Posts Tagged ‘Finance Secretary Cesar Purisima’

Neda committee endorses 2 PPP projects

Manila Standard Today, 27 August 2014

By Othel V. Campos

 

The Investment Coordination Committee of the National Economic and Development Authority approved two public-private partnership projects that aim to improve land and water transportation systems.

The committee approved on Aug. 23 the P17.5-billion Davao Sasa port project and conditionally cleared the P19.3-billion Motor Vehicle Inspection Center Project. Both projects will be implemented by the Transportation Department.

The Davao Sasa port project involves the construction of a world-class container terminal that is expected to enhance port operations, reduce vessel waiting time and attract direct calls of large foreign container vessels that will translate to reduced shipping costs for shipments to and from Mindanao.

Under the build-operate-transfer scheme, the private partner will finance the construction and upgrading of existing port infrastructure, operate and maintain the improved port facility.  It will be allowed them to collect user fees for cargo and ancillary services for the next 35 to 40 years.

Meanwhile, the Neda committee approved under certain conditions the Motor Vehicle Inspection Center project.

Finance Secretary Cesar Purisima said the project should first prioritize public transportation, before subjecting private vehicle owners into the same routine and costly inspection system.

He said there was no pressing need to force private owners to have their vehicle checked yearly.

The project will be implemented via the BOT structure initially for 10 years, which is renewable for another 10 years.

The private sector partner will build, finance, operate and maintain the motor vehicle inspection center and should supply and maintain the equipment.

Under the proposal, there will be five jurisdictions each with a single concessionaire. It will also allow for the inclusion of sub-franchises to be owned and operated by Filipino nationals with the concessionaire having overall responsibility.

 

MRT7 construction to start before 2014 ends

Rappler, 26 August 2014

 

After several years of delay, San Miguel secures a performance undertaking from the finance department, green lighting the P63-billion PPP project

MANILA, Philippines – The Department of Transportation and Communications (DOTC) expects the construction of the P63-billion ($1.44-billion)* Metro Rail Transit Line 7 (MRT7) to start before 2014 ends.

San Miguel Corporation finally obtained a performance undertaking from the Department of Finance (DOF) after years of delay.

The proposed train project that is expected to serve 2 million commuters will start at Tala, Caloocan City, and pass through Lagro and Fairview, Novaliches, Batasan, Diliman, PHILCOA, before ending at EDSA corner North Avenue in Quezon City.

DOTC Secretary Joseph Emilio Abaya expressed optimism that San Miguel could do the financial closing soon.

“We asked them to do it (financial closure) sooner than 18 months. They are saying they could do advance works once they get the green light. We hope before next year they can start construction,” Abaya said.

He added that Finance Secretary Cesar Purisima already signed the performance undertaking for the public-private partnership (PPP) project.

The project, to be funded by official development assistance from Japan Bank for International Cooperation, needs a performance undertaking from the DOF representing a financial guarantee.

Years of delay

The construction of the 22.8-kilometer train line with 14 stations has been delayed for almost 4 years because of San Miguel’s failure to secure a performance undertaking from the DOF.

In 2008, DOTC signed a contract with Universal LRT Corporation Ltd (ULC BVI) to build the railway system and develop the project’s real estate and commercial components. San Miguel’s wholly-owned subsidiary San Miguel Holdings Corporation executed a share sale and purchase deal in 2010 to acquire 51% of ULC BVI from the group of Salvador Zamora II.

The MRT7 project worth $2.2 billion was supposed to start construction in 2010 and commercial operations by 2012. ULC BVI had said $320 million of the project’s total cost would be financed by equity, and the rest by borrowings.

DMCI Holdings Incorporated through construction arm DM Consunji Incorporated entered into a joint venture with Marubeni Corporation of Japan in 2012 for the engineering, procurement, and construction of MRT7 and its Intermodal Transportation Terminal.  Rappler.com

 

*($1 = P43.86)

 

Govt to guarantee MRT 7 rail

Manila Standard Today, 25 August 2014

By Alena Mae S. Flores

 

The government has agreed to provide a financial guarantee to Metro Rail Transit Line 7, allowing proponent San Miguel Corp. to start the construction of the P62.7-billion rail project within the year, Transportation Secretary Joseph Emilio Abaya said over the weekend.

