* My column in BusinessWorld last July 25, 2019.
SEOUL-INCHEON AIRPORT — An impressive new terminal greeted me here and it will definitely make many Filipinos wish that we have a similar airport soon. This is huge, spacious, and modern, with Wi-Fi that is fast and free. I am here waiting for my connecting flight to the US.
President Rodrigo Duterte’s State of the Nation Address (SONA) last Monday did not mention the new airports that are being proposed and developed around Metro Manila. That SONA was notable because of many things that he said and did not say. Foremost of what he said are the following:
• That corruption in government is pervasive, is everywhere. He is grossly disappointed with corruption and asked, “When will corruption end?” Special mention was made of PhilHealth (Philippine Health Insurance Corporation), the Customs bureau, the Bureau of Internal Revenue, Social Security System, Land Transportation Office, PAG-IBIG, Land Registration Authority.
• That he wants to create three new departments: Departments of Disaster Resilience, Water Resources, and Overseas Filipinos.
• That he wants more Malasakit Centers, higher salaries for teachers and nurses, a new National Academy of Sports for High School students. Which means he wants to expand welfare spending on top of existing agencies.
• That local governments should hasten the issuance of business permits to a maximum of three days, reclaim public roads, and enforce the Bangsamoro Organic Law (BOL).
• That the West Philippine Sea (WPS) is ours but we should not provoke China, otherwise there will be a confrontation and our Marines will die. Meanwhile, most or many Cabinet members are ex-military men.
• He pointed out that the Build, Build, Build programs are gaining ground, and the entry of the third telco player that will provide fast and reliable telecom service.
The creation of three new departments — how much would this cost taxpayers?
They could cost somewhere near the budget of the agencies in the Table on this page. Huge departments with budgets of at least P100 billion a year like the departments of Education, Social Welfare and Development, Health, Public Works and Highways, Interior and Local Government, and National Defence are not included here.
Where to get the money for these new departments, agencies, and subsidies?
One is from new tax reform measures like the TRABAHO (Tax Reform for Attracting Better and Higher-quality Opportunities) bill. Second, from remittances by government-owned and controlled corporations (GOCCs). The President noted that GOCCs, infamous for high salaries, are shaping up and, as of July 2019, have remitted over P61 billion.
The TRABAHO bill is among the “dampeners” of more investments, local and foreign. The proposed removal of certain incentives like the 5% gross income earned (GIE) as substitute for corporate income tax (CIT) and local taxes, to be replaced by lowering the CIT from 30% to 20% after 10 years, or reducing to 25% immediately, is not favorable to many investors and job creators.
WHAT’S NOT SAID.
There are things that should not be said or issued and indeed were not said by the President — good. Like new drug price controls, or further demonizing tax coal and fossil fuels “to save the planet,” or creating five or more new Departments and not just three, etc.
There was a good tweet by Senator Panfilo Lacson hours after the speech:
“SONA 2019: I like most the part when the president said, ‘I have come face to face with the enemy. The enemy is us. We are our own tormentors… for every transaction, commission; for every action, extortion.’ Then the camera panned out on the audience right in front of him.”
Overall, SONA 2019 has issued more alarm bells to businesses and taxpayers. Corruption remains high, as admitted by the President, and yet they will further expand the size and burden of government, taxpayers will pay for the extra financial baggage, waste, and evaporated money. The saving grace is that businesses can expect easier business permits from LGUs, and things could have been worse if some ugly and unsaid things were instead announced.-------------------
BWorld 350, Logistics, infrastructure and the consumers, July 21, 2019
BWorld 351, SONA economic numbers, July 22, 2019
BWorld 352, SONA and ICCC-13, July 26, 2019