General Membership Meeting of the Chamber of Thrift Banks

General Elections, Annual Membership Meetings and General Membership — meetings are a good time for the brethren, for all of the associates, for all of the members of any organization to look back at the preceeding year, or preceding term, to give thanks to the leadership that brought us to where the organization is today, to relive some of the difficulties and the battles fought and as well as to relive and to revel in the success of the organization.

It is also an opportunity for the organization to consider the very principles or the very reasons for which its members came together—to see whether in fact these principles or these reasons remain current, remain relevant given the challenges of today.

I  can simply look back and recall the last time I was with you in 2003 and certainly, the financial conditions then were very different from today and perhaps, even the profile of the membership of the Chamber of Thrift Banks could have been very different. I just checked my figures with Patrick as I was seated and he did in fact confirm that there’s about 1.6 trillion pesos in Special Deposits sitting at the Bangko Sentral, earning three and a half percent interest, which in some ways competes with some of the other fund accummulators, but also reflects the relative robustness of our financial system as it stands today– very, very different as it was back in 2003– and it certainly gives us a great deal of confidence to know that this is the situation, considering all the turmoil and turbulence happening in Europe and in the more developed economies in the world.

So let me take this opportunity to give a sort of satellite view of where the P-Noy administration wants to take our country, and what it’s doing in order to get there and more specifically, what we’re doing at at DOTC to make that happen.

I think the single biggest element that we can say has been brought to the economy, to the market place, to our society by the entry of the P-Noy administration is a wholesale transformation in the basic premise of what it’s like to do business in our country, and even broader than that, to be a citizen in our country.

The basic game-changing reform that the P-Noy government wants to achieve is that one can do business simply by depending on the rules, simply depending on the objectivity of the rule makers, simply depending on the policies remaining the way they are, and of the stability in the policies themselves. And one need not have a special edge, one need not have to know anybody or to gain special favor to conduct business. And that goal is basic and game-changing.

Why would I say that? In my conversations with the established business leaders in our country, the one thing that they constantly say is that, “Ibang-iba kung malinis ang gobyerno.” Your project studies and all of your efforts don’t have to account for whatever extraneous or other adjustments you have to make to take into consideration the other things the government wants from the business sector, particularly in off-books items. And that is the foundation for a healthy, vibrant, buoyant business economy in our country. And it is in that context that the members of the Chamber of Thrift Banks who are really part of the veins and arteries, who move money around our country, can benefit from good governance.

Many times, it is heard, “Ano ba yang good governance? Ano bang mapapala natin dyan? Makakain ba yan?”

What is not seen is that good governance, clean and honest governance—a government that plays by the rules, a government that ensures the rules are followed, that ensures the referees are fair, that ensures the rules don’t change mid-stream– if we have a government such as that, there will be vibrance in the business community, people will have greater confidence to engage in business and thus create the jobs and incomes and livelihood that they can benefit from.

So yes, indeed, nakakain ang good governance. Yes, nalalagay sa bulsa ang good governance. Yes nalalagay sa savings account dahil kung merong good governance, kung pantay ang laban, kung maaasahan na ang gobyerno ay di papanig, di kikiling sa isang special interest or another, then in fact, magiging mas madali, mas transparent ang kompetisyon. Ang kompetisyon that we all engage in everyday will be sa talino, sa sipag,  sa husay ng produkto, sa marketing, sa cost of funds, at sa iba pa. Hindi kompetisyon sa sino bang kakilala mo. Mas mahirap ang kompetisyon sa sinong kakilala mo eh, kasi di mo naman mapili kung sino ang naging classmate mo. Hindi mo naman ma-plano kung sino ang mapapangasawa mo. Hindi mo naman certainly mapili kung saan probinsya ka ipinanganak.

And so kung iisipin natin, “Saan ba yung mas magandang lugar?” Singapore or sa iba pang mga lugar, one element that is always there, and which is why we admire them, or we aspire to be like them is that pantay yung laban, malinaw yung rules, and accordingly, mas madaling magnegosyo, dahil hindi kailangang mag-compete kung sino ang kakilala mo o kung sino ang makakapagbigay ng pabor sa ‘yo.

And that in essence is what the “Matuwid na Daan” implies, and not only implies, but is designed to attain—to ensure that the business environment is fair and level for everyone—big boys and small boys, well-capitalized or not. Everybody gets a fair shake, everybody knows the rules, and the rules will always stay as they are.

And it is in that context that when the P-Noy administration, the programs, the good governance programs become well-entrenched, become the expected outcome, become in fact the  norm, rather than the exception, then that is the time when we probably can say, we really have a modern political economy in our country, which will be the solid foundation for growth and development.

