Pagcor can spur economic growth

A brilliant lawyer, Abraham Lincoln is said to have won all his cases. He allegedly was strikingly deficient in the technical rules of law, but sure knew how to win over a jury. He presented his cases in the simplest and most straightforward manner, spiced with wit and humor. This stemmed from his deep understanding of the justice system. A favorite tale is the morning he argued a principle of law from one side, then argued it again in a different case that afternoon before the same judge but from the opposite line. Pointing out the peculiar situation, the judge asked how Lincoln could switch sides so easily. To which Lincoln replied without batting an eyelash, “Your honor, I was sure of my position this morning, but I am surer of it this afternoon.”

The story comes to mind as a trade union opposes P-Noy’s intention to appoint lawyer Joel Cadiz as Secretary of Labor. The Trade Union Congress of the Philippines claims that Cadiz is a management lawyer. Its affiliate National Union of Bank Employees adds that having a management attorney as the labor sector’s sole representative in the cabinet would ignore the interests of workingmen.

The opposition to Cadiz becomes partisan twice over given the TUCP-NUBE’s political preferences. It reportedly supported another presidential, not P-Noy but the Arroyo administration’s Gilbert Teodoro. It also is pushing for its own man as labor chief.

The “management lawyer” tag is shallow too. Cadiz may have represented management in one case (against NUBE), but that doesn’t make him solely a counsel of big corporate interests. Lawyers have the duty to defend a party that taps them, whether for a fee or pro bono. As one-time president of the Integrated Bar of the Philippines, Cadiz consistently had upheld that right to defense. Besides, as president Jaime Miralles of the Association of Genuine Labor Organizations points out, a background as management attorney is not necessarily an obstacle to true labor secretaryship. He recounted that President Cory Aquino’s labor chief Augusto Sanchez was a management and human rights lawyer but ably promoted the interest of labor. So was Sanchez’s successor, senator-elect and P-Noy Liberal Party mate Franklin Drilon. Miralles’s group and the Workers for Aquino and Roxas have said they trust P-Noy’s judgment in selecting the labor secretary.

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I’ve been receiving lately a good number of policy proposals for the incoming P-Noy admin. Some are downright self-promoting, but most are sensible. At the risk of sounding presumptuous in offering unsolicited advice, I will present some of them in series — in broad strokes for P-Noy’s staff to study and perfect for his consideration. For starters, on PAGCOR (Philippine Amusement and Gaming Corp.):

The state firm reportedly grosses P32 billion and nets P17 billion a year — appropriate for use in economic development. But while it supports various projects of the government (under the Office of the President), it has never really promoted a strategic and sound economic policy. Its approach has consisted mostly of doles to local government units and private institutions, and the President’s pet charities. This leads to, and in fact has opened Pagcor to complaints of, corruption.

This can change. Pagcor can continue to support usual beneficiaries, but this time strategic, transparent and institutionalized. It can earmark, say, P5 billion of its annual net income as startup capital for economic development. From this, it could screen local government projects to finance, at modest interest rate. More important, the seed money must, by way of project selection criteria, turn over P50 billion (tenfold) worth of economic growth. In six years total direct economic spur could be P300 billion.

Let’s take an example. Congressman Emmanuel D. Pacquiao’s constituents in poor Sarangani very badly need a hospital, as reported. Assume the following: construction costs P20 million, the new Pagcor has approved the project study, and the provincial board has earmarked its internal revenue allotment (from the national government) to repay it over 20 years. Pagcor then lends Sarangani the P20 million at the concession rate of, say, three percent, by buying P20 million worth of Sarangani Bonds. In the Pagcor books its cash asset of P20 million is converted into an investment in the form of “risk-less” local government securities. They can even qualify under the Bangko Sentral guidelines for Agricultural Credit Financing.

Pagcor can then either resell the Sarangani Bonds outright, or borrow against it from selected government institutions (DBP, Land Bank, PDIC, BSP) and provident funds (SSS, GSIS). Conceivably the government can use the bonds as security for funding from multi-lateral, or back up grants from foreign donors. Pagcor thus re-converts its investment assets into cash for re-lending to another local government project. So the original P20 million generates P40 million worth of economic development. The same concept applies to the entire P5-billion fund.

Full documentation by Pagcor is a must, as part of P-Noy’s transparency policy. The P5-billion fund will produce high impact projects within his first 100 days in office.

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