The government’s refusal to accept 280 million euros worth of development aid from the European Union caught European investors in the country by surprise, lamenting that grants play a factor in keeping the business environment conducive.
The European Chamber of Commerce of the Philippines (ECCP) said it first thought there might have been a confusion with the generalized system of preferences plus (GSP+) or the ongoing free trade agreement negotiations with the EU.
Both mechanisms, the group said, imposed conditions that both sides mutually agreed on. On the other hand, the grants were generally “unconditional.”
However, as Malacañang clarified on Thursday, this would apply to new grants that come with the condition that the government sees has the potential to interfere with internal affairs. Trade and Industry Secretary Ramon M. Lopez added that the government would still like to keep its GSP+ status since the arrangement deals with “commercial transactions.”
“As far as the business community is concerned, it has been pointed out by most [if not all] business sectors, that peace and order is an essential and integral part of doing business and attracting investments, no matter where these come from. Hence grants help to expedite this very cause,” ECCP president Guenter Taus said in an e-mail.
EU Ambassador Franz Jessen said on Thursday that they were informed by the Department of Finance (DOF) that the Philippines would no longer accept the grant.
The move comes as the Philippines pursues what officials described as an independent foreign policy, even though the government is tightening its economic ties with China.
The grant, priced at 280 million euros according to DOF, would have primarily gone to the poorest communities of Mindanao.
“While usually grants are not affecting businesses, it must be said that they do greatly contribute to creating desirable conditions for businesses to thrive and spur inclusive growth as it creates much needed jobs—and grants come free of charge and conditions,” Taus added.
Also on Wednesday, Socioeconomic Planning Ernesto Pernia said that he was out of the loop during discussions on the EU grant, while noting that President Duterte has a knack of withdrawing from his previous statements. Malacañang said that Duterte allowed the DOF to reject the grant.
Since being informed of the government’s decision last Wednesday, Jessen told the Inquirer on Friday that they have yet to receive any update on their request for a written clarification on the issue.
It remains to be seen how this decision would affect the relationship of the Philippines with the EU, a bloc which was has been a crucial partner for development in terms of trade, investments, and even foreign aid.
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