• A 2017 wish list

    Ben D. Kritz

    Ben D. Kritz

    THE week between Christmas and New Year’s Day is usually the time when I make predictions for the coming year, but that is an exercise I am going to forego this time. Even though my accuracy over the past eight years has been about 75 percent, 2016 was the year in which my predictive powers seemed to abandon me.

    In reality, I did get some things right; I said the peso would fall to near P50 per dollar by year-end and it did, and I predicted that OPEC would finally see the light of day and agree to a production cut to boost oil prices, and that happened, too.

    But the things I got wrong were so far off the mark that I do not feel entitled to claim much success. Donald Trump beat me every time—I did not believe his campaign would last until the Republican convention, I was certain the party would find a way to thwart his being their nominee, and I gave him no chance of winning the general election. We all know how that turned out.

    Likewise, here in the Philippines, I was fairly confident Rodrigo Duterte’s ill-tempered, murder-solves-everything act would not resonate well with people outside his provincial comfort zone, and that Jejomar Binay, who had stressed to a group of us a couple years ago that he had been preparing for the presidency for the past 20 years, had the inside track to Malacañang. Not only did Duterte win, he won big, and Binay didn’t just lose, he was overwhelmed. I could not have been more wrong about the outcome if I had tried to be.

    It seems to me that the conventional patterns of things that indicate the way things might progress in the year to come have been seriously disarranged, and apparently I am not alone; the volume of “predictions for the new year” from analysts is noticeably lower than usual, and all seem to have a certain nervous tone to them; some are optimistic, but not confidently, and others are downright apprehensive.

    Since no one seems to know, or appears to really believe they know what will happen in the coming year, perhaps it would be more productive not to guess at that, but instead to focus on what should happen. Along those lines, and in the spirit of offering a few constructive ideas, here is a “wish list” for the Philippines for 2017:
    Put a stop to a couple of very stupid tax reform ideas that emerged in the latter part of 2016: Despite the strong dissent of virtually everyone who actually understands the concept of “taxes,” the House of Representatives pushed through with a two-tiered sin tax on cigarettes, which will not increase government revenue (and in fact may actually cause sin tax revenues to decline), and is likely to reverse the decline of smoking rates by making cheaper cigarettes more affordable, thus defeating the intent of the original sin tax program on two fronts.

    Hopefully the Senate, or President Duterte himself, will see through the lobbying efforts of local tobacco interests who control the low-price market (and who would primarily benefit from the two-tiered tax), and toss the tax bill in the recycling bin where it belongs.

    Likewise, an arbitrary and poorly thought out vehicle excise tax adjustment seems to have a good chance of being enacted, and it shouldn’t be; although it increases, not unreasonably, taxes on high-priced cars, its odd structure would actually encourage the proliferation of less expensive vehicles on Philippine roads, aggravating a traffic congestion problem that already seems to be insurmountable.

    Dust off the country’s Arroyo-era aspirations for medical tourism, and make a priority of them: One of the big changes that will happen fairly early in the term of America’s new president is that “Obamacare,” the complicated but still basically effective health coverage program available to virtually all Americans, will be replaced with something more to the Republican party’s liking, which means that there will be a big potential market of people wanting or needing to look elsewhere for decent medical care. Add to that rapidly aging populations in Japan and South Korea, and the prospects for medical tourism in the Philippines suddenly look promising again. The country should embrace the concept in earnest this time, not only as a growth industry for its own sake, but as a means to stem part of the flow of the Philippines professional talent to greener pastures outside the country.

    Attract a third telecom player: The House, which collectively seems to be intent on distinguishing itself as neither very intelligent nor concerned with the country’s best interests, has already passed a measure to extend Smart Communication’s franchise for another 25 years. This was, of course, a mistake, unless all expressions of interest in improving the Philippines’ communications infrastructure are mere lip service. If the Senate does not reject the measure (which it should), it should at least remove the “equality” provision that allows Smart to receive the same incentives any future telecom player may be granted. This will allow the government to properly sweeten the pot to attract the much-needed competition to the existing duopoly, which would, hopefully, improve everyone’s performance.

    Develop an alternative electric vehicle program: To the disappointment of many, the Department of Energy earlier this month canceled the $500 million electric tricycle, or “e-trike” program underwritten by the Asian Development Bank. It may not have been a completely bad move on DOE’s part, given the specifics of the program, but not coming up with a better alternative will be. Electric vehicles—mainly bikes, but including things like e-jeepneys—are a growing business in the Philippines, and in one sense are an easy path to partly fulfilling President Duterte’s aspirations to develop more industries in the Philippines. The President and his administration have demonstrated a certain talent for making the most of low-hanging fruit in their half-year in office; the electric vehicle industry is a particularly ripe one that they should not miss.



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