Pinoys prefer to scrap ‘pork’ than get scraps

BRATISLAVA — Let me start this piece with a mea culpa for serious lapse in last Wednesday’s column that mentioned Praha as the capital city of Czechoslovakia. It should have been Czech Republic. Since 1993, the country formerly known as Czechoslovakia has been divided into two independent states.

One is called the Czech Republic with Praha as its capital city. And the other state has been known as Slovakia, with Bratislava the capital city. From Prague, we proceeded here by land travel to the city of Bratislava. Not until today had I’ve been here nor knew there is such a place called Bratislava.

This was unintended so please pardon this writer. I was obviously half asleep as I tried to beat the deadline with difference of time zone here with the Philippines. But that’s not an excuse. It was a no brainer. Incidentally, by the time this clarification comes out, we would be back already in Manila today via Vienna, Austria.

So my sincere apology to our readers for such grievous wrong reference as well as to the respective peoples of both the Czech Republic and Slovakia that have long been independent of each other through these years.

In a travel brochure I read about the city of Bratislava, it is aptly described as “one destination, three countries.” This is because Bratislava is situated at the border of three countries: Czech Republic, Hungary and Austria. Actually, it has two other border neighbors, namely, Poland and Ukraine. But historical accounts showed only two kingdoms of its five neighbors annexed Slovakia into their respective lands.

Making a quick review of the history of Bratislava, it became the capital city first of the Hungarian kingdom during the 15th century and the coronation town of Hungarian kings. In January, 1919, the town was taken over and occupied by the Czechoslovak legions and annexed to the Czechoslovak Republic.

Bratislava was liberated by the Soviet and Romanian armies after World War II. However, a communist coup d’ etat in 1948 took control of its government. In 1969, Bratislava became the capital city of the Slovak Socialist Republic. The so-called “velvet” revolution in 1989 restored Slovakia to democratic rule. 

Both the Czech Republic and Slovakia were among the former European communist countries that were inspired by our own peaceful EDSA people power revolution in February 1986 when the Marcos dictatorship was ousted and the Philippines regained its democracy.

But it was only in 1993 when the Czech Republic and the establishment of the Slovak Republic that finally Bratislava became the capital city of the independent Slovak Republic. The two are member states of the European Union (EU).

The reference to the Czech Republic came up in my previous account on the report made by Philippine Economic Zone Authority (PEZA) director-general Lilia de Lima. The PEZA chief was in Prague as the last stop of her six-nation investment mission in EU last week that took her also to Norway, Denmark, the United Kingdom, Poland and Hungary.

As presented in the business forum held in these countries, De Lima cited there are at present 337 European companies registered in PEZA economic zones. Of this total, the bulk or 306 of these companies come from 18 out of 28 EU member states, including the Czech Republic and Slovakia. The bulk of PEZA registered companies — 110 of them — are from the UK but zero or none from Hungary.

Two Czech companies, in particular, are PEZA registered companies and one company from Slovakia. The two Czech firms are, namely, Elementz Interactive Inc., an IT software developer; and Janty Inc., an online marketing. The PEZA report did not name the lone company from Slovakia.

While the Philippine government has been embarking on investment promotions abroad such as this concluded mission in EU by De Lima, there are pending bills now being tackled in the 16th Congress that seek to change certain trade and tax policies and regulations here. One of which include the long pending proposal to amend the fiscal incentives to foreign and local investors.

Recently a review team from the International Monetary Fund (IMF) went to Manila and sounded out the economic managers of President Benigno “Noy” Aquino III on the possible shortening of the 15-year tax holiday incentive. This is currently being enjoyed by companies that would register, invest and put up their operations in any PEZA industrial parks and economic zones in the Philippines. 

The last time I checked, the Philippines has already graduated from the IMF debt program that had kept our country tied down to IMF economic prescriptions. What gives the IMF this power of review again over Philippine fiscal incentives programs to prospective investors?

As recommended supposedly by the IMF team, the fiscal incentive of 15-year tax holidays being offered to prospective PEZA locators should be reduced to just 8 years such as those offered in Singapore. The IMF team obviously treats such fiscal incentive as revenue loss that the Philippine government must reduce or plug. 

Naturally, the Department of Finance (DOF)-Bureau of Internal Revenue (BIR) seem to be more than willing to accede to the IMF recommendation just to raise more state funds for the pork barrel-hungry government officials in both Congress and the executive branch.

Of course, such IMF prescription receives much resistance like the Department of Trade and Industry, the Board of Investments, the PEZA, Subic Bay Metropolitan Administration, Clark Development Corp., and other state agencies which have all these years been working hard to entice and create much needed fresh business ventures from both local and foreign sources, especially foreign direct investments into the Philippines.

We may have been upgraded to investment grade rating by Fitch and the Standard & Poor’s but that is not enough to entice foreign investors to come to the  Philippines without extra fiscal incentives and other investment come-ons. 

If our rich neighbors like Singapore offer as much as 25 years of tax holiday to attract big international conglomerates and multinational companies, how can Philippines compete and offer even such modest tax holiday package? Is the Aquino administration willing to settle just for scraps from the bigger pie of foreign investments that the Philippines can now aspire for since the country boasts of being given investment grade?

The Filipino nation deserves better than scraps. The prevailing mood in the Philippines would rather see the pork-barrel system scrapped!