Business minefield batters govt, private firms

by Butch Fernandez, BusinessMirror

Posted at Aug 06 2012 09:22 AM | Updated as of Aug 06 2012 08:47 PM

MANILA, Philippines - With state and private corporations becoming increasingly engaged in multinational ventures as competition for resources heats up, business must learn to be more adept at dealing with financial, legal and regulatory complications that arise with such trend, according to experts who convened at the launch of the Angara Center for Law and Economic Policy.

The “Inaugural Conference on Globalization, Innovation and Economic Growth” organized by the center, which was founded by Sen. Edgardo Angara offered during the launch on Friday at Sofitel Manila insights and experiences of both states and multinationals in navigating the legal and regulatory minefield.

Dr. Yas Banifatemi, an international legal expert on complex maritime disputes, said the Philippines has a good leg to stand on in pushing its position on maritime territory and exploitation, and encouraged Manila to present its case before international tribunals.

She added that she agrees with the government’s  view that the Association of Southeast Asian Nations could be used as a platform in settlement of disputes. Banifatemi,  though, granted that since China seems amenable to joint development by concerned parties of contested sites, such development could be  “a good starting point and could avoid the use of force.”

University of Chicago law professor Tom Ginsburg said there has been a  growing significance of international law  among nations and businesses, citing the expansion of courts and tribunals after the end of the Cold War with at least 25 standing bodies created.

In a briefing, Dr. John Nye, executive director of the Angara Center, said there is a need to change the “mindset” in the Philippines, from one of “protection and nationalism” to one that is confident about engaging the world. That kind of freeing up will encourage the rise of more major development centers outside Metro Manila, he added.

“One of the things I’ve emphasized is that we’re overly scared. If you look at Philippine laws, they seem as if they’re written by people whose main function is to make sure that foreigners don’t exploit or profit from Filipinos. The problem is, business will not occur unless there is some profit to be made. One of the ironies is that these laws are so restrictive that firms don’t want to open in the Philippines,” Nye said.

He added, “So what do we do? We send Filipinos abroad where then they work for companies that pay no taxes, follow no regulations and abuse these Filipinos far worse than if they were in the Philippines. Isn’t there some compromise where we loosen up these laws a little bit? I’m not talking about removing these laws, just opening up enough to attract more investments, more development, more decentralization so we can hire more of those workers here in the Philippines.”

Nye alluded to “barriers in developing the industrial export sector.”

“The agricultural regions are maintained in the low productivity net of protection. The focus again is on protecting agriculture by subsidizing, preventing imports, but there’s not enough focus on improving productivity and increasing market competition,” he said.

According to Nye, there is  no way one can develop the agricultural sector without allowing agriculture to become commercial.

“All over the Philippines are land of marginal productivity, around centers that are potentially commercially developed. However, there are huge restrictions on turning those agricultural lands into commercial lands. As a result, the country, which should have multiple major urban centers, basically has only one and a half. We have this huge area, NCR [National Capital Region] or Metro Manila, and then there’s Cebu, a small second city. That’s why I call it a half, instead of a second, major center.”

Explaining the rationale for setting up the think tank, Angara described it as “a small, initial step toward trying to open the Filipino mind to the outside world.”

The Philippines has “good research and researchers, but we have no organized research on strategic areas, research that will support lawmaking and administrative and executive policy-making,” he said.

The experts at the forum said an increasing number of Philippine businesses are finding out that they need to be attuned to global regulatory and institutional frameworks as they engage regional business partners. Fortunately, one expert said, Filipino businessmen have not experienced celebrated cases of Australian mining executives detained in China on suspicion of having benefited from price-fixing practices.

A window to  various options for commercial-dispute resolutions for diverse Asian firms was discussed in a presentation by the City University of Hong Kong law professor Dr. J. Romesh Weeramantry; Mannheimer Swartling head of Dispute Resolution Asia Dr. Nils Eliasson; and the secretary-general of the Hong Kong International Arbitration Center (HKIAC), Chiann Bao.

HKIAC handled 275 disputes in 2011: commercial (38 percent), construction (29 percent), corporate (15 percent), maritime (14 percent) and insurance (4 percent).

At least 65 percent of the cases lodged with HKIAC were international and the rest, domestic. Mainland China accounted for bulk of the cases, followed by the US, Singapore, British Virgin Islands, South Korea, Japan, Cayman Islands, Taiwan, Indonesia and India.