EDITORIAL – Draft clear-cut rules

Two Supreme Court decisions this week highlight the need for the government to get its act together before fo-reign investors shun the Philippines as if it were the country worst hit by SARS. The first, issued last Monday, nullified all the contracts entered into by Philippine International Air Terminals Co. to build and operate Terminal 3 of the Ninoy Aquino International Airport. The second, issued yesterday, nullified the joint venture agreement between the Public Estates Authority and Amari Coastal Bay Development Corp. involving a vast reclaimed area in Manila Bay.

Malacañang hailed the outcome of the Piatco case as a victory for good go-vernance. As for the PEA-Amari deal, public officials who entered into the onerous agreements with the company should be held accountable, the Palace said. Both deals were tainted with controversy from the start, with one former senator describing the PEA-Amari deal as "the mother of all scams."

Amid speculation that the decisions could dampen investor confidence in the country, the Arroyo administration countered that investor confidence would in fact be strengthened by the fact that the Philippines is doing something about anomalous deals and corruption. The government has a point, but it will have to move quickly to send the message that it is doing something to prevent a repeat of the conditions that led to the Piatco and PEA-Amari fiascos.

Having the Supreme Court bela-tedly overturn consummated government contracts hardly inspires investor confidence. What the business community sees are contracts signed by one administration, only to be overturned during the next one through a court ruling. The nation welcomes the nullification of onerous contracts and the possible prosecution of the corrupt. What would be more welcome, however, are measures that could have prevented those deals from being consummated in the first place. Tighter bidding rules and better monitoring of the progress of multibillion-peso government contracts could be a start.

It is not yet too late to draft such clear-cut rules on private investment in public projects and make them work. If the government wants a healthy investment climate, it cannot keep relying on the Supreme Court to act as the final arbiter of major investment deals.