KAREN DAVILA (KD): Joining us on “Hot Copy” this morning, we have Senator Francis ‘Chiz’ Escudero. Senator Escudero, it’s a pleasure to have you back on Headstart after some time, Sir.
SENATOR CHIZ ESCUDERO (CHIZ): Hi, Karen. Good morning. Sa lahat ng televiewers natin, magandang umaga. May naka-miss din sa iyo, Karen.
HEART EVANGELISTA (HE): Karen, I missed you so much and I really want to see you soon.
KD: (inaudible) Heart. Well before we talk about COVID, I just want to ask you both. I don’t want to miss this opportunity, how was New York?
HE: Very good. It was so fun we had such an amazing time, such an experience but honestly, Karen, it would never be complete without you there.
KD: OK. All right this is way too friendly for a Headstart.
HE: OK. I love you, Karen.
KD: But nice to see you, Heart. Thank you so much. We go back to the business of Headstart. Was nice to see the couple once again together, happy on Headstart, that’s quite rare guys. So, Senator Escudero on a more serious note after the World Health Organization announced that COVID is no longer a global emergency, you are calling on the government to take certain steps, let’s start with that, Senator.
CHIZ: To begin with Karen, PBBM certified the Center for Disease Bill we hope to approve that within this week. Hindi porket wala na ang pandemya hindi natin ipapasa itong batas na ito kasi ang palagi ko ngang sinasabi, we should never focus on our circumstances but rather what we can do in spite of our circumstances. As the old saying goes, we may not be where we want to be but we’re sure enough where we used to be. And that is something to be thankful for and that is something that for us to hold on to during these times.
KD: OK. So, let’s start with that did you say it’s the Center for Disease Control, tama ‘no?
CHIZ: Yes.
KD: OK. Ito po ba, Senator ang may budget ang Department of Budget and Management ng Php419-M set aside for virology-related projects or iba pa po ba ito, Sir?
CHIZ: This is different they’re speaking or talking of the 2023 Budget, Karen. The creation of this new agency, strengthening of this new agency will entail the allotment of a bigger budget from 2023’s savings initially and then full-blown in the 2024 Budget.
KD: OK. So that’s a priority measure and then you are also calling on the government to lift what you describe as the secrecy of the funds spent by the government on vaccines. Where are we on that exactly?
CHIZ: Well, we called COA yesterday, Karen, and they gave us the amounts given to them by DOH pero wala pa kaming hawak na dokumento o kopya galing sa DOH o COA na nagsasabing ‘yon nga ‘yon. It was merely relayed to us verbally especially given the fact that vaccines will probably be continued to be rolled out then the procurement of these vaccines should also be monitored by COA with the same amount and level of transparency and accountability as usual with other government funds or utilization of other government funds.
KD: OK. But then Senator do we have an idea at least of how much this government has spent for vaccines considering we did receive donations and grants from the WHO?
CHIZ: We don’t have that figure yet Karen, COA hasn’t given to us yet but we expect it to be given in the next couple of weeks. But Karen, while we’re on the subject of the vaccines and how much they spent on these vaccines it also bares noting that about 50 million doses of these vaccines will be expiring in September and given that the rollout of the vaccine, given that we’re not in emergency anymore according to WHO it slowed down to about 6,000 to 10,000 nationwide per day. So kapag kinumpute mo ‘yong hanggang September ni hindi natin makakalahati ‘yong mga vaccine na ‘yon. So, it begs the question, why did we even begin to go to get that many doses? Why didn’t we plan? Quite frankly these vaccines will be expiring this May, some expired last March but as usually is the practice, ‘yung mga gamot naman daw may malaking “daw” dito Karen effective ng anim na buwan pa matapos ang expiry date ‘di ba naririnig mo ‘yon madalas.
KD: Oo.
CHIZ: So, kaya binigay nila ‘yong date na September. So, if you compute backward, I guess the vaccines expired sometime March, April, and May but are still “good” until September.
KD: OK. But then for example who’s accountable for that because this isn’t the first time we are hearing about the expiring vaccines?
