2016 elections, Governance

Profit-driven, foreign interests made Aquino President; is Mar Roxas next?

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Photo from arabnews.com

Recent pre-election surveys show that administration and Liberal Party (LP) bet Mar Roxas supposedly gaining ground after consistently lagging behind in previous surveys. One dubious research firm even claims that Roxas is the new man to beat. There is apparently a campaign to condition the public mind that a Roxas victory is not far-fetched after all. Roxas himself declared that “It’s my time to top the surveys.”

LP desperately intends to stay in power and Mar Roxas wants to be the next Philippine President at all costs, and an election controlled by profit-driven, foreign interests could help ensure that they do.

Former Commission on Election (Comelec) chair Sixto Brillantes recently admitted that it was the UK-based, private company Smartmatic Inc. that practically ran the 2010 national and local elections and not the poll body.

“If we were to review what happened in the 2010 first automated elections, one will realize that the Comelec then was most dependent on Smartmatic such that it was Smartmatic that practically ran the entire elections, not Comelec,” Brillantes was quoted as saying.

The ex-poll chief’s admission affirms what critics of the automated election system (AES) being implemented by the Comelec have been saying all along. An unaccountable foreign business has monopoly control over our elections, which is supposedly an expression of our democracy and sovereignty as a people.

Smartmatic was also in command of the 2013 midterm elections and will continue to play such role for the upcoming polls on May 9. It maintained its monopoly control over Philippine elections through its automation technology, the contracts it bagged with the Comelec as well as the support and other services that it will provide.

Various factions of the ruling elite aggressively vie for state power during elections not to the serve the people and develop the nation. Traditional politicians and their backers from big business and foreign interests compete for control over the state machinery out of the need to protect and advance their own political and economic interests. It is this intense and never-ending struggle for power and wealth and contradiction within the ruling elite that explain the massive spending (including of public resources) and perennial violence and fraud characterizing Philippine elections.

Put in this context and reality, a private and foreign company like Smartmatic taking over the conduct of the elections takes the subversion of the people’s sovereignty to a whole new level and makes it much easier for contending factions with vested interests to cheat. Whoever has ties – or has the resources to bid the highest – with Smartmatic can buy electoral victory.

Among the groups of the political and economic elite competing for power in the elections next week, it is the LP clique and its candidates led by presidential bet Roxas that have not only the biggest motivation (stay in power, avoid prosecution) and deepest electoral war chest (people’s money), but also the closest links with Smartmatic (through the Aquino family’s ties with Smarmatic chairman Lord Mark Malloch-Brown). Smartmatic installed Aquino as the country’s first AES President in 2010; it certainly has the capacity to do it again for Roxas.

Smartmatic-Comelec contracts

For the upcoming polls, Smartmatic is once again supplying the Comelec with VCM as it continues its profitable partnership with the poll body that started with the PCOS deals in 2010 and 2013. The Comelec is leasing a total of 97,517 VCMs from Smartmatic for about Php8.03 billion. In 2010, Smartmatic leased to the poll body 84,000 PCOS machines for Php7.2 billion. In 2013, Comelec purchased from Smartmatic some 82,000 PCOS machines for Php1.8 billion. Thus, Smartmatic has already bagged more than Php17 billion from its PCOS/VCM transactions with the Comelec for the past three elections, including the one on May 9.

Aside from the poll machines, Smartmatic also cornered contracts with the Comelec for other services. For the upcoming polls, Smartmatic is providing as well the Php558-million election results transmission services (ERTS). Smartmatic was able to corner the same contract in 2013 then worth Php405.4 million. Other contracts Smartmatic bagged in 2013 are the P154.5-million transmission modems; the P46.5-million compact flash (CF) cards main; and the P46.5-million CF cards worm. Comelec also purchased the canvassing and consolidation system (CCS) from Smartmatic in 2013 for Php36.6 million.

The privatization of Philippine elections covers not only the hardware and software for the automated polls; technical support to troubleshoot and address glitches is also controlled by Smartmatic. For the 2016 elections, Smartmatic bagged the Php122-million contract to set up a National Technical Support Center (NTSC) as a call center and troubleshooter for the elections. It was also Smartmatic that cornered the NTSC contract for the 2013 polls worth Php111.56 million.

All in all, the Smartmatic-Comelec contracts are worth well above Php18 billion as summarized in the table below. Note that the table is just a partial, incomplete list as it merely relied on data from various news reports.

Partial list of contracts bagged by Smartmatic in PH elections (in Php million)
Item 2010 2013 2016 Total
PCOS/VCM 7,200 1,800 8,030 17,030
Election Results Transmission Services 405.4 558 963.4
Transmission modems 154.5 154.5
Compact flash cards 93 93
National Technical Support Center 111.56 122 233.56
Total 7,200 2,564.46 8,710 18,474.46
Culled from various media reports

Why Smartmatic keeps on winning Comelec contracts boggles the mind especially considering the numerous and major malfunctions by the machines and services that Smartmatic provided in the past two elections. To illustrate, while the AES law mandates a 99.995% accuracy rate, Smartmatic’s PCOS machines registered a 99.6% rate in 2010 and 99.98% in 2013. These translate to hundreds of thousands of miscounted ballots and undermine the credibility of the election results. Further, Smartmatic’s ERTS is supposed to reach 100% transmission rate within 24 hours. But in 2013, it was able to achieve a mere 76% transmission rate when Comelec started declaring winners.

There have been allegations of rigged bidding to favor Smartmatic such as designing contracts where only Smartmatic can qualify or omitting requirements that will otherwise disqualify Smartmatic, a company tainted with various controversies even before it started its lucrative business here in the Philippines. For the upcoming elections’ bidding for PCOS/VCM, for instance, Comelec required that only those that can supply both the election management system and the machines could bid (which only fits Smartmatic) and that ongoing legal cases (which Smartmatic has arising from past electoral protests) should not prohibit bidders to participate. There were also similar complaints during the 2013 elections such as in the supply of CF cards. A competitor lost because its CF cards don’t work with Smartmatic’s PCOS machines as the latter refused to declare the machines’ technical requirements, which Smartmatic claimed is proprietary information.

But why does the Comelec so heavily favor Smartmatic, allowing it to monopolize the entire automated election system? One possible explanation is the political connections of Smartmatic with groups that have an interest in securing electoral victory. Smartmatic’s chairman, British Lord Mark Malloch-Brown, was the late President Cory Aquino’s campaign strategist during the 1986 snap elections (some accounts claim that Malloch-Brown’s group then – the Sawyer-Miller consultancy firm – was assigned by the US Central Intelligence Agency or CIA to Cory’s camp). In an interview with the Philippine Daily Inquirer during his visit here in June last year, Malloch-Brown claimed that his “final outstanding accomplishment during the Cory campaign was to produce an exit poll that indicated that she had won”. Malloch-Brown has supposedly developed a close relationship with the Aquino family and there were reports that he met with Cory’s son President Benigno Aquino III and other politicians during his visit in the Philippines last year. Malloch-Brown, however denied this, apparently mindful of repercussions in public perception.

Nonetheless, the presence of Malloch-Brown, a foreigner who made a career out of influencing elections in supposedly sovereign countries and strategizing for client political elites, in a private company that runs our elections is a big red flag. It further underscores the dangers of privatizing elections that have been perpetually marred by massive fraud even before automation.

The failure of the current AES technology to reach minimum standards set by the law means that election results could not be relied upon. At best, they could just be the result of glitches caused by machine/software and human errors. At worst, they point to the planned manipulation of poll results by those who have access to the election technology or have ties with the private and foreign interests that control the technology. Both in 2010 and 2013, allegations of electronic fraud were widespread ranging from supposedly altered results being transmitted by the PCOS machines to pre-programming of results such as the so-called “60-30-10” pattern (60% of votes for administration bets; 30% for opposition; and 10% for other candidates) during the midterm senatorial election.

It doesn’t help that another seemingly favored private, foreign company is also controlling the conduct of the source code review, a supposed safeguard under the AES law that scrutinizes the software to be used by the voting machines and by the canvassing and consolidation system. For the May 2016 elections, US-based SLI Global Solutions Inc. (formerly Systest Labs Inc.) is carrying out the source code review for Php35 million as it did in 2010 and 2013.

Undermining democracy and sovereignty

To be sure, the flaws of the country’s electoral system go beyond the issue of conducting it manually or electronically. Whether manual or electronic, elections will remain undemocratic as long as the people are left to choose among the same contending factions of the political and economic elite. And these groups and families vying for control of state power in order to advance the economic and political interests they represent will continue to find ways to subvert the elections through direct cheating, political patronage and/or violence and terrorism.

