RFP Amendment 1_Appendix 3 _RESPOND Y2 Q3 Report.pdf

THIRD QUARTER REPORT (YEAR 2) | RESPOND

3rd Quarter Report April – June

2020 | Year 2

REGULATORY REFORM SUPPORT PROGRAM FOR NATIONAL DEVELOPMENT

University of the Philippines Public Administration Research and Extension Services Foundation, Inc.

COOPERATIVE AGREEMENT NO: 72049219CA00003

Regulatory Reform Support Program for National Development

(RESPOND)

3rd Quarter Report for Year 2

Program Title Regulatory Reform Support Program for National

Development (RESPOND)

Sponsoring USAID Office USAID-Philippines

Agreement/Contract No 72049219CA00003

Program Implementer University of the Philippines Public Administration Research and Extension Services Foundation, Inc. (UPPAF)

Document Title 3rd Quarter Report for Year 2

Period Coverage April 1 – June 30, 2020

Date of Submission July 27, 2020

Author UPPAF RESPOND Team

TABLE OF CONTENTS

EXECUTIVE SUMMARY__________________________________________ 7

ACTIVITY ACCOMPLISHMENT REPORT ___________________________ 10

Activity 1: Amendment of the Public Service Act (PSA) ______________________ 10

Activity 2: Amendment of the Retail Trade Act (RTA) ________________________ 11

Activity 3: Strengthening the capacity of the Philippine Competition Commission

(PCC) _____________________________________________________________ 12

Activity 4: Addressing Non-Tariff Barriers _________________________________ 14

Activity 5: Strengthening the capacity of the Anti-Red Tape Authority (ARTA) in market competition regulation __________________________________________ 16

Activity 6: Use of Information Technology Systems in regulation _______________ 22

Activity 7: Rate-setting mechanisms _____________________________________ 22

Activity 8: Reforming the CAAP through Rationalization of its Charter, Mandate, Functions, Responsibilities, and creation of PADC __________________________ 23

Activity 9: Reforming the PPA through Rationalization of its Charter, Mandate, Functions, Responsibilities; Amending the Charter of the Maritime Industry Authority

(MARINA) _________________________________________________________ 24

Activity 10: Strengthening the Institutional and Technical Capacity of the Governance

Commission for GOCCs (GCG) ________________________________________ 26

Activity 11: Developing and Strengthening the Institutional and Technical Capacity of the Anti-Red Tape Authority (ARTA) _____________________________________ 27

Activity 12: Developing and Strengthening the Institutional Capacity of DICT _____ 31

Activity 13: National Competitiveness Roadmap____________________________ 32

Activity 14: National policy and legal framework to promote Electric Vehicle (EV) __ 33

Activity 15: Amendment of the Foreign Investments Act (FIA) _________________ 34

Activity 16: Capacity-Building for the Department of Information and Communications

Technology (DICT) __________________________________________________ 35

Activity 17: Enhancement and Updating of the E-Commerce Industry Roadmap __ 36

Women’s Global Development and Prosperity (W-GDP) Program ______________ 37

Activity 27: Revised Implementing Rules and Regulations (IRR) of the Philippine

Quality Award Act (R.A. 9013) __________________________________________ 41

Activity 28: Establish the One-Stop Shop (OSS) as indicated in the Innovative Startup

Act (RA 11337) _____________________________________________________ 42

Activity 29: Transport and Logistics Sectoral Roadmap ______________________ 42

Activity 30: COVID-19 Activities ________________________________________ 45

MONITORING, EVALUATION, AND LEARNING (MEL) ________________ 51

ANNEXES ____________________________________________________ 52

EXECUTIVE SUMMARY

In April 2019, the United States Agency for International Development (USAID) and the University of the Philippines Public Administration Research and Extension Services Foundation, Inc.

(UPPAF) signed a Cooperative Agreement for the implementation of the Regulatory Reform

Support Program for National Development (RESPOND). The Program seeks to improve regulatory quality that will lead to enhanced competitiveness, and ultimately, contributes to higher levels of investment and trade, inclusive growth and self-reliance.

Toward this end, RESPOND pursues interventions that (Objective 1) enhance market competition, and (Objective 2) strengthen regulatory capacity and governance. To advance market competition, RESPOND supports reforms that reduce barriers to entry (Sub-Objective 1.a) and reduce regulatory burdens and transactions costs for business (Sub-Objective 1.b). To strengthen the capacity of public officials to develop and implement quality regulations, RESPOND extends technical assistance that strengthens regulatory oversight (Sub-Objective

2.a) as well as transparency and accountability mechanisms (Sub-Objective 2.b). As a cross-cutting objective, RESPOND seeks to expand citizen engagement and the participation of civil society organizations to advocate for fair and open regulation and a better business environment.

This Report covers the activities and accomplishments of RESPOND for the Third Quarter (April

1 – June 30, 2020) of Year 2 (October 1 – September 30, 2020). Highlights of RESPOND’s major project activities and accomplishments for the third quarter are presented below:

▹ SCAN Dashboard and Incident Reporter app to address supply chain bottlenecks and promote unhampered movement of cargoes under the Enhanced Community Quarantine

(ECQ). Approved by the Inter-Agency Task Force (IATF), RESPOND and the National

Economic and Development Authority (NEDA) launched the Supply Chain Analytics

(SCAn) Dashboard last 21 May 2020. The dashboard provides the government with real-time data and useful information that will aid their decision-making processes and monitoring progress, especially during this current pandemic situation.