CHIZ: Well, definitely DOH, Karen. They are on top of it, they are in charge of it, they headed the IATF before and it doesn’t help the situation that our Health secretary up to these days still acting merely a year after this administration was sworn it to office.
KD: How important is it, I ask also my interviewee yesterday how important is it for President Marcos Jr. to already appoint permanent secretaries. I mean the Department of Agriculture is one issue but with the DOH na OIC pa rin si Sec. Vergeire so to speak, ‘no.
CHIZ: Well for me it’s very important, Karen, because the priority of this administration is not to only addressing the effects of the pandemic but also agriculture which is the life, blood of our economy. In fact, for me DOH is even better position than DA. For example, President Marcos was away for ten days and he’s leaving again today for Indonesia as you reported.
Presidente na nga kahit nasa Pilipinas ang hirap ng tawagan ng Bureau Director ng Department of Agriculture, ng usec ng ating, ‘yong mga usec doon paano pa kaya kung nasa ibang bansa siya? The effect of that is most likely nothing major will be happening on that department unless of course it is cleared first with the President. And it’s not that easy to have an appointment with the President. Hindi ‘yan tipong secretary na nag-oopisina lamang sa taas na floor at puwede kang umakyat at kumatok sa floor na ‘yon kapag may kailangan kang i-clear, liwanagin o hingan ng permiso.
It’s not going to be that easy and it take its toll, it takes time for decisions to be made in the Department of Agriculture where time is of the essence ‘pag lumipas ‘yong panahon, ‘pag lumipas ‘yong window na binibigay sa’yo para may magawa sa susunod na taon mo na ulit magagawa ‘yon kung saka-sakali. Dahil hindi naman naghihintay ang panahon. When I say panahon not only time but also the weather sa paggalaw at pag-aksyon ng mga opisyal natin sa Department of Agriculture.
KD: OK. And Senator can you attribute the problems that we’re having right now in terms of alleged smuggled sugar, what to do with it, the lack of these certain things with the fact that the President is concurrent DA secretary?
CHIZ: Well, principally smuggling is the jurisdiction of customs, Karen, kung smuggling man ‘yan agriculture products o hindi. Customs dapat ‘yan ang bawal ay bawal, ang puwede ay puwede. But then again in way it is related because smuggling occurs whenever there is low supply. That means we were not able to provide enough supply and therefore there is a market, there is a window by which smugglers can earn a buck and that is the number one incentives of smugglers, kung kikita sila. So ibig sabihin kulang ‘yong datos, pagpaplano at supply kaya may nag-i-smuggle, dahil may window of opportunity silang nakiktia para kumita at pagkakitaan.
KD: OK. Moving back to the Department of Health does it affect long-term programs, the decision-making of Sec. Vergeire the fact that she’s OIC will this affect even post-response after the WHO announced COVID is no longer a global emergency?
CHIZ: Well, under the law there are certain limitations of an OIC, not a full-pledged secretary. To begin with, Karen, she cannot appoint certain levels of officials within the DOH it has to be cleared or signed by the President or the Executive Secretary himself. She cannot make certain decisions as well without the consent of the President himself or the Executive Secretary given that she’s merely the alter ego of the President. It would have been better for a full-pledged secretary to act entirely on his own with minimal actions required of the President or the Executive Secretary himself. So, again this would be causing delays and so far as actions needed to be taken within the Department of Health.
KD: Okay. Now Senator can we really get records on vaccine purchases given that there are non-disclosure agreements signed by the government and the vaccine manufacturers?
