There ought to be a law on foreign aid

If the Senate eventually summons DOTC and NEDA officials to explain the ZTE Broadband deal, the Palace will most likely invoke their executive privilege, regardless of what the Supreme Court has already ruled. Most likely, the Palace will say the Senate’s sole intention is to generate headlines about the scandalous deal.

This early, it is best for a senator or a congressman to file a bill that would redefine how we should treat foreign aid offers. More particularly, there is a need to plug a giant loophole wherein any government-to-government deal is exempted from open bidding.

This current practice is dangerous. We need a law now that DOTC is clearly abusing this loophole to justify the special treatment given to the deal with China’s ZTE Corporation. By saying that it is a government-to-government deal, DOTC claims there is nothing else that could be done except to accept it as is. Forget cost and national security implications.

As I have said in this column, if it was an outright grant, that may be true in so far as cost is concerned but not for national security concerns. But since it is a loan that our grandchildren must pay for someday to the tune of a billion pesos a year (based on today’s exchange rate), we should have a say on the supplier and the specifications. Given the large amount of money involved, Congress must have a say.

There is a need to end the culture of mendicancy that prevails in our government’s bureaucracy. Just because something is being offered supposedly as “aid” and labeled “concessional”, our bureaucrats think it is alright to accept with no questions asked or allowed.

In the case of the ZTE broadband project, there is no way we can ascertain if the cost of the contract is net of commissions to influential local agents. Unlike American and British companies, Chinese companies don’t have to worry about complying with a strict foreign anti-corruption law. Also, because there is no way of comparing the deal with any other offer, we are being told to stupidly assume that we cannot get the same deal cheaper elsewhere.

Ideally for projects of this grand scale, our technical guys should first determine what kind of broadband facilities we need and publish the specifications for discussion among the experts. Then the specs should be contained in a bidding document to serve as the basis for a public bid among many prequalified suppliers. This is the only way we can ensure the Filipino taxpayer is not shortchanged. Unfortunately, the police mentality that prevails in DOTC’s top leadership is not receptive to the concept of accountable governance.

The worse part of this particular g-to-g deal is the way China attached ZTE to it. Yet, we don’t know if this Chinese company is any good. All we know about ZTE is what we read in the newspapers and the Internet about their projects in Africa and none of the stuff we have read speak well of the company. And because there was no competitive bidding based on a published set of specifications, we will never really know if we are being taken to the cleaners.

In any case, China’s “strings attached” kind of foreign aid offers to developing countries is now under serious question. The Financial Times recently reported that “such policy of ‘tying’ aid to purchasing goods and services from the donor country has been attacked by development experts as wasteful and inefficient, and most donor governments have been abandoning the practice.”

Tied aid has been a feature of European, US and Japanese assistance to poor countries for decades. But recent evidence, The Financial Times reports, shows tying aid reduces its effectiveness by as much as a quarter. And don’t we know that from experience! How many Japanese consultants and contractors wasted so much money we eventually had to pay for projects undertaken here under the Japanese government’s aid program with strings attached?

China should learn this lesson early if it is sincere in its assistance offers. In most of its aid assistance, particularly in Africa, China requires infrastructure construction and other contracts to go to “approved” Chinese companies or to local companies in joint venture with Chinese groups.

Sounds like “lutong Macau” to me. And while African countries may not have a choice, we are no longer at that same development stage where we should swallow everything without question because beggars can’t be choosers.

There ought to be a law to mandate a more honorable and cost-effective response from our government to such aid offers. Free or cheap somehow turns out very expensive in the end.

Besides, do we really want to trust such a sensitive infrastructure with national security implications to a company from a country where the Communist Party still calls the shots?

E-government

Here’s a reaction from PhilStar reader Johann M. Santos to a previous column.

While implementing e-services to serve the public is an effort that goes way back to Orly Mercado’s on-line bidding system for the DND, it is unlikely that politicians in the Philippines will do anything more than pay lip service to this supposed priority of the Arroyo administration. Their position is to actively oppose and hinder any computerization effort in the government.

Take the example of the ECN Group from New Zealand. ECN provides web-based applications and systems for logistics and related services. They are actively involved in providing on-line services for the retail industry in the Philippines and their office here serves as one of the main application development centers for the company’s clients worldwide. Software developed by ECN manages the port of New Zealand (from receiving to inspection to payment) and has enabled them to achieve efficiencies that allow turnaround times measured in hours, not days or weeks.

ECN was tasked by the Arroyo administration to develop a system for processing and managing on-line payments for duties and tariffs on shipments passing through our ports. The on-line tax payment/collection system was completed and presented to Pres. Arroyo with much fanfare. At the demonstration GMA extolled the virtues of the web-based application that would have revolutionized the Bureau of Customs’ collection process. They even had a ceremonial “activation” to symbolize the system being put on-line.

After the President left however, things turned out quite differently. The goons left behind were ordered to dismantle the computer on which the demonstration was conducted. They did not shut the system off; they literally tore the power and network cables out while the machine was still running. And ECN was told—not in so many words—to take a hike. They have not been contacted again, for this or any other computerization project.

So much for e-government. Like so many things in this country, it’s all BULLSHIT!

Speaking of which—maybe I missed the announcement but there seems to have been some kind of adjustment in the PSE composite index closing level last Wednesday 11 July 2007. The close at 12:10pm that day was 3,704.22. Apparently, a memo was posted on the PSE website later that adjusted the closing level to 3, 696.51. No explanation was given for this adjustment.

Maybe I should scrutinize the papers more carefully but I don’t think I came across any mention of this adjustment in any of the major dailies. I couldn’t find the memo on the PSE site either. (Then again, the PSE site has got to be one of the worst designs I’ve ever come across) I only found out about this from an article on Forbes’ website. (They in turn cited Thomson Financial and AFX),

Highly irresponsible for the PSE to fail to make investors aware of this.

Reading of the will

This one is from Chito Santos.

The relatives of the family’s rich dowager gathered for the reading of her will after her long awaited death.

“Being of sound mind,” read the lawyer, “I spent every last cent before I died.”

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