Spanish traders still cautious due to perceived ‘economic instability’

The Spanish Chamber of Commerce warned yesterday the government that Spanish businessmen continue to stay on the sidelines and remain cautious towards investing in the Philippines due to perceived economic instability.

In a press conference, Spanish Embassy economic and commercial counselor Jose Miguel Cortes elaborated that foreign investors feel that there is over-regulation and state, as well as judicial, intervention in the Philippines.

The Philippines, Cortes said, must liberalize its policies towards private business.

Likewise, Cortes said, investors want the government to recognize the sanctity of contracts.

"They have to feel comfortable in that area," Cortes said, adding that if there is a problem parties must be able to go to the proper courts but that such cases must not stay there forever.

One Spanish firm indirectly affected by a Philippine court ruling, Cortes said, is Union Finoza which has a 10 percent stake in Manila Electric Co. which was ordered by the courts to refund its customers.

The court ruling affected Meralco’s share, thus, affecting Union Finoza’s holdings.

Spanish Chamber president Jose Luis Romero-Salas, for his part, said that even with macro economic figures showing positive growth, Spanish companies may still choose to take their expansion plans to other Asian countries as investment rules in the country remain unclear.

Spanish firms, Cortes said, invest in a lot of build-operate-transfer (BOT) projects but have chosen to look at the Philippines.

Spanish businessmen, Cortes and Romero-Salas said, are fortunately still looking at possible investments in infrastructure, solid waste management, water and energy distribution in the Philippines.

However, the two Spanish officials urged Philippine authorities to resolve some uncertainties including the right of foreigners to own properties and businesses.

According to Cortes, even official development assistance (ODA) by Spain to the Philippines has dropped significantly primarily, however, due to the lack of counterpart funding.

Among the projects Spanish firms are looking at, Cortes said, are a solar technology project for agrarian communities, at least two windfarm projects with the Philippine National Oil Corp. (PNOC), a water supply project in Vigan, Ilocos Sur, and mini-hydro power plants in Palawan.

Only the solar technology projects for agrarian communities, Cortes said, already has firm funding with a $24 million soft loan from the Spanish Government through the Department of Agrarian Reform (DAR) for phase 1 and another $26 million for phase 2.

The Spanish Government, Cortes said, is also talking with the Philippine Infrastructure Corp. (PIC) about possible infrastructure projects.

A Spanish firm is participating in the P1 billion South Luzon Expressway (SLEX) Alabang viaduct rehabilitation particularly the study involving the use of carbon fiber support for the viaduct.

A Spanish bank, Banco de Bilbao, Cortes said, is also providing a $100 million credit line for a port equipment supply contract with the Cagayan Economic Zone Authority (CEZA).