• FILIPINIZE OUR PUBLIC UTILITIES (PART I)

    We’re the only Asian country where foreigners control the telecom industry

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    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?

    Constitution skirted
    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.
    PLDT20150907This 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.
    ownership20150907
    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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    16 Comments

    1. The Philippines must open up! it needs to catch up! The 1987 Constitution restricts foreign ownership of many many high growth industries.

    2. why all of these happens? because of many corrupt politicians and corrupt businessmen.Imagine our internet connection is very slow, because they intentionally do this for profit.if you rent computer (in internet cafe) they will charge you P25 per hour while in popular supermart a only one internet computer shop will charge P40 per hour excluding charges of the tangang attentants if you said tapos na ko the time continues while you are lining up to pay the P40 pesos it becomes P48 because the time consume continues, when you reach the cashier you expected you’ll pay P40 it becomes P48, this is a simple form of corruption.Even at popular supermarkets many space business rentors are not giving official receipts. Kahit saan maraming MAGNANAKAW!

    3. Johnny Agustin on

      Not only telecommunications, would you believe that even Malacanan is also controlled by foreigners? Isn’t it?

    4. Australia’s Telstra is about to enter the Filipino market via a JV with San Miguel, which should shake up the current status quo and ensure higher connection speeds and more competitive offerings, which is only good news for the country.

      As for foreign ownership of telcos, many of the world’s largest countries are the same. UK, Germany, US, Brazil – and even large Asia countries inc Indonesia (Indosat which is Qatar) and Malaysia (Telenor = Nordic), so i wouldn’t get too caught up on it. It should be more about how good quality and cost effective those companies are.

      The current duopoly in the Phills needs a shake up !!!

    5. Our colonial masters from the Chinese, Americans, and Spaniards are still our slave masters to this day in substance in a different form. Our slave status is now called contract workers with no benefits working for the slave master – the corporation. Our form of barangays is now consolidated into a Republic. By institutionalizing the slave status population they now control the whole country and can bastardize the Constitution at their whim and, corrupted the politicians to promulgate laws, government agencies to expedite their permits and pay-off the military for their own interests. Imagine that the population of over 100 million people and wealth of the nation much less the future of the Filipino people is controlled by the 1% slave masters. Does that make sense? Does it make sense for the OFWs to enrich the coffers of these corporations without just compensation like creating jobs and benefits such as providing for the basic necessities, sanitation, clinics and hospitals. Nationalism is a utopia as we can never evolve into a homogenous society of different tribes living in over 7000 islands speaking different tongues, so you can forget about revolution. Singapore is one small island and one man with high moral fiber and vision and most importantly the courage to hold on steadfastly to make his dream a reality. That is not our case. Our case is as complex as our genetic disorder brought about by centuries of colonization which we unknowingly mutated to our tendency to easily exchange moral values for temporary gains. If we dig deeper into our hearts to find that courage to steadfastly want to make our people united in the spirit of protecting the future of the 99%, we can find effective solutions. China catapulted into the number two biggest economy in the world because their leaders required 51% ownership on foreign corporations and disclosure of their technology and processes to operate in China. They also limited repatriation of profits and so corporations resulted in barter of goods until the currency swaps were introduced. Your article shows as many examples of what the 1% can and will do to trample on the rights of slaves because they have every politiciane and SEC management in their payroll. Fraud has no statute of limitations. And I have a dream that one day we will prevail with the use of the internet, social media, and spearheaded by the students in every corner of the archipelago. Thank you for your expose and now you delivered a notice to foreign corporations they have violated the laws of our country and we will fight back every means imaginable. I wonder if SSS and GSIS investment group was even invited to participate?

