Preparation for #APEC2015 should have included fixing the Philippines’ infrastructure

The Asia-Pacific Economic Cooperation (APEC) summit is a major event, which strangely enough, will be held in the Philippines, a country with poor facilities and infrastructure. About twenty world leaders are said to be attending including US President Barack Obama and Chinese President Xi Jinping. The latter requested talks about the ongoing dispute between China and the Philippines over islands located along South China Sea be put aside during the summit. Tensions should give way to cooler heads in favor of more productive issues like promoting free and open trade among countries participating in the event. In other words, both parties will have to talk through gritted teeth during the event.

The Philippine government’s preparation for the event under President Benigno Simeon Aquino reportedly includes fencing off eyesores like shanty towns and hiding street dwellers camped out along the major routes that the foreign dignitaries will be using. Some people have criticized the government for copying Imelda Marcos’s ideas in hiding the poor from foreign visitors in the 1970s. They say it appears BS Aquino has become one of the people he is fond of criticizing for being callous to the plight of poor Filipinos. Some of his supporters though, defend the move by saying that it is important to impress the investors. Sure, if they consider deceiving investors about the real state of the nation, they can keep telling themselves that.

Some religious leaders have slammed the preparation for the summit as extravagant and immoral. The event, to quote an excerpt from their statement: “…constitute a serious violation of human rights, a very grave injustice for those concerned: more than 1,125 domestic and international flights canceled, millions of wage earners deprived of four days’ salaries, undue sufferings to city commuters, school calendar disrupted, shameful cover-up of poverty areas and excessive expenditures on unnecessary objects and activities.” What they are saying is starting to make sense considering some world leaders from Russia, Indonesia and Taiwan have so far cancelled their trip.

It’s not so much the lack of facilities and infrastructure that’s the problem in holding the summit in the Philippines. Rather, it’s the lack of both imagination and foresight combined with misguided pride by the current government in holding it in Metro Manila. Indeed, there are alternative venues outside of the capital where it would cause less disruption for the general public. Former President Fidel Ramos was surprised that BS Aquino did not consider holding the summit again in Subic Bay, Zambales where the first APEC in the Philippines was held. It even has Clark airport close by to serve air transport needs without much disruption to the rest of the country. The reported 10 billion-peso budget for this event could have been spent building accommodation similar to the one built in 1996 at Subic instead of spending it on unnecessary items like fencing and posh accommodations for street dwellers.

An unhealthy ego could also be to blame. This is evident in the way the BS Aquino government felt the need to hide the real condition of Manila from potential investors. Hiding the truth means the organizers are not confident about being accepted for who we are as a people. It’s like they are ashamed of being from a poor country and not even consider that most people from the international community already know the Philippines is poor. It’s not like pictures of squatter colonies just outside of Manila’s business district have not reached global news before. Besides, we don’t hear about countries like Mexico hiding their poor during international events.

Yes, the BS Aquino government wants to pretend the Philippines is already progressive under his regime. We all know that is a lie. In fact, if the purpose of the APEC is to showcase the Philippines’ business competitiveness to foreign investors, fencing off the shanties won’t be enough to lure them in.

Of course the APEC summit will be a good opportunity for the both public and private sector to network with prospective foreign investors. Foreign investors can provide jobs for millions of unemployed Filipinos. However, the summit itself will not necessarily result in deals. It will still be a long process. Foreign investors come in to see what the Philippines have to offer. Some of them have specific needs that the country might meet like our ability to speak English but some of them might get turned off with restrictions in foreign ownership and the lack of infrastructure.

In order to attract investors, the following needs to be done:

1. Upgrade the public transport system and fix the traffic chaos.

The fact that the BS Aquino government mandated the cancellation of classes and office work in some parts of Manila should be a warning to investors that something is not right in the transport system in the country. It means it cannot handle the normal capacity of commuters and motorists moving from point A to B. This is bad for business because it can mean delays and loss of productivity and, eventually, loss of income.

2. Upgrade of facilities and vital infrastructure like telecommunications and power.

Ask anyone using the Internet in the Philippines and they will tell you that they have to live with slow and unreliable Internet connection from a limited set of local telecommunications companies. The worst part is Filipinos are also paying more for the crappy connections. Swearing is part of the process as well as not holding your breath.

Filipinos are also paying more for their power supply:

Electricity rates in the Philippines are among the highest in the region, the National Statistical Coordination Board (NSCB) said in a report.

“Data from Asean Center for Energy show that among the ten countries in Southeast Asia in 2007, the country ranks as having the third highest residential electricity tariffs, fifth highest for commercial, and fourth highest in terms of industrial electricity tariffs,” NSCB secretary-general Jose Albert said.

One of the main reasons for this is the absence of government subsidies for electricity, unlike in Indonesia, Thailand, and Malaysia, where the government subsidizes electricity costs.

The Philippines is also losing out to Vietnam due to the latter having “very low wages, relatively good infrastructure and business environment”. This is sad news considering Vietnam was a devastated country after the Vietnam War as recently as the 1970s.

3. Respect principle of sanctity of contract.

The Philippines suffers from a bad reputation thanks to its government’s getting into the habit of breaching contracts over recent years; particularly after BS Aquino started his term. These contract breaches include the cancellation — seemingly out of spite — of GMA’s PhP1.9 billion worth of various flood control projects as well as the P18.7 billion Laguna de Bay dredging project signed during her term. The Belgian company, Baggerwerken Decloedt en Zoon (BDC) which was contracted to do the dredging job filed a lawsuit against the Aquino government for the cancellation of the deal.

Another case is that of JKG-Power Plates, the company that won the bid to supply the Motor Vehicle License Plate Standardization Program (MVLPSP) of the Land Transportation Office (LTO). After delivering motor vehicle plates worth P620.35 million, the government reportedly has so far only paid them P477.90 million. The worst part was the Commission on Audit (COA) disallowed additional disbursements for the project saying, “it did not undergo legitimate procurement processes”.

If word gets around that Filipinos cannot keep their promises, foreign investors will look to other countries for the needed stability required to do business.

4. Philippines need to fix red tape to improve ease of doing business for foreign investors.

According to a World Bank report, the Philippines’ ranking dropped six notches to 103rd from last year’s 97th spot across 189 economies. This is no surprise if you consider all above issues investors have to deal with.

In addition to the above mentioned, Japanese investors also cited difficulties in refunding taxes. They also cited the impact of congestion at the Port of Manila on local operations as being among the biggest concerns.

Many Filipinos have been saying that some of the funds from the bloated budget for the APEC summit could have gone to upgrading the country’s facilities and infrastructure instead. It would, they argue, have yielded more return on the investment. Unfortunately, it seems that making a superficial impression while masking the underlying truth about the Philippines is deemed the more worthwhile pursuit.