TRAIN: Si CEO, ang kanyang luxury car at si manang tindera

Si manang tindera at kapwa mahihirap nyang suki ang magbabayad sa matitipid ni CEO sa kanyang luxury car.

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(Larawan mula sa expatch.org)

Isipin n’yo ito –

Kapag bumili, halimbawa, ang presidente o CEO ng isang malaking kumpanya ng luxury car gaya ng Toyota Alphard 3.5 V6 na ang presyo ay nasa Php3.28 million, makakatipid siya nang hanggang Php337,000.

Si manang tindera sa sari-sari store na kailangang bumyahe sa Divisoria para mamili ng mga paninda ay maaaring magbabayad ng dagdag-pasahe sa dyipni nang hanggang Php4, o hanggang Php8 kung balikan. Magiging mas mahal na rin ang bibilhin nyang mga paninda gaya ng yosi na tataas ang presyo nang Php2.50 bawat kaha at softdrinks na tataas nang Php12 kada litro. Kailangan ni manang tindera ng mas malaking puhunan, habang maaaring liliit naman ang kanyang dati nang maliit na kita.

Si manang tindera at kapwa mahihirap nyang suki ang magbabayad sa matitipid ni CEO sa kanyang luxury car.

Ito sa simpleng salita, ang ibig sabihin ng TRAIN (Tax Reform for Acceleration and Inclusion) para sa mayaman at mahirap.

Nakakalula ang laki ng sahod ng mga CEO ng mga dambuhalang korporasyon sa bansa. Ang average na sahod ng CEO ng Metro Pacific Investments Corp. (MPIC) at Meralco nina Manny V. Pangilinan ay nasa halos Php8 million kada buwan. Ang mga CEO na nasa Ayala ay sumasahod ng halos Php7 million kada buwan. Sina Ramon Ang sa San Miguel Corp. (SMC), sumasahod kada buwan nang halos Php6 million. Si manang tindera? Swerte nang kumita ang kanyang pamilya ng Php2,700 sa isang buwan (batay sa 2015 Family Income and Expenditure Survey o FIES ng gobyerno).

Directors-Salary-v2
Mula sa Entrepreneur Philippines

Noong 2016, ang tinubo ng top 1,000 corporations sa bansa na kontrolado nina Pangilinan, Ayala, Ang at iba pang super rich kasama na ang mga dayuhan ay umabot sa Php1.24 trillion, mas malaki pa nang halos 15% sa tinubo nila noong 2015.

Yan lang ang deklarado o alam ng publiko. Magkano pa kaya ang totoo? Kaya walang epekto sa kanila ang anumang taas-presyo sa mga produkto o serbisyo. Sila nga ang may monopolyo sa mga produkto at serbisyo sa bansa at lahat ng taas-presyo ay ipinapasa sa pobreng mamimili. Laruan lang sa super rich ang mga luxury cars, tapos makakatipid pa sila nang daan-daang libo kapag bumili ng mga ito?

Sa kabilang banda, marami sa mga Pilipino ang gaya ni manang tindera na umaasa sa informal economy bilang nagtitingi ng produkto o nagbibigay ng serbisyo gaya ng mga drayber ng traysikel at dyipni, o mga tindera sa karinderya. Wala silang buwanang sahod. At marami sa kanilang kostumer ay mga galing din sa informal economy. Ibig sabihin, hindi sila makikinabang sa mas mataas daw na take home pay dahil sa mas mababang income tax. Pero tiyak na tataas ang kanilang gastos.

Si manong tsuper ng dyipni ay magbabayad ng dagdag na Php2.80 kada litro ngayong taon sa diesel habang si manong traysikel drayber ay may taas-gastos sa gasolina nang Php2.97 kada litro. Si manang may-karinderya ay tataas ang gastos sa LPG nang Php12 kada tangke (11-kg). Batay ito sa pahayag ng DOE.

Paano ang mga magsasaka at mangingisda – na pinakamataas ang poverty incidence sa lahat ng sektor (kapwa nasa 34% sa pinakahuling official data) – na umaasa sa kerosene, na tataas nang Php3.30 kada litro dahil sa TRAIN (pinakamalaki sa lahat ng produktong petrolyo) bilang pang-ilaw, pangluto at sa paghahanapbuhay?

Ngayong taon pa lang yan. Sa susunod na 3 taon, lalo pang tataas ang presyo ng langis dahil sa TRAIN, bukod pa sa halos linggo-linggong oil price hike dahil sa deregulasyon. Binibilang pa lang natin ang direktang impact. Ang pagtaas sa presyo ng langis (at kuryente bunga pa rin ng TRAIN) ay may domino effect sa presyo ng iba pang produkto’t serbisyo.

Lampas 15 million ng mga may-trabaho sa bansa ang walang regular na buwanang sahod o hindi nga sumasahod kahit nagtatrabaho, katumbas halos ng 37% ng kabuuang bilang ng employed noong 2017, kabilang ang gaya nina manang tindera at manong drayber. Paano pa kaya ang mga walang trabaho na nasa 2.4 million batay sa pinababang unemployment rate ng gobyerno?

Pero maraming ordinaryong manggagawa o empleyadong may regular na sahod ay hindi rin naman makikinabang sa TRAIN. Walang madadagdag sa sahod ng mga dati nang sumasahod ng minimum wage o mas mababa pa na bumubuo sa halos kalahati (46%) ng lahat ng manggagawa sa Pilipinas. Pero papasanin nila ang pagtaas ng mga presyo’t bayarin dahil sa TRAIN.

Kakarampot na nga ang minimum wage sa bansa. Bago pa ang impact ng TRAIN, ang minimum wage ay wala na sa kalahati ng tinatayang cost of living (hal. sa NCR, nasa Php1,130 ang cost of living kada pamilya kada araw kumpara sa arawang minimum wage na Php512). Paano kung maging mas mahal pa ang mga bilihin at serbisyo dahil sa dagdag-buwis?