But these fundamental problems of the electoral system are further worsened by allowing private and foreign companies through the technology they own to control the entire electoral process – from reading and recording of ballots to the canvassing of results. Even for the technical support, troubleshooting, installation of system, training of staff, etc., the Comelec is completely dependent on a private, foreign company.

While modernizing the way the country conducts its elections with the use of appropriate technology founded on the principles of transparency and credibility is the right step to take, the AES that the Comelec has been implementing since 2010 is further undermining election as a democratic exercise and an expression of the people’s sovereignty. ###

(Portions of this article were lifted from an article I wrote for IBON Features)

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2016 elections, Labor & employment

5 reasons why workers will reject “Daang Matuwid” in the May elections

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Photo from gettyimages.com

The “Daang Matuwid” regime of outgoing President Benigno Aquino III, which Liberal Party (LP) standard bearer Secretary Mar Roxas vows to continue, has been notoriously anti-worker throughout its six-year rule. Below are five reasons why Filipino workers will overwhelmingly reject the “Daang Matuwid” regime in the upcoming May 9 elections:

  1. Daang Matuwid opposed any meaningful increase in the daily minimum wage and further cheapened the already low wages of workers

Daang Matuwid has consistently opposed proposals for a substantial wage hike. Since 2010, the daily minimum wage in the Philippines has only increased by Php13 (Ilocos Region or Region I) to Php77 (National Capital Region or NCR). These adjustments are insignificant amid the soaring cost of living. For instance, in NCR where the minimum wage is the highest and which also posted the largest wage hike among all regions, the estimated cost of living jumped by more than Php114 during the same period, easily offsetting the Php77-adjustment in the minimum wage. Consequently, the already big gap between the daily minimum wage and the daily cost of living has even furthered widened under Daang Matuwid – from Php571 in 2010 to about Php608 today. This means that the capacity of workers and their families to meet basic food and non-food needs has been further eroded.

Worse, instead of a substantial wage increase, Daang Matuwid introduced the so-called two-tiered wage system that provided capitalists another tool in pressing down the pay of their workers. Under the two-tiered wage system, companies will give workers a basic floor wage, which is computed above the official poverty threshold but below the existing average pay. Employers can then voluntarily increase the basic floor wage depending on their own computation of the workers’ productivity. Such system means greater abandonment of government of its obligation to set wages that would allow workers and their families to achieve decent living while giving profit-seeking firms more freedom to exploit the workers.

  1. Daang Matuwid worsened the burden of workers with onerous taxes

Daang Matuwid oppressed Filipino workers with onerous taxes. Compared to other countries in Southeast Asia, the Philippines has the highest rates for income tax (5-32%) and for the value-added tax or VAT (12%). The tax system is so oppressive that that those earning about Php50,000 a month pay the same tax rate of 32% as the billionaires who own and run the country’s biggest conglomerates. Meanwhile, the regressive 12% VAT punishes the ordinary income earners as even the most basic goods and services are covered including water, electricity and petroleum products, which all directly impact on the standard of living and inflate the cost of other commodities.

There have been several proposals in Congress to correct this injustice but were rejected by the Daang Matuwid regime, dismissing them as populist and impractical measures. “Kung papogihan lang ito, wag na tayong mag-income tax,” Mar Roxas was quoted as saying. But the issue, of course, is much deeper than “papogihan” as a progressive tax reform system will allow a just distribution of wealth, help improve the living condition of many, and spur economic growth driven by domestic spending.

Another additional tax burden imposed on Filipino workers by Daang Matuwid is the so-called sin tax on alcohol and tobacco products. Guised as a measure to supposedly address health concerns caused by smoking and drinking (even as the national health budget remains grossly inadequate, state hospitals are being privatized, and poverty-related illnesses remain widespread amid low wages/incomes and lack of jobs), the sin tax in reality is primarily aimed at raising government revenues at the expense of ordinary income earners.

  1. Daang Matuwid rejected calls to increase the limited benefits enjoyed by workers such as their SSS pension

Just early this year, President Aquino vetoed the bill hiking the monthly pension (which has been at a paltry Php1,200 for almost two decades now) of 2.1 million members of the Social Security System (SSS). The Daang Matuwid regime justified its heartless decision by claiming that the SSS might go bankrupt if the proposed Php2,000-pension hike is implemented.

But as proponents of the pension hike led by Bayan Muna Rep. and Makabayan senatorial bet Neri Colmenares pointed out, SSS can avoid bankruptcy if it will improve its collection efficiency that currently stands at a dismal 35-38% (including an uncollected amount of Php13 billion as of 2014) and cut back questionable expenses such as massive bonuses for its board members (e.g. Php200 million in retirement package). The administrative cost of SSS at almost 7% of contributions is too high compared to other countries (e.g. Singapore’s 0.5% or Malaysia’s 2%). By stoking bankruptcy fears, the Daang Matuwid regime is also oblivious to its legally mandated obligation to replenish the SSS should it incur a deficit arising from the pension hike.

For the elderly workers, the Php2,000-pension hike means duly recognizing their contribution not only to the SSS fund but to the national economy while promoting their capacity to support themselves in their retirement.

  1. Daang Matuwid failed to address the jobs crisis and to promote the job security of workers

The Daang Matuwid regime would want us to believe that the jobs situation has improved under its watch. But nothing could be farther from the truth. While 692,000 jobs a year appear to have been created between 2010 and 2015, almost 7 out of 10 of the additional jobs were made in hotels, restaurants, call centers, malls, and other less productive sectors as well as in highly seasonal, contractual work like construction. In addition, research group IBON Foundation noted that job creation under Daang Matuwid is much weaker compared to previous years. Between 2000 and 2009, for instance, 732,000 jobs were created annually.

Chronic job scarcity is being concealed by distorted official employment data as government labor surveys tend to exclude jobless workers who have already been discouraged by lack of employment opportunities. Including such workers, IBON estimates that unemployment rate remains at double-digit with more than 4 million jobless workers today – or basically the same as the situation before Daang Matuwid took over.

A separate survey by the Social Weather Stations (SWS), on the other hand, shows that the number of jobless actually increased from an average of 9.5 million in 2010 to 9.8 million in 2015.

Also, four out of 10 workers are own-account and unpaid family workers that further illustrate the low quality of jobs in the country. Job insecurity, meanwhile, remains severe. IBON estimated that four out of 10 rank and file workers are in non-regular work – e.g., contractual, probationary, casual, seasonal, apprentice workers or agency-hired.

  1. Daang Matuwid continued neoliberal policies like PPP that resulted in higher prices and fees

Daang Matuwid’s centerpiece economic program – the public-private partnership (PPP) – is a continuation, expansion and deepening of the same neoliberal privatization policy started by the first Aquino administration in the 1980s. Under PPP, fares in the LRT 1 and 2 and MRT 3 have jumped by as much Php10 to 13. Among the most affected are the workers/employees and job seekers who comprise about 59% of LRT and MRT commuters. Another 32% are students mostly from working class families.

While the Daang Matuwid has vehemently opposed substantial wage hike, increase in SSS pension, and reduction in taxes, it has showered with generous perks the billionaire oligarchs who cornered PPP contracts. Under the LRT 1 PPP deal, for instance, the Daang Matuwid regime has given enormous benefits to the consortium of Ayala Corp. and the Manny Pangilinan group. Of the total project cost of Php64.9 billion, Daang Matuwid made the public shoulder Php34.9 billion or 54% of the total. Government share includes expenses for right of way acquisition, purchase of additional coaches, civil works and construction of depots. The Ayala-Pangilinan group also enjoys real property tax exemptions reportedly costing Php64 billion. ###

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2016 elections

On presidential chopper and taxes: An open letter to Kris Aquino

 

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From Kris Aquino’s Instagram account

Dear Kris,

Echoing your Kuya Noy’s absurd argument to justify that notorious presidential chopper ride you took to campaign for Mar Roxas, you bragged the 322 million pesos in taxes that you paid in the past seven years.

You reminded us that you’re consistently among the top individual taxpayers in the country. I will not argue against the amount of money you contributed to public coffers. But let me respond to your outrageous entitlement complex.

First, the huge taxes that you paid don’t justify your blatantly illegal use of public resources to campaign for Kuya Noy’s candidates. It is plainly against the law (i.e. Omnibus Election Code). Unless your entitlement complex makes you think that you have 322 million valid reasons to do so.

Unless because you think that the Filipino people owe you and your family so much – you never fail to remind the public that your dad and mom (and now, Kuya Noy, too) had sacrificed so much for our country, that it is like the people’s “utang na loob” to the Aquinos our so-called democracy – that you are above the law.

Well, you are not. And we don’t owe you anything. Not the taxes that you pay, which are your legal obligations, and certainly not the fake democracy that massacres farmers in Mendiola and Hacienda Luisita.

