Business World Online
Posted on October 08, 2014 10:50:00 PM
INVESTORS can take the creation of the Bangsamoro region as a good cue to do business in Mindanao, but other business concerns -- such as how its resources are managed -- need to be addressed under the draft law.
“For business to thrive, we would need a very business-friendly environment. A bad peace is still better than a good war,” Mindanao Business Council Chairman Vicente T. Lao told members of the House of Representatives Bangsamoro ad hoc committee.
“As long as the shadow economy persists in Mindanao, we will have a problem,” Mr. Lao said, adding that the high poverty rates and patronage politics have turned off potential investments in the region.
The present Autonomous Region in Muslim Mindanao (ARMM) only remitted P1.8 billion in revenues to the national government last year, according to the Bureau of Internal Revenue (BIR).
Mr. Lao said that while the potential for business in the region is promising, much needs to be done to fully realize the same.
CLARIFY AUTHORITIES
Other Mindanao officials also sought to clarify the administration of local resources, saying it could cause confusion between the local and the national governments.
Among the facilities in question are local power plants and Lake Lanao, which would fall within the Bangsamoro territory.
“If there are two entities determining the protocol, then we have a problem there,” Mindanao Development Authority Chairperson Luwalhati R. Antonino said. “We in Mindanao don’t want a war over water. There are histories of fighting over water sources.”
Lake Lanao is the primary source of the Agus hydropower plant, which supplies the ARMM’s energy needs. Under the draft law, the Bangsamoro government shall have exclusive powers over inland waters, and power generation, transmission and distribution.
Former National Economic and Development Authority (NEDA) secretary-general Felipe M. Medalla suggested the establishment of a Bangsamoro Water Regulatory Board to address the issue. Mr. Lao also called for the creation of a Mindanao Power Corp. to run local power plants.
Peace panel chair Miriam Coronel-Ferrer, however, said an intergovernmental body would allow the coordination between local and national authorities, as stated in the draft law.
Zamboanga City Rep. Celso L. Lobregat (2nd district), however, said there should only be one body to hold jurisdiction over these Bangsamoro facilities to avoid delays in decisions and service delivery.
The creation of the Bangsamoro region could also strengthen the Al-Amanah Islamic Investment Bank, the top official of the Development Bank of the Philippines (DBP) said.
“The proposed creation of the Bangsamoro offers another option on the future of Al-Amanah bank,” DBP Head Isidro A. Sobrecarey told lawmakers during a recent hearing on the Bangsamoro draft law at the House of Representatives.
Mr. Sobrecarey told BusinessWorld on the sidelines of the committee meeting that the turnover could as well be the “best option” for the bank, which has suffered losses since its creation, and for the entire Bangsamoro region as well.
The Al-Amanah bank, a fully owned subsidiary of the DBP, is the only authorized institution to practice Islamic banking in the country.
Islamic banking adheres to laws based on the Koran, which prohibits the charging of interest upon loans. Instead, the lender earns by forging partnerships and lease-to-own deals.
Mr. Sobrecarey said that prior to the proposed Bangsamoro region, privatization was the sound option being considered for the bank. Such monopoly, however, would not do good for the banking system.
The DBP official also stressed the need for a legal and regulatory framework on Islamic banking to allow the entry of more players into the system, in light of the upcoming Southeast Asian economic integration.
“Under the general banking law, there is no Islamic banking framework. It should even be happening even before the Bangsamoro,” Mr. Sobrecarey said.
Section 30 of the draft law states that the Bangsamoro government shall “encourage the establishment” of local banks and financial institutions, as well as off-shore units of foreign banks.
During the hearing, Ms. Ferrer clarified that the draft law does not require the transfer of the Al-Amanah bank, but merely provides an option to potentially turnover the Islamic bank to the Bangsamoro parliament.
“What is being proposed is a smooth process of potentially turning over some of the functions based on regular business practices,” Ms. Ferrer said.
Should the turnover push through, the DBP should be paid to recover equity investment, Mr. Sobrecarey said.
BSP SEEKS CLARIFICATION
In the same hearing, the Bangko Sentral ng Pilipinas (BSP) also sought to clarify the power given to the Bangsamoro government to supervise banks within the region, saying it could run counter to the constitutional mandate of the central bank.
“Constitutionally, the power of supervision over banks is vested in the BSP. We really have to make it clear,” said BSP General Counsel Elmore O. Capule.
Mr. Capule also expressed concern on the authority given to the Bangsamoro region to contract foreign loans, saying that under present laws, these must first be approved by the Monetary Board. He said the draft law must be “harmonized” with existing laws to prevent any issue.
For her part, Ms. Ferrer said the Bangsamoro law would not prejudice existing laws, even the Constitution. source
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