National security and privatization

Protecting a country’s national security and promoting an open investment policy are two goals that may come into conflict with each other.

This conflict was illustrated by attempts of sovereign corporations to acquire American corporations—the China National Offshore Oil Corp. Ltd. (CNOOC) tried to purchase Unocal, a US oil company, while Dubai Ports World (DPW), a state-owned company based in the United Arab Emirates, attempted the same with terminals in six American ports.

Ensuing massive public objection and a congressional act foiled these two foreign bids. The incident led to the enactment of the Financial Investment and National Security Act, which empowered the existing review board, the Committee on Foreign Investments in the United States, to examine and investigate foreign investments in the United States that may have adverse impact on national security.  

Several countries such as Canada, Japan, France, Germany and the United Kingdom have a foreign investment review board that sets the security implications of disposable state assets.

The primary objection is not so much on the loss of strategic assets to foreigners, but on the foreign corporations being controlled and owned by their respective governments.

The Philippines is currently fast-tracking its privatization efforts, selling its equity in Philippine Long Distance Telephone Co. (PLDT) and other prime assets, such as shares in Meralco and San Miguel Corp. These assets pose little security threat, if any, as they are commercial in nature.

The World Bank has agreed to give its universal consent for the transfer of the debts and assets of the National Power Corp. (Napocor) and National Transmission Corp. (Transco) to the Power Sector Assets and Liabilities Management Corp. This consent makes Transco and Napocor attractive, thus inching them forward toward privatization. Transco is a clear example of a vital installation and a state monopoly attracting foreign bidders controlled by their governments. 

What should our policy be?

Here, the National Economic and Development Authority (Neda) classifies whether or not an industry is strategic, but its privatization requires only the President’s approval. 

Though the benefits of privatization are highly recognized, extra caution should be exercised with regard to the sale of state assets classified as a strategic industry, considering its serious implications on national security. The decision involves a balance between two major national interests: that of keeping markets open for badly needed foreign investments, and safeguarding national security.

A collegial and expert body will be more effective for this purpose. Perhaps an interagency review committee to be headed by Neda, with the DOF, DFA, DND, DOE and DTI as members, should carry out a more heightened scrutiny and evaluation of national-security implications of any proposed sale of strategic assets prior to its approval.               

Email: edgardo_angara@hotmail.com   Website: www.edangara.com

MIGRATION to the city, or even to other countries for work, says the latest report from the World Bank, is no way out for the rural poor. Not all the time, anyway, and still the best way to solve rural poverty is directly addressing rural folks’ problems right where they are.

A new book about world economic development is causing a controversy among those interested in the subject. It has not yet been discussed in the local press, but if you want some insights into the Philippines, you might want to get it. The book is A Farewell to Alms: A Brief Economic History of the World by Gregory Clark.

“The geopolitics of sexual frustration.” That’s how Martin Walker, a senior fellow at the New School University of New York, refers to an underappreciated risk to Asia’s economic outlook.

Market Files: Makisig in, Solar out

With its unique programs, Makisig Network is certain to attract a lot of viewers next year, especially after getting the slot of Solar Sports in Skycable. This development is expected to launch a new “war” among content providers as far as offerings are concerned.

There are stories that simply won’t go away. Like the Glorietta 2 blast that killed 11 shoppers and passersby, the ZTE bribery case and, among other controversies, the “Hello, Garci” tape.

Protecting a country’s national security and promoting an open investment policy are two goals that may come into conflict with each other.

To allow taxpayers with unpaid tax liabilities to start with a clean slate and provide the government with an opportunity to realize uncollected tax revenues, Congress passed the tax-amnesty law (Republic Act 9480) that took effect on June 16,  2007.