Biz Buzz: Treasury pays up. Kinda.
Finance Secretary Carlos Dominguez is committed to honoring the government’s contracts, obligations and liabilities—even if those are the result of wrong decisions made by the previous administration, he told members of the Philippine Chamber of Commerce and Industry (PCCI) last week.
He was, of course, talking about the reported P800-million liability that the government would have to pay to a Belgian firm after former President Aquino unilaterally nullified a contract firmed up by his predecessor for the dredging of Laguna Lake. And the Finance chief pointed out that the Duterte administration had no intention of walking away from other obligations that were the result of the government’s legal setbacks.
Apparently, this included the issue of the so-called PEACe bonds, whose investors felt aggrieved by the decision of the Aquino administration’s fiscal authorities to stop the return of some P4.9 billion in withholding taxes levied on bondholders.
No less than the Supreme Court has ruled in favor of local banks that bought the 10-year bonds in 2001, only to find out when they matured in 2011 that the Aquino administration wanted to collect more taxes on the securities than what investors had agreed to.
In any case, the Bureau of the Treasury—which is directly under the Department of Finance—recently wrote banks involved in the PEACe bonds deal that the government was very much willing to pay up for the “mess” caused by the previous dispensation, plus interest as required by law, of course. (The interest payment, as ordered by the Supreme Court, is a generous 6-percent annually counting from October 2011, until the liability is extinguished).
But the banks that were excited to receive a cash windfall from their legal victory saw their spirits dampened by what must have felt like a cold glass of water thrown in their faces. The Treasury said it would be willing to pay the nearly P5-billion liability, but not in cash. Instead, it offered the banks payment for the fiasco in the form of—hold on to your seats—more government bonds.
Yes, the government will pay its creditors with more IOUs. Understandably, bankers who were excited about the prospects of receiving cash were left scratching their heads. One banker wondered whether the Treasury was being disingenuous about the whole thing (and not wanting to “man up and pay up” for the policy mistake). Another lamented: “Your bonds are good, but we need cash.” —DAXIM L. LUCAS
Testing the waters
Some mining firms—particularly those whose nickel operations in Zambales (a.k.a. the Zambales alliance) were suspended by the Department of Environment and Natural Resources (DENR) —believe they have found a regulatory loophole that will allow them to resume operations.
Citing regulators’ own pronouncements during the recent Commission on Appointment and Mining Industry Coordinating Council hearings, there’s now a growing belief that the suspension orders are not final and executory after all. Not until these are formally upheld by the Office of the President, that is. President Duterte, for his part, has verbally backed the crusade of Environment Secretary-designate Gina Lopez but has yet to act on official petitions.
Different mining firms have taken different strategies to assail the DENR order, with some going straight to the Malacañang and others going to the normal process of appealing to the DENR before heading to the OP as a last resort.
But in the meantime, the miners’ coffers are drying up and the rainy season will soon come. Since it’s been clarified by legal counsels that there’s no legal impediment to resuming their operations, many of these mining firms have started rebuilding manpower to prepare to rekindle operations. That’s testing the water, as one miner explained.
One potential gray area, however, is defining what kind of operations they are allowed to resume. The risk is that while there’s technically no impediment to their resumption of operations, regulators may tighten on the granting of export permit.
In any case, whatever local or national regulators decide with finality, the last resort of these miners—who collectively feel they were not given due process —is to bring their respective cases to international arbitration. That could mean a whole lot of lawsuits. In the end, only the lawyers will be enriched. —DORIS DUMLAO-ABADILLA
Entrepreneur Enrique Gonzales has teamed up with Malaysian tycoon Wong Thean Soon on the business of enabling government and large enterprises to benefit from the internet, automation, big data and software distribution.
Gonzales-led I-Pay Ventures Commerce Ventures Inc. (I-Pay) signed a 60-40 percent joint-venture agreement with Soon’s MY E.G. Services Bhd (MYEG) to offer services online supported seamlessly by a payment gateway and other value-added services. Both parties envision the joint venture will replicate the business model of MYEG in Malaysia. MYEG is Malaysia’s fastest-growing company as the civil service embraces the digital way of providing services to the public. Online services include renewal of foreign workers permit and insurance as well as online renewal of vehicle road tax and insurance and online transfer of vehicle ownership.
The tie-up with the Immigration Department and Road Transport Department, for instance, has resulted in the company recording euphoric growth in its top and bottom lines. It is was one of Asia’s “Best Under A Billion” companies honored by Forbes magazine.
“We are super excited to work with I-Pay to offer a superior G2C user experience in the Philippines. Our unique model provides significant cost savings and increased efficiency to all stakeholders and combined with I-Pay’s established operating record, we are confident of achieving mass adoption in the coming years,” Wong said.
“Our partnership with MYEG gives us access to world-class technology that can upgrade internet infrastructure and government services in the Philippines. The ultimate goal of our partnership is to improve delivery of government services for the Filipino people. We have deep conviction behind our joint-venture with MYEG,” said Gonzales, president of IP Ventures Group.
I-Pay is a payment processing provider and a direct agent of Western Union in the Philippines. Apart from Gonzales’ IP Ventures group, this company is backed by Kaikaku Fund (Softbank-affiliated fund). —DORIS DUMLAO-ABADILLA