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When winning is losing

/ 04:02 AM December 13, 2019

What should have been a cause for celebration when water concessionaires Manila Water Co. Inc. and Maynilad Water Services Inc. won indemnity from the arbitral tribunals in Singapore—after a few years of legal battle—became a curse after President Duterte lashed out against the two water concessionaires. He threatened to slap criminal charges against the companies and its officials and called for new deals in lieu of their existing “onerous and disadvantageous” contracts, prompting the two concessionaires to waive the arbitral award (amounting to P7.4 billion and P3.4 billion, respectively, for Manila Water and Maynilad). Such a loss would have been better than losing the concession.

But they are losing the concession after all as their regulator, the Metropolitan Waterworks and Sewerage System, announced that it would no longer renew the franchise after 2022.

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To recall, the concessions were privatized during the time of President Fidel Ramos and extended to 2037 in 2009 during the term of President Gloria Macapagal-Arroyo.

Some believe that what Mr. Duterte is doing is right. “Why did Arroyo extend it when the deadline is still far off? Look at what happened. There’s failure to invest in sewerage. If [investment is] risk-free, the tendency is to slack off,” an analyst at a local fund management firm said.

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This populist move would have taken off, however, if we didn’t see massive water supply disruption earlier this year. The government is partly to blame for the water crisis, by the way, because it did not initiate the building of new water sources for the fast-growing metropolis and failed to act on private sector proposals that came its way. Mother Nature is also to blame for bringing drought to the unprepared.

While the surprise move of taking away the water concessions is seen favoring consumers in the short term, such assault on court-upheld contracts with the private sector may have an impact on foreign investor sentiment. We have already seen this in how the stock market has bludgeoned Maynilad investors Metro Pacific Investments Corp. (MPIC) and DMCI as well as Manila Water (and parent conglomerate Ayala Corp., to a less extent) to date.

While it’s seen as a political victory for the government for now, in the long run it will cast doubts on the sanctity of contracts in the Philippines.

Whether or not the contract is onerous is not for one party to decide and if the private sector cannot rely on arbitration proceedings, then more businessmen will avoid doing business with the government, except maybe for those with direct line to powerful politicians.

If this ultimately results in another water crisis in the years ahead because of delays in the capital spending, the consumers will be on the losing end.

So who won in this case? Maybe only the lawyers are getting a windfall. We heard that MPIC and DMCI spent around P300 million to bring the case to arbitration, having absorbed the government’s share in the cost of the proceedings. Ayala-led Manila Water may have spent around the same amount. —Doris Dumlao-Abadilla

Changing of the guard

Toyota Motor Philippines (TMP)—the country’s biggest seller of automobiles—will soon have a new president after its current chief announced that he would be ending his four-year term at the helm by year’s end.

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According to the firm, Satoru Suzuki’s term lasted from January 2016 to December 2019 and was marked by a strong resurgence of local parts manufacturing, grassroots motorsports and environmental initiatives as well as the introduction of key global models to the Philippine market.

The formal press announcement of his departure was attended by TMP chair Alfred Ty, who led the farewell toast that was joined by more than 120 guests from the media.

“His hands-on leadership approach propelled Toyota to rebound from last year’s tough market conditions and we are fortunate to have a president who truly led by example,” Ty said before raising his glass to Suzuki.

The Japanese executive oversaw the CARS program participation of TMP with the Philippine government, through the All-New Vios model. In 2019 alone, Toyota enjoyed three major launches under his leadership: the Hiace World Premiere, Toyota GR Supra and All-New Corolla Altis with the Hybrid Electric Vehicle variant.

Upcoming projects initiated by Suzuki include the P4.5-billion Luzon hub, which will revolutionize Toyota’s logistic operations; the Toyota mobile app to better connect customers with dealers, and expansion to a new business model to explore long-term leasing of vehicles.

“This is not a final goodbye, but a new beginning,” Suzuki said. “I am sure I will see you all again very soon.”

Congratulations are in order. Meanwhile, the next president of TMP will be publicly announced early next year, the company said. —Daxim L. Lucas

A surprise, from Malacañang to NPC

Deputy Privacy Commissioner Ivy Patdu was delivering a speech in Cebu province last week, not knowing that around that same time, President Duterte had just appointed her replacement.

Patdu was one of the first deputy commissioners of the National Privacy Commission (NPC). And she still had her post when she spoke at the 52nd Asia Pacific Privacy Authorities Forum in Cebu City.

It was only after her speech that she found out her replacement had already done his oathtaking in Malacañang. While change feels slow for critics of the Duterte administration, the change she felt was quick, not to mention unexpected.

Patdu, who is both a lawyer and a doctor, has been on a holdover status for more or less nine months, which means that she was just waiting for news of whether she would be asked to stay, or in this case, go.

Replacing her is John Henry Naga, an undersecretary at the Department of Information and Communications Technology.

His Facebook profile shows a picture of Duterte holding a piece of paper with Naga’s name on it. “Congratulations,” the paper read.

It was posted in September, along with a simple but loaded caption—an emoticon of a closed fist, a symbol that has been widely associated with the politics of the Duterte administration.

Patdu joined the NPC at a time when the road for the country’s privacy rules and practice was largely uncharted. But a lot has changed since then as more and more Filipinos become aware of their data privacy rights at the age of social media. We don’t know if Naga was being congratulated, way back in September, for the NPC post. But one thing is sure.

The road may have already been paved for him, but he has bigger shoes to fill. –Roy Stephen C. Canivel

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TAGS: manila water co. inc., Maynilad Water Services Inc., National Privacy Commission, Toyota motor Philippines
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