Foreign execs issue SONA wish list

AHEAD of President Benigno Aquino 3rd’s second State of the Nation Address (sona), foreign business executives lauded efforts to combat corruption in his first year in office, but admitted that a great deal of work remains to attract long-term investments into the Philippines.

During the launch of its Arangkada website, the Joint Foreign Chambers said the Aquino administration has “significantly reduced” corruption.

“Corruption is something that will take a long while to eradicate, but the beginning has begun and it has started at the top and for us that’s critical,” said Austen Chamberlain, president of the American Chamber of Commerce of the Philippines Inc.

John Forbes, AmCham senior advisor, welcomed the government’s “more ambitious” targets for economic, export and investment growth, which would allow the Philippines to catch up with Asian neighbors.

Despite the Aquino administration’s good start, the foreign executives said the country’s image abroad of a corrupt and inefficient place to do business in hardly has changed.

“I guess my biggest disappointment is that the perception of the Philippines externally hasn’t changed. We see the effort of our FiIipino partners and the public and private sectors to change things,” said Forbes.

After laying down the economic “foundation for take-off,” the foreign executives expect Mr. Aquino to provide details on “what will happen now, where are we going from here” when he delivers his second SONA next week.

The group challenged the government to craft a long-term development plan extending through 2025, or beyond the usual six-year tenure of a president, anchored on the sanctity of contracts and the consistency of policies.

“Unless you improve the business and regulatory environment for long-term foreign investment, you will not get the foreign investment on the PPP projects,” said Julian Payne, president of the Canadian Chamber.

“If you look at infrastructure, the payback period is 20 to 25 years. We have to be very clear that the rules that apply now would have to be respected by administrators down the line,” said Henry Schumacher of the European Chamber.

While the government has yet to implement its much-vaunted Public-Private Partnership projects, the foreign executives said they would be patient since feasibility studies for big-ticket projects need time to develop.

“I think it’s very important for PPP to have certainty so I think it would be wrong to put projects online without arrangements in place for a bankable project,” Ian Porter, director of the Australia-New Zealand Chamber.

Foreign executives also revived proposals to amend the 1987 Constitution, particularly the removal of the 40-percent restriction to foreign equity participation in public utility enterprises.

“It’s a very old principle. It is clearly time to have a national debate. Many people have recommended in the last two presidencies to change that. The world has changed a lot since
1935,” said Forbes.

The foreign executives said the Constitution requires a franchise or other form of operation of a public utility, but imposes no requirement over mere ownership of the facilities required for operations.

“Since there is a clear distinction between the operation of a public utility and ownership over its facilities and equipment, then there should be no barrier to foreign ownership of such facilities and equipment for as long as operations are undertaken by an entity that meets the nationality requirement,” they said.

Another cause for disappointment is the conflicting policies of the national and local governments on mining, referring to the $5.2-billion Tampakan copper-gold mining project in South Cotabato.

“You don’t come in to [mining] unless you have uncertainty and so statements that confuse potential investors will inhibit them from investing straight away,” Porter said. –Krista Angela M. Montealegre, Reporter, Manila Times