Jeepney phaseout could hurt commuters, too

“Fare increases would serve as an incentive to move forward to modernization” – LTFRB

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The Land Transportation Franchising Regulatory Board (LTFRB) claims that its controversial jeepney modernization program only has the interest of commuters in mind. Phasing out the jeepneys and replacing them with vehicles that use modern engine (Euro 4) and designed to provide utmost safety (speed limiter, CCTV) and comfort (bigger space, wi-fi) will surely benefit the riding public, the said government body likes to stress.

To be sure, all these features and amenities that the LTFRB and Department of Transportation (DOTr) promise are welcome for commuters. What transport officials do not say is what or how much it would cost for the riding public to enjoy the supposedly modernized jeepneys under their plan.

At the hearing of the House of Representatives (HoR) on the modernization program, LTFRB chair Martin Delgra III said: “fare increases would encourage drivers and operators to take part in the modernization program, as these would cover losses, inflation or fuel price increases and serve as an incentive to move forward to modernization.”

DOTr Secretary Arthur Tugade also earlier said that the program is “designed to strengthen [and] to guarantee the profitability of the jeepney business”.

Clearly, the supposed modernization will not be cheap not only from the point of view of jeepney drivers and small operators but also of the commuters.

As fares are not subsidized by the state, commuters will have to shoulder the full cost of the pricey vehicles including interest payments owed to the banks, cost of maintaining and operating the units and their required terminals, taxes and fees owed to the government, income of drivers and operators, etc.

Taken with the unabashedly pro-big business policy direction being charted by the Duterte presidency, the threat of skyrocketing fares becomes even more imminent. Consider, for instance, the proposed Public Service Act amendment or House Bill (HB) 5828, one of the priority and urgent legislative measures of the administration. If passed by Congress, HB 5828 would allow public services like transportation to set rates (or fares) that would give its operators the maximum profit rates based on existing market condition. If that amount translates to a minimum fare of Php15, Php20 or even more, commuters will be left with no choice. Worse, deregulated rates or fares is also an option as stipulated in the Malacañang-backed HB 5828. Deregulated fares will actually be easier to implement with the planned beep cards. Now combine this with the long deregulated oil industry and the result would be catastrophic for commuters.

Do the small operators benefit from this lucrative jeepney business? Only if they could get a franchise under the demanding new guidelines of the LTFRB and meet the high capital requirement of managing a fleet of at least 10 vehicles (worth Php12 to 16 million), which is unlikely. Most of them would be certainly displaced by established business groups with access to capital (and political power). And these firms, under HB 5828, could be foreigners even. HB 5828 says transport is not a public utility and thus excluded from the constitutional restriction on foreign ownership.

Some commuters, of course, would be willing and able to pay a premium for better services. But most commuters of jeepneys are the lowest paid workers and are from the poorest households who struggle daily to make ends meet. They are the students from working class families. They are the self-employed and jobless. According to the Japan International Cooperation Agency (JICA), the average low income group households in the country have to spend at least 20% of their monthly household income for transportation. Soaring fares would push millions of Filipino commuters to greater poverty and marginalization.

What transport officials refuse to see is that modernization is not merely about replacing the old with the new. Modernization must above all be about long-term development that addresses the people’s basic needs and promotes their rights. When a society upgrades its ways of doing things, the primary objective should be to advance the interests of its people. If “modernization” comes at the expense of those who are already marginalized such as the poor jeepney drivers and commuters, then that is not development but regression. To ensure that genuine development comes with modernization, the state must play a central role.

But instead of addressing this question, the DOTr, LTFRB and President Duterte himself are creating an artificial contradiction between the interests of jeepney drivers/operators and the commuters. They absolve government of its duty to build a modern public transport system that protects both the welfare of the commuters and those who rely on it for livelihood. This as the apparent direction of the Duterte administration’s program is for big corporations to fully take over, push out the small drivers/operators and fleece the riding public with exorbitant fares.

The chronic state of disrepair of the country’s public transport system is the result of decades of government’s wrong policies, bureaucratic corruption and outright neglect.

Access to safe, efficient, reliable and affordable public transport system is a right that the state must guarantee for commuters and not a privilege for those who could afford it. What is the role of the government to ensure this? Is it simply to issue franchises and set standards? Why not start the discussion on jeepney modernization on these fundamental questions? #

 

Martial Law 45th anniversary: US imperialism and the Marcos dictatorship

Marcos, his family and cronies would not had been able to plunder and repress the country the way they did without the support of the US. Marcos lasted for as long he did because he was backed by an imperialist superpower.

(Ferdinand Marcos with US President Richard Nixon in a motorcade during the latter’s Philippine visit in 1969 | Photo from filipiknow.net)

We mark the 45th year of the Martial Law declaration by highlighting the numerous atrocities and massive corruption of Marcos. Amid the rising fascism of the Duterte regime and systematic bid to revise history, reminding the people of the crimes of Marcos and evils of tyranny is more relevant than ever.

But we should not forget as well the role of the US as the country’s foremost colonial patron in the Marcos dictatorship. This is important to better understand why in today’s global/regional context (e.g. China’s rise and weakened US hegemony) and Philippine context the US, to advance its agenda, would also support the Duterte regime in its consolidation of political power through tyranny and fascism.

Marcos, his family and cronies would not had been able to plunder and repress the country the way they did without the support of the US. Martial Law and the Marcos dictatorship were useful for American economic and military interests in the Philippines and the region. Marcos lasted for as long as he did because he was backed by an imperialist superpower. Until of course when the political and economic crisis and social unrest intensified to a point that it was no longer beneficial for US interests to sustain Marcos’s tyrannical and corrupt rule.

