analysis
Nationalize Power Industry!
By Ray L. Junia, Publisher
Something scandalous about the nation’s power industry – it’s in the hands of few oligarchs!
From the Sys to Lopezes, Aboitizes and Consunjis, they are in control of a multi-billion peso industry, virtually placing millions of hapless Filipinos at their mercy.
In recent years, new players emerged with just one driving obsession – rake in billions of pesos in profits like literally squeezing blood from stone.
They include the old-rich Ayalas, banking magnate George Ty and, of course, listed retailer Meralco controlled by Indonesian conglomerate Salim Group through controversial “point man” Manuel V. Pangilinan (aka MVP).
From generation to transmission and distribution of electricity, the oligarchs are just everywhere, placing them in a vantage position to dominate – and dictate – the nation’s economy.
Like A Sore Thumb
Among industry players, Meralco prominently sticks out like a sore thumb, it being the most vilified for raising its power rates to exorbitant levels sans public consultations, in cahoots with an inept Energy Regulatory Commission.
While it cost the Salim Group billions of pesos to buy the Lopezes’ controlling stake in Meralco, their return on equity (ROE) had been awesome, if not mind-boggling.
Based on the firm’s annual reports, Meralco’s (ROE) and profit margin have risen several folds since 2008.
From just five percent in 2008, Meralco’s ROE steadily increased to 10 percent in 2009, 16 percent in 2010 and 25 percent in 2012.
This means that the ROE of Meralco has ballooned five-fold in a span of just five years.
In comparison, Meralco’s 2012 ROE of 25 percent is much higher than the entire power industry’s estimated average of around 15 percent.
From Filipino Pockets
Yet, Meralco has been stingy as far as complying with the government-mandated refund to its customers is concerned.
Apparently, Meralco’s foreign owners want to reinvest elsewhere such as in Singapore and Myanmar the profits they earned from the pockets of ordinary Filipinos.
In Singapore, Meralco acquired last February two brand-new natural-gas-fired 400-megawatt generators valued at US$1.2 billion with earnings from its Philippine operations.
Analysts say that had they been built in the Philippines, Luzon’s 8,000-MW capacity would increase by 10 percent and would have decreased incidence of brownouts and brought down Meralco’s high electricity rates.
Meralco’s defiance is an offshoot of the government’s glaring pro-business, anti-poor policy stance.
Blame, of course, rests squarely on the government’s lack of political will to resist the policy dictates of multi-lateral financial institutions which have a stranglehold on the government’s finances.
Foreign Meddling
For instance, the Electric Power Industry Reform Act (Epira) was passed by Congress in 2001 under threat by the World Bank, the International Monetary Fund and the Asian Development Bank to freeze the bailout funds for the once debt-saddled state-run National Power Corp. (Napocor).
Epira was nursed in its infancy and continue to be protected by its principal author, Sen. Sergio Osmena, who has chaired the Senate committee of energy for the longest time now.
Meant to foster competition in the power industry, Epira turned out to be a toothless law, unable to check its rampant violations by profit-hungry power firms and protect consumer interests.
For more than a decade, Epira failed to check the unabated surge in power rates, one of Asia’s highest, the reason why foreign investors shied away from the Philippines.
Ironically, Epira bred the rise of twin evils of monopoly and oligopoly in the power industry, precisely the key objectives it wanted to eradicate to bring sanity to an industry which has gone berserk with endless rate increases.
Not content with just distribution, some players like the Lopezes and Meralco also ventured into generation and transmission, enabling them to dictate market prices at will. Here the family of the wife of Sen. Osmena and Meralco appears to have violated the law on cross ownership that will allow them to control prices.
Fire Sale
Suspicions of shady deals also surfaced, largely attributed to certain loopholes in the Epira law on which some capitalists exploited to the hilt. In gist, Epira called for the fire sale of state-owned power assets even at grossly undercut prices from their appraised value.
How and why ethnic Chinese taipan Henry Sy ventured into power when his core businesses revolved around retail, his flagship that catapulted him to become one of the world’s richest.
It may be gleaned from how the cash-strapped government resorted to a fire sale just to dispose of its power assets as fast as it could.
From out of the blue, the cash-rich Sy has wrested control of the previously state-owned National Grid Corp. of the (NGCP), the company transmitting power to its franchise areas across the country.
Once Napocor’s money-spinner because of its extensive transmission network, NGCP – formerly called Transmission Corp. (Transco) – was sold to Sy for just US$3.95 billion in early 2000.
