RP upbeat on Taiwanese investments despite despute

RP upbeat on Taiwanese investments despite despute

MANILA (AFP): Philippine officials are optimistic of
attracting more Taiwanese investment despite concerns in the
private sector about the cancellation of direct flights from
Taiwan.

Taiwanese investors scouting for opportunities in the
Philippines have to go through a third country since Manila
banned direct flights from Taiwan on Oct. 1 amid a row over
alleged breaches of an air agreement.

Aviation officials also plan to take up bilateral air
arrangements with Singapore and South Korea -- two other
countries the Philippines has been courting for more investment.

Manila's air wars, which seemingly contradict President Joseph
Estrada's avowed policy of economic liberalization, has raised
concerns of renewed protectionism, if not outright cronyism where
the wider interests of the country are sacrificed for the sake of
a single company.

Sergio Ortiz-Luis, head of the Philippine Exporters
Confederation, said the dispute between Taipei and Manila had
resulted in a "freeze" in the movement of Taiwan investment here.

"This (Taiwan investment) is not encouraged," he said, adding
"the sooner we resolve that issue, the better."

He said Taiwanese officials were worried, not so much for the
lost seats but over the fact that a bilateral air agreement had
been suddenly cut short.

The Philippines had accused Taiwan of violating their
agreement by flying in more passengers than they were allowed and
by taking passengers to third country destinations, using lower
fares to allegedly steal customers from flag-carrier Philippine
Airlines (PAL).

Taipei in turn rejected Manila's demand that the two Taiwanese
carriers' weekly capacity be reduced to 3,000 a week from a
combined total of 9,600.

"They are bringing down the price of air fares. Philippine
Airlines is losing more and more and since it is our national
flag carrier, let us give it some protection," Estrada said,
affirming the government position.

PAL, owned by key Estrada supporter, Lucio Tan certainly needs
help.

The airline is saddled with US$2.2 billion in debt and has
been in the red for the past seven fiscal years. It narrowly
avoided bankruptcy last June 4 when Tan and some friends pumped
in US$200 million in fresh capital, meeting a regulatory and
creditor deadline.

Estrada has committed to help the airline but has affirmed
that no government money will be pumped into it. Instead, the
bilateral air agreements seem to be their weapon of choice.

Tourism groups and businessmen warn that even if PAL benefits,
the rest of the country may be the ultimate loser since investors
and tourists will be scared off and passengers -- particularly
the hundreds of Filipinos working overseas -- will have to
shoulder higher air fares.

The Freedom to Fly Coalition, a grouping of tourism and travel
groups, charged that the reduced number of seats offered to
Taiwan airlines would still cost the Philippines about US$146
million a week.

There is no immediate estimate of the cost of the canceled air
links.