Foreign business group raises red flag over LTO's car plates contract

The foreign business community on Wednesday raised concerns about doing business in the Philippines, citing the delays in releasing car plates under the standardization project of the Land Transportation Office (LTO).

 

The contractor has stopped delivering the license plates because of unpaid receivables from the LTO.

 

“It is simply unfathomable that the common principle of sanctity of contract can be completely disregarded here,” European Chamber of Commerce of the Philippines Inc. (ECCP) Vice President for External Affairs Henry J. Schumacher said.

 

Schumacher was referring to the contract awarded by the Department of Transportation and Communications (DOTC) to JKG-Power Plates, the winning bidder for the Motor Vehicle License Plate Standardization Program of the LTO.

 

“How can the country attract foreign investors if even a signed contract offers no assurance that the other party, in this case the government, will respect it?” Shumacher said.

 

In 2014, the DOTC signed a supply contract with JKG-Power Plates, a Philippine-Dutch joint venture, for vehicle license plates. The five-year, P3.176 billion contract covers 5.23 million pieces of motor vehicle plates and 9.97 million for motorcycles.

 

The new car plates are being manufactured in the Netherlands, where J. Knieriem b.v (JKG), the partner of Filipino contractor Power Plates Development Concepts Inc., operates a factory. 

 

According to the ECCP, JKG-Power Plates delivered a total of 877,166 pairs of MV plates, 2,370,006 pieces of MC plates, and 12,685 pieces of trailer plates with a combined value of P620,348,072.50. But the joint venture was only paid P477,901,329.00, the business group claimed.

 

Due to the unpaid receivables, JKG-Power Plates has stopped delivering the license plate to the LTO and would do so until the government is able to pay for the initial deliveries, the ECCP noted.

 

Last July, the Commission on Audit (COA) disallowed additional disbursements for the project on the heels of a Supreme Court (SC) decision on a petition for certiorari and prohibition regarding the procurement under the LTO Motor Vehicle License Plate Standardization Program.

 

The SC ruled that the petition has been rendered moor and academic, and any defect in the procurement process has been “cured.”

 

“Again, it is difficult to understand why we cannot rely on the strength of a decision of the highest court of the land. Can COA overrule or disregard a decision of the Supreme Court?” Schumacher said.

 

According to the ECCP official, none of the supposed defects in the procurement process is attributable to the foreign supplier and yet the supplier and the public are suffering the consequences.

 

However, Schumacher said he hopes that the COA will revisit its earlier decision and abide by the SC decision.

 

“If this phenomenon continues, as we have seen in a number of other cases, including Piatco, Manila Water, Manila North Tollways Corp., to cite a few, foreign investors will look for more stable investment climates elsewhere,” Schumacher said.

 

The ECCP warned that such uncertainty and unpredictability of how policies in place are being disregarded will dilute the efforts of foreign chambers in promoting the Philippines as an investment hub in Asia.

 

“It will be no fun doing business in the Philippines,” Schumacher added. – Jon Viktor Cabuenas/VS, GMA News