European Chamber of Commerce of the Philippines

To all the officers and members of the European Chamber of Commerce in the Philippines, led by its President Michael Raeuber,

Henry Schumacher, Vice-President and General Manager,

Other esteemed guests and friends from the Philippine business sector,

A pleasant afternoon to everyone!

Magandang hapon po sa inyong lahat!

Thank you very much to the European Chamber of Commerce of the Philippines for the invitation to be here with you in your membership meeting this afternoon. It is a true honor to be with our dependable friends, partners and facilitators from the European business community, and also from our very own Philippine business sector.

Not only am I glad that our respective schedules have permitted this meeting of ours to happen, considering that the past half-year has been a very particularly busy and hectic one for me in the Senate, as Chairman of both Committees on Local Government and Public Works.

I consider myself also lucky to have recovered quickly from sickness, caused by a rather unfortunate and isolated case of Father’s day dinner food poisoning. Or else, I would still be consigned to the sickbed at this time, perhaps generating more annoyance on your part than your genuine concern for my wellbeing!

Kidding aside, at any rate, I am pleased that this dialogue pushed through. So kindly allow me then to begin and impart to you legislative updates on certain matters under my watch and some comments on your preferred topics for this afternoon.

PPP

First, about Public-Private Partnerships (PPP). The Senate Committee on Public Works, which I chair, is presently hearing proposals to institutionalize Public-Private Partnerships (PPP) in the Philippines. The concept of PPP in the Philippines is not new, though. It has been around for some twenty-five (25) years already, popularly known—albeit inaccurately—by the moniker “Build-Operate-Transfer” (BOT) law.

To digress a little, I think on hindsight that its more proper and clearer name should have been: “Private Sector Infrastructure Projects” law.

Anyway, when President Aquino assumed office in 2010, he bannered PPPs as one of his administration’s flagships, and created the PPP Center through an Executive Order. Now, the present proposal in Congress, through a bill that I filed, is for the PPP Center to be formally created by virtue of congressional act, for more permanence and stability in the bureaucracy and to avoid possibility of obsolescence and its non-observance by subsequent administrations.

However, I note that there are still lots more to be done in the proposed law. One colleague of ours in the Senate, Senator Recto, is pushing for the inclusion of provisions that would ensure transparency, consumer protection, and Congressional oversight.

As for me, I want to ensure a smooth working relationship between the national government and the local governments, which, by virtue of their local autonomy, should be respected in their respective territorial jurisdictions. At the same time, local governments should not pose as stumbling blocks to the successful implementation of PPP projects. Moreover, I also want to ensure improved public service and more affordable rates for the people, just as much as I want to ensure a reasonable return on investments for the proponents.

We have instructed the PPP Center to revise the draft of the proposal to incorporate these aforementioned suggestions, and we shall resume hearings once Senate goes back for its regular session on July 27. Indeed, with the formal institutionalization of PPPs through congressional act, PPPs can be concrete and genuine accomplishments with strict and professional monitoring by an independent body, and not just mere PPPs or “Power-Point Presentations”!

Road Right-of-Way

Secondly, the present law providing for the procedure of acquisition of road right-of-way for government projects, embodied in R.A. 8974, is also being revisited, under the auspices of the Department of Public Works and Highways (DPWH).

The main improvement sought to be instituted in the proposed law is a faster and a smoother system of acquisition of, and compensation for, right-of-way easements in order to facilitate and hasten, in a mutually beneficial and just manner, the process of implementing government projects that tread on private property.

The Senate Committee is about to wrap up the technical working group meetings. In my conservative estimate, we can hopefully pass this in the Senate when Senate resumes—of course, barring unforeseen supervening events that can push it aside. The House of Representatives having already passed its version of the proposal in May, there is thus a strong likelihood that this could be enacted by Congress in the near future.

Restrictions on foreign construction firms

As to the implementation of restrictions on the operation of foreign construction firms, please allow me to thank the Chamber for bringing this up. For this is certainly an issue that involves national policy, which Congress is responsible for laying down.

