Privatization could cut it for PHL

Published on Tuesday, 11 December 2012 20:51

Written by Recto Mercene and Max V. de Leon / Reporters

A top United Kingdom official broadly suggested on Tuesday that the Philippines could take off faster if it considered privatization but with the government still playing an important role as a judicious regulator.

Hugo Swire, visiting minister of State at the Foreign and Commonwealth Office, cited the UK’s economic transformation after it elected to privatize.

Britain, Swire said, is now a success story in Europe because it opted for privatization in the late 1970s after struggling against uncompetitive “smokestack” industries, strikes by labor organizations and related human problems.

He offered the reason for the feat, at the same time saying that he sees his country’s  dilemma almost 40 years ago as also being faced by the Philippines now.

According to Swire, a big  lesson that they learned from their experience is that businessmen are better economic managers than bureaucrats.

“Businesses run businesses better than government does. The government, despite its very best intentions, is not there to run business, the government is there to enable business…to make sure that investors and people are protected,” he said.

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Swire added that, ultimately, the  government ought to run infrastructure such as  railways, hospitals or airports.

When asked on the Aquino administration’s Public-Private Partnership (PPP) Program, Swire said, “I think your government is looking at this, I think it’s right to be cautious and look at the progress made in other countries.”

Despite his apparent warning, he  still urged the Philippine government to seriously consider its PPP Program, since “this is the best way forward for your economy and that is the No. 1 consideration.”

Looking back at his own country before it embarked on privatization, Swire said that Britain at the time was in a “winter of discontent,”  when “[it] was a deeply humiliating time to be British.”

When also asked if  the government should regulate business, he replied that there has to be a balance.

“ You can’t have no regulation, they [businesses] have to be regulated properly, but, on the other hand, your business can suffer from overregulation,” Swire said.

He added that in the United Kingdom, they are cutting red tape.

“There are far too many regulations on business, but certainly whether it is schools or hospitals, railways and airports, they don’t need regulations because they are essential services and essential services need to be protected,” Swire said.

But, according to him, these social and economic arms should not necessarily be run by the  government because the job could be done by commercial organizations.

Swire said the Philippines is heading down the same path—as Britain was nearly four decades ago—that is seemingly spiked with corruption, insufficient infrastructure, fragile peace and protectionism.

Corruption, he added, remains a scourge in the global economy.

“It adds as much as 10 percent to the total cost of doing business globally and up to 25 percent to the cost of procurement contracts in developing countries,” Swire said.

Good infrastructure, he added,  could provide foundations for long-term prosperity.

Peace and stability, Swire said, “perhaps are the most crucial platform for prosperity.”

He suggested that the Philippines shun protectionism and embrace free trade instead.

In pushing the government to pursue the PPP Program, Swire said the United Kingdom is committed to support the program in terms of both policy know-how and investments in actual projects.

He told the BusinessMirror that a number of British companies are eager to invest in the Philippines and are only waiting for the government to put together good PPP packages.

Swire  said the country remains as a top priority for UK investments in the region.

“As we say, the proof of the pudding is in the eating. The single largest European investor in the Philippines has been [the UK] and will remain [so]. There are already British businesses here and there are many others who are looking at the opportunity to break into the market. If the government takes the PPP route, more UK firms will be coming in,” he added.

Britain is also sharing its experience on PPP as a privatization tool because, Swire said, this is a good way to get more private participation and improve the delivery of services to the people.

“It’s like what we did in the 1980s. We made some mistakes, but got it right in other areas. We will share those mistakes and the way of getting it right with your government,” he added.

The visiting UK official  said that London  will also share its policy experience in infrastructure development, energy and PPP.

Swire, who is on a Southeast Asian official tour, added that it is the intention of UK to increase its level of trade and investments with the Philippines.

He addressed a joint meeting of the Makati Business Club (MBC) and Management Association of the Philippines at the Tower Club in Makati City.

Swire announced that he just signed a joint action plan with Foreign Secretary Albert del Rosario that will take the two country’s relations to a new level.

“This is a genuinely exciting proposition. Our partnership will help to shape the business environment, working together on issues like anti-corruption, competitiveness, economic reform, a low-carbon economy and building awareness about the opportunities for trade and investment,” he said.

Swire also announced the signing of a new air-services agreement between him and Transportation Secretary Joseph Emilio Abaya, and met with Ramon Ang of Philippine Airlines, which is hoping to start direct flights to London soon.

He also  urged the Philippines to conclude a free-trade agreement with the European Union as “international trade and investment is the best route to development.”

Ramon del Rosario Jr., MBC chairman, said that the Philippines enjoys a trade surplus with the UK. Also, as of first half of the year, UK investments in the Philippines had reached P1.47 billion, surpassing the full-year 2011 total of P1.38 billion.