Power Regulation: In the dark

 

October 3, 2021 | 6:14 pm

Introspective By Romeo L. Bernardo

 

Since we passed EPIRA 20 years ago, the energy sector has come a long way. It has not been a smooth journey and, understandably, mistakes have been made. We have, however, made much progress in ensuring that our country has the energy needed to power its economy, support investment, and generate jobs, and thereby improve outcomes for our people. To continue to build a sustainable and responsive energy system we must understand the role of our energy policymakers and regulators and challenges they face.

Let me start with some disclosures. I was an Undersecretary of Finance during the last two years of the Cory Aquino and the first four years of the Ramos administrations, and was involved in addressing the 1990/92 power crisis. I am currently an independent director in a diversified publicly listed holding company with major investments in power generation (both fossil fuels and renewables) and distribution.

The nation’s long term structural response to prevent a repeat of the massively costly 1990/92 crisis was the passage of the Electric Power Industry Reform Act (EPIRA; 2001), after seven years of intensive study and debate involving all stakeholders. As envisioned, private sector players are expected to deliver electricity under a competitive playing field. A critical element of EPIRA was to “break up” the business — separating those selling energy from those buying it. This transformed the energy sector into a real marketplace, which is the key to lowering energy prices while ensuring quality supply. The government’s role is to ensure market players abide by market rules to produce the competitive outcome.

Over the past two decades, much has changed. The once stable power sector has been disrupted by a number of forces, resulting in higher levels of uncertainty for market participants and stakeholders.

The market liberalization set in motion by EPIRA is alone a challenge, but accelerating technology curves, and elevated expectations around environmental sustainability have increased the complexity of our energy system. As the system evolves, our regulators also need to evolve to maintain their ability to manage the system.

As we approach elections and tackle near-term challenges such as thinness in energy supply, we must reflect on our experiences and craft a long-term vision for the industry. This includes a future vision for our energy sector public institutions. I would like to put forward a few reflections for your consideration.

First, our policy-makers and regulators must ensure a focus on the long-term, especially when the short-term political stakes are high. In the slow-moving energy industry, decisions can be made fast but the consequences of those decisions — whether positive or negative — will not emerge for years. This environment can be challenging for public leaders whose performance is measured in real-time by the Twitterati. It is often easier to address the short-term political pressures at the expense of the long-term health of the system.

Case in point are the decisions to impose price caps on the wholesale market twice over. Price controls are an effective way to reduce prices in the short term and to respond to a burst of public criticism, but in the context of a free market, where pricing signals encourage or discourage new investment, they can distort the market and unintentionally result in supply gaps in peaking capacity.

Fortunately, it is not too late to fix this. The price caps can be withdrawn and the market can be allowed to work as designed.

It must also be said that our regulators have demonstrated the necessary foresight and restraint needed to manage such a complex industry. The repeated resistance to the idea of retroactive changes to distribution rates has provided market participants with confidence that the sanctity of commitments will be protected and is paramount in an environment where large-scale, long-term capital investments are necessary. These decisions that put the long-term interests of the country and its energy stakeholders ahead of the popular (or perhaps more aptly, populists) interests of today are the foundations for a successful long-term energy system.

To address the underlying tension, however, we must hold our energy institutions to a higher standard and insulate them from political pressure, much as we have with the Banko Sentral ng Pilipinas (BSP). The BSP has evolved over time to be recognized both here and globally for excellence of its independent and non-politicized stewardship of the monetary system and supervision of banks and other financial institutions for price stability and development.

Electricity is arguably as critical to the day-to-day health of our country as banking. Perhaps there are lessons for the energy sector to draw from our institution-building experience in the financial sector.

Secondly, we must ensure we match the capabilities and strategies of our public institutions to meet the challenges of the job at hand, not use blunt, heavy-handed regulation as a means of avoiding the complexity of the job.

Today, the electricity value chain includes varying levels of industry structure and market power. The power generation sector is competitive and includes a diversity of market mechanisms that allow the buying and selling of electricity to occur. The transmission line sector, on the other hand, is a single nationwide monopoly that is tasked with connecting our power plants to our distribution networks and contracting power reserves. The low voltage distribution sector is composed of jurisdictional monopolies that transmit power to our homes and businesses.

The diversity of market participation, market design, and market power across the value chain makes the job of regulation and management a difficult one. It requires a high level of sophistication in organizational design, capability, and culture.

