I love watching movies. Preferably, American films. Yes, I’m a pure-blood-pinoy. But, Hey… I’m just being honest here. Two weeks ago, I’d watched the movie “The Day after tomorrow”. It’s fictitious but you couldn’t help but think of the possibilities of what mother nature’s revenge could bring about. To summarize it, the sudden shift of weather has brought about hazardous experiences among the affected areas in America. Those who were caught outdoors by the snow storm had frozen to death instantaneously. It was freezing cold, their whole body to the bone were frozen. Tsk..tsk…tsk… a horrible fate.

Now, let’s talk about the Philippines. It’s cloudy and rainy nowadays, but it’s not that cold. What’s extremely cold are the hearts of those Filipinos who would do everything in their power for their selfish intentions. Gone were the days of the true meaning of a peaceful revolution. Since Edsa People Power 1, that was the only truthful plea for transformation that has touched the lives of the Filipinos and other nations. Edsa 2 was effective but it’s not as pure as the latter. There were claims of Edsa 3 and the foreseen Edsa 4. Expression of grievances during the Oakwood Mutiny, rallies, protests et.al. The principles of the society with regards to democracy has shifted to an abhorrent misconception which has resulted to a disgraceful image of our nation. In the eyes of our neighboring countries, we have become irritatingly rebellious. We have become too defensive that we have been blinded to think of the country’s fate. Our judgments became so gloomy and malevolence has taken over us.

The citizens are anticipating the results of the canvassing of votes from the Congress. What is threatening is the Opposition’s preference for a mass walk-out if their demands are not granted. Up to this day, they are still insisting on the opening of the statement of votes and election returns over the objections of the majority in Congress. The denial of their requests would bring about a scenario similar to the non opening of the sealed “second envelope” of the Jose Velarde account during the January 2001 impeachment trial of then President Joseph Estrada (Manila Standard, page A1 – A2, June 7, 2004). As you may recall, the failure of that envelope prompted members of the prosecution panel to walk out on the night of January 16, 2001, which later progressed into a full-blown Edsa 2. Predictably, they might be thinking of a similar procedure.

I would not be surprised if this is just another vengeful tactic against the administration. Is there no end to this vindictive ploy among the wounded pride of men? Politics has changed our lives. Beyond doubt, our custom has altered to a very repulsive one. In my opinion, their hearts has frozen fast that caused the death of their very soul.

..basta ang alam ko, P90 na ang galunggong , pork is now 150/kg., rice ranges from 20 - 40/kilo , gasoline is now 25/liter, apartments with rental of below 5,000 and covered by the prohibition of rent increases looks like a joke to be lived in, and the pesos to the dollar is now 56 to 1. to top it all, marami nang kidnap, holp-up, hulidap, at kotong.

mix it up with politics and we are certainly a banana republic.

ok. gloria and her allies can have the phililppines on one condition: put in a good word for the visa application in the united states, canada or europe of people who want to escape her and her administration and the life we have in this country.

deal?

The solution: gag the filibuster.

Miriam Defensor Santiago says filibustering might be unconstitutional. The Constitution provides that the President's term of office starts June 30 and under the principle of necessary implication, Congress has a duty to finish the canvass before June 30.

The delaying tactics of the opposition could be stopped through the cloture or closure rule, Miriam says, which is intended to close the debate and gag the filibuster in order to avoid purposeful delay. The rules of canvass do not provide for a cloture rule, but Senate rules, which has a cloture provision, is considered "suppletory" and can be applied.

what? philippines has a tomorrow?
i didnt think so...
anyone who does is delusional.

How so?

This country has no future whasover if the current kind of politics will reign in this country.

Joker, Drilon and Pangilinan should shut up instead. They're talking about constitutional mandates and yet they are urging the opposition to walk out. This time, since sila ang di nag walk-out , their evil schemes will now fall into place. Siempre, they will continue the canvass and proclaim Her Highness, Madama Gloria.

If we're going to be strict about following the constitution, the ones who walked out in January, 2001 should all be punished instead. They are mocking the Constitution, which they themselves made, and got away with it. Ano, for convenience sake na lang ang Saligang Batas??

I don't know where DVD, DVD got his Law, but his ruling stinks. Maybe he is in cahoots with Ed Angara na taga U.P. Si Digs D. minamata nila, eh taga Ateneo pa mandin yan, LLB78.

For once, they should open the SOV and CER to validate the COC. Parang nagulat sila sa insistence ng opposition to also open those 2 documents kasi mahahalata ang pandaraya nila. I believe they only made magic sa COC kasi less than 200 lang ang mga yan and its the one that will count anyway, kasi summary yan. The SOV and CER are numerous and according to their rules before, there is no need to open it. Kaya kampante sila na dayain na lang ang COC. Eh, iba ang hinihingi ng opposition.

Drilon and Pangilinan and Gonzales will railroad the proclamation. Pangilinan broke the gavel, bad omen. Gonzales will be the next Justice Secretary for a job well done. Drilon will remain in perpetuity as senate President. Pangilinan will be successful maski wala si Sharon.

Makarma sana kayong lahat!

The Presidential Electoral Tribunal is the proper venue for the opposition to prove any cheating allegations.

lol
this is just a realization that the Filipino people would see when june 30 arises.
nuf said. abangan na lang ang susunod na kabanata in "Onli in the Pilipines"

delaying tactics of the opposition... sa congress pa talaga.. they said they would follow the constitution.. cla pa nga ang nagvviolate eh

delaying tactics?? as if the adminsitration (ex-oppostiton ) are following the rules whether in congress or the constitution or the supreme court.

this administration follows whatever is convenient to them. to hell with the law. were they punished and put on trial for abandoning the impeachment proceedings - which the constitution mandated them to see through? were they punished when the vote to impeach erap was made in congress -- ( ask villar the fastest mouth on earth at that moment ) ? did they have a rally permit when they marched to malacanang in jan, 2001? did they follow the constitution on the question of succession ?? they did not. and they expect people to observe the constitution and laws which they violated??

as senator avelino would say: 'para que estamos en poder???""

makarma din kayo.

i wish people would value their educations a lot more. how can one say that a country is hopeless? reading about countries during desperate times, i never came across the word 'hopeless' from any writer of average intelligence. countries like the US during the degression, the weimar republic, post-world war 2 japan, the soviet union and east germany all sighed despair and near-lack of hope. but people never doubted that change could come.