Abaya said the Finance Department issued the performance undertaking for the 22.8-kilometer rail project.

A performance undertaking, or a financial guarantee given by the government to the contractor, is a requirement for the financial closure of a project that would be partially funded by official development assistance from multilateral banks or foreign lenders.

“The performance undertaking has been signed by [Finance] Secretary [Cesar] Purisima. We have signed our implementing guidelines, so it is a matter of calling them [proponent] and giving it to them, so that’s already a go,” Abaya told reporters.

“The next step, once the performance undertaking is given to them, they should commence financial close. What I’m requesting them to do is to do it sooner than 18 months, but they’re saying they could do advanced works once they get the green light. I hope they can do it before next year,” Abaya said.

The National Economic and Development Authority board, chaired by President Benigno Aquino III, approved the MRT 7 project, an unsolicited offer from conglomerate San Miguel Corp. in November 2013.

MRT 7 involves the construction of a 22.8-kilometer rail system from North Avenue station in Quezon City, passing through Commonwealth Avenue, Regalado Avenue and Quirino Highway, to the proposed intermodal transportation terminal in San Jose del Monte City, Bulacan.

The project, first proposed by Universal LRT Corp. Ltd. nearly a decade ago, was delayed because of the company’s failure to secure a performance undertaking from the Finance Department.

San Miguel, through unit San Miguel Holdings Corp., acquired a 51-percent interest in Universal LRT in 2010.

San Miguel awarded the engineering, procurement, construction contract to the Marubeni-DMCI consortium.

San Miguel earlier said once the performance undertaking was given by the Finance Department, the processing for the financial closure could be received within the year.

The company said construction of the project was estimated to take 42 months.  Once completed, MRT 7 is expected to serve 850,000 passengers daily.

 

SMC gets OK for MRT-7 construction

Malaya Business Insight, 25 August 2014

 

San Miguel Corp. (SMC), a proponent of the P62 billion Metro Rail Transit line 7 (MRT 7) project, has obtained green light from the government to pursue the construction this year or early 2015.

Transport secretary Joseph Emilio Abaya said the Department of Finance (DOF) has signed the MRT 7 performance undertaking while the Department of Transportation and Communications has signed the implementing guidelines of the project.

“MRT 7 performance undertaking has been signed by Secretary Purisima. We have signed our implementing guidelines. It’s a matter of calling them and giving it to them,” Abaya said.

SMC has been waiting for the DOF’s nod on the performance undertaking as it is crucial in the financial closure of the project.

A performance undertaking represents a financial guarantee on the part of the government. It is a requirement for the project’s financial closure that would be funded by official development assistance.

Abaya said he expects the construction to commence this year or early next year once the performance undertaking is given to SMC.

“They (SMC) are saying they can do advance work, once they get the green light. I hope (they can do so) before next year,” he added.

On the common station, Abaya said SMC is open to the possibility of building a mini common station near SM City North Edsa as long as their revenue expectations don’t drop.

After the financial closure, construction of the 44-kilometer road and rail transportation will begin immediately. This will take an estimated 42 months to complete.

In October 2010, through its unit San Miguel Holdings Corp., SMC acquired a 51 percent stake in Universal LRT Corp. (ULC), which holds the Build-Operate-Transfer concession for MRT 7, a planned expansion of Manila’s metro rail system.

MRT 7 is one of several rail extension projects to the existing metro rail system that serves Metro Manila. It includes a 22-kilometer 6-lane asphalt highway that will connect the North Luzon Expressway to the intermodal transport terminal in San Jose del Monte City, Bulacan, as well as a 22-kilometer mostly elevated MRT with 14 stations that will start from San Jose del Monte City and end at the integrated LRT 1/MRT 3/MRT 7 station at North EDSA.

ULC will operate and manage the system on behalf of the Philippine government for 25 years while gradually transferring ownership to the government in proportion to payments of semi-annual capacity fees.

MRT 7 will have 14 stations that include North Avenue, Quezon Memorial, University Avenue, Tandang Sora, Don Antonio, Batasan, Manggahan, Doña Carmen, Regalado Avenue, Mindanao Avenue, Quirino and Sacred Heart in Quezon City; Tala in Caloocan City; and Araneta in San Jose del Monte.

