Declare entire country a free port

Smuggling is a big problem in this country and the few free ports we now have appear to have aggravated the problem. The national treasury is losing billions of pesos in unpaid taxes on smuggled oil products, luxury cars and other highly dutiable items. There is no sign whatsoever on the horizon that the problem is about to be addressed, to even think of stopping it altogether.

So how come this administration and its political allies in Congress are now about to pass a bill that will create another free port to add to our national headache? The answer is easy. The bill that will create the Bataan Free Port out of the current export processing zone is a project of a powerful political family allied with Ate Glue. That’s all there is to it.

Politics is the only engine that moves this administration even if what is politically desirable for her is bad for the country. It doesn’t matter that the last thing we need in this country is another free port. It doesn’t matter that Ate Glue’s own finance department is against the proposal because it will involve revenue leaks in terms of tax exemptions and believe it or not, billions of pesos of actual equity contribution by the National Government. That is like robbing the taxpayers in the rest of the country to support a very small number of taxpayers in Bataan.

If a free port is the way towards development as claimed by the proponents of the Bataan measure, why don’t we simplify matters by declaring the entire country a free port? That will remove the hypocrisy behind the supposed reasons for having free ports in the most improbable locations.

Why should a well connected cabal of cronies have all the fun? Once the entire country is a free port, there will be no more smuggling. That also solves the age old problem of corruption at Customs. We are entering an era of Free Trade with Asean and other major trading partners anyway where tariffs are set to melt away. Of course we will aggravate our other problems in relation to industrial and agricultural competitiveness and fiscal deficit. But that’s another story.

I had earlier written a column supporting the objections of the Department of Finance to a bill passed by the lower house and now pending in the Senate that would convert the Bataan Economic Zone into the Bataan Special Economic Zone and Freeport. Also opposing it are the Philippine Economic Zone Authority (PEZA), the Export Processing Zone Chamber of Exporters and Manufacturers, Inc. and employees of the Bataan Economic Zone.

Curiously, the Department of Trade and Industry to which PEZA is attached, is not objecting and reportedly even sent word to some of the groups opposed to the Bill to abandon their opposition. I am not surprised. The current DTI head is not known to express strong intelligent views. He must have received orders to abandon his own troops because the Palace wants to make a political deal.

The thing is… do we really need more Special Economic Zones and Freeports?

There are now 154 Economic Zones administered by the Philippine Economic Zone Authority (PEZA) in the country. Except for 4 Public Economic Zones built with government funds under the defunct Export Processing Zone Authority (EPZA), namely, the Bataan, Mactan, Cavite and Baguio Economic Zones, the rest were developed and managed by the private sector mostly in partnership or joint venture with foreign companies. They are spread out in the country, and include industrial and IT parks and Tourism zones.

I was covering Congress when they were discussing the Special Economic Zone Act of 1995 (R.A. 7916) that created PEZA. Then Sen. Gloria Macapagal Arroyo was handling the bill in the Senate and then Rep. Tong Payumo was doing it in the House. To verify what I recall from those days, I checked it out with Tong and yes, the law was indeed passed precisely to put some order and rational basis for such special zones.

As Tong puts it in his recent e-mail to me, the law “was passed to provide the legal framework and mechanisms for the creation, operation, administration and coordination of special economic zones in the country.”

Then as now, the problem was that every Congressman wanted to put up one economic processing zone in his district. Then Senator Gloria Macapagal Arroyo who chaired the Senate Economic Affairs Committee sponsored the bill. She believed at that time that there is a need for rational and objective criteria to be followed in accrediting economic zones.

(I get totally disoriented every time I think of the old days when I admired the principled Sen. Gloria Macapagal Arroyo who seems as different as night is to day with the President Gloria Macapagal Arroyo who is an unprincipled trapo… a real life Jekyll and Hyde transformation.)

Then Sen. Arroyo and then Rep. Payumo understood the desire of every Congressman to uplift the economic conditions of his district, but also knew that most locations proposed for ecozones were not viable. And the best test for viability is the willingness of the private sector to invest in developing the ecozone. If it does not think it is viable, Government cannot make it so by simply pouring on funds. Now it is worse… it is free ports that they want.

If one is to believe the Explanatory Note of the proposed bill to create the Mariveles Free Port, they want to improve the infrastructures such as roads, buildings and communications; to help create jobs; and to attract tourists to visit the pristine beaches and forests of Bataan. I think it is obvious that a Freeport status is not necessary to meet those objectives. Good governance is all they need.

I will no longer repeat the massive costs to the national treasury that this proposed law will entail. At a time when the administration of Ate Glue has already caused National Government borrowings to reach historic highs, and with a yawning fiscal deficit expected, this is definitely unaffordable. The benefits are also too local to a small corner in Bataan while the pain is national.

This proposal is proof again that our legislators have to learn to look beyond their parochial concerns. The desire to have free ports is similar to the desire to have state universities. As a result, the expected benefits cannot be delivered because we simply to not have the resources to make all these special zones and state universities work as promised after the law is passed.

Incidentally, that’s one other reason why I am very doubtful a one chamber legislature composed of district representatives the way the lower house is now constituted will work for the national interest. Such a system will accentuate the tunnel vision of our small town politicians. The greater good of the nation will be sacrificed just so they get their basketball courts, so to speak. The national budget will just become one big pork barrel.

That’s what this bill pending in the Senate is all about. If we are to pass this bill into law, it may be better to just declare the entire country a free port. That would abolish smugglers in one blow. It may even make us an attractive trading center in the region. It may even diminish government control of business to such a degree as to finally make our investment climate friendly.

With a free port here and another one there, some localities will be benefited at the expense of others. Why should the people in Bataan, Subic and Cagayan be more special than those in Tawi Tawi or Batanes? Why can’t Palawan have a free zone too specially because its local government has a proven track record of good governance?

Religious hypocrisy

This one was contributed by Artemio Tipon.

A Jewish Rabbi and a Catholic Priest met at the town’s annual 4th of July picnic. Old friends, they began their usual banter.

“This baked ham is really delicious,” the priest teased the rabbi. “You really ought to try it. I know it’s against your religion, but I can’t understand why such a wonderful food should be forbidden! You don’t know what you’re missing. You just haven’t lived until you’ve tried Mrs. Hall’s prized Virginia Baked Ham. Tell me, Rabbi, when are you going to break down and try it?”

The rabbi looked at the priest with a big grin, and said, “At your wedding.”

Boo Chanco’s e-mail address is [email protected]. This and some past columns can also be viewed at www.boochanco.com