CHIZ: We don’t care about that Karen, quite frankly our law does not recognize NDAs that often by itself is actually illegal because it is against the constitution, it’s against the existing laws, it’s against the existing policies, memoranda, and circulars issued by COA which demands transparency and accountability when it comes to spending government funds. Add to that the fact na ‘yung mga bagong pinapapirmahan ng mga supplier ng vaccine balita ko, we have yet to confirm it to the DOH is a free and harmless clause from liability connected with an emergency use vaccine. That clearly is unfair close to holding us hostage given that we seem to have no choice because the pandemic hit us without any notice beforehand. So parang hino-hostage tayo na hindi tayo su-supply-an ng vaccine ‘pag hindi ka pumirma ng non-liability clause. As you have seen in some social media posts, people are starting to file cases against the vaccine manufacturers because of certain side effects and certain guarantees they gave which apparently was not (inaudible) had no basis whatsoever and people simply bought them because we panicked and government officials. They made them appear through media, perhaps, or social media that government officials if they don’t get the vaccine aren’t doing anything. When in fact, not enough research has been made to back up the guarantees and the promises, they made with the vaccine rollout was made.
KD: OK. But other than that, there’s also Pharmally so far, the Ombudsman has issued a preventive suspension on 33 government officials allegedly involved in these anomalous transactions. But where do we move on from that?
CHIZ: Well, we should learn from that lesson, Karen, that an emergency is not an excuse for us to take advantage or for anyone to take advantage of it. Sa totoo, lang mas malaking krimen ‘yung gumawa, ginawa nung mga involve sa Pharmally dahil ginawa nila ‘yon sa gitna ng pandemya. Siguro mas magaan pa ngang tanggapin ‘yung nakinabang sa panahon ng tag-busog o tag-ani. Pero sa panahon ng pandemya tapos yung iisipin mo pa papakinabangan mo yung kapwa mo sa panahon ng maraming naghihirap, mas hindi yata katanggap-tanggap ‘yon. Any amount of corruption is not acceptable, but this makes it all the more unacceptable because it was done during a time of public calamity. And Karen, we’re still paying for that because as you have seen in the latest report (inaudible) risen to 13.9% nearly 70% of GDP. So, if you want to bring it back to half of GDP then that means you have to increase the economy to about Php30-T. I don’t know where we will get the additional Php10-T on to increase our GDP (inaudible).
KD: OK just very quickly. I know that your fellow lawmakers had wanted that the procuring arm of the DBM either be taken out and there’s another one the PTIC, right? Anong nangyari dun, Senator, moving forward?
CHIZ: I think Sec. Mina is reviewing the efficacy of still maintaining a DBM-PS which does the procurement for most of government supplies. And I think Sec. Mina is also reviewing the requirement that government should first try and look if DBM-PS has it in stock before they’re allowed to buy. I’ll give you an example, Karen. When I was governor, hindi kami makabili ng papel sa labas dapat tanungin muna namin yung DBM-PS kung mayroon silang supply. Ang problema sa DBM-PS up to now they still owe the province of Sorsogon.
KD: Hanggang ngayon?
CHIZ: Up to now. ‘Pag nag-order kami ng papel, ballpen, tinta, iisyu kami ng tseke siyempre may proseso ‘yon. By the time we go to DBM-PS with that truck, sasabihin nila ay ito na lang ang available pero bibigay na namin yung tseke. So, hihintayin namin magka-supply sila. We’re not even allowed by COA to buy a piece of paper, ballpen or ink from outside if it’s not from DBM-PS and we have to wait until they actually have it. Another problem with DBM-PS is some government officials are scared. They are concern about making huge procurements. So, they usually hide behind DBM-PS and pass on the procurement procedures to DBM-PS.
KD: Para hindi makasuhan.
CHIZ: So, that they won’t be accused of corruption.
KD: Oo. OK. So, clearly there has to be a change in the system kasi kung dadaan sa DBM-PS hindi naman puwedeng delayed ‘di ba kung kailangan na nung LGU.
CHIZ: We’ll, Sec. Mina promised during the CA deliberations that she will review it and she’s open to abolishing it if that would be the outcome of her study.
KD: OK, let’s move on now. Malacañang has released a list of—there are priority measures that the president wants to pass immediately. And I know there’s 11 additional bills covering public health, job creation, and economic growth but the most controversial is the Maharlika Investment Fund it’s now part of the LEDAC. So, the Senate President says you aim to ratify it by the first week of June. Senator Escudero, you’ve been quite vocal. You’ve studied the Maharlika Investment Fund. You were there for the deliberations. Palagay niyo po ba mapapasa na ‘to sa bagong porma this coming June?
