part 4: general business environment, panel discussion 3 transcript

18
The Arangkada Philippines Project (TAPP) www.arangkadaphilippines.com Panel Discussion 3: General Business Environment Moderator Lala Rimando Business News Head Rappler Business Costs John D. Forbes Senior Advisor American Chamber of Commerce of the Philippines Governance Heidi Mendoza Commissioner on Audit Judicial Sherisa P. Nuesa Head Judicial Reform Initiative Social Services Jaime Galvez Tan President Health Futures Foundation Social Services: Education Kenneth Yang President and CEO Golden Arches Corporation Rimando: Good afternoon, everyone. This is the third panel. We’ll talk about business costs, education, the judiciary, and social services. Let’s start with a question: What do you think have we accomplished in 2012 as far as your sectors are concerned? Let’s limit it to just three and then we move on from there. Let’s start with Mr. Yang. Yang: To give you some perspective, I probably will represent the quick service industry or the informal eat-out industry. We are one of the biggest employers, so labor is one of our most important factors for success—the quality of labor. In the field of education, what’s most important to us is that the quality of education improves for our labor force. I think we are lucky that Filipinos have a natural sense of hospitality. In our business that’s critical, but the educational level needs to improve, so the K+12 program which the government has embarked on provide a longer term increase in the competitiveness of our pool of labor. Rimando: What about in the health sector, Dr. Galvez-Tan?

Upload: arangkada-philippines

Post on 08-Nov-2014

129 views

Category:

Documents


0 download

DESCRIPTION

Arangkada Philippines Second Anniversary Forum: Realize the Potential!February 26, 2013 at the Rizal Ballroom, Makati Shangri-LaPanel Discussion 3ModeratorLala RimandoBusiness News HeadRappler Business CostsJohn D. ForbesSenior AdvisorAmerican Chamber of Commerce of the Philippines GovernanceHeidi MendozaCommissioner on Audit JudicialSherisa P. NuesaHeadJudicial Reform Initiative Social ServicesJaime Galvez TanPresidentHealth Futures Foundation

TRANSCRIPT

Page 1: Part 4: General Business Environment, Panel Discussion 3 Transcript

The Arangkada Philippines Project (TAPP) www.arangkadaphilippines.com

Panel Discussion 3: General Business Environment

Moderator Lala Rimando

Business News Head Rappler

Business Costs John D. Forbes Senior Advisor

American Chamber of Commerce of the Philippines

Governance Heidi Mendoza

Commissioner on Audit

Judicial

Sherisa P. Nuesa Head

Judicial Reform Initiative

Social Services Jaime Galvez Tan

President Health Futures Foundation

Social Services: Education Kenneth Yang

President and CEO Golden Arches Corporation

Rimando: Good afternoon, everyone. This is the third panel. We’ll talk about business costs, education, the judiciary, and social services. Let’s start with a question: What do you think have we accomplished in 2012 as far as your sectors are concerned? Let’s limit it to just three and then we move on from there. Let’s start with Mr. Yang. Yang: To give you some perspective, I probably will represent the quick service industry or the informal eat-out industry. We are one of the biggest employers, so labor is one of our most important factors for success—the quality of labor. In the field of education, what’s most important to us is that the quality of education improves for our labor force. I think we are lucky that Filipinos have a natural sense of hospitality. In our business that’s critical, but the educational level needs to improve, so the K+12 program which the government has embarked on provide a longer term increase in the competitiveness of our pool of labor. Rimando: What about in the health sector, Dr. Galvez-Tan?