Fundamentally, the approach to regulating natural monopolies should be vastly different from the approach to a competitive market. The regulator should take a hands-on approach to regulating the natural monopolies’ market power, while taking a more hands off approach, a lighter touch, in overseeing the competitive sector, allowing the market to work and focusing instead on long term guidance and market optimization that increases competition and market responsiveness.

Since the onset of EPIRA, unfortunately, our regulators have done the reverse, taking what seems to be a hands-off approach to the least competitive segment of the value chain, the transmission line segment, and an overly hands-on approach to the most competitive segment of the value chain, the generation segment.

This is evidenced in the organizational structure of the regulator, whereby they have evolved to create two teams called the Investigation and Enforcement Division to police the generation and distribution segments, but have not established one for the transmission line segment. This may partially explain why numerous documented cases of non-compliance to franchise and other regulations by the National Grid Corporation of the Philippines (NGCP) have yet to be enforced.

On the unregulated end of the spectrum, gencos are required to obtain 326 signatures to build a new power plant. Once built, they have to undergo a burdensome process of Certificate of Compliance renewal every five years, lest they cannot continue the operations of their power plant. This is in stark contrast to the 25-year franchise renewal process of monopolies such as NGCP. This approach of trying to regulate what is designed to not be regulated has had the unintended consequence of increasing the level of uncertainty in the operating environment. This in turn is dampening investor confidence and increasing the costs of compliance.

As I look ahead into the future of the energy industry in the Philippines, my hope is that we as a country are able to come together to develop the foresight, the political will, and the institutional capability necessary to make the challenging tradeoffs involved in navigating the complex issues facing the energy industry.

As stewards of the future, we owe it to the next generation to take the long view and to have the clarity of vision and the courage to take the necessary, even if  unpopular, actions along the way.

 

Romeo L. Bernardo was finance undersecretary during the Cory Aquino and Fidel Ramos administrations.

romeo.lopez.bernardo@gmail.com

 

Impact of the Mandanas Ruling

 

APPC Webinar 1 on Resetting Capitalism- Moderator Opening Remarks

 

Moderator Opening Remarks

 



Thank you for the kind introduction.  I was going to write a review on the subject but was spared the effort by my former GlobalSource Partners co-author Maggie Debuque Gonzales. Her thoughtful and comprehensive report titled “Re-thinking shareholder capitalism” was shared with me, and I encourage all to read.

Let me summarize the key points in her paper peppered

w my own musings:

1) there has been recent serious rethinking both in academia and business circles of the Friedman Principle— “the only responsibility of business is to increase profit”.   Initially occasioned by the Global Financial Crisis, and now with the harsh impact of COVID, which revealed some of the weaknesses of the existing capitalist system.  In the business sector, the debate focussed on which market model would deliver long lasting and widespread prosperity— stakeholder capitalism or shareholder capitalism.

2) landmark events that skewed  the discussion towards

 the latter are:

- the August 2019 US Business Roundtable signed by over 180 CEO’s of major corporations released a “statement on the purpose of a corporation” that declared “a fundamental commitment to all stakeholders” and listed specific commitments to customers, employees, suppliers and relevant communities, in addition to long term value for corporate shareholders “. 

- here in the Philippine 20 business organizations signed last November 2020 “ A Covenant for Shared Prosperity” where the country’s business leaders vowed to raise the welfare of all local stakeholders.

- these same organizations and conglomerates,  have also walked the talk in addressing pain points brought about by the pandemic, way way beyond their commercial interests.  These initiatives welcomed by and working hand in hand w govt include  in :  testing facilities ( construction of new laboratories), quarantine facilities, hospital facilities, vaccination procurement, administration and communications.  


These were all done in the Phl Bayanihan spirit of volunteerism,  not because of dictat, but a recognition that corporations do have social responsibilities emanating from their dominant role and command over resources, apart  from individual shareholders initiatives.

3)  The pandemic and talk of a a new normal and a reset have raised the profile of the issue.   Practical question of  how do we translate high level principles to actionable items for  boards and managements ( esp of major publicly listed corporations.)

   

a) how relevant are the limiting conditions to Friedman in a developing country / Phl contexts? 

Hart and Zingales wrote: “Friedman is right only if the profit making and damage generating activities of companies are separable or if governmentperfectly internalizes externalities through laws and regulations” or in case the government does not, if the shareholder population  perfectly internalizes externalities and spend the appropriate amount for mitigation or correction.