The years before Marcos declared Martial Law were characterized by a surge in people’s protests – the First Quarter Storm (FQS) – against the exploitative and oppressive social order represented by the corrupt Marcos regime amid a worsening global and national economic crisis (soaring prices, massive unemployment and landlessness, ballooning public debt, etc.). The political instability threatened not only Marcos’s survival but US political, military and economic interests in the Philippines. To restore “stability”, the Marcos regime imposed Martial Law.

What were the US interests that Marcos and his dictatorship served?

At that time, the US was embroiled in the costly Vietnam War, a Cold War-era proxy war between the US and the former USSR. The Philippines under Marcos served the American war by deploying thousands of Filipino troops to help the US forces. Note that before he became President, Marcos was opposed to the sending of our troops to Vietnam. But once in Malacañang, Marcos changed his stand due to US pressure and because he knew that he would need US patronage to remain in power.

But beyond the deployment of Filipino troops, far more strategic for the US were the Subic Naval Base that their naval forces (US Seventh Fleet) used for repair and replenishment throughout the Vietnam War as well as the Clark Air Base that served as their key logistics hub. After the US’s disastrous defeat in the Vietnam War, Subic and Clark became even more important for the US in order to maintain its military presence and operations in Asia.

The US backed the fascist regime in exchange for the dictator’s assurance that the Philippines will continue to allow the stay of US military bases. Days before he publicly announced Proclamation 1081 that placed the entire country under Martial Law, it was reported that Marcos phoned then US President Richard Nixon to get his commitment of support. When Marcos imposed Martial Law on September 21, 1972, the US reportedly stationed 40,000 troops at its Subic Naval Base to “meet any contingency” arising from the dictator’s declaration.

Aside from its military agenda, the US also used the Marcos dictatorship to retain its privileged position in the Philippine economy and the exploitation of our natural resources. The Laurel-Langley Agreement of 1955 which gave full parity rights to American citizens and businesses or equal access like Filipinos to domestic agriculture, timber, mineral, public utilities, and land expired in 1974. But with his Martial Law powers, Marcos issued decrees that effectively maintained the neocolonial economic privileges of the US such as reversing court decisions that disallowed American ownership of landholdings in the country.

Indeed, as a 1973 press report read: “The most encouraging aspect of President Marcos’s assertion of one‐man rule has been the disappearance of the anti‐foreign feeling that had been mounting in the press and the Constitutional Convention in the year preceding the proclamation of martial law.” Prior to Martial Law, the 1970 Constitutional Convention was formed to rewrite the then prevailing 1935 Constitution. The US was concerned that the new charter would affect its military bases and economic interests in the country. Under Martial Law, Marcos arrested some members of the Convention and reconvened it to write the 1973 Constitution that favored Marcos’s and the US’s agenda.

On top of ensuring that the policy environment under Martial Law remained favorable to US interests, American businesses and politicians were also actually in cahoots with Marcos and his cronies in plundering the economy and public coffers. American banks provided odious debts that funded Marcos’s projects riddled with corruption.

Perhaps nothing is more notorious than the hugely overpriced white elephant US$2.3-billion Bataan Nuclear Power Plant (BNPP) that the US Export-Import Bank and American Express bankrolled together with the Bank of Tokyo. Through payoffs worth US$18 million to Marcos via his crony Herminio Disini, American firms Westinghouse and Burns and Roe bagged the lucrative contract to design and build the BNPP. Built on an earthquake zone, the BNPP was never operated for public health and safety while billions of dollars in payments went to American banks and firms at the great expense of the Filipino people.  

Finally, the US also undermined the Filipino people’s quest for justice to make the Marcoses accountable for their crimes. This as real justice would mean making the colonial masters of the Marcos regime liable as well. According to a May 2016 report by The Guardian, the US Central Intelligence Agency (CIA) knew that Marcos stole US$10 billion but refused to tell the Philippine Commission on Good Government (PCGG) what they knew because apparently, American businesses such as those involved in the BNPP and political figures would be implicated as well.

Marcos also allegedly bribed high ranking US politicians and helped illegally fund the presidential bid of US presidents Jimmy Carter and Ronald Reagan, said the same Guardian report. The US systematically covered up its link with the corruption of and plunder by the dictator. For instance, the documents that the American authorities seized from Marcos when he fled to Hawaii in February 1986 have been allegedly redacted to hide transactions involving US organizations when they were turned over to the Philippines.

Today, the Duterte regime has been playing a leading role in revising the history of Martial Law and in the political rehabilitation of the Marcoses. This serves his own fascist agenda of establishing a Duterte dictatorship. He has already imposed Martial Law in Mindanao in what could be a dress rehearsal for a nationwide Martial Law.

Would the US support Duterte and connive with his regime in plundering and repressing the people the way it propped up the Marcos dictatorship? For all the President’s anti-US rhetoric (or more precisely, anti-Obama rants) and moves to deepen ties with US rival China, the Duterte regime has continued to foster ties with the country’s neocolonial master.

US military presence and intervention is felt more than ever with American troops and attack and surveillance drones deployed in Mindanao as part of Duterte’s military campaigns. US military bases remain through the Enhanced Defense Cooperation Agreement (EDCA) while joint military trainings including urban warfare continue under the Visiting Forces Agreement (VFA). For all its rhetoric about human rights, the US would work with any fascist dictatorship, even with someone as unpredictable as Duterte, to protect its interests and influence in the region especially amid a growing challenge from China as well as Russia.

