AS the 17th Congress begins its third and last regular session on Monday (July 23), both lawmakers and the Executive are braced for busy days ahead, with a long queue of measures awaiting disposition—a busy schedule aggravated by the push for a shift to federalism, as pitched by the President and his allies.
The noise from Charter change, primarily to effect such a shift to a federal system of governance, has been compounded by the initiative of House Speaker Pantaleon D. Alvarez to scuttle the May 2019 midterm elections, ostensibly to afford legislators time to handle constitutional amendments, chewing largely on a draft for a federal republic made by the 22-member Constitutional Commission (Con-Com).
As if that were not game changing enough for an agenda, the President’s third State of the Nation Address (Sona) is also expected to tout the Bangsamoro organic law (BOL), which the Senate and the House of Representatives will ratify in separate sessions on Monday morning, so it can be submitted to President Duterte for signing in the afternoon.
There’s widespread concern among economists, as well as leading business groups, that such changes, especially in the pivot to federalism, will negate the hard-won gains in drawing investors who are wary of the Philippines’s bad reputation of changing rules midstream. The concerns of leading business groups—about the constitutional changes spelling more taxes and red tape for them—were ventilated during the Con-com deliberations, and they remain skeptical despite assurances given by the draft Charter framers.
That aside, the lawmakers and key sectors nonetheless expressed hope, in separate interviews with the BusinessMirror, that the President this time around will address perceived gaps in his administration’s declared thrusts and priorities, and what is actually happening on the ground.
They hope that federalists will realize that creating more bureaucratic layers and providing each “state” billions of block grants will be extremely unproductive and tighten the fiscal space that is so challenged already, as it is, by the requirements for “Build, Build, Build,” the ambitious infrastructure program meant to address decades of backlog in public infrastructure so crucial to economic growth and human progress.
The legislators and sector leaders also fret over the worsening peace and order, with some noting the irony of a National Police touting a decline in routine crime statistics, yet unable to solve or stem the rash of high-profile—some say political—killings of politicians, priests, human-rights defenders and journalists.
On the eve of Sona, there has also been a lot of political noise surrounding the “soft” handling by the Philippine government of issues on the South China Sea, with experts warning about losing everything Manila gained from its victory two years ago in a United Nation arbitral tribunal. A Social Weather Stations Inc. survey also showed 9 of 10 citizens desiring that the government move to retake areas occupied by China.
With the latest pronouncements from Malacañan Palace and the Department of Foreign Affairs, however, there seems little chance of the conciliatory policy changing.
Still, as happens each time another Sona rolls around, everyone hopes for the best.
Senators’ agenda
Senate President Vicente C. Sotto III told the BusinessMirror his wish list of priority measures to be endorsed by President Duterte before the joint session of Congress includes the early passage of the Universal Health Package and the creation of a Presidential Office on Drugs and Crime Prevention.
Minority Leader Sen. Franklin M. Drilon, on the other hand, would “like to hear measures to address the law and order breakdown, including the culture of impunity; how to arrest inflation and high prices; [and] address the South China Sea issue.”
Sen. Miguel F. Zubiri said that besides the since renamed Bangsamoro Basic Law (BBL), he expects to be included in President Duterte’s priority list “free education, free irrigation, ease of doing business, anti-red tape.”
Sen. Gregorio B. Honasan II said he expects “nothing that we have not heard already.”
Still, Honasan listed the “the first responsibility of any government, aside from protection of life, liberty, property is order; a strong AFP-PNP mission-oriented morale.”
For his part, Sen. Joel J. Villanueva’s Sona wish list is to hear Duterte lay down a “clear policy and balanced implementation of provisions of the Labor Code, particularly on Security of Tenure and an end to Job Contracting.”
Villanueva also hopes to hear “a declaration that direct employment is the primary and guiding policy of the State in labor standards; as well as “a commitment to ensuring quality jobs created and furthering training and skills development to address unemployment; adequate protection for employers and management, and other stakeholders that generate employment such as investors and MSMEs.”
Former Senate President Aquilino “Koko” L. Pimentel III expects the Sona to tackle federalism and the Bangsamoro issues.
Like Villanueva, Pimentel’s wish list includes a clear resolution of the controversial endo or end-of-contract scheme that allows employers to skirt labor laws on hiring workers.
Like Drilon, he wants to hear clear guidance on how high prices will be dealt with, as well as the “apparent breakdown in law and order” that Sotto flagged.
Meanwhile, Pimentel seeks President Duterte’s disclosures on “how to avoid corruption” in the Build, Build, Build program.
Law and order and business
Entering his third year in power, the tough-talking President Duterte is faced with a question on whether he can deliver on his promise to bring peace and order. This, as the killings have breached the upper echelon of society.
The country’s top business leaders are concerned. They want the President to address the situation in his third Sona.
George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry (PCCI), aired his frustration over the recent killings of mayors and vice mayors. He said this violent trend might stain the country’s image to foreign investors.