Babawiin din ng taas-presyo dahil sa dagdag-buwis ang sinasabing pagbaba ng personal income tax. Kahit ang mga mataas-taas ang sahod at may pambayad pa, halimbawa, sa Uber o Grab ay hindi ligtas. Nagsabi na ang Grab ng taas-singil sa pasahe nang aabot sa Php13 dahil sa TRAIN. Mas mataas na ang gastos sa gasolina ng mga de-kotseng middle class. Hindi pa pinag-uusapan na inaalis ng TRAIN ang dating tax exemption na hanggang Php100,000 para sa 4 na dependents (hal. anak) ng isang taxpayer (o Php25,000 kada dependent) bukod pa sa personal exemption na Php50,000.

Isang paraan ang progresibong pagbubuwis para tiyakin ang makatarungang pamamahagi ng yaman ng isang lipunan. Pero kung ang mahihirap ang papasan ng buwis para sa maluhong pamumuhay ng mayayaman, hindi lang iyan regressive, pang-aapi na iyan. #

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. ###

‘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)

US aid and imperialism

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Photo from The Philippine Star

For daring the US and others to withdraw their aid, President Rodrigo Duterte has been called a “psychopath”. For those whose way of thinking has been systematically warped by colonialism and neocolonialism/imperialism, it is plain madness. As a poor country, why would we shun the “altruism” of rich countries like the US?

On the contrary, the US would rather not stop its aid program here. Since our nominal independence from the US’s colonial rule 70 years ago, patronage through economic and military aid has been a key component of enduring US imperialist domination and plunder of the Philippines.

Beyond altruism

Data from the US Agency for International Development (USAID) show that from 2001 to 2014, total economic aid to the Philippines reached more than US$1.94 billion (in current prices). Total military aid during the same period reached almost US$566.11 million. That’s a combined US$2.51 billion in 14 years. Annually, the US disbursed US$138.95 million in economic aid and US$40.44 million in military aid or a combined $179.39 million every year from 2001 to 2014.

For 2015, preliminary USAID data show that the US disbursed $180.62 million in economic aid. There’s no 2015 data yet on military aid from the USAID online database. Reports, however, say that US military assistance for the Philippines was about US$50 million last year that will reportedly rise to US$79 million in 2016, on top of another US$42 million from the new US-Southeast Asia Maritime Initiative.

Further, note that US assistance to the Philippines has grown quite substantially under President Barack Obama and his declared US pivot to Asia. From 2010 to 2014, US economic aid increased by almost 15% in real terms annually. Military aid grew by almost 8% a year during the same period.

(US economic and military aid data since 1946 can be generated from USAID’s reports & data)

And we’re counting just the bilateral aid from the US. The US is also a major contributor to multilateral bodies like the World Bank and agencies of the United Nations (UN), which provide development aid to the Philippines as well.

That’s a lot of aid money that Duterte would be foregoing if the he will really spurn American patronage.

But as mentioned, there’s more to foreign aid than the simple altruism of donors. Aid, especially US aid, is used not for development cooperation but to advance the interests and agenda of the donor and deepen their patron-client relationship with the aid recipient. It is an effective neocolonial tool to foster continued dependence and subservience, and steer domestic policy making in directions that the donor wants. Lastly, aid is also a means for the US to directly create profit-making opportunities for their transnational corporations (TNCs).

Education, health, disaster relief

Remember how the US used the public education system as an integral part of their colonization campaign in the Philippines? It was far more successful in making Filipinos subservient to the colonizers than using purely military might. Colonial education was so effective that many Filipinos could not imagine life without the US. Just look at the reaction to Duterte’s stance on independent foreign policy.

It continues to this day through, among others, the use of foreign assistance. Classified by purpose, the largest bilateral US aid disbursed to the Philippines in 2015 was in Primary Education at US$25.33 million. Almost half of this amount, US$12.49 million, went to the Basa Pilipinas project of the USAID. Through this project, the US develops and distributes teaching and learning materials, English books and reading materials, etc. for local teachers to use for their Grades 1-3 pupils. Another US$5.35 million in US aid was also disbursed for Higher Education in 2015. (See Chart 1)

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The second biggest chunk of US aid disbursement last year went to Material Relief Assistance and Services with US$20.37 million. They also disbursed US$3.84 million for Disaster Prevention and Preparedness; US$1.92 million for Emergency Food Aid; and more than US$1 million for Relief Coordination, Protection and Support Services.

The US has been using disaster relief to justify and expand their military presence in disaster-prone countries like the Philippines. The controversial Enhanced Defense Cooperation Agreement (EDCA), for instance, was justified using the pretext of humanitarian aid and disaster relief. American troops can base in military facilities here so they can preposition not just their weapons and war machines but also “humanitarian relief supplies”. (Read for instance, US Secretary of State John Kerry’s recent statement on EDCA made last July 2016)

Family Planning also traditionally gets a big portion of US aid with disbursement reaching US$17.08 million in 2015. Related sectors also got significant amounts such as Reproductive Health Care (US$3.94 million) and Population Policy and Administrative Management (US$0.43 million).

Population control has long been a strategy of US imperialism in the Philippines. In 1974, the USAID and Central Intelligence Agency (CIA), among others, produced the “Kissinger Report”. It said that population growth threatens US access to the natural resources of poor countries. A large population of youth must also be controlled because they are most likely to challenge US imperialism. The Philippines is one of 13 countries identified in the Kissinger Report as primary targets of US-led population control efforts.

Public health is another major sector that the US has been long supporting in the country. In 2015, the US disbursed US$16.04 million in aid for Tuberculosis Control and more than US$0.90 million for STD Control including HIV/AIDS. A productive and efficient (and, of course, cheap) labor force is one of the primary resources that US imperialism exploits for super profits. Control of infectious diseases like TB and AIDS helps ensure an efficient workforce, which poor countries with weak public health systems due to imperialist plunder and underdevelopment could not afford

Plus, big US pharmaceutical companies that have monopoly over patented drugs used in these health programs are assured of markets. In the Philippines, for instance, the anti-TB campaign is a partnership between USAID and Johnson & Johnson, an American pharmaceutical and consumer goods giant.