CHIZ: I met Karen, about three weeks ago with the entire economic team. You’re talking of DOF, DBM, OGCC, GOCCs, some GOCCs including MDC with Bangko Sentral the Monetary Board and we tried to clarify a lot of things outside of the four corners of the Senate through hearings so that it was more open. And we were able to come out with a lot of agreements and we are awaiting the proposed amendments to the versions submitted by Senator Villar emanating from his Committee on Banks so that we can clean it up, so to speak the Maharlika Fund Bill. Now, I haven’t seen it it’s not yet ready apparently and I reserve my interpolations and if all amendment if the committee will not propose it in order to clean it up. But in principle, we agreed on how it should appear and look like. Some basic concerns Karen, for example: They’re getting money from Landbank and DBP separately and yet they plan to merge it. Which will come first? DBP and Landbank have investments that are earning anywhere between 6% to 8%.
KD: That’s pretty good.
CHIZ: And if DBP and Landbank is good, if DBP and Landbank will invest in the Maharlika Fund then they should earn at least 6% and 8% too if that is correct otherwise the Bangko Sentral will question these investments or they can turn a blind eye. But then again with government securities whenever government issues a bond, the government pays 6%. So, why pay 7% or 8%? Why give Landbank and DBP 7% or 8% when you can just simply issue government security and pay interest at 6%? It’s by far cheaper, more practical, and more efficient on the part of the government.
And you have the problem again of Single Borrower’s Rule (SBR) that it’s too much to lend to one entity. A hundred billion pesos being lent to one corporation even if its government created will valid the Single Borrower’s Rule. So, will Bangko Sentral look the other way? Php50-B is even bigger. The main reason behind it, Karen, is ika nga sa Ingles na kasabihan “you don’t put of all your eggs in one basket.” ‘Pag bumagsak ‘yang korporasyong ‘yan baka dumapa ‘yung bangko at maapektuhan ‘yung bangko. So, I don’t know how the Bangko Sentral will look at that as well. Landbank and DBP during the hearing said we would ask for an exemption. Now, of course, based on administration measures, Bangko Sentral appointed by the president, the president appointed all the members of the Monetary Board will most likely grant it.
But is that a sound practice? So, there are still some things that need to be ironed out. And regardless, Karen, of the authorized capital stock of the Maharlika Investment Corporation, I’m referring to a corporation. Private corporations are allowed to borrow up to four times their cash flow in excess of their authorized capital stock. Well, the same rules applied to Maharlika Investment Corporation, or like the sovereign wealth fund of Malaysia, they were allowed to borrow way beyond that. And we want to make sure that these safeguards will be placed in the law so that were not surprised by the situations some are long along the road that this corporation like NAPOCOR owe several hundred billions of pesos and it’s burdening the National Budget in so far as paying for these longing concerns.
KD: Very strong points. I think you’re making strong points about the Maharlika Investment Fund. So, if it’s Landbank and DBP, ang tanong ngayon is the Maharlika Investment Corporation considered as one borrower that is an entity that still covers the definition?
CHIZ: Not only the borrower, Karen, but also as an investment.
KD: Yeah. Yeah, oo.
CHIZ: Can a bank lend or invest in a single corporation to the tune of a hundred billions of pesos? What percentage of that is the loanable amount or investable funds of both Landbank and DBP? And for sure as I said it will violate the Single Borrower’s Rule of the Bangko Sentral and the Monetary Board.
KD: Okay. So, with the points that you have – with these areas you’ve pointed out, how does the Senate Bill this unrecognizable version change all of that or solve that?
CHIZ: It’s not yet in the reported-out bill of the Committee on Banks but we came to an agreement and they acceded. I’m talking about the economic team which is backing up this bill and they committed to draft the necessary amendments and I will go over it with Karen once they’re finished with it. I followed it up yesterday. Apparently, the one in charge is National Treasurer Lea De Leon is finalizing.
KD: OK, another question. Has it been changed already where the Maharlika Investment Fund can invest? Because when I last interviewed you, you said they weren’t even clear. Do these new bills specify areas of investment?
