Invisible

The British American Tobacco Company (BAT) lobbied hard for the passage of the new excise tax schedule on tobacco products. Apart from improving revenue collections for government, the new excise tax regime will (supposedly) improve competition and open the doors to new manufacturing investments.

During the debates on the new excise tax regime, we were told that BAT has invested $200 million in new manufacturing facilities and will invest much more under the new tax framework. In addition, the new player will treat our tobacco farmers better and consume the major portion of their produce.

It is not clear today where that much ballyhooed $200 million investment went. BAT should show us the new manufacturing capacity they invested in. Nor is it clear to date if any new investments are coming in, considering the expected tapering off of demand because of higher commodity prices.

BAT claims it will procure 50% more tobacco leaf from our farmers compared to the other players in the field. Our agriculture figures put local tobacco leaf production at 80 million kilos.

Recently, however, BAT-Philippines manager James Lafferty admits his company buys an annual average of 2 million kilos. That represents only 2.5% of what our farmers produce — not enough to have an impact on improving incomes in that agricultural sector.

BAT admits it only sold “a couple of million” sticks of cigarettes last year. That represents a domestic market share of less than 1%. Its actual sales last year is way off its boast that it will sell 150 million sticks in the domestic market, using predominantly local leaf content.

Lafferty excuses his company’s negligible market share by saying they made “a conscious choice to really just stay on a limited basis and learn, to see what happens and understand how the market works.” That sounds like dark foreboding. If market conditions become tight, BAT could simply pack up and go — after lobbying hard to induce an excise tax regime that nearly kills the domestic market.

We now have an excise tax regime tailored to suit a new industry player whose supposed investment is invisible to the naked eye, whose market share remains negligible and whose determination to stay in the market is doubtful. The economic costs inflicted on our domestic farmers seems unjustified.

Education

Marvel at the economic powerhouse that is South Korea. From Psy to Samsung, from Kia to K-pop, from cars to content, the once war-torn country is a talent-driven global competitor.

Such an economic powerhouse would not have been possible without the massive state investments in education made decades ago. The older generation sacrificed much to make those investments, to ensure that the succeeding generations will be a global-grade talent pool.

We are, sadly, nowhere close to having the same global-grade talent pool that powers South Korean competitiveness. Our public education system is decrepit (we have not even closed the classroom gap). The dropout rate is intolerable. Much of even our tertiary-level educational institutions serve out low capitalization course packages. Not enough state investments have been poured in “hard”, capital-intensive course packages not attractive to commercial educational institutions.

Although late in the game, we need to prepare the next generations for global competition. This is ultimately a matter of national survival in a new global economy driven by talent.

This is the reason we should pay close attention to what the candidates say about our educational system and what they intend to do about it.

San Juan Rep. JV Ejercito-Estrada consolidated 53 House bills into one proposing the establishment of a scheme called United Financial Assistance System for Higher and Technical Education (UniFAST). The bill seeks a financial mechanism that will help poor students pay their way through college (and, presumably, repay the fund when employed).

Ejercito-Estrada likewise authored HB 4598 seeking to create a National Tuition Fee Rationalization Council. Chaired by the Commission on Higher Education, this council will broaden participation in tuition fee setting to include parents, student councils, campus publications and faculty associations. The solon fought for additional funds for state colleges and universities, resulting in an increase of P16 billion in additional spending for tertiary education.

The cost side of education, which Ejercito-Estrada addresses, is one part of the equation. The other part is the content and process of our educational system.

Aurora Rep. Sonny Angara, for his part, authored the Free Kindergarten Act that makes early schooling not only mandatory but also free. He likewise advocates increases in the pay of public school teachers to address the recruitment and retention problem plaguing our schools.

Everyone agrees government investments in education have not been enough. There are fiscal limits to that. To supplement outright public spending, Angara proposes several designs for public-private partnerships to build the facilities we need to dramatically modernize our educational facilities.

In particular, Angara wants to use the PPP formula to infuse the school system with the latest tools in information technology. The latest information technologies will improve the efficiency of our educational system and possibly cut costs in the process. However, we lack the proper policy framework and reform programs to make this happen. The ossified education bureaucracy is part of the problem in this regard.

Sonny Angara is comparatively well equipped to address the policy deficiencies keeping our educational system backward. He is probably the best-trained to perform that role, having studied political economy at the London School of Economics, law at UP and a masters at Harvard. He brings to our legislative process a keen sense of what is new in the world and a clearer view of our place in it.