The Philippine senator who blasted the Joint Foreign Chambers of Commerce (JFC) for writing to the President regarding the country's power sector policy accused the foreign investors for caring only for their self interest, at the expense of the Philippine people.
For those not blinded by nationalistic feelings, you can read about the points made by the JFC in these press releases :
European Chamber of Commerce
US Chamber of Commerce
Yes, the foreigners may be after their own interest. They do not want the cost of energy to be too high for their factories in the Philippines. They may also want to buy the privatising assets for cheap. I guess if the Philippine government is being forced to sell assets for cheap, then there is valid reason for getting upset. At the same time, we must know what 'cheap' means. Some assets appreciate over time, like land. Others depreciate in value, by wear and tear. Some 'assets' can be operating at a loss, because of bad management and/or inadequate investment. If a badly managed power plant can be sold, and then managed properly and becomes profitable in the future, is there any victim here?
Investing in the distressed assets of a foreign country is always tricky. When the asset is in distress, the owner begs to sell. Yet the buyer will bear the risk of nationalistic sentiment when the situation improves. The foreign owner will be accused of exploitation, even though he took up a tremendous amount of risk by betting on a distressed asset, and invested in its turnaround. Examples are South Korean banks sold during the 1997 financial crisis to foreigners.
What is a good public policy regarding distressed/dilapidated public assets, when you do not have money to continue subsidizing or renew it?
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