Page 2: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 2

Galvez-Tan: For me, the three biggest policy and program change that we truly welcome in health poverty and population are, number one, the passing of the Reproductive Health law. I think there has been no other substantial law that has been passed. Second, the passing of the [new] sin tax law. Sin tax is very interesting. It’s the first ever earmark tax for health. For the first time in the history of the Philippines, we have tax earmarked for health, and this year we will start to benefit at least PhP30 billion for health. Third, I’d like to see the program on public-private partnership in health. I’d like to congratulate the Department of Health for launching the public-private partnership in health last year, officially. They have a Center of Excellence now that is based in the National Kidney and Transplant Institute. I consider these the three most important policy and program changes that will guide the actions of government and private sector in the next three years. I am almost optimistic that we will get something concrete by the end of 2016 if not by the end of 2013. Rimando: And Ms. Nuesa? Nuesa: For the most important accomplishments for 2012, they are in your packet. But I would like to cite that the first is a coordinated approach toward reforms in the justice system—the DOJ as well as the Supreme Court both have their packages of judicial reform initiatives. The Department of Justice together with USAID have been spearheading the Philippine Development Forum with a focus on the rule of law. There is already what they call a Justice Sector Coordinating Council (JSCC), composed of the heads of the Department of Justice, the Chief Justice, as well as the Secretary of the Local Government. Second would be the speedy resolution of cases, which is in [the Arangkada] report already. The case load per judge has declined—fifty percent increase in case resolution? That’s a lot. There had been a number of improvements that are moving towards speedier resolution of cases, including alternative dispute resolution (ADR) and the like. The last is, at least, there was improvement in the consciousness of courts in deciding on economic issues, although that has also been cited as a major problem. I’ll get to that later.

Page 3: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 3

Rimando: We will follow up on cases touching on economic issues. Mr. Forbes? Forbes: Business cost is very important. If you can’t make a profit, you can’t run a business. If you can’t make a profit in the Philippines, you go to a country that is more competitive; the very point that Bill Luz was pointing out in his rules on having to move forward. We need a much more comprehensive study on what business costs we can reduce. In the last year, I would like to single out two areas where there was progress and one area where I think we fell backwards. For the airline industry, the fact that the government is now absorbing the cost for the CIQ is extremely important to the growth of tourism and having connectivity, because our actual inbound and outbound flights from abroad has not been growing, while in competing countries like [Indonesia], [Thailand], and Malaysia, and around the region, it’s been growing by low double-digit figures. That and the signing by the President of the [bill abolishing] CCT-GPBT—those are very important for growing torusim. Second, labor is a very big cost to companies. It’s the reason why half a million jobs in the garment industries have been lost here, and three million have been created in Bangladesh. The cost of holidays and leave days—34 leave days per year for the average male employee plus 21 holidays—you begin to wonder when people are going to get work done. They need to be rationalized. There are two steps forward in that in 2012: The first is an important Memo that was released by the Institute of Labor Studies at DOLE, which analayzed in five pages the number of paid non-working holidays in the Philippines compared to our regional competitors. That’s a policy that was circulated to our politicians in the House and the Senate who sometimes like to give away the expenses of businesses without properly considering or talking to the businesses. There were no new paid non-working holiday in the past year. The other one is the two-tier wage system. The policy was announced two years ago in this administration. What it essentially does is it stops the constant escalation of the minimum wage. The minimum wage became equivalent to the average wage. When you do that, your other competitors in the region will eat your lunch because their minimum wage is much lower. We can keep the minimum wage above the poverty level, which is what the policy is,

Page 4: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 4

and then have a second tier for productivity. It’s important that we implement that over the next several years, because Malaysia introduced the minimum wage; Thailand has brought one up to the same as level the Philippines; in Jakarta the new mayor approved a 40% increase; and in China wages are going up. If we can maintain a level of control over this and reform the labor code, we will begin to move into a sweeter spot to attract some of the manufacturing and other investors that are moving around the region. The negative I want to mention about last year was the cost of living increase in Manila. According to the Mercer study two years ago, we were less expensive than Hanoi and Ho Chi Minh. We are now more expensive. You would expect that because the Vietnamese Dong depreciated significantly, and the Philippine Peso appreciated significantly, so we have to watch that out. If we are not careful, we are going to be more expensive than Bangkok and Kuala Lumpur. Rimando: Talking of business costs, we hear a lot from our economic managers that we have to be competitive as far as labor costs are concerned, especially with the growing costs in China. Has the government been listening to your recommendations? It’s always there, and you’ve always mentioned these issues to policymakers. Forbes: You see companies closing. You find companies setting up in Jakarta and Vietnam. You have to find out why they’re doing so. It’s an important issue. When you have too high a cost of employment you can close down and go to another country, shed workforce, ask your workforce to work harder, or go underground. Peter Wallace wrote a column recently saying you ought to be able to dismiss an unproductive employee, because you don’t lose a job, you just hire a more productive employee. There is no net job loss. You just have greater efficiency and productivity. Rimando: May we hear from you, too. Mendoza: When we talk about the three reforms inside the government, let me start with the Commission on Audit, because this is where I came from.

