(This is the edited transcript of the Question and Answer session between Department of Finance (DoF) Secretary Carlos G. Dominguez (CGD) and BusinessWorld Editor-in-Chief Roby A. Alampay (RAA) during BusinessWorld’s Economic Forum held on July 12 at Shangri-La at The Fort, Taguig City)
RAA: Secretary Dominguez, before we get into everything, the discussion on the national level, how are things now in Davao? Our editors note that land prices have been going up, there’s a lot of locational interests in Davao. How are things picking up and how does this audience look at Davao now? It’s already becoming a center of government of sorts, at the same time we know that the Duterte administration has a particular push to develop Mindanao.
CGD: Thank you. MVP [First Pacific Co. Ltd. Managing Director Manuel V. Pangilinan] just told me that Davao is the politically-correct city, and I think he’s right. Business is booming, and of course a lot of attention has been focused on Davao. But really, the big story is a lot of attention is now being focused on Mindanao as an area that needs development and that will probably be the major food basket for the Philippines.
RAA: And MVP touched on some areas: agriculture, tourism, mining of course. Is there any sector that the Duterte administration is looking at that was not touched upon by MVP?
CGD: Hardly any. But really, we’re looking more at infrastructure development particularly in the rural areas and we have lined up quite a number of projects for implementations either through PPP (Public-Private Partnership) or through government budget methods.
RAA: In terms of ramping up spending on infrastructure, everybody said we have to ramp up spending on infrastructure. Is there any particular bottleneck or innovation that you identified that can be tweaked, that can easily see spending and expenditures rise immediately?
CGD: We have noted that a typical PPP project takes 29 months from the average to get started, and definitely we’ve been discussing with the [National Economic and Development Authority], which is in charge of the PPP Center, as well as with the Budget Department that this process has to be speeded up and brought down to probably below 20 months.
RAA: PPP, from Day 1 of the previous administration was identified as a pillar. As the years went on, people were saying what’s happening, it doesn’t seem to be getting off the ground. Putting it bluntly, what went wrong with PPP? Why was it so slow in your view, in your review right now?
CGD: They stopped the PPP project for two years while they were reviewing everything. That is the mistake we’re not going to commit. We’re going ahead with all of them, we will just assume that the previous administration did the right thing and then we will push ahead, so there will be no hiatus in time for the PPP projects that are already in the pipeline so we’re not going to review them. The next thing we’re going to review as I mentioned earlier is we’re going to review all these procurement processes, we’re going to review the pauses of the approvals, and cutting down the red tape for getting all the approvals for all these projects.
RAA: Are these things, just like the FoI (Freedom of Information bill), you’re confident can be executed and improved just through EOs (executive orders) or are some of these things going through the legislative mill? And what’s the timeline for all of these reforms? On the procurement law, for example, cutting down red tape, some of the targets you mentioned, what’s the exact timeline that you’re looking at?
CGD: What can be done by EOs is going to be done and I suppose it will be the process that will begin and some of them will end within the first six months. Some items like the procurement law, tax reforms, do have to go through legislation. In fact, I have begun consultations with some legislators already on the tax reform law that we’re going to be proposing. So it has already begun. In the next couple of weeks, we will expand that consultation to include the private sector so by the time it hits the Senate or the House floors, there will already be some kind of consensus that has been built around these proposals.
Question from the floor: Secretary Dominguez, in the previous administration there has been so much talk by the then-finance secretary on how we are preparing for the [Asean] harmonization. As I understand it now, the [Asean] integration is here, it’s the harmonization now that many Filipinos seem to be asking “what’s that? Are we really ready for it?”
CGD: The harmonization program has begun, I don’t think it has been explained very clearly to everybody, and definitely that is again part of our subject matter for the consultative process. Again, just to bring to the fore idea that our government will be focusing on consensus building on a series of issues that are coming before the public. It’s very important that everybody or at least the majority is on the same page. And again you know I think I’ve said this several times, we are not going to do things unilaterally or pabigla bigla. I mean this is certainly going to require a lot of consultations as we have done in the Sulong Pilipinas project that we did in Davao last month. This will be a continuing process.
Question from the floor: Hello Secretary Sonny Dominguez. I have 3 suggestions for you. Number 1, is there any chance we can establish a foreign investment authority? It means a one-stop shop for the investor because many of my friend investors would like to invest in this country, they don’t know how to start, and there are lots of red tape in our government and why not establish a one-stop shop for foreign investment authority?
CGD: I believe that to some extent the BoI (Board of Investments) already provides that function, but if you believe it has to be focused a little more on foreign investment, yes definitely. There is another agency in government called the PEZA (Philippine Economic Zone Authority) which I think has been very helpful for foreign factories and foreign investors coming into the Philippines. In fact I wanted to go a step further. I will say that I think it’s more important for us to identify the kinds of investments we want and to go after the best companies in the world to come here, not just sit down and wait for them to come. I think a more pro-active approach wher
eby we identify say you know the top camera makers in the world for example, then go after them and make specific proposals for them to come to the Philippines. I think that’s better than just waiting here and whatever lands in our shores, we help them.
RAA: What about smugglers, what will be the penalty regime on smugglers? What would be some innovations there? Is there a hotline for the DoF?
CGD: Well on smugglers I guess it depends on what the crime is. Definitely we will be going after them. And it depends on what level of criminality they are doing, whether a fine, suspension, or jail. Should I ask for all smugglers to start surrendering now? After all Faeldon is there.
Question from the floor: Is Landbank-DBP merger pushing through?
Question from the floor: I’m Jun Palafox, an architect planner. Thank you Secretary Dominguez for sharing and for accepting the very challenging role. So the unsolicited proposal we can now put forward bold, revolutionary ideas. One of them, which I remember some from the business community have shared with me, is there a possibility of abolishing Customs and BIR? Number one, I worked for foreign government, Dubai. They have no personal income tax. Everybody just pay value-added tax. In our country, the corrupt and the smugglers are tax-exempt, they don’t pay taxes. Whereas all of us, the more honest Filipinos we pay taxes and with that value-added tax, even the corrupt and the smugglers will pay the same value-added tax as the very poor. If you don’t want to pay VAT, don’t go to the restaurant. And it is being done elsewhere in the world. Secondly, the Real Estate Investment Plan. When I studied it 14 years ago in Harvard, it was so simple and when it came here became so complicated and they have so many stupid, no not stupid, obsolete laws that make us less globally competitive.
CGD: Thank you. On the matter of the REIT (Real Estate Investment Trust) we will reopen the consultations about that. The first meeting we will have tomorrow evening is re-energizing, reviewing the IRR (Implementing Rules and Regulations) of the current REIT law.
RAA: We only have about a minute left. I’ll give it to you sir. Is there anything else you would like to add to your comments?
CGD: Nothing else I just wish to request you to listen to the president when he says obeying laws in the Philippines is no longer optional. And I’m sure he meant paying the right taxes as well as paying the right duties and taxes on your imports. Thank you very much.