Japanese businesses have raised concerns over a controversial asset-surrender provision introduced ahead of the planned coal mine site bidding, warning that the rule may spoil investor confidence in the Philippine market.
In a position paper dated Oct. 30 submitted to the Department of Energy (DOE), Japanese Chamber of Commerce and Industry of the Philippines Inc. (JCCIPI) said many firms continue to explore possible investment opportunities in the Philippines, including artificial intelligence, mineral processing and semiconductors.
However, the recent joint administrative order issued by the DOE and the Department of Environment and Natural Resources (DENR) posed legal questions as well as further uncertainty in the business environment.
JCCIPI noted that the recovery, amortization or even depreciation of operational assets should not be the basis for the eventual transfer of ownership to the government. Doing so could threaten the financial position of the companies, as this would lead to a drop in their asset value.
‘The scope and legal basis of the turnover requirement therefore require clarification, particularly where assets were acquired using private capital and remain privately owned,’ the group said.
JCCIPI also said that some of its members had joined in previous bidding rounds without the government demanding them to surrender their assets.
The sudden shift in the rules would create regulatory instability, it said.
‘Bidding rules should be clear, transparent and applied equally to all qualified participants,’ the business group said.
‘Mining and resource development require substantial, long-term capital commitments. Uncertainty over the ownership and treatment of operational assets at contract expiration can affect corporate valuation, financing arrangements and decisions on future investments,’ it added.