Page 5: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 5

First, we lifted pre-audit, because statistics have shown that when there was pre-audit, there was also so much corruption. This means it is not a perfect system that will prevent corruption. We lifted it because we believe such is the responsibility of management. Second, we tried to strengthen integrity inside the Commission. We started filing administrative cases against our own people. We published several guidelines and policy issuances, the first of which is on the benefits or assistance that can be extended to our auditors who are resident of the agencies we are auditing, so the agency heads are aware that these are the only legitimate assistance that can be extended to them. Third, we introduced the package audit, so there will be consistency in the opinions of the auditors in various agencies. Last December, we also introduced the citizen participatory audit. We are encouraging citizens to be active in terms of audit. Recently, we have issued policy guidelines disalowing the use of public funds over tarpaulins, like “Happy Valentine’s Day” or “Happy Graduation” or “This project is in the name of so-and-so.” We do believe that certain information has to be relayed to the public, but only those information na talagang kailangan [which are truly necessary]. Sumabay ito dun sa “Anti-Epal” ng Comelec. [This coincided with the “Anti-Epal” initiative of Comelec.] On the public financial management arena, we are working on the government integrated financial management system. Nandun yung [That includes] accounting, budget, and procurement. In addition to this, we are also looking into the electronic integrated risk-based audit system para yung mga auditors namin dun sa mga areas na malalayo [for our auditors based in far-flung areas] like the Autonomous Region for Muslim Mindanao ma-susupervise namin, makikita naming yung mga working papers nila [we can supervise them and check their working papers], so that we can be on top of what is happening, while the audit is happening, in a region that is very sensitive. We also have some improvements in terms of our collaboration with the Office of the Ombudsman. We have the so-called joint investigation team between the Office of the Ombudsman and the Commission on Audit and we have prioritized cases that we will

Page 6: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 6

jointly look into. This is very important especially in terms of managing the gap between audit and prosecution. In our country, we do the audit, while the Office of the Ombudsman evaluates and files the case in the Sandiganbayan. Siyempre, [Certainly] while we are doing the audit, we have the mindset of an auditor. Only a few auditors will look into what are the legal implications of this and what are the elements of the crime, so we need to interact with the Office of the Ombudsman, so while the audit is being done, the legal requirements are already being looked upon. Collaboration with the Office of the Ombudsman also allows us to facilitate or shorten the duration between audit and case filing. For some complainants especially those going into our office, we immediately evaluate the case if it is “auditable” or something that is within our jurisdiction or can be immediately endorsed to the Office of the Ombudsman. At times, we immediately refer it to the appropriate office, and that office will immediately request for copies of the audit report to hasten the fact-finding and investigation at the Office of the Ombudsman. More or less, these are the areas I believe have been creating some traction in the field of prosecution aside from public financial management. We are also looking into the development of the single treasury system, which will solve some of our excess liquidity, and also the unaccounted depository accounts which are excluded in the books. Our audit of various agencies have shown that there are several bank accounts in the name of government agencies but these are not included in the books, so they spend it like its their own private resources. We are trying to solve these weaknesses we have seen in our public financial management system. COA, as a constitutional agency, exercises both accounting and audit functions–limited accounting though. That’s why we both have to be active in public financial management, as well as audit, and corruption prevention. Rimando: Before we move onto the wish list you have for 2013, let me just follow up with Mr. Yang. You mentioned about K+12 a while ago. Can you give us more information on how the K+12 affect your business or your industry, at least? Yang: I think what it really does is improve the quality of labor we have, and that’s looking forward. Today we are lucky in the sense that we do have bodies for labor. Metro Manila