 

 

These assumptions are:

- perfect market (no market failure ) assumptions chief among which are 
           

             - no market power (implying no rule making power for firms) 
            - no externalities (absence of markets ) and whether they may or                                    

 

                may not be internalized by shareholder.

 

 

The answer is clearly affirmative. But these assumptions are heroic and generally hold true only for small firms. Thus, they conclude maximization of shareholder welfare should now be Pareto efficient for large firms while the Friedman rule of maximizing shareholder value hold only for

Small firms.

.  
 

b) which brings us to the next question:  how do we  operationalize stakeholder welfare optimization, clearly the relevant situation in a country like the Phl w high concentration of large companies?

- multiple masters and objectives means no guidance to the Board.  (Issue of primacy of  fiduciary responsibility to shareholders still a live one. To give weight to interests of other stakeholders, often amorphously , on the premise of social responsibility is de facto is

“taxation without representation” on the residual owners, the shareholders..  

 

- conflicts not just  across various stakeholder interests, but also how much weight to attach to conflicting social goods?   To cite a very live debate for the Phl, the issue of the energy trilemma— energy security, affordability/equity vs environment for a country which needs fossil fuel driven base load plants to address poverty— and which only contributes 0.3 pc to global carbon and  in relative terms much less per capita.

-“market-oriented solutions” include:

*ESG ratings— now an emerging industry w dozens of players , but with differing methodologies and emphasis, but in all cases overweighting E - carbon reduction vs S- social impact.  

 

*other mechanisms like explicit vote in Board of Directors or all shareholders  on policy as suggested by Hart and Zingales.

 

I would be remiss if I do not call out more general questions posed by our organizers on the Great Reset.  Namely:

 

• How must we reset our ways of life and rebuild toward a better normal?

• How can we build new foundations for the world’s economic and social systems?

• How can we steer the market towards fairer outcomes?

• How can we ensure that investments advance shared goals, such as equality and sustainability?

  

 

To address these questions, we are most honored to have as our  featuredspeaker, highly acclaimed thinker on the subject, Prof. Luigi Zingales.

Professor Luigi Zingales is Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance and faculty director of the Stigler Center at Chicago Booth. Zingales' research interests span from corporate governance to financial development, from political economy to the economic effects of culture. He co- developed the Financial Trust Index, designed to monitor the level of trust that Americans have toward their financial system. In addition to his position at Chicago Booth, Zingales is currently a faculty research fellow for the National Bureau of Economic Research, a research fellow for the Center for Economic Policy Research, and a fellow of the European Governance Institute. Zingales also serves on the board of ProMarket and is the co-host of the podcast Capitalisn't.

 

 

Pls help me welcome Prof Zingales with a warm virtual applause.

 

 

At the end of his talk.

 

 

To provide reactions to his talk, we are honored to have two deep thinkers on the subject with familiarity  with the Phl and other EMC’s.  One a practitioner like me, and another an Professor .  

 

 

The first is :

 

 

MR. ANTON PERIQUET

 

Mr. Anton Periquet is Chairman and Managing Director of the Campden Hill Group, an investment holding company that owns interests in publicly listed and private equities. He was until recently chairman of BPI Asset Management and Trust Corporation, the wealth management arm of the Bank of the Philippine Islands, and is currently a director in various publicly listed companies, including Ayala Corporation, the Bank of the Philippine Islands, DMCI Holdings, the Max’s Group, Philippine Seven Corporation, Universal Robina Corporation, and Semirara Mining and Power Corporation.   He is an experienced investor and equities analyst and co-founded Deutsche Regis Partners, Inc.

 

Pls help me welcome him. 

 

At the end of his talk. Our next speaker is :

 

DR. BENITO L. TEEHANKEE

Jose E. Cuisia Professor of Business Ethics Management and Organization Department Ramon V. del Rosario College of Business De La Salle University

Dr. Benito L. Teehankee is the Jose E. Cuisia Professor of Business Ethics at the Management and Organization Department of the Ramon V. del Rosario College of Business, De La Salle University. He is Head of the Business for Human Development Network (BHDN). His research focuses on corporate governance, leadership ethics and institutional change. He conducts governance and management development seminars for various corporations. He serves on the boards of the Philippine Academy of Management (PAoM), Shareholders Association of the Philippines (SharePHIL), and the International Humanistic Management Association (IHMA). He has been awarded as Best Business Columnist for his writing in Managing for Society in the Manila Times by the Catholic Mass Media Awards (CMMA) and Outstanding Educator in Corporate Governance by the Financial Executives of the Philippines (FINEX).

