“The tragedy is: time lost cannot be regained. Investor interest lost because we keep changing the rules of the game cannot be easily rekindled.”
Senators Imee Marcos and Chiz Escudero posed a legal conundrum on the Day One veto of the Bulacan Airport City Special Economic Zone and Freeport Act.
If the 18th Congress has already adjourned, to whom is the presidential veto being addressed? The Senate is a continuing body, with 12 senators who were elected in 2019, and whose terms end three years from now, even if its leadership positions have become functus oficio.
The House has yet to be convened on July 25, when they elect their Speaker and other key positions in time for the State of the Nation Address.
So is President Marcos Jr’s veto necessary, or has the inaction of the Duterte administration as of 30 June deemed the enrolled HB 7575 lapsed into law? Or, should the same be re-filed in the 19th Congress?
Apparently, quantum caution got the palace to rush a veto message, addressed to the non-existent leadership of both houses of Congress.
The issue will of course become mute, because legislators and the executive have announced that they will “cure” the defects which the president in his veto message highlighted. A more acceptable version will be filed in the 19th Congress, when, expectedly, Speaker Martin Romualdez and Senate President Miguel Zubiri are elected.
If not for the end of President Duterte’s term on June 30, the bill, if un-acted upon by him, would have lapsed into law on July 3. But then again, there was a 14-page memorandum submitted by the Secretary of Finance, Carlos Dominguez, dated June 2, asking Pres. Duterte to veto the bill.
In the memorandum, Dominguez cited powers exempting the Bulacan EcoZone Authority from economic regulations recently amended by Congress (such as the CREATE Law) but also “more importantly, regulations made in the exercise of police power as implemented by National Government Agencies.”
Dominguez argued that the objectives of HB 7575 can be met by the implementation of the CREATE Law where “eligible enterprises may apply for and avail of tax incentives… subject to the review and approval of the Fiscal Incentives and Review Board.”
But that is precisely refuted by Sen. Imee Marcos, who stated in an interview that the intent of the legislation which she sponsored as Chairperson of Economic Affairs, and got 21 senators to approve, precisely wants to cut through the bureaucratic rigmarole of the FIRB controlled by the economic managers, so as to create a more stable incentive package for both foreign and domestic investors to invest their capital, and thus create more and better jobs.
There would be “enormous tax leakages” if the bill becomes law, the former finance secretary averred. To which Sen. Marcos said that there would be no tax revenue loss because there are no revenues collected in the present state of the location in the seaside town of Bulakan, Bulacan.
The man on the street would say, “Oo nga naman.” If no businesses would locate in those foreshore lands, what lost tax revenues are we talking about?
Our economic managers argue that investments are not necessarily lured into the country by tax incentives but by “a more stable business environment.” The Dominguez memo further states that according to the Philippine Statistics Authority “the difference in poverty incidences of provinces with eco-zones versus those without is insignificant.”
But that is because Congress in the past created so many eco-zones, virtually every congressman wanting to parade his province as an economic zone without any consideration of its comparative advantage.
Indeed, there are “ecozones” which bear nothing but an entrance arch in its ingress proclaiming it to be such, without locators, and with nary an interest for anyone to invest.
But that does not diminish the fact that the growth of regions like Calabarzon and Central Luzon are, to the greatest extent, a function of these economic zones, whether run by PEZA or by the private sector accredited to it.
If poverty incidence is high in Cagayan province where Juan Ponce Enrile formed CEZA, blame it not on the law but on the implementation of the same.
The same goes for the economic zone in Aurora province.
Still, Mactan is what it is today, having created thousands of jobs because a former airbase was converted into a special zone with tax incentives. Ditto Subic, and Clark, Cavite, Laguna, Batangas, etc.
The issue is between a rock and a hard place, as the saying goes.
Do we want more jobs for Filipinos forced to leave the country because they find a lack of economic opportunity here? More jobs for the millions who are currently unemployed, pre and post-lockdowns, and the many more who are under-employed?
Or is premium to be placed on government’s ability to raise more and more future tax revenues even if these are yet to be realized (the memorandum gives us a whopping sum of 1.62 trillion pesos of “foregone” revenues based on VAT and income taxes alone) on a yet to be built, yet to be developed marshland with nothing but dalag and hito populating it, giving a hand-to-mouth existence to the few hundreds eking survival on these lands?
Let’s face it. We are not exactly the hottest kid on the regional bloc when it comes to attracting investments. FDI’s go to Singapore, Vietnam, Thailand, Indonesia, and now are looking at Cambodia, even Myanmar. Our archipelago is not a favored destination for capital.
Our labor costs are not that competitive any longer, even if that is offset by relatively competitive labor skills (which are rapidly deteriorating, given a decrepit educational system).
Our electricity costs are the highest in the region, fighting toe to toe in high prices with uber-developed Japan. Our infrastructure pales in comparison with Thailand, and now Vietnam and Indonesia, even with the Build, Build, Build initiative of the Duterte administration.
As former Sen. Dick Gordon kept saying, “we should prioritize job creation over immediate revenues.” Revenues will come, if the investment come-ons are attractive.
Anyway, we are consoled by the executive announcing that they just want to “cure the defects” of HB 7575 in the next Congress.
The tragedy is: time lost cannot be regained. Investor interest lost because we keep changing the rules of the game cannot be easily rekindled.
I need not cite the big names in the international business community where, as I understand, San Miguel has been kindling interest in the sleepy town of Bulakan. Our colleague in the Standard, Tony Lopez, estimates 200 billion US dollars in potential export revenues alone. That is 12 trillion pesos, by the way, reckoned at 2023 exchange values.
And sure, the veto does not cover the franchise on the Bulakan airport, but, then again, how financially viable would the airport be if nobody locates in the surrounding areas because of our “bigay-bawi” attitude on FDI’s?
The other question that I wonder about, and surely many more wonder is: Why didn’t the former president veto the bill in his time, given that there was a Dominguez memorandum as early as June 2? Why pass the buck to a new administration whose ostensible deadline “to be or not to be” was June the third?