EDITORIAL - Buyer beware

Foreign investors have sad tales of being burned in this country, especially when dealing with the government. A South Korean investor got conned into believing that he could build a recreation area right inside the crater of Taal Volcano, one of the country’s most active volcanoes. The rumor at the time was that a government official made millions out of the deal that was later aborted.

Germany’s Fraport AG is still trying to recover its investment in the NAIA Terminal 3. Chinese corporate giant ZTE saw its name become synonymous with large-scale corruption in the Philippines. Many smaller companies have their own cautionary tales. Dealing with the Philippine government is at its riskiest when the current administration is supposed to be busy simply with ensuring a smooth transfer of power. Foreign diplomatic missions should remind their investors of caveat emptor. In the dying days of an administration, especially one that will be remembered for a string of corruption scandals, investors should trust their instincts when they feel that a deal sounds too good to be true.

In the past months, reports have proliferated of the Arroyo administration rushing the sale or privatization of certain state assets, or proceeding to close big-ticket supply procurement deals. Such deals, if they push through, are certain to be subjected to a thorough review by the incoming administration. Suppliers who don’t want messy legal entanglements, with a possible congressional investigation thrown in, should be able to wait a few more weeks before closing any major deals with Philippine officials.

Yesterday Malacañang itself stopped Commissioner Ricardo Abcede of the Presidential Commission on Good Government from rushing the auction of jewelry confiscated from former first lady Imelda Marcos, estimated to be worth about P15 billion. It remains to be seen whether Abcede will heed the presidential order. He had earlier brushed aside opposition to the sale by all his PCGG colleagues including Chairman Camilo Sabio.

As of yesterday, Abcede said he still expected representatives of auction houses Christie’s and Sotheby’s to proceed with their Manila visits for the appraisal of the Marcos jewels. Those representatives should take their cue from defense suppliers, who according to reports are putting major deals on hold until a new administration is in place. A rushed sale by the Philippine government typically ends up as a no sale. Buyer beware.