PHILSTAR: P-NOY 'SALES' BLITZ FOR HIS PPP
MANILA, MAY 30, 2011 (PHILSTAR) COMMONSENSE By Marichu A. Villanueva - One of the highlights of the just-concluded state visit of President Benigno "Noynoy" Aquino III to Thailand was his pitch for his administration's flagship Public-Private Partnership (PPP) program. Spending only a day and a half in Bangkok, P-Noy conducted his whirlwind of activities, mostly business meetings, during the short state visit.
The Chief Executive met with top executives of prominent Bangkok companies Charoen Pokphand (CP) Group, Siam Cement Group (SCG), and PTT Public Company Limited. They reportedly expressed interest in pouring more investments to Manila.
The CP Group wants to expand its agricultural business, particularly hog-raising, after the Philippines has been declared foot-and-mouth disease-free by the Paris-based Office international des Epizooties. Siam Cement, which owns tile maker Mariwasa, wants to expand its operations here and is also looking at breaking into the Philippine power industry. The PTT, one of the small oil players in the Philippines, expressed interest in supplying LPG to taxicabs as well as compressed natural gas that some buses in Metro Manila use.
Certainly, these are pieces of good news that P-Noy brought home as the current "salesman" for the country that badly needs investments from here and abroad. The President's pitch to local and foreign investors like the Thais to put their money here would be put to naught if his appointed subalterns in government would make it difficult for them to do business in our country.
On top of these usual concerns, Malacañang Palace would have to make sure that government agencies and state-controlled corporations that deal directly with investors are helping sell the President's PPP. As it is turning out, however, the opposite seems to be what's happening. Instead of promoting the kind of climate needed to boost P-Noy's PPP, certain smart alecks in his administration are sabotaging his flagship program by arbitrarily changing the rules in the middle of the game in the implementation of government projects.
One example of this "investor-deterrent" or investor-unfriendly behavior exhibited by government-controlled corporations is the way that the Bases Conversion and Development Authority (BCDA) has been shabbily treating its private business partners.
The BCDA has reportedly been demanding back rentals from its private partner – the Camp John Hay Development Corp. (CJHDevco) – to the tune of P2.4 billion. Instead of trying to facilitate payment of rentals to the government, the BCDA even makes it impossible for the company to raise the money needed to pay its obligations.
Under the contract it entered into with the BCDA, the CJHDevco would develop the John Hay Special Economic Zone in Baguio City. The CJHDevco has reportedly plunked P2.6 billion into the project since 2001 despite corporate and legal setbacks it suffered like the withdrawal of fiscal incentives for the project. To save the project, the BCDA and CJHDevco drew up a restructured Memorandum of Agreement (MOA) in 2008.
From what can be gleaned from the MOA – actually the third revision – the BCDA was required to set up a One-Stop Action Center that would streamline all applications and permits needed by investors to set up business in the John Hay Special Economic Zone. The CJHDevco complained that the One-Stop Action Center has not acted on anything but has merely passed on what it was supposed to do to other government agencies.
Instead of eliminating red tape, the BCDA's One-Stop Action Center became just another bureaucratic layer that made investors wait even longer in processing their requirements. With this kind of inutile One-Stop Action Center, how can CJHDevco entice investors to do business in the John Hay Ecozone?
The CJHDevco is not alone in its miseries in dealing with the BCDA. Private investors led by business magnate Manny V. Pangilinan who runs the Subic-Clark-Tarlac Expressway (SCTEX) were being taken for a wild ride also by those people now in charge at the BCDA.
Pangilinan, who chairs the Manila North Tollways Corp. (MNTC), entered into a concession agreement with the BCDA. Under the original terms of the perfected contract, the MNTC would pay semi-annual concession fees in the first five years, which the government would use to pay off loans that had been secured to bankroll this road project. For the remainder of the contract, the BCDA would have 20-percent share in all toll revenues.
But just before the Arroyo-appointed BCDA officers stepped down and new ones took over under Aquino's watch, the MNTC received a letter from the BCDA top management informing it that they want the contract terminated because of certain "money" issues. Pangilinan would not reveal what these issues are but we can only speculate.
Pangilinan is no ordinary investor. He also chairs the Metro Pacific Investments Corp., which controls a significant chunk of shareholdings in large companies like Meralco, Maynilad, the Tollways Management Corp., and several health care and medical institutions. Pangilinan was quoted as saying that he is not suing the government for now because they want to save a viable project like the SCTEX.
We couldn't agree more with Pangilinan when he said that "contracts with private companies should be sacred, especially if the fulcrum of the government's economic program is the PPP program." Pangilinan is still keeping his options open and hopes that the new BCDA management led by chairman Felicito "Tong" Payumo would honor their obligations under their contract.
When he first launched the PPP, President Aquino vowed that his administration – which will be in office until 2016 – would ensure that the rules would be fair, clear and equally applied to all, and that policies would not be changed mid-stream so that companies would recoup their investments, if not earn profit.
But with such seeming arbitrariness in the way BCDA deals with its business partners, this is not the kind of indicative policy environment that investors look for.
If the Aquino administration fails to fix these problems soon, then all the hard work that P-Noy puts into his "sales blitz" for his PPP program will just be flushed down the drain.
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Chief News Editor: Sol Jose Vanzi
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