The cart before the horse, again

They have announced another study they call a roadmap, supposedly to market the Philippines as an investment destination. They even have a mind boggling figure of P2.405 trillion worth of projects that we are supposed to attract in the next five years. They are also calling this the first ever “Philippine Investment Promotions Plan.”

I really want to be impressed but I find it hard to be. I seem to recall similar such plans in the past that either gathered dust or didn’t work. I remember a story many years ago that was related to our business economics class at the then Center for Research and Communication. It captures what is wrong with us that I think persists to this day.

The guest speaker told our class he participated in an investment promotions road show that took them to Bangkok. Someone in the Philippine delegation asked their Thai host what was their secret of success in attracting all those foreign investments.

The Thai host had a simple response. He reportedly said that among other things, they studied our Investments Incentives law and tweaked it a bit.

The Pinoys couldn’t understand so one of them asked a follow up question: how come you are more successful than us in attracting foreign investors if you just copied our law?

The Thai host replied: we implemented it well.

I guess that is our curse. We are good in making plans, making laws but very poor in following up with excellent implementation. I am not belittling this new so called roadmap. But I know I can be excused for being somewhat skeptical about the shockingly ambitious targets being touted.

This new road map was funded by the Japanese government and subcontracted to Nomura Research. I understand that even Nomura Research conceded during the launch press conference that “investment promotions are more or less dependent on investment incentives as well as... the investment climate in general.”

In other words, Nomura is saying that this will remain a plan, a pie in the sky, if we do nothing with things that affect the investment climate in general. We all know how we rate in comparison to countries in the region as a place to do business. The conditions must be right for this ambitious plan to even have a chance.

P-Noy knows the problems. I heard him identify the problems in a televised interview with the press. Among the factors he cited that keeps us at the periphery of foreign investors’ radar screens are: high cost of electricity, poor infrastructure, changing investment policy and corruption.

 Additionally, I think investors, local and foreign, would be more bullish about the country if we had a credible leadership who made sure the bureaucracy does not put pesky roadblocks to doing business. Plainly said, let us make sure government officials do not extort from business investors, local and foreign.

Just to illustrate with a very simple example, a sister of mine gave up on her restaurant business because she was constantly being harassed by fire inspectors who wanted her to buy fire extinguishers from them, inspectors from the labor department as well as from the DTI who gave broad hints on how they can be appeased. So my sister just closed her restaurant because you can’t run even a small business here and be true to your convictions.

I imagine the hurdles for investors in more controversial enterprises, like mining, would be more daunting. Yet this so called roadmap is actually targeting the largest chunk of new investments on mining ventures. Who are we kidding? What we need before this roadmap is a roadmap to make it pleasant to do business with government and in the case of mining, reasonable NGOs.

Trade Secretary Jesli Lapus thinks the roadmap has a “level of permanency” even with the entry of a new government, because the agencies involved will police each other and the Japanese government which funded the plan’s drafting will be monitoring implementation. I think we need to get some basic things done first.

What I want to see is a plan on how the bureaucracy will make things easier for investors to get down to actually doing business in this country. Right now, the attitude of many bureaucrats, specially at the local government level, is to screw the business entrepreneurs because they can afford it. If this attitude persists, this presumably expensive plan paid for by the Japanese government will merely be filed and gather dust just like similar plans in the past.

Just to amuse ourselves, here are some of the things they said is good about this plan.

The plan recommends that marketing activities be shared by investment promotion agencies through joint road shows and uniform collaterals. According to Benigno N. Ricafort, head of the technical working group and president of the Clark Development Corp., this should ensure that investors are referred to the suitable economic zone and are provided comprehensive information.

The key sectors were chosen based on prevailing government plans, their potential as shown by historical data, free trade agreements and plans of multinational companies. The eight sectors are mining, power, particularly renewable energy, shipbuilding, semiconductor manufacturing, agro-industry, business process outsourcing and information technology services, tourism and logistics.

The road map, which was funded by the Japan International Cooperation Agency, also identifies transportation parts and equipment manufacturing, iron and steel, and mining as sectors where we should focus our investment efforts targeted at Japan. China was also cited as a good country to attract investors for mining.

We are putting the cart before the horse. We have to do our homework before we go out to the world to try and attract investors. By homework, I mean getting the bureaucracy to become more business friendly. By homework, I also mean getting the needed infrastructure in place from ports, roads and reasonably priced and reliable power supply.

I think it is good to have a plan. It is good to have a roadmap. But we are only good in making plans. What we need now is great implementation. Let us start with local investors first. If we can make the locals feel it is a great idea to invest in this country, the foreigners will follow.

Right now, it is the cart before the horse as usual.

Reaction

Here is a reaction of Manuel Diaz , a US-based Pinoy geologist to our column last Friday on the subject of attracting foreign investments.

The biggest stumbling block in the Philippine aside from the rotten infrastructure is the arbitrary powers of our public officials. We should abolish the requirement to get a Mayors Permit to do Business.

The President of the Philippines, the Governors the Mayors should not be given arbitrary powers to suspend operation of any business entity without due process. Just look at the case of Marcopper, had the regime of President Tabaco allowed Marcopper to operate, the Mogpog tailing disaster could have been mitigated long time ago.

The DENR should not be given arbitrary powers to suspend ECC without due process. Let the Courts get involved in perceived environmental violations. Giving arbitrary powers to bureaucrats is a sure formula for extortion.

Let us reduce the red tape in registering a corporation. Here in California you have only at most three pages of Incorporation papers. In the Philippines you have more than one inch thick of documentation. It takes months to register a corporation in the Philippines.

Tell our congressman and senators not to change the rules in the middle of the game.

Pulling teeth

Here’s something from Gilbert J.

Woman complaining to dentist: “It’s so painful, I’ll rather have a baby than have a tooth removed.”

Dentist: “Make up your mind. I’ll adjust the chair accordingly.”

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