The Philippines has improved its ranking as a business destination, especially in terms of market access on the World Economic Forum’s enabling trade index, ranking 72nd out of 132 countries. However, how do we improve the the problem that comes in when registering a business in the Philippines? According to the World Bank Ease of Doing Business 2012 data, the Philippines ranks 136 out of 183 countries, while our neighboring countries, Singapore ranking 1st and Hong Kong ranking 2nd. We’ve asked some of our clients who have registered companies in SG and HK what the problem was in incorporating a company in the Philippines and a majority answered it’s the timeline in getting a company registered with the different government agencies. Countries like Singapore and Hong Kong takes a few days to a few weeks to incorporate or registration a business. In the Philippines, however, this takes 2-3 months, and this is assuming that there are no problems with the documentary requirements presented to the different government agencies; national, city and neighborhood.
But this negative perception of incorporation and the poor rankings in surveys are about to change. The Department of Trade and Industry has officially launched the Philippine Business Registry (PBR), a new machine, which promises to make the business registration as short as 30 minutes, making way for a hassle free registration through modern technology.
According to Philippine Trade Secretary, Gregory Domingo, the PBR system will be connected to the SEC’s registration process to further assist those registering under sole proprietorships, partnerships and corporations. The machine enables the single proprietorship registrants to get their TIN from the BIR and SSS, Philhealth and HDMF.
The Philippine government plans to install workstations in the offices of DTI, SEC and Local Government Units. A PBR workstation was set up in the SEC head office to kick start this project. The next step is to install a PBR at each of the seven government agencies involved in the business registration process.
What does a Philippine business registration process entail? Depending on the structure of your business, your first step is to get a certificate of registration for your business name in one of these agencies:
Certificate of Business Registration in the Philippines
Depending on the structure of your business, your first step is to get a certificate of registration for your company name in one of these agencies:
- Department of Trade and Industry (DTI) – for single proprietorship
- Securities and Exchange Commission (SEC) – for partnerships or corporations
- Cooperative Development Authority (CDA) – for cooperatives
After getting your certificate of registration, you will need to visit the following offices:
- Homeowners Association – for businesses inside villages and subdivisions, you need to get a homeowner’s clearance
- Barangay Hall – secure a barangay clearance to operate your business
- Local Government Unit (LGU) – visit the municipality or city hall office and process your business permit
- Bureau of Internal Revenue (BIR) – apply for a business taxpayer identification number (TIN), register your books of accounts
At this point, you may now legally start your business operations. However, you will need to then register your employees with the following agencies:
- Social Security System (SSS) – secure an SSS number for yourself and your employees
- Department of Labor and Employment (DOLE) – for businesses with five workers or more, register your business with DOLE
- Home Development Mutual Fund (HDMF) – as required by RA 7742, SSS members earning at least P4,000 a month must be registered with HDMF. This agency administers the Pag-Ibig Fund.
- Philippine Health Insurance Corp. (PhilHealth) – all employers of are required to register their employees to this agency as stated in the New National Health Insurance Act (RA 7875 / RA 9241). PhilHealth manages and administers the government health care system.
The PBR project was actually started in 2006, but had little progress and was pushed more aggressively by the DTI when the new administration came in in July of 2010.
“I thought it would be done in six months but it took much longer because it’s a very complicated system. We need to have real-time access to the computers of five different agencies and they have five different systems requiring different protocol. So it took a while to settle down,” Domingo said.
The PBR is still at its early stage of implementation but aims to interlink the computerized registration systems of these government agencies which will make the registration easier as it does not require the registrants to go to each government agency to physically register their businesses.
How the PBR helps in the registration process:
1. Registrant fills in the PBR application form then submits to DTI teller for processing.
2. DTI Teller secures applicant’s TIN. (If there is an existing TIN, PBR will validate against records).
3. Business Name (BN) Certificate and Employer’s Registration Numbers (ERNs) are processed.
– A Transaction Reference Number (TRN) is presented to Cashier for payment of BN fee.
Official Receipt of Payment is presented to the DTI Releasing Officer for the BN Certificate.
Applicant gets SSS, PhilHealth, and PagIBIG ERNs from DTI teller.
4. Certificate of Registration or employer ID can be secured from agencies upon presentation of PBR-generated ERNs.
For SEC-registered companies, walk-in application through teller at DTI Office or SEC must follow the following steps, but note that only partnerships or corporations already registered with the SEC can apply.
1.) Registrant fills out the PBR application form and submits to the teller for encoding and processing.
2.) Registrant also submits photocopies of complete SEC registration documents (i.e., SEC registration certificate, articles of partnership/incorporation). Original copies are required for verification.
3.) Teller transmits application for employer registration numbers (ERNs) to SSS, PhilHealth, and Pag-IBIG and applicant gets PBR-generated ERNs.
4.) Certificate of Registration or Employer ID can be secured from agencies upon presentation of PBR-generated ERNs.
In lieu of this positive change, the Securities and Exchange Commission (SEC), lead by SEC Chairperson Teresita Herbosa, had launched its own “green lane” processing unit which is tied up with the Land Bank of the Philippines and has an extension office in Tarlac.
Like the PBR, the SEC’s “green lane”, aims to offer a faster approach in processing of applications of new corporations and partnerships. However, it is not available to corporations with the following situations:
- Subscribed capitals are not paid in cash
- More than 40% foreign equity
- With Secondary License issued by the SEC.
A confident Domingo expressed that the positive changes to business incorporation will definitely put the Philippines at the top 50 in the World Bank survey by 2016. Herbosa also added that this modern technology will enable the government to gather statistics on the kinds of businesses being registered or terminated and that data may be used for economic progress.