Chinese investments

It looks like the view from the business community perspective differs from the knee-jerk reaction of the political sector to the presence of President Arroyo in the signing of a joint agreement for a mining project involving a local company where former presidential chief of staff Michael Defensor sits as chair.

It appears some politicians want the country to close its doors to Chinese investments on the excuse that some investors from China were involved in recent controversies.

The business community cautions against this tendency. China is now a global investment giant and the country could benefit tremendously from direct investments coming from the erstwhile Sleeping Giant. They also caution against “the political rhetoric of generalizations” which tend to cast aspersions on the Chinese firms with which Defensor signed an agreement.

According to stock market analyst Astro del Castillo, the business community has a “neutral to positive” view of the entry of Nihao Mineral Resources, Jiangxi Rare Earth and Rare Metals Tungsten Group into the nickel mining sector in the country. Nihao is the partner of Geograce Resources Philippines, Inc. of which Defensor is chair. Nihao and Geograce are eyeing joint exploration projects in Zambales for nickel with the Chinese companies.

According to Del Castillo, the business community “has not put color into the presence of the President in the signing of the agreement in China”. China has a booming stainless steel industry which is having difficulty coping with its nickel requirements. A major nickel find in Zambales should inject significant energy into the mining sector, he said.

Why others would put color to her presence during the signing could not be helped. Defensor was an important personality in the President’s circle and is known as one of her best problem-solvers (he was instrumental for the opening of the NAIA Terminal 3).

The agreement for the nickel exploration may have been met with political brickbats from the opposition. But what is important is the result that the exploration would bring about.

Rethinking CARP

If the comprehensive agrarian reform program’s implementation will be extended, then government better think twice how it will do it this time.

If the sole purpose of agrarian reform will continue to be land distribution, then the program will just be a waste of public funds.

The experiences of other countries that have implemented land reform should serve as a lesson. Thirty-three countries adopted agrarian reform. Only three succeeded – Japan, Taiwan, and Korea. In order to make land reform successful, reform beneficiaries must be provided with support services. Unfortunately, the area of support services for CARP has not been given much attention and funding.

A post-land acquisition and distribution study by the Department of Agrarian Reform and the German Technical Cooperation (GTZ) says poverty incidence remained high at 63 percent after CARP, mainly due to high cost of inputs such as fertilizers, pesticides, seeds, pumped water, as well as farm machinery and fuel.

The same study also notes that agricultural trade balance has also deteriorated since the enactment of CARP, with the country reversing its position from being a net agricultural exporter to a net importer by the mid-90s. CARP came at a time when we had an open trade regime. Unfortunately, to be competitive under such a regime, our farmers have to be placed on equal footing with those in other countries– in terms of cost competitiveness. But with high cost of inputs in this country, a level playing field may remain a dream.  

This probably explains why the economic situation in rural areas has not improved much. While there had been success stories among CARP beneficiaries in the rice and corn sector, we cannot say the same for sectors where economies of scale is crucial, such as sugar and the so-called plantation crops such as bananas, coconuts, mangoes, etc.

The DAR-GTZ study also revealed that about 26 percent of CARP beneficiaries have sold their lands.

If CARP were to be extended, then government should instead strive to make the four million beneficiaries productive and efficient. The DAR has reported that there were still 2.03 million FBs who have not been given support services.

Social justice and land distribution are not synonymous. If social justice means uplifting the lives of Filipinos, then government better concentrate on these 2.03 million FBs who are still waiting for salvation, under the next leg of CARP. Because if we start acquiring and distributing more lands, then more Filipinos will never know what social justice means.

What are they up to

In August 2005, businessman Raymond Moreno petitioned the Makati Regional Trial Court to place publicly listed Liberty Telecoms Holdings and its subsidiaries Liberty Broadcasting Network and Skyphone Logistics under rehabilitation. The petition was approved two years ago under certain conditions.

And because rehabilitation appears to be no longer possible, creditor RCRC has asked the court to terminate the proceeding and instead start with the liquidation process.

Moreno’s rehabilitation plan is anchored on two aspects – a WiMax network service and the infusion of additional funds. But since according to RCBC, the WiMax business is no longer possible in the absence of a broadband frequency (the National Telecommunications Commission has assigned Liberty’s frequency to Smart Broadband Inc.) and the deadline for additional fund infusion is over, then there is no rehabilitation to speak of.

In a rejoinder (to Liberty’s reply on RCBC’s supplement on its earlier motion to terminate rehabilitation proceedings), the bank stressed that Liberty violated the Interim Rules of Procedure on Corporate Rehabilitation when it refused to identify the alleged committed investor who will infuse the needed capital for the rehabilitation. The fact of the investment was disclosed by Liberty to the Philippine Stock Exchange but the identity of the investor was withheld.

Under the revised rehabilitation plan, during the first 18 months from the approval of the rehabilitation plan, negotiations with identified lenders for the P81.6 million fund infusion should be finalized. However, it is only from the 19th month at the latest up to year 10, that actual infusion of $40 million should be made. The 18-month period expired last June.

RCBC and the investing public are now asking why the secrecy when Liberty Telecoms Holdings is a listed company. They are asking why the rehabilitation court is allowing this when material financial commitments to support the rehabilitation plan are required to be disclosed under the Interim Rules.

The PSE, NTC and the rehabilitation court should demand more transparency from Liberty just to find out what Moreno is up to and if what he is doing is good for Liberty and the public.

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