▹ CIC Memo 02-2020 addresses the negative payment information reported during the crisis and ensures that the same will have very minimal of no effect on credit histories and risk scores of data subjects. The circular provides guidelines to Submitting Entities (SEs) on tagging of missed payments during ECQ, and is in accordance with the provisions of the

“Bayanihan to Heal as One” Act issued on 24 March 2020, which requires implementation of 30-day grace period to all loans with principal and/or interest falling due during the ECQ.

▹ DOTr Department Orders (007, 008, 009) 12% allocation for food and agricultural products in domestic shipping, 40% discount of freight; creation of complaints desk re high shipping costs; increase of free time from 5 to 8 days. Just on the increase of ‘free time’ intervention alone, quick impact estimates point to a $20-40 million reduction in cost.

▹ IATF adoption of Rapid Regulatory Assessment (RRA) Guidelines to simplify and fast-track assessment of regulations (in terms of regulatory burdens). RESPOND assisted

ARTA in doing RRAs to 14 COVID-related issuances. The RRA is a quick and efficient evaluative tool that will aid government agencies as they come up with regulations during this time of the pandemic. ARTA envisions the RRA as the regulatory assessment process that will be used during times of calamities and pandemics.

▹ IATF ICT SWG project vetting framework. RESPOND is supporting the Inter-Agency Task

Force for the Management of Emerging Infectious Diseases Management (IATF-MEID)

Information and Communications Technology Sub Technical Working Group (ICT-SWG), by providing expertise and leadership to aid the ICT-SWG’s mission to deliver new and enhanced ICT services and technologies as part of the agency’s role in direct support of

RA 11469, “Bayanihan to Heal as One Act.” RESPOND developed an extensive but flexible vetting checklist for speedy evaluation and eventual adoption of ICT technologies for use by the government in its efforts to battle COVID-19.

▹ Women – Global Development and Prosperity (W-GDP). Gender inputs provided to the draft RRA Guidelines. RESPOND also submitted its Gender Assessment

Report to the Credit Information Corporation (CIC) on 14 June 2020. This was presented to the CIC and was accepted. Preliminary gender assessment of ARTA likewise completed. This is being circulated within the team before sharing it with

ARTA. Online focus group discussions are planned for the fourth quarter.

The matrix below shows the level of ‘redirection’ of approved Year 2 RESPOND activities in support of initiatives to address the impact of COVID-19.

PROJECT ACTIVITIES

Deferred to Year 3 Implementation of activities slowed down due to COVID

Proceeded as planned Expanded (with COVID focus)

New activities (COVID-related)

18 – Women Global Development and Prosperity (WGDP)

Governance Commission for GOCCs (GCG)

1 – Public Service Act (PSA) Amendment

3 – Philippine Competition Commission

(PCC)

4 – Tariff Commission Non-Tariff Measures (NTMs)

30 – Congress National Budget Analysis

28 – Department of Trade and Industry (DTI) One Stop Shop (Innovation Act)

2 – Retail Trade Act (RTA) amendment

6 – ARTA

Philippine Business Registry Information System (PBRIS)

5 – ARTA Local Government Units (LGUs)

31 – Congress Economic Assessment Study

7 – National Government Rate Setting

14 – DTI E-Vehicle Policy

11 – ARTA

Regulatory Impact Assessment

(RIA)

32 – National Economic And Development Authority (NEDA) Supply Chain

Analytics (SCAn)

8 – Civil Aviation Authority of the Philippines (CAAP) reform

17 – DTI e- Commerce Law amendment

12 – Dept. of Info and Comm

Technology (DICT) policy reform

9 – Philippine Ports Authority (PPA) reform

18 – WGDP Credit Info Corp. (CIC)

16 – DICT COVID

ICT framework

10 – GCG Public Enterprise reform

23 – WGDP Regulatory Impact Assessment

(RIA)

13 – DTI National Competitiveness Roadmap

27 – DTI Philippine Quality Awards (PQA) IRR amendment

15 – Foreign Investment Act

(FIA)

29 – Transport Policy Regulatory Reform

19 – WGDP Food and Drug Authority (FDA)

20 – WGDP RTA

21 – WGDP LGUs

22 – WGDP Labor Market

25 – WGDP Anti-Red Tape Authority

(ARTA)

26 – WGDP Philippine Commission for Women (PCW)

ACTIVITY ACCOMPLISHMENT REPORT

Activity 1: Amendment of the Public Service Act (PSA) The Lower House of Congress on 10 March 2020 approved on 3rd reading House Bill 78, otherwise known as New Public Service Act in response to the clamor of the private sector to liberalize the country’s public utility sector by removing the equity restriction (nationality condition) on most of the economic activities considered as “public utility”. This reform will enhance market competition and the policy more relevant to contemporary and developmental concerns. It is expected that the new PSA will reverse the sharp decline in foreign direct investments (FDI) to the Philippines

(23% decrease, from $9.9 million in 2018 to $7.6 million in 2019) with the removal of a significant market entry barrier (equity restriction) to investment especially on important industries like transportation (land-based) and communications among others. HB 78 allows full foreign ownership in the public service sector such as transportation (land- based) and communications by limiting the definition of public utility to the distribution and transmission of electricity, as well as water pipeline distribution and sewerage system. In the interest of national security, however, the restriction on foreign ownership imposed on public utilities under the 1987 Philippine

Constitution shall continue to apply to a person that manages, operates, and controls public services involving air transportation, Philippine ports and airports. Moreover, the regulation of sectors imbued with public interest shall continue. Hence, all references to Public Service