Second, hindi lang ikaw ang nagbabayad ng buwis. Certainly, with your enormous wealth thanks to a lucrative showbiz career and Hacienda Luisita exploitation, you pay multiple times more than the impoverished workers in your hacienda and your TV production crew in terms of absolute pesos. But accounting for taxes paid should not work that way. What you and the oligarchs and their CEOs pay in taxes, hundreds of millions as they are, are actually peanuts relative to what you earn.

But for the ordinary wage earners, the daily MRT commuters, the taxes that they pay take away a big portion of what they get to bring home to their families.

The minimum wage in Metro Manila is just 481 pesos per day and the estimated amount needed to live decently in the capital is more than 1,000 pesos per day per family. A sugar plantation worker I have recently talked to said that their take home pay is just 150 pesos a day, which he said is just barely enough for their daily rice consumption.

And government squeezes taxes from them – whether through their income or their spending (like VAT). Worse, the super rich folks you rub elbow with, they pay the same income tax rate as those ordinary managers and supervisors. Your Kuya Noy vehemently opposed moves to correct this grave injustice.

Which brings me to my third point – these ordinary people, especially those who live hand-to-mouth, those who your Kuya Noy and his government squeeze dry for taxes, they are the ones who should be entitled – no, have the right – to more public resources.

Unlike you, they do not ask for a chopper ride so they won’t have to “walk three kilometers” to attend a Liberal Party sortie. What they ask for are rather simple and very basic services that the government should have been providing. You know, like public education, health services, decent housing or agricultural support.

Do you read the news, not only those that are favorable to Kuya Noy? Do you remember, or even know, Kristel Tejada? She was 16 years old. She committed suicide because she could not enroll at UP for an unpaid tuition of Php 10,000.

Do you know Ariel Leonor? He was 21 years old. He was shot dead by the police during the violent demolition of their poor community of about 25,000 families in Silverio Compound, Parañaque City.

Do you know Darwin Sulang? He was 22 years old. He was one of the two killed when the police opened fire at the farmers’ barricade in Kidapawan City. They were asking for rice because drought destroyed their crops and they have literally nothing to eat.

O, before you blame Gloria Arroyo, all these happened under your Kuya Noy’s watch. Kidapawan was like just three weeks ago, in case you missed it.

You see Kris, these young people died because your Kuya Noy’s government, which should have been providing basic services and assistance to the poor – not from your family’s massive wealth but from the taxes that the people (and not only you) pay – has abandoned them.

And you have the gall to justify your illegal chopper ride because you pay taxes? ###

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Agrarian reform, Governance, Human rights

#BigasHindiBala: Beyond bureaucratic neglect and police brutality

Image from Kilusang Magbubukid ng Pilipinas (KMP)

Image from Kilusang Magbubukid ng Pilipinas (KMP)

Long before the drought and the Kidapawan bloodshed, hunger and poverty were already debilitating countless in the countryside.

Along with fishermen (39.2%), poverty incidence is the worst among farmers (38.3%). In Region XII, site of the violence, poverty incidence among farmers is 47.9%, the fifth highest in the country. All cited data are as of 2012, the latest available from the Philippine Statistics Authority (PSA). For comparison, the 2012 national poverty incidence was pegged at 25.2 percent.

It is said that eight out of 10 of the poor in the Philippines are directly or indirectly dependent on farming. As compared to other countries, our rural poverty of nearly 40% is said to be the worst in ASEAN. (Data cited by Rolando T. Dy, 2015)

Farmers earn very little, even without a drought. Palay farmers, for instance, earn at most PHP 60,000 a year – way below the annual rural poverty threshold of PHP 80,000. (Data cited by Ernesto M. Ordoñez, 2014)

Underlying peasant poverty is landlessness. A recent IBON article noted that: “Even the official census could only claim at most 62% of farms under full ownership. The rest are under various forms of land tenure, including tenancy at 15 percent.” The latest Census of Agriculture is 2012.

Note that government’s poverty standards are ridiculously low and its data on land ownership questionable. Rural poverty and landlessness are thus much worse than what official data shows. Nonetheless, even distorted government data could not hide the dire situation that Filipino farmers face.

Aggravating landlessness and all the feudal exploitation it brings are government policies and programs that devastate rural livelihood perhaps in a magnitude much worse than droughts or typhoons. Neoliberal restructuring brought in a flood of cheap agricultural imports that drowned local produce while commercializing vital infrastructure such as irrigation.

So when calamities like drought strike, the already destitute farmers become even more despondent. Meanwhile, government negligence and inefficiency are further highlighted by its incapacity to respond as it has long abandoned its obligation to provide support services like irrigation and subsidies.

All these combine to stir unrest in the countryside that has been long raging. Farmers become fighters in the agrarian revolution being waged by the New People’s Army (NPA). Or they barricade highways to force the powers that be to listen. But for a government of landlords and its armed forces, it makes no difference if you hold an M16 or a placard.

Image from Kilusang Magbubukid ng Pilipinas (KMP)

Image from Kilusang Magbubukid ng Pilipinas (KMP)

The brutal dispersal in Kidapawan reminded us of the repression that farmers face when asserting their most fundamental right to live with dignity. Farmers, in fact, are not only the poorest – they are also the most repressed.

According to human rights group Karapatan, more than 300 cases of extrajudicial killings have been recorded under the Aquino administration. More than 200 of these cases involve farmers.

Before Kidapawan, there was Hacienda Luisita. And before it were Mendiola and Escalante. None have been resolved and the powerful people behind them become presidents and senators, feeding the reign of impunity and terror in the countryside. Some note that President Aquino remains silent on Kidapawan. But what do we really expect a landlord president will say?

All these killings occurred in contexts of struggles and assertion of farmers’ rightful control over land and other resources for production against moneyed investors and landed families. They illustrate that cases of atrocities against farmers like Kidapawan are not isolated incidents but a systematic repression of the people’s dissent by those few who wield power and arms.

Already, the propaganda machine of the landlord regime is at full force in its disinformation and cover up. Propaganda and deception are part of its war against the farmers and the people.

Indeed, the Kidapawan bloodshed is more than bureaucratic neglect as farmers go hungry. It is more than the police violating their own rules of engagement.

It is about the ever-deepening contradiction between the impoverished and starved – the farmers who directly produce food but have nothing to eat, and the landlords and bureaucrats who profit from the people’s poverty and hunger. ###

Image from Kilusang Magbubukid ng Pilipinas (KMP)

Image from Kilusang Magbubukid ng Pilipinas (KMP)

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SONA 2015

SONA 2015: Favoring the rich, oppressing the poor – Aquino legacy, by the numbers

The LRT 1 privatization, cornered by the Ayala-MVP group, shows how the Aquino regime has favored the oligarchs at the people’s expense. Read more here (Image from Rappler)

One of the biggest legacies that President Benigno S. Aquino III will leave behind is how his regime has favored the rich and oppressed the poor.

Below are some numbers.

  • Php168.9 billion – total cost of the 10 public-private partnership (PPP) projects awarded so far by the Aquino administration (An updated report – as of 22 July 2015 – from the PPP Center now pegs the total cost at Php189 billion, reflecting the Php20.1-billion adjustment in the cost of the Cavite-Laguna Expressway from Php35.4 billion to Php55.5 billion)
  • Php104 billion – total cost of the four projects that the Ayala family and Indonesia’s Salim group, as represented by Manny V. Pangilinan (MVP), have cornered so far under Aquino’s PPP program both as a consortium and as individual proponents (the amount is now Php124.1 billion, reflecting the adjustment in the cost of the Cavite-Laguna Expressway) 
  • Php49 billion – total cost of the five PPP projects under Aquino where Henry Sy is involved
  • Php15.9 billion – cost of the lone PPP contract cornered by presidential uncle Danding Cojuangco’s San Miguel Corp. (SMC) under Aquino’s PPP program
  • Php97 billion – total cost of the two PPP projects of SMC that started with previous administrations but finalized under Aquino