    6. Pera pera lang ang nakikita ng mga ganitong investor, hindi ang kanilang quality of services. Basta ang alam nila kumikita sila ng salapi kahit bulok ang quality ng kanilang serbisyo.. Ipinapasa nila ang ibang trabaho sa hindi kuwalipikado na mga contractor..kaya waste of time.. walang mangyayari sa compllain ng customer.
      sindikato ang gobyernong ito ng kanilang mga kamagnak , kaibigan sa pamumuno ng mga aquino family,,,,niluluto nila ang mga filipino sa sarili nilang mantika…

    7. so far you are lucky here in the Philippines as in the UK all Utilities except part of the Telephone and internet systems are owned by Foreign companies !
      And a lot of the Manufacturing Businesses are Foreign owned.
      And of course all the Utilities are expensive as there is no competition!
      Mind you there is fast internet !

    8. What exactly do our two large telecommunication companies have to say about the pathetic internet speed they offer? Now that we know their strings are being pulled by big time foreign telecom companies…..the service they provide should be at par with that of Singapore and Japan. What is their explanation?

    9. Thanks to Cory Aquino, that is exactly how the scenario looks like. The PPP isn’t helping any either.

      The damned government has more than enough tax money to take control of basic communications, power, and transportations. They just make it appear the government is broke, yet trillions are disappearing from the national budget without a trace.

      They know exactly how to solve the country’s problems. They just pretend to be stupid as a door nail, while they stuff their pockets with our money.

    10. Edmundo Coronado on

      I think we (Juan Dela Cruz) is aware of that.
      Bottom line is: CORRUPTION! + The Philippine Constitution, and Laws are suggestions only. Tacitus quoted: “The more corrupt the state, the more numerous the laws.”

    11. Indeed, the logic that we need “foreign investors” or “foreign capital” to jumpstart our economy or to lift restrictions in the constitution to allow “foreign equity” is the rant of those who do not know that they do not know. Even without any infusion of foreign-sourced funds, the country has all the assets to make the country the biggest economy in the Asean Region within five years from today. It is just a matter of studying and digesting the Annuity Formula, the basic equation required to create the money and fund development – the very same formula used to develop Europe thru the Marshall Plan after WW2 and ditto with Japan. It is either our pawnshop operators masquerading as “bankers” are clueless on what their functions are or the so-called “political leaders” are so incompetent, stupid and ignorant on what direction the country needs to take. If I am the president, I will just unleash all the power of DBP/LBP to create the money to break all the foreign stranglehold on our economy with plenty to spare to create the military-industrial complex that shall create no less than two million jobs immediately in a Free Trade Zone-converted ARMM.

    12. It is in the technical service of PLDT that I am most worried because it is now profit oriented instead of service oriented now. If call now PLDT to complain about slow speed of your internet service it will be a call center agent who will handle your complain and because the call center belong to another company serving PLDT like answering machine. Your complain will then be forwarded a technical group which is actually another service company serving PLDT to handle repair. From this group they will dispatch another service company who will tend send their linemen to your place. The worst part of it is that this linemen does not have any test equipment except a pliers and portable ladder. Their linemen does not have technical know how on measuring the signal strength of you modem and wireless wi fi inside your house because they can not afford the test instrument. Even the massive corrosion on your telephone junction box, in the telephone poll and the major junction along box near house remained un check simply the simply the field contractor are not allowed to clean it to prevent signal splatter among other wires. It would have been different if it were real PLDT linemen doing it because other line problem can be well attended. There are also the tendencies that line problems are created by the service contractors are doing wreckage on the system because they collect revenue per job ticket from PLDT. Some of the problems also arises from having several contractors are sabotaging each other to get more job order and the competition in the PLDT becomes who will offer a much lower repair job order than having quality service. It is about that our government should step in because the eccense of service in PLDT no longer apply now a days. I am will to share my little know how with the government for free if it intend to improve this wrong doing of PLDT being run by foreigner. Kawawa naman tayo kumikita sila sa palpak na serbisyo.

      • Leodegardo Pruna on

        Can you imagine PLDT forcing us to talk to a machine, senior citizens at that? And, the way it has been handling complaints, it surely doesn’t mind if the customer is wailing for lack of attendance to their complaints. The role of government is to make sure that the welfare of the people is properly address in terms of policy and regulatory means. But what is it doing? Sometimes we cannot avoid to suspect that the leadership is making a killing out of this. God bless the Philippines.