Category: Manila Times Columns

Duterte warns of one downside of ‘globalization’: Brain and brawn drain

I WAS very pleasantly surprised when President Duterte, for most of his working life a city mayor in Mindanao and hardly known to be an avid reader, demonstrated a grasp of such a complex issue – “globalization.”

At the Asia Pacific Economic Cooperation (APEC) CEO Summit in Vietnam last week, after his speech, a British journalist at the press conference asked him about his views on the “rise in anti-globalization feelings in some countries.”

That journalist obviously wasn’t too familiar with the Philippines. Here, “globalization”—the dismantling of nations’ borders to allow untrammeled flow of capital, commodities, and even people—is believed in and embraced almost on the same level as the Catholic faith.

Not a few millennials even think that it is chic to declare that they are only secondarily Filipinos, but are “global citizens” — an oxymoron as citizenship imply a single nation-state. Even the concept of a Filipina beauty—just look at our recent beauty pageant queens—has been “globalized,” so have our basketball, why even our volleyball teams, and few notice.

The dogmatic belief in globalization is due to several factors, among them: our colonial history, especially the American occupation during which we were brainwashed to believe that we were Asia’s “brown Americans”; the fact that the education of our elites have been in the US, where the ideology of globalization—also called the Washington Consensus—was imbued on them; and the massive migration, permanent or temporary, of lower-middle-class to upper-class Filipinos to the US and elsewhere.

OFWs in Saudi Arabia returning home: Will they stay?

Duterte seemed to have either studied the issue or saw its actual impact on ordinary people and was bold enough to tell the APEC CEO Summit of the downsides of globalization.

Damaged economies
Duterte started his reply: “Globalization, to a certain extent has really damaged poor economies. Globalization by itself is the deprivation of some, those who have been called ‘left behind.’ There has be to some remedial measures.”

Duterte zeroed in on one clear, very negative impact of globalization, for decades known in our country as the phenomenon of “brain drain.”

Duterte explained: “The best of our young minds, Filipinos—the summa cum laudes, the valedictorians—upon graduation, they go somewhere else, most of them to America. So, they are there, they are in Silicon Valley or New York and they tend to gather in places where there is already an economy that is thriving, and leaving behind a country getting bereft of talent.”

We have been underestimating the effect of our country’s brain drain, as globalization has accelerated not just the free flow of capital and goods, but of our educated elite. It is a myth that it has been our poor who have mostly migrated abroad. It is rather the lower middle class to the upper class, including even the crème de la crème. Half of my Ateneo batch in high school and college have migrated to the US and Canada

I was shocked a few years ago that even an old colleague of mine who had been one of the our top investigative journalists abandoned her country to live a New Yorker’s life — teaching Americans journalism in a top-notch (and expensive) university. And she was relatively well-off, one whom I had thought was imbued with the nationalism of the 1970s and 1980s, now all but vanishing.

Her case would be like a tuberculosis doctor educated in state-subsidized University of the Philippines and trained at the Philippine General Hospital who, after becoming a very skilled doctor, migrates to New York to practice cosmetic surgery there. How better would the state of journalism in our country have been – and therefore of our democracy – if she chose to remain in her country? Now she’s totally been brainwashed in US neoliberal ideology that she writes biased articles in US publications on the Duterte administration, in one case even using wrong data – as many other journalists who have moved to the US have done.

Human capital
The economic history of the world has one major lesson: It is human capital –- people’s talents, intelligence, and skills –- that is one of the biggest factors for growth. A very backward territory like Australia and New Zealand swiftly became developed nations in a few decades essentially because of the migration there of the British, who of course brought with them centuries of civilization that allow the blossoming of a human’s talents and skills. The same phenomenon with tiny Israel, which is even a nuclear power, in that case migration of mainly European Jews.

A rigorous economic study in Taiwan using actual industrial data concluded that “human capital accounts for 46 percent of output growth in the manufacturing industry.” A more recent study in Spain had similar results, emphasizing that economic growth is best accelerated by people with higher education.

Japan and Korea in the 1950s and 1960s and China in the 1980s sent hundreds of their youth to the US and Europe for studies in engineering, mathematics, and business – most of whom returned to help in the economic growth of their countries. How many Filipinos go to the US to study and never come back, and instead move to global economic centers? How many UP-educated doctors have left the country, many reportedly even agreeing to be nurses instead so they could more easily get jobs?

Duterte even pointed out that our problem isn’t only “brain drain” but what has been called “brawn drain.”

“The Philippines is having a boom in real estate but developers are having difficulties finding the workers and that leaves us behind in terms of how long it would take to complete a project,” he said. “They have to scrape the bottom to find who can work to build houses. These are the effects of globalization.”

Brain- and brawn-drain has certainly become a problem that has been colossally underestimated, and I hope Duterte walks the talk on this. Businesses, whether foreign or Filipino, would see no use for massive infrastructure if they are unable to find the skilled workers and intelligent staff to man their companies.

The need to replace millions of educated and skilled Filipinos who have migrated abroad, facilitated by globalization, has become more urgent, even as our educational system has deteriorated. The irony, if you can call it that, as I found out during my ambassadorial stint in Greece, is that a significant number of our domestic workers abroad are – school teachers.

Filed under: Manila Times Columns

Fake news: ‘PH has huge restrictions on foreign investments’

A FILIPINO blogger working in Singapore has been, whether wittingly or unwittingly, badmouthing the country to the world by spreading the lie in social media that our levels of foreign direct investments have been low because our Constitution is against foreign investments.

He has also in effect spread the canard that our legal framework restricts, or will restrict, to just 40 percent foreign ownership in any industry.

I would have ignored such blabber if not for the fact that I found out that some good-intentioned netizens believing in this blogger’s fake claims. This is not unexpected: nationalism has been dying in our country, with “globalism” — “I am a global citizen” — becoming chic to believe in.

