Hope beyond the crisis

The global business community is jittery over the impact of this latest triple whammy to hit the world: An American economy possibly heading towards a double recession, Europe’s sovereign debt crisis, and a downgrade of the US government long-term debt paper and ensuing market volatility.

But corporate guru Manny V. Pangilinan sees a silver lining on the horizon—and is confident that the Philippine economy could ride out this new financial storm on the crest of its strengths and, more importantly, that it could even harness this global crisis as a take-off point for an upward trajectory.

Challenging conventional wisdom that values a “wait-and-see” attitude in business in seasons of crises, MVP believes that now is even the time for greater investments by big business in the domestic economy.

And to encourage such investments from the private sector, he believes that the Aquino government should foster a competitive playing field leaning towards an “efficiency policy” rather than a “market structure view” of the domestic business environment. 

The “market structure view” imposes limits on market share and protects market rivals, while the “efficiency” view asserts that consumer welfare must be paramount, regardless of market structure.

MVP’s optimism is rooted in what he perceives to be the four “pluses” of the Philippine economy, which, if properly harnessed, would likely work in our country’s favor.

In his Aug. 17 speech before the Financial Executives Institute of the Philippines (FINEX), MVP identified these four positives as: first, the strong growth of overseas Filipino workers or OFW remittances that continue to support domestic consumption; second, our low-interest rate environment; third, a healthy and liquid banking system and robust corporate sector; and fourth, an improved macro dynamics, topped by a “lower government debt-to-GDP ratio, lower external debt to GDP, and a slightly higher tax revenue to GDP.”

Rather than borrow more money, the government should give priority to creating an environment that would encourage both foreign and domestic investors to invest in the Philippines, especially at this time that business confidence in the Aquino administration remains high.

MVP’s pitch for consumer welfare in his FINEX speech makes sense because protecting consumers ensures that competitors will have people buying their goods and services, with the resulting demand overdrive energizing the economy and creating more jobs.

A “market structure” view doesn’t generate such a positive impact on the economy. It merely protects companies—or specifically, the rivals or competitors of market leaders—but sometimes to the detriment of the consumers.

“Only when a dominant player abuses its position, by imposing predatory pricing, price collusion, supply restriction, or tying  the sale of one product with another—that government intervention is required,” Pangilinan pointed out in his speech.

Perpetuating a dynasty?

Observers note that two running stories point to a grand design by one of the country’s oldest political dynasties to perpetuate itself.

The first House Bill No. 4820—that seeks to carve out a new province to be named Nueva Camarines, out of the 4^th and 5^th legislative districts of Camarines Sur. Critics allege that this bill’s final approval was railroaded in by its lead proponent, House Deputy Speaker Arnulfo Fuentebella, in collaboration with the chamber’s Committee on Local Government chaired by Negros Oriental Rep. George Arnaiz, even if not a single public hearing was ever held in the province to get inputs or feedback from the people.

It is said that this bill is littered with 29 legal infirmities, all of which are meant to equip the proposed Nueva Camarines powers not enjoyed by other LGUs.

The second “super” tool is the Partido Development Administration (PDA), the government corporation created by Republic Act 7820 or the Partido Development Administration Act, which was enacted in 1994 to oversee the economic development in the Fuentebellas’ 4^th district, which is better known as the Partido area.

But despite its super powers, it is claimed that the PDA, which from the start has been under the control of the Fuentebellas, has failed to do anything to improve the lot of the Partido folk in the 4^th district. In fact, the poverty map of the National Statistical Coordinating Board (NSCB) shows that five of this district’s towns are among the poorest in the province.

All that the PDA can show in its almost 20 years in exist. But if you believe that this is the end for the PDA, then you are dead wrong because it turns out that it has secured last summer a memorandum of agreement (MOA) from the Department of Environment and Natural Resources (DENR) empowering it to oversee mining activities in the Partido area—again, like the Nueva Camarines thing, in violation of various laws that vests such powers in the provincial, municipal or city governments of provinces where the mineral resources are to be explored or mined. 

Going back to HB 4820, Sangguniang Panlalawigan member Angel Naval has listed at least 29 provisions that would lead to the bill’s imposition of double taxation in the proposed Nueva Camarines and vest the provincial government with powers that have been granted solely to cities and municipalities under Republic Act No. 7160 or the Local Government Code.

But perhaps the biggest sin of Rep Fuentebella is the flawed Electric Power Industry Reform Act (EPIRA) of which he is among its major supporters. Ten years after EPIRA was passed into law, power rates in the country remain among the highest in Southeast Asia with generation fees charged by the National Power Corp. going up twice since 2001. 

The pervading crab mentality in the bid to pass the gerrymandering law creating Nueva Camarines is evident in that it totally disregards the ongoing initiatives of the local government of Camarines Sur to make tourism the primary engine of economic growth for the province.

CamSur folk who clearly see HB 4728 as a gerrymandering scheme are in no mood to give the Fuentebellas a new political fiefdom, given their dismal failure in improving the lot of their constituents in the 4^th district in the over 100 years that they have controlled political power there.

For comments, e-mail at [email protected]