On the state of affairs at Camp John Hay Part IV: Role of Government

In Part III, it was mentioned that special economic zones are instruments to jump-start or boost a country’s competitiveness, to raise it at world class standards.  Here, Part IV, discussion is on the role of the public sector, the government, in the task.

The legal, regulatory, and institutional policy frameworks applicable include the Philippine Development Plan 2011-2016Special Economic ZonesPhilippine Foreign Investments Act, and Public-Private Partnerships.  The Philippine Development Plan 2011-2016, for instance, outlines the results framework for national competitiveness in which the goal is a globally-competitive and innovative industry and services sector contributing to inclusive growth and employment generation, among which strengthening special economic zones is a strategy.

In the global competitiveness ranking for 2014, the Philippines moved up by seven points from 2013, however, there remain persistent issues that continue to keep the country from finally emerging as one with a developed economy.  For example, in 2014, the top five most problematic factors for doing business in the country were

  1. Corruption
  2. Inadequate supply of infrastructure
  3. Tax regulations
  4. Inefficient government bureaucracy
  5. Tax rates

One notices that the above are factors from the government side.  Take no. 2 (inadequate supply of infrastructure).  The SEZ is a fine example of the truth behind the adage ‘no man is an island’ in that although it is an enclave from the rest of the community, it needs infrastructure support from that community which is represented by it’s Local Government Unit.  In the case of JHSEZ, for instance, critical infrastructure systems needed to enable it to operate as planned would include reliable electricity and water supply, telecommunications that comply with international quality standards, roads, market linkages, and sewage lines and facilities.  If the SEZ was to build and manage all of these, where is the incentive in investing and operating a SEZ?  The country might as well scrap it’s SEZ and Foreign Investments Acts.  Moreover, with the SEZ being a place where growth policies are pilot tested, it is the LGU’s role, the challenge it faces, to link the zone to the rest of the community, the nation, in tandem with the national government, and the world.  In essence, selling a brand.

How will the LGU do that?  First, it has to step away from a traditional mindset and practices that don’t work.  For instance, in the realm of economic policies and financial instruments.  Raising the competitiveness level of, say, Baguio City (with it, JHSEZ), folks at City Hall need to overcome reliance on just it’s annual allocation from the national coffer (or, the Internal Revenue Allotment) and as it’s mandate via the LGU Code think up modern ways, so to speak, of raising capital.

If only public officials and officers do that, they will find that there simply would be no more time to think up ways to one up the other.  In this case, the BCDA one upping it’s investor-partner.  The headaches that BCDA gave to the developer of JHSEZ since the start of their partnership in 1996 had been costly and wasteful in terms of people’s money and resources.  If these had been instead spent on strengthening the JHSEZ, as it is national government’s mandate on itself, the Camp would’ve been by now achieved it’s goal of a world class tourist destination.

Also it is a shame that locals especially those with vested interest in the Camp have remained silent in the course of this debacle and as such showed themselves as opportunists.  The Golf Club, for instance.  Who is the Club?  Are not they – locals – the Club, at least as partly owning it?  Having followed this news topic, I had long expected these locals to be the first to bang on the court’s door and make a case for government to leave them in joyful enjoyment of the golfing sport and Sunday buffets, free from the drawn out political push and pull.  The Club is a candidate of the Guinness Record as probably the only golf club in the world which if it happens is forcibly taken over by national government, and with it violation of individuals’ liberties and rights (i.e. freedom to pursue and practice hobbies or past-times, forced eviction from a property that was essentially put up via individual owners’ monies and with the forced eviction absence of private property compensation plan from government, to name a few).

This year will see the ASEAN Economic Integration hence the ASEAN Economic Community coming to fruition.  Among this Community’s objectives is a highly competitive economic region.  This implies that localities need to align themselves to that objective.  Doing so entails critical reforms, specifically, in line with preparations for the APEC Structural Reform Ministerial Meeting in September this year, on behind-the border barriers, or structural policy impediments (that) have become the more important obstacle to economic integration.  (These) barriers may come in the form of poor infrastructure, unclear property rights, complex licensing procedures, weak enforcement of contracts, excessive regulation of some industries, or an inadequate legal framework for competition.  (The) structural reform will open new opportunities for the private sector, especially for the small and medium enterprises, to take advantage of the gains that the economic integration can provide for local and international businesses.  The government, national and local, leads the way in these reforms, mindful that in no way will investor harassment and individual rights violations produce results that are in line with the desired economic objectives relative to SEZs. Beyond SEZs, government cannot claim to be a real reformer and peace maker when it reforms one and doesn’t the other or makes peace with one and snubs the other.

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