The taipan, known for his shrewd sense of business, made a down payment of US$987.5 million and promised to settle the balance of US$2.962 billion or P148 billion within 15 years. Why this was allowed had many guessing the answers but surely raised eyebrows while stirring suspicion of another sweetheart deal.
No Such Efficient Market
But reckoned with its strong balance sheet, the NGCP has been making P15 billion annually, hence its income in 15 years would work to P225 billion. That translates to P77 billion profits for Sy.
Amid the power industry’s bleak outlook, calls are mounting to repeal or amend the Epira law by nationalizing or de-privatizing the highly cartelized power industry.
By and large, the power industry is just too important to the national economy to be left to free market forces.
In most countries, power is highly regulated, owned by the state to a substantial degree, and subsidized by public funds.
Looking back, the EPIRA law was apparently enacted on the premise of an existence of an efficient free electricity market, uninhibited by government.
Unfortunately, there is no such market in the Philippines. Its electricity market is controlled by an oligopoly.
Foreign Interests
While debates are split on whether to nationalize or not the power industry by scuttling the Epira law, there are those who expressed caution against such move.
In a joint statement last week, some groups representing foreign businessmen believe that scrapping or amending Epira will not solve problems hounding the power industry, but will confuse investors regarding the investment climate in the country.
“If EPIRA is sent back to Congress for review, the uncertainty it will introduce into the regulatory regime of the power industry will lead to a potentially chaotic system, and worryingly put our future needs at risk at a time when our supply of power is marginal,” the statement read.
It warned that without stable rules and good investment climate in the energy industry, international and local investors will steer away from making investments in that sector.
But among lawmakers, there’s an emerging consensus that Epira has failed to promote free competition to benefit the consumers and likely to push for some changes in the government’s power privatization policy with a nationalization bias.
Any paradigm shift can’t gloss over the fact that the law has been used as smokescreen to hide patterns of collusion, monopoly and oligopoly among industry players to deceive the consumers without even knowing that they are being robbed.
RESIGN!
The die is cast.
The more the pork scam drags on, the more its money trail leads to the centers of power.
From President Aquino, the collateral damage has spilled over to his inner sanctum led by Budget czar Butch Abad.
Abad, who wields the enviable power of the purse, is believed to be the hidden hand pulling the strings behind the pork barrel drama.
The self-confessed architect of the infamous Priority Development Assistance Fund (PDAF) inexplicably made himself scarce since the scam hogged headlines over the past months.
While his peers turned themselves into Pnoy’s own bunch of apologists, the former solon from typhoon-battered Batanes Island kept himself away from public view – and scrutiny.
His silence on the controversy is not only deafening, but also intriguing.
Finally, he turned gutsy last week, apparently bugged by insinuations that he’s the “pork king” alluded to by reports quoting sources close to Janet Lim-Napoles, the alleged pork barrel queen.
“These fresh allegations that I tutored Napoles in designing the PDAF scam are simply not true,” Abad said. He has been used to being called names since he served the Aquino administration starting in 2010.
But ‘‘pork king?” Certainly not, he said, describing it as the “most ridiculous” he ever heard. “It would in fact be funny if it weren’t such a blatant lie.”
Inescapably with Aquino and Abad in the eye of the pork scam, dyed-in-the-wool political allies House Speaker Feliciano Belmonte and Senate President Franklin Drilon can’t be far behind and turn deaf and blind to mounting calls for them to call it quits.
Broadband Interconnection
BINDER: Many companies have already thrown in their support to the proposed Broadband Interconnection for National Development and Emergency Response. This might sound like the National Broadband Network (NBN), but it is not. NBN is technically just a Value Added Network (VAN), but it does not have Value Added Services (VAS). As I proposed it, BINDER will be not only be a VAN, it will be the backbone upon which an infinite number of VAS could be attached to it, so that these could function and operate.
VAN-VAS ARCHITECTURE: As it was supposed to be (but it did not happen), the government was supposed to build the VANs, and that would have enabled the private sector to attach their own VAS, without spending too much on their own infrastructure. This would have lowered the cost of services, because the private sector would not have too much investment to recover. This is similar to what happened in the case of the network of roads and highways that were built by the government. With these in place, the private sector was able to provide the land transportation services that are now running on these networks.
PRIVATE TOLL WAYS: We pay our taxes and in doing that, we expect the government to build infrastructure like roads and highways. As it happened however, the government was not able to build the superhighways as it was supposed to do, and that is why private companies had to build and operate the private toll ways, and that is why we have to pay money as we pass through. In a way, this is like double taxation, but that is what is happening, because what was supposed to happen did not happen.