This is also interesting, since the applicable law, Republic Act No. 4566, does not seem to set any foreign equity limits in the construction business in the Philippines. In fact, I was informed of a 2009 opinion by the Securities and Exchange Commission (SEC) to the effect that a 100%-foreign construction firm, without being the project proponent, can undertake the “construction stage” of an infrastructure project, subject to the minimum paid-up capital requirements.

In any event, I hope to coordinate with you further on this. May I request you to try to generate more public opinion and seek the relevant views of all the affected stakeholders on this matter. On my part, I can initiate an inquiry in aid of legislation, so we can revisit the intention and wisdom of the Contractor’s License law (R.A. 4566)—which, by the way, just celebrated its 50th birthday last week—and also study the policy implications of these restrictions set by the Philippine Contractors Accreditation Board (PCAB).

Indeed, this is important if we are to clearly determine the proper and consistent policy directions of our country, and balance the equally important State interests of promoting foreign investments and competition vis-à-vis protection of the local industry players—especially in light of the forthcoming ASEAN integration.

BBL

You are all perhaps aware that we in Congress, most especially myself as Chairman of the Senate Committee on Local Government, have been busy undertaking this huge task of studying and deliberating on the Bangsamoro Basic Law (BBL) as proposed by Malacañang.

Essentially, this bill aims to recalibrate the terms of the political autonomy granted to the Muslim Mindanao region, as borne out of our numerous peace agreements with the MILF.

However, the Senate Committee report prepared by Senator Miriam Defensor-Santiago has concluded that the draft BBL is unconstitutional, because it creates a “part-sovereign state” or a “sub-state”. Allegedly, the Bangsamoro government has all the elements of a State under the Montevideo Convention, namely: 1) Permanent population; 2) Defined territory; and 3) Capacity to enter into relations with other States. Thus, the report concluded that the draft BBL could not be passed by Congress in its original form without grossly violating our Constitution.

Regardless of its constitutional implications, the BBL expressly grants to the Bangsamoro Government exclusive government powers, previously withheld to the ARMM government under the present organic act (R.A. 9054 or the ARMM law).

Some of these exclusive powers include: the power of taxation; the regulation of trade, industry and investment and regulation of business; labor and employment; regulation of local power generation, distribution and transmission; mining policy; agriculture and food security, including the manufacture of food, drinks and drugs; land management and housing; regulation of public utilities, including take-over powers; regulation of the financial and banking system; among others.

Certainly, these great powers, among others, concern essential and basic public needs and services that are being supplied and provided by businesses and the private sector. These powers then have direct correlation and influence on the private sector, which the BBL expressly recognizes as a “mover of trade, commerce and industry”, and of which all of you here are vital components.

More importantly, by virtue of the draft law, since these are exclusive powers, the Bangsamoro legislature thus shall have the “authority to enact laws on matters that are within the powers and competencies of the Bangsamoro Government”.

Thus, within these particular areas deemed exclusive domain of the Bangsamoro government, the Bangsamoro legislature can enact laws that could effectively amend, render inapplicable or even entirely supplant important and relevant laws that otherwise apply to the entire archipelago without exception.

For example, the Bangsamoro government can enact and implement within the Bangsamoro territory its own tax code, labor code, trade and investments laws, banking laws, et cetera, et cetera.

Taxes being one of the things certain in life, there would surely still be a BIR, although this time it shall be called the “Bangsamoro Internal Revenue”!

Seriously, all these lead to the observation that the Bangsamoro government could in the future have a policy direction that is substantially different from, or at a great disconnect with, that of the Philippine government.

While these are all but speculations, they are nonetheless plausible scenarios owing to the lack of mechanisms that guarantee vertical alignment of policies with the national government and with the national development plan, as well as the lack of sure safeguards for consistency with the Constitution and existing laws.

To use a concrete example, we may all perhaps be aware that one of the primary and constant scourges of Mindanao is the unreliability of power supply, tangibly felt by Mindanaoans in the form of rotating brownouts. It is not only a cause of considerable annoyance to the people of Mindanao, but is also an acknowledged substantial impediment to the sustained progress and development of Mindanao.

