INQUIRER.net | 11/30/2008
By Sylvia L. Mayuga
[...]
Kabayan’s tip on a new option for the Philippines is worth careful consideration on a darkening horizon:
“We had a meeting today on alternative investment vehicles and discussed hard assets. One of the topics was farmland. There's lots of movement in this space. South Korea just leased more than one million hectares in Madagascar for 99 years. Abu Dhabi has publicly announced intent to invest in around 500 thousand hectares but nothing is finalized yet.
“This brings up issues of colonialism or neo-colonialism, but there are many ways to structure these types of deals. If structured right, it could work really well. This could be an agrarian ace in the hand for Pinas.”
How would that be fleshed out? “Pinas could do a deal structured to allow the host country an equity stake, with the responsibility to sell food products at market values but with a guarantee to the investing country to have the option to buy as much as they need at a discount with the right-of-first-refusal i.e. they should be offered the deal before the Pinas sells to the market. If they refuse, Pinas can sell in the market.
“A lease can be structured so as not have money on the land, like South Korea, but to have BOT deals on necessary infrastructure development projects – warehouses, irrigation, ports, farm-to-market/farm-to-port roads, etc. The fees generated from usage (private enterprise will lease the warehouses, roads are tolled, port fees collected, etc.) will be split, with a larger percentage to the investing country, then at given time period, say 50 years, all of it is given back to the host country.
“This type of deal will also need a non-exportable clause, i.e. the investing country can't turn around and export the product at a higher price after buying it at a discount. It should also include a clause for the host country to have an equity stake in the returns from selling the produce at market prices.
“This way both investing and host countries get a good deal and it’s not lopsided and, most importantly, NOT dangerous or contentious to the other, unlike the South Korea-Madagascar deal, which will likely lead to huge labor uprisings etc.
But how would the Philippines and its vociferous organized labor get around something like that? “There must be a clause stipulating that all labor should be local, but the investing country brings in technology and expertise, etc. The only thing left can be the first-refusal on discounted produce but at a different schedule i.e. no longer as much as they want to buy but at a regressive amount – first 5 years at 80% of prior levels, next 5 years at 60%, and so on.”
Kabayan continues to love his native land, but he’s also a realist who sees a far more serious obstacle to his idea: “The only problem with this whole thing is that we do not have a credible government that can be trusted with a deal like this. If we can staff this with the right people – like Camacho on the finance, the Brimos of Philex in management, etc, good upstanding folks. But those guys would not stick their neck out for this – too juicy for the evil-mongers to pass up, so they'll railroad everyone else. ”
[...]
By Sylvia L. Mayuga
[...]
Kabayan’s tip on a new option for the Philippines is worth careful consideration on a darkening horizon:
“We had a meeting today on alternative investment vehicles and discussed hard assets. One of the topics was farmland. There's lots of movement in this space. South Korea just leased more than one million hectares in Madagascar for 99 years. Abu Dhabi has publicly announced intent to invest in around 500 thousand hectares but nothing is finalized yet.
“This brings up issues of colonialism or neo-colonialism, but there are many ways to structure these types of deals. If structured right, it could work really well. This could be an agrarian ace in the hand for Pinas.”
How would that be fleshed out? “Pinas could do a deal structured to allow the host country an equity stake, with the responsibility to sell food products at market values but with a guarantee to the investing country to have the option to buy as much as they need at a discount with the right-of-first-refusal i.e. they should be offered the deal before the Pinas sells to the market. If they refuse, Pinas can sell in the market.
“A lease can be structured so as not have money on the land, like South Korea, but to have BOT deals on necessary infrastructure development projects – warehouses, irrigation, ports, farm-to-market/farm-to-port roads, etc. The fees generated from usage (private enterprise will lease the warehouses, roads are tolled, port fees collected, etc.) will be split, with a larger percentage to the investing country, then at given time period, say 50 years, all of it is given back to the host country.
“This type of deal will also need a non-exportable clause, i.e. the investing country can't turn around and export the product at a higher price after buying it at a discount. It should also include a clause for the host country to have an equity stake in the returns from selling the produce at market prices.
“This way both investing and host countries get a good deal and it’s not lopsided and, most importantly, NOT dangerous or contentious to the other, unlike the South Korea-Madagascar deal, which will likely lead to huge labor uprisings etc.
But how would the Philippines and its vociferous organized labor get around something like that? “There must be a clause stipulating that all labor should be local, but the investing country brings in technology and expertise, etc. The only thing left can be the first-refusal on discounted produce but at a different schedule i.e. no longer as much as they want to buy but at a regressive amount – first 5 years at 80% of prior levels, next 5 years at 60%, and so on.”
Kabayan continues to love his native land, but he’s also a realist who sees a far more serious obstacle to his idea: “The only problem with this whole thing is that we do not have a credible government that can be trusted with a deal like this. If we can staff this with the right people – like Camacho on the finance, the Brimos of Philex in management, etc, good upstanding folks. But those guys would not stick their neck out for this – too juicy for the evil-mongers to pass up, so they'll railroad everyone else. ”
[...]