 

San Miguel’s proposed MRT7 bags gov’t guarantee

InterAksyon, 25 August 2014

By Darwin G. Amojelar

 

MANILA – After six years, the government finally has issued a financial guarantee for the construction of a train service that would run between Quezon City and Bulacan province.

“The performance undertaking has been signed by Sec. [Cesar] Purisima. We have signed our implementing guidelines, so it is a matter of calling them and giving it to them. So, it’s a go,” Transport Secretary Joseph Emilio Abaya told reporters last week.

The performance undertaking covers the Metro Rail Transit Line 7 (MRT7), which the San Miguel Group has proposed to build. The issuance of a performance undertaking by the Department of Finance (DOF) is a requirement for financial closure of a project that would be funded by official development assistance (ODA).

A performance undertaking represents a financial guarantee on the part of the government that it will assume the risk of of a project. ODA refers to foreign aid in the form of grants or loans that carry below-market interest rates and longer repayment terms.

“We requested them to complete the financial closure sooner than 18 months,” Abaya said, adding that San Miguel can start construction before next year.

The MRT 7 project has been delayed for six years because of the proponent’s failure to secure a performance undertaking from the DOF.

The Department of Transportation and Communications (DOTC) and proponent Universal LRT Corp (ULC) signed the contract to build the railway in 2008. San Miguel Corp, through unit San Miguel Holdings Corp (SMHC), is part owner of ULC.

Ramon S. Ang, San Miguel president, had said funding was “ready” for MRT 7 as the Japan International Cooperation Agency agreed to provide partial financing for the project.

The P62.7 billion MRT 7 Project involves the construction of a 22.8-kilomenter rail system from North Avenue corner EDSA in Quezon City, passing through Commonwealth Avenue, Regalado Avenue and Quirino Highway up to the proposed Intermodal Transportation Terminal in San Jose del Monte, Bulacan. This project will cover 14 stations.

The railway will serve an estimated two million commuters in the northern parts of Quezon and Caloocan cities. Apart from the elevated transport system, ULC will also build at no cost to the government a 17-kilometer, six-lane asphalt access road in Marilao, Bulacan that will lead to its depot in Tala.

Besides the railway project, ULC plans to develop 900,000 square meters of commercial space throughout the concession period.

 

DOF signs performance undertaking for MRT-7

The Manila Times, 24 August 2014

By Rosalie C. Periabras

 

The Department of Transportation and Communications (DOTC) on Friday said that the Department of Finance (DOF) has signed the performance undertaking for the construction of the Metro Rail Transit Line 7 (MRT 7).

“[The] performance undertaking has been signed by DOF Secretary Cesar Purisima. We have signed our implementing guidelines, so it is a matter of calling them and giving it to them so go na ‘yan [so that is a go],” DOTC Secretary Joseph Emilio Abaya told reporters.

He added, “DOF signed that [performance undertaking]. Next step, pagkaabot sa kanila [once the implementing guidelines are given to them], they should commence financial close. Ang pakiusap ko sa kanila [My request to them] is to do it sooner than 18 months, but they’re saying they could do advanced works once they get the green light. Sana [Hopefully], before next year.”

Last year, the National Economic and Development Authority (NEDA)-Cabinet Committee endorsed the MRT 7 project to President Benigno Aquino 3rd.

However, under the implementing rules and regulations of the Build-Operate-Transfer (BOT) Law, a project that undergoes cost changes should go back to the NEDA-Investment Coordinating Committee for re-evaluation.

NEDA approval for the project had lapsed, so the project needs to undergo re-evaluation. BOT rules also provide for an 18-month validity of the NEDA approval.

The MRT 7 project will cost roughly $1.2 billion. The said project has been delayed for about five years because of the proponent’s failure to secure a performance undertaking from the DOF.

A performance undertaking is a guaranty issued by the government that an agency implementing a project will comply with its obligations.

The MRT 7 will run from San Jose del Monte City, Bulacan to SM City North Edsa, linking up with the Light Rail Transit Line 1 and MRT 3.

The DOTC earlier said that the planned MRT 7 would begin in Tala, Caloocan City, pass through Lagro, Fairview, Novaliches, Batasan, Diliman, and Philcoa, before ending at the planned common station on the Epifanio delos Santos Avenue and North Avenue. The railway will serve an estimated two million commuters in the northern parts of Quezon City and Caloocan City.

