Looking forward

At a lunch with a select group hosted by British Ambassador Asif Ahmad and British Chamber of Commerce general manager Chris Boughton, our British hosts communicated their concern regarding the business climate in the Philippines, noting that the country is surely poised for takeoff judging from the recent credit upgrades from international credit rating agencies.

Last year, the Philippines emerged as the second fastest growing economy in the region next only to China, and despite a bit of a slowdown in the first quarter, there is promising growth potential especially with the recent signing of a law that allows 100 percent ownership for foreign banks. According to a foreign analyst, the Philippines will most likely outperform other Southeast Asian countries for a variety of recent developments.

Singapore for instance has become too saturated and is now the most expensive city to live in according to the 2014 Worldwide Cost of Living Survey by the Economist Intelligence Unit. The coup in Thailand that saw a military government taking control is making investors put their plans on hold. The brewing unrest in Indonesia following a tightly contested presidential election that saw Joko Widodo winning over Prabowo Subianto by a margin of 6.3 percent is also making foreign businessmen wary and cautious. While Vietnam has been aggressive, it faces a number of challenges such as the lack of skilled labor.

Positive developments are being sidetracked and weighed down by negatives such as the government’s seeming preoccupation with the Disbursement Acceleration Program (DAP), with the Executive bitterly questioning the Supreme Court decision that struck down the DAP as unconstitutional. There is strong perception of a tit-for-tat with a report that BIR Commissioner Kim Henares is intently looking at the SALN of all the Supreme Court justices with the Palace also accusing the SC of being guilty of committing “cross border” transfer of funds to the DOJ amounting to P1.8 billion from “savings” for the construction of the Manila and Malabon Halls of Justice.

Our SC insider refuted the accusations, saying that the P1.8 billion is still with the SC and not a single centavo of savings was transferred to the DOJ. In fact, the SC is poised to bid out the engineering and architectural design for the Manila Hall of Justice, the insider disclosed, adding that the DOJ was not even invited during the groundbreaking ceremonies. 

Investors are complaining that the DAP issue is making government lose focus on basic issues that are hampering business expansions, foremost of which is the bureaucratic red tape that delays the implementation of projects, in particular the big ticket PPP infra projects that could impact economic growth in a major way. Take for example the P18 billion NLEX-SLEX connector road project that can cut down the traffic congestion in major thoroughfares like EDSA and C5. Unfortunately, this one hit a snag once again with the DOJ saying it should be subjected to a Swiss challenge because someone questioned why the project had become a joint venture with the PNCC when it was originally an unsolicited proposal. So what did Transportation Secretary Jun Abaya mean when he declared on TV that there is really no problem with the NLEX-SLEX connector project? At least one piece of good news is that the LRTA board has awarded the P64.9 billion LRT-1 Cavite Extension project to the Ayala-MPIC consortium.

Foreigners who have been doing business in the country for several years are also unhappy about the arbitrary changing of rules. Japanese Ambassador Toshinao Urabe and Japanese Chamber of Commerce president Tetsuo Tomino wrote BIR Commissioner Kim Henares about Memorandum Circular 54-2014 issued last June outlining new rules and procedures for filing VAT refunds or tax credits, where the BIR has 120 days to decide whether to grant or deny a pending application.

Japanese businessmen are objecting to the retroactive effect of the memo on pending refund applications, more so because the circular stipulates that if the BIR takes no action in 120 days, then the application is deemed as denied. To think, a BIR employee can just sit on a claim and there will be nothing an applicant can do about it? This is prejudicial to taxpayers because it deprives them of the right to the refund without due process, the letter stressed, urging the tax agency to “fairly deal with its taxpayers by respecting its previously issued policies.”

The chaotic situation at the Bureau of Customs is also another source of frustration. An importer who has been in business for three decades complained that a number of containers were stuck for four months because of the slow process of examinations delaying the release of shipment – costing him triple the cost of his shipment because of storage fees while the cargo languished. This businessman is so incensed that he is ready to sue the Bureau of Customs. 

I received an email from a schoolmate, Panfilo Castro, about the current congestion in Manila’s seaports and that it was not the fault of Customs Commissioner John Sevilla, pointing instead to the daytime truck ban as the culprit. But many importers insist the young Customs chief is clearly out of his league – instead, they claim, he needs “adult supervision.”

Like basketball, the Aquino administration has its last two minutes to leave a lasting legacy. Instead of “beating a dead horse” like the DAP, the government should find other ways in funding the big-ticket items in its list. Tomorrow is the second to the last SONA of the President. He should look forward instead of backward by asking Congress for a supplementary budget to sustain the economic growth.

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