Road map to recovery | Henry Empeño



SUBIC BAY FREEPORT—On March 2, a day after Malacañang installed a new chairman and administrator of the Subic Bay Metropolitan Authority (SBMA), officials of the Subic Bay Freeport Chamber of Commerce (SBFCC) paid a visit. But it was not just an ordinary courtesy call. For beyond the niceties of a social meeting, the business leaders brought with them an 11-page document that spelled out what purportedly ails the Subic Bay Freeport Zone (SBFZ) and what could be done to cure it.

Innocuously titled, “Summary of Feedback and Recommendations for the Subic Bay Metropolitan Authority,” the manifesto contained what could be the strongest indictment yet to come from the business community here in Subic.

SBFCC officials led by Chamber President Benjamin E. Antonio III (third from left) meet with SBMA Chairman and Administrator Rolen Paulino Sr. (middle) to present their recommendations for Subic’s economic recovery.

Warning of an “alarming trend impeding sustained success” in generating investments and jobs in this former United States military facility, the SBFCC document pointed out that: (1) the system has become bureaucratic; and (2) there is not much incentive to do business in Subic anymore.

The manifesto was quick to point out, however, its good intention: to serve as a springboard for a rejuvenated push to establish Subic as the most conducive investment location in the Philippines.

“This document has not been prepared to single out any individual or group, or point an accusatory finger at anyone,” a disclaimer in the statement stated. “This is done to document certain observations and recommend solutions to ensure the long-term viability of the entire SBFZ and its locators.”

Concerns

THE SBFCC manifesto is a product of years of painful experiences, said SBFCC president Benjamin E. Antonio III, who is also CEO of Subic Water & Sewerage Co. Inc., the water utility firm here in Subic.

“The situation has deteriorated over the years, until it has become untenable,” Antonio told the BusinessMirror in an interview on March 30. “A lot of investors had already wanted to go out; parang walang aruga [It’s as if no one cared].”

Antonio said that the SBFCC, which counts about 200 big locator companies in Subic, consulted business locators and other SBFZ stakeholders about the local business climate and came up with an unequivocal conclusion: “Masyado nang mahirap kausap si SBMA [It has become too difficult to talk things over with the SBMA].”

SBMA Chairman and Administrator Rolen Paulino Sr.

The SBMA, he claimed, “is already out of touch with locator companies; it has no time to discuss the individual concerns of locators.”

“To generate jobs, you need happy locators,” Antonio pointed out. “If the SBMA mindset becomes customer-centric, then everything would follow.”

Antonio said the Subic chamber had meant to present the manifesto to former SBMA Chairman and Administrator Wilma T. Eisma, but events overtook this course when Eisma resigned on March 1 and was replaced by former Olongapo City mayor Rolen Paulino Sr.

“Various stakeholder consultations and private sessions were held to put together this amalgamation of observations and recommendations,” the SBFCC said in its manifesto. “Hopefully, [it] may be implemented sooner rather than later, to improve the trust and confidence in doing business in the SBFZ,” the business group added.

Observations

THE SBFCC said the Covid-19 pandemic had further brought to light the ability and limitations of the SBMA in meeting the needs of Subic business locators.

“Businesses are now finding it ever-more difficult to survive. When in the past, the situation has been largely tolerable, current conditions have rendered them more untenable,” it said.

The foremost concern, the SBFCC said, was that “the current system is inefficient and bureaucratic,” thus making it difficult to do business in the Freeport.

A good case in point, the SBFCC said, was the processing of the Certificate of Registration and Tax Exemption (CRTE), which is required of all businesses operating in Subic.

SBFCC officials and SBMA Chairman and Administrator Rolen Paulino Sr. open the “Subic Banchetto” food fair, a recent Subic chamber project to help drive tourism in the Subic Bay Freeport.

“The SBFCC membership is unanimous that it has never heard of a CRTE released within three working days, even with complete documentation,” it claimed. “In addition, these gaps in CRTE issuance pose a risk with the tax incentives with the BIR, which is a major determent to smooth and continued business operations. In fact, the CRTE at times is used as a tool to force compliance.”

