Business Consulting BlogPhilippine LGUs Increasing Compliance Requirements at SME cost

December 30, 2013

Last year it was Makati City which added additional requirements for application and renewal of business permits in the form of pest control certificates and chest x-rays.  This year it is Mandaluyong which is now requiring installation of CCTVs in all business with gross income of more than 1M Peso.  Companies will also be forced to secure a certificate of their CCTV from the City. Undoubtedly like with Makati these certificates can only be given by “accredited suppliers”,  certified CCTV installers, certified pest control companies and a number of health clinics within the city.

While Makati is one of the cleanest cities in Metro Manila, I do not believe that this is the result of strict enforcement and requirement of pest control services.

What is the gain of chest x-rays for all staff including the president or ceo of companies?

Has there been a tuberculosis outbreak in Makati that we are unaware of?

The recent additional requirement for the CCTV comes after the recent robbery in SM MegaMall which is located in Mandaluyong. Now the city is looking for quick action to appear responsive to its citizen’s needs, but with little focus on effectiveness of its laws and the effect it plays on small and medium businesses.

Already SMEs in the Philippines are taxed with the one of the highest corporate tax rates in South East Asia, coupled with the strict labor requirements which sees a mandatory 13th month (some senators are even proposing mandatory 14th as well)  and 25 paid working holidays on the calendar, the most in the world.  Heavy red tape and high cost of electricity and internet makes it one of the most difficult countries for SMEs in the region.

By requiring all businesses with gross income of 1m peso to purchase these systems, thousands of SMEs that have 0 cash transactions and 0 risk of robbery (they are located in office buildings with only small amounts of capital equipment on location) are now required to spend on additional equipment they do not require.

Triple i has already blogged about this growing trend we are seeing nationwide as legislators on both the national and local level wish to appear active in legislating. Government agencies across the board are looking to increase compliance requirements. Large corporations and MNCs are more equipped (by using consulting firms like Triple i Consulting) to handle this growing list of compliances more than any SME. Unfortunately we at Triple i believe this will be a growing trend in 2014 moving towards 2016.

Triple i Consulting is the only ISO 9001:2008 business and management consultancy in the Philippines. Triple i’s core competence lies in compliance consulting in the verticals of Food & Drugs, Environmental, Tax and Accounting, and Corporate Compliance. For more information about compliance consulting, or registering a business in the Philippines contact us.

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