 

Take it away, Prof Ben! 

 

—- 

Now for the open forum.  Pls type out your questions in the chat room or in FB, and they will be relayed to me.

 

Let me start the ball rolling while we wait for questions from the floor by asking the first question. 

 

Emerging fiscal risks: Not a black swan, but a grey rhino

August 22, 2021 | 6:07 pm

Introspective By Romeo L. Bernardo

 

I am pleased to share with readers excerpts from a note sent September 2020 to subscribers of GlobalSource Partners upon the release of the Development Budget Coordination Committee’s Fiscal Risk Statement (DBCC FRS). Christine Tang and I, assisted by Charles Marquez, are their Philippine Advisers.

The 2020 DBCC FRS (https://www.dbm.gov.ph/wp-content/uploads/DBCC_MATTERS/FiscalRiskStatement/Fiscal-Risks-Statement-2021-for-Circulation.pdf) expounded on the impact of the COVID-19 pandemic on government’s fiscal health over the medium-term. Below are our key takeaways of fiscal risks to keep watch on over the medium-term. (Verily, the finance/economic team of the next administration have their work cut out for them!)

 

1. The DBCC expects the National Government debt-to-GDP ratio to swell from below 40% last year to 53% this year due to the emergency borrowings made to finance the suddenly wider budget deficit. The debt ratio will continue to climb with “moderate risk” of exceeding 60% as soon as next year. A reversal to a downward path for the debt ratio depends on GDP growth and the fiscal deficit returning to their pre-crisis averages over the medium-term.

 

The higher debt will need closer monitoring as it translates into much higher annual gross financing needs, exceeding 10% this year and next. Rollover risks are partly mitigated by looser monetary policies everywhere that will keep interest costs low, with the foreign currency share making up only about a third of total National Government debt, a portion of which is held by residents. The Philippines also has a robust external payments position that provides fundamental support to the currency.

2. National Government revenues, forecast to fall to 13.6% of GDP this year or 2.7ppt below the pre-crisis level, will not return to pre-crisis levels in the foreseeable future. Following the declaration of a state of emergency, government was able to secure more than P100 billion (0.5% of GDP) in unprogrammed revenues from public corporations in the form of dividends. This amount is one-off, with non-tax revenues expected to be lower by 1% of GDP by next year. The passage of CREATE lowering corporate income taxes will further erode tax revenues with compensatory inflows from the rationalization of fiscal incentives expected to be pushed back. No new taxes are likely under the current economic crisis, especially with the administration in its penultimate year.

3. With lower revenues, the fiscal space for discretionary spending is expected to shrink further. Even before the pandemic, the National Government was already grappling with how to deal with (a.) ballooning pension costs of military and uniformed personnel, estimated at P114 billion (about 0.6% of GDP) and growing by 3-4% annually, and, (b.) a Supreme Court ruling (Mandanas case) requiring increased annual transfers to local government units amounting to 0.9% of GDP starting 2022. Moving forward, interest payments on the larger national debt will take up an increasing share of the budget (from 9.5% in 2019 to 12.9% by 2022) which however is well below the 30% share recorded in the mid-2000s. On the other hand, some cutback in infrastructure spending may already be seen in programmed disbursements falling to 4.5% of GDP by 2022 from over 5% next year. Proposals to address (a.) and (b.) will gain more urgency to enable government to do more to hasten post-crisis recovery.

4. Fiscal risks from other parts of the public sector have likewise risen due in part to off-budget financing of COVID-19 expenses. Social security institutions were the first to see surpluses reverse to deficits (close to 0.5% of GDP this year) due to substantially higher medical and unemployment insurance payouts, while the aggregate surplus position of frontline local government units is expected to halve this year (from 1.3% of GDP in 2019) and further deteriorate next year to 0.5% of GDP. Government financial institutions (GFIs), in addition to providing debt moratoriums and other temporary relief measures, are also being tapped to finance the post-crisis recovery effort with the financial impact of developmental lending and guarantee activities dependent on safeguards that will be put in place during program design. Other major corporations, particularly in the transportation (aviation, ports) and energy sectors, have also seen revenues from operations drop with economic contraction.