In the first place, the Constitution is categorical in its Article XII Section 10 that this “60-40 rule” (60 percent Filipino, 40 percent foreign) applies only to public utilities, i.e., power, telecommunications, transport and in Section 1, to natural-resource extraction, i.e., mining mainly.

My book Colossal Deception: How Foreigners Control Our Telecoms Sector, and my many columns since 2013 in this newspaper have indisputably shown that because we have a weak state that is under the control of oligarchs, our telecoms industry—made up of the duopoly PLDT and Globe Telecom—have managed to violate this constitutional provision, with foreigners owning more than 70 percent of these firms. The two companies have not disputed my facts.

PLDT and Globe
The biggest stockholder of PLDT is the Indonesian magnate Anthoni Salim, while in Globe it is the Singtel, owned by the Singaporean state firm Temasek Holdings. Our mining laws have become so complicated, and again because of our weak state, many mining firms are controlled through dummies by foreigners—in recent years by firms from resource-hungry China.

After I pointed this out to this blogger—I decided to later “block” him as I thought it was useless to argue with somebody who grossly misreads the Constitution—he retreated to the argument that the Constitution’s Article XII’s Section 10 was a “Damocles sword” that discourages foreign investments.

This blogger’s imagination has gone wild.

This section specifies: “Congress shall, upon recommendation of the economic and planning agency,when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments.” (emphasis mine.)

That blogger is the first person ever—not even the most rabid Western neoliberal apologist—to make such a preposterous claim that this provision discourages foreign investment. The statement is merely a reminder that the Philippines is a sovereign nation, and therefore if the national interest dictates, Congress must restrict foreign capital to only 40 percent of industries vital to our security. Even without that provision, the Congress can of course decide to reserve certain industries only to their own nations. Don’t sovereign nations have such a right?

Why the reminder? Because the framers of the Constitution were educated enough to know that the US in 1955 required us to allow 100 percent American ownership in any business as a condition for us receiving post-war US assistance of $800 million. They were also experienced enough to know that our state has always been so malleable for the oligarchs to use as they please.

If, for instance, by some miracle uranium is discovered in the country, and foreigners insist through the most expensive lawyers they can hire (as they have done in the case of PLDT and Globe) that they are legally entitled to mine this rare material, Congress has the constitutional backing to pass a law requiring at least 60 percent Philippine ownership of such industry.

Kind of laws
And what kind of laws have the Congress passed since 1987?

One was a law which made it so crystal-clear that we have restrictions on foreign capital on a very small set of industries. The Foreign Investment Law of 1991 made it so categorical that other than public utilities and natural-resource exploitation, the restrictions are only mainly on such very specialized sectors (those in the so-called “negative list”) such as media, arms-making, dangerous-drugs manufacture, and enterprises such as massage clinics and cockpits and that may pose risks to “public health and morals.”

Only if some communist nut like Korea’s Kim Jong-un or Cambodia’s Pol Pot becomes dictator in our country will industries like BPOs, chip assembly, and car assembly—where most foreign investors are—be included in such a negative list. That blogger of course believes that that will happen. “Everyone knows that the regular negative-list exercise means a possible chopping board for MNCs,” that blogger wrote. “Everyone”? This guy is living in his own world.

The Retail Trade Liberalization Law of 2000 passed under President Estrada even opened up retail trade – which had long been restricted – so much to foreigners that the now-ubiquitous 7-Eleven chain stores, owned by one of Asia’s biggest conglomerates President Chain Stores, has given Filipino stores such stiff competition many have collapsed or will collapse. It is even obviously skirting that law. The law specifies that a branch of such a foreign-controlled retail company should have at least $830,000 (P42 million) in investments, so it won’t compete with the smaller Filipino mini-groceries. I haven’t been into a single 7-Eleven store that’s worth that much. However that law did bring to us such stores as Uniqlo (my favorite), Muji, Marks & Spencer, Zarah’s, and hopefully soon Ikea.

Only if your intention is to scare foreign capital away from the Philippines, as seems to be that of that Singapore-based blogger, will you claim that that Article XII, Section 10, which is simply an assertion of Congress’ responsibilities, has scared foreign investments, and therefore should be deleted from the Constitution.

What got my goat is that this blogger grossly misrepresented my views, claiming that I hate foreign multinational corporation—and that those who don’t see the Constitution’s anti-foreign investment provision are just stupid.

Like most rational people, I believe foreign capital would be good for the country—less for their money (with their loans guaranteed by their mother companies, most foreign companies get their capital from the local banks) but more for their technology—as long as the industries they go into will help us develop the economy.

But an in-depth study of foreign capital by Dani Rodrik (an International Monetary Fund economist and Harvard professor whose warnings, the IMF said, about the downsides of globalization proved prescient) put it: “While capital inflows definitely boost consumption, their effect on investment and growth is indeterminate, and [may]even be negative.”

The consensus among economists now is that foreign capital should be in ”greenfield” investments—or those that are built from the ground up—rather than the type that merely buys out or into an existing company, as the Indonesian Salim did in the case of PLDT and Singaporean Singtel in Globe Telecom.

However, as is the policy of nearly all countries in the world, which was wisely enshrined in our constitution, public utilities must be controlled and majority-owned by nationals, even by state firms.

That principle is really a no-brainer: Why would a state allow a foreign company, whose primordial interest is to get as much profits as they can, to operate a public utility, which is an enterprise whose primordial function is to serve essential needs of the public, and which exploits a captive market as well as a natural resource (in telecoms, the radio spectrum)?

Singapore, Japan, South Korea and China all restricted their public utilities to their nationals. Hence, Singtel, NTT, SK Telecom, and China Telecoms have become the biggest telcos on the planet. Much publicized has been Vietnam’s opening up to foreign capital—except in their telecom and power industries, which are tightly controlled and completely owned by state firms. Only when their firms have become conglomerates have they allowed these to accept minority foreign investments (as a way of getting their technology) to give foreign capital telcos a minority market (to inject more competition in the sector.)