Thus, when we protest against Martial Law, fascism and tyranny, we should protest not just for the violation of our human rights but also for the violation of our sovereignty as a people. ###

Murderous war on drugs could be Duterte’s downfall

Duterte’s war on drugs kills the poor but not their poverty. This is the reason why Duterte will never win this war. But the more poor people he kills, the deeper he digs the grave of his own regime.

(Artwork by PJ Palits)

President Rodrigo Duterte wrongly thinks that his war on drugs is his regime’s greatest strength and biggest source of political legitimacy. In reality, it is his biggest vulnerability  and – unless he shifts course – could be his downfall.

The collective grief and rage that followed another apparent extrajudicial killing is setting the stage for a wave of protests against the murderous war on drugs of the Duterte regime. To be sure, the public condemnation of the bloodshed and its endorsement by Duterte has been as persistent as the killings. But the indignation over the death of 17-year old Kian Lloyd delos Santos appears to be something different. The outrage is stronger and more felt than ever, and shared even by those who support the administration.

Duterte has to listen – the killings must stop. The broad call today is against his war on drugs and its brutal and criminal methods. It is a call that is steadily expanding support and Kian’s cold blooded murder in the hands of the police is accelerating its growth. Failure to recognize this growing and legitimate demand could easily transform the broad call from one against his war on drugs to one that is against the Duterte presidency itself.

There may be truth to Duterte’s claim that forces with vested interests have been plotting his ouster from day one. It could be the Central Intelligence Agency (CIA), the Liberal Party (LP), the drug lords, some generals in the armed forces, and they are all possibly working in cahoots with one another. But Duterte’s thuggish leadership is the biggest threat to his own presidency. His fascism – the war on drugs; Martial Law; all-out war, bombings and militarization in the countryside – is creating the condition for a wide public sentiment unfavorable to his continued rule to consolidate and thrive. His high political capital could easily dissipate and resorting to more vicious violence and state terrorism would only spell his regime’s doom. His ouster would have legitimacy.

It is not just the killings of overwhelmingly poor people – many of whom were innocent, including children as young as four and five years old – in his war on drugs. His regime is also continuously losing legitimacy in other areas of governance. Duterte allowed the trapos to kick out progressives and reformers from his Cabinet. He let the warmongers sabotage the peace efforts and kept on the bloody counterinsurgency campaign that targets civilians, especially the farmers and lumads. He did not lift a finger when his allies got involved in corruption or gross incompetence even as he persecuted his political foes. He let his economic managers further squeeze the poor dry while maintaining an economy that enriches the local oligarchs and foreign interests.

But the murderous war on drugs is and will remain the biggest issue that could galvanize a broad movement – with Kian’s death among the key turning points in its formation – that will seriously challenge the Duterte regime. Those with self-serving agenda such as factions of the ruling elite that want to take over or get back to power – or foreign interests like the US which prefers a more reliable and predictable regime –  will certainly exploit this. Unfortunately for Duterte, whether or not self-serving interests are at play, the movement for his ouster will enjoy legitimacy if he continues to cultivate the culture of impunity and to unleash his brutal wars against the people.

It is up to the progressive and democratic forces that desire genuine change and social justice to thwart these narrow interests by decisively taking the lead in making the Duterte regime accountable for its crimes.

The war on drugs should not be waged against the poor, which is what Duterte’s bloodstained campaign has become. They are actually victims themselves not just of drug syndicates but of the rotten social system that drives them into desperation and into criminal activities like small-time drug peddling. Even when dead bodies massively pile up, the poor will continue to risk life and limb for that next meal as long as the political and economic system that deprives them of decent living and the opportunity to be productive persists. Worse, as poor communities are transformed into war zones, even innocent lives become fair game.

Duterte’s war on drugs kills the poor but not their poverty. This is the reason why Duterte will never win this war no matter how many get killed in its name. But the more poor people he kills, the deeper Duterte digs the grave of his own regime. ###

SONA 2017: What’s in it for China in Duterte’s ‘Build, Build, Build’?

Big infrastructure lenders like China and Japan profit not only from the interests accruing from their loans to build rails and roads. The larger gains they make are from the conditionalities they tie to these loans.

President Rodrigo Duterte with President Xi Jinping of China (Photo from Etienne Oliveau/Reuters, Aljazeera)

In his second State of the Nation Address (SONA), President Duterte as expected mentioned his grand infrastructure plan. There was special mention of China that Duterte said generously offered money for his “Build, Build, Build” program.

“If your Congress has no money, we will give you money” was what the Chinese supposedly told him, the President said in his speech.

Duterte in his SONA made the Chinese offer look like simple altruism and generosity. But in reality, on top of making Chinese imperialism appear benign, using soft power by bankrolling the country’s hard infrastructure profits China’s economy in various ways.

No debt crisis?

The concerns that Duterte’s infrastructure plan would result in a heavy debt burden are valid. After all, the price tag of what economic managers call as the “boldest infrastructure development program” in recent history is a whopping Php8 to 9 trillion.

Economic managers, however, assure the public that they have everything figured out. The plan is that government appropriations, not debt, will mainly fund the so-called “golden age of infrastructure”. The Finance department’s tax reform package aims to raise Php157 billion in additional revenues a year; the version passed by the House could generate Php130 billion.