INFORMATION SUPERHIGHWAYS: Since the government was not able to build the national broadband networks as it was supposed to do, the bigger companies decided to build their own information superhighways. As it was supposed to be, these private information superhighways were supposed to operate only as VANs, because the original intention was to give the smaller companies the opportunity to provide the VAS components. As it happened, the bigger companies monopolized the business by running their own VAS components in their own VANs, thus leaving out the smaller companies.
INTERNET SERVICE PROVIDERS (ISPs): As it originally happened, the smaller companies were buying bandwidth from the VANs of the bigger companies, so that they could provide services to the general public as the ISPs as we knew them before. As it eventually happened however, the bigger companies started providing internet services on their own, thus breaking the ethical rule that the producers of goods and services should not compete with their own wholesalers and retailers. As it happened, the ISPs went out of business, leading to the monopoly of the VAN-VAS businesses by the bigger companies.
PATCHWORK CAN WORK: Since the bigger companies have already built their own VANs (they all have their own separate networks), it is now possible to build a nationwide (as in national, if you get the drift) broadband based interconnection, by simply patching (as in interconnecting them) together, to the extent that they would allow it. For many years now, I always find myself in the company of government planners who would always want to build a “brand new” national broadband network, instead of a patchwork. They would be in the right place if they were working for a superpower, but there is really nothing wrong if a developing country would choose instead to patch together what is already there.
FOUR MAJOR TRENDS IN COMPUTERIZATION: The four major trends in computerization are (1) cloud computing, (2) big data, (3) server virtualization and (4) storage scalability. As it used to be, private companies and government agencies had to invest a lot of money in building their own data centers, thus incurring too much costs in servers, storage and facilities management. As it is now however, they have the option of getting (acquiring) these services from “the cloud” (meaning from remote offsite locations). As it used to be, it was very difficult to manage and mine huge data assets in an economical and efficient manner. As it is now however, there are newer technologies to manage and mine the “big data” robustly, no matter how big and diverse it is. As it used to be, hundreds of servers were needed to run big data centers. As it is now however, servers could already be “virtualized”, thus needing lesser servers and smaller space. As it used to be, servers and storage devices were “married” as one. As it is now however, these are now “divorced” and the storage spaces are now scalable.
THE BETTER SIDE OF BUSINESS: I worked for San Miguel Corporation (SMC) when its corporate motto was still “Profit with Honor”. The motto is long gone, but SMC along with many other companies are now practising “Corporate Social Responsibility” (CSR for short). As it used to be, corporate philanthropy was a one way street, meaning that corporations gave money to worthy causes without expecting anything back, except perhaps a good image and goodwill. As it is now however, corporations have the option to get back something from their donations, in the form of tax credits that they could deduct from their net taxable incomes. It does not really matter whether corporations would give donations in exchange for something or for nothing, as long as they give to worthy causes.
SYSTEMS INTEGRATOR AND PROJECT MANAGER: Many companies in the Information and Communications Technology (ICT) sector have their own CSR programs in pursuit of their own corporate objectives. Since I know many of the officers from these companies, I volunteered to become the “Systems Integrator” (SI) and “Project Manager” (PM) of a shared network that would be built from a patchwork of donated hardware, software and services, combining whatever surpluses they could donate. This is now the BINDER project.
For feedback, email iseneres@yahoo.com or text +639083159262
Money Wins
By Ray L. Junia, publisher
Binay is aware of MVP’s anti-politics stance, but feels his much-vaunted technocracy is what the country needs in the face of a globalizing economy.
Speculations are rife that business mogul Manuel V. Pangilinan (aka MVP) may yet throw his hat in the political arena come 2016.
That depends though on the ongoing talk between the emissaries of Vice President Jojo Binay and MVP for their possible tandem in the next presidential elections.
From the rumor mill, word leaked that Binay personally handpicked his emissaries, some of them MVP’s Ateneo classmates and business leaders, to persuade the tycoon to join politics.
That was the same tact used by then presidential bet Richard Gordon in the last national elections when he wanted to rope in MVP as his running mate, but the tycoon begged off.
Binay is aware of MVP’s anti-politics stance, but feels his much-vaunted technocracy is what the country needs in the face of a globalizing economy.