CHIZ: Based on our discussion, yes. They can focus on green investments because there’s a lot of money in the “green sector.” Infra is out according to them. I told them there’s no reason for you to exclude it, especially if you’re talking of dividends and profits from the Maharlika Fund going to the National Treasury. It can be used; it should be used by the National Government for whatever priority in need or project or purpose it may have. And there’s no sense limiting it or prohibiting it from being spent directly on needed infrastructure projects.
The only problem with infrastructure, Karen, is when will the arrow eye be realized. Remember DBP and Landbank will be investing a total of Php150-B in the Maharlika Investment Corporation. If they spend it on a road as they were initially talking about it. On a dam, how will you compute the arrow eye of the bank at 6% to 8%? When will you pay it after 10 years, 5 years, or 15 years? How will the Bangko Sentral and Monetary Board book that unrealized paper gain of Landbank and DBP? So, these things still need to be ironed out before we approve the bill.
KD: OK, but can the Maharlika Investment Fund invest abroad? Because other investment funds well the whole concept in the beginning was you really invest out of the country, right? And you make the fund earn because they were using the surplus for the fund. So, what about this fund?
CHIZ: Well, there are two sides of the same coin Karen. It’s not so much whether we can because in the proposed bill we are allowing Maharlika Investment Fund to invest abroad. Because that is one of the strategies in creating a sovereign wealth fund, that you are able to hedge. I’ll give you an example of the sovereign wealth funds of Middle East countries whose economy is based on petroleum products, oil, and fuel. They’re sovereign wealth funds are investing in solar, and in electric corporations, they’re hedging. So, in our case, we’re an agricultural country might be best for us to invest perhaps in Thailand or Vietnam where they produce a lot of rice and import a lot of rice so that we hold power, and we can hedge based on our own needs.
But there is the other side of the coin, Karen, if this sovereign wealth fund is not clear if this sovereign wealth fund is not understandable to other countries. They won’t even allow the Maharlika Investment Corporation to invest in their country, because of the huge amount of money a sovereign wealth fund carries, it might affect the macro and micro economic policies of that country. Especially when you talk of hot money coming in and out on a regular basis.
KD: Very good. Because the problem is if the Maharlika Investment Fund is going to invest in projects here, the money is coming from DBP and the Landbank. What makes it different for example from the yearly budget wherein we really set aside funding for infra.
CHIZ: We had a long, we had a long discussion about that, Karen. Initially, I was insisting on the point why create a corporation when you can just create a fund.
KD: Yes.
CHIZ: And then, let government decide on where and how to invest and use this fund. Well, the reason given to me, I was not as convinced but I let it go through the discussion. According to them, it’s easier to invest abroad when it is a corporation than when it’s only a fund. And they have a point there. My problem, Karen, is those who are pushing for this bill are talking of buying back the national grid, of buying back the distribution utility. How can you expect foreign governments to invest like Temasek to invest in the Maharlika Investment Corporation, if you are utilizing this corporation to nationalize certain private corporations and endeavors? It won’t go well for the country if that’s the intended strategy so we plan to clarify that—
KD: I didn’t know that. That’s not written that part of the intention was to buy back the NGCP.
CHIZ: No, it’s possible it’s not entirely impossible and it’s not prohibited in the proposed bills. Remember there’s a lot of clamor Karen for the NGCP to be, because this is the so-called “crown jewels” of the country.
KD: Yes.
CHIZ: That we sold. I’m not necessarily against getting it back but it might be sending the wrong signal. When you want foreign corporations, foreign sovereign wealth funds to invest, and then you’re starting to nationalize private businesses. So that’s one more thing we have to clarify so far as the intent or the investment intent of this Maharlika Investment Corporation fund will be once it’s created.
KD: OK, so I also read that in the new bill, it’s going to be managed by professionals no political appointees. But who’s going to hire these professionals?
