Why our business environment remains scary

Outside of the less than ideal world economic environment, the reason why we have all but vanished from the radar screens of potential investors is politely attributed to political risk. When analysts say investors are worried about our political risk, they mean we are one hell of an unpredictable country to invest in. And they are right.

Potential investors want to plan if not for the long term, for the medium term. They value some amount of predictability. At the top of their list, they want to know who is really in control. Is the legal system dependable? They want to be assured that if they signed a contract with the explicit guarantee of the country’s officials, there are no more problems other than normal business risk. They also want to know that if they bribed some officials, these officials will not only deliver but also not go out to a competitor for a higher bid.

I don’t think anyone has accused us of being predictable. Not even the constitution and its provisions on form of government or tenure of officials are good enough anymore. Ate Glo says she is not running for President in 2004, a statement everyone took to mean she will retire to being private citizen. Now, even her Cabinet members are no longer sure. Her recent actions betray the intention to remain in power beyond 2004.

Speaking of 2004, no one really knows what will happen, and that’s just a year away. Will there be elections, to begin with? Will the constitution be amended in time to shift to a parliamentary form of government?

If 2004 will be the last presidential election, who are the contenders? So far only Raul Roco and Ping Lacson have openly declared their interest. But we get this feeling that neither of them is it. Jun Magsaysay? Danding Cojuangco? Ate Glo? Or, if Kit Tatad is to be believed that the constitution is no longer worth the paper it is printed in, Kuya Eddie can very well get the Supreme Court to rule that he is eligible to run again. Erap is now saying that Miriam Santiago has cleared his eligibility to run again too.

If you are a potential investor, local or foreign, knowing who will be numero uno in the next 12 months is important. You are likely to postpone plunking down your money on an investment here until you are sure who that one is. Right now, it is anybody’s ball game. It is wiser to just wait.

The other unpredictable factor is the Supreme Court. Union Fenosa, the Spanish utility company that invested heavily in Meralco learned this lesson the hard and expensive way. When Union Fenosa invested $250 million for nine percent of Meralco in 1998, there was no indication that the established manner of computing Meralco’s rates would be changed and made to apply retroactively. There was also a belief that the regulatory agencies will act promptly on justifiable requests for rate adjustment.

Guess how much that original $250 million is now worth? Believe it or not, $16 million. No wonder Ate Glo’s visit to Spain had been postponed twice already. No wonder too the Spaniards, who should be supporting us as a former colony in the tuna quota controversy at the EU, is staunchly fighting our position. My favorite Kastila, Don Pepe Rodriguez, who helped Union Fenosa, has migrated back to Spain with his Filipina wife and children.

I am not saying that the Supreme Court decision is wrong. The law is after all, what the Supreme Court says it is. But the retroactive application is one messy situation that hurts our business environment. There must be a way by which the High Court promulgates its decisions, specially those that turns established practices and precedents upside down, without causing such disruption and unpredictability.

Of course the Supreme Court ruling on the PEA Amari deal is another example. The decision that nullified sale of reclaimed land to anyone but individual citizens may well be the right interpretation of the constitution but if the doctrine is applied beyond PEA Amari, the repercussions are horrendous. Financial institutions will find out they are holding useless paper as mortgages. Dura lex, sed lex, I hear, but is there a way of making the harshness of the law less disrupting?

Maybe the foreign investors behind the PEA Amari deal deserve their fate, given the notoriety of that deal. But from the perspective of a potential investor, what he or she will now see is the absence of honor among thieves. Or should we say, extortionists? Said another way, nothing here is for sure, even after the customary tributes have been taken care of, assuming they were.

For Piatco, I guess they got what they deserve. They have yet to explain the Liongson "retainers". In fact, this Liongson fellow must still surface to explain. Until then, we can only guess why that airport’s construction cost is out of this world.

The Supreme Court may have had no choice but to declare void an illegal contract that is obviously disadvantageous to the people. It should serve notice that investors, local or foreign, can’t do what it seems they did in that airport project and get away with it. But Fraport, a foreign investor, lost a lot of money and that will affect how future potential investors will look at us.

That is why we are once again eating Thailand’s dust. Specially under the leadership of a former captain of Thai industry who is now prime minister, Thailand is projecting the kind of stability and predictability of policy and politics that we can only dream of. Thailand, once upon a time the land of the monthly coups, is now a thriving and stable democracy. I doubt if we could say the same of ourselves without making brazen liars of us all.

We need a strong leader we can respect. Our tragedy is, there is no one in the horizon that will fit the bill. So, we are condemned to muddle through in the foreseeable future, characterized by national underperformance. What investor in his right mind will want to be part of that?

Maning Silva

Last week, a special friend and co-worker in journalism took his last snapshot, so to speak. Photojournalist Maning Silva must have been everyone’s friend. He has a ready smile and a pat on the back when you meet him. And he has a way of smelling colleagues in need of help, no matter how simple. Maning is one person who helps without any hesitation and without thought of winning favors in return. I didn’t bump into Maning all that often, but the few times I did were enough to establish him in my short list of forever friends.

To most of us, Maning lives at the international airport. You could suspect he owns the airport. Nothing newsworthy happens in that airport that he does not hear of. When I was editor of the Manila Chronicle and later on as head of ABS-CBN’s news department, Maning was always a life saver who delivered timely photo or video coverage of events we could have missed. I can’t think about the airport without Maning.

One other thing with Maning is that I rarely saw him without his wife Zeny by his side. They covered events together. When you needed something from Maning, you could tell it to Zeny and it’s good as done. As far as I was concerned, they were twins with an invisible cord attached to each other. I don’t even want to think about how much pain Maning’s death must be to Zeny. One without the other is simply unthinkable.

But such is life and death. And we must simply live on sad at the loss of a dear friend but still richer for having known him and enjoyed his friendship. Not even death can take those memories away from us.

Fortune cookie

Found in a fortune cookie:

"You are a poor, pathetic, gullible fool who seeks advice from bakery products."

Boo Chanco’s e-mail address is [email protected]