At Php8 to 9 trillion, the annual cost of building infrastructure from 2017 to 2022 would be Php1.6 to 1.8 trillion. Clearly, the additional revenues from the tax package will not be enough even as it bleeds the poor dry.

In reality, the infrastructure program would be mostly debt-funded. But again, the public is being told that a debt crisis will not rear its ugly head. In fact, the Budget department expects that by the end of President Duterte’s term, the debt-to-GDP ratio would even fall to 38.1% from 40.6% in 2016.

Such optimism hinges on the economy not only sustaining its expansion but posting even more rapid growth. To outpace debt, the gross domestic product (GDP) must grow by 6.5 to 7.5% this year and 7-8% between 2018 and 2022.

It is tough to be as upbeat as administration officials given the structural weaknesses of the economy and amid a global crisis. For this year, debt watchers and creditors put Philippine GDP growth at 6.4 to 6.8% – below the range being hoped for by the economic managers. That’s the most bullish the projections could get.

Whatever rate the GDP grows by, the budget deficit is sure to increase as government ramps up infrastructure spending. The plan is to let the budget shortfall climb to 3% of GDP as infrastructure spending reaches as high as 7.4% of GDP.

While a bigger deficit means greater borrowing, there is supposedly no need to be anxious as the Budget department claims they will borrow in a fiscally sustainable way. Eighty percent of the deficit would be funded by domestic debt and only 20% foreign. Such borrowing mix lessens foreign exchange risks that could cause public debt to balloon.

Chinese and Japanese loans

But a review of what the Duterte administration has identified as its flagship infrastructure projects tells a different story. To be sure, the flagships – numbering 75 as of June – are just a fraction of the more than 4,000 infrastructure projects that government plans to do. They nonetheless represent the largest ones in terms of cost and are the top priorities for implementation.

Of the 75 flagship projects listed by the National Economic and Development Authority (NEDA), 48 will be funded by foreign debt or official development assistance (ODA). Only 14 will be bankrolled through the national budget or General Appropriations Act (GAA). Just two projects are planned to be implemented via public-private partnership (PPP) while 11 have yet to be identified which mode to use.

As of June, only 53 out of the 75 flagships have estimated costs totaling PhpPhp1.58 trillion. Of the 53, 41 are ODA-funded projects worth Php1.40 trillion. The remaining Php181 billion would be funded through the GAA. In other words, almost 89% of the total cost of projects with already determined amounts will be paid for by foreign debt. (See Tables below)

Flagship infra summary

Notes: ODA – Official Development Assistance; GAA – General Appropriations Act; PPP – public-private partnership; TBD – to be determined (Based on data from NEDA) 

Just nine of the 41 ODA-funded flagship projects have identified donors/creditors, based on NEDA’s June list. These are Japan with three projects worth Php226.89 billion; China, three projects (Php164.55 billion); South Korea, two projects (Php14.06 billion); and World Bank, one project (Php4.79 billion).

The Chinese and Japanese are backing the Duterte administration’s largest mega-projects, an indication of how the two economic behemoths see “development cooperation” as one of the key arenas of their competition in the region. Japan is funding the Php211.46-billion PNR North 2 (Malolos-Clark Airport-Clark Green City Rail); Php9.99-billion Cavite Industrial Area Flood Management Project; and the Php5.44-billion Malitubog-Maridagao Irrigation Project, Phase II.

Meanwhile, China is bankrolling the Php151-billion PNR Long-haul (Calamba-Bicol); Php10.86-billion New Centennial Water Source – Kaliwa Dam Project; and Php2.70-billion Chico River Pump Irrigation Project.

Although not yet identified in the latest NEDA list, various media reports also link Chinese and Japanese loans to other big-ticket rail projects. These include the Php134-billion PNR South Commuter Line (Tutuban-Los Baños); the Php230-billion Manila Metro Line 9 (Mega Manila Subway Project – Phase 1); as well as the Mindanao Rail Project, of which the first phase (Tagum-Davao-Digos) costing Php35.26 billion will be funded via the GAA. (See Table below)

ODA flagship 1

ODA flagship 2

ODA flagship 3.png

Source: NEDA

Download NEDA’s entire list here

Gains beyond interests

Over-reliance on debt is obviously problematic but by itself tapping concessional loans to build much needed infrastructure is not a wrong policy. Sadly, ODA is shaped not by genuine development cooperation but by the narrow agenda of lending governments and the corporate interests they represent. Thus, potential economic and social development gains for a borrowing country are greatly weighed down by bloated costs of ODA-funded infrastructure.

Big infrastructure lenders like China and Japan profit not only from the interests accruing from their loans to build rails and roads. The larger gains they make are from the conditionalities they tie to these loans such as requiring the Philippines to exclusively source from Chinese and Japanese firms the goods and services needed to build the rails and roads.

Lenders dictate the technology, design and construction of the infrastructure to accommodate their own suppliers and infrastructure firms. As such, Chinese and Japanese contractors are also favorably positioned to corner operation and maintenance contracts once the rail systems and other infrastructure are privatized under the Duterte administration’s hybrid PPP scheme.

Lastly, creditors also favor the development of infrastructure in areas where they have business interests. This explains the concentration of Japan-funded infrastructure in Central and Southern Luzon where export zones with Japanese investments are concentrated. China’s interest in building infrastructure in Mindanao is tied to its plantation and mining interests in the region.

