Monday, October 01, 2007

Amando Tetangco and our ‘fundamental’ problems

What is called resignation is confirmed desperation.Henry David Thoreau (1817-1862), in Walden, “Economy”

FINALLY, the power of public opinion has forced Benjamin Abalos to resign from the Commission on Elections (Comelec). His lawyer said it was an “agonizing decision” for Abalos.

But certainly, there was no other way for Abalos but to go. He is just too controversial to remain effective at the Comelec and too hot a potato for his friends in Malacañang. In fact, his resignation serves his friends in Malacañang well, in light of the belief that a full-blown impeachment trial at the House of Representatives could reverberate right up to the pillars across Pasig River.

Abalos’s departure from the Comelec is probably good for all of us. His tenure at the Comelec had been a stormy period; controversy marred his important election-related responsibilities as chairman of the Comelec—election computerization (read: the controversial Mega-Pacific deal), the 2004 fraud-ridden presidential election, and the loss of election returns in Maguindanao in the recent midterm election, among many others.

The ongoing investigation at the Senate shows that Abalos has really spent a great deal of quality time with ZTE. That seems to prove that his skills may lie elsewhere, outside the Comelec—including brokering for private and foreign interests.

He was so “good” at it that he got the national broadband network (NBN) onto the signing table in China despite all the technical, financial and economic issues against the deal. He was so good at it that the Senate is currently wondering how we could undo the close to a billion-dollar deal that people must pay with tax money in the next 20 years.

Now that he is free of his “public service” duties, the chairman could now devote himself to, besides defending himself against accusations of wrongdoing, the private deals that friends ask him to have a hand in. And certainly, he needs all the time and energy to defend himself in the courts of law.

For one, the ongoing investigation at the Senate may earn him lawsuits for possible malfeasance. For all the complaints about grandstanding and idiotic grilling by some lawmakers, the fact is that there have been inquiries in the past when the panel reports led to the filing of formal charges in the proper courts. There’s no reason why this cannot be done with this one—and the accused to include not just Abalos, but possibly, the executives of the implementing agency, the Transportation department, who actively pushed the NBN despite the questions surrounding it.

The Abalos resignation and the ongoing investigation by the Senate on the NBN deal is part of that process we need to purge our political system of undesirable characters, policies and processes. We need this purging to improve our standing in the international community.

A few days ago, Transparency International released its survey saying the Philippines ranked among the most corrupt places in terra firma. Unless we start posting good results in surveys like this, the outside world, especially foreign investors, are not going to take us seriously—not even after Amando Tetangco Jr., Bangko Sentral governor, announced the other day we have the best “fundamentals” in the last 10 years.

In the second quarter, the Philippine economy grew by 7.5 percent but the labor-force survey says we have not been producing enough jobs. This is why we are hardly making a dent on poverty.

Why? It’s because we are not attracting investments, be it local or foreign.

Investments promotions agencies like the Philippine Economic Zone Authority and the Board of Investments have been producing good numbers in the last three years. But when reckoned in real terms, based on the country’s national income accounts, those investment numbers hardly mattered as most of those “investments” were probably intercompany transfers that don’t build job-creating factories.

This is the backdrop of Tetangco’s analysis about our supposedly fantastic “fundamentals.” We believe we have good economic statistics, but then that is accounted for by the continuing diaspora of Filipino workers and expatriates.

It means we have those numbers for some bizarre reason: people leave for overseas placements either because they are sick and tired of local politics or for lack of economic opportunities, or both. And when they send their money back home, they produce “good fundamentals” that make government economic bureaucrats happy.

Well, the mall owners, of course, are happy as well. More remittances mean a very strong peso that cheapens imports and, therefore, raises profitability for retailers even if they don’t have to raise price tags so much. But it hurts factories, especially those that are producing for exports. That’s why the industry sector, when stripped of the contributions from construction and mining, has not been doing great.

In fact, the Philippine economy is probably “hollowing out.” Just like Tetangco, we believe the economy is undergoing an economic transformation, albeit it’s a transformation we are not going to be happy with. This is about business people shifting their operations toward nontradables, toward services, and shifting their factories elsewhere, like Vietnam, Cambodia, China and Laos.

They have to shift because the government is not doing anything to address the “strong peso.” They have to go elsewhere because the government doesn’t have the courage to do away with policies that hurt entrepreneurs and the economy, the latest being the tax amnesty and the law allowing nondisclosure of union members to companies where such unions are operating—both laws were “sneaked in” practically into the statutes books, because Malacañang merely allowed them to lapse into law, a classic copout by the government if there ever was one.

And entrepreneurs have to go elsewhere either because politicians are always squeezing them for bribes or because they can only get contracts if they offer the highest bribe.

Yes, Tetangco’s fundamentals are indeed good, but we need to address a lot of more fundamental problems, especially corruption that the NBN deal typifies, if we ever desire to get out of the current economic rut. (Written as editorial for BusinessMirror, 2 Oct 2007)

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