Duterte orders contracts review

PHILIPPINES - In Brief 03 Apr 2019 by Romeo Bernardo

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President Rodrigo Duterte’s order to review contracts entered into by the government with the private sector and foreign governments has met with no small amount of unease not only among its private sector partners in infrastructure projects but also among those worried about its impact on perceptions of regulatory burden and thus, future investments. The order came on the heels of an unannounced water shortage that severely affected parts of Metro Manila served by a private water concessionaire. News reports highlighted the Metro Manila water concession agreements, signed in the 1990s under the administration of Fidel Ramos, as containing provisions that President Duterte found problematic. The President’s spokesperson has been quoted saying that the President’s review directive may involve removal of “onerous” provisions in the contracts, cancellation of contracts and prosecution of people behind any contracts deemed unconstitutional.While the high visibility water problem that affected densely populated communities, including hospitals, may indeed have precipitated the order, other pundits suspect that the motivation may in fact be political. In recent days, the most senior member of the Supreme Court, Justice Antonio Carpio, has been sounding the alarm over provisions in the government’s loan agreement with China to build a dam to augment raw water sources for Metro Manila. Justice Carpio is an outspoken critic of China’s strong-arm wrestling of areas claimed by the Philippines in the West Philippine Sea/South China Sea (WPS/SCS). His warning is based on a worst case scenario where a Philippine default on the loan agreement may lead to China exercising legal rights...