All these make the cost of infrastructure development in the Philippines more expensive and the debt burden onerous. Tied loans for infrastructure development creates commercial opportunities for Japanese and Chinese companies that are otherwise not available to them. In China’s case, infrastructure lending in poor countries is even used to create employment for their own workforce at the expense of local labor.

At a time of prolonged global recession and slowdown in profit rates of the industrial economies, these opportunities become even more important. Alas, these opportunities only arise by undermining the debtor’s own development needs. ###

(This is a slightly revised version of an article first published as IBON Features)

SONA 2017: Business interests with ties to Duterte to benefit from Martial Law extension

President Rodrigo Duterte with his Martial Law administrator Defense Secretary Delfin Lorenzana and implementor Armed Forces Chief General Eduardo Año (Photo from Al Jazeera)

As expected, the so-called supermajority in Congress granted the extension of Martial Law that President Rodrigo Duterte asked for. Martial Law would be in effect in Mindanao until the end of the year.

Malacañang said that with the extension, the country could now “get on with the job of nation-building and contribute in the attainment of the full promise of Mindanao.” The Duterte administration intends to “transform Mindanao into a land of fulfillment”.

How exactly Martial Law could contribute in “nation-building” is unclear. What is clear is that the 261 lawmakers who rubber-stamped the presidential request have further built up the nation’s fear of an authoritarian regime that Duterte wants to establish.

Martial Law in Mindanao and its extension could indeed be just a dress rehearsal and forebodes an of all-out fascist rule that Duterte and his Martial Law generals plan to unleash on the entire country.

Meanwhile, the “attainment of the full promise of Mindanao” pertains to the unrestrained exploitation of the region’s resources. Despite decades of corporate plunder, many areas in Mindanao are still not yet fully exploited.

Business interests with ties to the President appear to be among the beneficiaries of the extension of Martial Law in Mindanao.

Investment opportunities

The World Bank, for instance, in an August 2016 report said that: “Mindanao has 10 million hectares of land, of which 59.4% or 6.066 million hectares are classified as forestlands… if properly delineated, and rights are defined, can potentially increase the land inventory for large- scale investments.”

It noted that of the 6.07 million hectares of forestlands in Mindanao, only 700,000 hectares are covered by industrial forest management agreements, mainly by corporations. There are 700,000 hectares more that are still not covered by any form of tenure instrument. Another 400,000 hectares of public forests that are unclassified – all potential areas for big corporate investments.

In addition, of the remaining 4.14 million hectares of alienable and disposable (A&D) lands in Mindanao, a huge 2.24 million hectares have not been covered by the Comprehensive Agrarian Reform Program (CARP). These millions of hectares of forest and A&D lands offer enormous opportunities for investment and profits.

“If we push for massive agri investments in Mindanao, we need to start looking at the availability of these lands for consolidation to achieve economies of scale,” said the Mindanao Development Authority (MinDA), a government body created to among others promote and facilitate investments in the region.

Under the Duterte administration, MinDA and the Philippine Economic Zone Authority (PEZA) are also working to fast-track the Mindanao Ecozone Masterplan. The plan will develop existing and new economic zones around Mindanao to increase trading activities and attract more foreign investments.

There are 81 accredited ecozones in the region covering agro-industry, manufacturing, information technology and tourism. The Duterte administration is currently conducting an inventory of areas in Mindanao that can be developed as “ecozone cities”.

But many of these supposedly idle areas or available lands are actually occupied by lumad and peasant communities. Their firm resistance and the strong presence of the New People’s Army (NPA) are the biggest obstacles to the massive expansion in Mindanao of corporate plantations, big mining companies, and export-driven industrial enclaves – and the construction of hard infrastructure to support their operation.

The resistance is not against development but against the land and resource grabbing and massive displacement of local communities that often accompany big-ticket investment projects in Mindanao. That is why the NPA, and the lumad, farmers and farmworkers are the real targets of the extended Martial Law in Mindanao.

Big business interests

Indeed, Duterte’s Martial Law is apparently more about providing security to big investors who want to further exploit Mindanao. And it appears that the business sector feels encouraged by the strongman rule that Duterte is imposing. The organizers of the recently held Davao Investment Conference (ICON), for instance, reported record-breaking confirmed attendance, including about 100 foreign investors.

In an earlier report, the organizers said ICON participants include the country’s biggest conglomerates like San Miguel Corp. (SMC) as well as 30-40 “big Chinese investors”, among others.

SMC and the Chinese are among those most aggressive in expanding in Mindanao particularly in establishing vast plantations and constructing infrastructure. Chinese investors have been reportedly discussing with the Duterte administration the possibility of a 6,000-hectare tea plantation in a territory controlled by the Moro Islamic Liberation Front (MILF).

Duterte has been actively seeking Chinese patronage, mainly in the form of official development assistance (ODA) or loans as well as military assistance. Among those that the administration is pitching to China are multi-billion infrastructure projects in Mindanao including expressways, coastal roads, seaport and airport development, and the Mindanao railway system.

On the other hand, SMC (together with Malaysia’s Kuok Group) is developing about 18,495 hectares of forestlands covering four Davao del Norte municipalities for oil palm production. Just last August 2016, SMC also opened a 2,000-hectare industrial estate in Malita, Davao Occidental that also has a 20-meter deep seaport that can accommodate container vessels.

Earlier, the conglomerate was reported to be looking at a total of 800,000 hectares of lands for development as commercial farms in Zamboanga del Norte, Zamboanga Sibugay, Sarangani, Davao del Sur, South Cotabato, North Cotabato and Agusan del Norte.