Additional information on these PPP projects here

  • Php57.2 billion – total amount allocated in the 2015 budget to guarantee the profits and other commercial interests of investors participating in Aquino’s PPP program (more details here)
  • Php902.3 billion – total reported contingent liabilities of the Aquino administration arising from state guarantees on commercial debts and subsidies associated with PPP projects (more details here)
  • US$35.6 billion or 237 percent – increase in the combined wealth of the ten richest Filipinos, most of whom are in the PPP business, in 2014 compared to their combined wealth in 2010, as listed by Forbes (more details here and here)
  • 12 – number of Filipinos who landed in Forbes’ 2015 list of billionaires in the world, up from just five billionaires in 2010 (more details here and here)
  • 6th – the global rank of the Philippines in The Economist’s 2014 Crony Capitalism Index, with the billionaires’ wealth in crony-sectors such as utilities and infrastructure comprising about 13 percent of the gross domestic product (GDP); in 2007, the country ranked 9th (more details here)
  • 11.4 million – number of families who consider themselves poor, according to the first quarter 2015 survey of the Social Weather Stations (SWS); in the second quarter 2010 or the start of the Aquino administration, it was pegged at 9.4 million (more details here and here)
  • 7 out of 10 – number of Filipinos who believe that poverty did not go down under the Aquino administration, according to the May 2015 survey of IBON Foundation; the same number of people also consider themselves poor (more details here and here)
  • Php129 – increase in the daily cost of living in the National Capital Region (NCR) between June 2010 and June 2015 as estimated by IBON (request additional details here)
  • Php77 – increase in the daily minimum wage of workers (including allowance) in NCR between June 2010 and June 2015 (more details here)
  • 44 percent – the portion of the estimated cost of living in NCR as of June 2015 that can be met by the current minimum wage in the region (request additional details here)
  • Php8 per kilo – increase in the retail price of regular-milled rice between July 2010 and July 2015; well-milled rice increased by Php7 during the same period (request additional details here)
  • Php10 to Php13 – largest increase in fares of LRT 1, LRT 2, and MRT 3 implemented by the Aquino administration starting in January 2015 (more details here)
  • 4 – number of service interruptions every month in MRT 3 in the first semester of 2015, twice the recorded number of monthly incidents in 2010; 193 total incidents of MRT 3 service interruptions from 2010 to June 2015 (more details here)
  • Php3.98 to Php12.65 per cubic meter – increase in water rates in Metro Manila between July 2010 and July 2015 (request additional details here)
  • 0.4 percent – share of the housing budget to the national budget in 2015, even lower than the 0.5 percent in the 2010 budget (more details here)
  • 70,000 – estimated number of urban poor dwellers in Metro Manila that have been displaced by demolitions under Aquino to give way to PPP and other projects, according to Kadamay (more details here)
  • 9 million – number of jobless adults as of first quarter 2015, according to the survey of SWS; in the second quarter of 2010 or the start of the Aquino administration, it was pegged at 8 million (more details here and here)
  • 44 percent – estimated portion of workers who are contractual, non-regular or agency-hired in 2012, up from 37 percent in 2008, based on Bureau of Labor and Employment Statistics (BLES) data compiled by IBON (request additional details here)
  • 1,024 – increase in number of OFWs leaving the country everyday between 2010 and 2014, based on data from the Philippine Overseas Employment Administration (POEA) compiled by Migrante (more details here)
  • 7 – number of OFWs executed abroad under the Aquino administration, the highest among all administrations, according to Migrante (more details here)
  • 144 – estimated number of workers killed due to occupational accidents under the Aquino administration, based on BLES data compiled by IBON (request additional details here)
  • 1.2 million – number of farmers who are still under leasehold arrangements (cited here; request additional details here)
  • 9 out of 10 – number of farmers who are qualified beneficiaries of CARP but are still landless, according to IBON (cited here; request additional details here)
  • 8 out of 10 – number of CARP beneficiaries who have stopped paying amortization and could be at risk of losing their land, based on Land Bank data (cited here; request additional details here)
  • 145 – number of farmers killed by suspected state agents under Aquino as of first quarter 2015; 55 – indigenous people killed; 13 – urban poor killed, according to Karapatan (more details here)
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Privatization, SONA 2015

SONA 2015: Aquino’s PPP legacy

(Short video produced by AlterMidya)

First published as IBON Features

“We have so many needs: from education, infrastructure, health, military, police and more. Our funds will not be enough to meet them… Our solution: public-private partnerships… From these public-private partnerships, our economy will grow and every Filipino will be the beneficiary… We will be able to fund public service in accordance with our platform.” 

– President Benigno S. Aquino III, State of the Nation Address (SONA), 26 July 2010

Five SONAs ago, President Aquino declared public-private partnership (PPP) as the key to many of the country’s needs. Ten PPP awarded projects worth Php168.9 billion later and one SONA left to give, how did Aquino’s centerpiece program fare? (An updated report – as of 22 July 2015 – from the PPP Center now pegs the total cost at Php189 billion, reflecting the Php20.1-billion adjustment in the cost of the Cavite-Laguna Expressway from Php35.4 billion to Php55.5 billion)

Aquino has been often criticized for the slow progress of his flagship infrastructure program. There are 15 more PPP projects under various stages of bidding with an indicative cost of Php549.4 billion. Measured against this, Aquino has only awarded 40% of the total number of projects identified. They are equivalent to less than a quarter of the overall indicative cost. Aquino, however, claims that with 10 awarded projects, his administration has already surpassed the six solicited PPP projects of the past three administrations.

Before he steps down, Aquino aims to award five more PPP items. The largest is the Php122.8-billion Laguna Lakeshore Expressway Dike. Like others in the PPP portfolio, the bid schedule for this mega-project has been moved by several months. As such, doubts persist on meeting the target of 15 awarded PPP projects.

But the number of contracts Aquino has sealed will not define his PPP legacy. His biggest contribution is the kind of PPP environment that his regime has began to build. Aquino made a three-decade old neoliberal scheme even more desirable to the local oligarchs and their foreign backers. He has paved the way for more and bigger privatization deals for his successor. Twenty-seven more projects in various stages of pre-bidding preparations are in the pipeline of the PPP Center.

The country, in fact, is recognized globally for its PPP program. UK-based Economist Intelligence Unit (EIU) recently named the Philippines as the “most improved country in Asia Pacific for PPP readiness”. Aquino’s reforms led to distinctions as “most-improved regulatory and institutional frameworks” and “improved investment climate and financial facilities”. Aquino made this possible through perks and guarantees unprecedented in the history of privatization in the Philippines.

Creating the most favorable climate for private investors has been one of the earliest and top concerns of Aquino. Less than a year into his term, economic managers started conducting consultations with business groups and foreign aid agencies on revising the Implementing Rules and Regulations (IRR) of the BOT Law.

Approved in October 2012, the revised IRR introduced new provisions that make the PPP program more palatable to private business. Chief of them are explicit provisions guaranteeing that PPP proponents will be able to collect the contractually agreed fees or charges that they can impose on the public, regardless of regulatory intervention that may affect (i.e. lower) such fees or charges.

This is contained both in the context of granting final approval of grant of the franchise by the regulator and of regulatory determination of tolls, fees, rentals and charges that the proponent can charge to the public. Such government guarantee is absent in the old 2006 IRR.

Back in November 2010 at the international PPP Summit that government organized, Aquino referred to this as “regulatory risk guarantee”. Before 200 foreign businessmen, Aquino said, “When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature – then our government will use its own resources to ensure that they are kept whole.”

An example is the so-called Deficit Payment scheme in the Concession Agreement (CA) Aquino signed with the consortium of Ayala and Pangilinan for the Php64.9-billion LRT Line 1 Cavite Extension and Operation & Maintenance project. The LRT 1 Deficit Payment scheme states that government will shoulder the disparity between the Notional Fare, which the Ayala-Pangilinan group is entitled to impose under the CA, and the Approved Fare that the Light Rail Transit Authority (LRTA) may grant.

Aquino likewise issued Executive Order (EO) No. 78 in July 2012 that mandates the use of Alternative Dispute Resolution (ADR) in all PPP contracts. ADR provides for alternative avenues outside of court to settle disputes or conflicts, which may arise during the contract lifetime of a PPP project. ADR includes conciliation and negotiation, mediation and arbitration. ADR makes for a more inviting climate for investors. Costs are shared and investors have a say in the final decision. The process is also less tedious since watchful and assertive public interest groups are shut out unlike in regular judicial courts or public hearings.

The arbitration mechanism in the CA of the Metropolitan Waterworks and Sewerage System (MWSS) with the Ayala and Pangilinan-led concessionaires is a form of ADR. Under it, investors and regulators sit down in a panel to settle dispute away from any form of public scrutiny, much less participation. The LRT 1 PPP contract also contains a provision on ADR.

The worst of Aquino’s PPP reforms, however, are yet to come. As a “continuing legacy for the people”, Aquino seeks to pass the PPP Act that will amend the 26-year old BOT Law. Lobbying for the PPP Act are the Joint Foreign Chambers in the Philippines (JFC) and the Makati Business Club (MBC). The bill has already been approved by the House committee on public works and highways. It is currently pending at the appropriations panel which will discuss the bill’s funding provisions.

When passed, the PPP Act will consolidate, institutionalize and expand the already outrageously investor-friendly reforms Aquino has initiated. Aside from institutionalizing EO 78 on the ADR, for instance, the PPP Act will also substantially further weaken the courts and regulatory bodies by directly restricting their mandate.

