Beware of rising expectations

I know how it feels. Because they are constantly under attack, it feels good to have positive validation of what you are doing. That’s exactly what the latest numbers of Pulse Asia delivered to P-Noy and his team. Pulse Asia found out that 72 percent of Filipinos are appreciative of Aquino’s performance, with 74 percent trusting him in a survey conducted over two weeks in November.

It is easy to put aside the caveats that come with the good results. For instance, Pulse Asia said dissatisfaction with the Aquino administration’s performance on selected national issues became more pronounced between August and November 2011. That is one important caveat that threatens the long term approval climate for the administration.

As I pointed out last Monday, the biggest problem of P-Noy now is how to deliver on the rising expectations of our people. Sure, they want an honest government and they are giving him credit for that, as the Pulse Asia numbers show. Some 56 per cent say he is doing a good job in curbing corruption. But they want him to be more than honest… he must also be effective.

For me, we need to focus attention on DOTC Secretary Mar Roxas. He supposedly delivered a speech before the joint foreign chambers which, if news reports are accurate, is a repeat of the speech he gave over a month ago to the joint meeting of the Makati Business Club and the Management Association of the Philippines. He talked of the Clark to Manila express train but offered no details, specially a timeframe we can count on.

By this time, I think we ought to hear from Mar when he will commence the negotiation with China on reconfiguring NorthRail. Without a date, it is just all talk. As for the PPP, I got this e-mail from a trusted source that brings up very disturbing things about how this program is progressing. Here is that e-mail:

“Sometime last week, I saw a TV program where an official of the PPP Center was being roasted (to put it mildly) by Winnie Monsod. The poor guy could only promise two projects to be tendered by the P-Noy government in 2012! These were the 10,000 classrooms of DepEd and the four-km DaangHari Toll Road. He could not answer why only 10,000 and why only four-km? Where are the big-ticket projects? Then, he rattled off a number of airports projects – which, in reality, are only privatization after government has incurred the debts and built them.

“The DaangHari Project is a low-hanging fruit that was not even in the original priority list of 10 announced by P-Noy sometime September 2010. It was a toll road that NDC wanted to pursue on its own, in competition with the private sector, until DPWH Secretary plucked it out into open solicitation. The bid opening is sometime mid-December 2011.

“Unfortunately, the term sheets reveal how amateurish the bright boys of the PPP Center are (my source says, it was this was the brainchild of a bright boy at DOF). The criterion for award is biggest payment to the government!

“Looks okay if you are in the private sector, but egregious, if you are on the government. It is a desirable infrastructure project that would have been paid for by general taxes (i.e., no financial returns to government). By placing it under PPP, the government now wants to earn upfront a minimum P371.67 million.

“To win, a bidder has to top this amount. Who will end up paying for the extra cost? Naturally, this will have to be passed on to the motorists. In short, aside from transferring the obligation to the private sector, the government also wants to be in business. In the bidding for Star Expressway and TarlacPangasinan LaUnion Expressway, the criterion was lowest toll fee.

“Another problem is the low starting toll fee (flat rate=P12.84) and a concession period of 25 years. A simple financial analysis would show that the present value of the gross revenues – using traffic forecast from government own study – yielded P1.5-billion at 12-percent discount and P1.1 billion at 15-percent discount. These do not yet include annual O&M costs, as well as VAT.

“Since the estimated construction cost is P1.5 billion-P2 billion, the terms are clearly unattractive. Perhaps realizing their mistakes, the terms were suddenly changed to P17 toll fee and concession period raised from 25 to 30 years, but the minimum ‘tuition fee’ of P371.67 million remains.

“The change in terms would invite legal challenges - unless the whole game plan all along, is for the tender to fail. Is there a conspiracy to make the PPP program of P-Noy fail? Or is it simply incompetence?”

Something good has to happen soon or this problem of rising expectations (and frustration) can reverse and prove really toxic for P-Noy fairly quickly.

GDP and more

Here is the conclusion of that e-mail from reader Lito Austria.

“I think the President should just have one guideline for all his cabinet members, as our GDP is not the sole responsibility of the Economic Managers. GDP encompasses all industries, and therefore all Cabinet Secretaries should take this as their personal goal. There should be just ONE underlying criteria for anything the Cabinet Secretaries will do : WILL IT PROVIDE JOBS and stimulate the economy? Some examples:

“1) The DOF revised REIT guidelines. They had some disagreements on the amount of public float so major developers backed out. I don’t know if Mr. Purisma is correct on his formula on REIT, but no one accepted his formula. So we did not achieve anything to stimulate the real property business. The government also did not offer a compromise figure on the public float. What is the use of the new guidelines if NOBODY is now interested in the program?

“2) PPP. I agree with you Mr. Chanco, that Mr. Roxas should just do it. PPP will provide jobs not only to the middle class but provide food on the table for the families of the construction workers. Buying new trains will not stimulate growth, unless those trains that you will buy are made in the Philippines. Of course we need new trains but I hope we choose an option that will provide more jobs like letting the private sector take the responsibility to invest on the infrastructure also and integrate LRT and MRT as a seamless loop.

“3) Train from Clark to Manila. Yes it will take 10 years, but the jobs it will generate is a noble cause by itself.

“4) Closing of fishing season for our sardine industry is a very dignified way for BFAR to address sustainability. But we forgot to protect the jobs of our people in the sardine industry for straight six months. Yes we need to protect the fish, how about the fishermen?

“5) GSIS plan to invest back its funds in the international equity market. Why invest in the US or other equity markets and feed the expansion of US multinational companies? Investing in our local equity market will provide capital to our local companies so they can expand and hire more workers. Yes ROI and risk are important factors in investing, but again taking it as a whole-- GSIS General Manager can play an important role in stimulating the economy also by investing in our local companies so they can expand and generate more jobs.

“6) People working at City Halls for Business Licenses and Permits/ Mayors/Governors. Can we ask ourselves after work if we had really helped your neighborhood factories and businessmen so they can expand and hire more workers? Or we just make it harder for the businessmen to put up new business? After all, these companies might be the future employer of our children too.

“7) Senators and Congressmen. Did we pass any bill to support any industry this year so companies or plain businessmen will be more profitable so they can expand and hire more workers?

“Soon NEDA would be providing us again the GDP numbers that will show our embarrassing performance for 2011. Are we doing anything for 2012 now like the way our local big companies had already done their Business Planning and had come up with Specific Objectives for 2012? Has NEDA and all Cabinet Secretaries done this so we can be assured of a respectable 2012 GDP?”

Indeed, we need to be more enthusiastic of this result than that of the Pacquiao-Mayweather fight if it happens next year.”

Quiet

Ruth Marbibi sent this one.

A husband is like split air con. No matter how loud he is outdoors, he is designed to remain quiet indoors.

Boo Chanco’s e-mail address is [email protected]. He is also on Twitter @boochanco