The Strengthening Urban Resilience for Growth with Equity (SURGE) Project works to strengthen local business development, and facilitate investment and support services that foster low emission growth. Part of this is developing a business enabling environment in the cities of Batangas, Puerto Princesa, Iloilo, Tagbilaran, Cagayan De Oro and Zamboanga.
This report focuses on the assessment of the Business Enabling Environment (BEE) in these cities considering the factors that promote or constrain the flow of investments. These include regulatory framework and barriers to trade and access to finance, among others. Using a financial sector lens, the assessment provides an evaluation of the local investment promotion office, determines where assistance is needed, and recommends niche technical assistance.
A BEE diagnostic tool was used in the assessment. The tool aims to provide an independent and objective assessment of the BEE in the cities in the following dimensions: quality of regulatory environment, institutional capacity and performance of local government unit (LGU), quality of investment climate, and effectiveness of public-private dialogue. The assessment was done using key informant interviews, focus group discussions, enterprise survey and secondary research.
Based on the assessment, some of the BEE strengths identified in the cities are: (1) a strong executive legislative coordination; (2) updated, relevant and holistic vision; (3) convergence program with the national government on infrastructure projects; and (4) having a private sector supportive of efforts to attract/ retain investors.
Challenges
The assessed CDI cities showed a number of challenges that hinder their economic potential, especially in attracting and retaining investors. These challenges, when not addressed over time, will have implications in long-term development programs and eventually, the viability of their local economies as business-friendly destinations.
- Outdated laws and regulations related to the business environment;
- Regulations that are not properly enforced and communicated to the public;
- Local economic investment and promotion office (LEIPO) and/or investment offices that are not institutionalized;
- E-governance practices that need improvement;
- Weak internal communication among departments;
- Weak inter-office coordination and data sharing;
- Linkages with the Department of Trade and Industry (DTI)that have to be formalized;
- Absence of a long-term economic strategy and infrastructure plan;
- Poor traffic management plan;
- The need to strengthen the private sector, especially the business clubs and Chambers of Commerce; and
- The need to enhance public-private dialogue and consultations.
Recommendations
A number of lessons can be drawn for future BEE programming from the assessment. To implement programs for reforming and improving the business environment of CDI cities, the following are some of the recommendations:
Improve the quality of the regulatory environment.
First, updating local regulations will not only strengthen the business enabling environment, it will also make regulatory systems and processes more efficient. There is a need for the cities to update local laws and ordinances, particularly amendments to the investment code, revenue code, land use and zoning ordinance, and environmental ordinances. Second, the cities must develop and/or strengthen the institutional mandate of the local economic investment promotion office (LEIPO) and/ or investment center in conjunction with their local investment codes. Third, local laws must be reviewed to analyze overlapping regulations with known national mandates. Fourth, the cities must continue to strengthen the operations of the Business One Stop Shop (BOSS). Fifth, the cities must also strengthen the Joint Inspection Team (JIT) in enforcing regulations. Sixth, the cities must undertake a communications program to inform and communicate the pertinent laws and regulations to the public.
The SURGE Project can provide strategic technical assistance on several fronts: (1) the conduct of regulatory impact analysis to support legislative development; assistance in institutionalizing the LEIPO; (2) review of national laws affecting the local business environment; (3) assistance in institutionalizing BOSS and the Business Permit and Licensing System (BPLS); (4) developing guidelines for the operations of the JIT; and (5) developing a legislative tracker and shared database among key offices and the private sector.
Strengthen the institutional capacity and performance of the city government’s business support offices and service providers.
The cities must improve the quality of local governance, leadership and effectiveness in the delivery of business and enterprise development. To do this, cities need to have a long-term economic masterplan as the basis for local economic strategies. Cities must also improve the quality of business services and offices for investor relations and business support, and develop their business continuity and business recovery programs. Cities must improve the knowledge and technical capacity of their personnel, review their e-governance programs, and strengthen internal communication and coordination among departments. Cities must also develop competency-based hiring standards and review their internal physical assets and resources. Finally, cities must strengthen linkages with key national agencies such as the Department of Trade and Industry (DTI), Department of Labor and Employment (DOLE), Technical Education and Skills Development Authority (TESDA), and the Department of Social Welfare and Development (DSWD).
The SURGE Project can provide strategic technical assistance on the following: (1) undertaking a local economic planning exercise; (2) developing an action plan for LEIPO; (3) integrating business continuity and business recovery programs in disaster risk reduction management (DRRM); (4) developing and implementing human resource development plans to enhance the skill sets of various offices in partnership with the private sector; developing and implementing the cities IT/ eGovernance strategies; (5) implementing guidelines for knowledge sharing and peer-to-peer interaction; (6) developing competency-based standards for hiring personnel; (7) undertaking a review of resources needs; and (8) formalizing a memorandum of understanding (MOU) with various national government agencies (NGAs) to operationalize linkages.
Improve the investment climate and local economic competitiveness.
First, cities must work to improve the quality of local infrastructure and pursue activities that promote and sustain local economic competitiveness. The cities’ infrastructure plans must be linked with their economic plans. Second, cities must address the insufficient and high cost of water, telecommunications and power supply. Third, city-led programs must be aligned with potential partners to maximize opportunities for local economic development.
The SURGE Project can provide strategic technical assistance on the following: (1) assistance to cities in undertaking multi-stakeholder consultations to support their infrastructure masterplans; (2) assistance to cities in determining demand and sources of water and power supply, and access to telecommunications; and (3) linking the cities to national programs on shared services facilities, industry roadmaps, and sector competitiveness.
Improve the quality and effectiveness of public-private sector dialogue.
The cities must aim to improve the quality and effectiveness of local private sector representation and work for greater public-private sector engagement. There is a need to strengthen the private sector groups such as the local chamber of commerce, cooperatives, and business clubs.
The SURGE Project may assist these groups in developing their business advocacy agenda and strategy to support economic planning and investment promotion activities with the city government and the academe. City governments should also enable the private sector to take on a bigger role in economic planning, investment and business promotion to create more buy-in and ownership of local economic programs.