The big problem with our government, past and present, is the credibility gap between official pronouncements and execution. They promise big but underwhelm on the implementation side. This is why people just tend to yawn and roll their eyes when our officials talk big. Like the P20-per-kilo rice, an aspiration only.
Unfortunately, our government is managed by praise releases. Administration after administration is driven by headlines. It seems the most important job of cabinet members is to brainstorm the next big idea that will project the administration to be moving ahead. They don’t worry about execution, knowing people will forget anyway.
Take the Maharlika Fund, for example. After almost two years, nothing! Not a peso invested. Yet they have already taken the funds of DBP (P25 billion) and LBP (P50 billion) that could have been more productively lent to local industry. We can be sure those funds, meant for investment, are now being dissipated to pay the huge salaries and perks of big shot bureaucrats.
Everything looks good on paper. Having spent a good part of my career in the praise release industry, I know how the system works. It has grown worse through the years. When I was starting out, my mentor in the industry, the late Tony de Joya, used to remind me that PR is not just press releases but performance reporting. He explains that nothing disappoints the public faster than well written praise releases that raise expectations but fail to deliver.
These thoughts came to mind as I read about BBM’s statement to a visiting trade mission that: “We’ve been trying very hard to restructure ourselves so just to make us more business-friendly, investment-friendly.” We can recall that BBM has justified his many foreign junkets…to attract investments. But nothing is working. DTI is reporting impressive sums in terms of polite promises to invest and that’s mostly all they are getting.
Secretary Frederick Go, BBM’s investments guy, admitted in a television interview that “Thailand, Indonesia, Malaysia and Vietnam and even to a certain extent, Singapore, have been grabbing the lion’s share of investments, and the Philippines has lagged behind in this respect…we have missed the boat in the last many years…”
That’s exactly what we have been saying. And the new CREATE MORE law will be seen as another praise release unless we fix the basic problems with our investment climate down to the LGU level.
We have been through this exercise before. We see Vietnam overtaking us in FDIs, we get Congress to pass laws that will give the impression we are now business friendly.
For instance, their new baby, CREATE MORE Act or Republic Act 12066. It is supposed to make our country’s tax incentives more globally competitive, investment-friendly, predictable and accountable. The CREATE MORE Act, among others, lowers the corporate income tax rate, increases deductible items, provides value-added tax exemptions, etc. But what happens once an investor actually takes the bait and decides to invest here?
The piranhas at the LGU level will have a holiday, feasting on the investor who needs their approval on everything from business permits to barangay clearances. Big investors from EU and the US are banned by their Foreign Corrupt Practices laws from satisfying the LGU piranhas. So, before really settling down, the investors minimize their losses and pull out. Or because our bad reputation precedes us, they just avoid us altogether.
The reasons why investors overlook us are well known. Our laws seem to look good but the horror is in the implementation: regulatory inconsistencies, cumbersome bureaucracy, corruption, a justice system that is slow and has a reputation of being for sale to the highest bidder. Despite a new bureaucracy whose only job is to deal with red tape, the scourge remains.
Poor infrastructure and the traffic gridlock in major cities which our government seems helpless to control scare potential investors because that adds to the cost of doing business. The new train systems will not be available for a few years and may not be able to absorb the fast growth of demand for the service.
CREATE MORE has addressed the concern about our high power costs by allowing double deduction of power expenses.
The slow broadband connection may be addressed if Congress passes the proposed Open Access bill (Konektadong Pinoy) that removes the exclusivity enjoyed by telcos in accessing satellites to provide broadband services.
As Sec. Deck Go explained, there is now this great move to diversify manufacturing and services from China to Southeast Asian countries, except us. Sec. Deck recognized that “there’s a small window of opportunity to get through this… probably a three- year window to 2027 to try to grab all these large-scale investments.”
Deck should talk to former PEZA head Lilia de Lima who was so loved by foreign investors because of how she supported them. Ms. de Lima shielded them from predatory LGU officials and helped them get through the labyrinth of red tape in our government agencies.
Deck will have to go down from his high perch at Malacanang, shed his expensive barong and get his hands dirty at the LGU level, helping the investors being screwed there. Otherwise, Deck will just be generating praise releases but producing nothing.
One other thing the investors will look at is availability of good engineers. I recall that Intel left the Philippines some years ago to move to Vietnam partly because Vietnam was training more engineers. We have more lawyers. This is something our educational system must address.
Indeed, we can protect AI-threatened jobs in our BPOs by training more technically inclined young people. Close the law schools because lawyers only create more cumbersome rules and red tape.
Talking about great intentions in a praise release is OK. But the ultimate test is in the execution. Sadly, we have been failures in execution. Our politicians are all talk.
Boo Chanco’s email address is [email protected]. Follow him on X @boochanco.
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