The Board of Investments (BOI), the country’s lead investment promotion agency, considers as key disincentives the Local Government Units (LGUs) and the governing law that empowers them, the Republic Act No. 7160, or the Local Government Code of 1991.
“The basic problem is the local government code. The local government code authorizes the local government units to attack regulations (related to investments) or negate any (policy) issuances. That (assessment) is based on reports and complaints we are getting from our investors. The basic problem is dealing with local government units,” said Lucita P. Reyes, executive director of the BOI’s project assessment group, during yesterday’s public hearing on the 2011 Investments Priorities Plan at the Apo View Hotel yesterday.
The BOI official made the statement in answer to the question of Edge Davao editor Antonio M. Ajero what the BOI is doing to corruption, revolutionary taxes and other disincentives that discourage domestic and foreign capitalists from investing in the country.
The Local Government Code establishes the system and powers of provincial, city, municipal and barangay governments in the country. Aside from the general welfare clause, the Code also empowers LGUs to generate and apply resources and exercise eminent domain. It empowers local governments to enact local tax measures, including real property taxes and assures the local governments a share in the national internal revenue
Reyes said the BOI has created the national competitiveness council to identify specific projects and programs that will address problems confronting investment promotions campaigns.
One of the council’s projects, Reyes said, is facilitating tieups of the LGUs with the Department of Trade and Industry (DTI) through Memorandum of Agreements (MOAs) to hasten the process and accommodate the entry of investors
“Since they (the council) are not able to convince all the LGUs to be transparent and simplify their business requirements, they just selected the LGUs (willing to enter MOA with the DTI),” she said.
Reyes said there are 12 LGUs so far which have entered into an MOA with the DTI.
“And these 12 LGUs have been able to simplify their procedures how to start a business in their respective areas. What we are doing now is… we are now directing investments in these areas,” she said without naming the specific areas.
Reyes said the benefit of having a memorandum of agreement with DTI “is that we are giving to them (the LGUs) the investors. Because we are assured by these LGUs that they will take care of the investors. Unfortunately, we cannot mandate all the LGUs to do that. ”
BOI Gov. Pelagio T. Ricalde said the investors, whether foreign or local, are wary over uncertainties that they often experience among LGU officials.
“There are (policy) changes that subsequently come especially when another administration, another family or another political dynasty takes over in an LGU. And you know, they frequently inflict another set of requirements or more burdensome requirements on businesses,” he said.
Ricalde said that while the investors also know how “the game of change” works, “they need an assurance that the rules of the game will be stable.”
“So this is really, truly a bottleneck and although this is not strictly speaking corruption. It is in sense in a broader sense, corruption, although it is not covered by the anti-graft code. In a broader sense, it is corruption,” he said.
Reyes said one of the BOI’s ongoing projects is the review of the Code “to identify which of those sections (of the Code) considered as bottleneck and probably propose legislation.”
Even then, she still expressed pessimism: “Even if we are able to identify (the bottleneck), is this something? Are we able to crop a deal? Is this something that would be passed in Congress, considering that we have local politicians in Congress? So that’s another challenge that we have to face.”