Of course, SMC’s top man Ramon S. Ang is known to be “close” to Duterte. The SMC president was among Duterte’s campaign contributors in 2016 giving an undisclosed amount and perhaps other forms of support as Ang wasn’t even listed in the official Statement of Contributions and Expenditures (SOCE).

Ang also offered to buy Duterte a private jet (worth as much as US$65 million) that he could use as President while donating Php1 billion to the Chief Executive’s pet campaign, the war on drugs.

Meanwhile, Duterte’s former campaign spokesperson and Irrigation chief Peter Laviña and his group Philippine Palm Oil Development Council Inc. has been reportedly lobbying the government since Aquino’s time to develop at least 300,000 hectares of Mindanao lands for palm oil production targeting MILF territories as well as CARP and lumad lands.

These are some of the big business interests in Mindanao that stand to benefit from the state repression of local communities opposed to their operations. Apparently, Martial Law is more than what President Duterte, his Generals and their allies in Congress are telling us. ###

Martial Law: Lorenzana and Año’s “innovative” approach not just vs. Maute?

Defense Sec. Delfin Lorenzana and AFP Chief of Staff Gen. Eduardo Año (Photo from Frances Mangosing/inquirer.net)

Is Martial Law Defense Secretary Delfin Lorenzana and armed forces chief (and now Martial Law administrator) Gen. Eduardo Año’s “innovative” approach to end the armed conflict in Mindanao and to achieve the military establishment’s self-imposed target of wiping out armed groups in the region before President Rodrigo Duterte’s first State of the Nation Address (SONA) in July?

Is it actually aimed not just at the Maute and other terrorist groups but also legitimate rebel forces, including those that the Duterte administration is pursuing a negotiated peace agreement with?

At the start of the year (January 9), Lorenzana declared that the military would crush the Maute group (and Abu Sayyaf) in six months. To achieve the stated target, Lorenzana said they would use an “innovative” approach. “We are going to do something new or innovative to finish this problem once and for all,” Lorenzana said as quoted by the Philippine Daily Inquirer.

Armed Forces of the Philippines (AFP) Chief of Staff Gen. Año followed up Lorenzana’s declaration with the deployment of more than 50 Army battalions in Mindanao. It is said to be most massive AFP troops deployment ever with the avowed goal of “wiping out” the Abu Sayyaf, Maute group, and Bangsamoro Islamic Freedom Fighter (BIFF). The military is set to assess the progress of this bold counter-insurgency target in June.

By end of January, Lorenzana reported that the “all-out war” against the Maute and other terrorist groups is already in full swing, using the military’s ground, sea, and air assets (including newly purchased FA-50 fighter jets).

The AFP’s operations against Mindanao’s terrorist groups under the Duterte administration have actually started long before the January pronouncements of Lorenzana and Año. In its report for the first 100 days of Pres. Duterte, the AFP said that it has already launched 579 “massive focused military operations” against the Abu Sayyaf, Maute and BIFF that resulted in the neutralization of almost 150 terrorist personalities (killed, surrendered, or captured).

Prior to the Marawi clashes, the AFP said that the Maute group has been suffering heavy blows from the sustained military campaign. On April 24, the military reported that the Maute group’s main camp in Lanao del Sur has already been seized and occupied by state forces, with some 30 of its members supposedly killed in the combat operations.

Meanwhile, hours before Lorenzana and other Cabinet officials, who were in Russia, announced Pres. Duterte’s Martial Law order late Wednesday (May 23) night, officials on the ground were saying that the Marawi situation is already under control. (See Timeline)

With an already sustained campaign and deployment of huge military resources, what justifies the Martial Law declaration? And why the entire island of Mindanao when the incident that supposedly triggered it is only in Marawi City?

Apparently, for Lorenzana, the target of Martial Law is not just the Abu Sayyaf and Maute group in Marawi City but also the New People’s Army (NPA). In justifying the declaration of Martial Law over the entire island of Mindanao, Lorenzana, as quoted by MindaNews, said: “Because there are also problems in Zamboanga, Sulu, Tawi-tawi, also in Central Mindanao, the BIFF (Bangsamoro Islamic Freedom Forces) area, and also some problems in Region 11 (Southern Mindanao) yung pangongotong ng NPA (extortion by the New Peoples’ Army)”.

Lorenzana and the military establishment have been carrying out a sustained campaign to undermine the peace talks with the NPA, Communist Party of the Philippines (CPP), and National Democratic Front of the Philippines (NDFP). The DND/military propaganda against the CPP-NPA-NDFP has been clearly aimed to delegitimize the peace talks such as Lorenzana’s terrorist tagging of the rebel group just before the last round of formal peace talks between the NDFP and government panels started last April. NPA units have been the strongest in Mindanao with a string of successful tactical offensives against the military and police as well as against abusive businesses operating in the region such as mining companies and plantations.

Martial Law does not single out Maute, Abu Sayyaf or BIFF. It opens everyone in Mindanao – including those that the AFP and DND are accusing of as being NPA members or sympathizers and CPP front organizations – to the many abuses and atrocities of state forces. Gen. Año who will be the administrator of Martial Law has been notorious for committing such grave human rights abuses under the military’s anti-NPA campaign.

The human rights situation in Mindanao and throughout the country has already been appalling – with the military and police as among the main perpetrators – even without Martial Law. We do not need to imagine what will happen to human rights under a military rule, we just need to remember the Marcos dictatorship. ###

‘Dutertenomics’: golden age of oligarchic and foreign interests in infrastructure?