Commission (PSC) under Commonwealth Act 146 now pertain to any Administrative Agency – like the Department of Information and Communications Technology, Land Transportation Office, Civil Aviation Authority of the Philippines among others – to which the powers and duties of the

PSA were transferred. It is important to note that the “concessionaire” granted a concession by a

Government Agency engaged in public utility operations shall be deemed a public utility for the purposes under this Act. HB 78 provides provisions that protect Philippine interest:

• The President to suspend or prohibit in the interest of national security – based on the review, evaluation and recommendation of the relevant government agency – any merger or acquisition transaction, or any investment in the public service that effectively results in the grant of control, whether direct or indirect, to a foreigner or a foreign corporation. The National

Economic and Development Authority (NEDA) will be tasked to promulgate rules and regulations in the implementation of this provision. Moreover, HB 78 also mandates the need to consult the Philippine Competition Commission (PCC) on all matters relating to mergers and acquisitions;

• Employment of foreign nationals is allowed provided that (a) there is a determination made on the non-availability of a Philippine national who is competent, able and willing to perform the services for which the foreign national is desired and (b) in no case shall the employed foreign nationals comprise more than 25% of the total employees of the public service

(company).

In the Senate, the Committee on Public Services, chaired by Senator Grace Poe, is tackling the counterpart bill. The new law, when enacted, will provide a concise definition of public utilities, institute a rate-setting methodology that is fair to both investors and consumers, and facilitate greater competition in public services. The advent of the COVID-19 crisis substantially slowed down RESPOND’s advocacy activities as the attention of Congress was redirected to the passage of the Bayanihan Heal as One Act that gives powers to the Executive Branch to mitigate the impact of the pandemic and implement economic recovery measures. For the 4th Quarter, RESPOND will expand its participation in Senate Committee hearings to push the reform advocacy. For example, RESPOND was invited to be part of the Senate Committee on Sustainable Development and Futures Thinking TWG (Technical Working Group) that is working on the proposed

Sustainable Alternative Transportation Modes. RESPOND will advocate for PSA and other transport-related reforms in this Committee.

Activity 2: Amendment of the Retail Trade Act (RTA) The Philippines has allowed foreign investments in retail trade since 2000, but still lags behind in retail trade investments, especially compared to its ASEAN neighbors. On 11 March 2020, the

Lower House approved on 3rd Reading House Bill (HB) No. 59 in line with the government’s commitment to liberalize the foreign investment regime. This reform addresses the restrictive provisions of the Retail Trade Liberalization Act of 2000 (RA 8762). The amendments proposed by HB 59 which include the lowering of the minimum paid-up capital requirement to US$200,000 from $2.5 million are expected to attract new foreign investment in the retail sector on par with that received by our ASEAN neighbors and enhance market competition, create jobs, support tourism, and improve consumer choice, to the benefit of the economy and the Filipino consumer.

According to the Joint Foreign Chamber, the $200,000 minimum investment required will protect the over 400,000 micro and small retail and wholesale businesses comprising more than 90% of all Philippine-owned retail and wholesale businesses in the country.

Again, the advent of the COVID-19 crisis substantially slowed down RESPOND’s advocacy activities as the attention of Congress was redirected to the passage of the Bayanihan Heal as

One Act that gives powers to the Executive Branch to mitigate the impact of the pandemic and implement economic recovery measures. For the 4th Quarter, RESPOND will expand its participation in Senate Committee hearings to push the reform advocacy.

Activity 3: Strengthening the capacity of the Philippine Competition

Commission (PCC) The Philippine Development Plan (PDP) 2017-2022 seeks to enhance market competition by fostering an environment that penalizes anti-competitive practices, facilitates entry of new players, and supports regulatory reforms to stimulate investments and innovation. The enactment of

Republic Act (RA) No. 10677 of the Philippine Competition Act (PCA) reinforces the efforts of the government to sustain inclusive economic growth. The law provides for the creation of the

Philippine Competition Commission (PCC) as an independent quasi-judicial body to promote and maintain market competition by regulating anti-competitive conduct. Its main role is to ensure fair competition in the market for the benefit of consumers and businesses. RESPOND’s technical assistance to PCC is aimed at enhancing the latter’s capacity to enforce competition policies, as well as increasing the citizens’ awareness and understanding of the country’s competition policy and regulatory framework.

STRENGTHENING THE PHILIPPINE COMPETITION COMMISSION’S POLICY

ENFORCEMENT THROUGH BIG DATA ANALYSIS

In 2013, a joint government undertaking by the Philippine Statistics Authority (PSA), and a consortium between University of the Philippines and Erasmus University Rotterdam endeavored to match the universe of trade transactions of all Philippine firms from 1991-2012 with the Surveys of Establishments from 1996 until 2012. This makes the Philippine database, a transactions-firm surveys panel dataset, one of the longest databases available in the world. Using this database to conduct sector-specific analysis of the extent of competition can aid PCC in formulating guidelines for enforcing its competition policy. On January 20, 2020, a tripartite memorandum of agreement was signed by PCC, PSA and RESPOND, and guidelines were also prepared that will ensure data security and compliance with data privacy law as well as sustainability and institutionalization of the big data application in PCC’s competition policy enforcement.

RESPOND’s technical assistance shall support the broader goal the linking/merging of the PSA big data with other PSA-generated data (such as FIES, LFS household surveys) and other administrative data generated by other Philippine government agencies.