I agree. Even in mythology, when Pandora opened her box and let all the evil out in the world, one thing she kept in the box was hope.
I do not believe the country is hopeless. We are, however in crisis. We need a drastic change in attitude in both ourselves and in leadership.

Anti-investments Government Officials

Crab mentality at its finest and "blatantest". If he can't get the naphtha plant for his own province, nobody else can.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Bataan governor threatens to sue over JG Summit project
By FELIPE F. SALVOSA II, Reporter

The governor of Bataan is bent on haling the Board of Investments (BoI) and JG Summit Petrochemical Corp. to court over the Gokongwei-led firms' planned naphtha cracker in Batangas, citing a 1990 Supreme Court ruling that such a facility must be built at the government's petrochemical complex in Bataan.

Bataan Governor Enrique T. Garcia told reporters that BoI officials could have committed a "grave abuse of discretion" in their recent approval of investment incentives for the multimillion dollar project, in disregard of the Supreme Court decision.

Mr. Garcia, though, said he would exhaust all administrative remedies before going to court to try to "thresh out the problem," initially by sending a letter to protest the BoI approval.

"We'll see each other in court" if the BoI does not withdraw the approval of the P26.2-billion project, he said. "Hopefully, this will not be a repetition of the first controversy that lasted for three years," he added.

The 1990 Supreme Court ruling capped Mr. Garcia's efforts as a neophyte Bataan congressman to block a Taiwanese proponent from building a petrochemical plant in Batangas, with the tribunal declaring that for industries "essential to the national interest," investors did not have the right of final choice of the plant site.

Bataan Petrochemical Corp. originally planned to put up a naphtha cracker in Limay, Bataan under a joint venture with state-run Philippine National Oil Co. (PNOC), which operated a 576-hectare petrochemical industrial zone in Bataan created under Presidential Decree No. 1803 issued in 1981.

The company later changed its mind and sought to transfer the site to Batangas, so it could use the liquefied petroleum gas depot of Pilipinas Shell Corp., which had joined the project. Its name was also changed to Luzon Petrochemical from Bataan Petrochemical.

While heavily criticized by the business sector for driving out the Taiwanese investors, Mr. Garcia pointed out that he worked for the scrapping of import duties on naphtha at the House of Representatives, "only to lose the project to Batangas."

For the JG Summit Petrochemical project, Mr. Garcia initially sought to talk the Gokongweis out of their plan to put the naphtha cracker in Batangas, sending an invitation for a meeting through PNOC. So, far, the Gokongweis have not responded, he said.

While JG Summit Petrochemical operates polypropylene and polyethylene plants in Brgy. Simlong, Batangas City, Mr. Garcia argued that Bataan was already host to three midstream plants that would also make a naphtha cracker plant viable.

An upstream activity, a naphtha cracker supplies feedstock or raw materials to manufacturers of petrochemical resins. Naphtha is a byproduct of the process of oil refining.

JG Summit Petrochemical's project will cost P26.247 billion or about $470 million and will be finished by December 2008, according to BoI documents. It will have an annual production capacity of 318,000 metric tons for ethylene and 189,000 metric tons for propylene. Other products include pyrolisis gasoline (218,000 metric tons), fuel gas (150,000 metric tons) which will be for the plant's own use, and fuel oil (28,000 metric tons), of which 42% will be available for sale.

Currently, the company's two polymer plants are entirely dependent on imported monomers and are operating at only 42% of total capacity. With the naphtha cracker facility, the capacity of the polyethylene plant will increase to 350,000 metric tons per year from 180,000, and the polypropylene plant's capacity of 185,000 metric tons per year will be fully utilized.

In declaring the Batangas project null and void, the 1990 court ruling cited Section 1, Article XII of the Constitution, which provides that "The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices."

The Supreme Court then argued that "a petrochemical industry is not an ordinary investment opportunity" and that "it should not be treated like a garment or embroidery firm, a shoe-making venture, or even an assembler of cars or manufacturer of computer chips."

"The non-alienation of natural resources, the State's full control over the development and utilization of our scarce resources, agreements with foreigners being based on real contributions to the economic growth and general welfare of the country and the regulation of foreign investments in accordance with national goals and priorities are too explicit not to be noticed or understood," the ruling read.

/\/\

More about the above story.

Well at least some people are taking notice of one of the root causes of the Philippines' anemic job market - one that is characterized by educated professionals who are underpaid and overstretched by high prices.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Do we really want investments?
DEMAND AND SUPPLY By Boo Chanco
The Philippine Star 04/08/2005

http://www.philstar.com/philstar/NEWS200504080714.htm

"I decided to write you," a reader e-mailed me, "because I was dismayed with recent stories in the papers about Gov. Tet Garcia threatening to sue JG Summit for not wanting to put up a petrochemical plant in his home province of Bataan." So, what else is new?

As if Tet’s threat was not damaging enough, my reader, who is a Pinoy investment banker, noted that other officials are just as out of synch with the national effort to attract investments. "I was equally upset," my reader wrote, "with the announcement by a Public Estates Authority official that Japanese investors may not locate their planned landmark $100-million hospital in the reclamation area because the place was ‘off limits to foreigners’ (what an ugly term to use)."

As an investment banker, my reader declared he is "sure that these stories have once again caught the attention of possible foreign investors doing their due diligence on the Philippines." It is reasonable to ask whether we really want investments, foreign or local. Or, maybe we really just instinctively shoot ourselves in the foot because we have this tragic suicidal tendency as a people.

