The proposed law creates a HEAP Corporation, which shall administer the HEAP Fund. It shall be “used to finance programs aimed at rehabilitating and modernizing educational and health infrastructure, raising the quality of instruction, and strengthening delivery of basic health services in public elementary and high schools nationwide.” The rationale is contained in the explanatory note:

“The country is besieged by a multitude of problems but none as tremendous and far-reaching as the critical condition of our educational system today: the staggering shortage in classrooms, school facilities and educational materials, the shortage of teachers in public schools, and the dismal performance of our students.”

This, in effect, is a verdict on the government’s performance on education. While the bill has good intentions, it seeks to shift the burden from the government to the private sector, specifically business. The focus of the discussion is the impact of the Senate Bill in encouraging the culture of business or entrepreneurship in this country.

Up front, it’s important to state that only a few businesses are covered by the bill – the telecommunications companies or TELCOs (principally Smart, Globe, Sun Cellular). Under the proposed law, 50% of the revenue assessed and collected on all local mobile phone text messages sent from all networks would go to the government. The rationale, as appearing in the explanatory note of the bill:

"Only recently, the National Telecommunications Commission explored the possibility of lowering access charges between telecommunication companies for text messaging or short messaging service (SMS). This bill proposes that instead of merely lowering the cost of communication through lowered access charges, current rates should be maintained but with the government collecting half of the revenues, to be used to fund critical programs for acceleration of education and health standards in the country. At the same time, the economy is pump-primed with much needed investments."

The figures are also contained in the explanatory note: “Using 2007 estimates, there are 53,958,000 mobile phone subscribers in the country. Assuming that every subscriber sends out an average of 10 text messages daily through the country's telecommunication networks at the cost of PI peso per text message, the Fund's 50% share in revenues a day would amount to P 269,790,000.This would translate to a disposable fund of P 98,473,350,000 in one year.”

The issue, again, is whether it’s justified to shift the burden to businesses.

Sure, it’s easy to say that TELCOs are earning so much and there should be no problem with them shouldering the  bill. But why single them out? Other companies, like the oil companies, are also earning so much. If we say that’s the price TELCOs have to pay to maintain their franchises, other companies (like transportation companies and television networks) also require franchises. If there are savings to be realized from lowering the cost of sending text messages, by all means let the people enjoy that rollback, if we could call it that way.

But that is only part of the argument. The bigger argument is the danger of government dipping into the pockets of businesses and entrepreneurs. If you’re an entrepreneur, you work hard to make your business grow. You spend sleepless nights and you sacrifice a lot to make sure your business succeed. If you’re unlucky, your business fails and your finances are in shambles. If you’re successful and you grow big, you then run the risk of having to face a scenario, just as the proposed bill, where the government shifts the burden to you for something which the government should be funding in the first place.

Of course, what US President John F. Kennedy said years ago makes sense: “Ask not what your country can do for you, but what you could do for your country.” Businesses should be free to contribute to society as part of corporate social responsibility, without the government imposing additional burdens. This reason becomes more compelling if we consider that as stated in an article in the Asian Development Bank (ADB) site, the Philippines is estimated to have lost $48 billion (covert that to pesos) due to corruption over the last 20 years.

In the end, it does not reflect well on how you encourage businesses to grow. It sends a message that you should keep your business small, but in a global economy, small business may not be in a best position to effectively compete. Sure, there are exceptions, but preventing small companies from growing is not the answer to how the Philippines should enhance competitiveness of Philippine businesses.

The bill should be passed, but the funding should come from government funds. It should not be an additional burden on business. If you have another opinion, please feel free to use the comment section below.