'PH turning off investors by renegotiating contracts'

by Coco Alcuaz and Warren de Guzman, ANC

Posted at Jul 01 2011 02:31 AM | Updated as of Jul 01 2011 10:33 PM

MANILA, Philippines - The Philippines is turning off investors by trying to scrap or revise the terms of contracts for projects such a Roll-on Roll-off (RORO) port project and a Laguna Bay dredging, said European Chamber of Commerce President Hubert d’Aboville.
 
"Are we welcoming today the investors? Are we telling them you are going to invest 500 million euros, welcome for the next 20 years?" D’Aboville said in an ANC’s The Economy and The President forum. "The investor needs at least 20 years security, and today I am afraid they don't see that.’’
 
President Benigno Aquino this month ordered the cancelation of a Belgian project to dredge part of Laguna Bay, the renegotiation of a French port construction contract, and the review of a Chinese rail project.

The Bases Conversion and Development Authority (BCDA) is also renegotiating the terms of Metro Pacific Investments Corp.’s Subic-Clark-Tarlac Expressway (SCTEX) contract.

All were signed before Aquino took office a year ago.
 
In 2003, his predecessor Gloria Arroyo got the Supreme Court to nullify the contract of a group including Frankfurt-based Fraport AG to build Terminal 3 of the Ninoy Aquino International Airport, saying terms were changed after the contract was signed by her predecessor, Joseph Estrada.

Fraport and the group hauled the government to arbitration, where they remain.
 
'PH turning off investors by renegotiating contracts' 1"They see that we are more talking about a 5-year term,’’ D’Aboville said. "So one government after another government after another government, and then the contract may be questioned.  So when you sign the contract , it should be written in marble. It must be good for 20 years. I think we should go out of the concept of one government 5-year term. We should think Philippines Inc.  If you invest hundreds of millions of dollars or euro, you have to think that you are investing long term in the country.’’
 
He said he’s been told that Foreign Secretary Albert del Rosario will meet him to disclose certain information about the contracts. He said he hasn’t heard from Del Rosario yet.
 
Investment concerns may make it tougher for the Philippines to bid out infrastructure projects it calls Public-Private Partnerships. It already attracts one of the least foreign direct investment (FDI) among South East Asian nations and FDI fell in the first months of the year.
 
"The bright spot is PPP; biggest challenge, PPP," said Aurelio Montinola, president of Bank of the Philippine Islands. "In the end, if we can pull it together, we're going to get infrastructure and power, which is going to be very helpful for the country. And it will also solve the credibility issue with regard to FDI, which is a big stumbling block.''
 
The government plans to bid out 10 infrastructure projects this year and more in succeeding years, though it’s postponing the first, the contract to run MRT2-LRT1.