How the businessmen vote
posted August 25, 2017 at 12:01 am by Gary Olivar
The other day, we got a peek at what foreign businessmen think of the Duterte administration’s performance so far. The picture is generally positive, but with some alarums starting to be raised about peace and order.
In a preview of an impending official statement, the Joint Foreign Chambers (JFC), comprising the business chambers of the US, Canada, EU, Japan, Korea and Australia-New Zealand, expressed their “full support and confidence” in the Duterte administration. They approvingly noted that the economy is doing very well, and expressed appreciation that Congress has been aggressive in amending “some laws” to open up the economy.
As for areas needing improvement, they stressed the importance of keeping infrastructure projects moving along, strengthening anti-corruption measures, and further easing restrictions on foreign investment.
One notable bear was the Korean chamber president, who said that Korean companies were already planning to leave the Philippines for Vietnam, where they see lower costs (as much as a third of ours) and easier ways of doing business. He blamed higher logistical costs due to our lack of infrastructure, as well as “additional costs” being demanded by Customs and other government agencies.
On recent controversial peace and order and human rights issues, the ever-prudent businessmen basically danced around the question. They simply described peace and order “in any country” as a critical factor affecting investment decisions.
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What are the biggest implications of the foreign chambers’ comments for what ought to be the agenda of the administration? We think that the following initiatives bear highlighting:
“Build Build Build”—It’s an almost existential imperative that we aggressively catch up on infrastructure, considering that in 2015 according to the World Economic Forum, we ranked dead last among the “big six” Asean states (Singapore, Indonesia, Malaysia, Thailand, Vietnam and us) in each and every infrastructure category surveyed: airports, seaports, rail, roads and bridges, telecoms, you name it.
Tax reform—However, as the song from “Sound of Music” reminds us, “Nothing comes from nothing.” Spending on infra will require spending money. And yet the first of five tax reform bills from the administration has already been diluted from an original net gain of P164 billion, down to P134 billion after making it through the House, and may very well drop to below P100 billion in order to clear the Senate. That means cutting back infrastructure plans by at least 40 percent, or almost half. Are all those lost projects—over P60-B worth—really worth the reelection of senators too scared to do the right but unpopular thing?
Anti-corruption—The foreign businessmen, not surprisingly, singled out the Bureau of Customs on “additional costs.” Perhaps the shooting war that’s erupted between Senator Panfilo Lacson and former Commissioner Nicanor Faeldon will give us an excuse to finally push through radical reforms at an agency that over the decades has become the poster child for corruption. Two ideas come to mind for starters: a forensic audit of the bureau by the World Customs Organization, which comprises 95 percent of the world’s customs agencies; followed by resurrecting a bill from former President Gloria Arroyo’s time to replace the bureau with an independent, non-budgeted internal revenue authority.
Charter change—We hear that the proposed draft of a new Constitution will drastically reduce protectionist as well as statist language and limit Constitutional restrictions on foreign equity only to ownership of land. Restrictions on foreign investment should be the flexible subject of legislation, not permanently enshrined in the Constitution. That’s how pretty much every Asian country—including communist ones like China and Vietnam—does it, except for us.
Peace and order—On this issue, what foreign businessmen dislike is uncertainty. What they like are positive steps being taken, such as what they’re seeing from Duterte. They won’t be anguished by human rights issues as long as these do not create reputational problems for their companies. Don’t expect them to be picketing the International Criminal Court in The Hague anytime soon.
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We’ll close by wishing our fellow columnist Jose “Babe” Romualdez the best of luck in his new assignment as our ambassador to the United States. Babe is a veteran of public relations and publishing, a very affable man with a very recognizable family name, whom we’re sure will easily win new friends and keep old ones for the Philippines among his American audience.
Job one for our new ambassador is to counter the growing animosity against us within the US government—albeit apparently confined only to Capitol Hill and “deep state” bureaucrats at Foggy Bottom—over drug war and human rights issues. His should be a credible alternative voice to the organized Fil-Am destabilizers, led by Loida Lewis, who continue to believe that they’re wiser than the 80+ percent of Filipinos who actually live here and continue to support Duterte.
Job two for Ambassador Babe is to engage the US in our strategic agenda, which includes DuterteNomics, the push for federalism, the war against terror, and rebalancing our foreign policy. Americans must be made to appreciate that Philippine efforts to maintain peace in the region—even if we have to eat humble pie again and again—also serve to keep American soldiers and sailors out of harm’s way. This is something that we won’t even bother charging them for.
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