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Business
bureaucracies
andregulations
"'l'here is no art which one gw-
ernment sooner leams of another
than that of drcining monEt from
the pockets ofthe people.''
- Adamsmith
The Wealth of Nations 6276),
dookv Chqpter II, Part II
ast week, on Nov. 28, I
attended a conference
on Cutting Red Tape
for Small and Medium Enter-
prises (SMES) organized by
the AIM Rizalino S. Nava[o
Policy Center for Competi-
tiveness and the Konrad Ad-
enauer Stiftung (KAS) h6ld at
Discovery Primea in Makati. A
very interesting paper, "Cost
of Regulatory Compliance
for SMES in the Philippines:
Methodology and Survey Re-
sults," was presented by the
authors .Iamil Paolo Francisco
and Georgina Gonzales.
The authors and their team
made a survey and they covered
300 SMES from Metro Manila,
145 each from Cebu and Davao
cities, for a total 59o SMES,
$'ith average employment of
29 for Metro Manila, and 18 for
Cebu and Davao. The survey
was done from August to Octo-
ber this year.
The study had some inter-
esting or troubling results. I
summirize many charts and
lln^si$esqllhdd
fiuRo6Ai
.
MY CUP
T}F LIBISTY
BIENVENIDO S.
OPLAS, JR.
sub-topics i[to a table which
acgompanies this column.
The study made the follow-
ing Summary from their sur-
vey results:
. SMEs find regulatory
compliance, on average, mod-
erately burdensome and they
consider compliance as a gon-
cern ad soon as the business is
being established.
. Tax and local government
regulations are perceived as
most burdensome, and the
Bureau of Internal Revenue
(BIR) and local government
units (LGUS) as most difficult
to deal with.
. On average, SMES spent 30
hours to comply with regula-
tions, about a third of which
was spent on tax compliance.
. The burdens on SMEs are
more on time and effort, so to
save tirhe and effort, almost
a fifth of SMEs surveyed re-
ported making informal pay-
ments of an avetage of 2Eo of
their total expenses.
. When it comes to nonetary
costs, businesses spend hround
u oAer-bfstU
DECE]'|8ER 5, Zng
l77o of their total exPenses for
regulato ry complia a\\d zOVa
^ce Figures
for tax requirements.
include both direct and indi-
rect payments such as salaries,
transportation, suPPlies, etc.
There, Adam Smith's words
from some 243 Years ago are
still spot on.
Bureaucracies in SMEs can
expand as courPanies become
large. Take the case oftransport
network companies (TNCs).
Recently, PBA Partylist Jericho
Nograles unleashed a Political
attack on one Private company,
saying that "Grab owes govern-
ment PIs billion in fines for
ove!cha!ging 3 million riders."
Again, the term "overcharg-
ing." When peoPle flY business
class or first class instead of
economy class, theY do so vol-
untarily and pay for the ticket,
dqnot\cIy about being over-
charged. When People watch a
concert or sports game with a
ringside ticket instead of lower
box or upper box, they just PaY
and do uot cry that they are be-
ing over-charged.
So when peoPle take.an
expensive ride, the fare they
already know before clicking
"Book a ride,' theyjust PaY for
reasoDs of safety and comfort
and do not cry about being
over-charged. Otherwise theY
can take the ordinary taxi, or
motorcycle taxi, or an aircon
van, jeepney, bus, the MRT/
LRT and save money. A Person
ca!rying six or seven-digits in
cash, or important documents,
or rushing to the airport and
paying P50o for a safe TNC
ride instead ofPSoo for a regu-
lar taxi or Plso for a motorcy-
cle taxi will not cry that they
are being over-charged PeoPle
decide Y/hat rides are imPor-
tant for them, not Politicians
or bureaucrats.
So when politicials like Mr.
Nograles charge billions of
pesos that a Private company
"owes" to the Passengels they
have safely and comfortablY
served, there is clear malice.
The more Political harass-
ment f!ompoliticians, the more
restrictions from agencies like
the LTFRB (Land TransPorta-
tion Franchising and Regula-
tory Board) on expanding the
supply of accredited cars ol
players, then the more Public
suffering via long waiting time
for the few accredited cars, or
shorter waiting times but more
expensive rides
Can new governmeIrt regula-
tions like the Anti-Red TaPe
Act addtess problems that,gov-
brnment agencies themselves
created? Perhaps Yes
Methinks that one lastiDg
solution is to limit government
people from staYing in govern-
for a maximum of 20
ment,
years combined work in local
and national agencies, aPPoint-
ed and elected Positions. ManY
government officials inteud to
be regulators and Politiciaos
until retirement, meaning the
hardships theY create and,im-
piement will not aPPIY to them
and their friends. If they know
that their taxation, regulations,
and prohibitions v/ill aPPIY to
them somedaY, the:/ will think
trMo times or ten times about
ciafting legislation for irration-
al taxation and regulations. r
BIENVENIDO S. OPLAs, IR.
isthe president of Mininal
Govemment lhinkers.
mlninalgoYeflment
@gnall.com