By LEE C. CHIPONGIAN
Finance Secretary Carlos G. Dominguez III continues to assure the business community that while it seemed that government is on a witch hunt for erring past deals, the process is transparent and “follow the law to the letter.”
In a forum on Thursday, Dominguez defended the Duterte administration which at the onset, has vowed to change the way government did things in past administrations.
“You think this administration should sit down and say, well it was the way it was done in the past, then go ahead? You forget the basis on why this administration was elected. We said we wanted to change. And our change is for the better of the ordinary taxpayer,” Dominguez said, addressing members of the Foreign Correspondents Association of the Philippines (FOCAP) on why the government is reviewing existing contracts or concession agreements.
Dominguez is not worried that these reviews – and these are market-moving – will create confusion or investor jitters. “Our bond market is oversubscribed and our interest rate keeps on dropping. That is also an investment community, is it not?”
He added: “People doing investments in our future and they invest – the Europeans bought two sets of bonds, 3 years and 9 years. What better confidence can you ascribe than that?”
Dominguez also pointed out that, in his view, the review of contracts is not overly distressing investors, citing as example the successful float of Premyo Bonds and the Euro bonds which “indicate the deepening investor confidence in the Philippine economy on the Duterte watch.”
The government is pursuing review of contracts to “protect taxpayers and ordinary Filipinos from onerous provisions of these transactions that subvert the common good.”
“The review of government contracts, we hope, will deliver a clear message that while the government is interested in inviting businesses to our economy, we are also telling the investment community that the interests of the whole nation should be a primary consideration,” Dominguez said.
In a Department of Finance statement, it quoted Dominguez as saying that “the government’s contracts with the water concessionaires, for instance… one apparent lopsided provision that favored the contractors is the one that, in effect, surrendered the state’s regulatory powers in empowering these companies to seek arbitration abroad to challenge or oppose policies enforced by the government.”
This is not normal practice, Dominguez stressed. Again, he cited as examples energy companies overseen by the Energy Regulatory Commission and financial institutions supervised by the Bangko Sentral ng Pilipinas. “If you are in a regulated industry, for instance, banking…. you are regulated by the Central Bank…. If the Central Bank issues a regulation that you don’t agree with, can you go to Singapore for arbitration? Of course not! You have to follow the regulation here,” he said.
“If you are invested in a power public company and you are regulated by the ERC…. (and the ERC) issues a regulation that you don’t agree with, can (the company) go to Singapore and ask somebody there to decide for you? No! You follow the regulation here,” Dominguez added. “(So) why is it (then that) in the water concessions, (they) can go to Singapore and ask to challenge a regulation here in the Philippines? Now isn’t that onerous?”
Dominguez said the government is not “turning a blind eye to what it sees as onerous provisions in the state’s contracts with private businesses that are detrimental to the public interest.”
He has said that the government “has been reviewing its contracts with private companies as part of President Duterte’s commitment to protect taxpayers and ordinary Filipinos from onerous provisions of these transactions that subvert the common good.”
Those contracts under review include concession agreements of Manila Water Co. and the Maynilad Water Services, Inc., and the lease contract of National Development Co. subsidiary, Batangas Land Corp., Inc. with Chevron Philippines, formerly Caltex Philippines.