 

PH secures another credit upgrade

Manila Bulletin, 09 July 2014

By Chino Leyco

 

The Philippines has secured another credit-rating upgrade, this time from Japan-based R&I, which sees consistent rise in per-capita income in the country as a result of immense growth in infrastructure investments and continuity of reforms.

R&I raised the country’s long-term foreign-currency issuer rating by a notch from the minimum investment grade of BBB- to BBB. The rating was assigned a “stable” outlook, which means it is unlikely to change within a year.

At the same time, the credit watchdog maintained the country’s short-term debt rating at a-2, which indicates high certainty that short-term financial obligations would be paid.

“The Philippines’ economy continues to show strong growth, thanks to brisk investment coupled with private consumption driven by remittances from overseas Filipinos,” R&I said in a report released yesterday.

“This should allow for relatively high growth and raise per-capita income levels steadily,” it stressed.

Per-capita income in the Philippines has been modest compared with those of more advanced neighbors, but the country is catching up in this area. From $3,684 in 2009, per capita income in the country (using current prices and purchasing power parity) increased to $4,649 last year.

R&I recognized the country’s healthy fiscal situation, saying this helps fulfill the plan of boosting public spending.

“Savings in interest payments, thanks to fiscal consolidation, help the government to finance infrastructure projects. Budget execution is also expected to accelerate,” it said.

This year’s state budget for infrastructure at P404.3 billion, R&I cited, is 40 percent more than last year’s.

R&I also said the rollout of more projects under the Public-Private Partnership (PPP) program would help drive more job-generating investments and sustain the rise in incomes.

“Furthermore, public-private partnerships, which utilize private capital [for funding public infrastructure], are underway, albeit gradually, and will likely boost investments,” R&I said.

Earlier this year, the government awarded contracts for two PPP projects, namely the P1.72-billion automated fare collection and single ticketing system for the MRT and the LRT, and the P17.5-billion Mactan Cebu International Airport expansion project. This brings to seven the total number, and to P62.6 billion the aggregate cost, of the PPP projects awarded so far.

R&I also recognized the country’s sound macroeconomic fundamentals, including ample foreign-exchange reserves, improving manageability of government debt, and within-target inflation.

It also said reforms instituted by the Aquino administration, including legislative and administrative reforms in tax collection, helped improve the investment climate. R&I expressed belief reforms will be sustained even beyond 2016.

“There is risk that the next government will not be as reform-minded as the Aquino administration. However, pressures from growing international relationships, such as the establishment of the ASEAN Economic Community in 2015, along with public expectation for sustained reform initiatives, should deter the post-Aquino government from going backwards,” it said.

Meantime, Governor Amando M. Tetangco Jr. of the Bangko Sentral ng Pilipinas welcomed the upgrade, saying this validates soundness of existing policies.

“The latest development on the country’s credit standing is a recognition of a host of favorable macroeconomic indicators, particularly an inflation outlook that is conducive for business and the stability of the financial system amidst a difficult operating environment,” Tetangco said.

“The upgrade is an expression of confidence, in part, on the ability of the Monetary Authority to implement appropriate and timely measures that ward off threats to the economic stability we are enjoying. The BSP will continue to craft policies that will help maintain this stability,” the BSP chief added.

Finance Secretary Cesar V. Purisima, likewise, affirmed the focus on sustainability of favorable trends for the economy.

“Reforms that this government has started to institutionalize help ensure that the positive momentum will not falter,” Purisima said.

“On the fiscal front, administrative and policy reforms implemented by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) will make it easier in the future to keep the growth trend in public revenues,” he said.

Investor Relations Office (IRO) Executive Director Editha Martin said the country’s upward movement in the credit-ratings scale bodes well for raising the country’s international profile as an investment destination.

“It is always good to have institutions outside the government point out the strengths of the Philippine economy. The string of credit-rating upgrades that the country has secured in recent years makes it difficult for investors not to notice the Philippines,” Martin said.

 

PPP infrastructure program seen template for developing nations

Manila Bulletin / Yahoo, 23 May 2014

By  Chino Leyco

 

The Philippine government’s infrastructure program, the supposed centerpiece of the Aquino administration, is seen to become a new global benchmark that other developing nations may emulate, a cabinet official said.

