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Gov’t urged to honor contracts

Public sector warned against ‘changing rules midstream’

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The European Chamber of Commerce of the Philippines has urged the government to honor the sanctity of contracts and refrain from taking any action that may result in a “huge trust deficit.”

“The government has to understand that ‘trust’ is an asset it has to have. It’s precisely because of changing the rules midstream that investors are more and more reluctant to invest long-term,” explained Henry Schumacher, vice president for external affairs at the ECCP. “Who guarantees that the rules agreed with this administration will be honored by successive governments? Remember, PPPs (public-private projects) in infrastructure will last 25 years.”

The ECCP official cited as an example the case of water concessionaires Manila Water Co. Inc. and Maynilad Water Services Inc.

“The bashing that Manila Water and Maynilad Water went through recently in connection with their concession agreement with MWSS illustrates the difficulty in doing business with government. These billings have been in place for more than 15 years, were agreed to by MWSS in the concession agreement it signed with them in 1997, and which is effective up to 2022,” Schumacher said in a statement Wednesday. “After all these years, the MWSS suddenly found something wrong with the water charges. This controversy, another midstream change, will certainly end up in the Supreme Court.”

Schumacher also cited as an example the case of local energy developer San Roque Power Corp. The company has been fighting to get from the government what it was granted a decade ago: duty- and tax-free importation of capital goods.

According to Schumacher, San Roque Power represents many investors who may be short-changed by the government if the Supreme Court does not change its verdict to “progressive” from “retroactive.”

In February this year, the Supreme Court overturned the decision of the Court of Appeals, which allowed San Roque to receive a tax refund worth P483.8 million. In its decision, the high tribunal only noted that San Roque Power was ineligible to claim the refunds “based on technicalities.”

“Are there other examples? Yes,” Schumacher said, citing the review of the Mining Law and the attempt to change the Mining Fiscal Regime.

“Will new miners come? Unlikely. Will existing miners go? More likely,” he said. “The RP Energy case in Subic is another example. Infrastructure projects of national significance—as Luzon badly needs additional base-load plants—should be given priority and importance. They should be insulated from unfounded issues that only result in costly delays in the implementation of such projects.”

As it is, investors already expect to “navigate the country’s bad infrastructure, the rigid labor market, red tape and remaining pockets of corruption.”

Schumacher added that investors “are certainly not keen on tripping over the fine print of laws and implementing rules and regulations, and local power brokers with agendas at odds with Manila.”


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Tags: Business , contracts , European Chamber of Commerce of the Philippines , Government , Philippines , trust deficit

  • Hari Hana

    Yung kontrata ng Maynilad, Manila water at MWSS ay “legitimate contracts” walang hidden agendas at isa sa successful na PPP. Sana wag pakinggan ni PNoy yang mga Tao na kumukundina sa nagbigay ng ginhawa sa atin, na ngayon tuloy-tuloy ang serbisyo ng tubig sa atin. If PNoy did not honor that contract, magiging shakey na ang ekonomiya natin. At wala ng mag-iinvest dito sa atin sa Pilipinas dahil sa pabago bago ng desisyon in the middle of the game.

  • Kanon

    bat kasi mwc ang hinaharass, dapat kung sino man sa gobyerno na nag approve ng kontrata ang kwestyonin

  • opinyonlangpo

    Its their country and they have the option to make right whatever they perceive is wrong, especially when those contracts were given or approved by corrupt people. With hefty commissions/bribes of course.

  • katabay1106

    Honoring contracts like the horrendous Power Contracts that give these greedy contractors to be paid even if they did not generate one kilowatt of electricity. It resulted in the Philippines having the highest electricity rates in the world surpassing even Japan. Those contracts should be voided since they are onerous and oppressive.

  • http://www.yahoo.com JOSE RIZAL

    These concessionaires are just plainly “politicizing” their way up to any of their organizational clout. If the contract is onerous, then the rule of law must prevail and not by what those “helluva” Chamber of Commerce are saying. You engage business in the Philippines, then, by all means, you must have to abide by the law that protects it citizenry.
    The law of eminent domain must prevail. The welfare of the citizenry when it comes to the provision of basic services must be supreme over any business profiteering ventures. How could you imagine a government collecting tax over its citizenry, yet, they allow these profiteering concessionaires to levy another burden on them by directly dictating the rates on their monthly billings.
    Quite shameless, eh?

  • eight_log

    Learn from the leaders from Jakarta … they JUNKED MANILA WATERS’ BID TO DISTRIBUTE WATER THERE … instead they started their own company to do it!!!!

  • edsa1986

    Link is not accepted here so please search this in youtube and watch specially those advocates of privatization.

    Remunicipalisation: Putting Water Back into Public Hands

    “Learn all you can from the mistakes of others. You won’t have time to make them all yourself.” ~Alfred Sheinwold



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