Don’t kill the goose

Now that the Philippines is well on its way to sustained economic growth, it is well-advised for our policy makers and national executives to listen to well-meaning sectors who have some advice to give our economic planners – including President Aquino.

One  is the political will of our executives and regulators to honor covenants with companies, domestic and foreign, especially in the area of allowing them to adjust their prices. The problem that now confronts some sectors is that agreements entered into by government are not being honored by these executives.

We must be reminded that companies have their own investment criteria in considering a country for their investible funds.

One major criterion is the track record of that country in honoring its commitments. If the country is known for casually ignoring its covenants, such a country will be in the list of “undesirable investment destinations.”

A study made by Rachel Wellhausen of the University of Texas at Austin said that corporations, especially multinationals, would most likely “divert investments or exit” in reaction to a government which shows reluctance or outright refusal to honor an agreement.

Business observers point to the hesitation of the President’s subordinates to honor contracts between government and private firms involving huge infrastructure projects. Is the President predisposed against anything that concerns raising tariff?

What immediately comes to mind is the case of the toll rate adjustments of the tollway concessionaires in the country operating the North Luzon Expressway (NLEX), the Cavite Expressway (Cavitex), South Luzon Expressway (SLEX), the Skyway and the Star Tollways. All of these toll way firms have already submitted their respective petitions for toll rate adjustments. 

Regulator delays toll rate implementation. The Toll Regulatory Board (TRB) and its supervising organization, the Department of Transportation and Communications (DOTC), have not acted on the petitions of these tollway  companies. 

These tollway firms have to bear the brunt of revenue losses running to hundreds of millions of pesos. Such delays have wrought havoc on the programmed revenues of the expressway firms and affected their ability to meet their obligations to multilateral creditors.

The last thing that should happen to big investors in the country is when  government does not deliver its part of the deal. The tollway builders assembled a pool of partners and creditors in order to construct tollways whose costs run into billions of pesos.

The government, on the other hand, assured these investors that they would get a reasonable return for their large scale investments. In the case of expressway builders, they have been assured of a regular schedule of toll rate adjustments every two or every three years. 

With such an assurance and with good faith, the tollway builders deployed investible funds, people and machines to construct those gleaming expressways or skyways. It was good at the start when the Regulator was predisposed to honor the agreement between the tollway firm and the government.

The problem  has begun when the new Toll Regulatory Board, has not been acting on the petitions of the tollway companies. The Regulator’s inaction or studied indifference to the petitions has  effectively impaired the ability of these firms to meet their revenue and return goals, to keep their investors happy and to have enough cash flow to fund operations. 

This is an act which is injurious to the well-being and viability of any of these companies which invested huge sums to build infrastructure projects. And yet  these companies are not defenseless. 

According to the anti-graft and corrupt practices act, “neglecting or refusing,  after due demand or request, without sufficient justification, to act within a reasonable time on any matter” is an offense punishable by law.      

The DOTC and TRB must listen to well-meaning sectors which want these tollways to remain  effective road networks. President Aquino must clearly give the signal that his government consistently honors covenants – whether with domestic and foreign firms.

Expressways going north or south, west or east, have become a boon to people and have stimulated commerce in this country. The concessionaires deserve to be supported with  modest toll rate adjustments so they can sustain the returns required by their shareholders and investors.  

As we always say, honoring covenants is good policy. Enabling your infrastructure partner to survive and grow is the right thing to do. In a manner of speaking, you cannot kill the goose that lays the golden egg.

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 Benjamin “Behn” Holcombe Cervantes has passed away. Many friends and admirers,  and of course, his Upsilon Sigma Phi fraternity brothers,  trooped to the Church of the Risen Lord at the UP in Diliman, to pay homage to the great actor, stage and film director, activist, teacher and writer. He was 74.

 Behn wrote a column for BusinessDay, starting with its first issue 26 years ago, until poor health stopped him from writing early this year. He wrote about old Hollywood, family, friends, the theater, showbiz and martial law.  In person,  one  never knew what he was going to say, like “Stupid!”  or, when asked at an  interview why  he deserved  a grant at the University of Hawaii, he answered quickly, “Because I’m good!”  

He was born in Cabanatuan on August 26, 1938, the ninth of 11 children of Cenon Cervantes and Rosario Elizabeth Holcombe.

He first  shone under the university limelight  at the UP  stage. He worked with other theater groups, like the Arena Theater, the Barangay Theater Guild, the Manila Theater Guild, the Philippine Educational Theater Association, and Repertory Philippines. Then he moved on  to direct English language plays, then political Filipino plays, which were staged by Gintong Silahis, the theater arm of Samahang Demokratiko ng Kabataan, a radical group of which he was an active member. The group specialized in street theater and performed at rallies during the Marcos years.

He directed, and in some acted, in  well-applauded plays for the UP Repertory Company. His best known film was also his first – Sakada (1976) – which was banned a few days after it opened. He was arrested several times for his political activism.  In 1983, he and the famous late movie director Lino Brocka founded the Free the Artist Movement, which became  the Concerned Artists for the Philippines which he headed for three years.

Among his awards were the Lifetime Achievement Award from Aliw, the Cultural Center of the Philippines’ Centennial Award, and  a Lifetime Achievement Award from the  UP Alumni Association.

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