Taxes or jobs? (2)

Arnold  Garbanzos

Conclusion

ILIGAN Ciy–The main fault of our city was that we allowed the Indians and the liquidator/banks to officially consummate an Asset Purchase Agreement (APA) knowing openly that there were still outstanding taxes to be collected from the liquidator and the banks.

Prior to the APA was a MOA. The MOA was signed in January 2004, the APA was signed 10 months later in October 2004. The city was in the position to collect, and so why didn’t it collect during that 10-month period?  The city could have even insisted that it be a signatory to the APA (within that 10 months) since there were still tax collectibles from the liquidator but why did the city not exercise these rights? In effect, the city estoppeled on its rights and is the primary reason why the city will always lose to the liquidator in any court proceedings they meet. If only the city insisted on its rights then matters would have run smoothly up to today.

For the sake of simplicity and those who would like to know, the APA is simply the technical term for a deed of conditional sale. It is not a deed for absolute sale.

If bad faith was not with Mittal, the question now is who among the city and the liquidator and the banks have the intent for bad faith? Who is the main culprit?

If liability for negligence and bad faith could not be clearly pinpointed, isn’t it logical that the three parties sit down together and settle matters amicably rather than go to the courts and then re-open the plant as soon as possible? Why be so concerned over other matters when the economic destiny of our city is at stake and the thousands of jobs which our people badly want?

Iligan is not that rich that it could afford to shoo away a P13.5-billion investment and 2,000 jobs. Tell me, with our present economic and political condition as a city, who do you think among the oligarchs of this nation will invest with us? Can the city bring in Ramon Ang? Can the city bring in Andrew Tan? Can we bring in Henry Sy? Or even the Ayalas?

If the city cannot, then isn’t it also logical that we re-open our biggest steel plant now rather than wait for them to come?

My suggestion is not a matter of whimsical conjecture–it has scientific basis. In marketing, we call this “loss leader” strategy where we sacrifice or lower the prices of certain goods in order to draw more customers into the store. Once they are inside, then we convince them to go for the higher price items, detailing durability and quality.  Gillete intentionally lowers the prices of its shaves but makes a killing on their blades. Some stores lower the prices of their drinks but makes a lot of sales on their food. We sacrifice some now to win big in the future. In chess, we call this a positional sacrifice–we sacrifice material like a queen or a rook in exchange for a positional advantage wherein we mate the king in two or three moves.

Iligan must learn how to make sacrifices in order to gain greater advantages in the future like converting the debt of the Indians into equity and then becoming part owner of the mill.  On top of this, since the investor is planning to make the mill fully integrated, then the mill does not only produce steel but also power and energy which in today’s modern steel technology is a by-product of an integrated steel plant through Corex or Finex technology.  Thus, Iligan is not only into the business of steel, it is also now entering into the power business–a more lucrative market in the Philippines, and whose ROI is much faster than steel.

I’ve stayed in El Nido, Palawan for almost a year. Nobody invited Ayala to come in. He simply did because he found the area worth investing on. The economic and political parameters are all in place for him to invest. Question is, are those parameters in place for Iligan too? If I have to convince Ayala to come over then the task is much more difficult for me. But if Ayala comes on his own volition because of the good things he has heard from our area, then that would make my life much easier.

I write these things to help our city. We have so much potential but bad decisions and bad politics have been hounding us for so long–almost two decades now. How I wish Iligan would have a Peniel experience and stop eating “lugaw” for breakfast, lunch and dinner.  We are very rich. As a matter of fact, Iligan has the legal right to be rich by God’s grace simply because we are blest with so much resources–thanks to the blessing of the lake up in Marawi. Yet because we slept on our rights as a people and failed to defend our blessings as a city, then we suffer today.

God does not want Iligan to eat lugaw anymore. He wants it to be like Jacob who will go all-out to defend his blessings and will not let God go unless He blesses him. Iligan is blest tremendously to be a blessing not only to our neighbors but even to the entire nation.  If only you see what I see is our great potential as a city, then you will understand where I am coming from. We can even be better than Singapore and Hongkong as a city state under a Federal Republic but first, Iligan must first put its act together starting with the Global Steel issue.

Our mayor should consult economic planners, not only lawyers, since a healthy economic perspective is the key to the growth of Iligan and its rise. The city should be proactive not reactive in its economic policies.

For all you know the current fate and state of our biggest steel mill in the country was not the fault of the Indians of Global Steel or the NSC liquidator. What if the fault lies with the previous city administrations that bungled their way over the entire matter?  What will the current city administration do? And that, my dear friends, is the 64-dollar question that only a good UP lawyer can answer.