The PPP Act will disallow courts from issuing temporary restraining orders (TROs), preliminary injunctions and preliminary mandatory injunctions against practically all PPP-related acts. Court officials who will violate this would be expelled from the judiciary and face criminal and civil liabilities. While the Supreme Court (SC) can still issue a TRO, etc. against a PPP project, such order will only be effective for a maximum of six months.

Aside from weakening established judicial and regulatory processes that the public can resort to for protection, the PPP Act will also guarantee that public funds are available to protect the commercial interests of investors. It will ensure, for instance, that funds are accessible to finance government obligations arising from regulatory risk guarantees like LRT 1’s Deficit Payment Scheme through a Viability Gap Funding (VGF).

Moreover, the PPP Act will also institutionalize a Contingent Liabilities Fund (CLF) to be funded by foreign debt and local resources. Permanently appropriated, the CLF will ensure a steady source of public funds to meet government’s financial obligations arising from PPP contracts. Such obligations include performance undertaking where government guarantees payments for debts incurred by the private investor. One of the PPP projects that enjoy performance undertaking is the Php69.3-billion MRT 7 of presidential uncle Danding Cojuangco.

Remember the Ramos sweetheart deals with independent power producers (IPPs) that until today bleed the National Power Corporation (Napocor) dry? Those are also examples of PPP-related contingent liabilities. In 2011, the public debt arising from such liabilities still stood at US$16.73 billion despite a staggering debt servicing of US$18 billion since 2001.

Like his predecessors, Aquino justifies PPP because of limited public funds. But his proposed PPP Act will even further worsen government’s fiscal woes. Aside from the VGF and CLF, the PPP Act will likewise allow government to shoulder more than 50% of a project’s cost, lifting the cap under the current BOT Law. Perks like exemptions from local and real property taxes will be institutionalized as well for the big-ticket projects of the oligarchs like power plants, toll roads and mass transport.

Aquino has actually already given these generous perks to the Ayala-Pangilinan consortium in the LRT 1 PPP deal. Of the total project cost of Php64.9 billion, Aquino agreed to shoulder Php34.9 billion or 54% of the total. Government share includes expenses for right of way acquisition, purchase of additional coaches, civil works and construction of depots. The Ayala-Pangilinan group also enjoys real property tax exemptions reportedly costing Php64 billion.

Through his PPP program, Aquino has successfully built a legacy of completely surrendering public interest and the people’s sovereignty to profit-driven corporate agenda. His term will be remembered for making the Sy, Pangilinan, Cojuangco, Ayala business groups and the foreign interests behind them more powerful and richer than ever.
Meanwhile, commuters are forced to endure trains that break down every week and greatly risk their safety even as fares jumped big time. Consumers are forced to bear rising water rates amid questionable charges. Households are forced to cope with steep electricity bills, manipulated charges, and insecure power supply.

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Human rights, Military & war

More than meets the eye: People’s fact-finding on Mamasapano

Life Interrupted: Civilian communities terrorized by commando assault in Mamasapano

Initial Report of the People’s Fact-Finding Mission
Mamasapano, Maguindanao
February 9-11, 2015

The Government of the Philippines (GPH) and the Moro Islamic Liberation Front (MILF) are participating in ongoing peace talks. Prior to the signing of the Bangsamoro Basic Law (BBL) last year, signed agreements between both parties were already in effect, one of which was the Agreement on the General Cessation of Hostilities signed on July 1997. This agreement established the mechanisms to prevent hostilities between the armed forces of both parties, in order to prevent danger to civilian populations.

Despite these agreements, the encounter between the PNP-SAF and the MILF forces in Mamasapano, Maguindanao on January 25 suggests the agreement on the cessation of hostilities was violated. The loss of civilian life during the incident raises serious questions regarding violations of human rights and international humanitarian law, which are investigated in this report.

The reports and testimonies gathered regarding the presence of US personnel in the area during the encounter attests to the continuing ‘War on Terror’ campaign of the US and Philippine governments, which have undermined the peace talks and the rights of innocent civilians.

There is more to the Mamasapano incident than meets the eye.

While the media coverage have so far mainly focused on the death of the 44 police commandos after the botched operation on January 25, little has been publicly said about the Moro communities in Mamasapano, Maguindanao. But on the ground, reports of human rights abuses, violations of the International Humanitarian Law during combat, and involvement of US military personnel were persistent. Spurred by these reports from the commnunities, Suara Bangsamoro, Kalinaw Mindanao and Kawagib initiated a People’s Fact-Finding Mission in affected barangays of Mamasapano, Maguindanao on February 9 to 11, 2015.

About 100 individuals participated in the mission, which included Moro leaders, human rights advocates, children’s rights advocates, church leaders, youth leaders, labor leaders, women leaders, and alternative journalists. Two progressive parliamentarians from Makabayan bloc – Bayan Muna Rep. Carlos Zarate and Gabriela Women’s Partylist Rep. Luz Ilagan – also spearheaded the mission.

The People’s Fact-Finding Mission covered four affected barangays in Mamasapano, Maguindanao where initial reports of abuses came from: Tukanalipao, Pidsandawan, Pimbalkan and Tuka. These covered about 5,000 individuals in the said barangays. The mission was able to collect 11 sworn affidavits, as well as recorded testimonies, photographs and videos of the interviews with witnesses and affected individuals, as well as photographs of the affected areas.

Among the cases of human rights violations, as well as violations of the International Humanitarian Law, that the Mission was able to document are the following:

  • Extra-judicial Killings
  • Frustrated Extra-judicial Killings
  • Forced Evacuation
  • Destruction of Properties
  • Divestment of Properties
  • Child Rights Violations

The Mission was also able to gather sworn affidavits from residents of the affected barangays who testified to the use of drones before and during the botched police operation on Jan. 25. In addition to these, it was also able to gather testimonies of various witnesses in Brgy. Tukanalipao who said they saw the body of at least one (1) US personnel (purportedly military) among the other remains of SAF commandos in the aftermath of the bloody encounters. Undoubtedly, this direct US involvment in a military/police operation in the Philippines amounts to a clear violation of the country’s national sovereignty.

Highlight Cases:

Extra-judicial Killings & Frustrated Extra-judicial Killings

At around four in the morning of January 25, farmer Badrudin Langalan, 18, just came from his farm and was on his way to charge his cellphone at the Tukanalipao proper when he was ostensibly chanced upon the position of the blocking force of SAF members before he was able to cross the wooden bridge. Later in the day, after the encounters and when residents started to bring the bodies of fallen SAF members to the barangay proper, Badrudin’s lifeless body was found among the fallen SAF members, his hands and feet were bound.

Meanwhile, around the same time that Badrudin chanced upon SAF members, Sarah Pananggulon, 8 years old, was sleeping with her parents and younger brother in their house in Sitio Inugog, Brgy. Tukanalipao in Mamasapano town when they were awaken by loud explosions and gunshots outside their house. They realized armed individuals whom they later identified as members of the Special Action Force (SAF) were shooting in their direction. Sarah was shot on her side, while her parents, Samrah Sampulna and Pananggulon Mamasalaga, were wounded as they tried to evacuate from their houses.

Forced Evacuation & Indiscriminate Firing

Farmers Iskak Salao, 48, and Saada Teb, 25, were residents of Sitio Inugog, Brgy. Tukanalipao. They were sleeping in their respective houses when they and their neighbors heard gunshots. Iskak, Saada and many others were compelled to evacuate from their houses, as members of SAF fired upon their location. Saada, a mute and a student of the Mahad (one of 330 Arabic students in nearby madrasah in Brgy. Inugog), was hit by a bullet. Since then, the students and the Arabic teachers have not resumed classes and residents remain evacuees because of fear that their community will be again assaulted.

Meanwhile, Amina Kamiron, 40, lives in Tukanalipao proper, which is a few kilometers away from the site of encounters. She was taking her bath when she heard loud gunshots. She was shocked and fell on the floor. Amina was brought to hospital and is still recuperating, as of this writing.

At around nine in the morning of Jan. 25, residents of Tukanalipao proper who live along the main road were forced to evacuate from their homes when SAF tanks stationed along the main road began indiscriminately firing on their houses. They showed to the Mission members the holes in their concrete houses which were supposedly caused by gunshots from the tanks.

An estimated 1,500 residents of different barangays also hastily evacuated to nearby communities where they had relatives, according to the ARMM HEART program of the Autonomous Region for Muslim Mindanao (ARMM).

Divestment of Properties

Several residents who live along the highway in Brgy. Tuka complained that SAF members, who were stationed along the highway during the entire time of the encounters, had divested them of their properties. At four in the morning, Saneah Solaiman, 25, complained that SAF members allegedly divested Saneah of her belongings—among others, three pots, cups, kettle and goods from her sari-sari store.

ARMM HEART data revealed that P300,000 worth of farm crops were destroyed during the encounters, while more than a million pesos worth of properties were partially or fully damaged. Six (6) houses were partially damaged.

