Can we expect action?
July 2, 2015 at 14:10
Can we expect action?
By: Peter Wallace
Philippine Daily Inquirer
June 25th, 2015 and July 2nd, 2015
In 2013, 17 business groups, 10 local and seven foreign, got together and for the first time ever agreed to make a collective stand on a number of issues and concerns.
Getting 17 different groups, each with its own agenda, to agree on something was an almost impossible task; to get them to agree on eight issues was a monumental achievement—it showed how important they considered those issues were.
The groups submitted their recommendation to President Aquino before his State of the Nation Address. They expected that he would be grateful for the inputs and take them into account in his plans for the following year. Unfortunately, that didn’t happen. Of the eight issues only one was acted on: the Anti-trust and Fair Competition bill now past Congress but still awaiting the President’s signature.
As to the other seven, here’s where they are two years later:
Infrastructure projects must be accelerated. Government spending on infrastructure has been dismal. Public construction in the first quarter of 2015 was down -24.6 percent compared to first quarter 2014. In 2014 only 76 percent of the budget for infrastructure was spent. In the four years of the Aquino administration only an average of 2.2 percent of the gross domestic product has gone to infrastructure—that’s P237 billion annually, well below the P300 billion per year that was supposed to have been spent according to plan. If the necessary minimum of 5 percent of GDP (the Asean average) had been met, an estimated P520 billion to P540 billion should have been spent annually. The flagship public-private partnership program is finally moving after the awarding of 10 projects, but only four are under actual construction. To do better, regulatory bottlenecks must be cleared and the government needs to change its bidding policies and remove the constitutional restrictions in order to attract more foreign investors into the program. Not one of these has been done.
Overhaul the Bureau of Customs and create an oversight committee. The oversight committee has yet to be created. Under Commissioner John Phillip Sevilla, the bureau implemented several reforms, but the needed major overhaul has yet to take place. With Bert Lina there’s a chance for the overhaul to push through.
An existing mining act with a competitive tax regime. This recommendation was iterated in 2014. This year, the business community gave up on this issue, realizing the President is not going to act on this issue. The local mining sector is now at a standstill because the President’s doesn’t recognize the importance of this sector to the economy and to the Filipino people.
Build more power plants and create a favorable investment climate for energy investors. Construction work on the 600-MW Subic plant will finally start. But not enough new power plants are being built to cope with the increase in the demand for power; projected reserves are not enough to cover the entire country’s need.
Enact the Fiscal Incentives Rationalization bill. The government needs to harmonize and rationalize laws that offer fiscal and nonfiscal incentives to investors in order to make the Philippines competitive with its neighbors, and thereby attract foreign investments. But the Department of Trade and Industry and the Deparment of Foreign Affairs have yet to reach a final agreement on the terms to offer, so this won’t happen yet.
Amend the Constitution’s economic provisions. Realizing how important this move is, the business community has repeatedly made the recommendation every year. The Philippines’ “more open” neighbors are attracting foreign direct investments 5-10 times more than this country does, but for reasons no one knows President Aquino does not support this suggestion. The Speaker couldn’t get enough support without the President’s backing. So the proposal didn’t get approved before the second regular session of the 16th Congress adjourned.
Introduce reforms to improve competence and efficiency in the justice system. The judiciary is an independent body, so this issue is better addressed to the judiciary itself. The Chief Justice is introducing reforms, but that’s has a very long way to go. Let’s leave the judiciary out.
Of the remaining issues, only two have seen progress, albeit limited: one power plant has been approved and a PPP project is now moving, but with very minimal counterpart spending from the government.
Refusing to give up, the 17 business groups met again in 2014 and sent the President another letter, this time with nine suggestions. Six were on the 2013 list. This time he mentioned three in his Sona—infrastructure, power, and reforms at the BoC. But there was little further action on any of the three after that.
This year 15 very specific recommendations have been made. They are designed is such a way that they can be done in the remaining months of the Aquino administration. I will discuss each of them in my next column.