UPPAF RESPOND was able to conduct partial data cleaning and updating of the transactions and firm surveys data set. The updated transactions database consists of the universe of the exports and imports of all Philippine firms over the period 2013-2019. On the other hand, the available firm surveys in PSA’s enclave comprises four rounds of the Annual Survey of Philippine

Business and Industry (ASPBI). While all sectors are available in the enclave, the team only concentrated on utilizing the manufacturing sector dataset. This is to facilitate the linking with the

1991-2012 merged dataset which contains manufacturing firms. The data set for ASPBI 2017 is still being validated while 2018 is a Census year, which is still unavailable as of the present time.

For the 4th Quarter, and in consideration of the COVID-19 pandemic, UPPAF RESPOND will continue merging the big data with PSA, reviewing literature on the application of big data techniques in competition analysis, and conducting desk research on the drafting of manual for the big data workshop.

COMPETITION CONCERNS IN THE PHARMACEUTICAL INDUSTRY

The pharmaceutical industry is one of the most highly regulated industries because of the vital role it plays in social welfare. Concerns about increasing prices and the quality of prescription drugs are issues that continue to engage the attention of policymakers. However, the extent to which government should regulate the pharmaceutical industry to address these concerns has been an ongoing debate among policy experts and researchers. Those who support the regulation of the industry believe that the government has a role in addressing market failures. Those who think that the market should be left alone believe that the market is capable of producing efficient outcomes.

UPPAF RESPOND submitted the final report to PCC on Pharma industry competition concerns addressing the comments and concerns raised during the presentation last 2 March 2020 and the first complete draft report.

continue desk research on the Maximum Drug Retail Prices (MDRP) and organize the pharmaceutical technical advisory group that will advise PCC on competition-related issues in the

Philippine pharmaceutical industry. A webinar on pharmaceutical industry will be organized with

PCC.

Activity 4: Addressing Non-Tariff Barriers With the decline of the traditional tariff barriers, the attention has now shifted to non-tariff measures (Ederington and Ruta 2016). These NTMs can be divided into technical and nontechnical measures, and both types may have legitimate purposes, especially in the eyes of enforcers, but both can be misused to covertly impede trade. NTMs can also be classified as those behind (local) or beyond (major trading partners abroad) borders. RESPOND will provide technical assistance to Tariff Commission (TC) that will allow it to determine its role in the formulation and implementation of NTMs. At the end of the project, it is envisioned that the number of obstacles to trade arising from NTMs will be reduced, as well as the number of restrictive regulations officially eased with an implementation document from TC.

E-FORUM ON PHILIPPINE TRADE POLICY RESPONSE AMID COVID-19: NTMs ON

MEDICAL GOODS AND ESSENTIAL PRODUCTS

With 14,669 cases of COVID-19 reported in the Philippines as of May 26, 2020, medical and essential goods need to be readily available to address the contagion. As the country is a major importer of most of these critical goods, appropriate policy measures need to be in place to facilitate the country’s importation of these products. In a joint statement, both the International Monetary

Fund and World Bank recognize the importance of trade facilitation measures implemented by importing countries on these crucial goods, such as, cutting import duties, curbing customs-clearance processes, and streamlining licensing and approval requirements.

On May 21, 2020, UPPAF RESPOND organized a second event that addresses concerns on non-tariff measures (NTMs), the e-forum on

“Philippine Trade Policy Response

Amid COVID-19: NTMs on Medical

Goods and Essential Products” which followed the “Forum on Moving

Towards Quality Non-Tariff Measures” held in March 10, 2020. It was able to reach more than 200 participants in

Zoom and Facebook platforms. The e-forum brought to forth anew the key public and private partnership in addressing development challenges as noted in the Opening Remarks of

USAID Director for Economic Development and Governance Jeffrey Lehrer. The e-forum invited speakers from both the public sector (Commissioner Paderon of Tariff Commission and Dr.

Gutierrez of Food and Drug Administration) and private sector (Mr. Michael Raeuber of Royal

NTMs Webinar via Zoom platform (21 May 2020)

Cargo and Dr. Tamesis of Pharmaceutical and Healthcare Association of the Philippines). The e-

Forum was moderated by Dr. Thomas Aquino, Chairman of REID Foundation.

Given the current unprecedented circumstances on COVID-19 pandemic, the e-forum focused on

Philippine trade facilitation measures, particularly NTMs on critical goods relevant to COVID-19 prevention and medical treatment. The Republic Act 11469 or the Bayanihan to Heal as One Act called for ensuring adequate supply of these critical goods. It is imperative that smooth and expedited cross-border movement of these goods is unhampered by unnecessary behind-the-border NTMs. The objectives of the event were (a) to identify potential areas of improvement on trade facilitation measures, particularly NTMs on medical goods; (b) to highlight best practice in trade facilitation measures, specifically on non-tariff measures (NTMs) on medical goods given the unprecedented health crisis; (c) to understand enterprise-level experiences and challenges amid current state-of-calamity conditions; and (d) learn of new measures to sustainably support a post Enhanced Community Quarantine (ECQ)/General Community Quarantine (GCQ) recovery period.

For the 4th Quarter, and in consideration of the COVID-19 pandemic, UPPAF RESPOND will do desk research, conduct more online (a) training on NTMs with selected staff of the Tariff

Commission, (b) meetings, and (c) two more webinars on NTMs focusing on Food as Essential item and Construction Materials.

