Such an unstable environment would not only stifle investments, but would also dilute the efforts of foreign chambers in promoting the Philippines as an investment hub in Asia, the foreigners said.
The latest demonstration of this, according to the European Chamber of Commerce of the Philippines (ECCP), involved the case of JKG-Power Plates, the winning bidder for the Motor Vehicle License Plate Standardization Program (MVLPSP) of the Land Transportation Office (LTO).
JKG-Power Plates is a joint venture between a Dutch and a Filipino company. After going through a bidding process, the Department of Transportation and Communications awarded a five-year contract worth P3.18 billion to JKG-Power Plates in 2014 for the supply of vehicle license plates.
On the basis of this signed contract, JKG-Power Plates initially delivered 877,166 pairs of MV plates, 2.37 million pieces of motorcycle plates, and 12,685 pieces of trailer plates, all worth a total of P620.35 million. However, the company has only so far been paid P477.90 million, the ECCP claimed.
In July, the Commission on Audit (COA) disallowed additional disbursements for the project, saying it did not undergo legitimate procurement processes.
Confronted with the prospects of not being paid fully for the plates delivered and even more with the danger that the five-year project will be prematurely discontinued, PPI-JKG said it would cease delivering plates to LTO until it receives payment for the deliveries it has already made, the ECCP said.
“It is simply unfathomable that the common principle of sanctity of contract can be completely disregarded here. How can the country attract foreign investors if even a signed contract offers no assurance that the other party, in this case the government, will respect it,” ECCP vice president Henry Schumacher said.
The COA’s disallowance of additional disbursements comes on the heels of a Supreme Court (SC) decision on the MVLPSP.
The high court did not find anything wrong with the multi-billion program. The SC contradicted a claim the program was implemented without the necessary funding from Congress.
“Again, it is difficult to understand why we cannot rely on the strength of a decision of the highest court of the land. Can COA [Commission on Audit] overrule or disregard a decision of the Supreme Court?” he asked.
He also said none of the supposed “defects” in the procurement process is attributable to the foreign supplier, and yet it is the supplier and the public who are suffering from the consequences.
Nonetheless, Schumacher expressed hope the COA will revisit its earlier position and abide by the SC decision.
“If this phenomenon continues, as we have seen in a number of other cases, including Piatco, Manila Water, Manila North Tollways Corp., to cite a few, foreign investors will look for more stable investment climates elsewhere. It will be no fun doing business in the Philippines,” Schumacher said.
[*] Originally published in The Inquirer’s Business section.