Our reader complained that it is bad enough we have ill-advised barriers enshrined in our Constitution that prevent foreign companies from investing in a wider selection of domestic-market industries. It is ironic that many so-called nationalists forget that foreign investments not only create jobs but also provide strong enough competition to entrenched local vested interest groups to prevent them from continuing to exploit our people with low wages and high prices.

Now, we have to suffer people like Governor Garcia and that PEA official who have both reinforced foreign investors’ judgment that the Philippines is not an attractive investment location compared to Malaysia and Thailand where foreign investors are treated as fairly as their local capitalists. Even China, a communist country often accused of being xenophobic, welcome foreign investors better than we do. As a result, China has attracted the lion’s share of such investments in recent years that is responsible for its phenomenal growth.

China (including Hong Kong), has reportedly received about $67 billion in direct foreign investments in 2002 - more than double that of the US ($30 billion). That’s more money than all of Latin America, for example, received in 2002 ($56 billion), and more than the combined total of Eastern Europe (including Russia), and the Pacific, (including a surging Australia) -$29 billion plus $24 billion respectively.

The worse part about Tet Garcia, is that he is intelligent enough to know that he is most possibly wrong about the legal basis of his demand that JG Summit must build its petrochemical naptha hydro cracking plant in Bataan rather than Batangas.

[EDITED]

In the first place, JG Summit never thought of Bataan as a possible site because it already has downstream petrochemical plants producing polyethylene and polypropylene in Batangas. It proposed to build the naptha cracker close to their two downstream plants as a form of backward integration, with the cracker producing the raw materials for their downstream facilities.

They need the naptha cracker because they want better control on availability and pricing of this basic input material, which obviously determines the pricing and availability of their downstream products. Requiring them to locate the naptha cracker in Bataan would create logistical problems and increase operating costs that would kill the project and probably even the current downstream operations.

I am sure Tet Garcia knows the Supreme Court did not rule that henceforth any naptha cracker plant can only be situated in Bataan. Hopefully, the antics of Tet won’t kill another important basic industry this country needs to be competitive. But our trade and industry officials and even Malacañang must realize Tet is not so much the problem of the Gokongweis but of the Board of Investments which gave JG Summit the incentives.

This administration must defend its position vigorously or lose more credibility in the eyes of potential investors. As for that PEA official, Ate Glo must set him straight. They need people like that like they need holes in their heads.

nakakalungkot naman. haaaay....

Why is the Philippines not attractive to foreign invstors?


Here are some sections taken from a report published by STAT-USA, a US-based research firm whose works are read by international investors when they evaluate specific countries for their suitability as investment destinations. It indicates very clearly the institutional barriers that foreign companies face when trying to invest in the Philippines.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Philippines Country Commercial Guide FY 2004: Invest Climate

Investment Disputes

[EDITED]

A recent Supreme Court decision to nullify the Build-Operate-Transfer (BOT) contract for the construction and operation of a new terminal at the Manila international airport is a troubling example of the vagueness of the Philippine legal system. The Supreme Court decided that the winner of the 1996 contract was not a qualified bidder, and thus should not have been awarded the contract. The Court thus nullified the contract after it had been performed. The government lauded the ruling, citing it as a victory for good governance, the rule of law, and public interest. Following the decision, the government announced that it would take over and operate the as-yet-unopened facility, but that it would eventually revert to the private sector. The original projected cost of the project was valued at $400 million, but actual costs have already swelled to almost $650 million for the unfinished terminal. The company that initially won the contract--a joint German-Philippine enterprise-- is currently appealing the decision; however, the Supreme Court is expected to uphold its decision. The two parties are also engaged in efforts to resolve the dispute through international arbitration. The court intervention raises question about respect for arbitration as an alternate dispute mechanism.


Legal System

As in the United States, the Philippine judiciary is constitutionally independent from the executive and legislative branches. Unlike in the U.S. however, the Court of Appeals and the Philippine Supreme Court are not particularly selective in the cases they hear and tend to review most cases that are elevated to them. Many cases are, therefore, eventually elevated to the Supreme Court. This factor, along with rules of court that offer defense attorneys numerous delaying tactics and other administrative procedures that introduce delay, means that cases proceed extremely slowly through the justice system. Both foreign and domestic investors have expressed concern about the propensity of courts to issue temporary restraining orders (TROs) and to stray beyond matters of legal interpretation into policymaking functions.

Some observers charge that judges rarely have any background in or thorough understanding of economics, business or a competitive economic system, and that some decisions have strayed from the interpretation of law to policymaking. Also troubling are charges that judges are bribed to issue decisions favorable to a particular interest.

[EDITED]

Competition Law

The 1987 Constitution provides the government with the authority to regulate or prohibit monopolies, and it also bans combinations in restraint of trade and unfair competition. However, there is no comprehensive competition law to implement this constitutional provision. Instead, there are a number of laws dealing with competition, including the Revised Penal Code (R.A. 3815, 1930), Act to Prohibit Monopolies and Combinations in Restraint of Trade (R.A. 3247, 1961), Civil Code (R.A. 386, 1949), Corporation Code (1980) Price Act (R.A. 7581, 1991) and Consumer Act (R.A. 7394, 1932). These laws are rarely enforced, due to a lack of interest and/or competence on the part of enforcement agencies to challenge well-entrenched economic and political interests. The end result is high barriers to entry across many sectors for both domestic and foreign investors.

one reason why right now investors do not invest in the Philippines as much as we would hope is the pending VAT bill. these investors have been waiting for this bill to be passed as one of the guarantees that the Philippines is on its way to actively addressing the issue on our budget deficit.




