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OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHML #1417/01 1650029
ZNR UUUUU ZZH
O 130029Z JUN 08
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC 0998
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCPDOC/USDOC WASHDC IMMEDIATE
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RHHMUNA/CDR USPACOM HONOLULU HI//FPA//

UNCLAS SECTION 01 OF 02 MANILA 001417 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/MTS, EAP/EP, EEB/IFD/OMA 
STATE PASS EXIM, OPIC, AND USTR 
STATE PASS USAID FOR AA/ANE, AA/EGAT, DAA/ANE 
TREASURY FOR OASIA 
USDOC FOR 4430/ITA/MAC/ASIA & PAC/KOREA & SE ASIA/ASEAN 
 
E.O. 12958: N/A 
TAGS: EINV ENRG PREL PGOV RP
SUBJECT: Senators Tell Foreign Investors to "Get Out" 
 
¶1. (U) Summary:  A Philippine Senate committee grilled 
representatives of foreign chambers of commerce, including the 
AmCham on June 6 regarding a letter the chambers had sent to 
Philippine President Arroyo opposing a legislative initiative. 
Though the business leaders were poorly treated by the Senators, 
they held their own and seem to have won the sympathy and support of 
interested observers and the press.  Though the spectacle served as 
yet another warning of the risks of investing in the Philippines, it 
may have backfired, solidifying the position of the chambers as 
champions of reform.  End Summary. 
 
¶2. (U) The Joint Foreign Chambers of the Philippines, an informal 
grouping of major foreign chambers of commerce here, including 
AmCham, were raked over the coals by Philippine Senators.  Key 
Senators were upset with a letter the chamber group sent to 
Philippine President Arroyo opposing proposed amendments to the 
Electric Power Industry Reform Act (EPIRA). 
 
¶3. (U) Legislators have proposed amending the Act to speed up the 
implementation of open access (i.e., the ability of large consumers 
to negotiate the purchase of electric power directly from the 
producers, rather than buying it from distributors at fixed rates). 
The original Act allows for open access only once the government has 
sold off at least 70% of its power generation holdings.  The 
proposed amendments would lower the requirement to 50%.  In fact, 
the government has now reached 49% and expects to meet the 70% goal 
this year.  Members of the chambers oppose the amendments as they 
believe it important to the long-term health of the sector (and, 
ultimately, to lowering prices) that the government share be 
minimized.  The chambers are also concerned that amendments could be 
added changing unilaterally the terms of the contracts of the 
private power producers, some of which are members of the chambers. 
 
¶4. (U) The Joint Foreign Chambers has been active for some years 
lobbying the government on a wide variety of issues, ranging from 
competitiveness reforms to promotion of public investment in 
infrastructure and education.  It frequently interfaces with the 
government via letters to the President or other executive branch 
officials. 
 
¶5. (U) Senator Juan Ponce Enrile led the charge in response to the 
letter.  In a speech to the Senate he decried the "intervention" of 
foreigners into the policymaking of the government, the addressing 
to the executive branch of a letter regarding an issue currently 
before the Congress, and a suggestion in the letter that some 
legislators had made "unwarranted accusations against bedrock 
principles accepted in progressive countries around the world." 
Enrile labeled foreign investors "carpetbaggers, predators, and 
buccaneers" and demanded that they appear in the Senate to explain 
themselves.  Chair of the Senate Energy Committee Senator Miriam 
Defensor Santiago invited the Chambers to appear before the 
committee on June 6. 
 
¶6. (U) The spectacle of the foreign businessmen, led by the French 
head of the European Chamber, Hubert D'Aboville, being browbeaten by 
Senators Enrile, Santiago and Joker Arroyo was televised live 
nationwide.  Described by some observers as "hapless," D'Aboville 
attempted several times to read a prepared statement, but was not 
allowed to do so.  Instead, he and the other Chamber representatives 
(including an AmCham representative) were berated, interrupted, and 
heckled by the Senators.  At one point Enrile, seemingly enraged, 
shouted, "You wanted to make a profit. Because you are forcing the 
government to sell [its generation and transmission assets] for a 
song. My goodness, get out of this country if you can't live with 
us.  You're guests in this country." 
 
¶7. (U) Local Semiconductor Industry representatives present at the 
Senate hearing came to the rescue of the chambers, stating that they 
also opposed the amendment of the law, as they believed amendment 
would delay, rather than promote, the reduction of electricity 
prices in the country. 
 
¶8. (U) Press reporting of the hearing has generally been critical of 
the conduct of the Senators.  Other Senators have suggested to the 
press that they would not have treated foreign investors in such a 
manner.  Enrile's own repetitive calling of the Chamber 
representatives "guests" may have backfired on him, as Filipino 
pride in welcoming guests contrasts sharply with Enrile's actions. 
Some editorialists have suggested that the hearing may have a 
chilling effect on foreign investment. 
 
Ulterior Motives? 
 
MANILA 00001417  002 OF 002 
 
 
----------------- 
 
¶9. (SBU) A few commentators have gone so far as to suggest that 
there may have been ulterior motives behind the show at the Senate. 
The Foreign Chambers have been active for some years on a variety of 
sometimes controversial economic policy issues.  Some analysts 
suggest that the Chambers' anti-smuggling efforts may have incited 
Enrile's reaction since representatives of the Foreign Chambers last 
month discussed smuggling with Enrile's son in law, who runs an auto 
import operation operating in Cagayan Special Economic Zone and Free 
Port and is suspected of involvement in smuggling. 
 
Comment:  Nationalism vs. Hospitality 
------------------------------------- 
 
¶10. (SBU) The print press has been critical of the actions of the 
Senators and the story had no legs on television, where it was 
carried only on Friday and did not elicit much commentary.  Though 
appeals to nationalism are often effective for Philippine 
politicians, the perception that the Senators were rude and treated 
their foreign guests poorly may have helped counterbalance 
nationalist sentiment in this case.  As for the energy act 
amendments, Congress adjourned on June 11 without passing them.  The 
Joint Foreign Chambers are an important ally of the Embassy in 
pressing for key economic reforms here.  This ordeal may actually 
have strengthened their credibility and visibility as a force for 
reform. 
 
KENNEY