Three of the country’s big business groups are pressing their appeal to President Marcos to ensure “balanced” risk-sharing between the government and private sector by nullifying what they decry as an “antimarket” Build-Operate-Transfer (BOT) framework sanctioned by the Duterte administration.
In a joint letter dated Aug. 12, the Foundation for Economic Freedom (FEF), Makati Business Club (MBC) and Management Association of the Philippines (MAP) warned that the 2022 revised BOT Law implementing rules and regulations (IRR) could stymie the President’s avowed intention to make the Philippines an investment destination.
“With a national debt of P12.8 trillion as of end of April 2022, the participation of the private sector in infrastructure development is crucial. The private sector is willing to do this role in nation-building, with the potential of pump-priming the economy and employing millions,” the business groups said in the letter to Mr. Marcos, a copy of which was obtained by Inquirer.
“But leaving the 2022 BOT IRR as it is may lessen private sector interest in infrastructure, make bids less competitive, and ultimately make infrastructure more expensive for citizens,” they added.
At the tailend of the Duterte administration, the same groups had flagged the IRR as “antimarket and unfair” to the private sector, particularly the provisions that absolve the government from any project delays and increased costs as well as prevent private sector proponents from taking any prospective dispute to an impartial arbitration forum. These run contrary to generally accepted international business practices, the groups said.
‘Higher risks’
The wording of the material adverse government action (MAGA) clause in the 2022 IRR has also drawn flak from the private sector.
The IRR defines MAGA as “any act of the executive branch, which the project proponent had no knowledge of, or could not reasonably be expected to have had knowledge of, prior to the effectivity of the contract; and that occurs after the effectivity of the contract, that 1) specifically discriminates against the project proponent, and 2) has a material adverse effect on the ability of the project proponent to comply with any of its obligations under the contract.”
“This definition creates higher risks for business from a regulatory and political standpoint,” said the business groups in the joint letter signed by their respective heads, FEF president Calixto Chikiamco, MAP president Rogelio Singson and MBC chair Edgar Chua.
Despite the concerns that had been flagged by the private sector earlier this year, the Duterte administration pushed through with their IRR revision shortly before the presidential elections, citing the need to better manage the government’s contingent liabilities. INQ