On the sideline of the World Economic Forum (WEF) on East Asia, Finance Secretary Cesar V. Purisima cited the two-pronged approach of the government in boosting infrastructure, which include Public-Private Partnership (PPP) program, and higher budget allocation for infrastructure projects.

“We need connections to supply chains. We need to make it easy for tourists to visit and move around the country. We need to make it easier for investors to do business here. All of these require heavy investments in infrastructure, and the Aquino administration is doing exactly that,” Purisima said in a speech delivered at the Bloomberg Leadership Forum.

He said the national government targets to increase the budget for infrastructure from 2.9 percent  of the economy, as measured by its gross domestic product (GDP), last year and 3.1 percent this year, to 5 percent by 2016.

Moreover, under the PPP program, over P1 trillion in infrastructure projects are already in the pipeline.

According to data from the PPP Center, there are 57 infrastructure projects under the PPP program that are in various stages of implementation.

So far, contracts have already been awarded for seven PPP projects that have a combined cost of P62.6 billion.

These projects are the following: Daang Hari-SLEX Link Road Project, PPP for School Infrastructure Project Phase 1, NAIA Expressway Project, PPP for School Infrastructure Project Phase 2, Modernization of the Philippine Orthopedic Center, Automatic Fare Collection System, and Mactan-Cebu International Airport Passenger Terminal.

“Soon, one can look at the PPP program of the Aquino administration and say that it has been one of the better [economic development] programs not only in the Philippines but in the world,” Purisima said.

Rising infrastructure spending is credited for helping boost growth of the Philippines, which last year became the fastest growing economy in Southeast Asia and one of the fastest in the world with an expansion rate of 7.2 percent.

Robust economic growth achieved amid relatively weak global economy helped the Philippines secure investment grades last year.

 

NAIA CLOSED TO OPEN SKIES; Bad airports deter tourists

Malaya Business Insight, 23 May 2014

By Angela Celis and Irma Isip

 

The Philippines will continue to close its main gateway, the Ninoy Aquino International Aiport under the ‘open skies’ of Asean which takes effect next year according to Trade Secretary Gregory Domingo.

Domingo during a lull in the discussions at the World Economic Forum on East Asia admitted to reporters “pressure from local airlines” to keep NAIA closed to international airlines.

Finance Secretary Cesar Purisima also explained to delegates that the country needs to ease first the congestion at the Ninoy Aquino International Airport before it can be opened as the key entry point from the open skies being negotiated by the 10 economies in Asean.

In a related development, Transport and Communications Secretary Joseph Emilio Sevilla said the government will build a second runway at the NAIA that will cost P2 billion, as an immediate solution to the congestion.

Domingo said: “we are part of the open skies (agreement in Asean) but our stand is our open skies is all ports outside Manila,”

Purisima said infrastructure bottlenecks in the aviation industry must first be addressed before pushing for open skies policy on a national scale.

Purisima said yesterday NAIA is a problem aching to be solved immediately.

(As if to make a bad situation worse, air conditioning failed in Terminal I and III for about two weeks.  Terminal II built by Lucio Tan for Philippine Airlines remains comfortable)

“The challenge really is congestion in Manila so we need to fix the infrastructure (if) we want to have more connections,” Purisima said at the forum on East Asia Economic Outlook.

Purisima politely suggested open skies policy will attract more foreign airlines and increase the number of tourists only if the airports are comparable to those in Asean region.  The Federal Aviation Authority of the US has raised to 1 the category of the NAIA from 2.  The upgrade directly relates to safety.

Congestion is a different problem.

The Aquino administration adopted a pocket open skies policy, which liberalized the country’s secondary international airports by allowing more foreign carriers to fly and bring in more tourists.

“It’s okay to take small steps as long as you continue to take the right direction,” the finance chief added.

Tony Fernandes, AirAsia CEO, said during the forum there is great potential in the Asean region.

“We’re moving in the right direction, but there’s still a lot to be done. Open skies is one thing, but there are still a lot of invisible barriers,” Fernandes said.

“There’s a disconnect between policymakers and what the private industry thinks. The communication has to grow between the private sector and the government,” he added.

Meanwhile Purisima said he is confident the Aquino administration will succeed in pushing through with its planned reforms in the last two years of its term.

“The good thing about President Aquino is that he is extremely popular. He has the political capital to make sure that on the last two years of his term, he will follow through with the reforms,” Purisima said.

