ONCE again a trade officer of a foreign country, this time the American Embassy’s Mr. Brian Breuhaus, has asked us to lighten prohibitions on investments in our country.
He particularly asked restrictions on American investors reduced.
He repeated the truism that easing restrictions on foreign investors, especially from the United States, is a crucial step to expanding trade and growing the economy. He reminded us that, “The Philippines is one of the most restrictive countries in the world against foreign investment, with more barriers than any other large Asean country.”
He suggests that the constitutional restrictions on foreign investment, called the 60-40 rule, be relaxed.
We believe these restrictions should be properly and rigorously enforced. Otherwise, these should simply be removed.
The Constitution requires that public utilities here be operated only by Philippine nationals. This requirement applies to nearly all public-private partnership (PPP) projects.
“No American firms have been involved in a PPP, and no foreign firms have taken the lead on a PPP, even though they could provide a huge amount of expertise. This would take a constitutional change,” Mr. Breuhaus said.
He is partly wrong. The largest cluster of corporations with investments in the Philippines is a major owner of the Philippines’ largest telecommunications franchise, the PLDT.
Our columnist Rigoberto Tiglao has narrated in several columns that the “so-called ‘MVP’ group of companies—named after the initials of its public face and chief executive Manuel V. Pangilinan—has emerged as one of the biggest conglomerates in the country today, its newest and the most aggressive.”
“Yet the real ownership of this vast conglomerate has been kept hidden from the public eye.”
Until Mr. Tiglao dissected it in a series of his Times column last year.
“The conglomerate is dominantly owned and controlled by Anthoni Salim, 66, heir to the fortune of his late father, Soedono, who was the biggest and closest crony of the late Indonesian strongman Suharto during his 33-year regime. ‘MVP’ has minuscule shares in the conglomerate….”
“Forbes magazine ranked Salim as the third richest Indonesian in 2014, with his $5.9 billion net worth topping that of Philippine tycoon John Gokongwei’s $4.9 billion or Jaime Zobel de Ayala’s $3.9 billion,” according to the same list.
“The Forbes’ profile of Salim in 2014 is a revelation: ‘Salim’s Philippine Long Distance Telephone (PLDT) has invested $445 million [in]a 10% stake in Germany’s Rocket Internet. His father, Liem Sioe Liong founded the Salim Group; the clan was later criticized for ties to Suharto.’ Salim’s PLDT, not MVP’s nor First Pacific’s.”
In the same column, Tiglao said, “The Forbes’ writer probably kept scratching his head in confusion. Salim is the only billionaire in the magazine’s list who is indisputably one of Indonesia’s richest tycoons. Yet a big chunk of his wealth is generated in another nation, the Philippines. That’s how broken our nation has become.
“From 2000 to 2014, First Pacific Co., Ltd. – Salim’s holding company – generated $2.7 billion in profits from its Philippine operations, mostly from PLDT amounting to $2.2 billion. In comparison, Salim’s companies in his own country generated just about half of that, or $1.4 billion. That means his Philippine operations make up 66 percent of his empire’s profits.
“Remember that Salim acquired PLDT in 1998 for $749 million, while Meralco was captured – as these series will explain – with the Indonesian bringing very little new capital into the country [the Philippines].”
We wholeheartedly agree with him when he wrote: “So much for the argument that foreign investments bring in much needed funds to a capital-deficit country. In the case of Salim’s operations, it has resulted in capital outflow – $2.7 billion in 14 years or $200 million yearly, or nearly one fourth of the average foreign equity inflow over the same period.”
And, if the law and the constitutional provisions cannot be enforced by our government, then, yes, “Remove foreign investments limits, govt can’t enforce them anyway.”