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Francis Chua: Envoy As Problem Solver

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francis-chuaAs Special Envoy for Trade and Investments to the People’s Republic of China, Francis Chua has been working to draw Chinese investments to the Philippines. He sat down one afternoon with the China Business team to comment, with unique candor, on pressing issues related to his duties, as well as RP-Sino relations.

Last year, the FFCCCI (Federation of Filipino-Chinese Chambers of Commerce and Industry) was actively involved in efforts to make the government’s BOT (build-operate-transfer) policies more transparent. How did your efforts fare?

Okay, regarding BOT projects, so far there has been this practice in the Philippines; it is a little bit different from the BOT that most of us understand. When you say BOT, definitely it has to be the proponent who’s going to to shoulder the responsibility or, in short, the risk. But most BOT projects here, the risk is inelaborate.

I’ll give you an example. We are now along EDSA. You know, this EDSA MRT, maybe our government spent more than a billion pesos because they thought they were going to make so much money. Where in the world can you find a BOT project for the private sector that guarantees a return?

That’s exactly what happened. The risk is transferred to the government. That’s the reason why we were pushing transparency. How could you have a BOT where the risk is transferred from the private sector to the government? The risk should at least come from the private sector or we might as well not call it BOT. Where do we start? The defect is in the law. So, let’s revise the law.

What specific changes do you want made to current government supply contract policies? Are you currently involved in any efforts in making these changes a reality?

Any form of government purchase requires bidding. That’s mandated by law. The only exception is a government to government transaction. The Belgian government, way back during the time of Marcos in the early ’80s, wanted to built the light railway transit, the one in Taft. They gave our government a loan and told our government they would like to push for an LRT project.

The king of Belgium was very much interested so they approached Imelda and the loan concessionary, 0% interest, 40 years to pay. So, the government took that as a cue, because it’s government to government. It’s an international practice if government to government, you don’t need to sign. That’s where the project started. I understand na pinasok ng bidding (bidding entered into the picture).

A lot of other projects are like that. But, for example, if it’s from the Japanese government, the contractor should come from Japan. If there is more than one company or one manufacturer supplying the same thing, there’s a bidding.

How do you see the current ZTE fiasco affecting trade and investment relations with China?

You know, to me, this ZTE issue is blown out of proportion. If we think ZTE has a problem, they have proper code to address the issue. In fact, we are accountable. It is in the Supreme Court, let the Supreme Court rule on it. [The President had not suspended the ZTE deal at the time of this interview—Ed.] What has been going on is trial by publicity. The effect is not as simple as a single project of ZTE. The effect is that the project is tainted. So that’s a big black eye. We just hope that the Chinese will not perceive the Philippines as anti-Chinese.

How come that only China right now is being singled out? This is something we have to reevaluate. Of course, the Chinese being Chinese they would not be very vocal. Even if they don’t feel good, they would act as if nothing happened. But we have to resolve this. The sooner, the better. It affected a lot of investment in Sangley.

Colloquy-2Say, you were in charge of government contracts, how would you have handled the ZTE deal?

You know, the government handled the ZTE case exactly the way they handled all the other projects. So, the NAWASA project followed the same procedure. Do we have to revisit everything? Are we saying that we should cancel previous projects? The government believes that, henceforth, because of ZTE, some other measures should be instituted. It is something that the Philippine government should consult with the Chinese government. Because the one that gives us the money, ultimately, will have something to say about it.

If you were asked to advise on damage control —considering that China does offer foreign aid, despite criticism that it often comes with strings attached— what should government do to minimize negative impact from the ZTE contract suspension?

Foreign aid is not exactly hard. It’s like running a business. We must stay within our resources. But if your resources are not enough, what do you do? You borrow money. When you receive aid, you’d better look at the strings attached.

What should the government do to fast track the inflow of foreign investments?

Let’s not even talk about foreign investments. During APEC, I was invited to give a talk on investments. So, I finished the talk and everybody was impressed. How could we invest in our own country?

Kukuha lang kami ng lisensya sa probinsya namin (Just applying to get a license in our province), it’s just so difficult. Of course, all of us love our country and we like to put our money back in. But getting a license is difficult.

These are the complaints of our kababayans (countrymen). If you look at the history of China over the last 30 years, it has become an economic power because of overseas investments. Seventy percent of projects in China come from foreigners; 60% of the funding for these projects come from overseas.

If a Filipino businessman were looking into investing in China, what advice would you give him? What kind of business is the most successful now and what remains underdeveloped?

I always tell fellow [ethnic] Chinese, if we invest in China, the first thing we must put in mind is our ancestry. If we make money or if we lose money, it’s still our ancestral land. That is how I always advise the Chinese. For Filipinos going to China, I’d say, China today is very different from the 1980s. In the ’80s, I could almost assure you any kind of business you go into, as long as you personally take care of it, the chance of success is very high.

The biggest money to be made in China is in real estate. The other thing to invest in is Chinese stock. And, maybe, since Filipinos are good in service, maybe we could put up a language school.

I don’t think the Chinese government has left any stone unturned. You know the type of government they have will ensure success. For example, I want to build this highway. I tell you, “Sagabal ang bahay mo; umalis ka na." (Your house in in the way; leave.) I give you something of equal value. On the day of demolition the bulldozers come in and then "Gibain ang bahay." (Tear down the house.) If you don’t move, they issue a receipt for obstruction.

What was your primary frustration, if any, when you entered the foreign service? What changes or improvements do you want to accomplish during your term as envoy?

You know, this is not really a job. It’s just a service to the government. As long as you don’t expect anything personally, there’s no frustration. At the end of the day, the job is plain and simple. If people complain things cannot be done, you must be there to carry them from state to state. If there is no problem, then there is no need for an envoy. You shouldn’t think of frustration. If you do, you have backed out from day one.

Print ed: 12/07

 

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