Other faces of grief

The women shared the ordeals they and their children had to go through to escape the fighting. There was indiscriminate firing and they had to either crawl or dash to safer grounds, some with a baby or toddler in hand. The women who lost their husbands told the FFM of the grief and the economic uncertainty they now face.

The wives of the saheed (martyrs), four elements of the MILF who were fired upon and killed upon by an unidentified SAF element while they were sleeping in a pangguiamanan (mosque-hut) near the tulay na kahoy (wooden bridge) at two in the afternoon of January 25 in Brgy. Tukanalipao, also told their worries to the fact-finding team through a discussion group with the women’s team. Their husbands who were killed are Omar Dagadas, 24; Ali Ismael, 25; Mosif Hassim, 22; and a certain Rasul, 21, were members of the 105th Base Command of the Bangsamoro Islamic Armed Forces (BIAF) of the Moro Islamic Liberation Front (MILF).

Child Rights Violations

Classes in elementary and high school students of different public schools in the various barangays were disrupted by the heavy fighting on January 25. School officials of Linantangan Elementary School in Tukanalipao proper told the Mission that the said school was forced to cancel classes for two weeks after the incident.

According to ARMM HEART, 13 schools with 5,963 students and 124 teachers were affected by the bloody encounters. Aside from this, classes for the 300 Mahad/Arabic students were also disrupted.

During the psychosocial intervention to the children affected, the team found out that children are traumatized due to the incident and their consequent evacuation. According to the children, the encounter occurred because the PNP SAF did not inform the community and the MILF regarding their operation. They also narrated some of their experiences. They also recalled the deafening sounds of gunfire and how they evacuated. Most of the children were among those families who were temporarily displaced due to the incident. According to them, they stayed in several houses and barangay centers that served as the temporary evacuation center for two days and were only able to attend class a week after the incident. Many of them are still afraid, especially during night time. According to them, they fear nightfall as the incident might happen again. Their daily routines disrupted specially on education and economic aspect and they have the feeling of insecurity. Up to this time, many pupils have not reported back to school.

Deep US involvement

The Mission was able to interview, on condition of anonymity, some witnesses who said they saw one Caucasian (“white-skinned, long, blue-eyed, and had narrow, long noses”) who died among the SAF members in Brgy. Tukanalipao. Meanwhile, several residents from Tukanalipao, Pidsandawan, Lusay and Tuka submitted sworn affidavits that state that they saw drones fly above their communities for at least seven (7) days before the bloody encounters on Jan. 25. One witness said that the drone would hover above their houses, sometimes waking them up at night. Meanwhile, residents of Brgy. Tuka and Brgy. Pidsandawan called the drones “airplanes” that twinkled at night time. However, the night before the clash the sound of the drones was exceptionally noisy and busy. The drones, they said, were gone after Jan. 25.

Preliminary Findings: 

  • The PNP-SAF police operation undermined the civilian community and GPH-MILF peace process;
  • There was a violation of the ceasefire agreement or the Agreement on the General Cessation of Hostilities that resulted in a breach in the peace negotiations and human rights violations;
  • The lives of the residents have yet to return to normal, the farmers cannot easily go back to their farms for fear of possible clashes, and unexploded bombs continue to reside in local fields;
  • There is no normalcy in the lives of child residents, as evidenced by the significant decline in the attendance of students in elementary schools;
  • Further investigation should be undertaken into the role of the US government in the Mamasapano incident, based on the following reports: that US troops were seen during retrieval operations; that drones were heard and seen flying before and during the police operation; and that possible Caucasians were sighted with the PNP-SAF during operations, including the body of an alleged Caucasian among the slain PNP-SAF;

Recommendations:

  • The government must indemnify, give justice to the victims of human rights violations and be held accountable for the Mamasapano encounter;
  • Violations in the ceasefire agreement should be seriously looked into;
  • US participation in the Mamasapano incident must be investigated;
  • Call for an independent body, such as a truth commission or a people’s movement for truth and accountability, to probe deeper into the Mamasapano incident.

Aside from initiators Suara Bangsamoro, Kalinaw Mindanao and Kawagib, other groups from various provinces in Mindanao as well as national organizations joined the mission, namely:

KARAPATAN-Southern Mindanao Region
KARAPATAN-Socksargens
KARAPATAN-West Mindanao
Gabriela Women’s Partylist
Children’s Rehabilitation Center
Union of People’s Lawyers in Mindanao
Kilusang Mayo Uno
Nonoy Librado Development Foundation
Sisters Association in Mindanao
Oblates of Notre Dame
Social Ministry Episcopal Diocese for Southern Philipppines
Cotabato Annual Conference – United Church of Christ in the Philippines
United Methodist Church in the Philippines
Liga ng Kabataang Moro
League of Filipino Students
Anakbayan
CLANS
DIRECT
Panalipdan-Southern Mindanao
Community-Based Health Services Association
Anakpawis Partylist
Bayan Muna Partylist
Alternative media outfits Pinoy Weekly, Radyo Ni Juan Network and Kilab Multimedia

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Cronyism & patronage

Presidential pork, election budget and Aquino cronies

Image from the DBM website

Image from the DBM website

Massive presidential lump sums and discretionary funds in the 2015 National Expenditure Program (NEP), along with a redefined savings, expose the proposed P2.6-trillion budget to abuse by the Aquino administration. It is vulnerable, in particular, to patronage and electioneering by the ruling Liberal Party (LP). The LP is desperate to bolster the low popularity of its president-on-leave and perceived 2016 presidential bet – Department of Interior and Local Government (DILG) Secretary Mar Roxas. Local government units (LGUs), including the barangays, play a key role in ensuring the electoral victory of a presidential candidate. With enormous pork barrel-like funds at Aquino’s disposal, the LP and Roxas have the resources to buy the political loyalty of governors, mayors and barangay captains for the 2016 presidential race. Vice President Jojo Binay may be the most popular choice right now as the next Chief Executive according to various polls, but Roxas boasts of a bottomless election war chest.

Thus, we see in the 2015 NEP mammoth increases in the administration’s planned spending for LGUs, many of which will be directly handled by Roxas as DILG head. A glaring example is the huge 80% increase in lump sum allocations for LGUs – from the current P17.3 billion to P31.1 billion next year. The amount includes P27.9 billion in LGUs’ Special Shares in Proceeds of National Taxes and P3 billion in Local Government Support Fund (LGSF), including P2.8 billion under the controversial Grassroots Participatory Budgeting (GPB) scheme and P200 million for “financial assistance to support various priority programs and projects”. The balance is comprised of a “death benefit fund” for barangay officials worth P50 million and shares in proceeds of fire code fees pegged at P200 million. The P31.1-billion LGU allocation is part of the P48.1 billion that Department of Budget and Management (DBM) Sec. Butch Abad has admitted as lump sum in the 2015 NEP. The remaining P17 billion is composed of P14 billion in disaster fund, P1 billion in rehabilitation fund, and P2 billion as presidential “contingent” fund. These amounts pertain to DBM-admitted lump sums; to be sure, much larger discretionary lump sums are tucked in various items of the NEP.

But another feature of the NEP seldom discussed is how the proposed spending plan, including presidential lump sums, will be used to support rich families and business groups with close ties to the Aquino administration. Through budgetary support for the Public-Private Partnership (PPP) program, these elite families and groups, and their foreign partners and patrons, will continue to receive presidential favors under the pretext of infrastructure development. Indeed, the proposed 2015 budget will be used not only to promote the political interests of LP’s presidential wannabe; it will also be used to promote the economic interests of presidential cronies.

Some P57.2 billion in public funds have been allocated in the 2015 NEP to guarantee the profits of investors participating in Aquino’s PPP program, pay for an onerous PPP contract, and facilitate the implementation of more PPP projects. The amount includes: (a) P30 billion for the Risk Management Program (RMP); (b) P10.9 billion for the Department of Public Works and Highways’ (DPWH) PPP for Infrastructure Projects; (c) P7.4 billion to support the LRT 1 and LRT 2 extension projects of the Light Rail Transit Authority (LRTA); (d) P4.7 billion to pay for government obligations under its Build-Lease-Transfer (BLT) deal with the Metro Rail Transit Corp. (MRTC); (e) P2.7 billion for the Department of Transportation and Communications’ (DOTC) PPP for Transport Projects; and (f) P1.6 billion for the Department of Education’s (DepEd) PPP for School Building Projects.

The P30-billion RMP, according to the NEP, is meant to “manage the National Government’s fiscal risks and enhance the country’s credibility among potential PPP proponents”. Executive agencies and departments as well as government-owned and -controlled corporations (GOCCs) can avail of the RMP fund to “cover commitments made by, and obligations of, the National Government, in the concession agreements relative to PPP projects”. The amount shall also be tapped to pay for all the obligations of a GOCC in concession agreement covered by a performance undertaking or any similar instrument issued by the National Government. A performance undertaking usually involves government assuming debt or other financial obligations related to a PPP project. One of the projects covered by the Aquino administration’s performance undertaking is the P62.7-billion MRT 7 of presidential uncle Danding Cojuangco and his right hand man Ramon S. Ang.

