The search begins

The search for a third major telecommunications player has began.

The Department of Information and Communications Technology (DICT) recently released the draft rules that will govern the selection of a new telco player to join the ranks of industry leaders Philippine Long Distance Telephone/Smart Communications and Globe Telecom.

According to DICT Acting Secretary Eliseo Rio, they hope to wrap up the third telco selection process within this year.

The draft rules, as contained in the terms of reference (TOR), will determine how telco radio frequencies will be awarded to the third player. Its contents, which were crafted with the help of experts from the UN International Telecommunications Union, will however have to undergo public consultations.

As reported, the TOR provides for the requirements in terms of the third player’s qualifications, the frequencies to be awarded, the scoring system, other obligations to be imposed, and penalties for failure to comply.

To participate, an interested company or group must have a congressional franchise and must not be a related party to existing dominant players.

To ensure that the new player has sufficient financial resources, the TOR requires the prospective third telco, which can be a single entity or a consortium, to have a paid-in capital of at least P10 billion.

As for experience, the draft rules require that the main technical qualification is for at least one member to have experience in provisioning, delivery and operations of a telco service for the last five years.

The proposed new rules also give equal weight to service capability and financial resources. The rules provide that 40 points will be given for a minimum population coverage of 30 percent, 20 points for minimum average broadband speed of five megabits per second (mbps), and 40 points for a minimum and annual capital and operational expenditure of P40 billion.  By the end of the five-year commitment period, however, the participating players must have 50 percent national population coverage.

Participants will earn points based on their annual bids on the selection criteria, and the one with the highest cumulative score will be declared the new major player by the selection committee.

Will these new rules be enough to attract suitable players? Only time will tell.

Wait and see

Many existing and prospective investors, both local and foreign, have adopted a wait-and-see attitude in so far as proceeding with their investment plans until the government has come up with its new policy in so far as investment incentives are concerned.

The Philippines currently has 14 investment promotion agencies and 123 laws that grant investment incentives.

As planned under the second package of the Comprehensive Tax Reform Program (CTRP), these 123 investment incentive laws will be amended or repealed and then consolidate into one omnibus incentive code in order to rationalize the country’s complicated incentive system.

Finance Secretary Carlos Dominguez said the Philippines gives out the most generous tax incentives because they are granted forever, while other countries provide incentives that are time and performance bound.

House Bill no. 7458 provides for graduated cuts in the corporate income tax rate from the current 30 percent to 20 percent, as well as the modernization of investment incentives by ensuring that only qualified industries are given fiscal perks.

Finance Undersecretary Karl Kendrick Chua said the incentives have failed to attract investments because of government’s failure to provide the necessary infrastructure.

In fact, there are some legislators who want the incentives totally removed and the amount to be generated be used to fund needed infrastructure.

Note that in some our neighboring countries, there is only one agency or a single law that gives out incentives.

Chua said it would be better if instead of focusing on incentives, government strikes a balance between providing for incentives and infrastructure.

As planned, there will be one single menu of incentives that will apply to all investment promotion agencies.

I agree that there is a need to simply our investment incentive scheme to provide for only one set of incentives to be given out by all investment promotion agencies. I also agree that incentives are not enough if government cannot provide for adequate infrastructure as well as other factors that investors consider in arriving at an investment decision. But government should also take a look at reducing the number of investment promotion agencies which could be a necessary consequence of repealing many of our investment laws.

Not so hidden agenda

TOWER AWARDS SIGNING: The Rotary Club of Manila has signed an agreement with its partners for the TOWER Awards recently at the New World Hotel Makati. Shown in photo (seated, from left) are AVP Charmaine Canillas of Petron Foundation, Labor Secretary Silvestre Bello, past president Grace Abella Zata of the People Management Association of the Philippines, and presiding officer of the day and director Robert Lim Joseph of RCM. Standing from left are TOWER Awards committee chairman and RCM PP Bienvenido Laguesma, RCM PDG Robert Pagdanganan, PE Jesus Pineda, and DGE Rudy Bediones. The Search for Outstanding Workers of the Republic Awards was founded in 1975 by the RCM as an annual search for outstanding blue collar and white collar workers/employees who constitute the backbone of the country’s manpower resource. The Rotary Centennial Year 2018-2019 is led by Pineda. Among this year’s project partners are the Petron Foundation, PMAP, and DOLE.

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