Embarrassing moments

Coffee shop habitues continue to talk about the “dressing down” that heads of the Joint Foreign Chambers if the Philippines received from members of Senate, particularly from Senators Juan Ponce Enrile and Miriam Santiago.

And while that event happened a full month ago, the country’s investment image may continue to suffer from it. So much so that even the Asian Wall Street Journal (AWSJ) featured an op-ed piece on the incident entitled “Powering Down the Philippine Economy” while President Arroyo was busy wooing Americans to invest in the country during her State Visit to the US the week before last.   

The AWSJ article highlighted the concerns aired by the JFC on the planned “roll-back of Napocor’s privatization in a May 27 letter” to Mrs. Arroyo” and how her Senate allies responded in unusual outrage.

The editorial made particular reference to how the heads of the JFC were summoned last June 6 to a Senate hearing, wherein Hubert D’Aboville, the French president of the European Chamber of Commerce, tried to speak on behalf of the foreign chambers, whose members represent the US, Korea, Japan, Australia, Canada and New Zealand.

Mr. D’Aboville, tried to read a prepared testimony that expressed their sentiments on the potential negative consequences of amending EPIRA and how it would dampen foreign investor confidence in the Philippines, essentially likening it to our government’s penchant for changing investment rules in the middle of the game thereby turning off foreign investor interest in the country. And to put this in better perspective – foreign investments in Vietnam reached nearly $18 billion last year compared to the $2.93 billion in crumbs received by the Philippines.

Sadly, not only was Mr. D’Aboville not allowed to present his testimony, he was even chastised by Senator Enrile who told Mr. D’Aboville, who has lived in the Philippines for 31 years and is married to a Filipina, “My goodness, get out of this country if you can’t live with us.” Adding insult to injury, Senator Santiago joined the fray in saying, “You may not continue. You do not determine what you can say or not say. I determine.” Worse, these statements did not escape the attention of an Internet blogger who goes by the name of “Worried Pinoy” and uploaded these examples of shameful behavior on You Tube.

Evidently, President Arroyo’s allies don’t seem to care about signals they send that cause additional concern to potential investors. Take for example the EPIRA which the President signed into law in 2001 and called for privatization of 70 percent of the National Power Corp. (Napocor) by 2004.

However, only little over 40 percent has been sold.

Even worse, rather than looking into why the executive branch failed to execute the law properly, the palace and some legislators are now considering the proposed Enrile amendments after already having attracted an initial set of foreign investors that came in based on the current rules set by EPIRA.

Another example of the kind of negative signals our government’s inconsistencies in mandated policies are sending to potential foreign investors was also cited by the AWSJ editorial which uses Alstom, the power company from France as another example.

Industry sources say Alstom is interested in bidding for Napocor’s Limay power plant but as the  government continues to delay the bidding process, Alstom may just reconsider that plan. In the same way that when the government announced last year its legislative priority to roll back the power sector’s reform process, Alstom opted to build Southeast Asia’s largest hydro power plant in Vietnam.

Everyone knows that the President is busy and intent on changing the negative impressions of her and her government. So for the sake of the future of our children, we pray she take our views constructively and even into serious consideration.

Racetrack row

The Sta. Ana racetrack row which pits a group of Filipino shareholders led by the Puyat family against a Malaysian-backed faction led by Wincorp’s Santiago Cua Sr. a.k.a Cua Sing Huan may have produced perceptions which this column believes is totally unfair to the Supreme Court.

The issue has been raised as to whether or not a temporary restraining order (TRO) issued by SC Associate Justice Minita Chico-Nazario favoring the Cua Sing Huan group may have paved the way for the consummation of a swap deal that the Filipino investors are trying to avert. That deal transferred the ownership of the P12-billion Sta. Ana racetrack to an erstwhile moribund shell company called JTH Davies.

And in the aftermath of that swap deal, some quarters are loudly wondering if the Supreme Court had unwittingly supported a controversial scheme put in place by the Malaysian-backed Cua Sing Huan group.

The perception is outright unfair. A TRO is a legal remedy which parties seek from a court in order to avoid a serious damage to their interest. A TRO is an interim measure and not a judgment on the merits of an issue. True, the timing of the issuance of the Chico-Nazario TRO may have been helpful to the cause of the Malaysian-backed Cua Sing Huan faction. But we doubt if the SC even thought of that when it granted an interim legal remedy.

This column strongly suggests that the SC be spared from a controversy it did not create. The focus and the pressure should instead be on the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) which have been on the forefront of reforms in the corporate sector.

Both organizations have a stake in the strict and proper implementation of the country’s Corporation Code. The business sector recalls that there have been serious moves by the SEC spurred by initiatives of the Bangko Sentral ng Pilipinas and other agencies to encourage the enhancement of transparency in corporate governance.

The anchor of this effort is the principle that corporate officers and directors are responsible to all shareholders, and are accountable to them for decisions made in the course of the management of the corporate entities.

This is even more important among publicly-listed companies like PRCI where many small investors put in hard-earned money. The reforms in the corporate sector aim to protect their interest as well as to make it clearly understood that directors and corporate officers are merely managing other people’s money.

The PSE, on the other hand, was the first to express concern over reports that PRCI had breached the constitutional limits on foreign ownership. That reported breach appears to have taken place during the same period that the swap deal was being prepared.

The PSE and the SEC, not the SC, should be on the limelight on this issue.

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