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Wednesday, April 1, 2015

We really haven’t seen much yet



I like P-Noy’s chutzpah when he told a business conference last week that, we “ain’t seen nothing yet” in terms of the country’s economy. Then again, at the risk of sounding negative, I would like to echo the sentiment of a large part of the business community: we are still waiting to see much of the promised reforms implemented.
For one thing, it is still as tough as ever to do business here, unless you have a Lilia de Lima of PEZA to hold your hand. As one Philstar reader e-mailed me, it is not true the problem is mainly with LGUs as I had written previously. National government agencies still have bureaucracies that are essentially anti-business, specially medium and small businesses.
Here is that e-mail of a struggling Filipino entrepreneur:
“Doing business in the Philippines is no walk in the park. We found this out when our company was required to secure a new customs import permit for a product from the US. Since we have been importing this product for more than eight years, declaring its actual imported cost and freight for the corresponding duties and taxes, we thought we would get the permit without a hitch. To our horror this was not the case.
“Our ordeal began when first we had to get a BIR clearance. It took us three weeks to secure this as the regional BIR office failed to furnish the main office of our tax records. Our accountant had to shuttle back and forth several times from the regional to the main office to finally get the BIR clearance.
“Then came this ridiculous Bureau of Customs requirement that all officers of the company have to obtain a recent NBI clearance. That means we have to personally appear at an NBI satellite office in Robinson’s Mall, which we dutifully did. (I wonder if this was required of officers of big companies like SM, Ayala, Rustan’s etc). We were told to come back after four days for the release of our NBI clearance.
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“On our return, the satellite office informed us that we had to go to the main NBI office for a personal interview. This was ridiculous as we already have a previous NBI clearance which was issued last October 2014. This was when I blew my top!
“A simple solution to this new BOC Import Clearance is to review the track record of importers and if there was no question in the declaration of imported products and payment of duties and taxes, the BOC should automatically grant this BOC import permit to these companies.
“BOC should not punish us or make it difficult for us legitimate importers to go through this twisted path of complying with its import permit requirements. Doing business in the Philippines is indeed no walk in the park!”
There you have it… a good example of why we are still the laggard in FDI in Asean despite a record established last year. P-Noy hid the fact that our seemingly spectacular rise (in percentage terms) in FDI of $6 billion for 2014 is due more to a low starting base. Our FDI is usually at about $2 billion.
In comparison, Vietnam.net reports rather apologetically that “foreign direct investment (FDI) in the country decreased by 1.9 percent on the year to $21.92 billion in 2014, according to the Foreign Investment Agency’s revised report.”
FDI into Myanmar, on the other hand, has soared to more than $8 billion this fiscal year, $3 billion more than anticipated, Aung Naing Oo, head of the state-run Myanmar Investment Commission, told Reuters. This was attributed to the opening-up of its telecoms sector and the courting of manufacturers and energy firms.
Clearly, there is no real reason for breast beating about our record FDI number. Even Myanmar did better than us. 
P-Noy is clearly being told only the hopeful side of things. He should learn to ask his Cabinet really tough questions. For example, the PPP… We all know PPP is essentially stuck and there is little they can do to resurrect it in the remaining months of the Aquino watch.
I can only grimace while listening to P-Noy cite some numbers to justify a claim that PPP is moving. He may be technically correct to claim that “nine projects have been awarded; 16 are in the process of being bid out; and more than 30 other projects are under various stages of development.” He didn’t say how many will be delivered by 2016.
I have been telling my friends at the PPP Center that they are less than honest every time they claim they have “rolled out” another PPP project. It gives the impression that it has broken ground or about to. At best, the projects probably got a NEDA approval but that’s a long way, at least two years, before they can break ground.
Let us see what is really going on at ground level.
Daang Hari is a mere four kilometer road awarded almost as soon as P-Noy took office, the first PPP project. It is four years delayed but will probably be inaugurated before P-Noy leaves office. 
DepEd should be congratulated for being the agency that took PPP seriously and have actually completed Phase 1 of their school building project and about to complete Phase 2. Yet, building schoolhouses was actually more difficult to undertake because many are in out of the way places. The logistical requirements are more challenging.
The modernization of the Orthopedic Center was awarded but still to break ground. The initial problem was providing a location for it. Then the new Health Secretary decided to put on hold all projects initiated by her predecessor, as politicians normally do. There is opposition from some of the workers who are afraid they will lose their lucrative livelihoods (rackets?) and are using the poor patients as their excuse. I don’t think the project has finally broken ground.
San Miguel promised to deliver the NAIA Expressway in time for the APEC conference in the last quarter of this year. DMCI, the contractor for the project, assured that the accident last week will not delay completion.
We are told the Automatic Fare Collection System for the Metro Manila commuter train systems will be delivered in the next few months. This is private sector driven so I am confident the consortium will deliver this year. Ironically, we will soon have a modern fare collection system but the safe and modern trains may take more years to come, no thanks to DOTC.
Megawide’s consortium has taken over the operation of the Cebu Mactan International Airport. They have introduced changes that travelers say have improved the flow of passengers through the old terminal. They also now have better lighting and clean rest rooms.
But they are delayed in breaking ground for the new terminal because the Philippine Air Force refuses to leave the area where the terminal is supposed to be constructed. One would have thought that DOTC has coordinated with the Air Force before it awarded the project.
The LRT1 extension has been delayed by the insistence of DOTC to move the Common Station for three rail lines near Trinoma from the original site near SM North Edsa.
The Southwest Bus Terminal project has been awarded but no ground breaking yet.
We are lucky that foreign business analysts are too lazy to look beyond the macro numbers and have swallowed uncritically the propaganda line about P-Noy’s so called anti-corruption drive. They would have been less enthusiastic if they looked into what are being experienced by investors trying to start a business. The bureaucracy still impedes rather than facilitates the conduct of business. 
It should be crunch time for P-Noy with his days at Malacanang running out fast. While it is too late to deliver a new MRT or a new international airport, the groundwork can be laid so that long delayed infra projects break ground before he leaves office.
P-Noy must stick closely to the basics… deliver things any civilized government is expected to deliver. Consider this e-mail I just received on the subject of driver’s licenses:
“It is just mind boggling how DOTC operates, 24 years of payments without a contract!
“It was announced yesterday that starting April  1, there will be a P10,000 fine for unregistered or expired car registrations since there is an ample supply of new plates and stickers. I sent my car for registration yesterday and all I got was a receipt. They said plates in three to six  months and stickers in three weeks MAYBE! Such brazen liars at DOTC!”
Unless they start showing a dramatic change in the bureaucracy’s attitude towards value creating entrepreneurs, P-Noy will leave nothing behind of lasting value. That’s a terrible shame.

Correction

Julius Nyerere is from Tanzania not Nigeria. I was just quoting from S. Dhanabalan, an associate of the late Lee Kuan Yew, but I should have checked and corrected the quote. Sorry about that.
Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco

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