When a speech backfires

I call it providential when Malacañang speech writers actually writes something related to a topic I’m working on and even provides the perfect opening to show that they the writers or “Malacanang” for that matter are way off about what they say or claim.

Last week, when President Noynoy Aquino spoke before the officers and employees of Hewlett-Packard in Taguig City, the President was quoted as saying:

“We want companies like HP, who always seek to innovate, to stay here for the long haul, and we are doing what we can to do just that – to foster a level playing field, and to offer viable and mutually beneficial business propositions”.

The President was also quoted as saying “the government will continue to create an environment to encourage investors to stay in the country for the long haul”.

I have no doubt about the president’s sincerity even if he was probably reading a prepared speech. Unfortunately, as far as I am concerned, the words “Long haul” and “level playing field” were a bad choice of words at a time when the last remaining “Long haul” European airline, KLM, announced that they will no longer be flying DIRECT from Amsterdam to Manila.

This is largely due to the government’s refusal to “rationalize” how it imposed the “Common Carrier” tax and the Gross Philippine Billing tax as well as VAT.

At the same time that the President spoke about “level playing field”, the Board of Airline Representatives or BAR were up in arms about the continued demand and collection of CIQ overtime fees or charges made by Customs-Immigration-Quarantine officers for overtime work, something that is not done or allowed in any other airport or country.

To make matters worse, there is now a looming challenge for the Customs and Immigration Commissioners as well as the Department of Justice and the Office of the Ombudsman to investigate allegations and suspicions that CIQ officials and personnel have collected 4 times the “legal” fees because the same work hours were charged to individual companies repeatedly instead of subdividing the fees by the number of airlines serviced per hour.

Because very few people have an understanding of the business, the general attitude is that the business will sort itself out. So our lawmakers have not jumped in and neither has the media or the public. Many government officials have even put up a “Take it or leave it” attitude. That is exactly what is beginning to happen.

During the time of Ferdinand Marcos it was a common sight to see Swiss Air, Air France, Lufthansa, British Air, Alitalia and KLM airplanes flying into the Philippines. In fact it was a children’s game to guess what airlines a plane belonged to based on its colors and design. Unfortunately, Philippine businessmen and politicians discovered the game of legislated protectionism and dual tax system where foreign carriers ended up paying 30% more than local airlines.

It did not take long before the “Long haul” carriers began to thin out because the European airlines that flew directly to and out of Manila ended up paying more on taxes because ticket prices are based on final destination.

Airline companies that have a regional hub such as Singapore Airlines, Cathay and Thai etc. simply issue a ticket to the nearest destination in the region so they end up paying less in taxes. In effect because the Government, particularly during the Arroyo administration, refused to rationalize the taxes, it has discourage “Long haul” carriers from being efficient and eco-friendly.

The bad news is that once again, WE the Filipinos lose!

The Philippine government will now lose millions for being bullheaded about rationalizing the taxes on “Long haul” carriers. My sources believe that the decision of KLM to stop their direct flights effectively reduces local collection because passengers can now be ticketed to Taiwan and from there be issued a new ticket to Amsterdam. A more drastic move would be for KLM to reduce passenger load out of Manila to as low as 20 to 50 percent and fill up all seats from Taiwan.

Many Filipino Seamen begin their tour of duty out of Rotterdam in the Netherlands.

OFWs begin their land journey through Europe via Amsterdam, so it is no surprise that they all patronize the KLM direct flight to Amsterdam because it takes only 13 hours instead of the usual 17 to even 20 hours depending on the route or airline you fly. Without the direct flight our Seamen and OFWs travels have once again become harder and perhaps more expensive.

In terms of tourism, the biggest loser will be none other than Sofitel Hotel which will lose an estimated 11,000 room bookings a year, the merchants at the Greenhills tiangge, and a couple of pubs, bars and clubs.

Since my wife is Dutch, we have known for sometime that many crew members of KLM actually “fight” for assignment to be on board the Amsterdam – Manila flight because they enjoy the 3 to 4 day lay-over at the Sofitel. The flight attendants also enjoy going to Greenhills to buy pearls, spas and nearby resorts.

Because Manila is a final destination, the crew that served during the flight will stay in Manila, while the rested crew comes aboard. From what I heard each shifts totals 34 people per flight and the annual total of rooms booked by KLM is at 11,000 rooms. Soon there will no longer be any crews in Manila because all of them will be resting and spending in Taiwan.

Once again we see the same scenario where bureaucracy has forced business to reduce business with government! When will they ever learn that sometimes, less can become more!

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