The balancing act that will have to be Noynoy’s

economic agenda

Since the beginning of his campaign, “Noynoy” Aquino has made bold claims
regarding the loose ends left by the previous administration; now, the nation stands rapt
as its new president attempts to turn his promises into realities. Although the man has
laid down sensible plans to answer the whos, whys, and what nows of our nation’s
economic development, the gargantuan task that faces him leads us to wonder where and
how he will actually begin.

Dismembering and reassembly

The 19 days since his inauguration have shown us that setting the tone is just as
good a first step as any. Although the notion that loss of corruption causes the total
demise of poverty may be idealistic and even slightly misleading, Noynoy’s trademark
culture has already begun to challenge, in a very real sense, the longstanding norms
within Philippine politics and society as a whole—and it doesn’t stop at the wangwangs.

With so much conviction from up top and an admirably selective process for
screening appointees to key positions in government, past barriers to national progress
may find little room to flourish. In four words, “Kayo ang boss ko,” Noynoy set the
standard that might finally rewire our public offices to focus on the service and
accountability required of effective governance. As difficult as this renewed bond to the
social contract may be to carry out (recent headlines show that Aquino is struggling to fill
the top 5,000 posts), the consistency it promises is exactly what we need to kickstart
improvements in the economy.

In addressing certain issues identified by the Aquino administration as urgent, (i.e.

the budget deficit, rampant smuggling, and abuse of loopholes in investment and business
policies) it has been suggested that policy change will take a back seat. The Aquino
administration intends to first review existing protocols and practices, identify the
loopholes that encourage red tape and graft, and remedy the processes that are either
inefficient or illegal. The new secretary of finance, Cesar Purisima, justifies this approach
pragmatically when he says there is “no sense to put in more tax when the leak is there.”

As such, comprehensive audits are in order for government institutions whose

operations many have come to accept as “necessarily dirty”—the Bureaus of Internal
Revenue and Customs, to name a few—and promising projects, once buried for lack of
political will, are scheduled for resurrection. Such projects include the Run After Tax
Evaders (RATE), Revenue Integrity Protection (RIP), and Run After The Smugglers
(RATS) programs, under the BIR, Department of Finance, and BOC, respectively.

To plug some gaping holes

 Interestingly, the offices most under fire at the moment are some of the most
essential for the state to run properly. Because the BIR and BOC are the government’s
biggest revenue generators, the administration is in a precarious situation that requires it
to both rein in these offices and allow them to do their work. It is now necessary to find
alternative means of generating funds and acquiring them on Aquino’s terms.

Trade Secretary Gregory Domingo has shifted the spotlight onto the issue of
unnecessary tax incentives, which have sapped the government of much-needed funds for
years. While tax cuts reserved for development projects and foreign investors have gone
unquestioned, equally rewarding exemptions for big corporations that cater mostly to
domestic markets (and not exports) have rightfully raised eyebrows.

Since the first Aquino administration, the Board of Investments (BOI) has given
tax holidays to keep big businesses spending on our soil; but clearly, as a 2006 study by
the Philippine Center for Investigative Journalism (PCIJ) shows, such incentives should
make little difference to domestic producers. A brief excerpt from their report “Incentives
for the Rich Harm the Poor” paints a picture of the situation:

IT TAKES the tax bureau's southern Makati district office, housed at the
Atrium building along Makati Avenue, about a year to collect P13 billion
in taxes. Just a few blocks away, another government agency, the Board of
Investments (BOI), took just 14 working days to decide to grant the same
amount in tax exemptions to two of the country's most profitable
companies — Globe Telecom Inc. and Smart Communications Inc.

In other words, the government could definitely preserve its coffers by denying
incentives to entities that do just fine without them. Thankfully, the 2010 Investment
Priorities Plan (IPP) approved by the BOI last January has reduced the list of incentive-
eligible sectors to those that can ably take advantage of the global economic rebound, as
well as efforts in medicine, renewable energy, and disaster preparedness. However,
beyond sifting through industries deserving of exemptions is the need to monitor the
incentives that are approved. Since these tax cuts are legitimate government expenses,
the DTI would do well to employ a more stringent attitude in distributing these incentives
and evaluating their usefulness.

While Domingo’s resolve to tighten the screws around the seemingly whimsical
distribution of tax cuts will not go down smooth for big businesses, capitalists will have
to remember that they rise with the nation—that nation building is a job for the governed
as much as the government. (Besides, Smart and Globe were prepared to implement their
multi-billion peso projects even before their tax breaks were granted; why bleed
government resources more than they need to be, especially with the current optimism
that these resources will be put to better use than ever before?)

Within government jurisdiction

Other issues that Noynoy’s economic team will have to worry about have little to
do with numbers and everything to do with Filipino culture.

If hundreds were enraged when the television show Desperate Housewives

mocked “Recto-fied” medical certificates, how many will balk at the recent decision to
ban Filipino physical therapists from taking the US licensure exam? For once, there is no
one to blame but the Filipino students and review centers that cheated—yes, the
government is only liable in that it has permitted the crime and not committed it—but it is
still the government’s responsibility to take care of the 800-900 fresh graduates who have
lost their chance to apply for work abroad, at least for this year.

The Catholic Bishops Conference of the Philippines (CBCP) has also cashed in on
their democratic privileges, calling on President Aquino to scrap a mining law that allows
foreign investors to fully own local mining ventures. Not surprisingly, CBCP’s stance is
that the law will disenfranchise Filipino companies and wipe out smaller players, while
Aquino’s team believes foreign ownership will “develop the mining industry in a
sustainable manner and allow extractive industries to contribute to poverty alleviation”.

Additionally, although the CBCP has made no comment on this yet, there is the
possibility of backlash regarding Aquino’s intention to privatize the casino industry (for
obvious reasons). As counter as the entire nature of gambling is to traditional Christian
values, which influence 80-90% of the population, Aquino has been quite vocal in his
aims for the industry—which actually make a lot of sense and attractively combine
different motivations: profitability and culture. While Aquino wants to make the industry
grow in order to boost tourism and spur spending, he has clear boundaries, evident in that
he would not condone the proliferation of gaming establishment in places where there are
fewer tourists such as Cavite and Tarlac.

Conclusion

Aquino’s approach to the casino issue is actually an excellent example of the way
he will have to handle most of his presidency: (1) assess the situation, (2) make informed
and open decisions, (3) balance his plans with public opinion and need—and often make
compromises, (4) be firm, decisive, and run with what he believes to be best for the
country. It will be a challenge, certainly, especially because he needs to create change not
only within the government but among the citizenry as well.

For the administration to continue to generate revenue without resorting to

burdening Filipinos with steeper taxes, the need for the more accountable money-
handling and more honest business becomes imperative, and the wiser disbursement of
government subsidies will go a long way toward patching up the current leaks in our
tank. Along with streamlining tax collection procedures and ridding departments of
internal misfits prone to fraud and inefficiency, the main hope is that the Aquino
movement trickles down the government hierarchy and effects change where it has long
been deemed foolish. Early as it is in the game, we believe his current tactics will allow
him to simultaneously work with what he has and improve it, garnering the support of the
public and becoming a more effective leader in the process.
 What the President asks is reasonable, if not outright simple: that money be used
the right way, by the right people, and for things that the Filipino can genuinely benefit
from—this is admittedly a breath of fresh air. Will the distrust in government finally
dissipate enough to push our economy forward? Maybe… Hopefully. Idealistic as it may
seem, Aquino’s selling not just an agenda but a lifestyle; and buying into it just might
give us a chance at revival.