Gov't urged to simplify ways of doing business

MANILA, Philippines - If the Philippines is at the mercy of world crude oil prices, then logic dictates that the country should develop its own sources of energy to become less dependent on imported petroleum. It’s common sense, right?

Hence, the puzzle for Paul Aquino, 68, who retired last year as chief executive of geothermal energy company Energy Development Corporation: why make it so difficult for businesses to do business in the Philippines?

 “It’s almost impossible to do business in the Philippines,” Aquino once complained with the wit, liveliness and humor that is so very much like his older brother’s, the martyred Benigno “Ninoy” Aquino Jr., assassinated in 1983 during the waning years of the Ferdinand Marcos dictatorship. He always delighted listeners in corporate functions in the Lopez group of companies.

 “If I were a dictator for a day, I would make it as easy as possible to do business in the Philippines,” Aquino says. He points to EDC, the world’s second largest geothermal power producer at over 1,400 megawatts of clean and renewable electricity. Aquino had one whole department dedicated to renewing permits only. “We had 323 people at that time doing nothing but following up 600-plus permits a year.”

Aquino, an electrical engineer by profession, underscores the ease of doing business as a crucial factor in the equation. “Why am I talking about business? If you don’t have businesses, you don’t have economic activity. If you don’t have economic activity, the country will collapse. So, why are they making it so difficult to create economic activity?”

Aquino largely blames the country’s US-style tax laws – a legacy of the American colonial era – which he exasperatedly describes as “among the most complicated things in the world.”

 “For example, how are you going to tax that small ukay-ukay vendor? You will need an army of BIR personnel to tax them. How many of them are in the Philippines? Marami! To tax all of that, you need an inspector there to audit them. How are you going to audit them when they sell less than one thousand pesos a day? The cost of tax implementation is going to be more expensive than the amount that you’re going to collect. It’s stupid!”

Aquino’s suggestion: a fixed tax similar to a fee for micro businesses. “OK, here it is, good for one year,” he explains, complete with the act of paying to an imaginary tax collector. “No one is going to harass you anymore.”

Adding to the economic factor is the cost of doing business. “The general manpower complement of the Philippines is in small business. The overhead just kills you. I have friends who tell me, ‘I have five million pesos. What can I do with it?’ I tell them, ‘Just keep it na lang and spend it slowly.’ If you have five million pesos in capitalization, you are bound to fail.”

In other words, Aquino says, you need to be a Jollibee fast-food giant or a Mang Inasal chicken barbecue chain to overcome the cost of doing business in the Philippines. Ironically, the complexity of doing business fuels the rampant corruption.

His unsolicited advice to his nephew, President Benigno “Noynoy” Aquino III, who has been busy courting local and foreign investors: “Make the system of doing business easy. Our laws are so difficult, so numerous, such that it’s easy to just pay up.”

Aquino recalls his time in a shipping company in the 1970s, when the firm was selling one of its ships so it could buy a new one. “It took me two months to have all the paperwork done. I was so disgusted during those two months because shipping prices were going up and down. I asked around, how do they do it Japan? One week daw, someone told me. What! How do they do it in Taiwan? About two weeks. How do they do it in Hong Kong? Over lunch. Ha?! ”

So it’s no wonder that Aquino was only relieved when he stepped down as chief executive of EDC – or as a “regular employee” as he likes to put it – after the company’s stockholders’ meeting in July last year. His biggest achievement was steering the company’s privatization in 2007.

 “Life has been good because, number one, the best thing that ever happened since I retired is that I can wake up any time I like,” he says with the look of someone on vacation. “I found out that the best thing that you can do is to declare Monday a holiday because Monday is a terrible day. Oh no, it’s Monday.”

If there is one thing that Aquino thinks his presidential nephew is doing right, it’s getting rid of the so-called “utak wangwang” or sense of self-entitlement that eventually creates a culture of corruption. He was referring to President Aquino’s State of the Nation Address in July, in which the President lamented utak wangwang as one of the main roots of the country’s woes.

 “If Noynoy can get rid of just that, he will achieve his greatness. Matanggal lang niya iyan.”