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.