Page 7: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 7

will meet the needs more in terms of quality, although our industry is growing not just in the National Capital Region, but all over the country. We actually have a bigger need in other parts of the country like Visayas or Mindanao, so I think by standardizing the curriculum and increasing that by two years, that really helps us in the future. It helps us reduce our training and development cost, which we spend a lot of money in today. Rimando: This has something to do with your supply of qualified managers, I suppose? Yang: Managers as well as restaurant staff. I should take the opportunity to mention something about strengthening private and public partnership. That is something we would like to see more of. We’ve taken advantage of that with the Department of Labor which has this special program for the employment of students (SPS). What we have done is partner with government to provide employment for students who can’t afford to go to school. By tying together, we are able to provide jobs. This year, we hired 4,000 students through the program, just for our company. If you include the whole industry, that’s a lot. By doing that we are able to bridge the gap for those unprivileged students who are unable to finish school by providing employment. That’s another area that we should take advantage of. Rimando: We are looking forward to that. Dr. Tan, your wish list for 2013. You’ve had a dramatic 2012. Galvez Tan: My wish is that, one, the sin tax, reproductive health as well as the PPP will be integrated. By 2013 the implementation should help with the decrease in poverty. This can be done through a public-private partnership. The biggest problem in health is equity. We do have tremendous health resources in the key cities of the Philippines, but nowhere can we see it in the rural areas. My proposal is for both public and private sectors to be involved in at least six regions of the poorest of the poor. These are the six regions with the highest maternal mortality, the highest infant and child mortality, and the highest malnutrition [rate], affecting our workforce. First, the Autonomous Region of Muslim Mindanao is my top priority; second, the Zamaboanga

Page 8: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 8

peninsula; third, MIMAROPA; fourth, Samar, Leyte; fifth, Bicol; and sixth, the Cordillera region. This is a total population of 20 million. We can improve equity using PPP, sin tax, and reproductive health frameworks in these areas. There are areas of PPP where I’d like to involve all the chambers of commerce. First is pharmaceuticals. The number one problem in the Philippines is access to medicine, particularly, low-cost generic drug. Right now, we only have 18,000 pharmacies. We have a short fall of 24,000 pharmacies. That’s a lot of investment for PPP. Second area is laboratory and diagnosis. We need to upgrade our services across the country. If we can focus on these six regions, universal health care can be demonstrated in 2013. This will lead to universal healthcare in the Ilocos region, Quezon province, and others. If we can show it in these six regions covering 20 million Filipinos then we can move onto the rest of the population. Third area is birthing clinics. We have a shortfall of 4,000 birthing clinics. The private sector could help us build birthing clinics and even put human health resources in this. In 2013, we can, again, foruc on these six regions just to cut immediately the poverty level and improve access to universal healthcare. Even in primary health care, we have a short fall of 24,000 clinics. We still have 24,000 villages that have no health infrastructure at all. They have schools, but nowhere a health center for these 24,000 villages. Regarding health human resource, I would like to see the private sector participating in these large projects providing health services for these six regions. The government does not have enough nurses, midwives, and doctors in these areas. The sin tax, I hope, can help but I’d like to see private sector participation in this. Finally, let us involve all the ICT companies in providing emergency healthcare and making use of mobile technology for diagnosis, treatment, and referral in, again, these six regions.

Page 9: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 9

Rimando: Thank you. Let’s move onto Judiciary. You’ve touched about a strategic court for cases that involve economic issues. Can you tell us more about it and is it part of your 2013 wish list? Nuesa: Yes. When it comes to my wish list, the first concerns economic and strategic issues affecting the business climate. Some of the rulings are deemed detrimental to the economic climate, although the Philippines is already moving very fast in certain areas. One thing I could recommend, to quote former Chief Justice Panganiban’s book With Due Respect, “when it comes to economic agenda, the judiciary should adopt a ‘no interference rule.’” What does that mean? Former CJ Panganiban has always espoused the theory that Filipinos have the right to prosperity under Articles 2 and 12 of the Constitution—the rights to prosperity and freedom from poverty. What is being asked of the courts is to consider the economic issues and the rights of the citizens to a better, prosperous life when they analyze cases that involve the economic agenda and the key strategic issues of the country. It is quite different from protecting the civil rights, where it is a strict interpretation, but when it comes to economic rights, it is what he calls a differential interpretation of the law. It is essentially respect for the independent powers of the three branches of government. Of course, the clogged dockets are still very much a problem despite all of these efforts, although some gains have been made in the past. We should continue the system, the coordinated approach, the use of automation, decentralization, improvement of judges’ salaries–all these are related. Aside from those two, we also have to do something about the use of sheriffs and courts. This is written in the report as tools of legal harassment. There are also questionable TROs. Now, how do we handle those? In the business sector we have a performance system where we reward good performance. There is also an accountability system to penalize errant behaviour. We will be seeking those. We need a performance metrics system for the courts to identify the justices, judges, and prosecutors who are unable to resolve their cases within the required time and receiving a lot of complaints. On the accountability side, we are

