Vigilante Economics?

I winced when I read the President’s words.

Aquino said to an audience of international investors: If for any reason the courts or Congress would prevent investors from charging agreed toll or user fees on infrastructure projects “ the Government will compensate the private concessionaires for the difference between what the tariff should have been under the formula and the tariff which it is not able to collect”.

This new found policy is reportedly the lynch pin of the Private Public Partnership program which itself is the core of the country’s Economic Plan.

Seems to me this cornerstone of the cornerstone is on shaky ground.

For example, in the proposed hike in toll rates in SLEX, if, presumably for reasons of public interest and in consonance with laws; the Supreme Court was to prohibit such an increase, then the Executive Branch would make up the difference to SLEX by ordering government banks to pay up.

(What happens if the Supreme Court then enjoins these banks from paying? Does the Administration then make, say, the PCSO cough up?)

Again, if Congress were to pass a law (or if a law already existed) invalidating  an agreement between the Government and an investor, the Executive Branch would make it up to the investor.

In other words the Administration would use taxpayers’ money to defy and subvert a decision of the Supreme Court or Congress, co-equal branches of Government.

This is probably illegal, arguably criminal, possibly unconstitutional, a violation of the  separation of powers; and if so, clearly impeachable.

I can see the Ombudsman, Ms. Gutierrez (whom P-Noy has been seeking to oust), wringing her hands: “Bring it on. Make my day.” I hope Team P-Noy has liability insurance and a legal defense fund.

The Supreme Court and Chief Justice Corona (also not a buddy of Noy) are either bemused or aghast at the actuations of the President. The Court has properly declined to comment until presented with a petition; but I can already tell you how the Court will respond: No way, Jose.

Business is visibly delighted by the President’s announcement. Foreign investors have so crowded the office of Energy Sec. Almendras they have to take a numbered ticket and await their turn.

The Government has in its well-intentioned haste to promote foreign investments taken a stance that is questionable if not outright dangerous.

One, in bending backwards (or is it forward?), the Administration is deluding investors with a promise that is possibly illegal and unconstitutional. Not that I am particularly sympathetic to them. The private sector has sufficiently exploited the nation in previous PPP projects like the “take-or-pay” scheme in the energy sector. The Filipino is continuing to pay for these one-sided agreements in the form of shameful electricity rates.

Two, the Government is displaying weakness by extending assurances that are neither necessary nor practiced in other countries.The Administration need not take out its begging bowl. With worldwide liquidity, investors are hungry for projects. They will be at Almendras’ doorstep even without all the goodies that we are proffering.

Our economic officials can be over-anxious to cut deals with the private sector, however lopsided, if only to show accomplishment. By the time the harm is apparent, these officials would have been long gone… to the private sector from which they came.

Three, we should review the basis of the PPP. In the past the country has allowed  private enterprise, particularly in the power sector, to reap “excessive” profits which are being paid by the people.  Our national franchises are precious assets that have been undervalued by previous Administrations in their haste, incompetence, ignorance and possibly corruption.

Fourth, the Government must know that, if necessary, it can undertake the projects on its own. If the private sector can secure funding for these projects than so can the Government. If the endeavors are lucrative to the private sector, they will be equally so to the nation. Infrastructure projects are not rocket science.

In sum there is no need for us to surrender our patrimony nor engage in vigilante economics where we subvert our laws and institutions to attract investments.

We do not have to guarantee private sector profits at the expense of the nation.

Investors are big boys who are accustomed to risk. They are also whiners who will eat our lunch even as they laugh all the way to the bank.

So, P-Noy, kool lang.

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About Leo Alejandrino

The blog is principally a commentary on Philippine politics and economics.
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