Weak state
It is such an indictment of our weak state that the industries in which there are clear restrictions on foreign capital—telecoms and power—are those which foreigners control who continue to siphon off the country billions of dollars in profits.

Perhaps the reason why this blogger has been spreading this 60-40 lie is just to lobby for this restriction to be lifted even for public utilities. Is he working for a foreign telco?

As most economic phenomena are, our low level of foreign investments is the result of a complex of political and economic factors, and certainly not of our “restrictive” Constitution.

If we focus on fictional restrictions, we miss the real blocks to foreign investments, among them: political instability, expensive and poor telecoms facilities and power, the lack of physical and technological infrastructure; a limited and run-down highway network; an inefficient port system, and most importantly, red tape and corruption.

I’ll discuss that on Wednesday.

A teaser of sorts on this. What fans of Singapore and other Asian countries with huge levels of foreign investment don’t mention is that this island state—as well as Japan, South Korea, and Malaysia—were one-party states, for periods longer than the Marcos regime, with the usually bothersome press mostly owned and controlled by the power-holders. It has been that kind of political stability that has been so attractive to foreign capital.

Filed under: Manila Times Columns

The Mamasapano massacre: The worst crime ever committed by a Philippine President

THE Ombudsman the other day filed a graft case against former President Benigno Aquino 3rd for, in her words, “utilizing the services”—for the police operation in Mamasapano, Maguindanao, in January 2015 that led to the massacre of 44 police commandos—of Philippine National Police chief Alan Purisima when he was under suspension at the time.

What a clever way for Aquino to escape justice.

The Ombudsman’s charge is like, if ever, US authorities charging the New York terrorist who mowed eight people to death with a rented truck solely with reckless driving.

As relatives of the Special Action Force (SAF) troopers who were killed have pointed out—and are planning to ask the Supreme Court to order the Ombudsman to do—Aquino should be charged with 44 counts of criminal imprudence resulting in homicide.

JANUARY 25 , 2015: Aquino and Roxas in Zamboanga City pretending nothing was happening, while wounded SAF troops (lower photos) were being executed by Muslim rebels.

There has got to be some graver offense in our laws to charge Aquino with over the Mamasapano tragedy.
Aquino’s failure—or refusal—to prevent the massacre of our elite troops in Mamasapano by Muslim rebels is the worst crime ever committed by a Philippine President.

Aquino had been told early that morning that troops of the police’s Special Action Force (SAF) tasked with terminating an international terrorist were pinned down, and that its commander Getulio Napeñas, was pleading for his troops to be rescued. Yet Aquino did nothing the whole day.

Only at dusk

He called for a “command conference” of his security officials to deal with the crisis only at dusk. Army troops with air support were ordered— nobody even knows by whom—to act only towards sundown, when the 44 SAF soldiers had already been killed by Muslim rebel snipers, with some of the wounded shot at point-blank range.

This is not speculation but facts that nobody has disputed. These had been established by testimony in Senate hearings a month after the tragedy, of several officials who were with the President throughout that tragic day.

Aquino himself claimed in an impromptu speech before the SAF two days later that “Maaga pa lang, tuloy-tuloy na ang mga ulat na natatanggap namin.” (Since early morning, the reports had been coming in continuously.)
In the transcript Purisima submitted to the Senate hearing, Aquino learned of the progress of the operation he had ordered at 7:36 a.m., and that the troops were trapped before 11:36 a.m..

Aquino didn’t do anything that entire day, and pretended that nothing was happening as he went around Zamboanga City with his officials, including Mar Roxas and Defense Secretary Voltaire Gazmin.

The scenario that he had worked out was that on the pretext of being in Zamboanga City that day to inspect buildings damaged by a bombing two days before, he would rush to Cotabato City, the nearest city to Mamasapano and an hour by helicopter, to congratulate the SAF troopers for their capture of the global terrorists in Mamasapano, and to boast how he himself was on top of the operation. Instead, his glorious scenario turned out to be a horror for our troops.

Two explanations

There are two explanations for why Aquino abandoned his troops to the wolves, to be slaughtered, as it were.
One is that, given reports of psychological instability and of his penchant for burying his head in the sand in the face of crisis, he simply panicked when he realized that the scenario that was in his mind was turning into a nightmare, and was paralyzed into inaction.

He also realized the consequences of being blamed for the massacre of 44 commandos, and prosecuted for having given the authority as overall commander for the operations to his long-time buddy Purisima—his close-in security during the entire term of his mother, from 1986 to 1992—even if Purisima had been suspended at the time by the Ombudsman over corruption charges, and therefore had no authority at all to direct police operations.

A second explanation, which President Duterte himself has advanced, is that he was allegedly told by Teresita Quintos-Deles, his chief negotiator with rebel groups, including the secessionist Moro Islamic Liberation Front, not to order the military’s air assets from bombing the Muslim rebel positions as the battle raged, as this would endanger the peace talks with the MILF.

While Deles has denied she ever told Aquino to order his troops to stand down, the reports have been persistent that indeed she did so. Deles had allegedly convinced Aquino that he, together with his negotiators, had a good chance of being awarded the Nobel Peace Prize if they finalize the peace pact with the MILF. (Incredible as this notion may initially seem to be, it has credence given the fact that Colombia President Juan Manuel Santos got the Nobel in 2016, for his peace pact with the leftist rebel group, the Revolutionary Armed Forces of Colombia, known as FARC, that had been waging a guerrilla war for 50 years.)

Dante Ang, the chairman emeritus of this newspaper, had reported in an article published September 6, 2015, that based on accounts of his sources, police and army reinforcements were on the way to rescue the SAF troopers, and their commander asked Aquino for his final approval. Aquino, however, replied: “Negative. Negative. Stand down.”


