Finally, real reforms for the business sector

Last Tuesday, President Benigno Aquino III signed into law the Philippine version of the Anti-Trust Law, dubbed the Philippine Competition Act. Actually 85 years ago, we already had such a law, albeit a toothless one under Article 186 of the Revised Penal Code, which wasn't really helpful at all.  But this made the Philippines the only ASEAN country without an Anti-Trust Law. This was a distinct disadvantage to Filipino businessmen especially that by the end of the year, the ASEAN Integration would be implemented.

So this newly-signed law, sponsored by Sen. Bam Aquino, is truly a milestone and a red feather in the cap of the Aquino Regime who has always talked about reforms, but we never saw one until now. The Philippine Competition Act puts restraints on company mergers or monopolies or combinations thereof and putting huge penalties on violators. A case in point is when there are two airlines servicing one route… then the bigger airline buys into the competition and in the end, the route which once had competing airlines servicing that city ends up in a monopoly to the detriment of the people living in that place.

If you recall the famous merger of the biggest shipping companies, William Lines, Gothong Lines, and Aboitiz Lines, which became WG&A, the biggest shipping company in the country? Well, for my understanding of this Philippine Competition Act, this can never ever happen again. But in fairness to the WG&A, that merger didn't last very long.

The Anti-Trust Laws in the US began more than a hundred years ago when oil was discovered in the United States, and the oil producers had to ship their oil through the railroad, which controlled their shipping rates. So the rich oil barons in the end bought the railroad industry and they controlled everything! The same was true in the Film industry where movie producers had to build theaters to show their movies. They all came up with a chain of movie houses all over the US and their Anti-Trust Laws prevent producers from becoming exhibitors. This is why the Paramount Theater chain is no longer owned by Paramount Productions.

But what about the Telco Industry here? Well, when Smart Communications bought into Sun Communications, they became the dominant player in the Telco Industry. But with the Anti-Trust Laws in place, neither Smart Communications nor Globe Telecommunications can buy into each other's companies. Perhaps my next question should be… whether or not this is applicable to the restaurant industry, where Jollibee bought Mang Inasal in order to control that market. For sure because of this Anti-Trust Law, big companies would have to be careful in buying out other companies lest they end up violating this Anti-Trust Laws. Kudos to Pres. Aquino for signing this landmark law!

The other law that Pres. Aquino signed is the Act Allowing Foreign Vessels to Transport and Co-load Foreign Cargoes for Domestic Transshipment or the so-called amendments to the Cabotage Law. This means that foreign vessels can now call on multiple ports thus allowing importers and exporters to co-load containers and cargoes in foreign ships going in and out of the country. Again this law was amendment to make way for the up and coming implementation of the ASEAN Integration, which liberalizes coastwise trading and opens up the market to competition and hopefully it would help bring down the transportation cost of cargoes.

For sure, these two newly-signed laws would be mentioned in the President's State of the Nation Address next week. While these are the reforms we need for business and industry, we still need reforms in the government's bureaucracy, like streamlining Customs operations to go on a 24/7 service so that foreign vessels can come to our ports anytime of the day and would be served by Customs personnel.

For sure, the President won't mention in his SONA what former Senator Panfilo "Ping" Lacson recently exposed… that the 2016 national budget still has the Priority Development Assistance Program a.k.a. pork barrel was somehow reinserted into this budget and thus, the pork barrel has like the proverbial Phoenix alive again. Let me reprint that PDI news report on this issue. This was corroborated by Prof. Leonora Briones.

"Prof. Leonora Briones, a former national treasurer, studied the 2015 budget and found out that: First, the House was able to scrutinize in detail only 23 percent of the total amount of P2.6 trillion. The GAA, she said, is only P1.7 trillion. This is because P888 billion is automatically appropriated. Out of the proposed P1.7-trillion GAA, P382 billion is in lump-sum appropriations and P120 billion is in "unprogrammed funds." Since P761 billion is for personal expenditures, which Congress does not touch, it is left with P599 billion for detailed scrutiny. This is equivalent to 23 percent of the total P2.6-trillion budget."

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