Scary deal

There is one issue that the Duterte administration should investigate immediately, and that is the contracts between the Department of Foreign Affairs (DFA) and the Asian Productivity Organization (APO) Production, Unit  Inc., a government-controlled corporation under the Presidential Communication Operations Office (PCOO), for the production of Philippine passport and operation of the DFA Passport Appointment System.

This contract is good until 2025-2026 but there is no point in waiting that long if that means that millions of Filipinos will have to continue to wait in vain for a chance to get an appointment slot.

Recently, Foreign Affairs Secretary Alan Peter Cayetano announced that the DFA will be opening 100,000 new passport appointment slots last Thursday. About 50,000 slots were opened at 12 p.m. while the rest was made available at 9 p.m.

As expected, the first 50,000 slots were immediately filled up. I checked and all the slots were booked up to September this year. By 8:30 p.m., I tried logging into the passport appointment website, but failed. For 30 minutes, I tried and tried but all it said was that the service was unavailable.

Two years ago, APO Production Unit said that the days of fixers are numbered because the DFA has allowed APO to handle the end-to-end passport processing. As a result, the public can expect ease in getting online appointments. APO at that time showed to media its APO Processing Plant in Batangas which it said features new facilities and equipment to be used in producing the newly designed passports.

APO signed a memorandum of agreement with the DFA on Oct. 5, 2015 that allows the firm to handle the end-to-end passport system.

By June 2016, APO began handling not only the production of the electronic passports but also the passport appointment system.

As early as 2015, the Commission on Audit in its report mentioned about a joint venture agreement between APO-PU and a private printer, United Graphic Expression Corp. (UGEC), to get into high security printing, in particular the production of Philippine passports. The printing of our passports used to be handled by the Bangko Sentral ng Pilipinas (BPS), which not only has the printing machines but also the expertise to handle high security printing given that it prints our notes (Philippine peso).

According to the COA report, the deal between APO-PU and UGEC was disadvantageous to government. It noted that the deal’s profit sharing was based on net profit after tax instead of on gross sales and that there was no risk assessment made prior to the approval of the joint venture to ensure that the government was reasonably protected.

News reports say that the joint venture is 90-10 in favor of UGEC which provides the financing, equipment, expertise and operation of the high security printing plant while APO-PU contributes its land/leasehold rights in Batangas. In short, UGEC does all the work while APO-PU just markets the services to other government agencies.

Why the Aquino administration handed the passport job to APO-PU despite its lack of qualifications and credentials is highly questionable? If APO-PU had the capacity to do the work, then why did it have to engage the services of a private subcontractor?

Also according to news reports, UGEC’s qualifications are also questionable given that it had no expertise in high-security printing.

And if UGEC really had the financial resources to back up this venture, then why did APO-PU had to borrow hundreds of millions of pesos from the Development Bank of the Philippines to help finance this deal?

Inspite of all these, why had the DFA not reviewed and better yet terminated this contract with APO-PU?

The APO-PU Unit was created way back in 2011 by virtue of Republic Act 10149 signed by former President Noynoy Aquino.

Former DFA chief Perfecto Yasay has said in a House committee hearing that the joint venture between APO-PU and UGEC was disadvantageous to government. He added that APO-UGEC did not have the technical capability to print sensitive materials like passports but he had no choice but to continue with the
emergency measure” agreement since doing otherwise may disrupt the processing of passport applications.

Yasay, who initiated the investigation into this deal, stressed that he had recommended to Duterte the termination of the agreement back then but the JVA remains in effect until now.

According to the former DFA chief in a letter to Malacañang, the production of these passports was removed from BSP for no obvious compelling reason and awarded to a struggling and ill-equipped government printing outfit that had no capability or expertise to print sensitive and high quality secured documents such as paper currency, government securities, and passports.

He accused Malacañang and some quarters in Congress of pressuring the BSP and DFA back then to hand over the passport printing contract to APO-PU which was worth P8 billion over a 10-year period.

DFA’s passport contract with the BSP was supposed to expire in 2018 but was cut short in 2015.

Meanwhile, according to Cayetano, the major cause of delay in passport processing was the wide gap between the demand for passports and DFA’s capacity to receive and process applications. On other hand, sources from APO-PU say that they have problem with their machines. Cayetano has been questioning the fact that APO-PU has been delayed in terms of bringing in new machines.

Cayetano added that when he assumed office, the Office of the Executive Secretary already took over the investigation into the agreement. Up to now, there is no word from the OEC.

In last Thursday’s briefing, he said that this problem is something that the DFA inherited.

If there is another reason why Malacañang should review this deal between DFA and APO-PU, then it is the fact that our passports are reportedly overpriced. According to highly informed sources, the cost of producing the passport is only P700 so why are Filipinos being made to pay more (P950 or even as high as P1200 if express processing)?

Then there is this matter of the e-payment system which was just launched. Why should Filipinos be charged an additional P50 if they avail of e-payment despite the fact that from passport printing alone, APO-PU and UGEC stand to earn as much as P27 billion over the 10-year period of the contract.

So should the BSP once again take over the work of printing our passports? BSP sources say that the agency would not hear of it. After all, when APO-PU took over the job, BSP was doing the work well despite Malacañang’s pronouncement back then that the transfer was aimed at relieving BSP of some of its work. So why should BSP take over now when the job has become problematic?

Many are against the proposed national ID system because of fears that the information can be abused. In the case of our passports, our government has allowed a private company unlimited access to all these information. Isn’t this scarier?

For comments, e-mail at [email protected]