Whichever explanation is accurate, Aquino’s failure or refusal to order the military he commanded to rescue the SAF troops who had been pinned down since early morning is an abomination to the military and the nation.

Past presidents have been accused of corruption, on such a massive scale even. But Aquino is the only President who abandoned his troops, so that they were brutally massacred.

The Congress he controlled—with the Senate headed by Liberal Party pillar Franklin Drilon and the House of Representatives by Feliciano Belmonte, Jr.—share Aquino’s shame and crime, as even in this controversy that involved the massacre of the Republic’s troops, it chose to conspire in the cover-up of the worst crime by a Philippine president ever.

For the sake of the nation’s integrity, President Duterte with the help of Congress should find ways to get Aquino pay for this crime. We cannot allow an ingenious scheme that only pretends to bring him to justice to succeed.

Filed under: Manila Times Columns

Oligarch-controlled mainstream media vs cyber journalists

THE new presidential spokesman Harry Roque, Jr. in a TV interview said he hopes “to teach Assistant Secretary Mocha Uson and the so-called diehard Duterte supporters the value of mainstream media to government and society.”

Roque said Uson and her followers need to understand the value of the mainstream media since “after all, it was the so-called Fourth Estate which exposed the supposed failures of the previous administration, which in turn helped catapult then-Davao City Mayor Rodrigo Duterte to the presidency.”

He is dead wrong. So dead wrong. The Number 1 rule for presidential spokespersons—I was one from 2001 to 2003—is to be sure of your facts, as there is an army of media people out there lusting to prove you are misinformed. The Number 2 rule: If you’re not sure of your facts, then don’t go there.

It’s unfortunate that Roque has revealed his utter ignorance of the recent history and nature of Philippine media, which it is his main, and only task really to, well, for lack of a better word, manage.

I wrote a column way back in 2013, at the height of the Yellow regime’s popularity, that reported how the kind of media Uson would join two years later and exploit to the hilt to help Duterte’s rise to power – social media – had broken President Aquino and the Yellow Cult’s hold over Filipino public opinion. (See “Cyber mosquito press rising,” July 8, 2013)

If I had been in the room where Roque claimed that mainstream media unearthed the corruption of the Aquino administration, I would have thrown a piece of hollow block at him. It was mainstream media— especially the Prieto-Rufinos’ Philippine Daily Inquirer and the Lopezes’ ABS-CBN Network—that was the propaganda arm of the Yellow regime that propagated the myth of the God-given right of the Aquinos to rule the country.

Political assassination
Worse, mainstream media was the deadly political assassination squad for the Yellows’ perceived enemies, which it demonized and took down swiftly, among them: former President Gloria Macapagal-Arroyo Ombudsman Merceditas Guiterrez, Chief Justice Renato Corona, senators Jinggoy Estrada, Bong Revilla, and Juan Ponce Enrile, and finally Vice President Jejomar Binay. If not for mainstream media’s demonization of him, former Defense Secretary Angelo Reyes would not have taken his own life. The four senators and Binay, one way or another, were the political bigwigs that had threatened the Yellow regime’s survival after 2016—and therefore had to be politically assassinated.

The reason why cyberspace media people could go against the Yellow regime is obvious, if you think about it: They are not tied to the elites.

Mainstream media in this country—and even for most of the so-called developed democratic countries—has been an institution of, for, and by the elites, especially the oligarchs which essentially the Yellows represent in this country.

Roque displays so much naiveté when he romanticizes Philippine media as the democracy-loving Fourth Estate. They are controlled by oligarchs, which his boss President Duterte has all but declared war against:

• The Philippine Daily Inquirer, with its group of a dozen publications, is owned by the urban landed elite Prieto-Rufinos who controlled the Makati Mile-Long strip, the Dunkin’ Donuts shops and, until early this year, the Shakey’s pizza chain. (Did the newspaper help in getting past administrations to ignore the family’s Dunking Donuts’ P1.5-billion tax liabilities and long-expired lease on the Mile Long property?)

• The Philippine Star’s controlling shareholder now is not even a local oligarch but an international one: the Indonesian billionaire Anthoni Salim who presides over the newspaper (as well as BusinessWorld, TV 5, Bloomberg Philippines, and two dozen radio stations all over the country) through a unit of PLDT, where he is the biggest stockholder through his Hong Kong firm First Pacific, Co. Ltd. (Does Salim’s media empire help in discouraging past administrations from investigating the allegation that Salim’s firms have violated the 40 percent limit on foreign investments in public utilities?)

• The ABS-CBN broadcasting network is owned by the pre-Marcos oligarch that the Aquino-Cojuangcos resurrected, the Lopezes. Its chairman Eugenio Lopez 3rd is ranked 39th in Forbes magazine’s list of 50 Filipino billionaires. (Did ABS-CBN’s power help in getting past administrations forget the Lopez group’s alleged P1.6 billion in unpaid loans from the Development Bank of the Philippines — first exposed in 2011?)

The 41st, 42nd and 44thrichest Philippine billionaires in this list make up the triad that owns ABS-CBN’s biggest competitor, the GMA-7 broadcasting behemoth: Felipe Gozon, Menardo Jimenez and Gilberto Duavit, most of whom are directors of other huge non-media enterprises.

The oligarchy of course has not been so stupid as to ignore the rise of the new digital media. The internet-only site Rappler is mostly owned by property, mining, and energy tycoon Benjamin Bitanga. It has even secured funding from entities ultimately owned by the global elites: e-bay founder Pierre Omidyar and allegedly George Soros, through an investment in North Base Media. I keep receiving allegations that the Ayalas are really behind Rappler though.

Space for maneuver
Of course, nothing in this world is 100-percent this or that. There is space for maneuver for journalists even in newspapers controlled by the oligarchy. After all, such space hides the fact of oligarchs’ control, and propagates the myth of a free press.