CHIZ: Well, under the proposed bill, it’s the president who will appoint them and we have a verbal agreement, Karen, that it will go through the GCG. So, they’re no longer exempt from the GCG and that will provide some semblance of safeguard at least protection on the part of the people and their money, insofar as the appointees to be made is concerned. But I completely agree Karen a government bureaucrat cannot run this corporation or fund it’s best left to the private sector after certain policy directions have been made by the government.
KD: OK, now is this fund allowed to accept funding from the private sector? Because these were concerns of some individuals that the fund can actually be used for laundering money. So, you do have some funds I believe Indonesia they have a specific model other than surplus other than government. They do take money from the private sector, itong MIF po, Sir.
CHIZ: Well, you have two options, Karen, you can either allow them to buy insurance of stock in the MIC Maharlika Investment Corporation or you can simply open it up by allowing MIC to issue bonds subject to the limited cap I said earlier which is four times of cash flow. And that’s where the private sector can invest not directly in the corporation but by investing in a bond to be issued by the corporation. But if you’ll apply the same rules with private corporations the only time the Maharlika Investment Corporation can issue a bond is once it already has a cash flow. How can you issue bonds unless you ask for a government guarantee in so far as the bonds to be issued by Maharlika Investment Corporation is concerned? Otherwise, you can only issue bonds once Maharlika Investment Corporation already has cash flow and the basis for the payment of these, the interest rates of these bonds, and face value would be the revenue and cash flow of the MIC.
KD: Okay, but can the government actually, I mean, guarantee the Maharlika Investment Corporation?
CHIZ: There’s no prohibition, Karen, unless we put it in the law. If you remember right after EDSA, the EDSA Revolution it became the policy of the government not to issue any government guarantees it was merely a policy because as a rule, government can do that. But the problem with guaranteeing private debts or debts of the NAPOCOR, for example, at that time it’s just a government-owned and controlled corporation it went haywire and the government ended up charging from the national budget the payment of extra orbital debts that NAPOCOR incurred or during the time of the previous administration before EDSA, government had to pay based on the guarantees issued to debts or bonds issued by private individuals, and private corporations. Mahirap nang magdesisyon, Karen, at para sabihin palaging may pinapaburan so it’s a safer policy for me, for any president, not to simply not guarantee any private debts or go through either a government bank like Landbank or DBP. Go to the process let them seat to the requirements and let them lend them money instead of the government guaranteeing a private debt from a foreign bank by a private corporation.
KD: OK. My last question regarding the Maharlika Investment Fund is this because clearly, you’re not completely against it but you are scrutinizing it that’s the word with you. Those are the words. There are countries poorer than us that already have a sovereign wealth fund or let’s call it an investment fund of some kind. What can we do as a country for this to succeed? At the very least that it won’t be a failure that President Marcos Jr. will realize the gains that he wishes for this particular fund. What do we have to do?
CHIZ: Well, number one, we have to make or provide clear parameters as to what the corporation and the fund can do and invest in so that it’s clear from the start. And number two, Karen, I don’t think you will see the benefits of the MIC, MIF during the term of PBBM. You will see the fruits and benefits of this beyond his term at the very least. So, I don’t think his government will actually benefit from any income or earnings most commission to be paid for gains. For example, by buying into the corporation a share or the stock increase, the question is will they sell those shares or are they in for the long haul?
To give you an example, Dubai, which is running out of fuel, invested a long meaning to say they wanted to preserve the income from oil and make it rich, three, four, five, or ten generations down the road. They simply didn’t want to use up all the profits and windfall from the oil that they used to have or had for this present generation. That’s one strategy, that’s what I ask of our economic managers. What’s your plan? What’s your intention? We cannot just simply copy what other countries are doing without it being clear to us what exactly we want and need and why we’re doing it. Fine, ginagawa ng ibang bansa. Fine, nakikinabang sila. Best example would be Temasek. Worst example would be Malaysia, which was subject to lots of corruption by the former prime minister so learning from these lessons we should start by being clear about doing it because others have done it. Ang sama naman ng rason na nangongopya tayo kaya natin ginagawa pero ‘di natin alam bakit natin ginagawa ito.