On Oct. 16, 1996, the Bid Committee evaluated AEDC (another bidder) and PIATCO's respective project proposal. Both proponents offered to build the new airport for at least USD 350 million at no cost to the government, with the same percentage share of revenues going to government as income. However, AEDC offered the government a total of Php135M as guaranteed payment for 27 years, while PIATCO offered to pay a total of Php17.75B for the same period. Thus, the contract was awarded to Piatco. BUT the signed 1997 Concession Agreement between the government and PIATCO deviated from the draft concession contract appended to the Bid Documents and gave PIATCO unjustifiable benefits.

Wouldn't a signed contract be perceived to be more binding than a draft? After all, in business, it's not uncommon for drafts of transaction documents like prospectuses to deviate (sometimes substatially) from their final versions.

You are right. The VAT bill is a major concern for investors, specifically hot money investors who buy liquid assets like stocks, bonds and foreign currency.

But direct-equity investors tend to prioritize customer market conditions more. For as long as they see a market, they will be inclined to invest. The problem is when, despite the fact that there is a market, legalities would threaten to unhinge their investments. That's just too much risk to accept. A recent survey a few months ago indicated that the #1 concern among direct investors was government policies and legal issues, more than even peace and order, corruption, etc.

a contract violative of the Constitution is NOT binding to the government in any case. PIATCO either deliberately attempted to deceive the government or was perfectly ignorant of our laws which makes it unfit to do business in the country.

Actually in the mindset of an investor / businessperson, a signed contract is binding regardless of almost any circumstances that preceded the awarding of the contract. When the government signed that contract with PIATCO, it agreed to bind itself to the contract for the duration of the contract. To unilaterally change the terms in the middle of the game would send a signal that the Philippines is not a reliable business partner. And in the case of direct investments where the sunk costs are huge, unreliability is too much of a risk to take. Yes, we can choose to invoke the constitution and rescind signed contracts. But given the situation that the country is in right now, pulling out an investment like this would hurt Filipinos more than it would the foreign investors who could choose to park their money somewhere else.

Reading between the lines of the STAT-USA report, you could infer that this is how the international investment community viewed the PIATCO case. And the fact that is was published in a report that advises potential foreign investors, this would definitely factor into their evaluation of the Philippines as an investment destination.

Trying to get the best terms for themselves is just another day in the office for any negotiating party. The terms of the deal ought to have been pretty clear to all parties, including the gov't team, right before they signed it. One would think that the Philippine gov't officials who signed the deal were working to get the best terms for the country. If these officials had something else in mind, or if they were half asleep before they signed the agreement, then the burden should not be placed on the other signatories of the deal. If the Philippines wants to become a serious contender in the global business environment, it must be ready to play by this principle and honor the final outcome (which it signs off on anyway for it to become valid) regardless of whether the results are not entirely favorable to itself.

As to whether or not PIATCO is unfit to do business in the country, some facts would suggest that either the Philippines is the one unfit for most foreign investors, or that it is having trouble looking for investors who are fit to do business in the country. A sampe of foreign direct investments in various developing countries in 2004 include:

Poland - US$7.8 billion, Slovakia - US$11 billion, Malaysia - more than US$5 billion, Kazakhstan - US$8.4 billion, Philippines - less than US$1.5 billion

If we go into per-capita figures, the numbers look more pathetic for us (i.e. Malaysia w/ 25M people attracts more than US$5B while the Philippines w/ 80M people attracts less than US$1.5B).

Boo Chanco came out with this commentary today about the risks investors have to contend with when sinking their money into the country. Like what many in the business community have already observed and voiced out, the biggest risk is the legal / political risk. Another way to look at it is that our very institutions are shooting Filipinos in the heads with bad policies and decisions that deny jobs and higher incomes to thousands of educated Filipinos, not to mention making ordinary Filipinos vulnerable to higher prices of goods and services because of inefficiencies and anemic competition in the market.

And while the column below does not say it outright, it insinuates on the folly of putting the burden of additional legal due diligence on investors, whether they may be foreign or local. They can simply choose to put their money in countries where institutions won’t screw up their business deals.

------------------------------------------------------------------------

No done deals without Supreme Court OK
DEMAND AND SUPPLY By Boo Chanco
The Philippine Star 05/18/2005

Once again, the Supreme Court decision denying the tax-free status for the investors in Camp John Hay, one that was promised by the executive branch, proved that investing in this country is like playing the business equivalent of Russian roulette. Nothing here is ever a done deal unless the Supreme Court says it is. Even then, the court can also change its collective mind.

I am no fan of the Sobrepeñas, the biggest investors at Camp John Hay, but this time, I think they were screwed by government. The Supreme Court is probably right in ruling that only Congress can grant tax exemptions in very specific terms. As it turns out, the executive department erred in assuming they had the powers under current laws to promise the privilege to investors at Camp John Hay. Because the Supreme Court is the final arbiter in matters of interpreting laws, we have to assume they are right even if we feel an injustice had been done in the process.

If this was the first time this happened, we can probably shrug our shoulders and say that’s how the cookie crumbles. But this happens with such regularity that the executive branch has lost all credibility with investors. Look what happened in the Luzon Petrochemical case. The Taiwanese investors thought it was a done deal after the Board of Investments told them so. It is like the Supreme Court reversal of Meralco’s rate after nine years with retroactive effect… could all international jurisprudence on the matter just be thrown out the window?

The corruption scandal in the PEA-Amari scandal aside, the government did go out into the international market offering the development of the Manila Bay foreshore area. And after the Thai investor sunk in some amount of money in the project, the Supreme Court says the foreign investor had no right to do what the executive branch said it could do. Again, the Supreme Court may be right but didn’t the executive branch do its homework?

Even the NAIA 3 project falls under the same category. Again, the corruption angle aside, the German investor thought the clearance of their local legal counsel and the go-signal of two Presidents were enough assurance. They didn’t count on People Power 3 and a third administration getting into power before they could start operations. The Supreme Court ruling came just weeks before the building was completed.

The question now is, can a foreign or local investor take a Cabinet secretary’s or even a President’s word? Or should a major investor first go to the Supreme Court and get the high court’s clearance before investing a penny in any project in this country? Should there be a prescription period in our investment law for challenges to the incentives and contracts so that a presumption of legality kicks in after say, three years?