Aid and policymaking

But the biggest impact of US aid in the Philippines is on how national economic policies and priorities are determined. Obama, for instance, introduced the Partnership for Growth (PFG) initiative. It is an aid program participated in and coordinated by the USAID, State Department, Millennium Challenge Corp. (MCC) and other US agencies as well as the World Bank, International Monetary Fund (IMF) and various UN bodies.

Through the PFG, the US deepens its role in national policy making such as through the five-year Joint Country Action Plan (JCAP), which identified priority areas for policy reforms in the Philippines. These include trade and investment liberalization, deregulation, effective enforcement of contracts with private business (such as those engaging in public-private partnership or PPP), as well as fiscal and judicial reforms.

An example of how US steers internal policy-making is the PFG’s centerpiece program in the Philippines, which is the $433.91-million grant from the MCC. The MCC is a highly conditional aid and requires the Philippines to, among others, maintain so-called “economic freedom” to continue receiving the grant.

One of the indicators of economic freedom, as designed by the MCC, is the Trade Policy Indicator. It measures the country’s openness to international trade based on average tariff rates and non-tariff barriers (e.g. trade quotas, production subsidies, government procurement procedures, anti-dumping, local content requirements, etc.) to trade. The “Compact” or agreement between the Philippine government (as represented then by the Aquino administration) and MCC is that the latter may suspend or terminate the grant if the country fails to reverse its policies that are inconsistent with the Trade Policy Indicator and other indicators designed by the MCC.

Also part of the implementation of the PFG is The Arangkada Philippines Project (TAPP) of the USAID and the American Chamber of Commerce (AmCham). Through the USAID-funded TAPP, AmCham is pushing for 471 specific recommendations that promote the interest of foreign corporations in the country through greater liberalization, deregulation, privatization and denationalization. These are contained in the comprehensive advocacy paper “Arangkada Philippines 2010: A business perspective” prepared by the Joint Foreign Chambers of Commerce in the Philippines (JFC), of which AmCham is a key member.

Under the TAPP, the JFC has been producing Legislation Policy Briefs that identify broad recommendations for Congress and the Executive. Among the many proposals of the JFC is the lifting of constitutional restrictions on foreign investments through Charter change (Cha-cha).

All these are in preparation for the country’s future membership in the US-led Trans-Pacific Partnership (TPP) agreement. The TPP is an ambitious free trade deal and the latest campaign of US imperialism to further deepen and consolidate its economic domination in Asia Pacific in the face of a rising China. Just last March 2016, the US Chamber of Commerce, with funding from USAID under the PFG’s five-year US$12.84-million Trade-Related Assistance for Development (TRADE) project, released its “readiness assessment” of Philippine membership in the TPP.

The said report examined the “consistency of the country’s existing policy framework with the agreement’s requirements, and the implied changes that may be necessary if the Philippines is to meet these requirements”. As expected, one of the “implied changes” is liberalization through Cha-cha. (The full report may be downloaded here)

Military patronage

Lastly, the US employs military aid not to modernize the Armed Forces of the Philippines (AFP) but to maintain its influence and control over our military. US military aid mostly comes in the form of Foreign Military Financing (FMF). Under the FMF, the US provides grants and loans to help the Philippines buy US-made weapons and defense equipment as well as acquiring defense services and military training.

In 2014, US$50 million in FMF was disbursed by the US to the Philippines out of the total US$57 million in military aid that year. The Philippines is traditionally one of the largest recipients of FMF among all US allies. It ranked fifth in 2014 in terms of FMF behind Egypt, Israel, Pakistan and Jordan. The country also accounted for 64% of US FMF in East Asia and the Pacific. (Data here)

However, military items that the country gets under the FMF and other US military aid programs are either surplus or second-hand and antiquated military articles. They are also not actually given for free but are sold at a discount (with a portion of the amount shouldered or waived by the US through the FMF).

Examples include the five-decade old US Coast Guard vessels (“Hamilton-class cutters”) that the US Navy has retired and sold to the Philippines. Since 2012, the Philippines has already bought two of these decommissioned ships for about US$25 million – and a third one is expected soon – through the FMF, Foreign Military Sales (FMS) and Excess Defense Article (EDA) programs.

The weapons systems of the ships have also been removed by the US prior to their turnover to the Philippine Navy. The country had to separately purchase from the US the vessels’ weapons and guns as well as additional technology including radar system, anti-ship missile system, etc. US military aid thus also means more business for the US military industrial complex.

Aside from FMF, other US military aid programs in the Philippines include counter-narcotics, military education and training, cooperative threat reduction, and counter-terrorism fellowship program. (See Chart 2)

arn-07-us-aid-and-imperialism-oct-2016-chart-2

Along with annual military exercises under the Visiting Forces Agreement (VFA), military aid fosters complete dependence of the AFP on US military technology, hardware and expertise. It also helps justify the continued presence of American troops in the country. But despite decades of US military patronage, the AFP remains one of the weakest and least modernized in the region. The Abu Sayyaf that the US has long been using to legitimize their military presence in the country persists and continues to terrorize the people.

Mutual respect, sovereignty

Foreign aid is not necessarily bad. It is, in fact, an important element of cooperation among countries to promote development. But as the case of US aid in the Philippines illustrates, aid could also be used to perpetuate the skewed relationship between the donor and recipient, between the colonial master and colony.

Such unequal, oppressive and exploitative relation between the US and the Philippines is the real reason why the country is underdeveloped and Filipinos are starving. If the Duterte administration rejects US aid to pursue a truly independent foreign policy and nurture development cooperation with other countries based on mutual respect and sovereignty, then we are already taking the initial steps to address the underlying causes of our poverty and hunger. ###

Poverty trends

Original photo from www.solarnews.ph
Original photo from www.solarnews.ph

In its latest survey, the Social Weather Stations (SWS) said that the number of Filipino households that consider themselves poor has slightly declined to 53% in the first quarter of 2014 from 55% in the last quarter of 2013. The Aquino administration was quick to point out that the SWS findings mirror the official poverty data released by the Philippine Statistics Authority (PSA). Two days before Labor Day, the PSA released the Annual Poverty Indicator Survey (APIS) which reported that the number of Filipinos considered poor based on their average income fell to 24.9% in first semester of 2013 from 27.9% in the same period in 2012.