Activity 5: Strengthening the capacity of the Anti-Red Tape Authority

(ARTA) in market competition regulation It has been more than a year since the Ease of Doing Business and Efficient Government Service

Delivery Act of 2018 (RA 11032) was signed into law. Though RA 11032 is already being implemented during Deputy Director General (DDG) Perez’ stint as Office-in-Charge (OIC) even without the IRR, its full implementation is now the next step in order to ensure the compliance of all national government agencies to RA 11032. The Authority has revisited the draft IRR to ensure that provisions are updated and applicable to the current executive, LGU and GOCC processes and transactions after more than a year of not being approved and signed. With the appointment of Atty. Jeremiah Belgica as director general (DG) of the Anti-Red Tape Authority by President

Rodrigo Duterte, the IRR was finally signed on 17 July 2019. His appointment is critical for fully implementing the provisions of the law. RESPOND’s technical assistance to ARTA is centered on improving the country’s ranking in the Doing Business survey, especially in the areas of Starting a Business (SAB), Trading Across Borders (TAB), and Getting Credit (GC).

DRAFTING OF A JOINT MEMORANDUM CIRCULAR TO IMPLEMENT PROVISIONS OF

SECTION 11 OF RA 11032

The passage of Republic Act (RA) 11032, which is also known as the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, seeks to improve, among others, the country’s performance on this indicator. It created Anti-Red Tape Authority (ARTA) and designated it as the lead coordinating agency for the Doing Business survey in the Philippines.

The Implementing Rules and Regulations (IRR) of RA 11032 issued on 17 July 2019 required the issuance of a Joint Memorandum Circular (JMC) that would further expound on Section 11 of RA

11032 on Streamlined Procedures for the Issuance of Local Business Licenses, Clearances, Permits, Certification or Authorizations, within three months from the issuance of the IRR. In compliance with this requirement, the DILG and the Anti-Red Tape Authority (ARTA) is currently in the process of formulating the JMC that will be consistent with the provisions of RA 11032. The lessons learned from the COVID-19 pandemic can lead to new ways of business permitting processes (“new normal”) which are different from the existing business processes and hence, should be reflected in the revised JMC.

RESPOND submitted to ARTA and DILG the draft, “JOINT MEMORANDUM CIRCULAR (JMC):

Guidelines for Processing Business Permits, Clearances and Licenses in the New Normal in All

Cities and Municipalities” along with the “Notes on the Proposed Joint Memorandum Circular

(JMC)” for their consideration.

For the 4th Quarter, RESPOND will conduct virtual meetings with ARTA and DILG to discuss the draft JMC. Once the JMC is approved and officially issued, RESPOND will assist ARTA and DILG to draft a manual of operations and prepare training kits for use in rolling-out the JMC to cities and municipalities.

PRESENTATION OF PASIG CITY BUSINESS PROCESSING LICENSING OFFICE

ASSESSMENT AND BUSINESS CONTINUITY AMIDST PANDEMIC

The Pasig City government is in the process of re-engineering its business registration processes to make them more efficient and compliant with the Republic Act 11032) specially in relation to processing time.

RESPOND presented the initial assessment of Pasig

City’s Business Processing and Licensing Sector

(BPLS) to the city officials and staff. Representatives from the business sector (Pasig City Chamber) were also present in the meeting. Part of the recommendations is to reengineer Pasig City’s procedures and processes toward electronic one-stop shop or e-BOSS to conform to the requirements of RA

11032 and JMC mentioned above.

For the 4th Quarter, and in consideration of the COVID-19 pandemic, UPPAF-RESPOND will invite selected model BPLS cities, such as, Valenzuela City, Parañaque City and Batangas City, to a virtual meeting to present their respective city’s best practices on the business registration process, operations of the e-BOSS, and the role of automation in the development of the BPLS to

Pasig City officials and staff. RESPOND will also conduct 19-day online workshop sessions to assist Pasig city officials assess their current business permitting and licensing processes

(BPLPs) and carry out a re-engineering of such processes to make them efficient and client-centered as well as compliant with RA 11032. In support of the re-engineering the BPLPs, RESPOND will assist Pasig City and the Pasig City Chamber in the conduct of two surveys: Pasig

City BPLS survey and COVID-19 Effects on Pasig City Companies.

ONLINE DISPUTE RESOLUTION PROCESS WALKTHROUGH AND PRESENTATION OF

THIRD-PARTY VALIDATION FINDINGS

For the Getting Credit (GC) indicator, RESPOND conducted series of online consultations with Credit Information

Corporation (CIC) for the third-party validation on the Online Dispute Resolution Process

(ODRP), a system developed in-house by the

Corporation. The validation assessed the legal and technical aspects of the ODRP system guidelines and recommended improvements and additional features to ensure compliance with ARTA’s guidelines, Presentation of Pasig City Business Processing Licensing Office Assessment (29 May 2020)

Presentation of third-party validation findings to CIC: Online Dispute Resolution Process (26 June 2020) aiming to improve the usability, reliability, and security of the system. RESPOND IT and Legal

Specialists presented results of the third-party validation to CIC officials and staff, including

President Jaime Garchitorena and Vice President Aileen Bautista. DTI and ARTA attended the presentation as observers as functions and features of ODRP might also be applicable in their respective complaints’ divisions.

Once the ODRP system is fully operational, a regional forum (one in Luzon, Visayas, and

Mindanao) will be organized to disseminate information on the availability and benefits consumers can derive from an efficiently functioning ODRP. Given the current situation, an online forum is deemed appropriate for the planned regional fora. This system may be replicated in other front-line government agencies and local government units to improve their efficiency in providing services to their customers.

For the 4th Quarter, and in consideration of the COVID-19 pandemic, RESPOND and CIC will develop a marketing plan for ODRP that will increase the number of entities utilizing CIC credit reports.