Worse, as what happened to the Sobrepeñas in Camp John Hay, the executive branch has said nothing in defense of the deal it signed with Fil-Estate in the face the High Court’s habit of unhinging business commitments of the state. On the contrary, the BCDA has gone on a publicity blitz to collect on delayed payments of the developers instead of looking for ways to keep to the spirit and the financial assumptions of the deal.

Actually, it is not just Fil-Estate that’s in a serious predicament as a result of the High Court’s ruling. There are many other business establishments in the Camp John Hay leisure estate, who are operating on the basis of the government’s assurance that it is a special economic zone, and who are now exposed to tax liabilities on a post facto basis. They have yet to hear any reassurance from the Bases Conversion Development Authority (BCDA) and its local subsidiary, John Hay Management Corp. (JHMC), that whatever happens, the BCDA will keep them whole.

Among the establishments affected by the Supreme Court ruling of March 29, 2005 which invalidated the tax and duty exemptions enjoyed by the establishments, include the Camp John Hay Manor, the Camp John Hay Golf Club, and the Mile Hi Center, which houses 18 shops and restaurants. Sub-locators, concessionaires and residents of Camp John Hay, along with developer Camp John Hay Development Corp., said they set up shop in Camp John Hay "on the assumption that we would enjoy for fifty years the special economic zone tax and duty exemptions spelled out in the John Hay Special Economic Zone Implementing Rules and Regulations."

Maybe a special law could be passed by Congress to confirm the promises made to the Camp John Hay investors. Or maybe they could explore some administrative remedies that would amount to the same thing. But the court sounded clear about the need for Congress to pass a very specific law for those privileges to apply to Camp John Hay. It may be easier to make a strong motion for reconsideration before the High Court and get a reversal like in the case of the mining law.

As usual, this is a total mess and one that no one senior enough in government seems ready to take on and do something about. Maybe this is a job for Johnny Santos of DTI or for Cesar Purisima of Finance or both of them. The credibility of the Arroyo administration to foreign and local investors, or what little is left of it, hangs in the balance here.

there really have been some "misdeals" in the previous years which have led to reviews and revisions by the SC. thus, investors could become wary of investing here. but the way i see it, this is some sort of "cleaning-up" and getting rid of investment deals or parts of it that are technically illegal. imo, better get rid of them now so that future investors may be guaranteed of getting better deals and secured investments here in our country.

Yes, that would reduce the chances of rescinded deals happening in the future. But it would make Filipinos reckon with the question of whether it is the constitution itself that is detrimental to attracting foreign direct investors. Would these investors have even considered the Philippines as an investment destination had the terms that enticed them to invest not been offered to them in the first place? Take the case of the Amari investment. If the development did not involve reclaiming a portion of Manila Bay, the project would simply not have been feasible from a supply-demand perspective. The reality is that other countries can offer investors the same terms in their markets that would otherwise have been in violation of the Philippine constitution.

Likewise, some of these cases were decided by the courts on vague and discretionary grounds, such as what happened with the sale of the Manila Hotel and the first ruling of the supreme court on the use of foreign capital in the mining sector (a ruling which the courts later reversed but the damage to the country's credibility had already been done).

At the end of the day, it will amount to less investments coming into the Philippines and ultimately, a less-developed private sector with less jobs and incomes.

the philippines always shoots itself in the foot due largely to its damaged culture, lack of education, no sense of country for its leaders or a combination of many things.

the americans bounced back from the great depression, the japanese rose from devastation. if only we could have a great leader who can lead us out from the dark.if only the people could change. its close to impossible indeed. but despite the hopelessness, there is always hope... you only have to look at the unpublicized goodness of the deeds, the people and many other things that still bring a speck of hope in a sea of the abyss.

Eventually, even BPO and call center investors will not find the Philippines attractive. This column from Prof. Alex Magno came out today. What’s interesting about this is that it gives a fairly objective and balanced perspective on the Philippines’ real prospects in the outsourcing sector. These frank and down-to-earth views are supported by facts and empirical analysis and not wishful thinking. A very interesting input was shared by Peter Wallace on possibly the only practical thing that can be done to reverse the decline. Unfortunately, constitutional reforms liberalizing investments into a wide range of industries, including the education sector, are not a priority of the present administration. Nor have they been a priority of any prior administration for that matter.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Horrendous
FIRST PERSON By Alex Magno
The Philippine Star 06/02/2005

We asked this question: Are we ready to compete for the mushrooming opportunities for business process outsourcing?

There has been so much talk about how the Philippines might be a player in IT-based industries, about how we could go head to head against India which has become a software superpower of sorts and an attractive base for call centers and other non-voice IT services.

The Foundation for Economic Freedom wanted to know what the numbers are, how do we compare, what was our capacity to absorb the rising opportunities. What policy changes needed to be done? What should we improve on? What human resources do we have?

We invited Jose Xavier Gonzales, president of C-Cubed Services to present a paper from an industry practitioner’s perspective. We invited Florencio Abad, secretary of education, to tell us what was being done to improve the competitiveness of our human resources. In addition we invited, to compose a panel of reactors, Dr. Edita Tan who has doe much work on the economics of our educational systems, Jesus Zulueta and Gary Makasiar who were both knowledgeable about the state of IT-based industries in the country.

The forum, held last Tuesday at the Development Bank of the Philippines was very informative but not very encouraging.

Gonzales prepared an excellent presentation, doing a capacity analysis of our human resources. From this paper, we learn that while opportunities for business process outsourcing are abundant and industries such as call centers have become a major source of revenue for the economy, we have just about reached the limits of our capacity to compete for more IT-based investments.

The problem is not limitations on physical plant. With the deregulation of the telecoms sector, we have abundant capacity for data processing and transmission. We have broadband networks and satellite-based internet. We have encouraging policies and special economic zones to support more investments into this sector.