The presentation of these two surveys, released one week apart, depicts a picture of an improving poverty situation. The National Economic and Development Authority (NEDA) described the findings as a “remarkable improvement” in poverty and credited the “strong economic growth” and “government investments in social development programs”. But their manner of presentation is misleading. First, a two or three point decline in poverty is hardly a remarkable improvement especially when one considers government’s claim of rapid economic growth and massive expansion in conditional cash transfer (CCT) funds. Second, comparing poverty figures on a quarterly or semestral basis tends to hide long-term trends, which provides a more useful and accurate appreciation of poverty’s general direction.

Indeed, if one is to look at poverty figures since the Aquino administration took over, what can be seen is the indisputable trend of worsening poverty and living condition. I have been compiling the quarterly surveys of SWS on self-rated poverty, involuntary hunger and adult unemployment from 2010 to their latest available reports. The trends, based on the latest results, are summed up below:

  • From 2010 to 2014 (first quarter), the number of Filipino families that consider themselves poor is growing by 700,000 a year (or 3.5 million Filipinos annually at 5 members per family)
  • From 2010 to 2013, the number of Filipino families that experience hunger is increasing by 200,000 a year (or 1 million Filipinos annually)
  • From 2010 to 2013, the number of jobless Filipino workers is expanding by 500,000 a year

The annual averages are presented in the following charts:

Poverty:

SWS poverty, hunger, joblessness | 2010-2014

Hunger

SWS hunger

Joblessness

SWS joblessness

Meanwhile, even government’s own APIS does not illustrate a substantial improvement in poverty, pegged at 19.7% of families in 2012 (full-year); 20.5% in 2009; and 21% in 2006. Even worse is how government measures poverty – a person with P52.75 a day is not counted as poor. Such amount approximates the World Bank’s $1.25 per person a day poverty standard, which is being criticised by experts as being too low and artificial. (For instance, read here

But who needs an expert when common sense tells us that P52 could not afford decent living? Using P100 to P125 per person a day as standard, IBON Foundation estimated that the number of poor Filipinos could reach 56 to 66 million, or about 60-70% of the population.

If government’s economic managers could not even correctly count the number of poor and properly interpret poverty trends, how can the people expect the Aquino administration to address the country’s worsening poverty, much less end its structural roots? ###

 

Obama and the US Cha-cha lobby

Photo from here
Photo from here

Malacañang announced that defense and security would be on top of the agenda during US President Barack Obama and President Benigno Aquino III’s meeting on April 28. This, of course, is expected. In time for the visit, negotiators have rushed a new defense accord that will facilitate greater US access to and use of Philippine military facilities amid the country’s continuing territorial row with China. Obama and Aquino may sign the controversial Agreement on Enhanced Defense Cooperation next week as one of the concrete results of the highly anticipated meeting.

But another controversial topic may be discussed when the two presidents meet – Charter change (Cha-cha). Obama may discreetly push Aquino to give his open support to ongoing efforts to amend the 1987 Constitution.

Note that the US government and American corporations are among the long-time advocates of removing the constitutional restrictions on foreign investment. In fact, the Obama administration is more direct in its lobbying for Cha-cha compared to its predecessors.

Behind the cover of development assistance and promoting good governance, the Obama administration is quietly propping up the Cha-cha campaign through its so-called Partnership for Growth (PFG). The PFG is a signature inter-agency effort of Obama’s Presidential Policy Directive on Global Development, which claims to “elevate economic growth in countries committed to good governance as a core priority for US development efforts”. It supposedly aligns with policy reform areas outlined by the Aquino administration in its Philippine Development Plan (PDP).

The PFG is defined by the active participation and coordination of more than a dozen US government agencies led by the State Department, US Agency for International Development (USAID) and the Millennium Challenge Corporation (MCC), as well as multilateral donors like the World Bank, International Monetary Fund (IMF), United Nations (UN) agencies and even non-government organizations (NGOs) and private corporations.

In the Philippines, among the initiatives being supported by the PFG through the USAID is the Cha-cha lobby, which is being led by US companies under the American Chamber of Commerce (AmCham). In February 2013, AmCham and USAID launched The Arangkada Philippines Project (TAPP). This initiative pushes for the implementation of the policy proposals contained in the comprehensive advocacy paper “Arangkada Philippines 2010: A business perspective” prepared by the Joint Foreign Chambers of Commerce in the Philippines (JFC) where AmCham is a key member. Among the numerous policy proposals of the Arangkada initiative is addressing the 60-40 constitutional restrictions on foreign investments as well as other reforms for liberalization, deregulation, privatization and denationalization.

Meanwhile, even before the TAPP, the US government has been advocating Cha-cha through the Office of the US Trade Representative (USTR), which regularly brings attention to policy makers the restrictive economic provisions of the Constitution and the implicit message to remove them because they are barriers to US trade and investment. In March this year, the USTR released the 2014 edition of its National Trade Estimate Report on Foreign Trade Barriers covering 58 countries and trade partners of the US. The report is an inventory of the most important foreign barriers affecting US exports of goods and services, US foreign direct investments (FDI) and protection of intellectual property rights (IPR).

For the Philippines, the USTR identified the 30% constitutional limit on foreign ownership in advertising; 40% limit on foreign investment in the operation and management of public utilities (water and sewage treatment, electricity distribution and transmission, telecommunications and transportation); ban on foreigners to practice law, medicine, nursing, accountancy, engineering, architecture and customs brokerage; and restrictions on foreign ownership of land, aside from existing national laws, as among the barriers to trade being implemented by government.