 

Although most of these represent contingent liabilities that may never materialize, some parts would require major reforms to correct structural defects and avoid recurring National Government subsidies, equity infusion or advances for debt service. (At risk of requiring more government support at this time, is the health insurance agency which aside from a spike in COVID-related payables, will see revenues drop with corporate bankruptcies and higher unemployment to the detriment of universal healthcare goals.) Even before the pandemic, government had outstanding guarantees on public corporations’ debts and contractual obligations equivalent to 3.3% of GDP which it was servicing through “advances” amounting to 1.4% of GDP in 2019. Over the last 10 years, net budgetary flows to the corporate sector have been negative, ranging from 0.1% to 0.6% (2019) of GDP.

Local government units would separately need attention considering their high dependence on National Government transfers for operating income (60%) and with anticipated increases in revenues from the Mandanas ruling likely short-lived given the COVID-19 shock to the National Government’s own revenues.

5. Contingent liabilities associated with contractual obligations under public-private partnership (PPP) projects likewise need monitoring as the risks are expected to be correlated with the state of the economy, with the downturn adversely affecting projects’ revenue flows and/or proponents’ balance sheets, thus potentially impacting project viability. Based on the 41 projects for which information is available, a worst-case outcome involving termination payments will cost government the equivalent of 1.7% of 2020 GDP although an assessment of contingent liabilities based on project-specific probable risk factors yield an estimate that is only a tenth of that.

6. Aside from GFIs, government also has explicit (through deposit insurance) and implicit guarantees over the rest of the banking sector that require closer monitoring of individual and system-wide bank risks as asset quality and profitability deteriorate with weakened economic prospects. The risks are mitigated by ample capital buffers and increased provisioning for bad loans. Going into the crisis, the capital adequacy ratio of the big universal/commercial banks stood at 16% (consolidated basis) with high-quality Tier 1 capital at 14%, well above the BSP (Bangko Sentral ng Pilipinas) and BIS (Bank for International Settlements) prescribed thresholds of 10% and 8%, respectively. These banks have also increased loan loss provisions by 64% in the year to July, providing over 1.2x coverage for bad loans slightly up from below 1.1x at end-2019. While the risk of system-wide stress is low, it would nonetheless be impossible to discount problems at the individual bank level, especially those that have not developed strong credit disciplines. Separately, operational risks associated with cybercrimes have also gained prominence.

 

BOTTOMLINE VIEW

Thanks largely to successive reforms since mid-2000 to strengthen public finances, the National Government was well-positioned to respond to the crisis and is able moving forward to assume a greater role in driving economic recovery without sacrificing fiscal sustainability. The challenge of course is to optimize the use of scarce fiscal resources to generate immediate employment creating economic growth that can be sustained over the medium to long term. Moderately high sustained growth will help to lower the debt ratio through higher tax revenues (and lower primary deficit) and a more positive growth-interest rate differential. To this end, more urgent reform action is also needed to increase the efficiency of public spending and investments, including in addressing the imbalance between transfers to local government units and devolved functions.

At the same time, a more deliberate and comprehensive analysis of fiscal risks associated with needed new programs to hasten economic recovery and job creation, e.g., by providing liquidity to distressed firms, would help in managing and mitigating these risks over time and avoid abrupt and harmful threats on fiscal sustainability. Lastly, with the pandemic’s harsh impact especially on the poor and with elections less than a year away, fiscal sustainability also requires extra vigilance on the part of economic managers to ensure that new social programs are not just timely and targeted but temporary.

 

Romeo L. Bernardo was finance undersecretary during the Cory Aquino and Fidel Ramos administrations.

romeo.lopez.bernardo@gmail.com

Back on the grey list

July 25, 2021 | 7:11 pm

Introspective By Romeo L. Bernardo

 

 

I am pleased to share with readers a June 29 note to subscribers of GlobalSource Partners (globalsourcepartners.com), a New York-based network of independent emerging market analysts. Christine Tang and I are their Philippine advisers.

At the end of its plenary on June 25, the Paris-based Financial Action Task Force (FATF) announced that it is adding the Philippines to its list of jurisdictions under increased monitoring, widely referred to as the “grey list.” The latest list contains 22 countries and includes only two other Southeast Asian nations, Cambodia and Myanmar.