KD: And I think it’s also the timeline. You mentioned something important what’s the goal? Short term? Medium-term? Long-term?
CHIZ: They haven’t answered that question, Karen, they have to get back to me with the proposed amendments to clarify that. It can be both, Karen, but percentage-wise, they have to be clear about it. For example, if they are looking at a big budget deficit that they can find from the earnings of the MIC three years down the road then the investments should be realized not only a paper gain but actually realize, realize the profits in the three years they can time it that way.
Now if they want to preserve a windfall for future generations then they can invest long. Where the benefits should be realized ten, twenty years down the road and it will even be bigger. For example, you can buy shares of stock right now waiting up at the pandemic at very low prices and you can see it go up as the world economy starts to churn and turn all over again. But will you sell? You can sell simply because you earn like typical stock brokers or stock investors. You have to have a plan for a reason why you’re selling.
KD: OK. On that note Senator Chiz Escudero, we’re going to go into a quick break. You’re not yet off. So, we can talk about the possibility of wage hikes and labor issues. We’re going to take a break. Headstart will be right back. Stay with us.
And for the second half of “Hot Copy”, we’re still joined by Senator Francis ‘Chiz’ Escudero. Senator Escudero, the Senate President is actually hoping and wanting to pass a measure for, this is the Senate version for an across-the-board Php150 minimum wage increase for private sector workers that’s Php3,000 a month so ang tanong dito is this even possible? Who will pay for this? And can Congress legislate it?
CHIZ: Let me backtrack a bit. The Constitution speaks of a living wage, and the laws we have in the Labor Code speak of a minimum wage there’s a basic difference between a living wage and a minimum wage. Only our policymakers, particularly the DOLE, assumed that there are two members of a household that is working. If you add up the minimum wage of two person who are working that is roughly equivalent to a living wage. So usually the economists will tell you, if you increase the minimum wage there will be fewer jobs available but whatever, whoever has a job will have enough to pay for the needs of his or her family and it would be a living wage.
It’s a policy decision, Karen, but at the end of the day I believe that corporations can shoulder this. It’s the smaller businesses that might not be able to afford this. So, it’s a question of providing a cushion for smaller businesses, SMEs but for sure big corporations can take care of this. We have to remember their businesses are comprised of both labor and capital they keep on focusing on capital and bragging about the fact that they earn billions of pesos in the previous year so that their stock prices will go up but when you speak of labor, they don’t have enough money to pay for it. So, this has to be balanced in a way. So, number one, private corporations, big ones can afford it but we have to provide a safety net for SMEs who might not be able to afford it, and remember about 60 percent of our economy is comprised of SMEs. Number two Karen, this across-the-board will it applies nationwide?
KD: Nationwide.
CHIZ: Yes. But for sure it’s small for those who are working in Metro Manila, it will be a windfall for those working in the far-flung provinces. Congress might want to take a look at it because it might be too heavy for SMEs in the provinces and easily it can be handled within Metro Manila by SMEs. So, we have to have a dichotomy between these two interests, needs, and capacities. You’ve spoken in the article about BPOs it’s a long story it’s not a question of opening up BPOs. Number one, when you speak of higher-level jobs then you have to look at our education sector are we providing the necessary skills to provide high-quality jobs as our NEDA Secretary mentioned and you will have to bear with the burden of waiting for four years at least to produce the needed skills, to provide for high-quality jobs.
Number two, if you want to grow the BPO industry it cannot be simply limited to the wage rates. A second issue would be internet speed. A third issue would be the fact that we have 26 holidays in a month, including local holidays Karen and BPOs servicing and catering to foreign countries, and foreign corporations they couldn’t care less about our Sunday, our Araw ng Kagitingan, our Bonifacio Day, so that means 26 days in a year, nearly one month in a year they are paying more than double the salary of their employees here in the Philippines which makes us less competitive.
So, if you really want to make the Philippines competitive, I think we’re number two to India right now. Our only advantage is the fact that, our accent is more acceptable in the BPO industry than the other countries, if more, understandable. That’s our comparative advantage but we’re losing out on internet speed, we’re losing out on the cost of power, we’re losing out on the number of holidays that we have.
