Hopes on new economic laws

THE BUSINESS community has hailed the recent enactment of the Philippine Competition Act and Liberalized Cabotage Law as “game changers” in the economy.

The Philippine Competition Act aims to level the economic playing field by eliminating cartels, monopolies and other unfair trade practices so our people can enjoy quality goods and services at competitive prices.

A five-person Philippine Competition Commission (PCC) will oversee the implementation of the law and accomplishment of its objectives.

The law imposes administrative fines of up to P250 million or between five and 20 percent of the value of the transactions involved for violation of its provisions.

In what may be considered a first in our legislative history, the fines will be adjusted for inflation every five years.

The Liberalized Cabotage Law, on the other hand, allows foreign-registered vessels to dock at domestic ports to load and unload cargo for import and export purposes.

Cabotage is defined as “trade or navigation in coastal waters.”

Until the enactment of this law, cargoes can be transported from one local port to another only through Philippine-registered vessels.

With the opening of domestic ports to foreign vessels, the cost of transportation and prices of goods are expected to go down.

Legislation

These laws have been hyped as proof that the present Congress is responsive to the needs of the times, more so as the country prepares for the integration of the economies in the Asean region.

A signing ceremony was even held in Malacañang with key members of Congress in attendance.

It’s the same ritual our lawmakers go through every year when the national budget is enacted. And like clockwork, expressions of optimism about the positive effects of the budget (or whatever bills are signed into law) are made during those photo opportunities.

The new laws join countless other laws that have been enacted by past Congresses to spur economic growth, make goods and services more affordable, and improve the lot of our people.

There has been no dearth in creativity in the enactment of laws designed to provide our countrymen with the means and opportunities to be useful and productive members of society.

If all these laws had been self-fulfilling or worked like magic wands that instantly produced their intended results, the Philippines would not have to depend on the remittances of overseas Filipino workers to sustain the economy.

Implementation

The PCC will take over the responsibilities of the Department of Justice’s Office for Competition, which President Aquino earlier tasked to go after companies or persons engaged in unfair trade practices.

Since the first PCC will set the tone on the enforcement of the rules on fair competition, it is essential that people who have hands-on experience on commercial activities and, most importantly, committed to the accomplishment of the objectives of the law are appointed by President Aquino.

The PCC should be treated as a professional organization, not a dumping ground for political has-beens or run by people whose only qualification for the job is their closeness to the appointing power.

The members of PCC should fit the position, not the other way around. They should, for example, be wise to the ways and devices [both legal and illegal] of business entities that, with the assistance of wily advisers, try to put one over their competitors and customers.

Considering the awesome powers of PCC, the threat of “regulatory capture” (or vested interests controlling or influencing the actions of government regulatory agencies) cannot be discounted.

This usually happens if the regulated entities are in the good graces of the powers-that-be and are able to have their fair-haired boys appointed to the agency.

Or the person appointed to head the agency has only theoretical (as against actual) knowledge of the nuances of the job and therefore susceptible to “intellectual intimidation” by the regulated entities. It will be like the tail wagging the dog.

Infrastructure

The Liberalized Cabotage Law amends a law enacted 61 years ago when protectionism was considered essential to the growth of our economy.

Aimed at ensuring that the distribution of basic food commodities remained in Filipino hands, the old law complemented the defunct Retail Trade Nationalization Act which gave Filipinos and Filipino-owned corporations the exclusive right to engage in retail trade in the country.

This law was later replaced by the Retail Trade Liberalization Act which allowed foreigners to engage in retail trade depending on their paid-up capital in Philippine pesos.

Indeed, by doing away with the cumbersome and expensive process of loading and unloading cargoes from foreign vessels to Philippine vessels for delivery to and from domestic ports, and vice versa, inter-island trading activities would be faster and less expensive.

But this is better said than done.

The problem is, many of the ports where foreign cargo vessels may dock are not equipped with the berthing and loading and unloading facilities needed to accommodate them.

Without the required infrastructure, the entry of foreign vessels in provincial ports may result in the same congestion problem that has plagued the Port of Manila for months.

Although there is reason to be hopeful about the new laws, more work has to be done by the government to make sure these laws do not go the way of earlier laws that were promising but later turned out to be duds.

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