Providing the backdrop to the US Cha-cha lobby is the Trans-Pacific Partnership (TPP), a potential free trade agreement (FTA) to create more profit opportunities for American businesses. The TPP is a key component of the so-called US pivot or rebalancing to Asia, which is the overarching agenda of the Asian tour of Obama that aside from the Philippines also includes Japan, Malaysia and South Korea. Obama’s former national security adviser called the TPP the centerpiece of US economic rebalancing to Asia and platform for regional economic integration. Aside from their territorial disputes with China, another common thread among the four Asian countries that Obama will visit is the TPP where Malaysia is already a negotiating party while Japan and South Korea are expected to join soon, and the Philippines pushing for its inclusion.

While the TPP and US-PH bilateral economic ties are not as controversial as the rushed and secretive new defense agreement between Manila and Washington, these items in Obama’s agenda during his meeting with Aquino do have far-reaching implications, such as Charter change and its impact on Philippine sovereignty and economic development. Several US officials have declared – and admitted by some of Aquino’s Cabinet secretaries – that Philippine membership to the TPP will require amending the Constitution given the highly ambitious liberalization that the US-led FTA is aspiring for.

Obama’s discussion with Aquino on TPP will further heighten persistent US pressure to implement Cha-cha. Last month, a top official of the USTR was in the Philippines and met with Trade, Agriculture and Tariff Commission officials to discuss the country’s possible participation in the TPP. In January last year, a “powerhouse” trade mission composed of executives from US giants Citigroup, Chevron, Coca Cola, General Electric, Procter & Gamble and JP Morgan Chase, among others, also met with Aquino to lobby for Cha-cha and the TPP. The US trade mission was facilitated by the US-Philippine Society (USPS), a business lobby group co-chaired by Manny Pangilinan, a perceived Cha-cha supporter whose businesses are bankrolled by substantial foreign capital (beyond constitutional restriction, such as PLDT).

Do not expect Obama’s Cha-cha lobby to land in official press statements after the visit because the US is not supposed to meddle in the Philippines’ internal affairs and violate its sovereignty. We may just notice, however, a Cha-cha campaign that is more energized than ever. ###

Read more on US-Philippine relations under the Obama and Aquino presidencies

US-PH Partnership for Growth: Greater economic intervention

Obama’s victory: the fallacy of lesser evil and illusion of choice

“2+2” equals more secret US bases in PH

Obama’s dreaded drone war arrives in PH

US agenda in Asia and the risks that Aquino is courting

Tubbataha grounding: expect more abuses as US pivots to Asia

IBON infographic: US military operations in PH, 2001-2011

Prices, profits and poverty: Three years of the Aquino presidency

gutom at dukhang pilipino

Two weeks before the fourth State of the Nation Address (SONA) of President Benigno Aquino III, the National Statistical Coordination Board (NSCB) revealed that the income gap between the rich and poor in the country continues to widen. The high-income class saw their income grow much faster (10.4% between 2010 and 2011) than those of the middle (4.3%) and low-income (8.2%) groups. To be sure, the NSCB’s “revelation” is nothing new, but nonetheless, it affirmed widespread criticisms that the economic growth being hyped by the three-year old Aquino administration merely benefited the rich and has been meaningless to the poor.

But as always, Malacañang was quick to dismiss any claim that challenges the illusion of economic prosperity it is trying to sell, even if it comes from an official government body like the NSCB. The gap is not widening, said the Palace’s chief spokesman, because all income classes have posted growth. Never mind if simple math says that a 10%-increase in a company executive’s monthly salary of P200,000 and an 8%-increase in an ordinary employee’s monthly income of P10,000 means that their income gap has widened by P19,200 a month. There is a serious problem when government readily distorts basic facts and logic to suit its propaganda.

Indeed, the glaring reality in the first three years of the Aquino administration is that the number of poor and hungry families and jobless workers has been constantly rising while a handful of super-rich amass wealth at unprecedented levels. All the publicity about high gross domestic product (GDP) growth, unparalleled trading in the stock market and historic investment grade rating merely points to how profitable the economy has become for the country’s elite and their foreign patrons.

This phenomenon can only be adequately explained by examining the political and economic structures of Philippine society. For starters, Aquino did not re-orient the economy and created conditions that will dismantle its semi-colonial (i.e., export-oriented, import-dependent economy) and semi-feudal (i.e., vast countryside with backward production and intense land monopoly) character. Industries remain stunted and vast haciendas remain intact depriving millions of Filipinos of long-term, gainful and productive employment and livelihood. Infrastructure development, which has become the favorite investment destination of big compradors and foreign banks and corporations under Aquino’s public-private partnership (PPP), is being pursued not for national industrialization but to facilitate the plunder of the economy by big local and foreign business interests. This also explains why Aquino’s “kung walang corrupt, walang mahirap” (without corruption, there is no poverty) is fundamentally flawed and deceptive.

Such underlying reality is being aggravated by the neoliberal policies of privatization and deregulation that result to ever rising prices, with big business groups and families that control privatized and deregulated sectors of the economy massively accumulating wealth while the people are oppressed and impoverished by soaring cost of living. This has been one of the easily discernible trends in the first three years of the Aquino presidency.

Prices

The prices of basic goods and services have sustained their steep rise due to the continued implementation by Aquino of neoliberal privatization and deregulation programs. This has been most felt in the sectors of water, electricity, petroleum and education. The average inflation rate (i.e., the pace of change of prices) of water, electricity, gas and other fuels (plus housing) from July 2010 to June 2013 is 4.3 percent. The inflation rate of education during the same period is 4.6 percent. Both are higher than the overall inflation rate of 3.6 percent. Only alcoholic beverages and tobacco posted a higher inflation rate with10.4% mainly due to the Sin Tax Law, also a neoliberal reform, which took effect this year. (See Chart 1)

inflation rate, by commodity

Note that the costs of water, power and oil products are rising at a much quicker pace today. The mentioned 4.3% inflation rate of utilities and fuels posted in the first three years of Aquino is faster than the 3.4% recorded in the last three years of Arroyo. It does not mean, however, that Arroyo was better than her successor at keeping prices in check. They both adhere to the same neoliberal policies of privatization and deregulation that let prices spiral. It’s just that Aquino is a more ardent implementor of neoliberalism than his former Economics teacher at the Ateneo.

