Trust deficit

After the ungentlemanly leadership brawl last year at the House of Representatives, plus all the personal gripes unabashedly cited for rejecting the franchise of ABS-CBN, you can understand why the latest Charter change initiative at the HOR has been greeted with public suspicion.

In fact since the Constitution was ratified in 1987, suspicion about hidden agendas and personal ulterior motives of notoriously self-indulgent lawmakers has been the common reaction to every Cha-cha attempt.

It hasn’t helped that each time a presidency nears its end, a Cha-cha effort pops up without fail. Considering the complexity of altering even a single line in the Constitution, such efforts smack of a fast-break attempt, a railroading of something that calls for a thorough discussion.

President Duterte has been the biggest endorser of Cha-cha since Fidel Ramos. Duterte’s campaign for the presidency included a promise to work for a shift to federalism, which calls for a complete rewriting of the Constitution. Upon assuming power, he quickly formed a consultative committee (Concom) to draft the federalism Charter.

Even at that early stage of a hugely popular administration, however, there was already a great deal of skepticism that Cha-cha would materialize.

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Concom members soldiered on, produced the draft and submitted it to Malacañang. We don’t know if anyone read it there. We also don’t know if the draft ever made it to the HOR.

There were warnings that the proposed amendment seeking to limit political dynasties – apparently the trade-off for the lifting of term limits – was guaranteed to kill the initiative in Congress.

Sure enough, the draft painstakingly drawn up by the Concom went straight to the HOR wastebasket. Not only that, the House under Gloria Macapagal Arroyo quickly produced its own draft, eliminating the provision against dynasties and dropping the vice president from the line of succession in a shift to federalism.

Duterte himself appears to have given up on federalism, following the creation of the Bangsamoro Autonomous Region in Muslim Mindanao.

But the haphazard Cha-cha in the 17th Congress distracted the HOR enough to slow down deliberations on the national budget for 2019. So the year opened with a reenacted budget – a trademark of the GMA presidency.

Today there are concerns that the latest Cha-cha will against distract Congress from other measures calling for urgent attention amid the pandemic, notably the economic stimulus packages.

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Over the weekend the House committee on constitutional amendments, which is in charge of the Charter change offensive, reminded reporters about business groups’ support for economic Cha-cha.

The statement of support, given by groups including the Joint Foreign Chambers of the Philippines, was in fact issued as far back as 2013, under different circumstances. Presenting this statement as if it was issued amid the COVID pandemic can only aggravate the HOR’s trust deficit.

In the latest Cha-cha, the Philippine Chamber of Commerce and Industry has expressed concern about the timing and mode of amendment, and is pushing instead for the passage of measures such as the GUIDE Act (Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery) and CREATE (Corporate Recovery and Tax Incentives for Enterprises).

Former socioeconomic planning secretary Ernesto Pernia, who was the first in the Duterte Cabinet to publicly say that a shift to federalism would be bad for the economy, this time thinks economic Cha-cha is doable.

Pernia told us on “The Chiefs” last Wednesday on Cignal TV’s OneNews that he went to the House Cha-cha hearing this week “innocently” as a resource person – meaning he was giving lawmakers the benefit of the doubt regarding their avowed unselfish commitment to economic reforms.

Done correctly, the impact of Cha-cha on the investment climate and economic recovery will be for the long term, Pernia points out.

In fact he is more for economic Cha-cha than CREATE, a measure that he notes provides pandemic relief to the supply side. This is useless, he says, when demand, which should be the focus of the stimulus program, remains tepid.

Corporate taxes that the government will be giving up under CREATE are badly needed at this time for pandemic response. A better measure, Pernia says, is ARISE – the Accelerated Recovery and Investments Stimulus for the Economy.

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Cha-cha is meant to make the country a more attractive investment destination, even beyond the pandemic. But Pernia does agree that many other things apart from Cha-cha can be done to improve the investment climate.

Vietnam, which he cited as the only country in the region that managed to register GDP growth last year while other economies including ours went into a tailspin, has these other factors that we don’t have. These include lower power costs and ease of doing business.

He didn’t mention it, but Vietnam also has a more efficient telecommunications infrastructure and better peace and order situation (no New People’s Army extortion and bombing of the facilities of uncooperative businesses, no Abu Sayyaf or Maute-type threats).

As for human rights, which investors from Western Europe must consider in their global business dealings, it must be easier for them to accept the absence of press freedom in Vietnam than the thousands of drug-related killings in the Philippines.

And like that other favorite Asian investment destination, China, the strong central government in Vietnam can guarantee continuity and predictability of policies plus the sanctity of contracts. Although communist, the government in Hanoi doesn’t scare water concessionaires with the cancellation of their contracts and state takeover of their firms.

When it comes to corruption, I don’t know the extent of this problem in Vietnam. But a top Filipino industrialist with investments in many countries once told us that corruption is common especially in developing states, and he factors this into his business dealings. In other countries, however, he generally gets what he pays for, he says, unlike in the Philippines, where he could end up paying different sets of crooks from one administration to the next and still not get what he wants.

So there are many other things that can be done, apart from Cha-cha, if the objective is to improve the investment climate and boost post-pandemic recovery in the Philippines.

Eliminating the restrictive economic provisions in the Constitution, especially on foreign ownership, will of course be a plus. All such Cha-cha initiatives in the past, however, suffered from a deficit of public trust. The current Congress has the same problem, and all the more so after the events last year.

Surely Congress can find better things to do in responding to the pandemic.