Page 10: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 10

suggesting that there has to be an independent investigation, perhaps, a whistle blower policy even for the courts. As a last statement, there is nothing like advocacy. There is nothing like the private sector also getting involved, making their voices heard, and for this very reason, we are having dialogues with the Department of Justice and the Supreme Court. There is hope, but we have a long way to go. Rimando: We’d like to touch more on the Whistle Blower reform. Ms. Heidi, I think that’s right up your alley. Mendoza: My wish list is very simple, and that is insulate the bureaucracy from politics. By doing so, those inside the bureaucracy will feel empowered to implement the laws, rules, and regulations. Let us not go far with so much modesty. I have been working hard, and I am trying my best to do the things I am supposed to do, but you see, I have so many opponents inside and outside the office. I cannot get confirmed until now. When we talk of political will, to be honest, I have not seen as much political will as right now especially at the top. But the problem is, kapag nag-iba nang leadership, nag-iba na ng mga heads of agencies, pano natin i-eensure yung reforms na sinimulan [once the leadership has changed, once the heads of agencies have changed, how do we ensure that initiated reforms continue]? That can only take place if there is a bureaucracy that is insulated by politics, that people inside are so empowered that they have the will to implement the laws, rules, and regulations. Sa totoo lang, [truthfully] we are talking of passing another anti-corruption law, eh ang dami na nating batas [but we already have many laws]. When I had the opportunity to be invited outside, pag tinitingnan ko yung law natin [if we look out our laws] when compared to others, halos parehas lang [they are almost similar]. Pero saan nagkukulang? Dun sa implementation. Hindi rin natin masasabi na lahat ng nasa loob ng gobyerno hindi marunong magpatupad ng batas. Marami nangangahas, maraming naglalakas loob, pero sila yung binabatikos. [But where do we fall short? In implementation. We are not saying that everyone in government doesn’t know how to implement laws. Many are aggressive and strong-willed, but they get

Page 11: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 11

sidelined.] Nagiging tuloy two-pronged yung fight [The fight becomes two-pronged]: the actual fight against corruption and the fight against perception. So sakin napaka-simple [The solution, the way I see it, is very simple], insulate the bureaucracy from the politics and empower the people inside to implement the laws, rules, and regulations. You know, if we insulate the bureaucrats, kung iinsulate natin yung mga tao sa loob, na kaya nilang mag-implement ng laws, rules, and regulation, dadami ang marunong manindigan, dadami and magrunong tumayo. [If we could only insulate the people inside, if they can implement laws, rules, and regulations, more and more people will learn to have moral conviction and learn to stand up for what’s right.] The people inside—the bureaucrats—should find some kakampi [allies] from the citizens. Hindi yung pag ikaw yung gumagawa ng tama, ikaw yung makakasuhan [It shouldn’t be the case that people who do the right thing are sued in court], and then you feel so alone, and then you feel all the pressure. This is really nakakalungkot [disheartening]. Number one wish ko yan. [That’s my number one wish.] Let us insulate the bureaucracy and empower the people inside to be able to implement the laws, rules, and the regulations. Second, I am expecting a lot from the private sector. Saludo po ako dun sa [I salute the] Integrity Pact but I am asking more than the private sector committing na hindi ka mag-offer ng bribe [not to offer bribe]. We need more commitment on providing the information and the necessary cooperation in terms of preventing corruption, and most especially, in prosecution. I’ll set a specific example. We’re building cases against ghost employees. Kasi everytime may eleksyon, may ghost employees. [Because every time there’s an election, there are ghost employees.] Dyan nila kinukuha yung pang kampanya nila e. [That’s where they get their campaign funds.] Alam niyo po, napakahirap, susulat kami sa [You know, it’s very difficult when we have to write to a] private company so-and-so. “May we ask for the details of employment of the following, because we found out these employees are working for this company?” We get replies like, “Sorry, we could not give the necessary information.” Papano natin sisisihin yung corruption sa gobyerno, kung yung private sector, kahit yung napaka simpleng bagay, yung pag provide lang ng information, hindi natin magawa. [So how do we pin the corruption on government when the private sector cannot provide information as simple as that?]

