Holiday reflections

(First of two parts)

With Christmas and 2014 fast approaching, it’s a time to reflect on the years past and what we might have learnt from them.

Perhaps the most striking for me is that people power not only works—as we, the initiators of it, discovered in 1986, and Thailand, the Ukraine and others are realizing today—but also has taken a life of its own through the Internet. It’s new and it will revolutionize society, and politicians will no longer be able to get away with their shenanigans unscathed. Public anger can be rapidly expanded and sustained. It brought pork barrel down; in 2014 it may do more. Let’s hope so because the corruption in government (in all its nefarious forms) must be stopped.

President Aquino has been steadfast in this. Over the past three years his concentration on stopping the corruption rot has led to the resignation of Ombudsman Merceditas Gutierrez; impeachment of Chief Justice Renato Corona; filing of more than 300 cases on smuggling and tax evasion; detention of former president Gloria Arroyo; review by the Department of Public Works and Highways of all proposed infrastructure projects and holding of open and competitive bidding that has resulted in billion-peso savings for the government; and implementation of zero-based budgeting that terminated inefficient programs and increased funding for key initiatives. It has also led to Congress’ timely approval of the budget, as well as the prosecution of some corrupt officials. However, no one has gone to jail. And the entrenched systems of corruption in institutions are still blocking fuller change.

In other areas, the President has been less successful. The most important one, addressing poverty, hasn’t happened; poverty has even worsened. Forget the percentages, look at the numbers, because it’s people we’re talking about. From official sources, 26.5 million Filipinos were listed as being in poverty in the first half of 2009 (SWS says, more believably, 45 million). The official figure rose to 27 million in the first half of 2012 (SWS says 50 million were poor during the same period in 2012). You can crow all you like about the second fastest economic growth in Asia, but if it’s not bringing Filipinos out of poverty, it’s not growth at all.

This has happened because the President hasn’t focused on business (which creates the jobs) the way he needs to. His opposition to constitutional change and creation of a Department of Information and Communications Technology are examples of that, along with allowing capricious changes in policies and actions, which has been a major deterrent to attracting new job-creating investments.

The worst by far was the ill-considered release of Executive Order No. 79 that stopped mining dead in its tracks. EO 79 has some good features, but they were entirely negated by the ill-considered decision to review the taxes imposed on mining firms toward an increase of taxes that are already high by world standards. Billions of dollars are being lost, hundreds of millions of dollars on exports not achieved, and taxes reduced beyond any level of tax rate increase may ever recover.

Denying San Roque Power Corp. the P481 million in committed and promised VAT refund on the absurd excuse that it was outside the days allowed is just one example of retreat into legalism. This decision should be reversed.

Requiring the water concessionaires to remove taxes from their calculations, as the contract allowed, is an example of capricious policy. The President should get involved here early in 2014 and call for new discussions between the MWSS and the concessionaires without the need for arbitration. The government MUST conform to the original contract.

Another is the 50-year contract with Unisys to register births, deaths and marriages for the National Statistics Office. It was cancelled and put to open bidding, putting what had been a most successful PPP project at risk for little, if any, benefit to government or the public.

One of the reasons the Philippines attracts so little foreign investment is the way each new administration introduces different policies. Rules are changed on a whim, midgame. Government officials must keep in mind that foreign investors don’t invest for six years but for 50, 100 years, and expect a consistent, stable environment within which to operate.

What didn’t happen this year is construction of infrastructure under the PPP program. The Department of Transportation and Communications was particularly at fault on this, not the PPP Center that was hamstrung by inaction in other departments. Unemployment was not reduced either, and in fact increased from 2.7 million jobless in July 2010 to 3 million in July 2013.

The freedom of information bill, which seeks to promote transparency in government transactions, has yet to be certified as urgent. The pork barrel scam just emphasized its importance. There is no action as well on the bill creating a Department of ICT, an essential creation to support the fastest growing sector of the Philippine economy today, the BPO-ICT.

The President’s priority bills such as the rationalization of fiscal incentives and amendments to the Cabotage Law are still pending on first reading in Congress. But he has a new challenge now when dealing with Congress. He can no longer dangle pieces of pork to influence lawmakers. He must rely on persuasion—a tougher, but ultimately sounder, method of reaching agreements. It should lead to a better political society post-2016.

Next week we’ll look at the positives for a balanced view, because the Philippines is certainly a much better country today than it has been for many a year.

Have a wonderful Christmas with your families. My heart goes out to those who suffered the wrath of “Yolanda/Haiyan.” (To be concluded)