Let me say that again. Dati ang kalakaran, the norm dati, was mag-e-SOP ka, sundan mo ang so-called Standard Operation Procedure. Yung exception, yung malinis. Hindi naman ako nagsasabi ng hindi ninyo alam ito sa inyong mga operations, national government man o local government units.

Ang ating pinapangarap, ang ating ina-ambisyon, ang tinutukoy ng administrasyon ni Pangulong PNoy, is that magiging norm, magiging kalakaran yung diretso at magiging exception, at hindi lang exception, magiging nasa kulungan yung mga kinakailangan pang magsuhol, mag-tongpats, at gumawa ng kalokohan.

That’s the most basic way of describing what the administration wants to do, particularly as it relates to the business environment in our country.

Now how do we do that, how do we implement that, how do we operationalize that at the DOTC?

Let me just say that when I was DTI, the sum total of the money that I was responsible for, in 4 years at DTI, was roughly, say P5 billion a year. In DOTC, that’s just one project. And in fact, the annual budget of DOTC is about P36 billion pesos, not counting the many other projects that are under ODA, or under PPP or other funding situations.

Yung mga ma-anomalyang proyekto na nadatnan natin pagpasok natin sa DOTC, nadatnan din ni Pangulong PNoy nung pagpasok nung kanyang administrasyon, bibigyan ko lang ho kayo ng iilang halimbawa. That is about problem-solving para sa amin sa DOTC.

Itong GMA RoRo Ports Project. This is about P14 billion. Nautang na ito, may mga downpayments na naibayad, may mga kontratista na ito. This is for 72 ports all over the country. Subalit, nung nakita natin yung mga detalye nito, napatunayan na 66 of the 72, hindi angkop doon sa specifications nung mga ports. In other words, bumili tayo ng mga ports, P14 billion worth, 66 of 72 locations that would be located in areas that because of sea, tide, wind and other considerations, in a matter of 1 or 2 or 3 years, these ports will be broken because the locations are not hospitable to the specifications of these ports. Eh di nagsayang lang tayo ng pera. At babayaran yan ng mga taxpayers.

Another example would be the NorthRail. Matagal nang nirereklamo ito. Northrail as you know, is supposed to be a link to the airport in Clark. But after so many, I don’t know, changes, it became a train that  stops in Mabalacat, 15 kilometers short of the airport. It also begins in Caloocan, and so you can just imagine the distance from here, Mandarin Hotel, what we will have to do to get to Caloocan, to get on a train, to get to an airport…that doesn’t get to the airport, that they have to take another vehicle to get to Clark airport. The train became a commuter train with about 11 stops, and so, what businessman would take that knowing that it has 11 stops and that it doesn’t even begin in the Central Business District and it doesn’t end in the destination which is the airport?

And  lastly, the contract terms themselves were such that the Terms of Reference were written not by us, but by the contractor; the acceptance of the work was not by us, meaning the contractor was paid regardless of whether we accepted the work as in good condition or not; and the contractor that was chosen to implement the project had no experience at all in rail construction.  It’s a major contractor, don’t get me wrong, but their experience is in earth-moving, in dams, in power projects. In fact in their website, they brag about their rail experience and what they point to is the Philippines. So  tayo yung parang guinea pig. Dito sila nag-experimento. Which is why, it’s no surprise that after all these years, and after all the money spent, and after all the talk, and investigation and everything, out of 90 kilometers to Clark, only about 1 kilometer has been sort of constructed.

President PNoy was very successful in negotiating with  President Hu Jintao of China and Premier Wen Jiabao, in convincing them to agree to a reconfiguration of this project. We do want a rail link. We do want an airport express. But we don’t want it under the terms of the present contract, which in our view are anomalous, are disadvantageous to our people.

And so he asked the Chinese leadership to agree to a reconfiguration that would include the Filipinos writing the Terms of Reference. We will say exactly what we have in mind, what we are willing to pay for. Filipinos will also conduct the bidding among Chinese contractors and only experienced rail construction Chinese contractors will be allowed to participate. And lastly, it was agreed that the reconfiguration of the project will consist of a high speed rail link to the airport in Clark. It will not stop in Mabalacat, it will go all the way to Clark. It will not start in Kaloocan, it will enter the Central Business District here in the middle of the metropolis and will go all the way even to the NAIA Complex. We will be using the PNR right-of-way for that.

There are many others, but these are two examples that I think are pretty well-known, so that you will know exactly what the government is doing to try and correct some of these things that were done in the past that were wasteful, that were anomalous and were not in the interest of the people. And the President is doing this because it’s the right thing to do. Not because of politics, not because he wants to look good or not. No. Simply because he husbands, he shepherds, he protects the people’s money as if it were his own.