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Duterte’s economic managers present “Dutertenomics” – a grand plan that they said will usher in a “golden age of infrastructure” (Photo by Marianne Bermudez/Inquirer.net)

Build, build, build” is said to be the foundation of the Duterte administration’s development plan, which his economic managers are packaging as “Dutertenomics”. The plan is supposed to usher in a “golden age of infrastructure”.

But despite the attempt at branding, Dutertenomics is neither new nor unique. Its cornerstone of massive infrastructure development is still built on the neoliberal agenda of opening up additional profit-making prospects for big local and foreign business, including through “development” lending, building and operating the infrastructure themselves and/or constructing facilities that would benefit their commercial interests.

Worse, the ambitious plan may not usher in a golden age of infrastructure but instead a golden age of oligarchic and foreign interests in infrastructure while the public bears more onerous financial burden arising from greater debts and taxes.

AmBisyon Natin

There is no denying of the urgent and huge infrastructure needs of the country, especially transport. The Philippines has the worst overall infrastructure and worst transport infrastructure (roads, railroads, port and air transport) among major countries in Southeast Asia, according to the 2015-2016 Global Competitiveness Report of the World Economic Forum (WEF). The intolerable traffic in Metro Manila and the state of disrepair of the public transport system illustrate the dismal shape of transport infrastructure in the country.

Thus, infrastructure, specifically the transport sector, has been made the cornerstone of Dutertenomics. It is a key component of AmBisyon Natin 2040, a vision to make the Philippines a “prosperous, predominantly middle-class society” that President Rodrigo Duterte has adopted as guide for long-term national development planning.

AmBisyon Natin listed priority sectors that include the development of infrastructure such as roads, ports, airports, bridges and communication (“Connectivity”) as well as housing and urban development. It also identified “investment in high-quality infrastructure to make the cost of moving people, goods and services competitive” as one of the policy instruments to make the aspirations of AmBisyon Natin a reality.

The Philippine Development Plan (PDP) 2017-2022 is the first medium-term plan anchored on AmBisyon Natin. Under this PDP, the Duterte administration aims to make its six-year term the so-called “golden age of infrastructure” with spending on infrastructure increasing substantially (i.e. 5.1% of gross domestic product or GDP in 2016 to 7.4% in 2022). Concrete and measurable indicators have been set for transport infrastructure (road, rail, air and water transport); water and power resources; and social infrastructure (classrooms, health centers, housing units).

(Download the PDP’s Chapter 1 – Introduction and Chapter 19 – Accelerating Infrastructure Development)

The “golden age of infrastructure” includes an initial list of 64 big-ticket projects for implementation or in the pipeline that are mostly transport infrastructure such as major road networks, railway systems, bus rapid transit systems, and airport and seaport modernization. These are on top of 15 ongoing infrastructure projects, which are either locally funded, with official development assistance (ODA), or through public-private partnership (PPP).

Hybrid and unsolicited PPP

PPP, which is essentially the neoliberal privatization of infrastructure development and commercialization of services, will continue to be the main program to meet the country’s infrastructure needs. The PDP will promote PPP by addressing “bottlenecks in PPP planning and implementation” and pursuing “reforms to enhance the business environment” to encourage investors. To do these, among the legislative agenda under the PDP is the amendment of the BOT Law and its implementing rules and regulations (IRR).

In the previous Aquino administration, such policy reform has taken the form of the PPP Act that will among others institutionalize state guarantees on financial and regulatory risks of PPP projects. (Read “Aquino’s PPP legacy”) In the current 17th Congress, bills to introduce the PPP Act and BOT Law amendment have already been filed in both chambers. At the Senate, Sen. Sonny Angara filed Senate Bill (SB) No. 951 (“PPP Act”) while at the House of Representatives Rep. Vilma Santos-Recto filed a counterpart proposal (House Bill or HB No. 1944). HB 2727 of Magdalo party-list Rep. Gary Alejano, meanwhile, aims to amend the BOT Law. There are also moves to introduce foreign investment liberalization through the PPP Act.

As of March 28, there are 15 awarded PPP projects worth Php310.51 billion, based on the latest status report of the PPP Center. Of these, four are completed and operational (Php31.77 billion); seven are under construction (Php150.01 billion); and four are under pre-construction (Php128.73).

The country’s richest and most influential oligarchs control these PPP projects. The San Miguel Corp. (SMC) group accounts for 45.9% of the total cost of ongoing and/or completed PPP projects as of March 2017. The Manny V. Pangilinan (MVP) and Ayala tandem, meanwhile, comprises 21.5% on top of MVP’s own projects comprising 18.9 percent. All in all, the SMC, MVP, and Ayala groups collectively control 10 of the 15 ongoing and/or completed PPP projects worth Php275.15 billion or equivalent to 88.6% of the total cost. (See Chart)

Blog 05 Dutertenomics infrastructure Chart

These same oligarchs are positioning themselves to corner more infrastructure projects as the Duterte administration promotes unsolicited projects and the so-called hybrid PPPs to push its grand infrastructure plan.

Unsolicited projects proposed by the big oligarchs now total Php2.6 trillion, mostly in the transport sector as they see opportunity in the traffic crisis. These big oligarchs take advantage of unsolicited projects to build infrastructure that they will not only profit from but would also benefit their other business interests (e.g. SM’s unsolicited proposal to build a Php25-billion toll road that will link its malls in Pasay and Makati). This further weakens the central role that government should be playing in rationally planning and deciding which key infrastructure projects are needed, where to put them, and how they serve the overall development plan.

