Thursday, October 18, 2007

A skunk by any other name

WHAT have Malacañang’s “gifts” to members of Congress and some local government executives got to do with an overvalued peso that’s hurting exporters and overseas workers and killing off jobs? Simple: that “gift,” Malacañang’s “politically correct” term for bribes, is the same reason why we remain one of the lousiest performers in terms of investment inflows.

The other day, the United Nations Conference on Trade and Development (Unctad) released its report on global trends in investment flows, saying that the Philippines is not attracting investments, specifically foreign direct investments (FDIs), compared with its neighbors despite its huge potentials. Unctad, in effect, is saying that those publicly funded investment-promotion agencies—and there are four of them—are pulling our legs every time they release those dazzling figures on investment commitments.

Apparently, many of those investment pledges never materialize after Board of Investments (BOI) and Philippine Economic Zone Authority (Peza) gave them fiscal perks, including tax holidays and duty-free importation of machines, among many others.

We say this because despite the exuberant numbers from both the BOI and Peza, the country’s figures on capital formation hardly improved in the last several years. Imports, likewise, have not been rising, an indication that business managers and factory owners are not investing in new machines. Nor are they upgrading their office equipment or buying new ones.

That’s the same reason why we have an overvalued peso that is hurting the country’s bread and butter: the exporters and the families of OFWs. The OFWs have been sending dollars in increasing amounts. The problem is the business sector, the factories and importers are not using much of those dollars due to political uncertainties. Thus, the accumulation of those dollars within the borders is causing the peso’s overvaluation.

In fairness, FDI figures released by the Bangko Sentral ng Pilipinas have also been posting encouraging trends. But it’s likely that those figures simply reflect intercompany transfers that don’t translate to the building of factories. Proof: the jobs picture has not been improving despite the tremendous hype about a 7-plus-percent growth rate in the last two quarters.

Why? It’s because of lack of investor confidence. Despite some good economic statistics, investors are holding back. They are waiting for 2010 when the Philippines has a new president, and they are hoping that we could have a morally viable presidency then than we have today.
Some growth areas like business process outsourcing, mining, banking, wholesale and retail trade, and construction—of course—are growing quite well, but that’s because investors would rather put their bets in areas where they have really great chances of succeeding. Determinants of these new growth drivers are quite predictable owing to factors like the availability of cheap, skilled and English-speaking white-collar workers; the rising dollar remittances that props demand for consumer items; and housing.

But they are not plunking their money into job-creating factories and infrastructure development because of so many unpredictable variables. It’s so difficult to win a bid for infrastructure projects here because of the administration’s tendency to favor suppliers that are also willing to offer bribes to local officials just to get the contract. Traditionally, most of our investments here are from American and European companies. But under the current dispensation, they are wary about committing resources because—as publicly listed companies governed by strict disclosure rules back home—they could never justify the extra cost (“politically correct” term for bribes) that they would need to put here just to win business contracts. Thus, when compared with Chinese firms, many of them state-owned—with so much money to splurge but with too little public-accountability requirements to be bothered with—American, European and Japanese companies are always at a “competitive disadvantage.”

It is through this lens that we need to look at the ongoing controversy regarding the national broadband network and the cyber-education project. The Senate is currently investigating these deals and we still cannot figure out where it will lead us to. But it seems some officials in the Executive have internalized the ethos of corruption and wholesale bribery so well as to come up with bribes—nay, gifts—just to secure the loyalty of the members of the House of Representatives and some governors.

It’s a “gift,” said Malacañang spin masters. No, it’s an “allowance” for legislative work, they said days after. No, those are funds intended to help finance development projects, they said another day. But we know it’s a bribe, pure and simple. There are no receipts, and the Department of Budget and management denied it released money from government coffers.
A skunk by any other name stinks just as bad.

So where did the money come from? One can only assume they came from illegal sources. There’s no other way to explain that.

Malacañang has practically institutionalized bribery right at the top. It’s so brazen that any person with a sense of decency would be nauseated just hearing about it.

It’s this endless tale of massive corruption in high places that’s causing all our problems, and preventing us from moving forward.

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