Aside from this, business locators reportedly complained of multiplying requirements; redundant requirements and processes; lack of a central repository of compliance documents; and too pedantic or literal interpretation of SBMA board policies.

Meanwhile, regulatory activities are often done by national government agencies, when the SBMA could have easily done these more quickly, and with a more contextual understanding of local issues, the SBFCC also observed.

Another key observation by business locators is that Subic “consistently underperforms compared to other economic zones”; thus, the perception of a lack of incentives for businesses in the Subic Freeport.

In its statement, the SBFCC pointed out that: “A lack of investments and economic activity not only speak for the difficult position the geographical location the SBFZ is in, but also in the difficulty of the agency to identify, attempt to address and implement programs as to its USP or competitive advantage. No one will argue as to the immense economic potential of the SBFZ, but it simply remains comparatively untapped, underutilized and exploited by the wrong set of businesses.”

SBMA figures

TO be fair, the SBMA consistently reported growth even during the pandemic years under former Chairman and Administrator Wilma Eisma. In its 2021 yearend report, the Subic agency said it registered a revenue of P3.47 billion, capping 2021 with an 8-percent growth in income and other major accomplishments in key performance areas.

As to investment and employment generation, tourism, imports and exports, the SBMA recorded a total of 142,177 Subic Freeport workers as of December 31, showing an employment increase of 2.31 percent from 138,966 workers in 2020. SBFZ business locators, on the other hand, numbered 1,737 SBFZ as of yearend, “continuing a slight upward trend since 2019.”

Meanwhile, new investments, including expansions, totaled P17.29 billion, higher than the 2020 record by P15.74 billion, or 1,011 percent. The 2021 record even topped the prepandemic 2019 level by P8.05 billion, or 87 percent, with the bulk comprised by a P15-billion commitment from a business locator, which proposed to develop the SBFZ marshalling yard.

The SBMA also said the pandemic-hit tourism industry in Subic is recovering and has recorded a total of 7.3 million same-day visitors in 2021—also higher than the 2020 record by 2.18 million or 42 percent.

In terms of trade, Subic Bay posted a total of $1.58 billion import value in 2021, which was 49.53 percent higher than the 2020 import value of $1.12 billion, while export value reached a total of $1.37 billion, which was 32.42 percent higher than the 2020 export value of $1.03 billion.

However, using data from the Philippine Statistics Authority, the SBFCC noted that Subic has generated only P803.9 million in foreign investments in 2018, compared to P1.67 billion by the Authority of the Freeport Area of Bataan (AFAB); P7.14 billion by the Clark Development Corp. (CDC); and P1.19 billion by the Cagayan Economic Zone Authority (CEZA).

And while the SBMA generated P2.89 billion investments in 2019 compared to P340 million by AFAB, P1.25 billion by CDC; and P340 million by CEZA, Subic again lagged in the pandemic year of 2020 with P431 million, compared to P2.57 billion for CDC and P1.26 billion for CEZA, with AFAB generating the least at P395 million.

“The preceding two observations [bureaucratic red tape and lack of incentives] are shared sentiments by many,” the SBFCC concluded. These, it added, dissuaded “potential locators from investing, and existing locators from expanding or even staying.”

Root cause

THE consensus of the SBFCC membership, as well as other stakeholders in Subic, was that the underlying problem was too much regulation.

“The SBMA is playing too many conflicting roles, and has slowly gravitated to adopting its regulatory role the most,” the locators group said in its statement, noting that the Subic agency simultaneously serves as an investment promotion agency (IPA), lessor-landowner, service provider (for police, fire, and health services), client to some business locators, and regulator.

“Essentially, the SBMA fulfills too many roles, mostly disparate, consequentially inconsistent with each other. In addition, playing all these roles imbues the agency with unbridled and unmitigated power and authority to do pretty much what it pleases, sometimes to the detriment of its stakeholders. While it may not be done on purpose, the capability exists, and is prone to abuse,” the SBFCC said.

On the other hand, the SBFCC said that by wearing too many hats, the SBMA may have not paid enough attention to its most important mandate—that of generating jobs and employment opportunities.