Prices have soared as government ditched its regulatory duties like in the case of oil, and turned over to profit-oriented private firms many of its key functions like in the case of water and electricity. These paved the way for the profiteering of huge private monopolies. Among the first challenges to Aquino when he assumed power was to reverse these neoliberal prescriptions of the International Monetary Fund (IMF) and the World Bank that his mother Cory first implemented in the late 1980s.

Alas, when pump prices escalated in 2011, Aquino immediately defended the Oil Deregulation Law amid mounting calls for price control. He also rejected demands to scrap or at least reduce the 12% value-added tax (VAT) on petroleum products as an immediate relief. For Aquino’s inaction on skyrocketing oil prices, youth activists popularized Noynoying or lazing around. (Read more on oil deregulation here) Under Aquino, the pump price of diesel has increased by 24%; gasoline, 17%; and liquefied petroleum gas (LPG), 7-14 percent.

When Mindanao faced a power crisis in 2012, Aquino pushed for the full implementation of the Electric Power Industry Reform Act (Epira). The solution, said Aquino, is to privatize the region’s hydropower plants and for Mindanaons to pay more for electricity. His administration also started imposing this year Epira’s universal charge on stranded costs to pay for the post-privatization residual debts of the National Power Corp. (Napocor). These debts arose from the sweetheart deals of Napocor with independent power producers. (Read more on Napocor privatization here)

Since Aquino became President, the distribution charge of the Manila Electric Co. (Meralco) has already jumped by 43 percent. The transmission charge of the National Grid Corp. of the Philippines (NGCP) has already increased by 28 percent. Due to the imposition of the universal charge on stranded costs, the universal charge being imposed by Meralco has ballooned by 213 percent.

Meanwhile, Malacañang has remained silent on the raging controversy surrounding the privatization contract of the Metropolitan Waterworks and Sewerage System (MWSS). But it is noteworthy that the Aquino administration has been showcasing the privatization of MWSS to lure investors to its public-private partnership (PPP) program. The public now understands why MWSS is such an appealing model to PPP investors. In their Concession Agreement with MWSS, Maynilad Water Services Inc. and Manila Water Co. Inc. have been allowed to pass on to consumers billions of pesos in past and future income taxes, corporate donations, advertisements, projects, etc. and earn guaranteed profits from such onerous charges. This is on top of automatic adjustments in the basic rates as well as the collection of questionable items. (Read more on MWSS privatization here) The all-in water tariff being charged by Manila Water has already gone up by 24% and Maynilad by 41% since Aquino took over.

Table 1 below sums up the movement in prices of oil products and water and electricity rates in the first three years of the Aquino presidency.

oil prices, power & water

Tuition’s steady increase resulted in the high inflation rate of education. In the past three years, the Aquino administration approved almost nine out of every 10 applications for tuition hikes by tertiary schools. For this school year, the Commission on Higher Education (CHED) approved the tuition hike application of 354 tertiary schools and of at least 903 private elementary and high schools. In 2011 and 2012, CHED allowed 281 and 267 tertiary schools, respectively to increase tuition.

Profits

Big business has been cashing in huge amounts of profits due to the ever increasing prices of basic goods and services (and continued depression of wages). Due to rising electricity rates, for instance, the net income of Meralco has been growing by 42% or P3.67 billion annually from 2010 to 2012 and that of the National Grid Corp. of the Philippines (NGCP), by 17% or P2.91 billion (from 2010 to 2011).

Meanwhile, oil companies’ net income during the period has been weighed down by relatively lower prices in 2012. Petron’s net income, for instance, grew by 46% a year from 2010 to 2011 but declined by 73% last year, pulling down its annual net income expansion to just 7% in the last three years. Nonetheless, it still averaged an annual net income of P6.23 billion during the period. As an industry, electricity and oil and gas firms that belong to the top 1,000 corporations posted a collective 48% or P42.64 billion yearly net income growth from 2010 to 2011.

Similarly, because of rising water rates, Maynilad’s net income has been increasing by 36% or P1.33 billion every year and Manila Water by 19% or P737 million from 2010 to 2012.

Another indicator of the robust financial health of these firms is the gross profit margin. Among all industries in the top 1,000 corporations, electricity, oil and water companies registered some of the largest gross profit margins. In 2010 and 2011, the average annual gross profit margin of electricity and oil firms reached 32%, higher than the 27% they registered in 2008 and 2009. On the other hand, water firms posted a gross profit margin of 36.1% in 2010 and 2011, slightly lower than the 36.7% it recorded in 2008 and 2009. Other profitable industries include mining (50% profit margin in 2010 and 2011), banking and other financial activities (47%), information and communication technology (42%), and real estate (36%).

All in all, the average gross profit margin of the top 1,000 corporations improved from 21% to 23% in the periods being covered.  Also, their total net income grew from P755.97 billion in 2009 to P804.07 billion in 2010 to P868.08 billion in 2011, or an annual expansion rate of more than 7 percent.

Richest

Not surprisingly, a small group of super-rich families, which together with their foreign partners and financiers, control the country’s utilities, energy and oil companies, banks, mining firms, and real estate and infrastructure development among others, are amassing unimaginable wealth.

Forbes’ annual list of the world’s richest people shows a steadily and immensely growing wealth of the super-rich in the Philippines, who control the country’s largest companies, in the first three years of the Aquino administration. From $16.4 billion in 2009, the combined wealth of the 40 richest Filipinos has ballooned to $47.4 billion in 2012, or a 189%-increase. (See Chart 2 and Table 2) Forbes listed only 11 richest Filipinos for 2013 but their combined wealth has already reached a whopping $39.9 billion.

forbes richest filipinos 2009-2012

Table 2

Richest Filipinos as listed by Forbes Magazine ($ billion)

Name

2006

2007

2008

2009

2010

2011

2012

2013

Henry Sy

4.00

1.70

3.10

3.50

5.00

7.20

9.10

13.20

Lucio Tan

2.30

1.60

1.50

1.70

2.10

2.80

4.50

5.00

Enrique Razon Jr.