But believe me, I’ve seen it working for several media outfits: The owning oligarchs in different varied ways always, always get their press peons to toe their line, when it comes to the big picture.

It is really not surprising why the oligarchs have been able to control the Fourth Estate. (Do your own research, dear Reader, to find out if the two newspapers I write columns for, this paper and Bulgar, are owned by oligarchs.)

Only the oligarchs have the huge financial resources and the political connections (for franchises in the case of television networks) needed to operate media enterprises. These have to be of a large scale because of the features of the industry, such as the high cost of paper and distribution in the case of newspapers, and capital-intensive equipment in the case of broadcast media. Rappler, I was told spent nearly P200 million just for the internet proprietary technology that allowed it to get a huge “following” in a few years’ time.

In sharp contrast, bloggers are practically lone wolves, and for those who have developed sizeable followings like Mocha Uson, Rey Joseph Nieto (“Thinking Pinoy”) and Sass Rogando Sasot (“For the Motherland”), their only expenses have been their internet connection, their time, and much expenditure of their mental energies – for a relatively long period of time, and with regularity so as it has become a habit of sorts for netizens to read their posts. Of course, they have to display intelligence, wit, and good writing to build up their following.

Their main drawback of course is that they don’t have the staff support mainstream media members normally do, even if just in the form of an editor going over and correcting their drafts, and more importantly, paring down their egos, which get easily inflated when they see they have hundreds of thousands, even a million, followers.

In this era when Filipinos are finding newspapers too expensive to buy, and even too dirty to handle, when they read mainstream media’s output only if they are posted in their Facebook walls, digital media has started to create its new Fifth Estate, rivaling the old, oligarch-controlled Fourth Estate.

Uson, RJ, and Sasot’s blogs and Facebook walls together have 6 million people who regularly read their posts. That’s 12 times more than my estimate of total broadsheet and tabloids’ circulation of 500,000 copies.

Is that good for democracy? Most definitely.

Even if it has its risks, of course. Who edits the cyber journalists? Who improves their skills and deepens their wisdom, who keeps their egos at bay? Will they resist financial temptations as they grow older?

Unfortunately, Roque doesn’t see all these developments and features of today’s media, which are very important for him to be an effective spokesman for the President.

Filed under: Manila Times Columns

PH telecoms not only the lousiest, but also the most expensive

Third of a 7-part series
TELECOM services in our country are not only the lousiest in Southeast Asia, but also the most expensive. This is according to the latest data from the authoritative International Telecommunications Union, a United Nations specialized agency.

If the telecom monopoly consisting of PLDT and Globe Telecom provides the poorest service at the most expensive rates, no wonder these foreign-controlled companies are the country’s most profitable firms, easily beating the SM mall conglomerate, San Miguel Corp., and the Gokongwei industrial group.*

From 2005 to 2016, the monopoly’s super-profits totaled a whopping $9 billion, or P405 billion. To help you wrap your mind around that figure, PLDT and Globe have been making P100 million for each day of the past 12 years.

Of course, we don’t have a right to complain about how much capitalists make. But in this case, they are operating a public utility with a captive market, involved in public service that they’re making super-profits from.

Government is supposed to regulate them to make sure they put priority not on profits but on service, or at least put these on the same level. But who’s even heard of the nearly inutile National Telecommunications Commission? At least President Duterte realized something might be wrong in having the ICT department headed by a longtime Globe lawyer.

TEXTING A MUST: PLDT and Globe are making hundreds of billions of pesos from Filipinos like this rice farmer.

Telecoms is becoming an important cost for business as well as a base for economic growth. An ITU study of 120 developed countries from 1980 to 2002 showed that a 10 percent increase in broadband (Internet access) penetration produced a 1.1 percent increase in GDP growth.

Other than the obvious infrastructure needed, the affordability of Internet service is the most important factor for the spread of Internet use. How can we increase the number of Filipinos with access to the Internet, if it is so expensive? Believe me: In this country, if you require a decent Internet service with its speed never going below 5 Mbps, you’d need to shell out at least P4,000 per month.

Cellphone use has become, by necessity or culture, a mass must-have service in this country, nearly as essential as electricity. Think how many of our poor have to part with their meager incomes, lured by fraudulent promotional tricks, just to generate super-profits not only for our richest but also for foreign billionaires, like the Indonesian tycoon Anthoni Salim, the biggest stockholder of PLDT.

While the ITU provides data on the dollar-values of countries’ telecoms costs, the most useful measure that most accurately depicts how expensive our telecoms services are, is the price of each type of service as a percentage of a country’s gross national income (GNI) per capita per month, very roughly the average earnings of Filipinos per month.

If Internet service here is equivalent to 7.5 percent of our monthly gross national income per capita, while in Singapore it is just 0.2 percent, then clearly our broadband cost is more expensive than that of that wealthy city-state.

The accompanying table contains the ITU data for 2015. It shows that telecom service in our country is the most expensive among major Asean countries for mobile cellular use, fixed broadband (for accessing the Internet), and mobile broadband postpaid service. Only for our mobile broadband prepaid cost is ours cheaper than that of war-ravaged Vietnam.

We should be outraged by this data. Prices here for mobile-cellular services are 17 times (measured as a percentage of the gross national income per capita) than those of Singapore, where the dominant telco is Singtel— which is the biggest shareholder of Globe Telecom.

For fixed broadband, it is 12.5 times; for mobile broadband prepaid 7.5 times, and for mobile broadband postpaid, it is an astounding 22 times. Except for fixed broadband, prices here for other telecom services —which is dominated by PLDT, controlled by the Indonesian Salim—is more expensive than those in his home country.

Read the table and weep. Singapore has the cheapest Internet service, the Philippines has the most expensive. Yet Singapore has the fastest Internet speed, ours the slowest.