We are seriously limited, however, by the quality of our human resources. For instance, only 2.4 percent of applicants are found acceptable. The overwhelming number of applicants are simply educationally unprepared to meet the standards.

The 2.4 percent accepted by the IT-based industries here require up to two months of intensive training before they are ready to work. In the interim, 25 percent of those accepted drop out. There is, further, a very high turn-over rate among our IT workers.

Fully 52 percent of those hired by the IT industries come from the top ten colleges and universities in Metro-Manila, led by the University of the Philippines Diliman. In a word, most of our other educational institutions are not training their students well enough to prepare them to meet the skills benchmark that a highly competitive industry such as business process outsourcing requires.

India, our main competitor, has a population of about a billion people. She spends more on education per capita than we do. By sheer population size, she has a much larger human resource pool for IT-based industries. She is far from reaching the limits of supply for skilled labor.

We will reach the limits of our human resource supply much earlier than India will. Furthermore, India is quickly re-tooling its universities to produce precisely the talent requires by highly competitive IT-based industries.

Secretary Florencio Abad presented a paper rich in detail. Unfortunately, the details were not very encouraging.

In the tests conducted nationwide by DepEd, it was found out that among 4th year high school students, only 6.59 percent had mastery of English (with scores of 75 percent and above). That was the best percentage.

Only 1.75 percent of senior high school students had mastery of science. Only 3.31 percent had mastery of "araling panlipunan." A horrendously low 0.002 percent had mastery of Filipino.

DepEd is doing a heroic job raising the quality of public education in the country by getting the community involved in the schools. But still we have a classroom shortage of about 42,000, serious shortages of well-trained teachers and class sizes in the primary schools of 65.

There is no way a class of 65 pupils could be educated well. The younger the student, the more personal attention is required to get them properly educated.

From the numbers, and considering our crippling budgetary problems, it does not seem likely that we could dramatically raise the quality of public education within the next generation. Therefore, our human resource pool for highly competitive industries will be a serious restriction on our ability to attract investments.

At the tertiary level, we have a serious problem with the proliferation of state colleges and universities. From a handful in the sixties, we now have about 117 SCUs – all desperately under-funded and all short of faculty material.

The proliferation of SCUs is a by-product of the politicization of our educational policy. Pandering to populist expectations for a state college in every province, we only succeeded in creating a plethora of substandard institutions, all demanding greater subsidies from a cash-strapped government and none, save for one or two, really prepared to produce world-class IT talent.

The best solution is also a politically unacceptable one: Peter Wallace suggests, quite correctly, that we liberalize investments in education and privatize about a hundred or so SCUs, leaving only a few well-endowed institutions to be strong centers of science and technology.

We pride ourselves to be competitive in IT industries because we have an English-speaking population. But the survey shows that only 6.59 percent of our students have any real mastery of the language.

We are worse off in mastery of mathematics and science. Computer literacy is problematic. Years of neglect left us with an educational system that trains many incompetently.

So, while the opportunities may be there, and while we may have an abundance of unemployed, our human resource base is woefully unprepared to compete. That is the saddest part.

This is something that's worthy of public indignation. It is worse than jueteng and taped phone calls. What the government didn't tell Filipino citizens was that the Supreme Court decision revoking tax incentives to BCDA investors covered not just John Hay but CLARK FIELD as well. Aside from the 6,000 jobs in John Hay, thousands more would have been wiped out in Clark. There's also no way of telling how many potential investors have simply decided to stay away from the Philippines because of this and other investment fiascos. Imagine the impact this would have had in our job market. What's puzzling is why it took the DOF this long to react, let alone the mutedness of the DTI. Also notable is the continued refusal of Malacanang to come out with a coherent policy in dealing with investors. Well-educated Filipino college graduates will continue to have a hard time looking for work and achieving the middle class lifestyle that they aspire for. This again demonstrates that our leaders are not serious about improving the job prospects and quality of life of the middle class.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Tax perks limits cover Clark, Poro Point, too
Finance wants new perks law, to woo investors
Businessworld
BY FELIPE F. SALVOSA II, Senior Reporter

To avert capital flight with the closure of businesses and to keep foreign investors interested in the country, the Finance department wants Congress to pass a new law to restore tax perks for locators in former US military bases turned into special economic zones.

Finance Undersecretary Emmanuel P. Bonoan noted that the Supreme Court decision last March limiting such tax perks only to the Subic Freeport Zone in Zambales covered not only Camp John Hay in Baguio, which was the subject of the case, but also the Clark Special Economic Zone in Pampanga as well as the proposed Poro Point tourist zone in La Union.

"All the ones similarly situated as Camp John Hay" are covered by the court decision, which cancelled tax perks granted to businesses in the former Baguio City military camp, Mr. Bonoan said.

Clark alone has more than 400 locators including multinational cargo and freight firm United Parcel Service or UPS, and the manufacturers of Rolls-Royce engines and Yokohama tires.

As per the court order, they may be treated as ordinary taxpayers and may be asked by tax and Customs officials as well as local governments to return all taxes, duties, and fees previously waived.

The court ruling stated that Camp John Hay did not enjoy tax incentives under Republic Act no. 7227 or the Bases Conversion Development Act since that law was intended solely for Subic.

The main economic zone tax privilege is a 5% tax on gross income in lieu of all national and local taxes such as the value-added tax, the documentary stamp tax, real property tax, and import duties.

"There might be some remedial legislation, meaning there might have to be a law granting these tax exemptions and retroacting [them]," Mr. Bonoan said.

He added that the matter would have to be decided by the Finance and Trade departments in light of "equitable considerations."

"I emphasize that we respect the Supreme Court ruling. Given the state of the law, the Supreme Court could have been right. But given that these investors were sold to set up there [economic zones] on the basis of tax exemptions, which might have been misinterpreted in [their] application either by government policy makers or these entities themselves, we’re looking at fairness issues," the Finance official said.