CREDIT INFORMATION CORPORATION ISSUES LETTER MEMORANDUM NO. 2020-2

(ADVISORY ON EXTENSION OF DEADLINE OF SUBMISSION OF CREDIT DATA AND

TAGGING OF MISSED PAYMENTS FOR ALL LOANS WITH PRINCIPAL AND/OR INTEREST

FALLING DUE WITHIN THE ENHANCED COMMUNITY QUARANTINE PERIOD)

The Credit Information Corporation (CIC) is a government-owned and controlled corporation

(GOCC) that acts as a central registry or central repository of credit information and provides access to reliable, standardized information on credit history and financial condition of borrowers.

It currently has 483 entities that are submitting live or actual basic credit data of borrowers. It is directly involved in one of the ten Doing Business indicators, Getting Credit (GC), which measure coverage, scope and accessibility of credit information available through either a credit bureau or credit registry.

UPPAF RESPOND currently provides technical assistance to CIC by way of conducting a third-party validation of the technical and legal soundness of the ODRP system to ensure compliance with the EODB Law. With the implementation of a Luzon-wide Enhanced Community Quarantine

(ECQ) to contain the transmission and spread of COVID-19, enterprises, including many SMEs who borrowed from banks, have to temporarily close shop during the ECQ period, thereby depriving them of the main source of funds to service their loan obligations. As a result, borrowers’ credit scores would be negatively affected, with the possibility of sending those scores even down to credit unworthy territories. This would make it very difficult for these enterprises to access cheaper loans once economic conditions in the country normalizes. This may also lead to a sudden surge in disputes between borrowers and banks that can overwhelm CIC’s dispute resolution mechanism. In view of this situation, UPPAF RESPOND discussed with CIC the need to revisit its credit information system to determine whether it is possible to tweak it in such a way that this abnormal situation will not be reflected in the credit scores of enterprises that follow the

ECQ. In this regard, CIC issued on 17 April 2020 Letter Memorandum No. 2020-02, which provides guidelines to Submitting Entities (SEs) on tagging of missed payments during ECQ.

Specifically, “the CIC enjoins all its SEs to adhere to the following: Missed payments or partial payments of loans, and other payment arrangements or debt relief measures afforded to borrowers during the ECQ must not be tagged as “default” upon submission or reporting to the

CIS. The CIC Credit Report reflects payment, partial payment, or missed payment for the month reported based on the tagging made by the SEs.”

CIC’s memorandum is in accordance with the provisions of the “Bayanihan to Heal as One”

Act issued on 24 March 2020, which requires implementation of 30-day grace period to all loans with principal and/or interest falling due during the ECQ. The memorandum is also in line with the findings of the International

Committee on Credit Reporting (6 April 2020).

With Covid-19 as the backdrop, the committee recommends the following: a) safeguarding the integrity of the credit reporting systems; b) safeguarding borrowers; and c) improving transparency and disclosure regimes. CIC’s memorandum clearly addresses the second recommendation, whereby measures are in place “to monitor that the negative payment

CIC MEMORANDUM No. 2020-02 series of 2020 was signed by CIC President Jaime Garchitorena on 17 April 2020.

information reported during the crisis has minimal or no effect on credit histories and risk scores of data subjects.”

To supplement the memorandum, the CIC is currently developing a portion on its website detailing the FAQs (frequently asked questions) on missed payments and the impacts on their credit report during Covid-19. In addition to this, the same memorandum has been published in a local newspaper with nationwide coverage for both printed and e-copy

(https://businessmirror.com.ph/2020/04/22/be-more-considerate-phl-credit-registry-begs-lenders/). These are all part of CIC’s effort to help in establishing an empirical basis for determining a good financial relationship between two parties, and as a result, will allow the lenders to properly assess their clients to determine remedies to their loan situations, during and after the Covid-19 situation.

ASSESSMENT OF EXISTING REGULATORY FRAMEWORK FOR EMERGING INDUSTRIES

IN THE PHILIPPINES: THE CASE OF TRANSPORTATION NETWORK COMPANIES AND

TRANSPORTATION NETWORK VEHICLE SERVICES (TNVS)

Many consider ride-hailing apps as a transportation company because it provides a service that move people and goods from one place to another. However, ride-hailing apps claim they are not a transportation – particularly taxi – company, but rather a technology-based company that provides the platform in connecting passengers to drivers who, in turn, use their private cars.

Philippines is one of the first countries to regulate Transportation Network Companies (TNC) and

Transportation Network Vehicle Services (TNVS). Department of Transportation has delegated the LTFRB to regulate this new mode of transportation. The DOTC DO No. 2015-011 recognized the need to “encourage innovation across all forms of public land transport in order to increase mobility on major thoroughfares, boost travel times, improve the quality, sustainability and reliability of public transport services, and respond to the needs of the modern commuter.”

UPPAF RESPOND conducted an assessment of the existing legal and regulatory frameworks that govern the entry and operations of TNC and TNVS in the country. It also examined regulatory gaps and offered recommendations on how to enhance the regulatory framework for TNC and

TNVS that will provide win-win-win solutions to all stakeholders involved: the government, TNC and TNVS, and the consumers (passengers). For the 4th Quarter, UPPAF RESPOND will conduct a virtual presentation of the TNVS study to ARTA and continue to support the drafting and passage of the new legal framework for TNVS.

https://businessmirror.com.ph/2020/04/22/be-more-considerate-phl-credit-registry-begs-lenders/ https://businessmirror.com.ph/2020/04/22/be-more-considerate-phl-credit-registry-begs-lenders/

Activity 6: Use of Information Technology Systems in regulation Initially, the DTI, at that time when ARTA was not yet formed, initiated the development of the

Philippine Business Regulations Information System (PBRIS). This initiative is in line with Section

17(k) of the Anti-Red Tape Act to “ensure dissemination of and public access to information on regulatory management system and changes in laws and regulations relevant to the public”.

