Press Release
August 4, 2009


Lowering the costs of doing business will be the key to producing more jobs, boosting household income, and address basic economic concerns, opposition Sen. Chiz Escudero said yesterday.

Speaking at the Economic Agenda of the 2010 Presidentiables forum of the Economic Journalists Association of the Philippines (EJAP) yesterday in Makati, Escudero said every administration must put a very sharp focus on lowering the costs of doing business in the country.

"The goal is the creation of millions of new jobs and livelihood opportunities. This would necessitate being able to successfully attract much greater amounts of direct investments, especially foreign investments," Escudero explained.

"We must lower bureaucratic costs, which refers to 'under-the-table' payments. Corruption jacks up the costs of doing business and this makes the Philippines globally uncompetitive," he said. Escudero also said devolving authority to the lowest level of government can address the problem of bureaucratic costs.

"As soon as the national government can afford, a larger percentage of the Internal Revenue Allotment (IRA) should be given to local government units. It is presently 20%. By devolving added responsibilities, this could eventually go to 60%. This would speed up the development of the countryside," Escudero added.

The 39-year old senator laid down his six-point agenda which calls for streamlining processes, cutting down red tape, plugging revenue loopholes and improving agricultural production.

"It starts with good governance. We must repair our house. We must have a stable policy environment. We must enforce the laws and enforce them speedily. People will obey and follow our laws if there is certainty of punishment," he said.

He also called for lowering the ballooning budget deficit by addressing smuggling.

"We must put a stop to smuggling - estimated by foreign institutions to be as much as $10 billion or P480 billion a year. The uncollected VAT alone would be over P50 billion," Escudero disclosed. "You bring in a container, and you pay P200,000 but only get a receipt for P60,000. This means that P140,000 goes to the bureaucrats and tong collectors," he said.

"We sign a contract for North Rail which costs $17 million per kilometer while the equivalent cost in Shanghai is only $7 million. We witness the President approve a contract with ZTE for $328 million which turned out to be overpriced by as much as 60%. Such shenanigans bring up the cost of doing business in this country," he said.

He said that the overall cost of doing business in the Philippines is pushed up by the high costs of transportation and energy.

"We must bring down the cost of transportation and opening up those areas of our country which have not been developed. We must prioritize projects already partially built. Half a bridge is equivalent having no bridge at all. Then we have to focus on widening our major arteries, especially where traffic jams occur daily. The wastage of people's time and fuel runs into billions not counting the inefficient use of trucks which deliver goods," the senator said.

He also identified lower energy costs as a critical factor in lowering costs of doing business and called for the complete the sale of National Power Corp. (Napocor) generation plants and power purchase agreement (PPA) contracts to the private sector to generate more competition. "It is unconscionable that this government charges more royalty on the sale of our very own natural gas from Malampaya than it taxes imported coal and fuel. We pay P1.40 per kilowatt hour for electricity from generated from natural gas and only P.17 per KWH from coal. Does that make any sense to you?," Escudero asked.

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