Madalas tinatanong ng Pangulo, “kung pera n’yo ba yan, ganun din ba ang paggastos ninyo ng pera na yan?”  Which is a good measure of determining the prudence, the frugality, the correctness of the spending. It’s very easy to say, “Ah, let’s spend for this, let’s spend for that”, kasi at the back of our minds, anyway taxpayers’ money lang yan, it’s government money eh, di ba?

But the care that he’s exercised in spending this money ought to be the standard of, ‘if this were our own money,’ because in fact, it is our money. It is taxpayers’ money. We are all taxpayers. If it was our money, your money, would you spend it this way? Would you engage in this project in the manner and in the configuration in which it was set forth? If the answer is yes, then why not. But if the answer is no, then something is wrong with the project and it has to be stopped or fixed, amended or refined accordingly.

And this approach is why sometimes we also say, that the “Matuwid na Daan is the Matipid na Daan” because yung matipid, yung pagbabantay sa  pera ng tao is really the way of good governance, not as an ideal in itself, but also as a practical way of exercising the same.

That is what we do at the DOTC in order to protect your money. Aside for this, we also try to find the best and most efficient and the least cost to undertake the many projects that we have.

This is not a government only for unearthing anomalies. This is also a government that implements projects, and gets things done and accomplishes the many goals that it sets forth for itself and for the people. And what we have are projects all across the country. I mean,  the Chamber of Thrift Banks is nationwide, it’s all over, you have members from Luzon, Visayas, Mindanao, and every corner of the country. You’ll be happy to know that the President is very keen in opening up the travel routes, the arteries that will connect the country for tourism, business and for people. But he wants to do this in a coherent and rational manner. I’ll give you an example.

We want to have airports to open up the countryside and the provinces to bring them closer to the business centers, and for tourism purposes. But do you know that out of the 86 airports we have in our country, only 45 of them have scheduled flights?

Fred Yao here is an operator of Zest Air, and you know that, I was just asking him, he has certain criteria before he will dispatch one of his aircrafts to a particular destination. This is basically for you Fred. Out of these 86 airports, only 45 in fact have scheduled flights. So, we’ve spent for the other 40 airports, we’ve spent money for maintaining them, paying the personnel manning them but really, there are no flights to these airports.

So we have aligned our airport development program with the DOT, the Department of Tourism, promotion program. We’ll ask DOT which tourist destinations are the ones with the highest and best potential, current market as well as future market, and that is where we will spend the bulk of our money, considering the limited resources we have. We are in deficit spending, meaning we don’t have all the money that we want to develop the country, so therefore we must spend our money prudently, we must allocate our resources to the best and most efficient destinations. This is not different from you yourselves, right? You want to open branches all over the country but you will open your branch in those locations where you will have the best return. Same with the government.  I think the government should not just be throwing money here, there and everywhere based on political considerations simply because Congressman X or Governor Y wants to fix his airport, dahil in reality walang flight na pumupunta doon. So the government will be deploying its resources in a very coherent and programmatic way so that the entire economy, the people in general will be the best beneficiary, or the biggest beneficiary of this deployment of resources.

Let me give you more examples. These would include Laguindingan Airport in Mindanao. This will be the one that will replace the Cagayan de Oro Airport which is on top of a plateau, a bit less than ideal. So, this is on track. It will finish by last quarter of next year. The construction’s on-going. We will be bidding out the O&M, operations and maintenance of the airport sometime early next year so that by the time the airport is finished, it will also have an O&M operator to go along with it. This is a way the government privatizes many of its operations and is able to avail of the efficiencies of the private sector in these operations.

We are in the process of bidding out Puerto Princesa Airport. This will expand our capacities in Palawan which is a major tourist destination. We’re keeping our fingers crossed for this Palawan Underground River designation as one of the 7 Wonders of the World. If you haven’t texted yet, please text PPUR to 2861 so you can help ensure that we will have a major international tourist destination. The statistics are, once you are among the 7 wonders, then you’re tourist arrivals increase by 20 to 30%, automatically. So, it’s in our collective national interest to get on that list so that all those tourists will come in. Anyway, we’re fixing and expanding the Puerto Princesa Airport and that’s well on its way and on track and on schedule as well.

Government is committed to a modern, first class airport in Bohol. This will cost about anywhere from 5 to 8 billion pesos. The only decision now is whether to locate it in Tagbilaran or in Panglao.

Here’s the situation, the modern airport is defined as 2,500 meter runway that will be able to accommodate more passengers and heavier aircraft requiring longer runways. So it’s 2,500 meter. We already have 1,800, roughly, in Tagbilaran.

So the question is, do you build 2,500 meters brand new, from scratch, in Panglao Island, or do you build 700 meters in Tagbilaran and extend the current airport? The big difference is that Tagbilaran Airport is like NAIA, it’s like in the middle of the city. And so, to buy, you have to buy the 700 meters and for you to build 700 meters, you have to buy maybe a kilometer worth of land more. So will that be more expensive than locating it in Panglao?

