Dredging the Waters

The Laguna Lake dredging project is a good analogy for what the Aquino administration seeks to achieve with its anti-corruption campaign.

Last month, during the celebrations of Independence Day, PNoy sought to put an emphatic fullstop to the ongoing debate over what to do with a 19 billion peso dredging project involving the Laguna Lake by a Belgian firm which had handled a similar project involving the Pasig River.

In its most elemental form, the project intended to dredge the silt from one part of the lake and dump it on another part. It was cancelled not because the deal was invalid, as the DOJ had determined it had been. Nor was it due to corruption, as the administration did not allege any form of it had taken place (otherwise the OECD Anti-Bribery Convention would have required the filing of cases against those who offered or paid any bribes).

It was cancelled simply because as PNoy had put it, he was “allergic” to such deals, which led the firm to file for damages amounting to 6 billion pesos with the International Centre for Settlement of Investment Disputes. In seeking to dredge the silt from its own spending, the government seems to have delayed, if not cancelled many of its own public works projects in the first half of the year. Applying the same criteria (suspicion of corruption) to PDAF or congressional pork barrel would actually mean cancelling the lot of it.

But this post is not about that issue. Today, it was reported that credit rating agency Moody’s had followed another agency Fitch Ratings in recommending a structural (read: roots-to-branch) reform of the fiscal system. After praising the government for its efforts at consolidation (read: restraining expenditures while improving collections) without resorting to new taxes, it said that

(I)t is unlikely that stricter tax compliance will generate a material change in revenue performance if tax evasion cases are not resolved expeditiously by the country’s inefficient legal system.

So it would seem the efforts towards apprehending tax cheats is similar to the scuttled project that involved dredging the waters of Laguna de Bay in that it takes volumes of silt from one end of the bureaucracy, i.e. the revenue agencies, and dumps them onto another end, i.e. the courts, where they presumably accumulate and clog up the system. Without substantial amounts of spending to upgrade our court system, Moody’s is saying that a significant, permanent improvement to collections is unlikely.

To underscore the scale of the mountain the country has to climb if it wishes to gain an investment grade rating, Moody’s noted that the Philippines which had an average revenue-to-GDP ratio of 14.7% from 2006 to 2010 compared unfavorably with similarly rated peers in its category which averaged 23.7% in that period.

While it recognized the existing proposals to rationalize fiscal incentives and to index sin taxes to inflation as a positive first set of steps, it encouraged the country to go down a path of fiscal reform to improve its “ratings trajectory”. This is probably the loudest endorsement for what we have been espousing in this column.

Considering the problems the government has encountered in rolling out its PPP projects (with the first one being taken off the table), the government has to consider such recommendations seriously. Given the increasingly menacing headwinds coming from Europe, MENA, Japan, China and the US, it will have to find a way to pursue infrastructure and social spending in the future as the period of low interest rates (read: cheap capital from abroad) is bound to come to an abrupt halt.

Doy Santos aka The Cusp

Doy Santos is an international development consultant who shuttles between Australia and the Philippines. He maintains a blog called The Cusp: A discussion of new thinking, new schools of thought and fresh ideas on public policy (www.thecusponline.org) and tweets as @thecusponline. He holds a Master in Development Economics from the University of the Philippines and an MS in Public Policy from Carnegie Mellon University.

  • I’ve been surfing online more than 3 hours as of late, but I by no means found any fascinating article like yours. It’s pretty value sufficient for me. Personally, if all website owners and bloggers made just right content as you probably did, the web will be much more useful than ever before.

  • J_ag

    To those who are still babes in the woods. One of the more favorite projects where it is very difficult to assess the completion of the project is dredging.

    Siltation – how many tons will be lifted? Next how many tons will be moved and transferred and where?

    One thing the DPWH and other agencies should check is how many dredging projects were given out in the last few years of GMA. Or for that matter in the district of Mickey and Dato Arroyo.

    Anyone who has any experience in moving sand and gravel using dump trucks knows the expense and the capacity per truck.

