Open Today, Comply Tomorrow

Every small business begins as an act of faith. An owner counts out their savings, signs a lease, orders the first sacks of flour or bolts of cloth, and circles an opening date on the calendar. Then the permits begin, and the faith is asked to wait.

The rent does not. For an owner paying for a dark shop, every week of delay is money spent with nothing coming in.

These owners are the economy. Of the country’s 1,241,476 business establishments, 99.63 percent are micro, small, and medium enterprises (MSMEs), and they provide two-thirds of the total employment. Yet with GDP growth at 2.3 percent in the second quarter, the weakest since 2009 outside the pandemic, the permit process still makes new firms wait for their first peso.

The flaw is one of design. Current permitting treats every business as a potential hazard until proven otherwise, so every applicant must queue for approval. Risk-based regulation reverses the order. It asks what could actually go wrong, and focuses scrutiny there. A home-based bookkeeper and a restaurant kitchen do not carry the same risk, and the permit process should not pretend they do.

The law already points the way. The Ease of Doing Business Act promises strict deadlines and automatic approval when agencies fail to act on time. The Anti-Red Tape Authority has charged 117 local government units before the Ombudsman over the mandated electronic one-stop shops. Many LGUs now issue the permit first and inspect within weeks. But a right that depends on the address of the shop is only a favor.

The remedy is to make the permit a clock, not a gate. Once a business is registered with the SEC or DTI and the BIR, it should be allowed to open IMMEDIATELY and complete its local clearances later, on a schedule set by risk. Payment of business and local taxes should be a matter of course. The Mayor’s Permit should be ABOLISHED!

Low risk. Online sellers, home-based services, and offices without public footfall receive automatic provisional authority to operate, with a fixed window to complete local clearances.

Zoning first. Zoning is checked up front, online and instantly, against a public map. It is the one thing that cannot be deferred, because the cruelest loss in small business is the owner who fits out a space before learning the activity is not allowed there.

High risk. Food, manufacturing, hazardous materials, and public assembly keep pre-operation inspection, but with enforceable deadlines and deemed approval if the agency misses them. Fire does not read permits, but the clock must still run.

After opening. Inspections follow published, risk-based schedules, so a closure order can never be used as leverage. Opening first must never become a trapdoor.

The benefits reach well beyond the shop floor. By the time a business is registered, the state already knows who it is, where it is, and what it intends to do. A business that opens sooner hires sooner, buys from suppliers sooner, and enters the tax net sooner.

With household spending growth slowed to 2.8 percent, every week a viable shop stays shuttered is demand that never arrives. Delay protects no one. It only postpones the owner’s income and the government’s revenue.

The capital market stands to gain as well. A stock exchange cannot grow without a pipeline of firms to list, and that pipeline begins at the smallest scale. Medium enterprises make up only 0.37 percent of all establishments. The Philippine Stock Exchange has fewer listed companies than comparable Asean exchanges, and the bank loan still dominates how businesses are financed.

Few firms ever graduate from the loan to bonds, equity, or other market funding. A business that formalizes early builds what investors look for: clean books, tax records, and a track record. Today’s neighborhood enterprise is tomorrow’s issuer. A market is only as tall as the roots beneath it, and a deeper market begins with a wider base.

Whether this takes a joint circular or an amendment to the Ease of Doing Business Act is a question of law. Local governments license and tax under the Local Government Code, so Congress may have to lend a hand.

But what is important is that the system of securing a Mayor’s Permit should be abolished immediately! It has created local tyrants who mandate that franchises of reliable brands should be awarded only to them. This was very apparent in the ongoing impeachment trial wherein it became obvious that the local executive had a monopoly of a local fastfood chain.

A gate belongs to whoever holds the key. A clock keeps the same time for everyone. Open now, comply later, and let the economy begin where it always has: with a door swinging open.

Local executives should not have absolute control over who does business in the area, ABOLISH the MAYOR’s PERMITS!