Investment Ombudsman Team

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By Neil Honeyman

An Independent View

Monday, August 11, 2014


THE recent formation of an Investment Ombudsman Team (IOT) is very welcome. One of the many problems with Philippine economy is the low level of foreign direct investments (FDI’s) compared with other Association of South East Asian (Asean) countries.

Asean FDIs in 2013 were: Singapore, US$60.6 billion; Indonesia, US$18.4 billion; Thailand, US$13 billion; Malaysia, US$12.3; Vietnam, US$8.9; and Philippines, US$3.9 billion.

There are many reasons why the Philippines is unable to attract the FDI levels of other Asean countries. A Constitution which only allows foreign ownership of up to 40 per cent of public utilities and for foreigners to not be allowed to own land are cited as factors.

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The creation of the IOT team suggests the recognition of corruption and red tape as also being factors which reduce foreign investments.

The American Chamber of Commerce of the Philippines (Amcham) has also welcomed the formation of IOT. Amcham stated that the IOT is a manifestation of the sincerity of the Aquino administration to pin down corruption in the conduct of business, encourage foreign investments, and improve global competitiveness.

The IOT will work in partnership with the Department of Trade and Industry (DTI), the Board of Investment (BoI), and the business community. It will address “complaints containing verifiable leads or information involving allegations of solicitation, demand, or request by a government official in exchange for the issuance of licenses, permits, and certificates, the release of shipments and cargoes, as well as the arbitrary assessment of fees.”

“Verifiable” is a problem. The whole point of corruption is that, being illegal; it is introduced with subtlety, obliqueness, and deniability. The corrupt do not kindly provide a verifiable paper trail on which will prove their guilt. Writing unambiguous memoranda which demonstrate their corruptness is not something that the IOT will see.

In the infamous ZTE case of the GMA administration, it was alleged that Benjamin Abalos offered then National Economic Development Authority (Neda) Secretary Romulo Neri P200 million for favorable support of the US $329-million project. The inspiring locale for this alleged corruption attempt was Abalos’ golf cart and the words Abalos used could be decoded differently. Such is the slowness of the justice system that the case, dealing with events in 2006 and 2007, has not yet been resolved. We shall never know the truth. The IOT will confront insuperable difficulties.

If the IOT has sufficient resources, it may be advantageous to examine old, though not necessarily cold cases.

In 2007, the inauguration of San Carlos Bioenergy Inc. (SCBI) took place. As a pioneering renewable energy project, it attracted much support.

Those present at the inauguration included President Gloria Arroyo and other dignitaries including the then British Ambassador Peter Beckingham, since there was significant British expertise and investment in the project. But the Brits seem to have disappeared. Why? Incoming British Ambassador Asif Ahmad hinted darkly in October 2013 about difficulties in doing business in the Philippines. It may help the IOT if they made inquiries from relevant embassies.

We support IOT’s formation. IOT members should be warned that, if they are to make a difference, they will need to work extremely hard and tenaciously.

The corrupt are not easily exposed.

Published in the Sun.Star Bacolod newspaper on August 11, 2014.

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