 19% increase during the 2-year period; 4. Real property taxes also increased by 22% from P 35,828,511.31 in year 2010 to P 41,813,200.75 in year 2012. An average growth of almost 11% was noted during the 2-year period. The upward trend in real property tax collection was brought by the continuous discovery of taxable real property units and tax mapping activities; 5. Per 2012 status of Local Governance Performance Management System, the City Government rated an excellent performance in customer service, due to the seamless delivery and ease of obtaining frontline services. A trickle-down effect of the reduction in time will eventually lead to savings in the cost of processing the LAM documents due to the efficiency brought by the system (source: City Assessor's Office); 6. The City Government experienced a boost in private sector investments, in terms of the cost of new building construction and other property development. Investments almost doubled by 99% from year 2010 to P 561,209,909.60 in year 2011. The trend continued the following year at an increase of 82% amounting to P 1,021,958,938.45. The average growth in investments averaged to 91% for the 2-year period (source: City Engineer's Office); 7. An increase in the number of land acquisitions has been experienced. Purchases and sales increased 3-fold by around 155% in year 2012 with a total market value of P 714,443,274.23 compared to 2011. The number of sales also rose by 160% in year 2012 from 271 last 2011 (source: City Assessor's Office); 8. Property subdivisions also incurred an upward trend jumping at around 17% in year 2012 with an equivalent total market value of P 22,876,330.00. The number of subdivisions increased almost 3-fold by 146% in year 2012, from 175% in year 2011 (source; City Assessor's Office); 9. Improved land data and records management of the City Government, including the internal processes in assessment and collection, in terms of fast services, increased transparency, increased efficiency of personnel in their functions and productivity; 10. Enhanced revenue generating capacity of the City Government through updated business establishment and property valuation policies and practices; and 11. Improved the socio-economic development and environmental management in the City Government through land use and sustainable development planning. LAM transactions brought by accurate records and maps increases public satisfaction, transparency and accountability. The trust and confidence in the government by both the public and investors can stimulate the real estate market with the assurance that revenues generated from real property and business taxes will fund future infrastructure development. Efficient and effective LAM service delivery can contribute to poverty alleviation through facilitating process of land redistribution to the poor and providing security of tenure on occupied lands. Good governance is premised on participatory, transparent, accountable and equitable decision-making. As in all political and administrative systems, personal and institutional relationships within and between national and sub-national levels of government play a large part in shaping governance outcomes. The City Government and LAM agency partners have been able to demonstrate progress in achieving a level of interagency collaboration which has enhanced LAM service delivery and improved governance practices with respect to collection and management of property and business taxes.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
In the narrower context of City Government projects, sustainability refers to project viability: the condition under which a project is financially viable, and at the same time, economically and socially justifiable. Financial sustainability means that a project pays for itself and generates surplus. Economic sustainability looks at whether or not a project addresses a legitimate community need and whether or not its benefits outweigh the costs. These are the prime building blocks for any sustainable project seeking to attract good financing because they force the City Government to systematically look into what it will take to make a project pay for itself in the long term. Given the above premise, it is very positive that the reform system is sustainable. The City Government was able to share the ETRACS technology to several LGUs through an LGU-to-LGU scheme, where the principal LGU facilitates the hands-on training and working software for free to the recipient LGU. So far, Legazpi has been able to train the Province of Catanduanes and its eleven (11) municipalities and the Cities of Ligao and Tabaco on ETRACS. On-going is the roll-out to Masbate City. The system is an inspiration to other local government units that an enhanced land administration and management can improve the provision of social and economic services to their respective constituents through increased local revenue generation. LAM reforms remain to be a high priority since we are aiming for Internal Revenue Allotment independency, which is getting smaller as a result of new cities being created. This project is ensured with an annual funding since its component and activities are integrated in the City's Medium Term Public Investment Program and Annual Investment Program. In order to continue to operate, improve and expand the system, the City is addressing the issue of permanency in manpower so that responsibility and accountability will be set. An Ordinance was enacted, creating the Information Technology Unit. The staff should continuously upgrade their skills to keep up with the fast advancements in technology. To serve as cost recovery mechanism for the City Government to sustain its LAM enhancement activities, an Ordinance was enacted to include fees for computerized-generated maps and computer-generated LAM information on the City's revenue code. Further, the City Government was able to establish the Enhanced Tax Revenue Assessment and Collection System (ETRACS), and set up connectivity between the City Government and LAM partner agencies of the Department of Environment and Natural Resources V thru its Land Management Bureau and the City Registry of Deeds and started to develop the Digital Cadastral Database (DCDB) as an initial step towards the establishment of a full Unified Land Information System (ULIS).

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Despite limited resources, through several enhanced innovations as the system progress, the LGU visualizes to become agents of change. The sustainability of the initiative demands commitment and trust despite daunting challenges. Everyone should approach endeavors with enthusiasm and the energy that have been with it. Through oneness and support, the team has substantially achieved the desired goals. With positive mindset and attitude, amongst the concerned City workforce there is always room for improvement. The City needs to collaborate with all sectors to pursue its dream to keep pace with their more progressive neighbors. The City Mayor's political will and leadership, coupled with the full support of the public, has proven to be an essential success indicator of the establishment and implementation of the Reform System. The ideal set-up would be on-line application and processing, including payment of fees. With the improved telecommunication facilities and no power disruption, this could become a perfect setting, paving the way for economic renaissance.

Contact Information

Institution Name:   City Government of Legazpi
Institution Type:   Government Agency  
Contact Person:   Joseph Esplana
Title:   City Government Department Head I  
Telephone/ Fax:   (052) 480-2339
Institution's / Project's Website:  
E-mail:   joycpdc@yahoo.com  
Address:   City Planning and Development Office, 2/F City Hall
Postal Code:   4500
City:   Legazpi City
State/Province:   Albay
Country:  

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