Page 12: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 12

In most of our cases on overpricing, most of them are being dismissed for lack of evidence. Why a lack of evidence when you and I both know exactly the price of this item? The point is, the moment we try to ask that particular supplier, “Can we be given a copy of the receipt or invoice of this particular item?” No one will participate because they will raise the probability that the next time they will enter into bidding, they will get the punishment or the not-so good cooperation from the LGUs. Again, I will repeat, the Integrity Pact should not only include visions of non-payment of bribes, but also providing the necessary information, especially evidence for prosecution and the necessary assistance, lalo’t lalo na po kung actual prosecution na [especially when it’s time for the actual prosecution]. Yung government lawyers—alam yan ng DOJ— [The DOJ knows that if you are a government lawyer] you will be handling five to 10 cases. Ako po, government witness, ang naghahawak sakin isang prosecutor, ang hawak niyang kaso sampo. Ang kalaban namin number one na law firm, apat na abogado. [I am a government witness, and our lone presecutor is handling ten cases. Our rival is the number one law firm with four lawyers on the case.] It is so unfortunate that the ones who are corrupt are the ones who have the money to pay the highest paid lawyer. Ang sama sama ng loob ko, andito kami, nagdedefend ng kaso ng gobyerno, pero nakikipaglaban kami sa pinaka magagaling na abogado, [I feel so much anger and bitterness, because here we are, defending the case of the government, but we are up against the best lawyers in the country] and they are being paid out of the profit of corruption, and at times, they are schooled from the University of the Philippines. It hurts me a lot. I hope the private sector would take it so seriously. You want to end corruption, help the prosecutors. Be vigilant in monitoring cases. In my office, I need six lawyers. Until now, iisang lawyer ang nakuha ko [I was only able to recruit one lawyer] who is about to resign. You know, we need to find the right incentive for those people who are doing good. On the other hand, we have to make sure that doing those that are doing bad would necessarily and immediately be punished. So again I will repeat, I am expecting much from the private sector. Next, I am also expecting vigilance on the part of the citizen. When we assumed office, there were so many complainants. But if I take a serious look at the nature of the

Page 13: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 13

complaints, dalawang klase lang yan, isa natalo sa eleksyon kaya isinusumbong yung nakaupong mayor, o pangalawa, may utang na hindi nasisingil sa gobyerno kaya humihingi ng tulong. [There are only two types: one, a candidate is defeated in the election and reports the incumbent mayor, or two, there is an unsettled debt with the government, so he is asking for help.] Very small yung percentage ng complaint na nakikita kong pursigido, seryoso, nag-cocomplain para labanan yung corruption. [There is a very small percentage of complaints, which are pursued tenaciously and seriously, complaining to fight real corruption.] You have recommended reforms on procurement. I will admit that we must also recognize that there are seeming tractions created in the reforms initiated outside the area of procurement. When we look at citizens monitoring procurement transactions, we are going back to the same problem. May mga LGUs nag-iinvite ng mga observers [There are LGUs that invite observers, but] no one comes. Private citizens will be asking, “Where do we charge our gasoline allowance”, “Where do we get our allowance while attending the bidding?” If we want to fight corruption, if we dream of good governance, we do not rely on government to do it alone. We, as citizens, as private sector, as people inside bureaucracy, should be able to contribute the best we can. After all, it is our money. Rimando: I think what you just said are the wishes not only for COA but for a lot of the sectors represented here. Let’s wrap up with you, John, with business costs. It’s 2013; we just came from a year where we grew 6.6%. What are your wish list for 2013? Forbes: First of all, I will repeat one that Ray Cunningham mentioned—open access. It was supposed to happen two years ago. In this very forum in January of last year, the President asked the Energy Secretary what the target was, and the answer was September. So now, that target is June. Let’s make it a hard and fast target. Let the infrastructure be in place and then let’s hope that it works. We don’t know for sure yet, but we’ve been trying for this reform for 15 years. The law was signed in 2010. Second, we must work much harder on reducing red tape and that’s related to government regulation. The bureaucracy needs a mindset change to deregulate and regulate only as where and when necessary. We could consider experimenting with sunset provisions. Perhaps in the Congress, they can see if this works. We have some things that have been

