News and Events

Christmas Chimes, Christmas 'Tong'

Posted: 2010-12-11
Category: In the News

BUSINESS MATTERS, Philippine Daily Inquirer
By Edilberto C. de Jesus
December 11, 2010


IN THE Philippines, Christmas carols begin to play in September. Unfortunately, in some sectors, Christmas bells bring more alarm than anticipation: the taxmen and sundry collection agencies cometh. They sound a warning that the prime fund-raising season has begun and will grow more intense as the end of the year draws near.

Small and medium enterprises (SME) tend to be more vulnerable to predatory officials empowered to collect revenue for the government. Lower margins leave them limited resources for paying unofficial tariffs. They have less access to media and to the higher levels of officialdom that can address their concerns.

The Hills Program on Governance at the Asian Institute of Management, in collaboration with the Makati Business Club, the Management Association of the Philippines, and the respective Chambers of Commerce of the Americans and the Europeans in the Philippines recently launched an initiative to mobilize companies to sign a pledge committing them to promote ethical business practices.

MBC, MAP, ECCP and AmCham count as members some of the biggest corporations in the country. AIM?s Hills Program on Corporate Governance decided to focus its efforts on obtaining pledges from the SME sector. Individually weak, SMEs achieve their common objective of avoiding extortion only through collective action.

In the last six months, the Hills Program has conducted 13 focus group sessions or workshops on combating corruption with the SME in Manila, San Fernando, Cebu and Davao. The level of interest and support for these sessions exceeded expectations. The organizers tried to limit participation in each meeting to between 15 and 20 SME owners and managers for the FG sessions and to 30 for the workshops. Almost 300 people have now attended these meetings.

Assured of confidentiality, participants expressed their concerns with disarming candor. Some admitted that they often had no choice but to submit to the illegal exercise of power by government authorities. The alternative was to risk large financial losses and the viability of their enterprises.

They were also quite forthright in detailing their specific problems. They complained about the lack of transparency in the tax collection system because of the large degree of discretion allowed to Bureau of Internal Revenue agents in assessing taxes and fines. They suffered from the Bureau of Customs for a similar lack of clear and standardized guidelines for import valuation, inspection and collection of duties.

Local government units were faulted for the lack of clarity in the requirements for acquiring business permits and licenses. While the Citizen?s Charter is supposed to remedy this situation, SMEs still find themselves suffering long delays, unless they make a side payment to expedite the process.

The extortion goes beyond the processing of papers.

The Bureau of Fire Protection, for instance, requires its fire safety clearance as a condition for securing business permits. But a significant number of SMEs have complained about arbitrary decisions by agency personnel on the number of fire extinguishers required for their premises and the frequency prescribed for refilling them. The personnel would often ?assist? the SMEs with a list of ?recommended? vendors.

Many participants found the half-day session too short; they wanted more time for comparing extortion techniques and experiences in dealing with them. They suggested organizing the meetings according to industry sectors to facilitate the exchange of information. The most common demand was for the participation of government authorities in the meetings, preferably those at a sufficiently high level to do something about SME concerns.

The AIM Hills Program had decided at the outset that they would not start by confronting government on the shortcomings of its campaign to control corruption among its personnel and demanding corrective action. The project organizers felt that the private sector first had to demonstrate its determination to tackle a systemic problem and its commitment to sustain a long-term approach to its solution.

The private sector is well on its way to demonstrating that determination and commitment. After less than three months of collaborative effort among the Hills Program, MBC, ECCP and AmCham, almost 300 companies?large, medium and small?have signed on to the Integrity Pledge. It is now ready to invite government officials to participate in the Steering Committee of the Integrity Initiative.

P-Noy made anti-corruption the main message of his candidacy, and this has become the defining flagship program of his government. The private sector is doing its part by implementing its own anti-corruption initiatives. By joining forces with the private sector, the government can strengthen its anti-corruption agenda.

It will take many Christmases before businessmen lose all anxiety about government collectors coming to deliver season?s greetings. Neither corruption nor poverty will disappear within one administration. But the public must see an effort by government officials at the highest levels to address the corruption problems exposed by the private sector, even if they cannot immediately resolve them.


Edilberto C. de Jesus is president of the Asian Institute of Management.

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