Capital Market
MVP, an IVY League-trained investment banker, has built a multi-billion peso corporate empire, spanning from Indonesia to Thailand, Hong Kong and the Philippines, under the umbrella of Indonesian conglomerate Salim Group. Their businesses cater to every human need – from womb to tomb.
Some of the MVP-steered companies are among the biggest – in terms of assets and revenues — not only in the Philippines, but even throughout Asia as well.
They include the blue chips Philippine Long Distance Telephone (PLDT) and Meralco whose listed shares allow the public to own them via the Philippine bourse.
In more ways than one, PLDT and Meralco help woo foreign investments in the capital market, an integral part of the economy.
Being public utilities, their rising rates may drag down, however, MVP’s popularity come election time.
Campaign Weapon
Most likely, other contenders will associate MVP with a regime of high prices as a campaign weapon against him.
But politics is a game of numbers which often fluctuate depending on prevailing risks and opportunities.
Taking all things equal, MVP may yet emerge as a surprise package, given the rough-and-tumble nature of politics in a country long driven by partisanship.
There’s another hitch to Binay’s likely choice of MVP for the nation’s second highest public office.
The plunder cases notwithstanding, Senator Jinggoy Estrada minced no words in making himself available as Binay’s second in command for the 2016 polls.
Jinggoy’s preference has caught Binay in a bind since they belong to the opposition party UNA along with Jinggoy’s father, Manila Mayor Erap Estrada, and Senator Juan Ponce Enrile.
Why MVP?
Batangas Governor Vilma Santos, wife of Senator Ralph Recto, and Gawad Kalinga founder Tony Meloto are also being bruited about as Binay’s possible running mate, but both have declined so far.
Reckoned with the credentials of movie actress-cum-politician Santos-Recto and low-cost housing builder Meloto, why MVP?
So far, only Binay has openly declared he’s gunning for the presidency when Aquino’s six-year term ends by 2016.
As if MVP is on top of the heap, so to speak, Binay somehow hinted his bias and preference for the tycoon as his running mate for VP.
“If possible, the person should have a track record that will be of help to us in improving the country. Who can give that but of course an economist,” he said, apparently referring to MVP, himself an economics graduate cum laude from the Jesuit-run Ateneo de Manila.
No Formal Talk
Citing his experience as a local government executive, Binay recalled the days when he was mayor of Makati city, the country’s financial hub.
“One of my guiding policies when I was a mayor was to run the city government of Makati as if it were a corporate entity, “he said.
In wooing MVP into his fold, Binay believed he could prop up the values of efficiency and effectiveness in governance to get votes once the campaign in the run-up to 2016 heats up.
He noted that MVP’s experience as an investment banker could be an advantage to the new government as funds would be needed to push projects that address poverty, unemployment and other socio-economic ills plaguing the country.
Binay clarified though that he has not had formal talk with MVP who began his career as an investment banker in Makati city in the early ‘60s.
Technocrat
Although they met on several occasions, Binay said, they did not discuss the 2016 polls.
Once rumored eyeing the presidency, MVP stands out as one of the most powerful men in the country, being at the helm of companies that are leaders in industries considered crucial to the Philippine economy.
These include the infrastructure giant Metro Pacific Investments Corp., biggest gold producer Philex, as well as Metro Pacific Tollways Corp., and Maynilad Water Services Inc.
So far, MVP has kept mum on what may be described as a snowballing move to draw him to what could be his unchartered territory – politics.
Last year, some political commentators believed that MVP evoked strong potentials for either as president or vice president, citing his impeccable credentials as a business leader and a technocrat.
They noted how he turned around the once loss-making companies such as PLDT into highly profitable ones because of his management skills and expertise.
Outburst
But MVP, who has long shunned politics, said in a statement that “there is no political blood that runs through my veins… I believe I can serve our people better some other way.” To him, his role as a businessman is enough to help the country’s economy grow.
Nonetheless, the tycoon agreed that elections ‘provide a rare opportunity to define the country’s long-term economic and social priorities, and form a broad consensus around them.”
That sense of optimism is a far cry from what he uttered some two years ago – “kung ako lang,” he was quoted as saying, “I’d pack up and go back to Hong Kong,” headquarters of the Salim-owned flagship First Pacific Co. Ltd. “Ang gulo-gulo n’yo!” (You are troublesome)
That infamous outburst, which has gone viral on the internet, was an angry reaction to how critics demonized him for kowtowing to Beijing in his bid to form a joint venture with a state-owned Chinese company to explore oil in the Spratlys, claimed by both the Philippines and China.
