Regulator and operator

The good news from Budget Secretary Ben Diokno when he spoke before the Foundation for Economic Freedom (FEF) last week is about a reorganization of government now in the works. The objective is to streamline the bureaucracy for efficiency and to correct structural anomalies neglected for years.

Some of the things they intend to correct are instances of government agencies unfairly competing with private sector entities the agencies regulate. Three glaring examples are Pagcor, CAAP and Philippine Ports Authority.

Sec. Diokno said that for sure, Pagcor would cease running casinos and gambling businesses and just stick to its regulatory function. Then there is CAAP.

I had been wondering if the delay in the commissioning of Caticlan Airport is because CAAP operates Kalibo Airport. Caticlan will take most of Kalibo’s business once it starts operating.

The Caticlan project is almost two years delayed and may be delayed at least a year more. One cause of the delay is the failure of CAAP to deliver the right-of-way on time. In fact, it has still not been able to deliver the entire ROW needed by San Miguel to complete the project.

Then there is the delay in the inspection and certification of the airport’s facilities. There is the discussion on the length of the runway required for A320 operation.

The agreement from the start was for San Miguel to extend the current runway to make a total of 1,800 meters with a phase two extension for a total of 2,100 meters. It would seem Caticlan can already operate A320s given that its runway length at 1,800 meters is just about the same as Tagbilaran at 1,779 meters, Roxas at 1,890 meters and Dumaguete at 1,870 meters. All of those other airports are taking in A320s.

Assuming CAAP wants to impose the new ICAO standard of 2,100 meters, the other thing they can do in the meantime is to allow Caticlan to do night operations using the same aircraft presently allowed. The proper runway lights have been installed months ago and the request for CAAP certification was made last April.

Allowing night operations will let the airlines schedule their flights better rather than crowd the daytime hours because of Caticlan’s sunset curfew. It will also help alleviate air traffic congestion at NAIA.

The last I heard, San Miguel has submitted all the required documents to CAAP so they can immediately start night operations. When I got a briefing at CAAP on this matter two weeks ago, I was told permission would be given by December. It is only October, why wait two more months if it can be given now?

Again, it is easy to suspect CAAP is protecting its business in Kalibo. The thing is… government accepted the offer from a private sector entity to expand Caticlan, and San Miguel didn’t do that for charity or CSR. Time is money.

The other conflict of interest related to CAAP is not about money, but safety considerations. Consider the situation wherein CAAP investigates an aviation accident such as the Jesse Robredo plane crash. If an ordinary person was the victim, it would have been easy for CAAP to wash its hands clean of any responsibility.

Here is the statement of P-Noy after he read the investigation result: “The pieces of evidence pointed to one thing: If some people did their job, if the rules of the industry were followed, if those involved were only faithful to their obligations, the tragedy could have been avoided.”

The proper structure calls for a totally independent National Transportation Safety Board (NTSB) as is the case in the United States. Indeed, constituting a highly professional NTSB to look at accidents in all transport modes would provide the travelling public a level of confidence we don’t have now. We must learn from our mistakes.

If a train accident happened here like that one in New Jersey last week, the Transportation department would be tasked to investigate. But the department runs MRT 3, LRT 2 and PNR, making anything they say less than credible.

A bus accident will be investigated by the LTFRB and the LTO. But both agencies regulate the bus industry. LTFRB issues the franchises and the LTO licenses the drivers and assures the roadworthiness of the buses. An independent NTSB can point out inadequate vetting of drivers in the issuance of licenses, or failure to ascertain roadworthiness of buses.

In any case, CAAP does not need the distraction of its extra duties outside of its principal responsibility of regulating for safety. It should be busy doing just regulation.

For instance, there is this regulation calling for airports with aircraft operating with more than 30 passengers to be certified. I am told only Mactan, Davao, Iloilo and Clark airports are properly certified by CAAP. Even Manila isn’t. Manila has already been audited but needs to submit corrective action plan. Bacolod, Laoag and Butuan airports are currently being evaluated.

It seems even airports operated by CAAP like Kalibo are yet to be certified. In other words, majority of the 80+ airports in the country have not yet been certified, but local and international airlines are already operating in most of these airports.

This failure to certify speaks of a continuing failure CAAP must address. It is clear CAAP cannot operate what amounts to a business of managing airports at the same time it is regulating.

There is urgency for Congress to amend CAAP’s charter to remove from CAAP the responsibility of running airports and make it solely a regulatory body. The function of accident investigation must also be transferred to a new agency --- National Transportation Safety Board. We have to learn from our mistakes.

Indeed, the current review being done by the Duterte administration of the appropriateness of the bureaucracy’s existing structure should be given top priority. Other than sorting out conflicts of interests in the mandates of government agencies, the review should also cover the continuing usefulness of agencies.

A good example is the Philippine National Oil Company. It has lost its usefulness over the years. It no longer performs the functions it had in the past due to changes in the nature of the oil industry. I am sure its highly paid officials do nothing to justify their pay.

Over the last few years, PNOC’s only function is to provide political allies sinecures or jobs or positions that provide a regular income, but require little or no work. I heard the current administration appointed as chairman someone who is totally clueless about oil and energy.

PNOC, and I am sure many other agencies, should be abolished and the money saved used to mitigate the impact of new tax measures on the few of us paying taxes. Removing clear cases of waste is after all, the objective of this structural review of the government bureaucracy.

I am told President Duterte was enthusiastic about this review and ordered it done immediately over the objections of some Cabinet members with political interests to protect. Cleaning up government and making the bureaucratic structures serve their proper purposes is the right thing to do.

This is one change I can’t wait to see happen.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco.