Admin, European business group not on same page

Before the Aquino administration could consolidate its control of Congress following the midterm elections, the European Chamber of Commerce of the Philippines (ECCP) pressed the government to redouble its efforts in ensuring energy security if it wanted to attract more investors.

In a statement issued on May 13, Election Day, ECCP vice president for external affairs Henry Schumacher said improving the supply, stability and quality of energy should be made an administration priority in the second half of President Aquino’s term. The statement came on the heels of announcements of the administration’s economic managers to the effect that the recent upgrades of the country by credit-rating firms would trigger a massive flow of investments into the economy.

“The government has to speed up its infrastructure buildup and ensure consistency in business policies to address perennial worries of the business community, which are the dismal lack of infrastructure like roads and power facilities along with conflicting policies at the national and local levels that are anathema to sustainable high growth,” Schumacher said. He said that while the recent credit-rating upgrades were a positive development, greater effort has to be exerted on the energy front to help create a domestic environment that is “truly conducive to job-friendly investments.” This will help prevent a repeat of the power crisis that plagued the country in the 1990s, he added.

In particular, Schumacher pointed out that the energy department must give priority to a power project at the Subic Bay Freeport to ensure stable power supply not only in the specific economic zone but in the rest of Luzon as well. Doing so will help assure prospective locators that their businesses will not suffer crippling outages that undermine productivity and competitiveness, he said.

Schumacher deplored the fact that the Subic project had encountered obstacles stemming from “the misguided opposition by certain groups that have raised false environmental issues despite the fact that this coal-fired facility will be using state-of-the-art technology to generate power that is clean, stable and affordable.” He said the government had to consider the importance of addressing the issue of a possible tight power supply in the short and medium term rather than “pandering to noisy groups disguised as environmentalists.”

He emphasized that the credit-rating upgrades notwithstanding, investors would continue to hesitate in setting up businesses in the country unless they could be assured of adequate and steady power supply. Despite the upgrades, Schumacher said, “investors will not start going in droves to the Subic Freeport and other investment havens in the country until they can be assured by the government of adequate and steady power supply to run their businesses.”

He added: “Malacañang must take crucial steps to make the county a haven for investments. This can be done through a stable policy environment and more-than-enough infrastructure to cater to investors.”

But while the ECCP has specific investment bottlenecks in mind, the administration is thinking of something else up in the air that is remotely related to assets on the ground.

In response to the ECCP statement, administration officials airily fell back on the nostrum of constitutional change. They spoke about plans to push in the next Congress changes in foreign equity restrictions to attract more capital in order to create more jobs and reduce poverty. But they were not clear on how to push these changes.

Quezon City Rep. Feliciano Belmonte Jr., who is expected to be reelected  Speaker of the House of Representatives in its reorganization next month, said he favored amending the economic provisions of the 1987 Constitution. Among the economic provisions that supporters of the so-called “Cha-cha” (Charter change) group seek to amend are those that restrict foreign ownership of public utilities to 40-percent participation and those that ban foreigners from owning land.

On the other hand, Budget Secretary Florencio Abad seeks to focus the changes in foreign equity restrictions on the so-called “negative list” of investment areas, in which foreign capital is banned under the Foreign Investments Act. According to Abad, many of the restrictions are just executive or legislative issuances that can be amended in the normal legislative process.  As the administration embarks on formulating its legislative agenda for the second half of its term in office with its new majority in Congress, it is already caught in the snare of how to proceed to attract foreign investments into the country.

The President has made clear his opposition to constitutional change as a precondition to pushing his political or social reforms, knowing fully well that Cha-cha is a tedious and time-consuming process. Three administrations—those of Fidel Ramos, Joseph Estrada and Gloria Macapagal-Arroyo—tried to amend the Constitution to push their own reform initiatives, and failed. There is no reason to believe that President Aquino can do better despite the consolidation of his allies’ majority in the next Congress. He is falling into the trap of sterile and prospectively endless debates that can only paralyze the production of results.

He may end up in 2016 as a do-nothing President. The poor and the economic revival cannot wait for this impasse to be broken. We may be entering a new era of a squandered electoral mandate.