IT was a bit shocking to read that Economic Planning Secretary Ernesto Pernia claims that the administration will allow up to 70 percent foreign ownership of public utilities.
Hasn’t this Cabinet official, the director general of the National Economic Development Authority, a UP professor emeritus, read our Constitution? Does he even know that we have a Constitution on which the state he works for is based?
Article XII (National Economy and Patrimony), Section 11 reads:
“No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens.”
If Pernia can’t do the simple arithmetic, I can tell him with confidence that this constitutional provision says foreigners can own only at most 40 percent of a public utility. Pernia even says “full ownership of telco firms could be possible.” What?
Since Pernia in his talk with reporters last July 14 didn’t even mention the word “Constitution,” I am convinced he really hasn’t read the Constitution, and doesn’t know that to allow more than 40 percent foreign ownership, it must be amended, which is not an easy thing to do.
His ignorance even of the laws that govern foreign investments was obvious in his claim that public utilities can be removed from the “foreign investment negative list”. This Ph.D. in economics is saying that such industries as telecommunications and power can be reclassified as manufacturers of toys or trinkets so they would be allowed 100 percent foreign ownership.
Focus on telcos
I nearly fell out of my seat when I read Pernia as saying, “The focus is on telcos because that’s where we are really inefficient.” He says “full foreign ownership of telco firms” should be allowed to make telcos more efficient.
Doesn’t Pernia, even with his huge research staff, know that foreigners own 76 percent of PLDT and 73 percent of Globe Telecom, respectively, the two companies that make up the the telecoms industry duopoly, as I discussed in detail in my book Colossal Deception: How Foreigners Control our Telecoms Sector? The biggest stockholders of PLDT are the Indonesian Anthoni Salim and the Japanese NTT group, while in Globe Telecom, it is the Singapore state firm Singtel. Foreign fund managers hold about 20 percent in each of these firms, so that Filipino ownership in these firms is just 30 percent, in violation of the Constitution.
Foreign ownership of PLDT and Globe way exceeds the 40 percent constitutional limit as measured using the global definition of common shares as representing ownership.
That these firms claim less than 40 percent ownership is simply due to the Securities and Exchange Commission’s capitulation to their lobbying. SEC chair Teresita Herbosa issued a circular in 2013 that allowed their trick of lumping cheap Filipino-owned “voting preferred shares” with common shares to compute the ownership percentage of Filipinos and foreigners. We are the only country in the world to do this. We are the only country in which a middling bureaucrat like Herbosa can in effect amend the Constitution.
What restrictions on foreign capital is Pernia talking about? The reality on the ground is that the Constitution and even our laws have been easily overcome by foreigners’ top-notch corporate lawyers with the collaboration of the SEC, the entity tasked with enforcing foreign equity laws but which largely has forgotten its mandate?
Pernia is so unaware of what is happening in the country’s economy. The reality is that he won’t be able to go through a day without buying—having to buy from monopolies, actually—a product or a service sold by foreign corporations. Yet he claims we still have restrictions on foreign capital.
When Pernia wakes up in morning and he turns on the lights, his electricity comes from the Manila Electric Co., controlled by an Indonesian conglomerate that is tightly owned by Anthoni Salim, son of the late Liem Sioe Liong, who had been Indonesian dictator Suharto’s biggest crony.
Pernia’s breakfast and then his shower contain or use products made or distributed by big multinationals. The biggest consumer-product multinationals in the world, the Swiss-based Nestlé and the US-based Procter and Gamble, have dominated the industry since before the war.
In his posh La Vista village mansion in Quezon City, the water he drinks are supplied by Manila Water, of which the old-elite Ayalas own just 31 percent, while about 34 percent is shared by the Japanese Mitsubishi Corp., Singaporean firms, and the International Finance Corp. of the World Bank. In his office in the Ortigas business district, his water comes from Maynilad Water, which is 53 percent owned by the Indonesian Salim’s holding firm in the country, Metro Pacific Investments.
If he had to stop to buy bottled water at a convenience store, he’d be buying from 7-11 , now ubiquitous in the country’s urban areas. Guess who controls our 21st century version of sari-sari stores?
No, it’s not the family of the late Vicente Paterno nor Erap’s trade and industry secretary Jose Pardo nor Mar Roxas’ Araneta clan—although each of these, you might say, are ten-percenters, i.e., they each own 10 percent of shares in the firm.
Philippine Seven Corp. is 57 percent owned by Taiwan-based President Chain Stores, one of the biggest conglomerates in Asia with 80 subsidiaries and affiliates all over the region. (For details see my column of June 2, 2013, “Taiwanese firm booming in the Philippines”).
If Pernia on the way to his office stopped for gas, he’d likely be buying from foreign firms’ subsidiaries Pilipinas Shell and Chevron (Caltex), which has been in the country for a century and together have 40 percent of the market.
Among the newspapers Pernia would read is the Philippine Daily Inquirer, 20 percent of which the Indonesian Salim owns, through PLDT’s Beneficial Trust Fund. Salim through intermediary firms totally controls Philippine Star and Business World, owning 70 percent shares in both papers. Salim also has TV-5 and Bloomberg Philippines.
If Pernia has to travel out of Manila, he’d likely be on an expressway the Indonesian Salim operates through Metro Pacific Tollways Corp. This Indonesian-controlled firm is now the largest tollways conglomerate in the country, collecting the tolls from the North Luzon Expressway, the Subic-Clark-Tarlac Expressway and the Manila-Cavite Toll Expressway. In 2014, the Aquino government granted Salim’s firm the concession to run (and collect fares from) LRT-1 and extend it to Cavite.
And, knock on wood, if Pernia is hurt in car accident in those expressways, he’d ask to be brought to the country’s top hospitals. More than a dozen of these are majority-owned or run by Salim’s holding company, Metro Pacific Investments: Makati Medical Center, Asian Hospital, Cardinal Santos Medical Center, De Los Santos Medical Center, and three others outside Metro Manila.
If he commuted safely home and relaxed to watch TV, he would be using the services of SkyCable, 40 percent owned by the Singapore firm STT Communications Pte. Ltd., or of Cignal TV, controlled by the Salim group through MediaScape, which is also funded by PLDT’s Beneficial Trust Fund.
Pernia’s blindness to the fact that we have already opened up so much to foreign investors shows that he hasn’t gotten out of the industrial powers’ brainwashing of economists from the Third World so they’ll further open up their countries to their mammoth corporations that will bleed dry these nations of capital, through massive profit remittances. (Pernia got his Ph.D. in economic demography from the University of California at Berkeley — in 1976.)
It is such a disappointment that a nationalist President as very much grounded as Duterte would get for his economic planning czar a Pernia who’s not only stuck in passé Western economic dogma, but who doesn’t even know what’s happening on the ground.
Facebook: Rigoberto Tiglao