An appeal not to appeal

Newly-appointed Bureau of Internal Revenue (BIR) chief Kim Jacinto-Henares has worked in the agency during the Arroyo administration, implementing various programs to help shore up the government’s coffers.

And one of these high profile projects was Run After Tax Evaders (RATE). It attracted the public’s attention when cases were filed against celebrities like Judy Ann Santos, Regine Velasquez, Richard Gomez and even Manny Pacquiao.

If I remember correctly, the person who was actually behind this project was then Finance Undersecretary Emmanuel Bonoan, a former SGV & Co. executive who was personally handpicked by then Finance Secretary Cesar Purisima.

Bonoan drafted the RATE program which was vigorously implemented by then BIR head Guillermo Parayno Jr. and deputy commissioner Jacinto-Henares.

After Parayno joined the Hyatt 10 group and resigned from the BIR, Jacinto-Henares left the team to join the World Bank as its senior private sector development specialist.

Jacinto-Henares who so impressed President Aquino during his campaign is back. Businessmen expect the new BIR chief to run after tax cheats again, especially since the President vowed not to impose new or increase taxes but instead, improve tax administration.

However, her recent pronouncement to revive the track and trace system endorsed by Sicpa Product Security SA has worried traders and the tobacco industry. She said she would like to file a motion for reconsideration on the Department of Justice ruling because of its “far reaching implications not only about SICPA.”

The House of Representatives found so many fiscal and legal loopholes during the evaluation and negotiation of the Sicpa proposal, and these findings were affirmed by the DOJ.

Former BIR commissioners Jose Buñag and Lilian Hefti said no to this costly system proposed by Sicpa.

Thus, we caution the good commissioner to proceed slowly on her plan. She should ask around the BIR what really transpired during the evaluation of the Sicpa proposal, including why even the deputy commissioner of the legal and inspection group did not endorse the project.

We know Jacinto-Henares to be one sharp cookie. We hope she would listen to what the lawmakers, the industry, and even her own employees have to say about a deal whose cost has ballooned from $266 to $401 million in just two years.

In fact, Jacinto-Henares should investigate the BIR officials involved in this scheme, and punish those who had erred. We want to see her resolve and fortitude similar to what she did when she went after the tax evaders.

Regulatory capture

Our port system definitely leaves much to desired, if you compare it with those of Singapore and Hongkong.

But the success of the ports of Singapore and Hongkong did not happen overnight. It was a result of a firm resolve to become the best in the world.

This success is attributed to a large part to the manner they are operated. The governments of Singapore and Hong Kong operate their port in a decentralized manner and the ports are governed by independent boards of directors and professional managers.

In addition the personalities involved are either appointed or elected by the different sectors to represent and serve the interests and aspirations of the local community and industry.

Take a look at the Maritime Port Authority of Singapore (MPA), our version of the Philippine Ports Authority (PPA). Although it has representatives from the Singapore government, many of the members of its board of directors come from the different sectors of business, such as banks, shipping lines’ associations, legal firms, and even seafarers’ officers’ union.

On the other hand, the PPA board is mainly composed of heads of different government agencies and only one from the private sector.

The PPA dominates the Philippine port system as the main developer, operator and regulator of ports in the Philippines. While its control over some ports has been devolved to other entities. including the Cebu Ports Authority and the Subic Bay Metropolitan Authority, the PPA still corners some of the country’s most lucrative facilities, including the Port of Manila, which handles around 60 percent of the Philippines cargo volume.

PPA’s port system is also the most important and extensive network of ports in the country. It consists of 115 PPA-owned ports, many of which it operates. On the other hand, over 500 private commercial and non-commercial and industrial ports are directly under the supervision of the PPA.

With this set-up, PPA has a virtual monopoly over port facilities in the country and it can dictate who can join in that elite circle of port operators. Of course in other ports in the provinces where the government is losing money, PPA is more than willing to give the concession, but not in places like Manila or nearby areas. 

One study pointed out that the PPA charter has given rise to conflict of interest situations for the agency, and that the latter has only allowed token private sector participation.

It noted that the PPA regulates and approves tariffs, a share of which is given to it as mandated by law and that it has used its regulatory power to bar direct competition between private and PPA-owned ports, especially in Manila.

Manila only has three international port operators, all of which have their own turf. Even at the Manila North Harbor, a domestic port, there are a number of operators but the firms can operate in a specific area and cannot compete with each other. It clearly shows how PPA frowns on competition.

The paper stressed that this lack of competition in the shipping industry undermines incentives to minimize costs which could be simply passed on to the consumers of the service.

It added that because the Philippines aspires to become a major maritime hub in the Asia-Pacific region, that is, as an alternative to Singapore and Hong Kong, modernization and restructuring in the shipping and ports industries need to be seriously considered.

The real score

Non-golfers will probably find it hard to understand the honor system that golfers around the world have proudly adopted, but this is precisely why the appointment of Angelito Alvarez as customs commissioner is being questioned in some quarters.

Alvarez was the president of freight-forwarding company Air21, the local licensee of the global company Federal Express, when he played with three other golfers who supposedly submitted false scores during the Mango Tee golf tournament at the Alabang Country Club last February.

Because of that incident, the country club, headed by Boy Villareal, suspended last Tuesday the Air21 corporate account that was assigned to Alvarez on the same day that his appointment to the top post at the Bureau of Customs was announced.

Class D-golfer Alvarez emphasized that he was not the one who submitted false scores, but one of his flight mates. He told reporters that he was not really paying attention to the game and did not even bother with his scorecard which was filled by his caddie, and that he only played in the tournament because he was entertaining a client.

But probably more interesting than the allegations of cheating is the composition of Alvarez’ flight. Rumors say they include the president of a major cargo handling and warehousing company, a top PPA official, and the government affairs manager of one of the country’s largest port operators.

So who among the three was his “client” and, given the waterfront entities they represent, can Alvarez still maintain his claim that the Mango Tee incident would have no bearing on his new job at the customs bureau?

Since the tourney was held before the elections, some wags suggest that the golf game was nothing more than a “spadework” meeting so that Razon could have a foot in the door of the Aquino-Roxas camp.

Others, however, say that Razon simply wanted to apprise the Aquino-Roxas camp of his waterfront projects, particularly the casino-hotels he wants to put up at the PagcorCity in the reclamation area.

For comments, e-mail at [email protected]