Lake Lanao is a very important body of water to the Mindanaoans. It supplies and powers the steady stream of the Agus River, which in turn drives six (6) hydroelectric power plants, which collectively account for more than fifty percent (50%) of the energy requirements of Mindanao.

What would happen if Lake Lanao is allowed to be claimed by the Bangsamoro government as part of the “Bangsamoro territory”, under the BBL? Of course, control over it could be completely divested from the National Power Corporation (NPC) and transferred to the Bangsamoro government.

How can the national government protect the interests and welfare of the rest of the island of Mindanao, which is already beleaguered by power shortage and which is heavily dependent on the hydroelectric potential of the great lake?

In our hearings in the Senate, the Mindanao Development Authority (MinDA) has conveyed to Congress its position and the rest of the Mindanaoans who are just as much affected, that Lake Lanao should be excluded from the Bangsamoro territory, and should be maintained under the exclusive control of the national government for the communal use and benefit of the entire Mindanao.

As another example, in the area of mining, the Bangsamoro government can install a divergent mining policy from the rest of the archipelago, possibly with different bases and standards for mining bans and reservations. In particular, President Aquino’s Executive Order No. 79 of 2012 and “No-Go zones” could be rendered inapplicable in the Bangsamoro territory, by a single stroke of the pen of the Bangsamoro Parliament. It might also be claimed that the Bangsamoro government is not in anyway bound by the 2012 Responsible Mining Policies of the government or the so-called “Six-point agenda”.

I am mindful of all these ramifications and repercussions of this BBL proffered by Malacañang. I have vowed to consider all the relevant views and the helpful suggestions that the Committee was able to gather during its several hearings, in an attempt to craft an amended bill that is inclusive and beneficial to all, and to draft a committee report that will be acceptable to my colleagues in the Senate.

The task of drafting the amended bill is already daunting and overwhelming in itself; what more the succeeding task of sponsoring it in the Senate floor before my colleagues and defending it against their sharp and incisive interpellations?

Rest assured, I am going to do everything in my ability to see this through. I know it is going to be a difficult and tedious task. But I will stand my ground against any and all attempts to ride roughshod over the legal and constitutional processes, in blind adherence to the so-called “deadline” that was allegedly agreed with the MILF. We cannot allow that to happen. This proposed legislation impacts not only on Muslim Mindanao, but to the entire country as well, not to mention that it threatens our very sovereignty and territorial integrity.

There should be no railroading. No shortcuts. No threats of violence. No threats of war.

Let us do this right, and only via the peaceful and unifying means allowed by the Constitution and our rule of law.

I hope the people will stand by the same conviction that I have. I hope the business sector will also share my firm conviction. I am doing this in recognition and in respect of the various interests that stand to be affected and threatened by this monumental legislation, including those of the business sector, both local and foreign, which depend on the healthy operation of the markets in the Philippines for their survival.

Let me end on that note. I have said enough already!

You can count on my guaranteed objectivity and fairness and my wholehearted service and assistance to the Filipino people in seeing this to its proper and nationally beneficial conclusion.

Asahan ninyo na gagawin ko ang tama: tama para sa kapayapaan at kaunlaran sa Mindanao; tama para sa bansa; at tama para sa ating kababayan, lalo na para sa buong sektor ng pangangalakal ng Pilipinas!

This, I firmly hope and believe, is my humble contribution not only to successfully ending our country’s continued quest for that seemingly elusive and enigmatic formula for peace, justice and development in Muslim Mindanao, but also to the strengthening of our integrity and unity as one Filipino nation.

Again, thank you for your invitation, and I wish the Chamber a very meaningful and productive membership meeting!

Until we meet again!

Mabuhay ang European Chamber of Commerce in the Philippines!

Mabuhay ang pribadong sektor ng Pilipinas!

Mabuhay ang Pilipinas!

Maraming salamat po at magandang hapon sa inyong lahat!

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