Another way of looking at the data (and getting depressed) is to note how many countries in the ITU’s list of 184 countries provide cheaper telecom services than us.

For mobile cellular prices, there are 120 countries in the world that have cheaper rates than us: for fixed broadband, 125 other countries; and mobile broadband postpaid, 130 nations. It is depressing that Internet service here is more expensive than those in poorer countries like Vietnam, Pakistan, Yemen, Sudan, Bangladesh and Bolivia.

And to think that foreign companies control and own more than 70 percent of PLDT and Globe.

Why do we allow this?

*Details of these are in my past two articles: “Jack Ma would have been shocked at ou telecoms industry” (October 27, 2017), and “Why our telecoms will never be world-class with this kind of telco owners” (October 30, 2017).

Filed under: Manila Times Columns

Benefits of not being a US puppet

PRESIDENT Duterte ended the Republic’s subservience to the US, which its past 11 presidents either failed to do so, or even worsened, as his unthinking predecessor did.

Duterte has about five years to go, and the US imperial eagle will still try pull back its old pawn in the Pacific under its claws. We will see though the benefits of independence from the US, so that Duterte will most likely get the nation’s support for his earth-shaking change in our subservient foreign policy. That will be one of his most important legacies.

The timing of Duterte couldn’t be better.

It is only in recent years that China has indisputably emerged as an economic and military power, and the dire prognostications that its hundreds of millions of its poor in its inner territory will slow down its growth have not occurred. World Bank economists are applauding what they see as China’s miracle, that from 1988 to 2013, it has lifted out of extreme poverty (those living on $1.90 per day, or roughly P96 per day) 800 million of its citizens from 1988 to 2013.

The very pro-American Aquino regime’s filing of a case against China over its claims in the South China Sea made the Chinese see us as the US proxy in a dispute that is not its business at all. Despite this legal battle with China, Duterte in only a few months managed to warm up to this Asian superpower.

China seems to have put that arbitration decision we won behind it—as indeed most of the world has. Proof of this is that China pledged during Duterte’s state visit $9 billion in low-interest or soft loans for our infrastructure projects. Total Chinese economic assistance promised by Chinese President Xi Jinping to Duterte is estimated at $24 billion.

Now, the other economic superpower in Asia, Japan, which also has serious territorial disputes with China, can’t be outdone in wooing the Philippines. It rushed to extend to the country a similar magnitude of soft loans.

That idea isn’t even just my analysis. A news story that was published a few days ago in the privately owned Japan Times, the largest and oldest English-language newspaper in Japan, said much the same thing. The longtime city mayor who a Yellow writer said wouldn’t understand international geopolitics, is proving to be adept in diplomacy – the essence of which is take advantage of other countries’ self-interest, in order to advance the interests of one’s country.

The Japan Times article
Following is the text of the Japan Times story:
During a summit in Tokyo with Philippine President Rodrigo Duterte, Prime Minister Shinzo Abe on Monday reaffirmed Tokyo’s commitment to providing economic cooperation worth ¥1 trillion over the next five years.

The move is seen as an economic assistance race against Beijing to form a better relationship with Manila.

Abe has been trying hard to win Duterte over in dealing with territorial disputes in the South China Sea, in which the Philippines is a key diplomatic player.

Meanwhile, China, too, is trying to woo Manila by pledging to extend economic assistance worth $24 billion (¥2.5 trillion). The pledge was made when Chinese President Xi Jinping met with Duterte in Beijing in October last year.

Then, in January, Abe pledged that the government and private-sector corporations will extend economic cooperation worth ¥1 trillion over five years to help Duterte’s initiatives to revamp social infrastructure, including projects to build subways in Manila and improve rivers in Davao City, where Duterte served as mayor for many years.

“The government of Japan will strongly support the sustainable economic development of the Philippines by extending quality infrastructure assistance, using Japan’s funding and technology,” a joint statement issued by the two leaders said.

Japan’s assistance will include programs to ease “serious traffic congestion” in Manila and to “vitalize other areas” as well, it read.

For his part, Duterte has been trying to “maximize” economic assistance both from Japan and China, said Wataru Kusaka, associate professor of political science at the Graduate School of International Development at Nagoya University.

“Duterte’s intention looks very clear. He is trying to maximize what he can win from Japan and China,” Kusaka said.

“So, it’s important for Tokyo to have Philippine people feel that Japan is moving fast, in particular in assisting social infrastructure projects. That’s why infrastructure projects come at the top of the list” of economic cooperation items in a summary of a joint statement released by the Japanese government the same day, Kusaka said.

According to the gist, Japan also pledged to help the Philippines introduce better electric and liquefied natural gas facilities to improve the country’s power supply systems.

Tokyo will also help the Philippines crack down on the use of illegal drugs and aid the country in strengthening its maritime safety organization to monitor coastal areas, the statement read.

“He is trying to tread a fine line of balanced diplomacy with China, the US and Japan,” Kusaka said.

Since taking office last year, Duterte has put a fresh emphasis on Japan and China, thereby creating a situation where the two economic powers are “competing” to impress Manila with promises of generous fund infusions.

But at the same time, Duterte, despite his crude rhetoric against Washington, may be viewing the US in a different light after US-led troops intervened to help Manila fight Islamic State-linked militants in what became a five-month-long conflict in Marawi, the associate professor said.

Filed under: Manila Times Columns

‘New opposition coalition’ of political has-beens

I nearly choked on my breakfast toast the other day when I read this paper’s banner headline: “New group vows fight vs fascism.” The editors of all the other papers threw to the waste bin their reporters’ filings on this non-event, and didn’t even put it in their inside pages.

Fascism? What fascism? While the term has been debased by the Left since the Marcos era, it is a specific term for authoritarianism based on race-based nationalism, as Mussolini’s Partito Nazionale Fascista and Hitler’s Nationalsozialistische Deutsche Arbeiterpartei. Does Duterte’s administration even have a whiff of Filipino racism?

