Saga scares foreign firms, say experts

PUBLISHED : Thursday, 07 October, 2004, 12:00am
UPDATED : Thursday, 07 October, 2004, 12:00am

As long as the airport terminal remains closed, badly needed foreign infrastructure investment will continue to bypass Manila, businessmen and analysts said.

Henry Schumacher, executive vice-president of the European Chamber of Commerce, said last week: 'I'm sure we can get more infrastructure firms to invest in the Philippines, but such firms want some positive signals, like the opening of the Ninoy Aquino International Airport Terminal 3.'

He said foreign business groups were concerned about the country's shifting investment rules. He called for 'predictability and sanctity of contracts, otherwise we'll be investing on shifting sands'.

Earlier, he noted that foreign investors were disturbed by the 'pattern of contract renegotiations', particularly for big-ticket projects, whenever there was a change in political leadership.

A Europe-based source said his group's efforts to attract investment to Manila became harder after the well-publicised row began between the government and Fraport.

'[Fraport] is a big guy. What will happen to us small guys?' potential investors often asked him, he said. Manila's new airport terminal was widely known as 'a monument to corruption and the fruit of a poisonous tree', Mr Schumacher added.

He said: 'The Philippine government has its options [to open the airport] but is not exercising it. Maybe it's waiting for payoffs.'

Stock analyst Astro del Castillo said fund managers had been nagging him about when the terminal would open.

Mr del Castillo, managing director of First Grade Holdings and head of Manila's securities analysts' association, said: 'Definitely, its opening will really help rev up the economic engine. Access to funds will be easier.'

He said the government's refusal to allow the terminal to operate, followed by the Supreme Court's voiding of the operator contract, initially frightened away foreign investment.

'[The effect] was cushioned after the government was able to communicate to the investing public that it was an onerous contract,' he said.