PBRIS was envisioned to be a repository of laws, rules and regulations related to setting up and continuing to do business in the Philippines, in addition to its function in disseminating changes in laws, rules and regulations. After some consultation with stakeholders, and now that ARTA is functional, it was recommended to expand the functionalities of the PBRIS to include the conduct of regulatory impact assessments (RIA) in ARTA and related government agencies to the implementation of any new or revisions to major laws, rules and regulations. RESPOND will provide technical assistance to ARTA with the aim of increasing the country’s ranking on E-

Participation.

UPPAF RESPOND conducted a series of online preparatory meetings with ARTA for the

Functional Specification (FS) workshops that will be conducted for both PBRIS and ARTEMIS starting August 2020. The virtual 31-day workshops will include the key stakeholders of the systems including ARTA Better Regulations Office (BRO) and Compliance Monitoring and

Evaluation Office (CMEO) staff and 39 national government agencies and selected local government units. The development of the Functional Specifications of each system is necessary to ensure that features to be developed and/or incorporated into the PBRIS and ARTEMIS are relevant and essential to perform their intended functions.

Activity 7: Rate-setting mechanisms In 2015, INVEST Project published a report entitled “Guide for Setting Reasonable Fees for

Inspection Services by Local Governments”. The report presented a step-by-step procedure for setting fees and charges based on a cost accounting framework. Fees and charges are important factors in determining the direct costs of doing business for investors. In the same manner, in

2016, the National Competitiveness Council (NCC) initiated a program utilizing the standard cost method (SCM). Currently, the Development Academy of the Philippines (DAP) has programs using the SCM, sometimes referred to as the regulatory cost model (RCM). These programs are under the Modernizing Government Regulations Program (MGRP) of DAP, the objectives of which are to reduce unnecessary regulatory burden, improve regulatory coherence and quality, strengthen regulatory institutional capability, and minimize regulatory failure. The OECD defines

SCM as a method for determining the administrative burden for businesses imposed by regulation. It is also suitable for measuring simplification proposals as well as the administrative consequences of a new legislative proposal. RESPOND’s technical assistance to select national and local government agencies is focused on establishing objective criteria in setting regulation fees for permits and licenses.

For the 4th Quarter, and in consideration of the COVID-19 pandemic, UPPAF RESPOND and

ARTA will continue desk research and online consultations with selected National Government

Agencies (DTI, PPA, CAAP, DTI-CIAP) on rate setting.

Activity 8: Reforming the CAAP through Rationalization of its Charter, Mandate, Functions, Responsibilities, and creation of PADC The objective of Activity 8 is to address the conflicting mandate of the Civil Aviation Authority of the Philippines (CAAP). To achieve this goal, RESPOND is providing technical assistance to the

Department of Transportation (DOTr) and legislative institutions (Congress). The Project is also partnering with the Networking Committee of Transport & Logistics (NCTL) of the Export

Development Council (EDC) to advocate for the separation of the commercial and regulatory functions of the Authority. HB 07407, or an Act Strengthening the Civil Aviation Authority of the

Philippines ("CAAP"), Abolishing the Civil Aeronautics Board (CAB) and Transferring its Functions to the CAAP, and for Other Purposes, was filed during the 17th Congress. These bills have not been refiled in the 18th Congress. RESPOND is identifying potential members of Congress who will sponsor the amendment of the CAAP Law and creation of the Philippine Airport Development

Corporation (PADC). RESPOND is also supporting the passage of the Bill creating a National

Transport Safety Board (NTSB) because it supports the reforms in the aviation sector. The NTSB

Bill has been approved already in the Senate on 3rd Reading. RESPOND worked with the Export

Development Council (EDC) for the endorsement of the NTSB Bill to the House Appropriations

Committee and the Department of Budget and Management (DBM).

It should also be noted, however, that both the legislative and executive branches of the government are prioritizing programs and legislation directed at Corona Virus Disease 2019

(COVID-19). As such, most bills—including those related to CAAP—are currently not part of the priority list. Nevertheless, the project will continue to advocate for the rationalization of the mandate of the agency.

CAAP COMPREHENSIVE TECHNICAL REPORT AND GOVERNANCE REORGANIZATION

STRATEGY

RESPOND is in the process finalizing the CAAP Comprehensive Technical Report which was submitted last July 6, 2020. The said report contains a review of the current functions of the

Authority, an assessment of the current institutional capacity, and a discussion of its core competencies.

For the 4th Quarter, the final version of the report will contain a Work Program, including support to the bill separating the commercial and regulatory functions, and the proposed bill creating the

NTSB. Furthermore, the final report will be presented to the Department of Transportation (DOTr) for discussion, strategizing, and adoption.

Activity 9: Reforming the PPA through Rationalization of its Charter, Mandate, Functions, Responsibilities; Amending the Charter of the

Maritime Industry Authority (MARINA) The objective of Activity 9 is to address the conflicting mandate of the Philippine Ports Authority

(PPA). To achieve this goal, RESPOND is providing technical assistance to the Department of

Transportation (DOTr) and legislative institutions (Rep. Bernadette Herrera). The Project is also partnering with the Networking Committee of Transport & Logistics (NCTL) of the Export

Development Council (EDC) to advocate for the separation of the commercial and regulatory functions of the Authority. HB 04317 or An Act Separating the Regulatory and Commercial

Functions of the Philippine Ports Authority (PPA) by Converting it into Philippine Ports Corporation for Development, Management and Operation of Public Ports within its System and Transferring the Regulatory Functions to the Maritime Industry Authority (MARINA) was (re)filed by

Representative Herrera-Dy in this 18th Congress.