The same modern terminal facilities that will apply to Panglao will also apply to Tagbilaran. It’s the same. You just take the full terminal and locate it one or the other. The same navigational system will be there, one way or the other. It’s really just the runway we are talking about.

The rough calculation is, if we build from scratch, it’s about P8 billion for Panglao. The extension is about 5, maximum 6 billion pesos in Tagbilaran. The difference now is whether during bad weather, you can still use Tagbilaran, because Tagbilaran is pretty narrow, versus Panglao, which will be wider.

And so, just to show you, just to walk you through the kind of work that we do to make sure that your money is not spent willy-nilly, is, we then ask, how many times does the Tagbilaran Airport go down because of bad weather? Well, average is about 3 days a year. So that’s the decision point now. 3 days a year that Tagbilaran is closed versus 3 billion pesos more if Panglao is built. Another important point is that in bad weather, if the airport is wider, there’s more leeway, there’s more room for the plane to maneuver to come in for a landing. In narrower airports, in bad weather, the tower closes down the airport because then you don’t have as much room to sway or room for error and other considerations.

So that’s how these decisions are undertaken. What is important, what ought to be the take away though, is that these airports are going to be completed, it’s just a question of whether it’s in Panglao or Tagbilaran.

We’re looking at another situation in Daraga, because Legaspi also has the same dynamics as Tagbilaran. Daraga is about 20 minutes away from downtown Legaspi. The bid process is well on its way. It hasn’t been announced yet, but all of the feasibility studies, and the transaction adviser, all the other stuff that has to happen before government undertakes a procurement or a bid is well on its way for the expansion of Cebu Airport, as well as Tacloban, another one of these major destinations whose terminal is already overcrowded the way NAIA Terminal is.

So those are the kind of projects that are being undertaken. And in that respect, the moment we coherently spend these monies in order to connect the country, ports, airports, then we expect that greater commerce, greater business, movement of people, goods and services will lead to a much more vibrant and healthy economy.

Let us go to other projects being undertaken, for rail in particular, one of which is the LRT Line 1 Extension to Cavite. That’s an P80 billion project. The choice before the government is if we get the private sector to do this entirely, they will ask government for guarantees, the way they did for the MRT. And so if government is going to pay, we might as well pay for cheap loans, ODA loans, which cost about one-fourth of one percent, 40-year money, rather than to pay the private sector say, how much do you charge for 40-year money, 7-8 percent right now? Maybe you’ll have a float on top of that, or something. How much would you charge? Much more? 10 percent for 40-year money? Well, more? Realistically, how much? Assuming you had to cost it, what will your yield curve be? What’s the longest term that you have? 25 years? So how much will you charge for 25-year money? Government has access to ¼ of 1% money.

So you can see clearly we’re protecting the people’s interest. Right?

If Businessman X says, I will do that project, government you help me, well, he has to recover what he also pays. Right? Government has to pay him his cost of money plus some other factors for him to make a profit. Under ODA, government will only pay ¼ of 1%, maximum of 1 ½ %, assuming it’s an untied ODA loan.

So you can see that government is acting like a prudent business person, like a prudent entity such as you and your members. Government is looking at all of the options that are available so that it can undertake these projects most effectively, most efficiently at the lowest possible cost to the taxpayers.

And that is the reason why all of these studies, including NEDA studies and all of these processes have to be undertaken, because these are major commitments. I was going to say because these are major, major commitments, over 40 years, tens of billions of pesos, covering several projects.

So that’s what we do at DOTC. It’s a little bit different from what I used to do in DTI. In DTI, my job was more on, “Go ahead. Do it. How can I help you? Let me cut the red tape or protect you from harassment” or whatever.

Here, in DOTC, you’re actually representing the government in undertaking the projects themselves. And it requires a sense of responsibility over the funds and over the project so that whether it’s before you, the public at large, or hopefully not, a Senate investigation, then all of these projects that we undertake are defensible, are for the public good and attained the standard, in the most efficient manner and at the least possible cost to the people.

I understand that you want to ask a few questions; let me just end here and abbreviate my remarks by summarizing and sort of underscoring some points.

What we really want to do is change the game. It used to be a game—habulan, lusutan, tongpats and every which way just so that you can do business. Right?

What good governance stands for, what “Matuwid na Daan” really stands for, the everyday meaning for business people such as yourselves, is to make it such that the rules are clear, they’re transparent, they are objectively applied, it’s fair, and it’s not just change for one special interest or another.

That’s the best playing field so that your competition, as I said, is not going to be “sino bang kakilala mo?” but rather how you can improve your product, how you can improve your financing, how you can improve all of the elements…your management and so on and so forth, so that you can compete in that fair market place.

I want to thank you for your attention and good morning to you.