Pending bills in the Senate, such as that of Senator Richard J. Gordon, seek to allow the Bases Conversion Development Authority (BCDA), the Subic Bay Metropolitan Authority, and the Clark Development Corp. to develop other special economic zones in Luzon.

Mr. Bonoan said Mr. Gordon was "thinking along the right lines," but it would be a question of which entity must give the tax privileges.

He said Congress could grant tax privileges outright, otherwise, "the issue of undue delegation of power might crop up."

Finance Undersecretary Nieves L. Osorio, who attended public hearings for the Senate bills, told reporters that Mr. Gordon’s bill could be one of the solutions to the Camp John Hay dispute.

"It would recognize all subsidiaries created by BCDA, including those registered with the Securities and Exchange Commission under the Corporation Code, aside from the chartered subsidiaries or those created by law," she said.

In an earlier interview, Deputy Tax Commissioner Kim J. Henares said an option could be to proclaim former US military facilities as special economic zones under the Philippine Economic Zone Authority, a move that would not require legislation. The President can designate certain areas as economic zones or industrial parks under the PEZA law.

Camp John Hay Development Corp. has asked the government for assurance that it would not be made to pay backtaxes as a result of the court ruling.

--------------------

Story Location: http://www.bworld.com.ph/BW060905/topstory.php

That's because tax incentives for foreign investors are so reactionary. Even I'm against it. Why don't they give tax incentives to everyone?

Todo en la cama o todo en el suelo.

Specifically pertaining to tax incentives granted to BCDA locators, many of these incentives do make sense espescialy if the end result would generate more proceeds for the country (over and above the jobs, income and better quality of life for those employed) down the road. In John Hay, for example, much of the recreational infrastructure had to be constructed using imported raw materials such as pine logs from Canada. In Clark, where UPS set up its transhipment hub, it would be unreasonable to slap duties on packages from abroad "stopping over" in the Philippines before moving on to destinations in other countries. It is espescially in these areas where the Philippines has a competitive advantage over other countries, which justifies the need for these incentives. They may seem reactionary because a lot of developments in business happen very quickly. During the 80s, when everyone was fixated over manufacturing cheap garments and semiconductors, few people anticipated that logistics, telecommunications and the likes would develop into high-potential industries espescially for Filipinos.

Of course, some incentives are not good while other tax perks have been abused by technical smugglers. But the problem won't be answered by the wholesale revokation of these incentives vis-a-vis rationalizing incentive packages and better enforcement of anti-smuggling laws.

That being said, the issue with the BCDA has more to do with rescinding these incentives after the fact that they have been granted. It proects the image that the Philippines is not a credible place to do business and that any contract signed can be un-hinged after investors have poured in money.