Because of the Corona Virus Disease 2019 (CoViD-19), all legislative activities—including those related to the separation of PPA’s commercial and regulatory mandates—are not being prioritized at the moment. All efforts including those of the executive are geared towards their response to the current pandemic. Nonetheless, RESPOND will still advocate for the rationalization of the PPA

Charter as well as continue to coordinate with the respective offices.

FINAL PPA COMPREHENSIVE TECHNICAL REPORT

The PPA Comprehensive Technical Report and Work Program were already finalized by

RESPOND. The recommendations of the report are:

• Decouple the commercial and regulatory functions of the PPA by transferring its regulatory functions to the Maritime Industry Authority (MARINA), or, as an alternative, a new government office by creating a Transport Regulatory Office within the Department of

Transportation (DOTr).

• Rename the Philippine Ports Authority to Philippine Ports Corporation

• Revisit, review, and improve PPA’s current performance scorecard since the allocation of weights in the present scorecard does not reflect the GOCC’s mission and vision statement.

For the 4th Quarter, RESPOND will present the Report to the DOTr, the office of Rep. Herrera-Dy, and the Senate.

LOGISTICS RECOMMENDATIONS TO THE IATF AND SUB-TASK GROUP ON FOOD VALUE

CHAIN LOGISTICS

Last 2 June 2020, RESPOND was requested to present to the Inter-Agency Task Force (IATF) and Sub-task Group on Food and Value Chain Logistics its recommendation on how it can provide better logistics and unhampered flow of commodities given the current pandemic. One of the recommendations presented by the project is to rescind LOI-1005-A series 1980 which allows

PPA to receive a share from the port service fees which can be construed as a conflict of interest.

Other recommendations for the sub-task group that emanated from the Project were:

• Implement a moratorium on demurrage/detention fees and port congestion surcharges;

• Mandate the use of Subic and Batangas as extension ports; and

• Conduct Rapid Regulatory Assessment (RRA) of COVID-related issuances.

Activity 10: Strengthening the Institutional and Technical Capacity of the Governance Commission for GOCCs (GCG) The objective of Activity 10 is to strengthen the institutional and technical capacities of the

Governance Commission for GOCCs (GCG) by bolstering their Public Enterprise Reform Agenda.

While the focus of activities 8 and 9 (CAAP and PPA reform) are on specific regulatory agencies, Activity 10 (and Activity 11) zeroes in on the institutions that were created to introduce reforms that will improve the regulatory environment. This two-pronged approach (agency-level and institutional-level) allows the project to have a holistic implementation of reforms to effect regulatory improvement.

Given the current situation, the proposed activities that require face-to-face interaction are suspended until it is deemed safe to do so. During this quarter, RESPOND focused on the technical report that will be submitted to the Commission and the research activities for the Public

Enterprise Reform Agenda (PERA).

FINALIZATION OF THE TECHNICAL ASSESSMENT OF THE COMMISSION

The Technical Assessment Report of GCG is currently ongoing and it will be finalized next quarter.

The report aims to identify ‘areas’ that will need technical assistance from the project other than those mentioned in the draft MOU between RESPOND and GCG. Once final, the report will be presented to the Commission for feedback and discussion.

PUBLIC ENTERPRISE REFORM AGENDA

Administrative and technical activities for the Public Enterprise Reform Agenda (PERA) is ongoing. Administratively, the team is currently finalizing (and hiring) the necessary experts, and those that are part of the roster already started doing in-depth research.

The work on the water sector is gaining traction already. The team has already started (1) identifying the key stakeholders and players involved, (2) the characteristics of the regulatory regime in the Philippines, and (3) comparing it with the regulatory regime in other countries.

The Public Enterprise Reform Agenda (PERA) aims to discuss regulatory reform in GOCCs. The

Agenda shall be executed in collaboration with the Governance Commission for GOCCs (GCG) and the target launching, and presentation shall be in Year 3.

Activity 11: Developing and Strengthening the Institutional and

Technical Capacity of the Anti-Red Tape Authority (ARTA) Activity 11 aims to strengthen the institutional and technical capabilities of the Anti-Red Tape

Authority (ARTA) by supporting various programs and activities such as implementing the

Philippine Business Regulation Information System (PBRIS) 2.0, Program NEHEMIAH, the establishment of a Regulatory Management System (RMS), the institutionalization of the

Regulatory Impact Assessment (RIA) and development of the RIA Manual, among others. ARTA will play a critical role in the improvement of the regulatory environment of the country as it is one of the government agencies that can influence the business environment and competition in the policy.

Similar to other activities, all of the face-to-face interactions are currently being suspended. All activities with the ARTA are being shifted to virtual interactions including proposed future activities until further notices.

COMPLETING THE REGULATORY IMPACT ASSESSMENT (RIA) MANUAL

The drafting of the Regulatory Impact Assessment Manual is nearing its completion after several meetings between RESPOND and ARTA Better Regulations Office (BRO).

Last 17 April 2020, ARTA and RESPOND resumed discussion on the RIA Manual and RMS

Framework. During the meeting, technical edits were made as regards the manual, and comments were received for the draft Regulatory Management System (RMS) framework.