“In order to achieve any mandate, the customer is valued. When any entity loses its customer-centric culture, it loses its raison d’être. The agency may have overlooked this most critical of its mandates,” the SBFCC added.

“This is a systemic concern, and to address this, the SBMA needs to instead focus more on streamlining its operations, promoting growth, increased economic activity, and trade,” the Subic chamber of commerce concluded.

Recommendations

TO solve the perceived problem, the SBFCC proposed a campaign to make Subic a more customer-friendly and conducive business and tourism destination, calling it “Subic Smiles.” This, it added, should bring about a renewed push for investments and economic activity in the Subic Bay Freeport Zone.

Specifically, the SBFCC listed 18 recommendations, beginning with the following: for the whole SBMA, not just its Business and Investment Group (BIG), to undertake promotion of trade, commerce, and investment; for SBMA-BIG to focus on protecting the interest of locators primarily, with the traditional departments retaining the mandate to protecting the interests of the government; and for the SBMA to focus on its role as IPA and relegate to a secondary purpose its mandate to regulate.

The SBMA power to rescind leasehold rights and to withhold access of employees to the Freeport must only be used as a last resort, the SBFCC also said, and not be used as penalties for misdemeanors unrelated to the lease of the property; that an Internal Complaints Desk be established under the operation of the Internal Audit Service; and that the Regulatory Monitoring Unit (RMU) be reinstated.

It likewise called for the SBMA to revert to a window-based permits and license system, similar to how the Department of Trade and Industry and local government units administer these vital services. It pointed out that the SBMA currently makes use of account officers (AO) assigned to each locator, but that these personnel themselves act as regulators, thus promoting “unhealthy relationships.”

The SBFCC also called for automatic renewal of permits, as long as there are no significant changes or violations by the locator, and as long as its lease is valid; development of an online license and permits application system; conduct of ARTA (Anti-Red Tape Authority) risk assessment to ensure more efficient business processes; and formulation of policies covering payables and receivables in the processing of permits.

Similarly, the SBFCC urged the SBMA to connect with the online systems of national government agencies to verify documentation and compliance requirements; restore a customer-centric culture in the agency; and revert to the old method of routing requests and enforcing individual citizens charter to ensure that processing times are met, instead of dong it through the Accounts Evaluation Committee (AEC).

The locators group also asked the Subic agency to remain true to a single agreeable masterplan, and to aggressively market areas or parcels of land for the intended use under the plan; and to either undertake to regulate locators and prevent national government intervention in concerns which the SBMA can clearly understand, monitor and enforce compliance on their own—or hand over the regulation to national agencies.

Lastly, the SBFCC added that the SBMA needs to remain absolutely apolitical, and to give attention to concerns of Subic Bay Freeport residents.

To help deliver these recommended solutions, the SBFCC also urged the SBMA to lobby with concerned national government agencies in order to bring about better systems in terms of regulation, compliance, law enforcement, personnel qualification, and funding and subsidy.

Among the changes the SBFCC sought in its manifesto was the separation of the functions and positions of the SBMA chairman and administrator to bring about “true check and balance”; and the allocation to the SBMA of a third of the three percent national government share from Subic Bay Freeport operations to ensure that basic services are covered and to dissuade the agency from seeking new fees from Subic locators.

THE Subic Bay Freeport Chamber of Commerce manifesto was signed on behalf of Subic Bay Freeport stakeholders by 10 SBFCC officials led by Chamber President Benjamin E. Antonio III and Vice President Jake S. Oh.

The manifesto, SBFCC officials said, “has been prepared as a reference by which the SBMA and other agencies and entities who are capable of influencing the direction of the Subic Bay Special Economic and Freeport Zone, may use as a roadmap to re-calibrate their operations and be responsive to the needs of their locators and the industry in general in these current conditions.”

In the same manifesto, the SBFCC acknowledged that the Subic Bay Freeport Zone “remains to be the ideal place to live and work,” as many rural areas are wanting in infrastructure needed to drive progress, and these are already available in Subic.

Thus, ensuring that Subic operates at its most optimal is the best use of these resources, the SBFCC said.



Source link