Aside from performance undertaking, RMP will also cover “contingent liabilities arising from regulatory risks assumed by the National Government”. One project that enjoys Aquino’s regulatory risk guarantee is the P64.9-billion LRT 1 extension and privatization of the Ayala family, a longtime ally of the Aquinos, and the group of presidential supporter Manny V. Pangilinan (MVP) and his Indonesian patron, the Salim family. Under the concession agreement that will be signed with the Ayala-MVP group, if the notional LRT 1 fares stipulated in the contract are lower than actual or approved fares, government will pay the difference through a so-called Deficit Payment Scheme. Notional fares refer to the adjusted fares as scheduled in the concession agreement. Such situation may arise, when, for example, a regulatory body or local court intervened and prevented the collection of the notional fare. To fulfill its deficit payment obligation with the Ayala-MVP group, which is essentially a profit guarantee, government will disburse from the RMP fund paid for by the people’s taxes. The RMP is actually just one of the many favors that Aquino is giving the Ayala-MVP group in relation to the LRT 1 project. As part of the contract, the common station that will link the LRT 1, MRT 3 and the soon-to-be-built MRT 7 was taken away from Henry Sy’s SM North and moved to the Ayala’s Trinoma Mall. (The SM group questioned this before the Supreme Court and got a temporary restraining order or TRO. In response, the DOTC said they might just build two common stations to accommodate Henry Sy and the Ayalas.) The Ayala-MVP group is also exempted from paying real property taxes, which government agreed to shoulder and could reach P64 billion throughout the 32-year concession agreement. These are on top of the P5-billion startup subsidy and P34.9 billion in loans that government will borrow for the project.

Meanwhile, the P10.9 billion allocated for DPWH’s PPP for Infrastructure Projects will be used to cover the costs of right of way (ROW) acquisition and relocation of affected communities. The projects identified in the NEP where this fund will be used include those controlled by the same groups with close presidential ties such as San Miguel’s P15.52-billion NAIA Expressway Project and P18.1-billion Tarlac-Pangasinan-La Union Toll Expressway Project, and the Ayalas’ P2.01-billion Daang Hari SLEX Link Road Project. Similarly, the DOTC’s P2.7-billion PPP Transportation Infrastructure Project fund will be used for ROW costs particularly for the P2.5-billion Integrated Transport System, which San Miguel, Ayala, MVP and Henry Sy, among others, are also eyeing. Meanwhile, DepEd’s P1.6-billion PPP for School Building Projects 2015 fund will be used for the amortization or lease payment of the total project costs of school buildings constructed by Henry Sy-affiliated Megawide Corp. and other firms.

P4.7 billion under the proposed 2015 PPP budget will go to the servicing of onerous contractual obligations with the MRTC, which is 48% controlled by the MVP group. The BLT contract, a PPP deal signed during the Ramos administration, tied the national government to paying Equity Rental Payments (ERP) to MRTC for its guaranteed 15% return on investment (ROI). Instead of rescinding, or at least renegotiating, the patently unfavorable contract with MRTC to build and operate the MRT 3, the Aquino administration continued to honor it because doing otherwise would undermine its PPP program. To supposedly correct the situation, Aquino has set aside P53.9 billion in the 2015 NEP’s unprogrammed appropriations to buy out the MRTC and scrap the BLT. But this approach means government will shell out more people’s money while legitimizing the illegitimate financial obligations with the MVP group.

Lastly, the P7.4 billion allocated for LRT 1 and LRT 2 extension projects will be used to support the privatization of both lines. The Ayala-MVP group will take over LRT 1, as already mentioned, soon. On the other hand, the LRT 2 operation and maintenance project, estimated to cost P14.3 billion, is scheduled for bidding within the year or in early 2015.

These planned expenditures show how public funds, raised mainly through taxes of ordinary wage earners and consumers, are being wasted and drained not only through corruption and political patronage but also through questionable economic policies that only benefit a favored few such as big business groups involved in PPP projects.

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SONA 2014

Deceptive PPP claims in SONA

Contrary to President Aquino's SONA claims, government continues to provide incentives for investors to build our infrastructure needs. (Photo from here)

Contrary to President Aquino’s SONA claims, government continues to provide incentives for investors to build our infrastructure needs. (Photo from here)

Infrastructure development through public-private partnership (PPP) was among the highlights of President Aquino’s fifth State of the Nation Address (SONA). Thanks to good governance, we no longer need to offer perks for investors to build our infrastructure needs, said the President. Thanks to good governance, the days of state-guaranteed private profits to entice PPP bidders are gone.

If the private sector wants to build our airport or highways, they must be willing to pay a premium, Aquino pointed out. The winning bidder in the Mactan-Cebu International Airport Passenger Terminal Building paid government P14 billion. The private contractor in the NAIA Expressway Project Phase 2 shelled out P11 billion.

But contrary to the SONA claims of Aquino, government continues to provide incentives to PPP investors. Some of these perks are even more generous than those offered by previous administrations. In addition, Aquino’s supposed “good governance” has nothing to do with investors paying a premium to bag PPP contracts. Their bidding decisions are always determined by how profitable or strategic the projects are.

Let us take a look again, for instance, at the P64.9-billion LRT Line 1 Extension and Operation and Maintenance project. This PPP contract will be awarded soon to Metro Pacific Investments Corp. (MPIC) and Ayala Corp. It is a sweetheart deal. Aquino would not just guarantee the debts of MPIC-Ayala; government is directly borrowing P34.9 billion or 54% of the project cost for right of way acquisition, additional coaches, etc. Government also agreed to shoulder the payment of real property taxes estimated at P64 billion throughout the life of the contract. These are on top of the P5-billion startup subsidy that government will provide. All in all, the direct cost to the government is almost P104 billion and just P30 billion to MPIC-Ayala. It becomes even more outrageous when you factor in the guaranteed profits that MPIC and Ayala will reap through automatic and periodic fare increases throughout the 32-year contract (which can be extended to up to 50 years). When MPIC-Ayala could not collect the agreed fares, government will again shell out public funds to cover the difference. Aquino called this regulatory risk guarantee, a government guarantee never before seen in the more than three-decade history of PPP and privatization in the Philippines. All these make the P9.5-billion premium that MPIC-Ayala promised to pay to clinch the concession meaningless.

Similarly, the Henry Sy-affiliated Megawide and its Indian partner GMR are building and operating the P17.52-billion Mactan-Cebu airport expansion because of its huge profit potential. The P14 billion that the consortium paid is peanuts compared to the windfall that the airport would make, which the Aquino administration guaranteed. Among the sweeteners of this PPP project is a 25-year government ban on the construction of other airports and related businesses in the Mactan and Cebu islands. There will also be a 25-year moratorium on the construction of any competing car park facility or any competing hotel facilities within the project’s 500-meter radius. Megawide-GMR will operate the country’s second busiest airport for 25 years, enjoying absolute monopoly over air passenger terminal and related services guaranteed throughout the concession agreement.

Meanwhile, in the case of the P15.52-billion NAIA expressway project, San Miguel Corp. (SMC) is charging P35-45 in toll rates. With traffic expected at 150,000 to 160,000 cars a day, that’s P1.92 to 2.63 billion in annual revenues. Its concession agreement with government is 30 years. This means that SMC is guaranteed to recover the project cost and premium in as short as 10 years, and then enjoy 20 years of raking profits. The recovery period could even be shortened by toll hikes and increased traffic volume. Note also that for SMC, the NAIA expressway has a more strategic value. The project will provide access to the NAIA terminals, which will benefit SMC’s air transport interests. The giant conglomerate of presidential uncle Danding Cojuangco controls 49% of the Philippine Airlines (PAL). It will also build a seamless link between SLEX/Skyway and the Manila-Cavite Toll Expressway. SMC, with Indonesian partner Citra, already controls SLEX/Skyway and the NAIA project will further consolidate its position in road transport in the area.

Local oligarchs and representatives of foreign interests in the country like the Ayala family, Henry Sy, Danding Cojuangco and his right-hand man Ramon Ang, or Manny V. Pangilinan (MVP) of MPIC participate in PPP not merely because they want to solve our infrastructure needs. As Jaime Augusto Zobel de Ayala put it: finding a private sector solution to the social problems of the country… must be oriented around a profit-centered solution. He was talking about private sector participation in mass housing for informal settlers. So, you see, there is a reason why these people are among the wealthiest in the world. In the 2014 Forbes’ list of richest Filipinos, Henry Sy and family recorded a net worth of $12 billion while Jaime Zobel de Ayala and family posted $3.1 billion; Danding, $825 million; Ramon Ang, $260 million; and MVP, $105 million.

