TMA Philippine move ‘grossly prejudicial’

TMA’s move to open a thermal paper manufacturing plant in the Philippines has drawn strong criticism from the country’s government, with one government agency official calling the move “grossly prejudicial.”

The 2009 deal for TMA Group to open a 500-person thermal coated paper and plastics plant in the Philippines as a joint venture between the Philippine Charity Sweepstakes Office (PCSO) – a government body that spends lottery revenue on charities and health – and the Sydney-based label and ticketing manufacturer soured when the deal was reviewed by a new board and committee.

The report resulting from the review instigated by a new PCSO board, and its ‘Blue Ribbon Committee,’ which was carried out in December last year, said the deal should be cancelled because, in its signing, certain Philippine laws were violated.

The report said,

“The Blue Ribbon Committee supports the move of the current board of the PCSO to cancel this grossly prejudicial contract. Likewise, the case for graft already filed by the members of the current board against the members of the former board who approved this contract should be resolved immediately.”

The PCSO chairman, Margarita Juico (pictured), said, “the agreement is not within PCSO’s corporate purpose and mandate, and is grossly prejudicial to the interests of PCSO.”

However, after the new PCSO board moved to cancel the deal, TMA responded, filing a lawsuit to allow the deal to go through. This week, the company announced it would proceed with plans to build the thermal coating facility in the Philippines and transfer its thermal paper manufacturing offshore.

According to TMA’s chief, Anthony Karam (pictured), the legalities ensure that the PCSO must agree to the terms previously set out in the deal. “We have a court injunction saying that the PCSO must implement the joint venture,” says Karam.

This comes after TMA’s director, Tony Saad, reportedly challenged the Philippine government, saying to journalists, “as a multinational company which will be investing over $400 million this year in expansion, of which P4.4 billion has been earmarked in the Philippines, it is very difficult to understand how the President can simply allow his appointees to the board of the PCSO to act in contempt of court.”

According to TMA, local production of thermal paper will be wound down by the end of July, with the company’s existing Melbourne Bayswater plant set to lay off around 25 of its 75 staff, and be converted into a distribution centre.

Karam says that, while the deal had already been signed, the timing is fortuitous, with a strong Australian dollar impacting export rates and prices.

“The timeline has moved out, so it would have been much earlier, originally it would have been in 2010,” says Karam. “Looking at the business now, it was probably good luck we made that transaction. We’ve lost probably 25 per cent of the export sales out of that plant.”