0.29

0.82

0.53

0.62

0.98

1.60

3.60

4.90

John Gokongwei

0.70

0.43

0.68

0.72

1.50

2.40

3.20

David Consunji

0.15

0.21

0.11

0.30

0.72

1.90

2.70

2.80

Andrew Tan

0.48

1.10

0.70

0.85

1.20

2.00

2.30

3.95

Jaime Zobel de Ayala

2.00

2.00

1.20

1.20

1.40

1.70

2.20

George Ty

0.83

0.87

0.44

0.52

0.81

1.10

1.70

2.60

Roberto Ongpin

3.00

1.30

1.50

1.20

Danding Cojuangco

0.84

0.54

0.61

0.66

0.76

1.40

1.40

Roberto Coyiuto Jr.

0.29

0.31

0.40

1.30

1.60

Tony Tan Caktiong

0.58

0.79

0.69

0.71

0.98

1.00

1.25

1.40

Lucio & Susan Co

1.20

2.00

Inigo & Mercedes Zobel

0.66

0.43

0.44

0.73

0.98

1.15

Emilio Yap

0.35

0.45

0.42

0.51

0.67

0.93

1.10

Jon Ramon Aboitiz

0.13

0.13

0.36

0.76

0.96

Andrew Gotianun

0.28

0.86

0.24

0.31

0.50

0.80

0.83

1.20

Manny Villar

0.11

0.94

0.43

0.53

0.38

0.62

0.72

Beatrice Campos

0.16

0.22

0.33

0.41

0.84

0.69

0.70

Vivian Que Azcona

0.08

0.67

0.36

0.39

0.45

0.56

0.69

Alfonso Yuchengco

0.23

0.37

0.20

0.23

0.26

0.37

0.57

Mariano Tan

0.10

0.14

0.20

0.18

0.33

0.38

0.42

Enrique Aboitiz

0.28

0.38

0.05

0.15

0.31

0.40

Eric Recto

0.20

0.37

Jose Antonio

0.25

0.30

Glibert Duavit

0.21

0.19

0.13

0.16

0.15

0.19

0.27

Menardo Jimenez

0.21

0.19

0.13

0.16

0.14

0.19

0.27

Frederic Dy

0.07

0.07

0.04

0.07

0.11

0.26

Manuel Zamora

0.08

0.11

0.13

0.11

0.12

0.15

0.26

Alfredo Ramos

0.13

0.12

0.12

0.18

0.25

Oscar Lopez

0.28

0.25

Felipe Gozon

0.16

0.24

Betty Ang

0.17

0.24

Wilfred Uytengsu Sr.

0.15

0.23

Juliette Romualdez

0.16

0.20

Bienvenido Tantoco Sr.

0.10

0.20

Jacinto Ng Sr.

0.12

0.19

Tomas Alcantara

0.16

0.16

Michael Cosiquien

0.15

Edgar Sia II

0.09

0.14

2006-2012 data as compiled by Rappler
2013 figures as reported by The Philippine Star

Cojuangco

Among the country’s richest based on the Forbes list is presidential uncle Danding Cojuangco, whose San Miguel Corporation (SMC) has stakes in Petron and Meralco as well Jaime Zobel de Ayala, whose many business interests include Manila Water. Cojuangco has a declared wealth of $1.4 billion in 2012, or 112% higher than his recorded wealth in 2009. Manned by his right-hand man Ramon S. Ang, Cojuangco’s San Miguel Corp. (SMC) registered a 61%-increase in its net income between 2010 and 2012. Originally a food and beverages company, the conglomerate has aggressively expanded into oil and energy (Petron, SMC Global Power Holdings, and San Miguel Energy Corp. and Meralco) as well as infrastructure. Taking advantage of Epira, SMC now holds the largest share, about 20%, in the country’s power generation capacity. SMC is also investing in mining through a stake in the Sagittarius Mines Inc., operator of the controversial $5.9-billion Tampakan copper-gold project in South Cotabato.

Ayala

Meanwhile, Ayala’s total wealth was pegged at $2.2 billion in 2012, 83% higher than his wealth in 2009. Aside from Manila Water (which is also lists as investors the World Bank’s International Finance Corp., UK’s United Utilities, Japan’s Mitsubishi Corp., as well as American and European investment firms), the Ayala group has interests in banking (Bank of the Philippine Islands), real estate (Ayala Land) and telecommunications (Globe).

Pangilinan

While conspicuously absent in the Forbes list, Manny V. Pangilinan is widely considered as among the richest billionaires in the country due to his various business interests including Maynilad and Meralco. Aside from utilities, Pangilinan also has interests in telecommunications (PLDT, Smart), infrastructure and tollways (Metro Pacific Tollways Corp. which operates SCTEX and NLEX), media (TV5 and various newspapers), mining (Philex Mining Corp.) and a growing number of hospitals (Makati Medical Center, Cardinal Santos Medical Center and Asian Hospital, among others). However, it must also be noted that these business interests are under the Hong Kong-based First Pacific Company Ltd., which is part of the corporate empire of Indonesia’s largest conglomerate, the Salim Group.

Top 5

The richest Filipino, based on the Forbes list, is Henry Sy, known for his chain of SM malls (the Philippines’ largest retail business) with a declared wealth of $13.2 billion in 2013. His wealth has increased by 277% since 2009, boosted by his expansion in the power industry through the NGCP, which because of Epira now has a monopoly over the country’s transmission system. His holding company, SM Investments Corp., saw its profits grow by 34% between 2010 and 2012. Sy’s BDO Unibank Inc., the largest bank in the country, posted a 61%-increase in its net income during the same period while SM Prime Holdings, which handles the SM malls, had a 29%-increase.

