Regulatory failure

The first duty of government is to protect its citizens. That is government’s reason for being.

The reason government maintains an array of regulatory agencies, at taxpayer expense, is to ensure citizens are protected, their best interest looked after and their wellbeing upheld. Every thing — from the safety of imported toys and medicines, the quality of water that flows through our faucets, the adequacy of public utilities and passenger protection -— is the subject of regulation.

When toxic toys proliferate, that is the business of regulation. When firms that convey passengers --- ships, planes or buses — fall below best practices, it is the duty of regulatory agencies to call them out on that or prevent them from peddling hazardous services. When consumers fall prey to price manipulation, government is responsible for stopping that.

The past week, two issues distressed our citizens: the electricity price shock and the string of accidents involving passenger buses.

The electricity price shock is a complex event. Government is trying to spin the matter as the outcome of some evil conspiracy involving power producers and distributors to defraud consumers. Even if it is, it is the task of government regulatory agencies to prevent that and therefore protect consumers.

It is now probably too late to mitigate the price shock. Billings have been sent out and consumers are forced to shell out their Christmas money to pay for overpriced power. Unless a way to refund the consumers later is somehow figured out, the overprice is a done deal. The regulatory agencies performed weakly and the rest of government responded too late to avert this sad event.

The tragedy at the Skyway involving that Don Mariano bus merely reaffirms what we already know: the regulatory agencies involved in maintaining standards for public transport are not doing their jobs.

Passenger bus services, particularly in the metropolitan region, fall way below standards. The buses are badly maintained, the drivers are uncouth and the industry is beset with anomalous practices of every sort.

Spurred by the tragic accident, the LTFRB conducted an inspection of the Don Mariano garage. Of the 42 buses inspected, 36 were declared not roadworthy. Yet this company, and its many sister companies, have continued operating with impunity. The vehicles they put out on our roads are rightly called rolling coffins.

The LTFRB now tries to impress us by going through the motions of calling bus operators to account and conducting inspections of franchise holders. Jaded citizens, however, expect this flurry of inspections to soon subside after the grief of yet another murderous road accident fades.

As in the case of the power price shock, the response of the regulatory agencies is too little and too late. It is the general weakness of our regulatory institutions, more than just its reaction in this case, that is the larger malaise.

As I write this, nothing has been said by those who exercise command responsibility over our entire government addressing the larger malaise. Citizens justly feel vulnerable under a government that seems less than interested in protecting its citizens.

Waste

Nearby, at the Entertainment City, state-of-the-art structures are quickly rising like mushrooms in a moist field. The gaming industry, with the new developments, will bring an estimated $3.5 billion additional revenues to our economy.

By contrast, the adjacent property long ago designated as a “central business park” remains a wasteland. This 40-hectare “business park” is owned by the  Manila Bay Development Corp. (MBDC). The corporation is controlled by businessman Jack Ng Sr.

Ten hectares of this property was rented out to Uniwide’s Coastal Mall. In the nineties, when Uniwide was the retailing giant in the country, Coastal Mall was envisioned to be the country’s largest shopping mall complex. That was long before the SM Mall of Asia was even an idea.

The Coastal Mall was a deserted edifice for many years. Today, the property is known mainly as the ill-suited, badly located bus terminal that is the object of disdain by commuters from Cavite forced to disembark at the dead mall, far from connecting rides.

Uniwide’s corporate finances ran into rough waters after the 1997 Asian financial crisis. MBDC tried to take advantage of Uniwide’s financial weakness to try take back the mall development — allegedly with the connivance of Uniwide’s own financial executives.

Uniwide was able to raise about P2.1 billion by way of an initial public offering a decade ago. The fresh funds were intended to rehabilitate its financial standing and get back into business. The financial executives, however, turned over the money to MBDC as some form of “back rentals,” condemning Uniwide to illiquidity.

The matter of the Coastal Mall development is now the subject of numerous cases in court. Those cases will likely linger in the judicial process for many years to come.

Recently, small investors in Uniwide Holdings Inc. (UHI) have joined the fray. They filed estafa complaints against Jack Ng of MBDC, erstwhile UHI chief finance officer Jimmy Cabangis and former UHI treasurer Corazon Rey. The three, according to the complaints, connived to defraud UHI of P1.7 billion intended to complete Coastal Mall and an additional P381 million in highly irregular mall payments.

The complex corporate dispute will likely remain under judicial proceedings for many years to come. This condemns what is now prime property, sitting adjacent to Entertainment City and the Mall of Asia complex, will remain the wasteland it now is.

What an utter waste of economic opportunities.