Let’s veer away from the negative news of Napolitics to the positive news of Aquinomics. Notwithstanding the congestion and confusion at NAIA nor Manila’s sweltering humidity, our first-time hosting of the World Economic Form for East Asia was an unqualified success. In the end, Filipino hospitality triumphed over fortuitous and force majeure inconveniences. But more than a successful staging of a conference, there is a bigger reason to celebrate. On May 8, 2014, international credit agency Standard and Poors raised its long-term sovereign credit rating on the Republic of the Philippines from an already investment grade “BBB- A-3“ to a still higher “BBB+ A-2.†As I recounted to our multi-tasking National Treasurer, Lea de Leon, I still remember the moment in 1998 when my Citibanker sadly informed me that the Republic US dollar 10-year bond I invested in had dropped to a marked-to-market price of 73 cents to the dollar, with an effective yield of around 14%. Nowadays, 10-year Philippine paper is priced at over 30% above par with a yield at a historic low of 3.70%. Good news for the country; bad news for the investor. But how does an investment grade rating impact the economy and the people? In essence, this means less debt service or a smaller portion of the budget will be used to pay for the national debt. The resulting savings can then be used to build much needed infrastructure or fund additional social serv
The rationale for the country’s further investment rate upgrade was provided by S&P in its research report:
“We raised the ratings because we now believe the ongoing reforms to address shortcomings in structural, administrative, institutional, and governance areas will endure beyond the current administration. In turn, we believe the resulting gains in government revenue generation, spending efficiency, and the improvements in public debt profile and investment environment will at least be preserved in the medium term under the next administration. This is based on our assessment that even though a change of administration after the presidential elections in 2016 represents some uncertainty for reforms, the risks have shifted toward maintaining the impetus and direction of the process, away from a potential reversal or abandonment of advances achieved to date.â€
Indeed, our economy should create a life and momentum of its own. It needs to be less dependent on personalities and more reliant on structures. The latter characteristic is one of the hallmarks of a strong, functioning democracy.
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Busin-ease: This positive development comes on the heels of the country’s 30 point jump in the 2014 Doing Business Report of the World Bank and the IFC. The Report monitors 10 indicators — starting a business, dealing with construction permits, getting electricity, registering property, paying taxes, trading across borders, getting credit, protecting investors, enforcing contracts, and resolving insolvency. In other words, it measures the ease with which private entities undertake business approval and legal processes with government agencies. From our 148th ranking in 2012, we climbed to 108th place, registering the biggest improvement among the 189 countries which participate in the survey. Moreover, Bill Luz, private sector co-chairman of the National Competitiveness Council, is confident that we will further improve our standing this year. The short-term goal is to get to the top 63, which is the top third of all the participants.
However, a “black eye†in our report card is on the subject of Enforcing Contracts. The latter measures the efficiency of a country’s judicial system in resolving a commercial dispute. Unlike our improving over-all grade, our rank for this indicator has slipped from 109 in 2012, to 111 in 2013, to 114 in 2014. Worse, we seem to be the laggard among ASEAN countries. Philippine courts on average need 842 days to decide a case while its counterparts in Vietnam and Laos only take 400 and 443 days, respectively, to dispose of a commercial matter. The topnotcher is Singapore which only needs 150 days to decide commercial cases. For countries that have shown considerable improvement in this area, the creation of specialized commercial courts as well as the introduction of electronic case management and e-filing systems delivered the best results. There are countries that now allow litigants to pay fees online and deliver service of process electronically. The backlog of Malaysian courts was reduced by 50% and the time to enforce contracts by almost 30% after electronic case management and e-filing systems were rolled out in the country between 2009 and 2011.
My law faculty colleague, former Philippine Stock Exchange president Francis Lim, has been writing about this topic in his column with “the other paper.†I look forward to reading his thoughts on how we can expedite the resolution of cases in our country. By way of initial suggestions, my four centavos is that we do away with or severely limit the use of Rule 65 in our Rules of Court which allows a litigant to immediately question any interlocutory order made “with grave abuse of discretion†by a judge. This special civil action has been a source for many delays. Our Supreme Court should also find ways to discourage those who file frivolous cases and abuse our judicial processes. Perhaps a bigger penalty can be imposed on the loser so that a plaintiff and the respondent will think twice before proceeding with filing or defending a case.
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Post-paid elation: Not to get credit where credit is not due but I was elated with the news that Senator Ralph Recto has filed a bill known as “the Prepaid Load Protection Act of 2014†which seeks to remove the expiration dates in pre-paid mobile cards and penalize certain actions in relation thereto. This is a pro-consumer topic that we have tackled in our previous columns.
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Greetings: Birth anniversary best wishes to Society of Divine Word treasurer and kasinsin, Fr. Gerry Donato, and CIIF Oil Mills Group director Francisco Mabaso Jr.
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“We did not come to fear the future.
We came here to shape it.†– Barack Obama
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Email: deanbautista@yahoo.com