Take for example in the United States they have what they call a holiday called “Presidents Day”, pinagsama-sama na nila lahat ng presidenteng sikat sa iisang holiday na lang. Si Washington man ‘yan, si Lincoln man ‘yan, kung sinumang sikat. Tayo mayroon tayong Rizal Day, may Bonifacio Day tayo, may Araw ng Kagitingan tayo, May Ninoy Aquino Day tayo. We have to rationalize it. Mayroon tayong holiday para sa mga kapatid nating Muslim, may holiday tayo para sa mga Katoliko, nanghihingi ng holiday ‘yung mga Christian so we have to start talking about it and rationalizing it. So that we can be more competitive if we are speaking of the BPO industry and this can be a way to cushion the impact of any wage increase as well. Because some corporations operate seven days a week, 24 hours a day so it can cushion the impact as well of any wage increase. This should be look at holistically.
KD: I think that it should be tackled because it’s not just the BPO industry, we spoke with ECOP a few weeks ago and they said that, that they already the holidays in themselves are already kumbaga—
CHIZ: A burden.
KD: Taken a toll. Oo. On businesses. So, I want to ask you this, NEDA Sec. Arsenio Balisacan said that increasing the wages by legislative action, is reacting to the one filed in the Senate and the one filed in the House he said would harm the economy and contribute to inflation. So, what are your thoughts, he said Congress should not legislate it?
CHIZ: That’s what a textbook economist would usually say whether in this country or in other countries, Karen, but you have to understand wage increases have been provided by the original tripartite and wages productivity board. It’s a delegated power given to them by Congress but I have said this often if the delegated power to certain agencies like the regional wage boards isn’t doing their job and for me. They’re not then Congress has every power to take it back once or every so often and legislate wage increases but as I said it cannot and should not be across-the-board meaning a single rate for each and every region.
KD: Oo. ‘Yon lang ang sa iyo. So, in effect, you do support the suggestion in effect the bill of Senate President Miguel Zubiri ang ayaw mo lang across the board.
CHIZ: Because it might be again too burdensome on the part of SMEs and far-flung provinces that are poor and it might be easy for—
KD: Even for companies.
CHIZ: It might be easy for SMEs to do it in the NCR, CALABARZON or more progressive provinces which might be looked it to but I do support. Madalas ko ngang sinasabin, Karen, ‘yong mga miyembro ng regional wage board parang nasa ibang planeta nakatira dahil ‘yong mga binibigay nilang increase na Php5 kada buwan o kada araw. Saang palengke ba sila namamalengke, saang grocery ba sila naggo-grocery, saang jeep at tricycle ba sila sumasakay na ‘yong dinagdag nila ay sapat na para bayaran ‘yong gastusin ng ordinaryong manggagawa.
KD: OK. All right. Well, on that note, siguro ang huling tanong ko na lang sa inyo before you go on. Ano ang palagay mo Senator Escudero ang what will the Senate focus on in the next few weeks I think you have a few ‘no. You have three weeks, am I correct left, right? What’s the priority?
CHIZ: About four weeks actually, Karen.
KD: All right, four weeks.
CHIZ: We adjourn the first week of June I believe. Well, the Central for Disease Control, the Minimum wage that was tackled by the House, the Maharlika Fund as certified by the President, and then after we resume, Karen, we will begin tackling the budget for 2024 all over again because in theory, the President should be submitting the NEP the National Expenditure Program when he delivers his SONA on July 24.
KD: Yes. All right on that note Senator Francis ‘Chiz’ Escudero, I want to thank you, Sir, for joining me today and I do hope to see you soon.
CHIZ: Yes, Karen. Akala ko nga one gap lang tayo.
KD: Napahaba kasi marami ka talagang insights, ‘di ba? ‘Yon ang sinabi ko sa team.
CHIZ: Salamat, Karen. Salamat, sa televiewers natin. Pagbati na lamang. Magandang umaga, sa inyong lahat.
KD: Thank you, Senator Chiz Escudero.