• Paying double – privatization



    Quite some big numbers (in one case P10 billion) have been thrown around regarding the damage to the economy brought about by holding the APEC talking shop (sorry, conference) in Manila last week. The problems continue, I see, with the airlines now full of people who were prevented from traveling last week because of the APEC to-do, bunging up the available planes this week.

    The airlines, of course, have been quick to up their prices to reflect this sudden boom in passenger demand. Return fare to Puerto Princesa from Manila is now P 13,200 with very limited seat availability compared to a normal low season fare of about P3,000 to P5,000—the extra expense just goes on.

    Inefficiencies of the government put you at the mercy of the rapacious Philippine private sector, which then scam you for all their worth! Interestingly, there is an appearance of competition in domestic air routes: Four carriers fly between Puerto Princesa and Manila, for example, but I’m hard-pressed to find any competitive advantage among them and, when they are all full, then the carrier with a few seats left over can charge what they like, and they do.

    There is no great expectation anywhere in the world on the efficiency of government departments. In the Philippines, just look at the LTO, for another example. My new license plates reserved in February are still not available and there is still not a glimmer of hope that I will not get my driver’s license that ws renewable in May (it was supposed to be available in September).

    These issues, we now believe, are caused by difficulties in the procurement process for the plates and the license cards. Sounds like a plausible reason, knowing how the Philippine government’s procurement processes operate.

    The thing is that although the license issue is no longer news, having disappeared from the newspapers and rarely appearing on Facebook, the problems persist as absolutely nothing seems to have been done to improve the situation. So people just accept it—“that’s the way it is, can’t do anything about it!”

    The cost of these sorts of LTO-type inefficiencies is enormous and I am sure that the numbers used in assessing the cost of the APEC week are understated. So people, not without some justification, think, “Well, let’s privatize government functions, that will get rid of this appalling wastage of time, expense and effort.

    We will get our new license plates faster, we won’t have to keep running around Metro Manila to correct and resubmit forms that we are told have been either submitted incompletely or filled up in the wrong colored ink or added the wrong types of attachments or done anything else that would make them unacceptable to the bureaucrats sitting across the desk.”

    But, alas, to privatize government services does not necessarily make things any easier or more efficient, and it certainly makes them more expensive. In a Philippine environment where there is really no effective regulation, the free market truly is free (to do whatever it likes). I’ve often wondered what happens to the money that the government saves through privatizing services or functions—where does it go or how are such savings used? Taxpayers never seem to see any benefits and aren’t they the people who should get the savings as it was their money that paid for the government entity prior to privatization?

    What is it that makes the government appear inefficient in the provision of services? One of the top reasons is that the job is likely to be subject to political interference. Senior positions are frequently filled through political patronage, frequently by people who have little if any background or knowledge of the matters for which they will be responsible in terms of policy implementation and supervision. Come the next administration, six years later, there will be wholesale change in these patronage appointments.

    Another reason is the requirement to be able to say “hand on heart” that government procurement is transparent. The Procurement Law is followed to the letter, thus any untoward hanky-panky is impossible.

    This introduces long drawn out and tedious procurement procedures invariably aimed at always taking the cheapest price, or the highest franchises,, in the law’s terribly misguided aim of removing any risk of human subjectivity in the evaluation process. “We have to be transparent and we have to always get the best price.”

    This obsession with the need to appear transparent extends to the simple filling out of forms and satisfying requirements by the poor, long suffering public. Everything has to be done exactly as the “book” says, one mistake and you go back, often involving a journey of several hours, do it again, bring it back, wait in line for a few more hours and pray hard that you haven’t overlooked something in the application form, in which case the whole procedure is repeated.

    I wonder what the cost is to the economy of this endless cycling of forms and requirements. Must make people long for the days when you can just tip somebody to sign an approval on one of these endless forms?

    I guess you still can in many cases, but if the aim is to eradicate corruption, don’t allow government departments to run in such appallingly inefficient way that people say it was better when it was corrupt!

    So, turn it over to the private sector and let them look after the form-filling. It’s just the same, the only problem is that you are paying a lot more for the service whatever it may be and you are still paying the same amount to the government that you paid when it was doing it. A real double whammy!

    Mike can be contacted at mawootton@gmail.com.


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