“There seems to be a deteriorating peace and order. I know the crime rate has dropped, but lately, these political killings are sending the wrong image [to potential investors],” Barcelon told the BusinessMirror.
Barcelon was referring to the consecutive killings of at least local government executives in a span of two weeks.
“When there are things like [those], from outside—you hear about assassinations, you hear about being killed in broad daylight, and these are politicians—it becomes more glaring. I hope these cases are solved, that justice will be [served and] people will be accountable,” Barcelon said in a mix of English and Filipino.
Insurgent groups
Donald G. Dee, president of the Employers Confederation of the Philippines (Ecop), has a similar concern, but on a larger scale. He asked: What to do with the rebels?
For Dee, now is the time for Duterte to make up his mind on the peace process with the communists and Moro separatists. He wants the President to provide a definite policy on the negotiations with the National Democratic Front (NDF) and how he plans to settle the score with the Moro Islamic Liberation Front (MILF).
The government is engaged in an on-and-off dialogue with NDF negotiators, while the fate of the Bangsamoro law—the final peace agreement with the MILF—now lies in the hands of the Chief Executive.
“How will the peace process in the south [go about]? Are we going to scrap the peace talks and go to war with the NDF? If so, what about our agreements with the MILF? Do we implement [the] BBL [now BOL]?” Dee asked aloud.
He also wants the President to clarify whether authorities are still carrying out the war on drugs. Sans citing his source of data, Dee claimed the campaign that gained international condemnation has the approval of many Filipinos.
“The drug war, do we continue? This has helped the peace and order situation and has wide mass base support,” the Ecop chief said.
Barcelon argued the peace and order situation should be Duterte’s first and foremost concern in his Sona. He said it must be, before matters take a turn for the worse.
Clarify ‘endo’ crackdown
Meanwhile, not everyone is pleased with steps thus far taken to deal with illegal contractualization. Barcelon accused regional labor directors of being “overzealous” in going after firms alleged of practicing endo. Barcelon hopes Duterte will remind them in his Sona that firms can still source workers through manpower agencies as provided under the Labor Code.
The practice of hiring and terminating employees after every five months to circumvent their regularization, known as endo, has long been outlawed by the Labor Code. The President in May reinforced existing provisions of the law by issuing an executive order on contractualization. The Department of Labor and Employment crackdown has thus far been on “illegal contractualization.”
The PCCI chairman argued the country’s competitiveness will plunge deeper if Duterte fails to step in the divide between the parties. “People are a bit worried [because] we keep on saying we want to have more investors, but some of these things, [particularly] labor issues, are distracting,” he added.
The Philippines fell nine notches to 50th out of 63 economies in the IMD World Competitiveness Rankings 2018. According to the survey, “the reasons for such a drop include a decline in tourism and employment, the worsening of public finances and a surge in concerns about the education system.”
Food security
FARMERS from the Philippine Maize Federation Inc. (PhilMaize) hope promises to develop the corn industry would be fulfilled as the Duterte administration enters its third year in office.
PhilMaize President Roger V. Navarro told the BusinessMirror his group appreciates the President’s support for the corn sector, particularly the launching of the public-private partnership Rice-Corn Blend (RCB) food program.
“We appreciate PRRD’s support together with [Agriculture Secretary Emmanuel F.] Piñol for the corn industry, [particularly] the President’s launching of the rice-corn blend food program,” he said in an interview.
The rollout of RCB products in local supermarkets and stores has been delayed as the Department of Agriculture (DA) could not yet transfer government funds to its private-sector partner.
The DA earlier promised to set aside P50 million to kick-start the rice-corn blend project, which seeks to reduce the country’s dependence on rice imports, this year.
The DA had eyed to start selling RCB products in the market by April.
Besides implementing the RCB program, PhilMaize hopes the administration will throw its support behind other policies proposed by the corn industry. One example: the lobby to allow farmers to export their produce. They also seek creation of an agency to focus on the development of the corn industry, to be in step with developments that came after the advent of the World Trade Organization.
“We just wish that this administration will support our quest for the creation of the Philippine Corn Industry Development Authority to help stabilize corn prices, supply, farmers welfare and incomes,” he added.
Tax reform, rice tariffication
TO local economists, the third Sona should send clear signals on proposed bills on tax reform and rice tariffication, a game-changing policy shift that experts hope would bring down local rice prices as the import caps on the staple are dismantled.
Former Finance Undersecretary Romeo L. Bernardo and Action for Economic Reform’s (AER) Filomeno Sta. Ana III want Duterte to express support for the tax-reform program.
“[The President should] push strongly for fiscal incentive rationalization as the next major step in restructuring the tax system. Push for the increase in “sin” taxes, and have the tobacco tax immediately passed,” Sta. Ana told the BusinessMirror.
“New revenue from sin tax is necessary as source of financing for universal health coverage, which the Cabinet has certified as urgent. Pass the budget reform act to address inefficiency, including underspending and waste,” he added.
On rice tariffication, Bernardo and economist Calixto V. Chikiamco agreed that it is also important for the President to openly support the law “liberalizing private imports” and “removing QRs [quantitative restriction].”
