How to lose investors already here

A few weeks ago, government apologists were gleefully jumping up and down, like chimpanzees high on Prozac, at the news that foreign direct investment (FDI) has gone up for the first half of this year from $190 million to the level of $495 million. Overeager to show the imagined return of investor confidence for Ate Glue, the palace propaganda focused on the percentage increase. But the significant number is the $495 million, which is not really that large compared to typical FDI figures in the region.

There is no denying that we have disappeared from the radar screens of investors. For a number of reasons we already know, from corruption to red tape to peace and order to a rotten judicial system and so forth... investors do not instinctively think of us as a place to risk good money in ventures that create value and jobs. If you noticed, $495 million is not even enough to put up a decent oil refinery from scratch, an investment we need to get a better grip on our energy needs.

That’s just half of our sad story. Failure to attract investors to come here is one thing. Losing investors who are already here is quite another, specially if the investors are in a vibrant industry that’s giving some life to the local economy. I will concede we are not about to lose the investors in Globe Telecom just yet, local and foreign, but don’t be surprised if the Singaporeans are now wondering if their investment is safe.

Year to date, I am told that Globe has lost some 23 cell phone transmission facilities nationwide. At the average cost of about P5 million per, that’s over a hundred million pesos lost in facilities alone, without factoring the cost of lost business for Globe and for their subscribers. Even OFW families depending on Globe for remittances are affected.

Globe’s problem is the refusal of its management to pay revolutionary taxes in the naïve belief that the taxes they pay the government entitles them to police protection. Well, they aren’t getting much of that protection, if the continued destruction of their facilities in the countryside is an indication.

The irony is, the Cabinet member in charge of telecom was formerly the chief of the Philippine National Police. If he has not heard of this serious security problem of a major company under his area of responsibility, he has no right to be DOTC Secretary. But if he knows about it, how come Globe’s top officials feel so helpless in the hands of the communist rebel bands?

Ate Glue should give Globe a special tax rebate to cover their losses from all the destruction caused by communist rebel attacks on their facilities. It is only fair for Globe to get this tax rebate in the light of the failure of both the Philippine National Police and the Armed Forces of the Philippines to protect them.

Better still, Globe should be allowed to pay their revolutionary taxes and such payment be considered deductible as normal business expense. Think of the NPA as an ordinary security guard agency and the telecom company merely signed a normal contract to secure their cell sites with Ka Roger. Yun nga lang, no input VAT credits for Globe unless the NPA registers its protection business for VAT.

It is only fair to consider the revolutionary taxes paid to the NPA as nothing more than security expenses to protect capital assets that are very essential in running the business. Without it, their towers go up in smoke and this disrupts their business. It should also give government an incentive to compete with the NPA in providing the security it is supposed to provide to tax paying businesses, in the first place. The NPA, at least, delivers.

Take over

There is also another way of losing investors that comes to mind these days... letting Cabinet members talk loosely of cockamamie plans to take over businesses already here. I was listening to Justice Secretary Raul Gonzales being interviewed by Pia Hontiveros on ANC last Tuesday evening and if I were an investor, I’d have packed my bags and flown out of here quickly.

For a while there, I thought this Gonzales was genetically related to the other Gonzales in the Arroyo Cabinet who is now at the Heart Center. Both are loose cannons who inflict serious damage on their already beleaguered principal.

I cannot understand why government must take over utilities and strategic businesses at all, in case crude oil prices break the $80 a barrel level. What good would that do? Government control of oil companies won’t bring prices down unless government starts subsidizing costs. And if that’s what Ate Glue wants to do, they can subsidize without taking over.

Ate Glue’s Justice Secretary failed to justify the need to take over oil companies in that interview with Pia. According to him, taking over would let them look at oil company books and stop excessive profits. Excuse me but government has the power under the Deregulation Law to check on oil company pricing without taking them over. There is a committee of which the Justice department is a part, charged with that function. "Taking over" in the context of government taking over private business assets is very strong language that shouldn’t be used loosely.

Secretary Gonzales also displayed ignorance of current industry situation when he talked about old inventory being priced higher. The oil companies with refineries here have very short inventories these days and the new players operate on a just-in-time inventory basis. That’s why price fluctuations are quickly reflected at the pump. Before opening his mouth, Mr. Gonzales should have studied the facts first. Sen. Rodolfo Biazon, who was also being interviewed by Pia, commented that it seems Arroyo officials are grasping at straws.

But let me tell Mr. Gonzales how his loose talk of government takeover can have an effect, negative of course. I am sure his proposal of taking over oil industry facilities is now being absorbed by the decision makers in Shell in relation to their plan of investing over a billion dollars to expand their refinery here. If I were them, I would now hesitate to put that kind of money in a country whose officials cavalierly talk of taking over such multi billion dollar investments as if they are taking over a camote field. Such utter lack of respect for private property!

So tell us, Ate Glue, what‚s the point of threatening a government takeover and scaring the investors who are already here? Are your officials so punch drunk that they have gone bonkers? We have enough problems of serious nature as it is. Why are your boys creating new ones?

Coconut oil

I received this e-mail from a reader who calls himself "Coconut King".

Read your today’s article on trans fat and coconut juice. I have been producing different coconut products since I graduated from UP in 70’s. I have spent so much time in developing and producing different coconut products including the now popular extra virgin coconut oil. I am developing many coconut products, precisely to provide a healthy alternative for people who do not want to have trans fat. It is only recently that more people are talking about the negative effects of trans fat.

Most of popular food products such as non-dairy creamer contains around 40 percent hydrogenated or partially hydrogenated fat. Most ice cream uses hydrogenated fat too! We have developed the virgin coconut oil based non-dairy creamer to let the health conscious people have a choice and will be in the market soon.

As for the coconut juice or coconut water, it is unfortunate the "buko" juice you bought in the market mostly contains sodium benzoic. The C2 and the carbonated drinks you mentioned all contains sodium benzoic, a preservative that is banned in Japan! You have to watch out for these chemicals if you want to outlive Ate Glo’s term. And I think that is the reason that San Miguel is NOT producing that type of coconut drink you mentioned!

In the meantime, we had exploratory talks with San Miguel on producing coconut juice for them in Tetrapak. We also have an agreement with Selecta to produce coconut juice for them in Tetrapak. Selling coconut juice in Tetrapak requires no preservative, no refrigeration and is most cost effective. It should be available soon.

It is fortunate we have people like you, Dr. Bruce File and Dr. Conrado Dayrit who bring health issues to the attention of our people. More power to you and to your readers! I may be contacted at [email protected].

Parking space

PhilStar reader Norbert Goldie gives us a taste of mall-based faith.

Juan was driving down the street in a sweat because he had an important meeting and couldn’t find a parking place. Looking up toward heaven, he said "Lord, take pity on me. If you find me a parking place I will go to Mass every Sunday for the rest of my life and give up tequila."

Miraculously, a parking place appeared. Juan looked up again and said "Never mind. I found one."

Boo Chanco’s e-mail address is [email protected]