PPP will continue to be the centerpiece program of Aquino in the remaining two years of his term. In his penultimate SONA, Aquino enumerated the top infrastructure priorities of his administration, most of which are controversial because of their social costs and impact. The P150-billion Laguna Lakeshore Expressway Dike, the P18.72-billion Kaliwa Dam, and Clark Green City, for example, are all feared to cause the massive displacement of local communities and the destruction of environment.

The same elite families and groups that have been bagging Aquino’s PPP contracts are positioning themselves to corner these deals. Despite public opposition, Aquino is determined to implement them, which could only further aggravate social tension and delegitimize his presidency even more.

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SONA 2014

Sona 2014: A shaken regime

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All the previous issues that faced the Aquino presidency are like relentless jabs pounding its body, and the pork barrel and DAP are like powerful blows straight to the head of the regime. (Photo from here)

Since his first State of the Nation Address (Sona) in 2010, President Aquino has seen the steady erosion of his legitimacy as the empty presidential slogans of “daang matuwid” and “kung walang corrupt, walang mahirap” fall apart. Today, in his fifth Sona, Aquino is facing the worst political crisis of his regime amid the raging pork barrel and Disbursement Acceleration Program (DAP) controversies.

From the onset, Aquino’s presidency has been questioned for the powerful interests it represents as symbolized by Hacienda Luisita. His trumpeting of public-private partnership (PPP) in his first Sona signaled the perpetuation of pro-business and long discredited neoliberal economic polices. Barely two months in office, his leadership, or lack of it, was widely criticized with the Luneta Hostage crisis. When prices spiraled, “Noynoying” captured the indifference of the regime to the plight of ordinary people. The rapid growth in gross domestic product (GDP) and massively increased cash transfers could not camouflage the deteriorating poverty and job scarcity, made even more pronounced by the scandalous rise in wealth of the oligarchs. (Read: Prices, profits and poverty; Poverty trends) His criminal neglect of Pablo and Yolanda victims brought extra momentum to the public discontent that has been gathering force.

Then, the pork barrel and DAP scam exploded, shaking the Aquino administration in a way it has never felt before. If this were boxing, all the previous issues that faced the Aquino presidency are like relentless jabs pounding its body; and the pork barrel and DAP are like powerful blows straight to the head of the regime. It is obviously shaken. Aquino’s appeal to “tie a yellow ribbon” to show support to his administration illustrates how insecure and uncertain the administration has become. If this appeal were Aquino’s “counterpunch”, it merely exposed him to more blows as the Palace was forced to downplay the yellow ribbon call after an overwhelming public rejection.

Aquino and his Liberal Party (LP) hoped that the pork barrel scam would weaken the opposition for 2016. But the controversy quickly developed in a manner that Malacañang’s political operators did not foresee. It is no longer just about Senators Juan Ponce Enrile, Jinggoy Estrada and Bong Revilla, and Janet Lim Napoles and her bogus non-government organizations (NGOs). It has become more about the rotten system of patronage politics and bureaucrat capitalism with Aquino and his clique currently at the helm. Palace’s efforts to cover up the accountability of the President, his Budget Secretary Butch Abad, and other LP stalwarts and their allies are generating public anger as intense as the indignation against Enrile and company. In the eyes of the public, they are all the same trapos (traditional politicians) who abused the powers entrusted to them for selfish and narrow private gains. They must be all held to account, the President included.

The satisfaction and approval ratings of the Aquino presidency are dipping to their all-time lows and there are no signs of recovery. In the coming months, the neoliberal offensive against the people is sure to intensify with ever-rising costs of basic goods and services and economic displacement. After the Sona, for instance, we are anticipating a huge increase in LRT 1 fares related to its impending takeover by the Manny V. Pangilinan (MVP)-Ayala group (Read: How MVP-Ayala will squeeze LRT 1 consumers dry) followed by a massive retrenchment of Light Rail Transit Authority (LRTA) employees. (Read: How Aquino betrayed public interest in LRT 1 privatization) The long-delayed upward adjustment in LRT 2 and MRT 3 fares may also be implemented along with the LRT 1 fare increase, if not in the weeks or months after. Also after Sona, the results of the ongoing arbitration between the Metropolitan Waterworks and Sewerage System (MWSS) and its private concessionaires Maynilad and Manila Water are expected to come out, with a big-time hike in water rates a possibility. (Read: Water arbitration: Issues and implications) Then there’s the threat of El Niño, which experts say would be felt starting in the second half of the year with devastating impacts on the agricultural sector (and consequently, further increases in food prices) and on the livelihood of millions of farmers in the countryside. (Read: Bracing for El Niño) All these would aggravate the precarious state of the regime.

Meanwhile, on top of these brewing economic issues, Aquino himself is creating favorable conditions for persistent, growing and broadening protests against his regime and the rotten system of governance in the country. His display of excessive self-confidence and arrogance in successive speeches to defend DAP against the Supreme Court decision and pervasive anti-DAP public sentiment has further fuelled the likelihood in the coming months of mass mobilizations similar, if not bigger than, last year’s Million People March.

As the primary contradiction between the Aquino regime and the people further sharpens, so is the contradiction among the various cliques of the political elite for control of state power and resources. The filing of cases in relation to the pork barrel scam against LP’s perceived strong rivals in 2016 is just the start of electoral bickering among the trapos.

Already, the LP has initiated efforts to remove Vice President Jejomar Binay from the Aquino Cabinet, hoping to weaken his public profile as well as access to state resources that can be used to support his expected presidential bid. Plunder cases have been recently filed at the Ombudsman against the Vice President and his son Makati Mayor Junjun Binay, while daughter Makati Rep. Nancy Binay is facing allegations of anomalous pork barrel transactions involving an NGO founded by the Vice President.

The bickering among the trapos will surely intensify and escalate into full-blown maneuverings as 2016 draws near, and even earlier especially now that the impeachment against Aquino has already been endorsed in the House of Representatives. Palace propaganda operators, for instance, are trying to discredit the impeachment by charging it as a pro-Binay campaign, simply because of presidential succession. However, the blatant and arrogant way that Aquino has been covering up his and his clique’s accountability in the pork barrel and DAP scam is too glaring for people to doubt the intentions of the impeachment.

Another political flashpoint is the dynamics between Malacañang and the Supreme Court, which could develop into a full-scale confrontation between supposedly co-equal branches of government. Aquino’s veiled threat of impeaching the Justices would put the raging controversy into a higher level of contradiction between and within government’s institutions. Already, LP leaders at the House led by its Speaker Sonny Belmonte and its justice committee chair Niel Tupaz Jr. have called for a probe on the alleged SC’s own pork barrel – the Judiciary Development Fund (JDF).

Furthermore, the handling by LP and its allies of the impeachment process in Congress against the President will determine how fast and how intense the political crisis will escalate. The Aquino administration firmly controls the lower house and, like the Arroyo regime, will surely use all its influence and resources – including massive presidential discretionary funds – to dictate the outcome of the impeachment. Aquino apologists in Congress like Rep. Walden Bello of Akbayan, one of the biggest beneficiaries of presidential patronage and largesse, are already dismissing the grounds for the presidential impeachment as “flimsy” even before the process of determining its substance could begin. But for the people, all these only highlight how rotten the prevailing political system is and how hopeless reforms are within a decaying system dominated by narrow and self-serving interests.

We must emphasize that the Supreme Court decided against the pork barrel and DAP not because they are made up of upright Justices who are willing to challenge the country’s most powerful man (the decision, in fact, gives Malacañang wiggle room to evade criminal liability), but because amid the snowballing public condemnation against the corrupt and capricious use of state resources, upholding the patently unconstitutional and illegal DAP would only further fuel social unrest. Thus, while LP and its allies may blatantly derail Aquino’s impeachment, they will do so at the risk of triggering more public outrage and aggravating political instability.

The regime is shaken. The situation may or may not eventually lead to a dramatic outcome like Aquino’s ouster or resignation but the way people are rising up, challenging the status quo and asserting their democratic rights certainly gives us optimism that ultimately, the people will triumph.

It is not only about the pork barrel and DAP. Look, for instance, at how Yolanda and Pablo victims are gradually recovering through community actions and initiatives to ensure their livelihood and social services that government could not provide; or how the farmers and farmworkers have persistently pushed for, and in some areas even actually implemented, genuine land reform despite landlord repression and state terrorism; or how many Filipinos continue to join or support the 45-year old civil war in the countryside in the belief that it is the only way to end oppression.

Indeed, there is hope as long as the people are ready to struggle for what is truly democratic and just. ###

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