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Lack of transparency, bribery in government transactions hamper Cebu competitiveness

Lack of transparency in some government agencies and the practice of informal payments to move business transactions forward pose the biggest threats to Cebu’s competitiveness.

A good number of Cebu enterprises that were the respondents of a survey conducted by Isla Lipana & Co. in collaboration with the Cebu Chamber of Commerce and Industry (CCCI) admitted they were asked for gifts and tokens in the course of their dealings with government officials and agencies.

At least 20 percent of those surveyed said they made informal payments within the last 12 months, according to CCCI Trustee Aldie Garcia who revealed the survey results in a press conference shortly before the CCCI General Membership Meeting yesterday, October 29, 2019.

Cebu Chamber of Commerce and Industry survey

Garcia, who is at the same time the assurance partner of Isla Lipana, defines informal payments as anything asked for or given above and beyond what is required in lawful transactions.

Isla Lipana surveyed 204 enterprises from the micro (21 percent), small (24 percent), medium (25 percent), and large (21 percent) categories.

Gifts, token to government officials, agencies

The amount of informal payments varies for companies, with some giving more than others. With payments pegged as a percentage of annual business expense, this was how much Cebu businesses shelled out in gifts and tokens: 40 percent (paid less than 1 percent), 41 percent (paid from 1-10 percent), 12 percent (paid from 11-20 percent), and 7 percent (paid more than 20 percent).

Close to half said they paid to rectify delays in business transactions while another 17 percent did so because they were asked to by a government official or agency.

CHALLENGES. Cebu Chamber of Commerce and Industry (CCCI) President Virgilio Espeleta talks about the result of a recent survey that uncovered the lack of transparency in some government agencies and the practice of informal payments to move business transactions. With him are (from left) CCCI Executive Director May Elizabeth Ybañez, Isla Lipana & Co Assurance Partner Aldie Garcia, CCCI Vice President for Membership Development Benedict Que, and CCCI Vice President for Finance and Administrative Services Feliz Taguiam.
CHALLENGES. Cebu Chamber of Commerce and Industry (CCCI) President Virgilio Espeleta talks about the result of a recent survey that uncovered the lack of transparency in some government agencies and the practice of informal payments to move business transactions. With him are (from left) CCCI Executive Director May Elizabeth Ybañez, Isla Lipana & Co Assurance Partner Aldie Garcia, CCCI Vice President for Membership Development Benedict Que, and CCCI Vice President for Finance and Administrative Services Feliz Taguiam.

What’s disturbing, added Garcia, is the 17 percent of respondents who admitted voluntarily giving gifts to gain favors or advantage. “For micro to medium enterprises, giving between 1-10 percent of annual business expense is already life and death of the company. How much will you need to sell to be able to recover,” he pointed out.

Cebu’s competitive rating, which had suffered in the last three years, served as platform for the discussion and later on the decision to conduct the business survey.

Best, worst government agencies for business

CCCI President Virgilio G. Espelita said the goal of the survey “Shared Ambition: Driving Cebu Competitiveness to the Next Level” was to get the pulse of companies and their inputs on what it would take for businesses to thrive.

Informal payments

The main reasons business give “informal payments”

“Being truly the voice of business, it is our responsibility to tell the truth,” he added, citing that the chamber’s objective in revealing the survey results is simply to hasten public and private cooperation that would lead to solutions.

Espelita said the concerned local government units and government agencies were apprised of the survey results along with CCCI recommendations. Their respective department secretaries were furnished copies of the chamber’s communication.

Survey respondents were asked to rate the transparency of government agencies they frequently deal with and the Department of Trade and Industry (DTI), Securities and Exchange Commission (SEC), Department of Information and Communication Technology (DICT), Armed Forces of the Philippines (AFP), and Bureau of Investments (BOI) came out in the top five.

In the bottom five are the following: Bureau of Customs (BOC), Bureau of Internal Revenue (BIR), Bureau of Fire Protection (BFP), Department of Transportation (DOTR), and Philippine National Police (PNP).

Transparency ratings of government agencies

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By Marlen Limpag

Marlen is the editor of MyCebu.ph and co-founder of Cebu-based journalism startup InnoPub Media.