Page 14: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 14

around 30, 40 years, and they shouldn’t be there anymore. There is no time to go back and figure out what should or shouldn’t be there; it’s a gargantuan task. So if we begin to do it for five to 10 years, and then it ends, you have to revalidate it. We’re always asking whether it continues to be necessary, and we see an example of that in the recent pronouncement of Secretary Purisima to look at the Foreign Investment Negative List, which contains 30- or 40-year old laws. I understand the Congress also is interested to see whether or not they continue to be in the national interest. [Third] E-governance, we slipped on that. In 2003, we were third of six countries in ASEAN, and now we are fifth. I worry about that because e-governance goes hand in hand with the program of this administration to reduce corruption. Whether we do it with DICT, DOST, or DBM—there just has to be more emphasis on enabling citizens and smaller companies, not big businesses or companies, when they get their license, NBI clearance, or when they do this or that. There is great Internet penetration in the country. They may not be able to afford computers, but they can afford to go to an Internet café. Let’s bring the government to the Internet café rather than forcing the citizens to go stand in line and waste time. Finally, transportation. We are facing gridlock in big cities like Manila and some of the smaller cities. There are solutions that are coming. The NLEX-SLEX connector for the extension of the skyway, LRT 1, and other rail systems, but they will take three or four years to build, and yet we are adding 150,000 cars. If we are like Indonesia, they added a million new cars last year. I don’t know if we will get that high, but in the interim, we should get solutions to the buses—whether to move them outside the city, whether radically, they should nationalize all the buses and privatize the result—something like what former President Ramos had where he had emergency powers for the power sector. Maybe some emergency powers for the transportation crisis. On the inter-island cost of transportation, clearly, the RORO system needs to be expanded. When I was down in Davao at the PDF, I heard the people from Mindanao for the nth time, maybe for 20 or 30 years, that the cost of inter-island shipping is too high. I also heard Secretary Singson say it’s time we stop talking about it, because it’s time to implement it. That’s a good attitude for 2013. The Port of Manila also needs to be decongested. We heard that from Ito Carlos earlier. We’ve got the

Page 15: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 15

infrastructure in Batangas and Subic, but it’s underutilized. I’m told that 40% of the traffic in Manila is because of the trucks in Manila. Hopefully, our exports will go up through new manufacturing investments, but we’ll shift the point of the exports to Subic, Clark, and Batangas. Rimando: All right. There is actually a suggestion to open up the floor to questions. Are there any burning questions that you would like to raise? Q&A Participant: The question is [suggestions are] addressed to everybody but especially to the Auditor General. It appears that the underlying problem we have is the application or implementation of the justice system down to its lowest level. If private companies are hesitant to cooperate, its because they fear that they will be hit back and the legal system won’t be followed. My suggestion is this: To legislate an additional 1% tax levied on companies having net profit in excess of one billion (pesos) for the justice system. This fund cannot be touched. It will be in the line budget, but it cannot be touched even by the President to transfer to another budget line. The justice system can use the budget to train prosecutors properly down to its lowest level, and citizens will not have so much fear in cooperating in investigations. For the companies, in the long term, they’ll be in a better position to compete and plan the future, since they know that the justice system will give them the protection they need. The additional tax of 1% is really an investment for the future. For my last suggestion: It appears that we have forgotten a basic need, and that is the NEDA Board should be divided into two. Half should be from the private sector, and the other half from the government. The President remains the chairman, and he will have to make the final decision on contentious matters. He cannot just push it aside and have someone else be blamed. We are complaining about the private sector having so much problem. Let’s be part of NEDA, and be part of the Board of NEDA, which is the overarching authority for the development of the country. Nuesa: Going to the judicial fund, since that requires legislation and taxation, we can refer that back to an appropriate committee. Among the things that I have learned from our coordination with the Supreme Court is that they are getting less than 1% of the national