Hybrid PPP, on the other hand, is a worse form of PPP because it puts even heavier load on the public sector than the already onerous burden it shoulders under a regular PPP. In a regular PPP, the private sector will raise funds to build the infrastructure, and then operate and maintain (O&M) it in a fixed period to recover investments and earn profits. In a hybrid PPP, the public sector will finance the construction of the infrastructure through official development assistance (ODA) loans and then give the O&M to the private sector. The public will thus be burdened with direct debt servicing for the ODA loans (in a regular PPP, debt is often a contingent liability), profit guarantees and other perks for the private operator, and high user fees.

With preference for unsolicited projects and hybrid PPP, and the pending Traffic Emergency Bill – supposedly meant to address the traffic crisis – the stage to favor certain big oligarchs is set. With emergency or special powers, the Executive could fast track the implementation of transport infrastructure projects through negotiated contracts in the pretext of solving the urgent traffic crisis.

Increased foreign role

Meanwhile, as bilateral relations with China warm up under Duterte, the administration is actively seeking Chinese financing for big-ticket infrastructure projects through bilateral ODA loans, as well as multilaterally through the China-led Asian Infrastructure Investment Bank (AIIB), to fulfill the so-called “golden age of infrastructure”.

Reports say that China is set to finance Php172.4-billion worth of infrastructure projects this year. This is part of the 15 projects identified for Chinese financing under the Duterte administration estimated at a total of $6.96 billion (Php349.92 billion). Earlier reports indicated that one of the projects that China will finance is the South Line of the North-South Railway Project (NSRP) for $3.01 billion (Php151.33 billion). China also expressed initial interest in bankrolling “Duterte’s dream” of Php218-billion, 830-kilometer Mindanao railway system.

Aside from China, other imperialist financial institutions are also lining up to fund Duterte’s “golden age of infrastructure”, also mostly in the transport sector. The Japan International Cooperation Agency (JICA) has committed to finance three mega-transport projects with a combined cost of $8.8 billion (Php442.42 billion). Eleven other projects are being pitched as well to Japan for possible funding including irrigation and flood control projects. These projects are: $4.3-billion initial phase of the Mega Metro Manila subway system connecting FTI in Taguig City to the SM North EDSA and Trinoma malls in Quezon City; the $2.7-billion commuter line extending to Los Baños, Laguna, the south line of the North-South railway project, and the $1.9-billion high-speed rail extending to the soon-to-rise Clark Green City of the North-South Commuter Railway connecting Tutuban in Manila and Malolos, Bulacan.

The US-controlled World Bank, on the other hand, is providing $64.6 million (Php3.25 billion) for the first line of the Metro Manila bus rapid transit (BRT) system.

With increased ODA borrowing to fund infrastructure development, Duterte’s economic team has been pushing for a package of tax reforms that would be shouldered more heavily by the poor and ordinary income earners. The tax reform package entails additional burden that includes higher value-added tax (VAT), expanded and higher excise tax on all petroleum products, as well as the sugar excise tax. While the poor bear the brunt of these reforms, the rich get tax benefits such as lower corporate income tax as well as tax cuts in real estate and property-related transactions. And these rich include the oligarchs that corner the infrastructure projects (including those to be funded by ODA) the costs of which the taxpaying public will shoulder.

In addition to financing PPP projects, increased role for foreign interests is expected as the push to further liberalize infrastructure development continues. The US, for instance, has renewed calls to lift constitutional restrictions on foreign investments to allow and encourage American firms to participate in the Duterte administration’s PPP program. Another route being promoted by the US for American involvement in PPP is through the relaxation of limits set under the Foreign Investment Negative List (FINL). Meanwhile, Duterte himself has said that he is supportive of lifting constitutional limits on foreign investments through Charter change (Cha-cha).

Already, the PPP Center under the current administration has launched a UK-funded (Php4.35 million) Development of Foreign Investment Framework Project that “will facilitate the legal and institutional push to further build a favorable PPP business environment for foreign investors”. The output of this project will be translated into inputs to the PPP Act and its IRR.

Another pending legislative proposal to allow full foreign participation in key infrastructure sectors is HB 446 that seeks to amend the Public Service Act and redefine public utility. When passed, it will open telecommunications, transport and power industries to 100% foreign ownership.

Policy issue of profit-driven infrastructure

Ongoing PPP/infrastructure/transport projects continue to burden the people. The Php62.7-billion MRT-7 project (SMC) – the second largest among active PPP projects – for instance, is fraught with onerous contractual terms that are disadvantageous to taxpayers (state guarantees on private debt, amortization payments, etc.) and end-users (guaranteed fare adjustments) while causing massive displacement among urban poor and farmer communities. The same thing is true with the LRT-1 (MVP-Ayala) PPP project. (Read “How MVP-Ayala will squeeze LRT 1 commuters dry”)

Ultimately, it all goes back to the policy issue of private sector and profit-driven infrastructure development that the so-called Dutertenomics promote. The country needs to urgently address its infrastructure crisis but as IBON has repeatedly raised in the past, infrastructure development for transport as well other key sectors carried out with profit-driven agenda contradicts and undermines the role of infrastructure in improving the living condition of the people and serving the overall economic development and general public interests of the country. ###

This article was first published as IBON Features

(Exchange rate used: Php50.2752 per US dollar, March 2017 average, BSP – http://www.bsp.gov.ph/statistics/spei_new/tab12_pus.htm)