POSTSCRIPT / December 20, 2007 / Thursday


Philippine STAR Columnist

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Alien investors invited, then given a hard time

GAPING TRAP: A foreign investor bidding for a big government project or negotiating a fat contract together with Filipino business associates could be walking into a trap.

Doing business in the Philippines is fraught with political risks and aggravations that are not commensurate to the money to be earned.

Review the parade of giant projects won by foreign bidders or by consortia with foreign components that were eventually lost, turned sour, or eaten up by the rising cost of corruption.

Recall the Manila Hotel deal, the previous sale of the Masinloc power plant, the NAIA Terminal 3, the Comelec vote-counting machines, the National Broadband Network and, the latest, the National Transmission Corp. (Transco).

In many of these transactions, the winning bidder did not always come out winner.

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RAZON LINK: When a serious bidder is prequalified, we have to assume that he and the other bidders on the final list have been thoroughly examined and found qualified in all aspects.

At that stage, all bidders should be legally bound by a common undertaking that if they have to question the status of any fellow bidder, they should do so at that preliminary stage and never after a winning bid is announced.

In the Transco deal, the main target of criticism is Enrique Razon, head of the International Container Terminal Services Inc. and treasurer of the administration Team Unity in the May elections. He reportedly has less than 2-percent interest in Monte Oro Grid Resources that won with a $3.9-billion bid.

Opposition senators also said that Jose Ibazeta, president of the Power Sector Assets and Liabilities Management Corp. (PSALM) that conducted the bidding, was director of Razon’s ICTSI and its subsidiaries.

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SOUR GRAPES: Were not these details about Razon and Ibazeta known before the auction? How come the losers are complaining only now?

Assuming the alleged facts are true and correct, was any law violated? If so, then adversely affected parties should sue instead of cry over media’s shoulders and drag Malacanang into their mess.

I do not know Razon and Ibazeta, and will not recognize them if I sat opposite them at a lunch table. And nobody claiming to represent them has talked to me.

I am just amazed that sour grapes are so abundant in this country that we could develop a thriving industry extracting juice from them.

And come to think of it: If I happen to be a kumpadre or a close friend of President Gloria Arroyo (which I am not), would that disqualify me from doing business with the government or bidding for a public contract?

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JAPANESE WORRY: Despite repeated warnings of the business sector, particularly foreign investors, the government remains deaf to their plea to just carry out the Electric Power Industry Reform Act (Epira), not amend it.

The Japanese Chamber of Commerce and Industry of the Philippines Inc. (JCCIPI) has joined the long list of those opposing the plan to lower the privatization threshold of state-run power assets from 70 percent to 50, supposedly to hasten open access.

Being the biggest foreign investor group, accounting for more than 60 percent of the total, Japanese businessmen are worried that the dominance of the National Power Corp. in the power sector will not solve the problem of soaring electricity prices.

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PUSH EPIRA: JCCIPI president Toshifumi Inami said in a Dec. 14 letter to President Arroyo:

“We believe that amending Epira now would reverse the gains of your power reforms and endanger investment confidence. Instead, we encourage the government to be steadfast with full and proper implementation of Epira to achieve its primary objectives of providing a competitive and vibrant electricity industry that can play its role in making the Philippines competitive.”

The letter came after the influential Joint Foreign Chambers reiterated its call on the government to effectively implement Epira rather than amend it.

Inami said in June that Epira must come with a regulatory environment that is balanced and, most especially, stable.

Saying that most of the reforms are already in place and the industry is becoming more competitive, Inami added: “The privatization of (Napocor) generation assets is gaining momentum and can be replicated with the privatization of its independent power producer (IPP) contracts as well.”

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JOINT CHAMBERS: The Joint Foreign Chambers said that instead of amending Epira, the government and the private sector should press implementation and adopt alternative strategies to assure open access and retail competition.

The chambers said that three of the five conditions for open access had been met. The unmet provisions require the privatization of at least 70 percent of Napocor’s total capacity of generating assets in Luzon and the Visayas, and to transfer to IPP administrators management and control of at least 70 percent of the total output of plants under contract with Napocor.

Bills in Congress propose to reduce the 70 percent requirement for each of the conditions to 50 percent.

The joint chambers include the American Chamber of Commerce of the Philippines Inc., Australian-New Zealand Chamber of the Philippines Inc., Canadian Chamber of Commerce of the Philippines Inc., European Chamber of Commerce of the Philippines Inc., Japanese Chamber of Commerce and Industry of the Philippines Inc., Korean Chamber of Commerce of the Philippines Inc. and the Philippine Association of Multinational Companies Regional Headquarters Inc.

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(First published in the Philippine STAR of December 20, 2007)

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