Page 16: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 16

budget. They have requested for greater independence from LGUs that give them extra allowances, and I think LGUs also provide for their Capex, meaning the whole of justice—the structure and the buildings—have to be constructed by the LGUs. Those are the things that have been raised, and maybe that’s one thing that we can address. Regarding the legislation the gentleman is proposing, that’s something that has to be discussed in another forum, but I guess that is duly noted by TAPP. On the NEDA side, I think that’s a totally separate matter. I don’t know if any of the gentlemen with me would like to mention that. I know there is a NEDA infrastructure committee. Regarding the involvement of the private sector, yes, that’s very much welcome. Rimando: [Question on TRO flashed on the screen: What are latest stopgap & damage-control measures against our Judiciary Department’s TRO system, the bane of foreign investors, over infrastructure development projects; a typical example of which is our experience & lessons learned from the costly litigations of the NAIA 3 Airport Terminal project?] This is regarding the TROs and it highlighted an infrastructure project that has been raised many times in this forum, the NAIA 3 airport terminal project. Nuesa: Regarding TROs, there is a new Supreme Court memorandum issued in 2007 where unlike before, after a writ of preliminary injunction or TRO, it can be an indefinite or ongoing suspension. The courts now are required within six months to decide on the merits of the case so that it’s not a TRO forever. Forbes: I don’t want to talk about the NAIA terminal project, because that could take the whole afternoon to do it justice. I can say that in a meeting last week with the new Secretary of Transportation, he assured us that the target for getting Terminal 1 open is before Christmas. They are about to enter a contract with a very respected Japanese construction firm Takenaka, which is the one that built the airport for PairCargo, and while that company is still owed $90 million by PairCargo from the project, they will fix the systems which have been neglected since 2005 and get it operational. I hope that target is a hard target. Rimando: We hope so, too, because we’ve been hearing about NAIA 3 for ages since 2002.

Page 17: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 17

Forbes: Terminal 1 is also being fixed up gradually as we all noticed when we go there. Rimando: Any other question from the floor? Q&A Participant 2: Good afternoon. I am Jen Galvez from Vanguard News Network. My question is addressed to Ms. Heidi Mendoza. Since the time of your famous testimony of last year’s very high profile case, has there been significant increase in case filings in need of your office investigation? Second, what is the current ratio of cases filed and successfully dealt with under your watch? Mendoza: Let me just qualify the question. From the time I assumed office, there were so many complaints. We cannot talk of cases filed, because it will take a number of months before you can develop a case, before you can file it, and before they can be resolved. I was an auditor of one specific agency, and I filed a case against the Governor. It took at least 14 years before the decision was affirmed by the Supreme Court. Forteen years. Hindi natin pwede bilangin sa dalawang tao ilang kaso yung na i-file. [We cannot count alone the number of cases filed.] Let me just talk about the number of complaints that the office is receiving from ordinary citizens. I think on the first day I got 4,000 emails. Most of these complaints are very simple in the sense that they are asking for copies of annual audit report. Some are asking for clarification in terms of COA policies. There are some real complaints which we are pursuing, but they are not yet in the stage where they have already been acted upon, elevated to the Sandigan, and decided at that level. Rimando: Dr. Tan, you want to say something? Galvez-Tan: I just want to make an announcement that for those in the private sector who want to do PPP projects in health, I have in my list 25 of the 81 governors of the Philippines who have committed themselves to help and are willing to spend money in health. Of the 25, 13 are in the six regions that I have talked about. I hope all the chambers here in Arangkada can support this to reach equity, ensuring that the poorest of the poor are enrolled in universal health care and insurance.

Page 18: Part 4: General Business Environment, Panel Discussion 3 Transcript

www.arangkadaphilippines.com

Page 18

Rimando: Thank you, sir. There was a question flashed a while ago about the Maguindanao massacre, can we have it again. “How far are we in resolving the Maguindanao massacre case?” Nuesa: I do not know exactly where it is at, but we are still far. One problem we did raise before is that there are [over] 200 people who have been sued in connection with the Maguindanao massacre. I think the lawyers will be in a better position to explain this , but as I understand it, since it is supposed to be a crime of conspiracy, they are supposed to be tried together. It has been proposed that there must be a system of isolating the masterminds from those who are co-accused. The number of accused alone has been hampering the movement of the case. There might be a solution already. We will ask where it is, but yes, it has been taking so long, unfortunately.