Likening MVP’s move as “sleeping with enemy,” critics lashed out at him over his plan to allow the Chinese to explore part of the nation’s territory.
MVP may cite one plausible explanation that business is business since his group holds a substantial stake in the exploration rights granted by the Aquino government to an oil field in the Spratlys, also referred to as west Philippine sea.
Whatever it is, the torrent of criticisms could be a litmus test of MVP’s expected transition from a hassle-free corporate milieu to the abominable dog-eat-dog world of politics.
MVP Is The Wrong Leader
To MVP, abominable is not how he would describe Philippine politics even with his pretensions to be fed up with the dirty ways of our politicians. From all indications he has mastered the art of Philippine politics as he has turned out to be the master of many of the country’s political leaders.
It is common suspicion that many of the country’s political leaders are in the payroll of big business. And MVP is one at the front of big business. This suspicion has earned credence from the favored concessions big business get from the government.
That MVP could be tempted to run for vice president or president is a perception created by MVP himself. That the thought sometimes flirts in his mind could be a product of his experience in making his principals’ money win candidates who don’t deserve to be in office.
Should MVP take the dive into politics, preferring not to be simply the manipulator, there is strong reason he will win. He has command of billions of pesos in money machines and control over national media.
Then we will have placed another wrong person to lead this country from poverty, for while he has been active in corporate social responsibilities and sports, the truth is, he is one of the major reasons the country is very poor and why millions are without jobs and penniless.
MVP for 2016 VP
MANNY V. Pangilinan has repeatedly said he is not running for President in 2016. But he could be running for Vice President, instead. That is, if Vice President Jejomar Binay got his way.
Speaking to reporters, the former mayor of Makati City confirmed he is considering MVP as his running mate in the 2016 polls—and with good reason.
Considered as one of the most influential men in the country today, MVP is the perfect running mate for any presidential aspirant since he is at the helm of corporations and industries crucial to the Philippine economy: Philippine Long Distance Company, infrastructure giant Metro Pacific Investments Corp., Manila Electric Company, Metro Pacific Tollways Corp., Maynilad Water Services Inc., gold producer Philex Mining and the biggest local power player Manila Electric Company. And with vast holdings in media, health services and various other industries, MVP already wields enough power and financial resources to propel his chosen political allies into the halls of power come 2016.
But MVP is not the only person in Binay’s list of potential bets for VP. Last month he was mouthing off the name of another MP—that of Saragani Representative and boxing legend Manny Pacquiao—as running mate. Another potential mate for Binay is Ate Vi, Batangas Governor Vilma Santos Recto. But like MVP, Vilma has also repeatedly stated that she has no plans of seeking higher office in 2016.
With 2016 just around the bend, the Liberal Party is said to have already begun to raise funds for the campaign kitty of its next presidential standard bearer be it Mar Roxas or Kris Aquino. The LP, too, would benefit immensely having a man of MVP’s stature in its corner.
Let’s put ourselves in MVP’s shoes for a minute. Would it be wise to associate with any single political party in 2016? We think it’s not. And MVP knows it very well that for the sake of his business empire it is best to remain neutral and to stay out of politics.
“There is no political blood that runs through my veins,” MVP said back in October. “I believe I can serve our people better some other way,” he said.
Business and politics do not make good bedfellows. By staying neutral, MVP can play all sides of the fence and emerge a winner regardless of the outcome of the 2016 polls. All he has to do is to spread his bet—put money on the ruling party, on the opposition and the long shots, too. This way, MVP’s business empire is guaranteed to survive and thrive beyond 2016.
Delusional Patriots
IT is very natural for people to disagree with one another. Each human is created unique and distinct or, in a real sense: without equal. E.g., take an event, like a basketball game witnessed by a thousand spectators, and you can expect from them a thousand accounts with variances in perception, understanding, enjoyment and what have you.
Differences should never spawn ill feelings. They are like rains that come in cycles alternating with sunshine. Let us welcome them as opportunities for building healthier relationships, resting assured that the laws of God and of Man are precisely the infrastructure of just and orderly societies. Significantly, as there is a “carrot and stick” discipline for homes and schools, so also is there a system of “crime and punishment” in the wider environment beyond their fences.
Let us therefore acknowledge and accept life’s greatest challenge: to doggedly temper irreconcilable differences, to generously give or give in, or otherwise make sacrifices in order to strengthen or preserve the whole of which we are each expendable parts. Given the cited infrastructure, there’s no reason why peace is not attainable in our blighted land.
