Gov't adds security layer on investing Chinese firms

MANILA, Philippines — President Rodrigo Duterte led his economic team in approving guidelines for potential Chinese investments in the country, including ensuring they come from "qualified" and "legitimate" firms to ensure past controversies are avoided.

 

A key measure is assigning the inter-agency investment coordinating committee of the National Economic and Development Authority (NEDA-ICC) as the "focal point" to vet Chinese companies participating.

 

NEDA-ICC is co-chaired by the Department of Finance (DOF) and NEDA. A counterpart body from China will also serve the same purpose.

 

"Such a vetting process in both the pre-investment and investment stages is meant to ensure that all projects to be approved by the Philippine government and its Chinese counterpart are aboveboard, cost effective, implemented on time..." the DOF said in a statement on Tuesday.

 

Given the foreign investment cap in the Constitution, foreign firms usually form joint ventures with their local counterparts. In doing so, they are required to pass through the Securities and Exchange Commission and the Department of Trade and Industry for necessary permits.

 

Going through the Board of Investments for investment incentives is also another optional step. 

 

The new guidelines, in effect, add another layer before reaching those points, although specific details on how vetting would be conducted were not provided.

 

What the DOF only said was that "qualified, legitimate and good standing" Chinese firms would need to "adhere" to both Philippine and China laws.

 

It also mentioned that "different entities" would need to be engaged towards the development and implementation of projects. A "competitive selection" of contractors will also be done, which is already provided in the procurement law.

 

Duterte, on his trip to Beijing last month, boasted of securing investment pledges from the country whose wide claims in the South China Sea prompted the previous administration to sue before the international court.

 

Manila won the dispute, but the current government chose to set it aside and extend a friendly hand to Beijing, drawing concerns on possible investments given past questionable deals.

 

These include the botched $329-billion National Broadband Network with Chinese firm ZTE Corp. in 2007 and the Northrail project supposedly to be financed by a $400-million loan from Export-Import Bank of China.

 

The project had since been revived to be financed by a loan from Japan and the government. A part of it, together with nine others, was given the go-signal by the NEDA board last Monday.

 

Among those approved, Budget Secretary Benjamin Diokno said two projects will pioneer the government's round-the-clock public construction initiative.

 

These are improvements of General Luis-Kaybiga-Polo-Novaliches Road to Valenzuela City and widening of the road from Quirino Highway, Quezon City to Gen MacArthur Highway.

 

"It will be on a per contract basis. We already have some estimates on the time that will be saved and the costs needed for each project under 24/7 construction," Diokno told reporters.

 

"The costs won't be that much. We can shoulder it," he said on the sidelines of a budget hearing at the Senate.

 

To sweeten contracts to be offered, Diokno added monetary incentives may be provided for companies under 24/7 commitments which will finish ahead of their deadlines.

 

"The penalties are already there in the contract usually for delays... I'm sure there will be participants," he said.