    Check it out.

  • UP nn Grad

    PresiNoynoy very respectful so he coherently explained for you, cocoy, Ja_g and Doy to understand the reasons why he decided against the dredgng. Go to inquirer or Malaya and you’ll see the paragraphs where PresiNoyInoy explained to the citizens, his bosses

  • up NN grad

    …Unable to argue coherently…. Coherently.

  • Thai anton

    So Pnoy cancelled the contract ,we pay the the fiine,but laguna de bay still needs to be dredged,who losses ?
    A reminder all the govt land at roxas boulevard the CCP PICC ,Philcite,
    Philexpo,PNB ,Mall of Asia, Manila Cavite Coastal road all came from reclaimed ( Dredge ) land . Marcos projects. done by Sumitomo and then CDCP.

  • GabbyD

    “It was cancelled simply because as PNoy had put it, he was “allergic” to such deals, ”

    allergic? what do you mean?

    • That was the word used by PNoy in an interview with the AP (follow the link). What he meant by it? PNoy said that such types of projects are associated with a certain amount of corruption, although he did not allege it in this case. Which would be like saying to Congress, because PDAF has been highly suspected of corruption (though no successful case has been proven), we are going to cancel it from the approved budget.

      • GabbyD

        i tracked down the quote. he does believe the contract is fishy. i wish he would be clearer on what he means by that.

        also, he believes that the dredging plan per se wont work.

        his argument makes sense, but a lot depends on the details, which we arent privy to.

        so its NOT just “suspicion” of corruption that led to this.

        • UP nn grad

          P19Billion contract cancelled — P6Billion penalty. P13Billion saved!!!!

          COOL!!!! That is a 66% net savings, YEYYY!!!

          But Laguna Lake still needs dredging. So if Pinas eventually gets to spend P16Billion so the job gets done correctly via BFF’s and “daang matuwid”, what’s the savings????

        • UP nn grad

          Had he been a civil engineer or a PhD Marketing or had he cited Silliman University Engineering department or College Holy Spirit English Department, then it won’t sound arrogant for Presi-Noynoy to kill a contract on his gut-instinct // “…he believes that the dredging plan won’t work”.

          • GabbyD

            i would like to an explanation why it would work.

            i havent seen one anywhere.

            the europeans arent arguing the science.

          • UP nn grad

            Presi-Noynoy has access to the project documents. In fact, he can get MLQ3 or some other bureaucrat-hireling to explain the documents to him. Unable to argue coherently against the dredging, it is either Presi-Noynoy did not read the documents or he did not understand what he read.

          • GabbyD

            yes, he DOES have the documents..

            thats WHY HE CAN SAY what he has said.

            WE dont have it– so how can you say its a mistake/arrogant?

          • Bert

            UP n, read this…from Doy:

            “…involving the Laguna Lake by a Belgian firm which had handled a similar project involving the Pasig River.”-Doy

            and this:

            “In its most elemental form, the project intended to dredge the silt from one part of the lake and dump it on another part.”-Doy

            Now, after reading those, using your little logic and little common sense will tell you something.

            The Pasig River anywhere is still heavily silted, and, take note of this, UP n, better still, see what the dredging ship above is doing…it’s dredging and transfering the silt from the lake…to the lake.

            Now, you are a UP graduate, UP n. Can you see it?

          • justwondering

            i would have to agree on Bert’s last comment

          • UP nn grad

            So did anyone get to read in Manila Times or Inquirer where President Noynoy Aquino (Benigno, the 3rd) presented a coherent presentation of his three or four reasons why he’s cancelling the dredging contract? You know… so he doesn’t come off as capricious and arrogant so he had MLQ3 or some hirelings write an explanation that doy, bongV, leytenian, cocoy, GabbyD and bert can understand?

          • UP nn grad

            Bet… wouldn’t it be great if the silt from Laguna Bay could be dumped onto one of Pilipinas Spratley islands so those islands can be made more habitable?

