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Tuesday, April 04, 2006
Espinoza: Bright prospects for the country
By Fred C. Espinoza
Rules. There seems to be a convergence of bright prospects ahead for the country. The latest forecast from the World Bank (WB) and the landmark rulings of the Supreme Court (SC) finally put to rest lingering fears of foreign investors on the perceived uncertain future of their investments in the country because of the government’s “bad habit of changing rules of the game in mid-stream.”
In its findings, the multilateral lending institution has described the country’s economic performance in 2005 as resilient and said it expects to further improve in 2006 and 2007 despite the lingering political noise. The WB report also revealed that the Philippine economy “recorded another relatively strong performance in 2005. Public sector deficits and debt were reduced in real terms and the value-added tax reform law, passed in May 2005, was fully implemented by February 2006 following a number of challenges and delays,” the WB said in the country section in its latest Asia Update published in the Manila dailies.
On the side of the SC, reports in yesterday’s issues of Manila dailies said it has “reaffirmed the constitutionality of Republic Act (RA) 7042, when it declared valid the government’s financial and technical assistance agreement with an Australian firm to operate mines in Nueva Viscaya and Quirino.”
RA 7042 or the Mining Act allowed foreign investors to tap into the Philippines estimated $1 trillion in mineral wealth and the high court affirmed it in a resolution en banc or in full court and with full judiciary authority, the report said.
It upheld the decision of its First Division dismissing a petition questioning the constitutionality of Section 76 of the Mining Law and its implementing rules and regulations.
It also ruled as legal Department of Environment and Natural Resources Administrative Order 96-40 and the agreement signed by the Philippine government with Arimco Mining Corp., an Australian firm that was later renamed Climax-Arimco Mining Corp.
The impact of the landmark ruling of the high court is also being felt in the crucial search for oil and gas in the country.
Basic Consolidated Inc. will continue to explore for oil and gas in the Philippines and look at business-related and non-allied industries despite the sale of its oil and gas subsidiary to Forum Energy Plc. of United Kingdom (UK), the report said.
Roberto Alonzo, president and chief executive officer of Basic Petroleum and Mineral Inc., told Standard Today that with the company now debt-free, it can use the proceeds from the sale of Basic Petroleum and Mineral Inc. to Forum Energy under the agreement. Basic Consolidated will sell its 500 million shares in Basic Petroleum to the UK-based firm.
The sale will be paid in cash and Forum Energy shares. Basic Petroleum holds interests in several offshore oil fields in southern Philippines.
It owns a minority stake in Service Contract 14, an offshore area near Palawan, which covers the major oil discovery fields of El Nido, Masinloc, Galoc and West Linapacan.
Meanwhile, Trade and Industry Secretary Peter Favila cited the “need to go slow on the grant of fiscal incentives to strike a balance between attracting more investments and consolidating the government’ s fiscal position,” the report said.
Favila had stressed this point after the recently concluded two-day 2006 Philippine Development Forum (PDF) in Tagaytay City. He said rationalizing the country’s incentives laws would plug the revenue leakages that reach close to P300 billion a year.
The trade secretary explained that while the emerging consensus is that we do need to have a single bible and accept the Philippine government’s fiscal health today.
Nevertheless, he maintained that “government cannot just aggressively give in to these fiscal incentives.”
He observed that the 64 existing incentive laws in the Philippines has led to uncoordinated efforts among various investment promotion agencies.
For Bisaya stories from Cebu. Click here. (April 4, 2006 issue)
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