But never mind this ignorant use of a term in the banner headline.

What really got my goat is why they devoted a banner story to this non-event that was the “launching” of this tiny coterie so pretentiously called Laban ng Masa (Fight of the Masses). Its purported head (or spokesman) is the political has-been Walden Bello; its members are from a political has-been group. Didn’t any editor wonder why for a “new opposition coalition” nobody else could be quoted but Bello?

Bello has been a legend in his own mind. Reporting “writer” as his profession in his statement of assets and liabilities, Bello thought he had become a political leader with a following as he was the representative designated to Congress for nine years by the party-list Akbayan Party. Set up in the 1980s by mostly UP academics, the party had become the brown-shirts of sorts of President Aquino.

Akbayan thought that having an articulate, Arrneow-accented representative would boost its profile. It didn’t, as Bello apparently thought Akbayan needed him more than he needed it.

Preferring hobnobbing with international socialist groups and NGOs abroad rather than spending time with his colleagues and mass organizations, Bello never built up any political clout for himself nor for Akbayan.

RESURRECTION? Partido Lakas ng Masa founder, the late Popoy Lagman, the present chairman Melencio, and the spokesman of their new front.

Without consulting Akbayan, he resigned his post in Congress in March 2015 to protest, he claimed, Aquino’s washing-of-hands over the Mamasapano massacre of police Special Forces. The reality, I’m told, is that he was being opportunistic. He saw that the Yellow cult’s candidate Mar Roxas would lose, and sent word both to Duterte’s and Jojo Binay’s camps that he would support them. He was ignored.

Akbayan’s leaders in effect banished him, and Bello vanished into the political wilderness. Akbayan after all had its sights set on getting one of its members Risa Hontiveros to the Senate, and they needed Aquino for this.

Bello has never organized any mass organization in his entire life, except for a tiny group of anti-Marcos students in the US in the years just before the dictator fell. His work, if you may call it that, other than being a sociologist with no known accomplishment in that field, has been joining international anti-globalization events abroad and writing books on US anti-imperialism which, however, are merely filled with generalizations with little empirical work.

So, from where did the warm bodies that claimed to be members of “Lakas ng Masa” come from? From a has-been political organization.

Remember Filemon “Popoy” Lagman, the charismatic head of the Communist Party organization in Metro Manila, who directed the deadly, and feared assassination team Alex Boncayao Brigade?

Lagman had built up a big enough force loyal to him to challenge in the 1990s the leadership of Jose Ma. Sison. He was assassinated in 2001, allegedly because he had threatened to expose details regarding Sison’s planning and execution of the 1971 Plaza Miranda bombing of the Liberal Party ‘miting de avance.”

After Lagman was killed, not a few of his cadres rejoined the mainstream Communist Party of the Philippines. However, many continued the mass organizations that Lagman had built up.

These consist almost entirely of the Partido Lakas ng Masa, the party Lagman wanted to replace the Communist Party as the revolution’s “vanguard”; the Bukluran ng Manggagawang Pilipino, the labor federation he planned to rival the Communist Party’s Kilusang Mayo Uno (KMU); and the National Federation of Labor, whose leadership Lagman with Edgar Jopson had captured in the 1980s.

Lakas ng Masa claims to be a socialist party. This is because the thrust of Lagman’s harangues against Sison and the Communist Party was that they weren’t espousing socialism, but a better kind of capitalism called “national democracy”. He ordered his followers to read Lenin more than Mao.

The “Lakas ng Masa” coalition is a pathetic attempt of the Partido Lakas ng Masa to create their own version of the Communist Party’s Bayan Muna, or its National Democratic Front.

What I suspect is that its real goal is to win party-list posts in Congress in the coming 2019 elections.

Partido Lakas ng Masa’s present chairman was identified in an international socialist magazine and in the party’s youtube video as Sonny Melencio, Lagman’s right-hand man from way back, during their period of youth activism in Caloocan City. Melencio is the real leader of this “new opposition coalition.”

Trapped as if in a time warp in the martial law period, this socialist group’s leaders have been so “underground” for four decades that they can’t or are unable to be in the limelight of legal political struggle, even if none of them are being hunted by authorities, who really don’t care about them. I doubt if they can even converse in the normal way we talk now.

With Akbayan having banished him, Bello was looking for an organization to shelter in, and to be a somebody again in the political landscape. Lakas ng Masa on the other hand had been looking for an articulate mouthpiece, a front man. The only new coalition that emerged is between Bello and the tiny Partido Lakas ng Masa.

However, without a fiery leader out in the open with a charisma like Lagman, the Lakas ng Masa party more and more has become a spent political force.

Only this newspaper chose to give it a bit of life. I don’t think Party chairman Melencio though will be able to stand Bello’s ego for long.

Filed under: Manila Times Columns

Why our telecoms will never be world-class with this kind of telco owners

Reason 1: Their uncontrolled avarice
THE two companies monopolizing our telecommunications industry were taking us for fools when they recently claimed, trying desperately to counter Chinese billionaire Jack Ma’s pointed criticism that their internet service was lousy, that it is government regulations and red-tape that have hindered their efforts to improve their services.

The truth is that it is their owners’ avarice that explains why our telecoms industry hasn’t been on a par with the world, demonstrated by the fact that we have the slowest internet speeds—even slower than such countries as Kazakhstan, Kenya and Cambodia—and among the most expensive telecom services.

My accusation isn’t a moralistic nor subjective one. Data that I’ve compiled quantify and prove this obsession for earnings of the controlling owners of the two telcos, Philippine Long Distance Telephone Co. and Globe Telecoms, at the expense of improving their services at the least cost.