We promised last week to discuss the 15 doable recommendations that the business sector would like President Aquino to pay attention to in his remaining months. Of the 15, something has happened regarding three, but that something isn’t too impressive:
In the first, he had to fill the vacant leadership positions in four agencies, but only two have been filled. Reassuringly, though, he appointed competent people to the Commission on Elections and the Commission on Audit. But the top posts at the Philippine National Police and the Civil Service Commission are yet unfilled despite the need being long-known and, in the PNP case, urgent.
The second was to execute major reforms in the tax system. The finance secretary has suggested quite major tax reforms (see “A tax revolution,” 4/16/15), but they are still in the early conceptual stage.
A third was done, but wasn’t done, and that’s the reduction of the Foreign Investment Negative List to a minimum. There really should be none at all, as foreigners are not going to take jobs away from Filipinos. But instead of reducing, or even eliminating, the list, Mr. Aquino approved a new list that continues almost all the restrictions of previous lists. It was an action that was a nonaction.
The rest are yet to do, and let’s hope with better accomplishment than the first three. They are:
- Creation of a public-private energy council composed of credible experts who will draft an energy security and price competitiveness roadmap with specific targets and deadlines.
- Implementation of measures to increase the productivity of farmers and fishers, who are still the lowest-paid workers in the country (a meager P160-P180 daily). Of the 30 bills endorsed by the President to the House immediately after his State of the Nation Address (Sona) last year, not a single measure was dedicated to improving the competitiveness of the agricultural and fisheries sectors, where 30 percent of the workers are.
- Streamlining of the business registration process which currently still takes 16 procedures and 34 days. The government has promised to bring this down to six procedures and eight days—still too many, but better.
- Release of the implementing rules and regulations (IRR) of the Data Privacy Act and the Cybercrime Prevention Act. The IRR of both laws have yet to be issued three years after they were signed into law despite their obvious importance.
- Immediate and intensified construction of vital infrastructure projects. The first-quarter drop in spending has to be reversed. The slow, laborious processes of government have to be prodded into fast action by an uncompromising president.
- Speedy resolution of the Maguindanao massacre trial and the plunder cases filed against the three senators in the pork barrel scam. This move needs action by the judiciary. There is no action, only unacceptable excuses. May I remind the judiciary that 58 innocent, ordinary people like us were mercilessly murdered in the worst such incident in Philippine history. All that is happening is the witnesses are dying.
The others require Congress to act, but need the President’s active support if they are to be concluded in his term. Yet he has certified only three of the five as priority. These three are:
- Approval of the freedom of information bill, which has been pending in Congress for more than two decades. The President promised this as a major issue in his campaign but it’s still in discussion in Congress.
- Passage of the Build-Operate-Transfer Law amendments, which will improve the conditions for doing public-private partnership projects.
- Approval of the antitrust/fair competition bill. The measure has been approved on third and final reading in both chambers of Congress so it is likely to be signed into law before June 2016.
The following are not among the President’s priority bills:
- Passage of the Customs Modernization and Tariff Act, which adopts customs policies and procedures that are in line with global standards for customs services.
- Establishment of a Department of ICT. The bill has been passed on third and final reading in the Senate but the House version is still pending on first reading. Yet this is the most important change needed for the country’s future success in this rapidly expanding IT world. Mr. Aquino’s imprimatur will accelerate its passage through Congress, but has not been forthcoming.
- Enactment of Speaker Sonny Belmonte’s resolution for the amendment of the economic restrictions in the Constitution to encourage more foreign investment and make the Philippines more competitive on the world stage and eligible for the Trans-Pacific Partnership.
This is one of the most important bills for transforming society and the economy. As I mentioned last week, the absence of Mr. Aquino’s support led to it not getting sufficient votes in the House. So unless he has a last-minute change of heart, he will leave office not having instituted a measure that would have captured world attention and brought foreign investors to the Philippines. With investors still not coming, the Philippines remains at the bottom of the pile in Asean.
So there you have it—a business community still united in a desire to see action that will strengthen the Philippines’ position in the world, improve the economy and create jobs. These are presented from the perspective of those on the ground who daily experience the weaknesses and so know, in practical terms, what is needed. But the President has not accepted business’ suggestions in the past, and there is little indication that he will now. The July 27 Sona will determine if, in his remaining year, he will act to leave a legacy of achievement for business growth.
Sources:
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