• An optimistic visit from Australia’s trade caravansary

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    Ben D. Kritz

    Ben D. Kritz

    TRADE missions are an ordinary part of a country’s marketing strategy, and after one has experienced a few of them, they begin to feel a bit routine.

    Trade delegations will usually engage in at least one or two media-friendly activities “in the field,” so to speak – a visit to a factory here, a photo-op with key government officials there – but the valuable part of a country visit is the business-to-business meeting: Usually a luncheon, sometimes a dinner, where executives and trade and investment officials from both the host country and the visiting delegation can meet and expand their networks.

    On Wednesday and Thursday this week, Australia’s latest trade mission—timed to coincide with trade-related APEC talks being held in the Philippines—paid a visit to Manila. The group led by Australia’s Minister for Trade and Investment Andrew Robb included a dozen executives from Australian companies; a couple already have established businesses here, the rest are presumably interested in doing so. What the Australians did a bit differently this time was, instead of gathering business leaders from a variety of sectors, the entire mission focused on infrastructure investment and development; the business leaders included represented interests in the power, water, civil engineering, rail, air transport, general construction, and information technology sectors.

    In his remarks to the attendees at the business-to-business luncheon on Thursday, Trade Minister Robb complimented the Philippines on the progress it has made with its public-private partnership (PPP) program, the overall commitment of the government to infrastructure development, and institutional improvements.

    Many observers a bit closer to the action in the Philippines than Mr. Robb would likely disagree with his view that the Philippines’ “regulatory process is a strong one,” but on the other hand, a trade official trying to sell the products and services of his country’s enterprises could hardly be expected to be completely frank. Robb tacitly acknowledged that he actually does have a fairly objective idea of what the Philippines’ reality is by pointing out that a great deal of potential investment must wait until legislation to clarify and improve investment policies and processes is completed. Still, he added, firmly steering his brief speech back to an upbeat direction, there is a “sense of inevitability” that the necessary legislative work will eventually be completed successfully.

    A focus on infrastructure is, at least as far as the Trade Minister is concerned, the key prerequisite to boosting overall economic growth. “Infrastructure is so critical to productivity,” Robb stressed. It was, he explained, the direction taken by his own country, which has experienced near-continuous economic growth for the past 25 years. In the past decade, Australia has spent about $130 billion on upgrading and expanding its infrastructure.

    Another aspect of infrastructure development Robb discussed was privatization. Robb, who is a firm believer in the benefits of privatization in infrastructure, explained that Australia’s approach was designed to convince the public of the value of privatization by requiring all proceeds from the sale of government assets to be reinvested in other infrastructure projects.

    The message the Australian trade mission brings to the Philippines ought to be regarded as a positive one, even though it may not be exactly what the government and other stakeholders want to hear. Australian investors are interested in the Philippines, but that interest is mostly limited to opportunities for infrastructure investment, because Australia’s inferred position is that investment in anything else would be wasted if infrastructure remains inadequate.

    The second part of the message is that if the Philippine government stays true to its word and does aggressively boost infrastructure spending, the country’s inclusion in the Trans-Pacific Partnership (TPP) trade talks is likely. “The Philippines and Korea are the two countries we’re looking at for that,” Robb explained to reporters. “Perhaps after the pact is finalized.” This is tentatively planned for sometime in 2016, depending on how well the TPP agreement presented for legislative approval by the Obama Administration fares in the US Congress.

    The Philippine government and local business interests might prefer that one of the country’s most important allies and trading partners not be so forward in influencing development policy, but it happens to be the policy track the Philippines needs to be on, and is something that should be encouraged by the strong interest shown by Australian businesses in the Philippines’ investment potential.

    ben.kritz@manilatimes.net

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    2 Comments

    1. Amnata Pundit on

      Is Australia just as heavily into PPP as the Philippines? What is their experience with PPP? Actually, I would be really surprised if they had any PPP projects at all. As for the TPP, we’d be better off if we’re not part of it. Joining it is like asking your mother country to “part thy legs, Mom, the foreigners are coming.”

      REPLY
      Just a comment, Ma’am. The Philippines is not HEAVILY INTO PPP. Very few of BS Aquino’s PPP dreams have become real projects! Please don’t be a tool of this mendacious and hypocritical president by spreading lies.

      • Amnata Pundit on

        I’m sorry I gave the wrong impression. What I really meant to ask was does Australia follow the Philippine model of PPP where the private partner is given guaranteed profits for at least 30 years or more and the project loans are given a sovereign guarantee? The real question is what does the private partner bring into the equation that makes him deserve all these untold benefits when in fact his presence merely raises the cost of the project? What exactly is the value for money that we, the public/end user is getting in return ? Last but not least, is the private partner exposed to any risks at all in this venture when there is a sovereign guarantee? We were taught in school that every business venture is a risk, so what is the risk for these private partners? The Aussies are not stupid to embrace his Philippine model as I’m sure the government that attempts to introduce it there will be kicked out in no time. As for the TPP, it is America’s response to the Great Silk Road project of China with Russia and India, but unlike the Silk Road where the proponents will invest heavily in infrastructure, the TPP is designed to suck out profits from this region without hindrance, and to keep this region locked into America’s dollar hegemony, the hegemony that China and the BRICS are precisely trying to topple. Lets stay out of the TPP.