Following Sy is Lucio Tan, whose wealth jumped by 194% to $5 billion during the same period. Tan’s Fortune Tobacco and American giant Philip Morris have partnered under the PMFTC Inc. to monopolize the local cigarette market. Between 2010 and 2012, PMFTC Inc. saw its net income swell by 3,189 percent. Tan also controls Tanduay, Asia Brewery, Eton Properties (notorious for occupational hazards), the recently merged Philippine National Bank (PNB) and Allied Bank, as well as the University of the East (one of the educational institutions included in the top 1,000 corporations). Enrique Razon came in a close third with $4.9 billion, an enormous 690% expansion from his wealth in 2009. Razon is known for his International Container Port Terminal Services Inc. (ICTSI), which makes its fortune from privatized ports here and abroad, but is also expanding into casino operation through Bloomberry Resorts and Hotels Inc., which operates the recently opened Solaire Resort and Casino.

The fourth richest Filipino based on the Forbes list is Andrew Tan ($3.95 billion, 365% higher than 2009). He lists among his business interests the Alliance Global, which controls property developer Megaworld and the local franchise of US-based global food chain giant McDonalds. Like Razon, Andrew Tan will soon build and operate hotel and casino facilities at the so-called Pagcor Entertainment City in Manila. Completing the five richest Filipinos is David Consunji whose $2.8-billion wealth in 2013 an enormous 833% increase from his reported wealth in 2010. His main business interest is construction giant DMCI Holdings, which has also expanded to mining (Semirara Mining Corp.), energy (DMCI Power Corp.) and water (Maynilad). The Consunji group is among the most active in the privatization of power plants and IPP (independent power producer) contracts under Epira.

Poverty

Wages and incomes could barely cope with the ever rising prices of basic goods and services. In Aquino’s first three years, the daily minimum wage in NCR has increased by just P52 – from P404 (June 2010) to P456 today. The family living wage, which approximates the cost of living or the amount needed by a family to meet daily basic food and non-food needs, was pegged at P983 in end-2010 and at P1,034 in end-2012, using think tank IBON Foundation’s estimates, or an increase of P51. This means that the wage hikes have just been wiped out by the increase in the cost of living. Thus, the minimum wage remained way below the amount needed for a family to live decently, pegged at 44% of the cost of living today.

Based on SWS surveys, the number of poor families (annual average) climbed from 8.9 million in 2010 to 9.9 million in 2011 and further to 10.5 million last year. In the first quarter of 2013, the SWS reported that 10.6 million families consider themselves poor. This means that under Aquino, the number of poor families has increased by 1.7 million, or about 8.5 million Filipinos. Even official statistics indicate that poverty, at best, did not improve under Aquino. The National Statistical Coordination Board (NSCB) reported that poverty incidence among families stood at 22.3% in the first semester of 2012, which it described as practically unchanged from 2006 (23.4%) and 2009 (22.9%) figures.  (See Chart 3)

sws poverty 2010 - 2013 q1

SWS surveys also show that the number of families experiencing hunger has increased as well under Aquino. From 3.6 million families in 2010 (annual average), the number rose to 4 million in 2011 and further to 4.1 million last year. The first quarter 2013 SWS report indicates that hunger has not tempered, with 3.9 million families reporting that they experience involuntary hunger. In Aquino’s first three years in office, about half a million families or some 2.5 million Filipinos were added to those who go hungry. NSCB data, on the other hand, indicate that the incidence of food poor families (i.e., those who live in extreme poverty, with incomes not enough to buy even basic food needs) remains unchanged as well. In the first semester of 2012, it stood at 10% of families, identical with 2011’s 10% and just a bit lower than 2010’s 10.8 percent. (See Chart 4)

sws hunger 2010 - 2013 q1

The supposed economic growth is not creating jobs. SWS survey shows that the number of unemployed workers remained at 9.5 million in 2010 and 2011 (annual average), then jumped to 11.6 million in 2012. In the first quarter of 2013, SWS reported that there were 11.1 million jobless workers. This trend is being affirmed by government’s official unemployment data. Based on figures from the National Statistics Office (NSO), unemployment rate increased from 7.1% when Aquino took over (July and October 2010 average) to 7.3% this year (January and April 2013 average).  (See Chart 5)

sws unemployment 2010 - 2013 q1

Worst is yet to come

Aquino, in a recent speech, confidently declared that “the best is yet to come”. He promised that services will gain more speed in the second half of his term. Claiming to have realized that so many things still need to be done, the President said that his SONA will reflect the true state of the nation.

But if Aquino will stick to the same neoliberal policies that further impoverish the poor, the people should expect the worst. After the SONA, those who live in Metro Manila face the prospects of higher water rates and fares in LRT and MRT. Maynilad and Manila Water are seeking basic rate hikes of P8.58 and P5.83 per cubic meter, respectively. The planned increases are part of the so-called rate rebasing under the privatization of MWSS, which has been further exposed as a highly onerous PPP deal. Consumers in other parts of the country like Bacolod and Davao are also confronted with higher fees due to privatization efforts aimed at their water districts.

Meanwhile, LRT and MRT commuters will shoulder an initial P5 average fare hike that officials reportedly want to implement by August. Another P5-increase is set for next year. The fare hikes are part of Aquino’s plan to privatize the light rail system. LRT 1 is already slated for bidding this July with the groups of Pangilinan, Ayala, Cojuangco and Consunji as well as South Korean and Malaysian investors participating. The draft LRT 1 privatization contract provides for a regulatory risk guarantee wherein taxpayers will shoulder the cost in case the private operator could not implement a fare hike due to intervention by the courts or Congress.

Power rates, on the other hand, will again rise as another round of increase in the universal charge is expected soon to recover Napocor’s stranded debts as mandated under Epira. This is on top of the regular increases in the generation, distribution, transmission and other charges. Oil prices will remain artificially high and volatile due to foreign monopoly control and deregulation. Even the price of rice is starting to climb up, increasing by as much as P2 a kilo last week due to the continued operation of rice cartels and privatization of the functions of the National Food Authority (NFA).

The second half of Aquino’s term is shaping up to be three more years of increasing prosperity for the elite and worsening economic exclusion of the poor. Thus, while the Aquino clique savors the illusion of having consolidated its power after the midterm elections, in reality, social contradictions will surely further intensify and challenge the regime. (End)