That’s how messed up we are as a nation: We have given away control of our public utilities, natural-monopoly industries, telecommunications and power to foreigners.
In contrast, not a single one of the so-called Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan), neither Japan nor China, has done this. Except for the Philippines and Thailand, the telecom firms in all other Asian countries are an industry under the control of state enterprises, or firms owned by their citizens.
Do they know something we don’t? Or have we become so helpless to foreign firms that have co-opted our elites, in both their purses and in their minds?
And to add insult to injury, the Joint Foreign Chambers of Commerce in the country, and even our so-called top economists, have been raising the decibel of their demand that we amend our constitution to lift “restrictions” on foreign control over these sectors—when in fact, Indonesian, Japanese and Singaporean conglomerates already dominate them.
Philippine nationalism is now at its lowest level that Filipinos can’t see that unlike our neighbors in the region, the phones they use, the electricity, as well as the water they consume, even the expressway they travel through are controlled by an Indonesian tycoon, as well as by Japanese and Singaporean conglomerates.
But there are better Philippine elites, aren’t there?
We had a Constitution that was supposed to check our fatalism in times when the elites fail us. The framers of the Constitution had the wisdom and the information to know that the operation and ownership of public utilities, because they affect the country’s poorest and because they involve virtually the nation’s limited, unique resource (a captive market).
However, what the framers of the Constitution could not foresee is that we are a nation where the elites capture the regulatory bodies, a phenomenon in most developing countries termed by academics as “regulatory capture.”
In the case of the Constitution’s foreign investment restrictions, the Securities and Exchange Commission turned out to be more powerful than the Supreme Court, issuing rules that allowed Salim and then Singapore Telecom to go around the Court’s 2012 decision declaring PLDT to be in violation of the Constitutional limits. (For details, see my columns “Supreme Court: PLDT mocks the Constitution, March 26, 2014, and “SEC has already amended the Constitution!” December 12, 2014. )
Now our column-writing economists such as Dr. Bernardo Villegas and Marcos technocrats Gerardo Sicat and Cesar Virata — architects of the disastrous debt-driven growth strategy in the late 1970s — insist that we need to amend the Constitution to lift restrictions on foreign capital in public utilities and land, so the country would attract more overseas capital.
For crying out loud, foreign companies are already in those sectors, making a killing. They already dominate our telecom industries and power distribution in the National Capital Region, and in the biggest property firm. Foreign monopolists have found ways and means to defy our Constitution.
The Indonesian tycoon, Anthoni Salim, heir to the wealth of the late strongman Suharto’s biggest crony, Liem Sioe Liong, through Hong Kong-based First Pacific has 25.6 percent of PLDT, the biggest and dominant telecom firm in the country. (The largest mobile phone company in the country, Smart Telecommunications, is its 100 percent subsidiary).
Salim has a strategic partnership agreement in controlling PLDT tightly with two firms of Nippon Telephone and Telegraph Corp. (NTT Communications and NTT DoCoMo) that together have 22 percent of PLDT.
It is certainly ironic that in Japan where the NTT is the dominant telco, average internet speeds are 15 Mbps, while in the Philippines, where it is also the dominant telco through PLDT and Smart, the internet speed is a dismal 3 percent, the slowest in the region
PLDT 76% foreign-owned
The Indonesian Salim and the Japanese NTT together hold 47.6 percent of PLDT, way past the 40 percent constitutional limit. Add the 9.6 percent in American Depository Receipts held by foreign investors through J.P. Morgan Hong Kong Nominees Ltd. and the 19 percent held by foreigners in the Philippine stock market and total foreign foreign shares in PLDT, and the total goes up to 76 percent.
This is almost as much as when American companies owned the utility until it sold out in 1967 since the Parity Rights that allowed them to do so ended in 1974. (Salim, through PLDT and First Pacific, is also the biggest single stockholder of the power monopoly in metropolitan Manila – the Manila Electric Company or Meralco.)
Singapore Telecom, owned by the Singaporean government’s investment firm Temasek Holdings, owns 47 percent of our second largest telecom firm Globe Telecom. The Ayalas, crème de la crème of the Spanish-descended elite clan, own just 30 percent. Together with 17.4 percent held by foreigners through the stock market, Globe Telecom – the second member of the duopoly in our telecom sector – is 64 percent held by foreigners.
Again the irony there is that while the internet speed in Singapore, where Singtel is the dominant firm, is 13 Mbps on average, a lightning speed compared with our miserable 3 Mbps.
My estimate (on which I will present details in subsequent columns) is that the Salim and SingTel owners and other foreign shareholders have remitted abroad through their dividends in the lucrative telecom business here $3 billion, therefore, recovering almost totally their investments in the two firms.
If you think nothing’s wrong there, since we’re in a “global village” where nations don’t matter, think about this: In the 10 countries in Asia I’ve managed to get data on, only the Philippines and Thailand, the latter as result of certain unique political factors in 2006, have their telecom industries controlled by foreigners.
In the rest of Asia, their telecom sectors are firmly under the control of their nationals, with state firms’ dominance being the most common structure of their telecom and electricity firms.
But we need foreign technology, as the likes of Villegas would argue. But that is precisely the advantage of globalization in this era. Firms from all over the world — would you have imagined from Norway and Finland, for instance, with small populations and, therefore, markets – are in intense competition in offering communications technology to anyone who would buy them, without requiring that the interested party has to own the telcos. Singtel, one of the biggest players in the region, isn’t a telecom tech firm but gets technology from whoever would supply them.
But we need capital, again the likes of Villegas would say. But as I would explain in succeeding columns, after buying off the Cojuangcos (who apparently have not invested the money here) Salim relied a lot on foreign and local borrowings for the capital and operating expenses of PLDT. Not a single new dollar from abroad was used for Salim’s purchase of Meralco, These in succeeding installments of this series.
If you don’t believe that we have been brainwashed by Villegas and Co. that globalization has erased economic boundaries, and our neighbors are so open to foreign investments even for their telecom sectors, read the second part of this series on Wednesday.
Let’s follow the model of the Asian Tigers and Tiger Cubs: Filipinize our public utilities.
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