MANILA, JUNE 24, 2011 (STAR) By Aurea Calica - Amid concerns raised by the European Chamber of Commerce (ECC), President Aquino maintained yesterday that faulty projects could not be allowed even if they were foreign-funded so as not to waste government resources.

Hubert d’Aboville, president of the ECC of the Philippines, said investors could not help but be reminded of past incidents of contracts being rescinded by the government, especially when a new administration took office.

Earlier, the President said he was canceling or reconsidering foreign-funded infrastructure projects worth $2 billion, saying that although the country badly needed the improvements, the contracts were overpriced and technically deficient.

Aquino canceled the P18.7-billion ($430-million) Belgian project to dredge Laguna Lake; ordered a review and renegotiation of the P12-billion ($276-million) French project to build 72 steel roll on-roll off ports around the archipelago as it was overpriced by about 200 percent and the country could do with just 36 ports; and sought a renegotiation of a rail project linking Manila to the Clark airport complex in the north, financed by a loan from China, principally because of the cost, which had ballooned to more than $1.3 billion.

The President said he had yet to see the ECC president’s comments and would ask Foreign Affairs Secretary Albert del Rosario to get in touch with them and assure them “that the projects that are reasonable, that are sound, have economic benefits and of value to our people, we will continue.”

“But in the case of that Laguna Lake project, I think it is unarguable that their proposal to remove 12 million cubic meters and then dumping it also within the same lake does not redound to an improvement in the water quality nor the water holding capacity. And to be able to undertake that which at best, if they had removed it, would have given us a three-year respite, would have cost the Filipino people P18.7 billion,” Aquino said.

“I think if these facts are known to all the members there and even to their home countries, then they themselves would have asked for a review of the project,” he added.

Aquino assured businessmen his government could guarantee consistency in policy on projects that would stand whatever scrutiny after approval.

“We think and we believe that the projects that we will be approving will stand whatever scrutiny. Now if a project is called into question, so long as it’s valid, it should be able to withstand scrutiny and therefore will continue. If, however, it is based on very faulty and false premises, then obviously the tiniest scrutiny will not allow it to pass,” Aquino said.

D’Aboville noted that in investment missions that he participated in, businessmen often mentioned that they were concerned with the policy changes that new administrations undertake, which affected existing businesses.

D’Aboville said the perceived instability of business contracts in the Philippines remained a major issue that was holding back foreign investments, although the Aquino administration had been trying to assure investors that this was now a thing of the past.

“For somebody who wants to invest for the long term, we cannot just look at five years. We need to sell a bigger picture than the five years of the administration. We have to be at ease with the government that after five years, the project will be completed,” D’Aboville said.

The President said the three projects that he refused to honor were signed during the time of his predecessor, now Pampanga Rep. Gloria Macapagal-Arroyo and that he had been reviewing infrastructure contracts signed under her.

The Arroyo administration has been accused of large-scale corruption.

In his Associated Press interview on Friday, the President did not accuse anyone involved in the three projects of corruption but said that dredging in particular “is one of the most notorious practices for those who do corrupt practices… so I have a tendency to be allergic to such projects.”

Aquino said it would be better to spend that money for his administration’s P21-billion ($483-million) conditional cash transfer program to give financial assistance to the poorest 2.3 million Filipino families.

The year-old Aquino administration is fighting graft while wooing foreign investors to partner with the government to boost the economy and fulfill his promise of easing poverty.

“We thank the foreign governments that have been assisting us,” the President said. “We think it is incumbent upon us to be responsible with their kindness in ensuring that these projects are worthwhile.”

Aquino said he wanted to ensure that such projects would also allow the country to repay its loans to foreign creditors in the long run.

The President said the roll on-roll off project called for building ports in unprotected coves, mostly facing the Pacific Ocean on the country’s east, where most typhoons originate, thereby voiding the warranty stipulated in the contract.

The President said the existing Northrail plan was to have the line carry only passengers, not cargo, and for it to use narrow-gauge rail, which would cost more because such systems were no longer standard and would have to be custom made.

Aquino, who won last year’s election by a landslide on a strong anti-poverty and anti-corruption platform, did not directly accuse anyone or the companies involved in the projects of wrongdoing.

However, contracts that were overpriced were upon investigation often found to be tainted with corruption.

After a Senate investigation, then President Arroyo was forced to cancel one such contract for the proposed Chinese-financed national broadband network project.  


Policy flip-flops worry foreign investors

Chief News Editor: Sol Jose Vanzi

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