Dominguez disowns questionable provisions in economic bills

MANILA, Philippines – Finance Secretary Carlos Dominguez III denied that contentious provisions in various economic bills for the coronavirus pandemic were proposed by President Rodrigo Duterte's economic team.

"Those items definitely were inserted and did not emanate from the administration's proposals," Dominguez said in a virtual press briefing on Wednesday, July 8. 

Earlier this week, the Philippine Competition Commission (PCC) expressed concern over several clauses in 4 bills, as these sought to do away with competition and procurement laws.

These are:

The GUIDE bill and BARO bill both propose the creation of ARISE Incorporated, a state-backed holding company which would authorize the Land Bank of the Philippines and the Development Bank of the Philippines to enter into joint venture agreements with struggling businesses.

The resulting joint venture company would enjoy exemptions from procurement and competition laws, as well as tax exemptions and fee privileges.

The PCC maintained that joint ventures should be placed under its scrutiny to ensure that the market would not be distorted, especially at a time when the pandemic has drastically changed the business landscape.

Several lawmakers Rappler talked to, but refused to be identified, earlier confirmed Dominguez's statement, saying that the contentious provisions were never part of the plan.

In a GMA News report, Albay 2nd District Representative Joey Salceda noted that the ARISE bill would not clip the PCC's powers.

"I believe the intention of the language is to ensure that the regulatory agencies do not sit on the pending matters, and that the continuity of business at this crucial time is unimpeded, especially those that have to do with essential goods and services," Salceda told GMA News.

COVID-19 and competition

While the PCC recognized the bills' goal to hasten processes, it underscored the need for deals to be scrutinized.

"The unique confluence of these market dynamics create an increased risk of anticompetitive behavior. Suppliers may coordinate to disproportionally pass through cost increases to consumers or to coordinate volumes of supply. Firms could likewise take advantage of expedited procurement processes to engage in bid rigging," the PCC said.

"Finally, firms holding a dominant position and those who have access to essential goods may abuse the market power they gain because of the pandemic, and use this to take advantage of consumers. This is especially true during times of crisis or an impending recession, where market failures can be a distinct possibility."

The PCC reiterated that it already heeded the call for regulatory flexibility, but pointed out that it should still look into deals.

"Anticompetitive behavior during the pandemic and its aftermath would remain unchecked, and leave Filipino consumers helpless against unscrupulous market players and possibly stifling the country's prospect for shared recovery," it said. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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