“What’s important is we have set the foundations. We can’t finish it all in six years. But the important thing is the opportunity is there. That’s why we’re optimistic,” he added.

Meanwhile, the alternative runway will be located in the South of the main current runway, Abaya said the biggest challenge is the relocation of the 600 households that will be affected .

NAIA has only one runway that currently handles commercial aircraft takeoff and arrival of 40 events per hour its lower compared three years ago of 52 to 56 events per hour. But , NAIA still operating beyond its capacity limit of 36 events per hour. NAIA handles 625 flights daily.

At the session on Connect on Trade:Lifting Barriers to Growth, Singapore Senior Minister of Finance Josephine Teo said when Asean opens its skies next year, demand for air traffic will grow, driven by a growing middle class in Asia and specifically in Asean who are now interested and can afford to travel.

Open skies will allow Asean airlines to fly with fewer restrictions within the region and according to Teo, Asean could consider the EU aviation as a reference point.

She said while there is today overcapacity among low cost airlines, it is a matter of timing that demand would grow and multiple links and direct city links are needed to satisfy the travelling preferences of people in Asean.

The benefit, Teo added, would be in reduced cost of air transport passenger and freight.

“But this goes beyond idea of single aviation for the market and demand for air travel but also because of the tremendous effort on harmonizing regulatory requirements.”

She admitted though that challenges many Asean economies face is in the overcapacity of their airports and need to invest in airport infrastructure to expand the capacities.

Teo also broached the idea of considering liberalizing air transport agreement (ATA) as a bloc with other countries like what it forged with China.

Teo said there is a potential for a region to region ATA between Asean and EU.

 

ADB: Private investment lags in Southeast Asia

The Philippine Star, 23 May 2014

By Teresa Cerojano

 

MANILA, Philippines — An Asian Development Bank official warned Thursday of a largely unnoticed crisis in Southeast Asia: private investment in infrastructure has not recovered in the nearly two decades since the Asian financial crisis.

Stephen Groff, ADB Vice President for operations, said in an interview on the sidelines of the World Economic Forum on East Asia, that private funding for infrastructure in five of the biggest Southeast Asian members has declined steeply. It was $38 billion in 1997 and around $25 billion in 2010.

“It’s coming up but it’s nothing like it was in 1997,” he told The Associated Press. “Essentially, the ASEAN financial crisis led to a crisis of confidence with governments, a crisis of confidence in the private sector, and there hasn’t been enough investment or discussion or development of tools that allow risk-sharing to be used appropriately.”

The five members he referred to were Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The other members are Singapore, Cambodia, Laos, Myanmar and Brunei.

Groff said while private investors assume risks, there are other types of risks that governments and financial institutions need to assume “and that hasn’t yet come into play as much as it needs to.”

The region, which will launch next year a common market comprising 600 million people, needs to spend $60 billion yearly until 2020 to meet its infrastructure needs. But Groff said ASEAN currently spends only about half that.

He said while there has been some progress in a number of countries in recent years in helping facilitate private investments in infrastructure by addressing legal and regulatory issues that restrict private participation, the process is not easy and takes time.

There is a need to think about financing interest mechanisms, mechanisms to mitigate risks, developing bankable projects that attract private investments and bringing back home the region’s extra savings that have been invested in low-yielding treasury bonds in the U.S. and Europe, he added.

To bring back some of those funds, the ADB has helped develop the ASEAN Infrastructure Fund which began lending last year. Two infrastructure projects in Indonesia have been funded while more projects throughout the region are in the pipeline, Groff said.

The fund is being managed by the ADB, with funding coming from ASEAN members and the bank.

Indonesian Finance Minister Muhamad Chatib Basri said infrastructure is the “first priority” for his country after it had established political stability under outgoing President Susilo Bambang Yudhoyono.

However, he said the ” main challenge in the future is not only sustainable growth but also shared growth.”

Philippine Finance Secretary Cesar Purisima said the region’s relatively young population, natural resources and its geographic location are factors that would contribute to growth. But to make sustainable growth a reality the “capital surplus region” has to make more infrastructure investments, he added.

“We have the money … but we need to make our financial markets more efficient and more connected,” he said. “Governance is the most important ingredient because businesses want predictability, want open economy, want to be able to reduce the risks.”