Work with private sector

“Why does the national government want to monopolize the purchase [of the vaccines]? Why not just let [local governments] and the private sector do their own purchases?” Senate President Pro Tempore Ralph Recto asked during a public hearing on the matter.

This is strange because even Duterte said on national television that he welcomes help from private companies and LGUs in obtaining those vaccines.

At present, only the national government is authorized to negotiate with pharmaceutical companies, including Pfizer of the United States, AstraZeneca and China’s Sinovac and Sinopharm, for COVID-19 vaccines. This has given rise to speculations that corruption is involved.

The senators want to allow the private sector to import for themselves the brand of vaccine they want, say, the one with the highest efficacy… not just the Chinese one.

The officials explained they want to be able to closely monitor those who will be vaccinated since none of the vaccines are cleared for commercial use… only for emergency use.

The national government cannot do it alone. Indeed, they do not have everything necessary to control the pandemic and get the economy back on track. The government must learn to work with the private sector to hasten recovery.

This was recognized by Finance Secretary Sonny Dominguez in his speech before the Management Association of the Philippines last week.

“We recognize and appreciate the business community for their resilience, cooperation, and support—especially in keeping our workers and the economy afloat during these challenging times.”

Indeed, the enormity of the challenge was acknowledged by Sec Sonny.

“To be completely honest, some of the jobs lost may never return. The pandemic, however, provided us with the opportunity to accelerate our shift to digitalization in order to meet the demands of the emerging new economy. This will create new jobs that require new skills.

“We recognize the need to pursue more policy reforms as we rebuild our domestic economy. The private sector plays a crucial role in this undertaking. The depth of the pandemic’s economic impact must be matched with bold initiatives on the part of our enterprises and the government.

“We need to reinvent ourselves in order to recover. Be assured that we will continue to consult and engage with you as we move to boldly reopen the economy as safely as we can.”

As for the vaccination issue, Sec Sonny estimated “a conservative cost of inoculation per individual is going to be around P1,300, P1,150 for the vaccine itself and around P200 for the syringes, the information campaign, the monitoring, getting rid of the waste, etc.

“At P1,300 per individual, you will be able to vaccinate around 57 million people out of the 70 million who are supposed to be vaccinated. Now, of this—that leaves you 30 million. We expect the 30 million to be covered by the LGUs, the private sector.”

So, there is clearly a role for cooperation on the issue and it is just a matter of better coordination and greater transparency among the parties concerned.

Sec. Sonny also cited other areas of potential cooperation:

“The Philippine Guarantee Corporation expanded its coverage to encourage mobilization of private sector funds for housing. The corporation’s facilities provide coverage against credit losses to home lending.

“… we continue to have a housing backlog of 1.2 million each year. In 2019, the outstanding guarantee of the corporation to 48 banks was P201 billion covering housing loans to 125,000 borrowers. These lending banks enjoyed fiscal incentives amounting to P3 billion.

“We urge banks to share the incentives granted to them by providing more loans to home buyers at lower rates. This should also help create jobs in the construction sector.”

But Dominguez also chided private businesses for always asking for incentives.

“Why is everybody looking for incentives? If it’s a good thing—you do it yourself. I was in a banana business before. I was in the banking business… we never said ‘hey I’m going to do this if you give me a tax break’… Let’s grow up! Too much dependence on government. Come on guys!”

Dominguez also pointed out that he is carefully watching government contingent liabilities in connection with PPP projects.

“We don’t have the final numbers of our liability on PPP, but I know they are pretty huge.”

Then he turned the table on the private sector for the failure of bids to rehabilitate NAIA. He said government may just have to do the rehab itself.

“There was a private offer to do it. We said these are the rules, we want to reduce our contingent liability. It took them two years to look at it, then they said because of COVID they don’t want it anymore.”

Finally, he explained his reason for lowering corporate income taxes to 20 percent from the current 30 percent:

“You can do two things to stimulate the economy. You can collect the money and we distribute it. And you know how inefficient it can be.

“Why don’t you just leave the money with the private sector? Maybe they know how to spend it better. Why don’t we trust them in this particular case?

“And we leave the money with the people and let them decide how they’re going to invest money because I think the rational Filipinos are going to invest it in good business opportunities when they arise.

“Instead of collecting the money and then turning it over again in the meantime, you know with all the bureaucracy and corruption and what do they call it—that friction cost involved. I think it’s worth it to drop our collection rate rather than increase it and then we distribute it.”

Government and private business can and should work together. The challenges we face call for such cooperative efforts.

Sec. Sonny clearly says he is all for it, but also warns that he is determined to guard the interest of the taxpayers against unreasonable demands from private players.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco