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FOREIGN business group said Wednesday the controversy on
the national broadband deal only confirms investors’
long-held sentiment on the worsening corruption cases in
the
Philippines,
and noted that, as a result, foreign business interests
are shifting to other Southeast Asian countries like
Malaysia and
Thailand.
Michael
Clancy, chairman of the Philippine Business Leaders’
Forum, said the Philippines is no longer attracting
foreign direct investments due to a wide range of
corruption and Manila’s overdependence on “bad” loans
from
China.
Clancy
assessed the competitiveness of members of the
Association of the Southeast Asian Nations (Asean) in
the integration of the East Asian Region. He was one of
the presenters at the International Conference on the
Implications of the Asean Charter for East Asian
Integration at Sofitel Philippine Plaza.
“Generally, it’s [ZTE controversy] another story in the
wind. Even without ZTE, nothing would change much, it’s
a problem of governance. It’s been a problem here for
long, and it’s not getting any better. What [that case]
has done.... it has confirmed what’s in other people’s
minds that [corruption] is getting worse and there has
been no improvement in governance,” said Clancy in an
interview at the sidelines of the International
Conference on the effects of Asean
integration in the East Asian Region hosted by the Asian
Institute of Management held Wednesday at the Sofitel
hotel in Manila.
In an
internal survey of the members of the PBLF composed of
40 companies from Europe, United States and Australia,
there was a shared belief that at least 50 percent of
the project costs in doing business goes to
“commissions” and only 10 per cent of the total
investment is being used for facilitation, and the
remainder for implementation.
Among
the 40 companies surveyed, nobody aired plans to pour in
additional investments.
“Those
who invested here already, they’re committed to staying
and not pulling out. But in terms of asset management
mode, they’re not looking to expand because it’s too
hard... everywhere you turn [in the government system]
somebody got his hand [on] money, everybody wants
something under the table,” Clancy lamented.
He said
foreign companies that have invested in China are
seeking back-up investments in the region “but they are
not looking at the Philippines as they would prefer
Malaysia, Thailand and Australia.”
Clancy,
meanwhile, criticized
Manila’s
overdependence on concessional loans from
China,
saying the government puts itself at risk of being
hostage to Chinese technology that could be substandard.
He
explained that under concessional loans, the government
is usually tied to a specific supplier coming from the
donor country. “By its very nature, if you have a
build-operate project, whoever builds the technology has
to operate it; but if it’s done under a loan, you pay
the money and somebody will build it, then five years
later, it [structure] falls into pieces and no one takes
the blame.”
Clancy
also pointed to data in 2005-2007, showing foreign
direct investments (FDI) in the East Asian Region were
captured by China, with $253.3 billion and India, with
$44.4 billion, and only $151.9 billion left to the Asean
economies.
“But
half of the net FDI flowing into Asean goes to Singapore
and the Philippines’ share is only at 1 percent to 2
percent,” said Clancy.
He
stressed that the Asean economic zone targeted by 2015
would only reduce tariffs but “trade within Asean is
still dropping in spite of the zero tariff because of
the problems [from] the nontariff barriers.”
Meanwhile, he stressed that
Manila’s
overdependence on China also sends wrong signal to
Western investors.
“We were
involved in European investment delegation here two
years ago to look at investment prospects, but
government officials [whom we’ve met] told us, ‘we don’t
need your money anymore, we have China now, we can get
all money we need from
China,’”
said Clancy. |
