Foreign businessmen on Wednesday criticized the government for dishonoring a business contract, warning that the move will send a wrong signal to investors.
The European Chamber of Commerce of the Philippines expressed concern over the delay in government’s funding for new vehicle license plates, saying it represented a breach of contract that would discourage investors.
The business group cited the delay in the release of car plates under the standardization project of the Land Transportation Office.
“It is simply unfathomable that the common principle of sanctity of contract can be completely disregarded here. How can the country attract foreign investors if even a signed contract offers no assurance that the other party, in this case the government, will respect it,” said chamber vice president Henry Schumacher.
Schumacher referred to JKG-Power Plates, the winning bidder in the Motor Vehicle License Plate Standardization Program of the LTO.
Transportation signed a five-year, P3.18-billion contract with JKG-Power Plates in 2014 for the supply of vehicle license plates. JKG-Power Plates is a joint venture between Dutch and Filipino companies
JKG-Power Plates under the contract delivered 877,166 pairs of motor veheicle plates, 2,370,006 pieces of motorcycle plates and 12,685 pieces of trailer plates worth P620.35 million. The government, however, paid only P477.90 million to JKG-Power.
The Commission on Audit in July disallowed additional disbursements for the project.
Faced with the prospects of not being paid for the plates delivered in excess of the initial payment received and possibly the suspension of the project, the company stopped delivering plates to LTO until it receives payment for past deliveries.
The Supreme Court earlier dismissed a petition seeking to nullify a contract signed by the Transportation Department for the license plate program.
Despite the lack of adequate budgetary appropriations when the project was bid out, Transportation awarded the project to the joint venture of Netherlands-based J. Knieiriem B.V. Goes and local company Power Plates Development Concept.
Schumacher noted that none of the supposed “defects” in the procurement process was attributable to the foreign supplier, adding the Chamber was hoping CoA would revisit its earlier position and abide by the Supreme Court decision.
The business community warned that the uncertainty and unpredictability of policies stifled investment and would negate efforts of foreign chambers in promoting the Philippines as an investment hub in Asia.