Eternal patience
Last March 29, the Nationalist People’s Army (NPA), the military arm of the Communist Party of the Philippines (CPP), somberly observed its 45th Anniversary barely a week after the capture in Cebu of the two highest officials of the CPP-NPA network, along with 10 others. Apart from being a blow to the morale of the commies, the arrests are certain to set back their calendar of armed operations against government buildings and military installations, not to mention populated civilian areas.
In dealing with communist rebels, not to mention their Moro counterparts down south, civilian and military authorities have demonstrated eternal patience. Indeed, legislating, listening, negotiating, giving carrots and bending backwards to spinal discomforts have long become the norms of official policy. But what happens if carrots do not work any longer? Dialog after dialog has not worked. Ceasefire after ceasefire has not worked. Amnesty after amnesty has not worked. Of late, the peace process has ground to a halt…no thanks to the Reds!
Time for the sticks
My personal reaction to the recent arrest of twelve communists in Cebu, including the CPP-NPA Chair, his wife and five others who reportedly comprise the highest Maoist ruling body in the country today, is: “Good. Charge them all immediately with Rebellion. With respect to leader Benito Tiamson and his wife Wilma, Secretary General and Finance Chair of the Communist Party of the Philippines, against whom warrants of arrest for Murder and Frustrated Murder had long been issued, their criminal prosecution should commence without delay, unless of course the said crimes were committed in furtherance of rebellion, in which case they should be tried only for Rebellion”.
Ringing hollow is their claim that their arrest would only set back the on-off series of peace talks started over 25 years ago, since it is a documented fact that they have cavalierly derailed the peace talks with constant absences from scheduled meetings, not to mention their programmed forays into traditional targets anytime they choose. Should they be treated any differently from a widowed labandera who got 14 years for robbing and killing a businessman so she could feed her six children?
The Valley of Death
Sure, their alleged love of country is aflame with revolutionary fervor — dig those slogans screamed out with clenched fists! — but hey, non-commies like me are also country-lovers, and they need no strident slogans and clenched fists to assemble, debate and make meaningful headways in the quest for social change! And this they can do as a guaranteed right to use what is known as “democratic free space” — an expanse that includes the polling places, the halls of Congress, the courtrooms, the streets and other open spaces allowed for marches and the airing of grievances.
Revolutionary catchphrases like “Tuloy ang laban!” and “Patay kung patay!” are so scorchingly emotional they set ablaze the valor to “march into the valley of death”; ignominious death, that is, because the struggle of the Tiamsons and their fellow Maoists can never succeed, there having never been a time, ever, when their mindless and unreasonable methods appealed to the hearts and minds of the overwhelming majority of citizens.
So how can they proclaim themselves “patriots,” when they knowingly and openly oppose the peaceful and democratic ways of the vast number of Filipinos? By doing so, these handful of fully armed commies think they can impose their will upon a hundred million sovereign people. And to think that CPP-NPA Supremo Benito Tiamson is a UP-bred sociologist! One wonders how such anti-people sentiments could be hailed by him and his followers as patriotism.
Boon or Bane?
Editorial
The Philippines is not ready for the Initiative for ASEAN Integration (IAI) in 2015. The Initiative for ASEAN Integration refers to reducing various forms of disparities among and within member States where some pockets of underdevelopment persist, which could narrow the development gap in the region.
With the integration, people would be allowed to purchase, sell products and services, work and invest in any of the member countries of the ASEAN with lesser restrictions unlike strict protectionism. This would be enjoyed by all ASEAN member countries.
But according to Asian Development Bank, the economic integration of the Association of Southeast Asian Nations (ASEAN) will likely not be attained by 2015. Although various reasons were cited for the continued difficulties of attaining the AEC targets, what stands out is the unawareness of the private sector.
Since 2010 when this integration was first hatched, the Philippine government failed to prepare for it. In trade relations alone, where products are supposed to be exported to a less-restricted environment, the recipient chooses which products to accept or to reject. Naturally the more superior product in terms of quality and price are allowed into the member country. How can we export cheaper products when the cost of production is high? Electricity and labor costs, which are factors to production, are high.
Also, promoting greater mobility of skilled workers and better regulation and management of unskilled labor movements are to be addressed. In the Philippines, unemployment and underemployment are pervasive. Skills do not commensurate with job requirements. Can we compete with our ASEAN neighbors in the labor market?
What about our infrastructure?
There are so many things that we have to prepare for in order to be competitive. If we are not competitive, what benefit can the Initiative for ASEAN Integration do for us? Nada.
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