Chikiamco and Bernardo hope Duterte includes in his Sona the efforts to boost private-sector investments, such as “opening up of the economy to foreign direct investments.”
Public Service Act
One bill pending at the Senate that could encourage more foreign investments, Chikiamco said, is the amendment of the Public Service Act (PSA) of 1935.
The bill aims to redefine the term “public utilities” to liberalize industries falling under this category. This list includes telecommunication which, when amended, will allow the entry of more players in the industry.
“[This will] liberalize foreign ownership in strategic industries like telecommunications and transport, thereby increasing investments and providing competition in the strategic industries,” Chikiamco said.
Several ranking House members such as former President and Pampanga Rep. Gloria Macapagal-Arroyo and Bohol Rep. Arthur Yap, support amending the PSA.
Public utility
To properly define what utilities are, House Committee on Economic Affairs Chairman Arthur C. Yap of Bohol asked the President to certify as urgent amendments to the Public Service Act or the Commonwealth Act 146, now consolidated in House Bill 5828, combining House Bills 4389, 4468, 4501, 4787 and 4996.
Yap said telecoms in Hong Kong, Korea, Malaysia, Singapore, Indonesia and Vietnam, among others, are not deemed utilities. Hence, the need for a proper definition “so they [telecoms] can be removed from the ambit of constitutional prohibitions.”
Arroyo, one of the authors of the bill, said amending the 80-year-old law will provide a better quality of services to the Filipino people.
Chikiamco also said he would like the President to express his support for public-private partnerships (PPPs) because official development assistance (ODA) projects are taking too long to implement.
“The ODA and GAA [General Appropriations Act] for financing and implementing Build, Build, Build have yielded little by way of results. On the other hand, the Cebu Airport Modernization, which he inaugurated recently, was the fruit of PPP,” Chikiamco said.
‘Don’t mention federalism’
ECONOMISTS like Bienvenido Oplas Jr. said the President should not give too much focus on federalism, as pushing for federalism means expanding the bureaucracy and increasing the tax burden of Filipinos and businessmen.
Having a national, federal and provincial government will make it difficult to do business in the country, said Oplas. It will also mean more taxes to pay since each level of government can impose their own rules and their own taxes.
“You have taxes and bureaucracy at the national level, taxes and bureaucracy at the lowest provincial and city level, so that’s [the] third level. So, the federalism plan of Duterte is very bad,” Oplas said.
The only way for this plan to work, Oplas said, is for the government to further reduce the corporate income tax under the second package of the Tax Reform for Acceleration and Inclusion (TRAIN)—meaning, reduce corporate income tax from the current 30 percent, down to 15 percent, and not just 25 percent as now proposed.
Inflation
Also expected to draw focus in this Sona—and subsequently, the attention of lawmakers—is the higher-than-expected inflation rate in May and June, which TRAIN critics blamed on the law but which economic managers cite as the result of unforeseen “other factors” (the high global oil prices; and the supply issues that sent rice prices soaring) coinciding with the January 2018 effectivity of the tax package.
Ako Bicol Rep. Rodel M. Batocabe batted for strong safety nets to combat inflation and the impact of the TRAIN law.
Yap agreed that the rice tariffication bill “is a step in fighting inflation, but that has to be coupled by a new rice facilities center law.” The center can be built “within a 500-hectare radius of rice farmlands so it can provide mechanized services to minimize labor, planting, harvesting and processing costs,” the lawmaker said.
Anac-IP Rep. Jose Panganiban Jr., chairman of the House Committee on Food and Agriculture, said his panel will sponsor the measure amending Republic Act 8178, or the Agricultural Tariffication Act, when session resumes on Monday. Amending Republic Act 8178 is needed to scrap the QR and convert it into tariffs.
Security of tenure
MEanwhile, Villanueva’s push for a clear resolution of the contractualization problem resonated in the House. Akbayan Rep. Tom S. Villarin also asked the President to certify as urgent the measure seeking to secure the tenure of workers.
According to Villarin, the “gravest threat” to a workers’ right of security of tenure comes from “the current trend toward contractualization and deregularization.” Because of this, workers settle “for intermittent and and short-term employment” affecting their livelihood and quality of work.
Hence, the need to amend the Labor Code of the Philippines.
House Committee on Labor and Employment Chairman Randolph Ting of Cagayan said Congress is still committed to pass into law a pending measure addressing the problems of labor-only contracting and endo despite the issuance of an executive order to stop the practice.
He said the House awaits the Senate version of the anti-endo bill, which it approved on third and final reading in January.
Reports by Elijah E. Felice Rosales, Butch M. Fernandez, Cai U. Ordinario, Jovee Marie N. dela Cruz, Jasper Emmanuel Y. Arcalas, Bernadette D. Nicolas; and BusinessMirror Interns Kezhia Maglasang, Jose Oscar Magpusao, Joahna Lei Casilao and Mark Joseph Fernandez
Image credits: Alysa Salen