Inclusion in the grey list does not carry sanctions but publicizes remaining deficiencies in the country’s efforts to combat money laundering and terrorist financing and its commitment to resolve these within agreed timeframes. Satisfactory progress in addressing the deficiencies will lead to removal from the FATF grey list while non-compliance risks landing the country in the dreaded “black list” or high-risk jurisdictions subject to countermeasures. Based on the assessment of Bangko Sentral ng Pilipinas Governor Benjamin Diokno, chairman of the Anti-Money Laundering Council (AMLC), the Philippines can expect delisting not earlier than January 2023, a good 18 months away.

The Philippines was on the FATF black list for almost five years, from 2000 to 2005, and was removed only after the Anti-Money Laundering Act (AMLA) — passed in 2001, the Act criminalized money laundering and created the AMLC — took effect. It landed on the grey list in 2010 and was removed in 2013 after various measures were taken to strengthen its anti-money laundering and countering the financing of terrorism (AML/CFT) regime, including legislation amending the CFT regime. It has since avoided the FATF’s increased scrutiny (even after the Bangladesh bank heist in 2016) through incremental improvements in its AML/CFT regime, including the coverage of casinos under the AMLA Law.

This time around, the grey listing happened after the country passed the controversial Anti-Terrorism Act last year and a stronger AMLA early this year. The former applied tougher financial sanctions on terrorism financing while the latter expanded the powers of AMLC and the law’s coverage to offshore gaming operators and real estate brokers and included tax crimes among predicate money laundering offenses. Based on the FATF summary of the Philippine action plan, remaining deficiencies are mostly implementation/operational issues, i.e., for authorities to demonstrate the various laws’ effectiveness.

The Philippine action plan to strengthen the AML/CFT regime follows:

1. demonstrating that effective risk-based supervision of designated non-financial businesses and professions (DNFBPs) is occurring;

2. demonstrating that supervisors are using AML/CFT controls to mitigate risks associated with casino junkets;

3. implementing the new registration requirements for money or value transfer services (MVTS) and applying sanctions to unregistered and illegal remittance operators;

4. enhancing and streamlining local enforcement agencies (LEA) access to beneficial ownership (BO) information and taking steps to ensure that BO information is accurate and up-to-date;

5. demonstrating an increase in the use of financial intelligence and an increase in ML investigations and prosecutions in line with risk;

6. demonstrating an increase in the identification, investigation and prosecution of terrorism financing (TF) cases;

7. demonstrating that appropriate measures are taken with respect to the non-profit organization (NPO) sector (including unregistered NPOs) without disrupting legitimate NPO activity; and,

8. enhancing the effectiveness of the targeted financial sanctions framework for both TF and proliferation financing (PF).

Source: http://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/increased-monitoring-june-2021.html#Philippines

However, one remaining item that requires legislation is the proposed amendment to the bank secrecy law, reportedly the most restrictive in the world. Despite the backing of 26 business groups, the measure has yet to be certified as urgent by the President and appears to be languishing in both houses of Congress. In its latest Philippine Financial System Stability Assessment (FSSA), the IMF warned that the current arrangement, which limits direct access to information protected by deposit secrecy only to the AMLC, could weaken the AML/CFT regime’s effectiveness. It recommended giving direct and full access to financial sector regulators.

OUR VIEW

We agree with the Governor that it will take years, likely longer than he is expecting, for the country to be delisted, especially given the upcoming election season. Knowledgeable people we consulted think that it is unlikely the Philippines will be removed as long as: a.) the secrecy of bank deposit law is not relaxed; and, b.) the AMLC is unable to show that it can effectively investigate and act on reports of suspicious transactions submitted to it.

So far, financial markets seemed to have taken the grey listing in stride. However, given recent IMF findings that grey listing significantly affects capital flows, financial sector players are worried that an extended stay on the list would over time adversely affect remittances, starting with higher fees, and foreign investments. This would be a pity considering current efforts to liberalize foreign investment rules in order to attract foreign capital to aid the economy’s post-pandemic recovery.

 

Romeo L. Bernardo was Finance Undersecretary during the Cory Aquino and Fidel Ramos administrations. He serves as a Trustee/Director in the Foundation for Economic Freedom, The Management Association of the Philippines and The Finex Foundation.

romeo.lopez.bernardo@gmail.com