What business really needs
Reading between the lines of the 10-point resolution passed by members of the Philippine Chamber of Commerce and Industry (PCCI) at the plenary session of the recently concluded Philippine Business Conference, the honeymoon between the President and the country’s business sector seems to be over.
This doesn’t mean, though, that the President has lost favor with businessmen. Rather, unlike last year when businesses could (or chose not to) find little fault with the newly elected chief executive of the land, critical words this time have started to come out during small huddles.
After all, the Duterte administration is moving past its one-and-a-half anniversary, and the ticking of the clock seems to be getting louder as the halfway mark looms larger.
Business sentiment more or less mirrors the two public surveys of the Social Weather Station and Pulse Asia Research, even if they exhibited a huge difference. Notwithstanding, what is certain and apparent is that the approval and trust ratings of the President today compared to the time when he just assumed office shows substantial drops, although still considered a “big majority.”
Delivering on promises
Let’s backtrack a little. When President Duterte spoke before the Makati Business Club during one of the presidential debates leading to election day, Philippine business chose not to be offended by punctuating expletives or the deflective ramblings that tried to mask a scant knowledge of economic policy.
What they saw (or wanted to see) instead was the strongman aura reminiscent of former president Ferdinand Marcos in the 60s or Singapore’s autocratic Lee Kwan Yew. It was the vision of a presidential candidate who could deliver on his promises.
Too many promises
The problem was he made too many promises. The most popular were, uh, too populist, like the eradication of menacing drug problem, income tax exemptions for more people, free tuition in state colleges and universities, and a pension payout increase for members of the Social Security System (SSS) – but not enough on how exactly the economy could move forward.
Businessmen, however, believed that candidate Duterte kept at the stage a seemingly reliable economic team headed by who would become today’s finance secretary. And that Duterte would largely leave decisions on economic policy to this team. This had a somehow reassuring effect.
Three-quarters to go
We are now entering the second quarter of Team Duterte’s term, and reality bites appear harsher than they were 16 months ago. The SSS has declared it will increase membership contributions, and business is not too happy with having to raise its share.
Labor wants to have a minimum wage hike, which again has been met with vocal objections from the business sector. The proposed tax reforms are not progressing as fast as promised, which compromises also the schedules of all the other grand plans that rely on increased government collections.
Public-private partnerships in infrastructure projects were junked, but the launch of the celebrated golden age of infrastructure did not usher a flood of new project groundbreakings, or the promised quick release of official development assistance (ODA) from China.
The war on drugs is turning out to be a little too unacceptable to even the most liberal human rights advocate, while the war in Marawi now carries a total bill that would make a huge dent on the already constrained national budget.
Foreign investments have also dipped, and there is a general hesitation now among overseas investors to bet on the country. For the first time in so many years, revised downward economic projections for the Philippines seem to be more real than mere speculation.
The above is a partial list, but it shows how much needs to be done to win back business.
Reassurance
Business needs reassurance that all these conflicts and issues will be resolved for the better. For example, Filipinos now enjoy one of the highest effective minimum wages in the ASEAN region, thus the support of the national government against raising the mandated minimum level would be most welcome.
The war on drugs has dragged on for too long, and counting out all the associated deaths of alleged drug users and pushers, very few (if any) drug lords have really been apprehended. Instead, we still hear of big shabu shipments entering our shores. Has there really been something substantial that has come out of this increasingly controversial exercise?
Projects need to get off the ground
On the big front, major infrastructure projects need to get off the ground pronto. If this means seeking more private sector participation, why not? After all, ODA funds are flexible enough to be channeled to PPPs, not just to hybrids.
If we want more investments coming into the country, the government must somehow revamp the justice system where even projects that have sovereign guarantees are not immune from temporary restraining orders and delays caused at the lowest local government level.
Next month will be crucial in determining if the proposed Tax Reform for Acceleration and Inclusion (TRAIN) bill will indeed get the majority vote from the Senate, and pass on to become a law that simply needs to signed by the President.
It would be big trouble if this first installment of the total tax reform package gets delayed some more.
More needs of business
Business wants to see delayed power projects moving, and electricity prices dropping further. The same holds true for telecommunication projects meant to raise internet speeds and improve reliability, as well as bring down current rates.
Companies want to move their imports faster to the end consumer. This means less red tape through Customs, and an elimination of the rampant corruption that has hogged this government agency since decades ago. As with any macho government, corruption should be dealt with firmly and swiftly.
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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.