Taken from today's column by Babes Romualdez.

~~~~~~~~~~~~~~~~~~~

What’s happening to our country?
BABE'S EYE VIEW By Babe Romualdez
The Philippine Star 09/11/2005

In 1982, the late Vice President Emmanuel Pelaez was ambushed by a group of armed men on his way home. His driver of more than 30 years was killed instantly. As Pelaez was being wheeled into the operating room, he asked Gen. Tomas Karingal, "General, what’s happening to our country?" Today, the same question is being asked by everyone: What is happening to our country? Where are we going? Let’s take one step backward and analyze our situation.

After 14 years under authoritarian rule, we went into the EDSA People Power revolution. Hastily replacing the 1973 Constitution, which was a semi-parliamentary type of system, we installed a new Constitution that was a direct reaction to anything that was Marcos, be it good or bad. The new Constitution’s provisions substantially clipped the powers of the Presidency and of the military to forestall the rise of another authoritarian ruler. This Constitution even offered a vague role for the military with a slashed budget that rendered it impotent. It became known as the Cory Constitution. Sadly, Mrs. Aquino is now rallying against the very constitutional process that legitimately allowed the impeachment charges to be dismissed by the majority. Right or wrong, horse trading is simply an intrinsic part of the system. Businessmen are now calling on Mrs. Aquino and the others to desist from continuing these indignation rallies. These will only cause economic instability bringing greater suffering to more people aggravated by the Oil Crisis.

If we are to follow the process, then perhaps Teddyboy Locsin’s suggestion that another impeachment case be filed next year should be what the Opposition has to start preparing for. This time, as Teddyboy – who is a known Cory Boy – correctly pointed out, it should be more carefully studied instead of planning to recreate another People Power scenario. It looks like the EDSA crowds aren’t going to get larger anyway. As a matter of fact, a lot of people are beginning to resent the use of EDSA for these indignation rallies like the one last Wednesday evening. Compounded by the rain, many suffered from the gridlock with people shouting, "Tama na, Lumang Tugtugin Na!" Many of our tired employees complained to me the next day that it took them five hours to get home that night. A strong indication that people are just tired of politicians singing the same tune on a discordant note.

As I said, any public figure should plan the time and place for an exit. Perhaps, Mrs. Aquino should consider planning her exit from center stage on a high note before her stature is diminished. Just the same, if by some remote possibility People Power comes into play again, military analysts are saying the armed forces will take power for themselves this time around. They have learned from the past. Ironically, Mrs. Aquino always abhorred the military. She endured six serious coup attempts during her term.

Other People Power figures like FVR are more pragmatic. They’re advocating for Charter Change and would rather see this country move forward instead of sliding back to the glory days of past People Power. To paraphrase Santayana – "Those who never learn from mistakes of the past are condemned to repeat it." Another EDSA 1 veteran, Juan Ponce Enrile pointed out the other day that People Power, especially the last one, has set the country back 10 years. We should instead strengthen democratic institutions, change the system that allows patronage politics, and effect a "Garci-free" electoral system. Economically, China and Vietnam are already leaving us behind. Now Cambodia is fast catching up and before we know it we’ll be the lowest on the totem pole. Instead of Economic Power, we persist in People Power.

As I’ve said, EDSA 2 has created greater and deeper divisions in the country. Joseph Estrada was democratically elected but was deposed by another People Power. And let’s face it, Erap’s removal created a bad precedent. With Erap ending in detention, do we seriously think GMA will gladly follow suit? We can expect her to hang tough and avoid the disgrace at all costs. Various political groups and the so-called Civil Society have conveniently exploited the rich versus the poor theme. The sad part is Civil Society has turned into a mixed bag of conflicts.

A member of Civil Society – and I heard it with my own ears – arrogantly said that it would be heroic for GMA supporters to cheat in the elections because FPJ "should not win at all costs." Now you see them locking arms with FPJ’s widow. You know there’s something wrong with the picture or are we missing something here? One day they’re protesting against Erap, now they’re screaming for GMA to resign. This is an absolute contradiction! Take for instance the Civil Society ringleader Dinky Soliman. Last year, she was crying because she was about to lose her Social Welfare Cabinet post to Noli de Castro. This year, she advised GMA to apologize on TV and led the Cabinet in serenading GMA with "If We Hold On Together". A few days later, she demanded GMA’s resignation calling her boss evil. A couple of weeks later, Dinky did a beso-beso with GMA in pleno publico telling the media she and GMA care for each other. What do you call that – Dinky Do or Dinky Don’t?

No country can perhaps claim to be the same as the Philippines. Yet Filipinos, when they are in a different kind of system or government, flourish. They follow the rules. Those who are against Charter Change argue that changing the people is more fundamental than changing the system. But we have changed leaders so many times and nothing has changed so I daresay, it is the system that can change the people. We have to remember – as our friend Rob Sears of the American Chamber pointed out – it took the United States more than 150 years and 21 constitutional amendments to develop a system that worked well for Americans. The American experiment has evolved but it is by no means complete. We need to adapt a system customized to the Filipinos’ peculiar emotions, psyche, and mentality. In short, it should be an "Only in da Pilipins" kind of Constitution.

Instead of looking back and trying to relive the glory days of the past People Power – we must now look forward to the glorious days ahead and whether we like it or not – with La Gloria. We must start the process of changing the system and the Constitution for the better. As FVR said, when I bumped into him at a cocktail reception the other night, the window of opportunity is now and we need to follow a timeline. We are at a crossroads. We either act to change or improve the charter that is best suited for this country or we can continue to plod along with the present system slowly sliding back to the past and be doomed to perdition.

what a good article . gma is really an uninspired leadership. she's a professor pa naman. but i am against any people power activities. useless rallies that curtail productivity of honest taxpayers. the communists and generals will rule the country if we allow lawlessness and chaos. this is unacceptable / .

the reforms should be done . i agree w/ the ramos formula. if ramos charter change pushed thru in the 1995, we wouldnt have been in this situation right now. curiously, it was cory , erap and the church w/c blocked the move. cory does not have moral ascendancy (due to hacienda luisita protectionism during her term) in the same way DLSU doesnt have moral ascendancy to ask for GMA to step down.

i hope the egoistic senators will have an epiphany.

It looks like they're laying low with rallies recently. Temporarily maybe. Well, we'll see.

Seems to me like they're now too busy with this so-called "Citizens Congress for Truth and Accountability" (CCTA). They are now trying a new gimick I guess. Since it is held in public school campus, the exercise is considered legal even without a permit because it is held in a which is allowed by the Public Assembly Act. Clever eh? But, same as ever, and quite obviously, they still have the clinging for theatrics.

They must only watch out for utterances, proclamations, writings, emblems, banners, cartoons or other paraphernalia or documents that may bring into hatred or contempt, or excite disaffection against the government. The gathering should also avoid any public and malicious imputation of any crime, vice or defect, act, omission, condition, status or circumstance tending to cause dishonor, discredit or contempt of any person. In other words anything seditious or libelous should be avoided.

Too much politicking is poisoning the minds of many Filipinos. This is just so sad. As a result, we see rallyists or some of those followers of Guingona, hurting those they see as hindrance to their mission. A man almost beaten to death. Numerous fists hitting a single man just because he has expressed his contradiction for what they're doing. They're losing respect for their fellow Filipinos while losing the same for the rule of law. Why? Because of the supposedly educated personalities brainswashing people into thinking they're just doing the right thing. Unreasonable suggestions like we shouldn't pay our taxes to blackmail the present administration. That's just too irresponsible of them.

ang gulo na talaga. the communists are agitating the people. everyday rallies. red colored banners. disguised in women's movements, political parties, workers unions, farmers unions, congress, lahat. they have practically penetrated everything. the people should be aware of this because i guarantee you, joma sison's idealogy is similar to stalin, hitler, etc...

the solution they are offering is actually much much worse than the current situation we are in. they want our economy to go down so that they can replace it w/ their own socialist leanings. but even china is going capitalist. they are dinosaurs barking at the wrong tree.

Thats one of the reasons why people are so disgusted over their rallies. The presence of dubious individuals and groups with dubious motives are making the people think a twice.

Why don't they just use their time for a better cause? Why can't our honorable senators focus their mind on important bills to be made into law? Perhaps they can think of something that could improve public service in aid of legislation. They should not treat the executive branch as enemies. If any of them have some personal grudges with the President or anyone supporting her, they should set it aside first. They oughta' be helping our leader and her goal to continue the country's improving economy, and not hinder it.

its all about money happy soul. if they get power, they get money. if they have more money they get power. the communists nowadays are now extortionists disguised as idealogues. they cannot even abandon their dinosauric idealogies because of the extortion racket they are engaged in.

No(?).. Go on your own.. Why will we try to escape the country's condition, when we all (or more, people like you) caused the Philippines this downfall???.. tsktsk.. Be one with the nation's dilemma.. coz you've joined the people at times of glory.. Don't expect to gain much from the government & nation, when in the very first place you are not willing to work & are not sharing your efforts for its well-being.. Finally, why expect a good future when you're not hoping for it at all?.. hehe.. Peace dude..