Losses outweigh gains in Phl hosting of Apec

By Jerry Maglunog

The Philippines hosts this week what critics have come to regard as the annual “socials” of global leaders called the Asia Pacific Economic Cooperation (Apec) summit, the outcome of which, a noted economist lamented, would bring little in terms of immediate benefits to the economy. 

The four-day event is scheduled Nov. 17 to 20, but the so-called summit –where the top leaders of the participating economies meet – stretches for two days – Nov. 18 to 19.

Businessmen were caught flat-footed with the announcement of a two-day closure of Metro Manila banks in connection with the Apec extravaganza. A businessman in the construction industry said it was a “stupid idea” to have the banks closed during the two-day “summit” since there is no crisis to speak of, in the first place.

While the Bangko Sentral ng Pilipinas announced that banking days would remain “normal” on the 17th and the 20th, the fact is that the two-day closure of the banks on the 18th and 19th was something not necessary, in view of the effects of such closure on the economy.

Banks have started to alert their depositors in Metro Manila about the two-day closure by text and by phone. It seems that while the BSP pronouncement asked banks to open some of their branches that would not be affected by the Apec traffic, many of the banks simply decided to close their Metro branches.

Another financial institution to be affected is the Philippine Stock Exchange, which must stop its operations for two days. One broker said the first advice was for a four-day banking “holiday “ but the stockbrokers resisted since this could hurt the image of the Philippines.

The Apec event also meant that trucks, especially those taking out cargoes from the Manila International Container Port, the Port of Manila and the North Harbor, are not allowed to use the roads leading to the pier.

This means huge economic losses in terms of unserved export orders, with many facing the prospects of having to pay for demurrage fees due to the delay in the take out of the cargoes.

Dr. Benjamin Diokno, former budget secretary and currently University of the Philippines (UP) School of Economics professor, said the financial windfall the government has been saying would result from the event, is not likely to come.

“Without the needed infrastructure, we can’t expect anything more than showcase the country to the other heads of state,” he said.

Diokno described as “bureaucratic epidemic” the widespread lack of infrastructure and the daunting number of documents needed to start business in the country.

The staging of important international events here is of little help to the Philippines because the hindrances for economic growth, particularly low investments, are deeply rooted, said Diokno, who served as budget secretary from 1998 to 2001. Come to think of it, he added, the P10 billion spent to bring the event to Manila, would have done the country a lot better if it were used for building additional roads or facilities at the Clark International Airport so it could serve as an alternate to the Ninoy Aquino International Airport (Naia).

Diokno said a massive overhaul of the system in processing permits, documents and requirements before a business could start is needed to entice investors to relocate to the Philippines.

The overhaul means easing, if not solving, the most gripping issues hounding investors in the Philippines: the 160-plus signatures needed before a business can start operating; the very high cost of electric power; the severe lack of roads and bridges; congested airports; and the many unfriendly local government units (LGUs) that mostly demand perks or grease money before processing the permits of prospective business locators.

“We have to do our homework,” Diokno added.

The bureaucratic bottleneck has caused the Philippines to have the lowest foreign direct investments (FDI) receipts among its fellow original members of the Association of Southeast Asian Nations (Asean 5).

The upcoming integration of Southeast Asian economies also poses a bigger threat among local businesses, according to Diokno; many observers feel the integration will intensify rather than usher in cooperation among Asean members.

The cost to business of the Apec summit is also expected to be staggering, as Manila will be under a virtual business lockdown for the duration of the event and related activities.

The government gave a figure of P10 billion in total expenses for the hosting of the event. But the bigger costs would be the lost opportunities for businesses affected by the long Apec holiday.

Economists estimate the economic activity in the NCR will decrease by about 20 percent during the Apec meet, meaning a loss of about P10.6 billion. Add this to the P10-billion government budget for hosting the event and you have a P20.6 billion loss for the event

Malacanang defended the P10-billion budget for the hosting of the Apec summit, saying the country’s economy would benefit most from the amount invested for the prestigious event.

”For the attendance alone, it is expected that more or less 10,000 people including 3,000 media delegates, will participate in the Apec. Each one of them will spend and that will go directly to our economy,” Communications Secretary Herminio Coloma Jr. said.

Coloma urged the public to look at the long-term benefits the country will reap from hosting the event.

”We have to look at the bigger picture. We have to invest now. What we have planted will bear fruit in the future which is the favored investment,” Coloma said.

Coloma said APEC hosting would also help the country attract more tourists. “A big part of the development in the world is based on the so-called people-to-people friendship and cooperation. According to my friend, ‘an investor starts as a tourist; happy tourist becomes interested investor,” he said.

The event will also affect air travel as more than 1,300 flights estimated to carry 26,000 passengers will be cancelled at Naia during the event.