            Or maybe haul the silt to Nueva Ecija to make a dam to protect some of the ricefields from flooding.

            Now do the math — liters-diesel per dump-truck per kilometer.
            Kilometers from a Laguna Bay shoreline site to Nueva Ecija.
            Number of truckloads needed.

            You-thank it would cost a little bit more than a 2008 Porsche?

            But Noynoy already knows this… the cost of a Porsche, I mean.

            Why again hasn’t Presi-Noynoy made paki-lang super-nice request to MLQ3 to explain a few details of the dredging contract that Pilipinas is now being sued for…. a bit more than a 2008 Porsche?

          • GabbyD

            dredging? porsche? ha?

          • UP nn grad

            si gabbyD naman…. sa dami-dami ng mas importante, ang pinili mo… iyong porsche.

            hindi ba isang importante, ano nga ba — dalawa o tatlong razon — bakit nasumpungang kansel-kansel iyong kontrata? Kung mahal, saan ang mas mura? Kung may korap-korap, nasaan? Kung ma-alingasaw, aling parte ng kontrata ang mabantot?

          • Bert

            @justwondering

            You have a clear and balance mind, pare.

        • UP nn grad

          Hmmmm….. contract cancelled…. so is that picture one of ships used by the French working on a Laguna Bay dredging contract that has been cancelled?

          Hmmmmm…. v-e-l-l-l-y interesting!!!

          • Bert

            Hehehehehe, UP n, for a UP grad you can’t still see what a barangay university grad or a Silliman U engineering grad can easily see.

            Now, do the math yourself, and on this I will have to spoon feed you. Here’s the simple math, just to make it a bit easier for you:):

            Belgian firm can’t clear Pasig River of silt+Belgian firm will dredge the lake then dump the silt in the lake+Belgian firm/GMA/ZTE deal combination not a good combination=Noynoy stops the Belgian firm from wasting precious government money.

            Of course, UP n, you’ll agree with GMA that the Belgian firm is good at dredging rivers, or lake.

            And government coffers.

          • UP nn Grad

            Bert: did you read last week in Inquirer where Presi-Daang-Matuwid has sued the Belgian firm? Or maybe the suit was filed 3 days ago? NO?? No lawsuit? Bakit hindi kinakasuhan the BElgian firm? Tinatamad si deLima? Bakit kaya, bert?

          • UP nn grad

            … o… next na… hintayin natin pag dumating na sa Korte ang labanan. O hintayin natin kung may isusulat sa Inquirer o sa ManilaTimes ang Malakanyang.

            Ano ang next? Iyong PNP helicopter na bayad, brand-new pero gamit na pala.

          • Bert

            The more relevant question, UP n, should be this:

            Considering that there are more pressing problems that the government has to prioritize in its allocation of much needed goverment fund, is it reasonable for the president to stop this questionable dredging project?

            Stop, don’t answer the question muna. Let me guess what your answer to the question will be. I think your answer will this:

            “Hindi pa kasi itaas ni Presi…ang mga taxes, at maglagay ng mga bagong taxes, para wala ng cancel-cancel maski ng mga questionable projects ni GMA.”

            Hindi ba?

          • UP nn Grad

            Oy, bert… Basahin mo sa Manila Times, inilista ni Ochoa the six reasons why Laguna dredging contract is mabantot . One– A. Two – R. Three – G. Four – L. Five – I. Six – O.

          • UP nn grad

            O, eto ang bago.

            10-million new jobs by 2016, yey!!!!

            ————-
            DTI aims for 10M export jobs in 3 years
            By Darwin G. Amojelar, Senior Reporter

            THE Aquino administration plans to create nearly 10 million jobs by 2016 under the country’s three-year export development agenda, according to the Department of Trade and Industry (DTI).

            The Philippine Export Development Plan for 2011 to 2013 forecasts a doubling of Philippine exports to reach $120 billion by 2016.

            http://www.manilatimes.net/business/dti-aims-for-10m-export-jobs-in-3-years/