MAPping the Future
February 1, 2010

Tougher Panel for Presidential Forums

Presidential forums can be fun …or dismaying to watch. While we get occasional glimpses of insights of our candidates, they are rare, and what we get mostly are stock answers that had been rehearsed or even memorized-as some deluge us with torrents of words delivered in staccato fashion. It is not entirely their fault. The format hardly allows for reflective pause lest the candidates appear clueless, and the panel members do not follow through or worse, do not know how to follow through on their questions. Glibness or rote memory, thus, passes for brilliance.

A candidate is asked what he thinks is wrong with the country and he can rattle off any of the dozen things that we already know, and he won’t miss the mark. But the public is not edified.

To expound my case, I will pick only one item-Fiscal Deficit- among Noynoy’s list during his last appearance before the Makati Business Club. I chose Noynoy because as a fellow Liberal, I could be accused of bias if I pick on some other candidate.
Noynoy mentioned Fiscal Deficit as his priority concern. And he is right. The deficit has ballooned to P273 billion equivalent to 4.2 per cent of our GDP. But since he said that he would not impose new taxes or increase existing rates, his options have been reduced to curbing tax evasion and smuggling. And he knew his stats: BIR collection dropped by 5.5 per cent and Customs revenues by 16.6 per cent. Consequently, our tax effort slid down from 17.7 per cent to 13 per cent. He intends to increase it to 15 per cent, so that he could raise revenues by P150 million. Good, but how?

No one in the audience or among the selected interrogators knew that a Bill converting the Bataan Ecozone into a Freeport has just been passed by Congress. So, Noynoy was not asked follow up questions whether he supported creating more Freeports and how that would be compatible with his objective of reducing the fiscal deficit. Since I knew the dynamics of the “old boys” club in the House, it was the Senate that I expected to hold its ground. After all, since the creation of the Subic, Cagayan and Zamboanga Freeports in the early 90’s, no other Freeport had been established. Unfortunately, while the Department of Finance, PEZA, and even the Chamber of Exporters of Bataan Ecozone opposed the Bill, the Department of Trade and Industry to which PEZA is an attached agency, played politics and did not lift a finger to support PEZA from being dismembered. So what did President GMA do? She did not sign the Bill, but let it lapse into a Law. The President who pushed for the EVAT at the expense of the public (and caused the defeat of Senator Ralph Recto in the Senatorial election), did not have the will to veto a Bill that would punch a gaping hole in the Customs administration. Was she trying to please both sides?

But back to the Senators who were equally responsible with the Congressmen in passing the Law. A Senator, now running for Vice-President, who previously vowed not to let the “Freeport” provision pass, was author of the Senate counterpart Bill. Another, who is now a “Presidentiable,” sponsored it on the floor. And who among the Senators running for reelection voted yes? Maybe, they thought that one more hole does not a pockmarked ball of cheese make. But, as I asked in a previous column, if Bataan could be conferred a Freeport Authority status, could the same be denied Cavite, Mactan and Baguio?
And, true enough, not only these three (3) operational, Government – funded, Ecozones followed suit, but a whole slew of Bills creating new or converting Ecozones into Freeports were filed. Let me name them:
Approved on Third Reading for Bicameral Approval -Aurora Special Ecozone and Freeport
Approved on Third Reading for Transmittal to the Senate- Samal Island Special Ecozone and Freeport, Ilocos Sur, Davao Oriental, Misamis Occidental, and hold your breath, the Entire island of Cebu.
In Various Stages of Approval- Municipality of Caluya and its component islands in the Province of Antique, Sarangani, Surigao del Sur, General Santos City, Northern Samar, Southern Palawan, City of San Jose del Monte, Laoag, Bacolod City, Iloilo City, Romblon, Negros Occidental, Ilocos Norte, Davao City, Southern Leyte, Isabela, Pangasinan, Tawi- Tawi, Sangley Point, La Carlota City, and -hold your breath again- one in every Province and highly urbanized City in the Philippines! Columnist Boo Chanco was right. Why not declare the entire country a Freeport? That way, we eliminate smuggling altogether!

I fully understand why each Congressman would want to bring home the bacon when he sees the others doing it. Each Ecozone and Freeport Bill now carries a P2 Billion appropriation. Assuming a Congressman’s Priority Development Assistance (PDAF) averages P50 million a year, that’s equivalent to 40 years of pork for each one who brings home an Ecozone and Freeport mega-bacon, regardless of its viability. And yet there was a public howl when Malacanang increased the PDAF by P700 million to accommodate all Party List Representatives. The hidden leak from smuggling is compounded by the open leak of P2 billion funding from the Government. The Philippine Economic Zone Authority (PEZA) which was tasked to prescribe objective criteria for the accreditation of privately -funded Ecozones, will lose its rationale. The test for viability, i.e. the willingness of the private sector to risk its capital in establishing an Ecozone in a particular site, will be thrown out of the window.
But the most pernicious harm comes from the proliferation of prohibited drugs made easy through the Freeports. In Bataan, 80 per cent of all cases against persons and property, such as murder, homicide, rape, robbery, theft, etc. that clog the courts are drug induced or related. The fact that the Philippines is listed as fifth major source of prohibited drugs should compel our candidates to treat the drug problem as their foremost concern.
Recall the 746 kilos (a ton almost) of shabu chemicals that was accumulated (or what was left of perhaps a bigger stock) inside the Subic Bay Freeport Zone? Despite the more than a thousand Security Police, Harbor Patrol, Forest Rangers, Intelligence Officers, Cyclone wire with razor -sharp top fence, CCTV, Canine Units, etc., the perpetrators succeeded in shipping in and hiding the contraband goods. There was, obviously, a lapse in the SBMA administration (whatever happened to the investigation conducted by the Presidential Commission? Was any SBMA official held liable?) but a Freeport, admittedly, makes the task of Customs collection more difficult. An ordinary Ecozone confers equal fiscal incentives to investors such as importation of capital equipment, raw materials and supplies, income tax holiday, etc. as a Freeport. Thus, a Freeport status does not add any attraction to investors. But a Freeport is managed and operated as a separate Customs Territory, hence, any shipper can unload any goods in a Freeport, including oil and consumption goods, except contraband goods, without payment of duties and taxes, for as long as they stay, are consumed or exported out of the Freeport. Since they are not assessed for taxes and duties unless they enter the domestic market, they remain hidden in warehouses until the necessary “contact” is made to have them surreptitiously brought out.
Herein lies the danger. Who knows if the crates declared as containing cigarettes, chocolates or liquor do not hold prohibited drugs?


Felicito C. Payumo
F.C. Payumo was a three-term Congressman of the First District of Bataan and former SBMA Chairman and Administrator. He is Chairman of the University of Nueva Caceres.