PLDT and Globe have been giving out the bulk of their profits to their shareholders, leaving little to be used for infrastructure to improve their services. This is in stark contrast to what other Philippine conglomerates do, such as Henry Sy’s SM, San Miguel, JohnGokongwei’s JG Summit, property and alcoholic-drinks tycoon Andrew Tan’s Megaworld, and even Ayala Land.

The accompanying table shows two types of data for the two telcos and for a sample of the country’s conglomerates.

Dividends and payout ratios
One set shows how much each of the companies declared for the 12 years from 2005 to 2006 as dividends – corporate lingo for the part of the company’s earnings given to its shareholders.

The second set show for the same period each company’s average dividend-payout ratio. This is how much, expressed in percentages, of a company’s income was distributed as dividends to its shareholders. If a company earned $100 million for 2016, and $60 million was distributed to its shareholders, its dividend payout-ratio is 60 percent.

While stock market players (since stock prices are mainly determined by how much a company distributes to its shareholders) are happier the higher the dividend-payout ratio is for a company, it also measures the greed of its shareholders. That is, they get the bulk of the company’s profits, rather than leaving more to be reinvested into the company – in the case of telecommunication companies, in order to improve their services at the least cost to consumers.

The company of course could, as PLDT and Globe massively do, get loans from the financial markets to fund its operations and capital expansion. But these aren’t free, obviously: the interest cost is ultimately borne by the consumer, which partly explains why we have among the most expensive telecoms and especially internet costs in the world.

Relying more and more on borrowings, PLDT’s debt-to-equity ratio has risen from a low of 0.7 in 2007 to 1.4 as of June 2017. That of Globe has gone up from 1 in 2009 to 1.9 last June. Because of its need to finance its operations while it gives out as much dividends to its owners, PLDT for instance borrowed P15 billion to be paid in seven years from the retail market in 2014, at an interest rate of 5 percent, the cost of which is tacked on to the cost of mobile-phone and internet service.

The data shown in the table is astonishing—and depressing for us consumers. While we have a telecoms industry that is below par with the world average, PLDT and Globe are the most profitable companies in the country, both in terms of the amount of money given to their shareholders and how big a part of the companies’ earnings these are.

Can you believe that PLDT’s dividends from 2005 to 2016 totaled a colossal $6.4 billion—P294 billion at the peso’s average international value for those years—more than four times bigger than the $1.5 billion and $1.2 billion given to shareholders, respectively, by Sy’s SM empire and San Miguel Corp., the country’s biggest industrial enterprise?

In fact, in my sample of 30 of the country’s largest firms, only PLDT and Globe—and another public utility, Meralco—have average dividend-payout ratios of over 50 percent, with all of the other firms’ ratios at 37 percent and below. That means unlike the dominantly foreign-owned PLDT and Globe, these Filipino firms reinvest 60 percent of their profits back to their firms. It is really quite amazing:

Source: Company reports

How can PLDT and Globe make so much money? First, the two make up a monopoly, with their prices basically the same, and with a market that is captive. Their competition has not involved prices which would have benefited consumers, but only marketing —how many stores they have, their various (confusing) promos, and advertising.

Second, they exploit a natural resource without the fees that is required in all countries for such exploitation of a limited, natural resource.

What limited, natural resource? The radio spectrum, which is the exclusive property of a sovereign country. Australia as an example last year auctioned for $400 million its 1800MHz spectrum to three telcos. Here, our valuable cellphone and internet spectra have been given out to dominantly foreign-owned PLDT and Globe.

Indonesian tycoon Salim
PLDT has been such a big money-maker for its biggest stockholder, the Hong Kong-based First Pacific Co. Ltd. of Indonesian tycoon Anthoni Salim, the heir of strongman Suharto’s biggest crony. Profits from PLDT from 2000 to 2016 totaling $2.4 billion, according to First Pacific’s reports, have eclipsed those from Indofood, the world’s biggest noodle maker that used to be the jewel in Salim’s collection of firms.

The Spanish-American Ayala elite is usually described as “property-based,” with its collection of malls and posh residential villages. Yet Globe Telecom, in which the Ayalas are the second biggest stockholder, had dividends from 2005 to 2016 of $2.4 billion, more than three times bigger than Ayala Land’s $705 million.

What a telecoms industry the past three administrations have created. We suffer from lousy and expensive mobile-phone and internet service, while the owners of the PLDT and Globe monopoly are raking in money by the tons. Our telecoms industry won’t ever be world-class if the owners of our telcos are such greedy capitalists.

Something is terribly, terribly wrong. Even the poor now are using cellphones so much it is eating up a big part of their very meager earnings. And they are paying at rates that are among the most expensive in the world.

There is worse news: the biggest owners of PLDT and Globe, profiting so much from our suffering, aren’t even Filipino. Maybe that explains why they’ve been milking the two companies as fast and on the biggest scale that they can. That—reason two—for next week.

Filed under: Manila Times Columns

Jack Ma would have been shocked at our telecoms industry

Kazakhstan, Kenya and Cambodia have better telecoms

CHINESE mega-billionaire Jack Ma the other day told an audience that included executives of PLDT and Globe Telecoms, the two firms that make up the telecom monopoly in our country: “Your internet service is not good here.”

Ma, whose wealth—mainly from his e-commerce behemoth—wouldn’t have been possible if not for his country’s developed telecoms sector, would have fallen off his seat in shock if he had been told: “The two firms that control our telecoms sector are majority-owned and -controlled by private companies from Indonesia, Japan, and Singapore.”

After the shock wore off, Ma would have told his companions—of course, beyond hearing distance of his hosts:
“These Filipinos must be crazy or stupid for allowing foreigners to own public utility companies that are natural monopolies.”

DUTERTE’S NEW FAN? The billionaire at the Palace the other day.

Ma’s Alibaba has become the world’s largest retailing company, surpassing even the American Walmart. It is the planet’s biggest internet company, bigger than and Alibaba would not have grown to a global company if not for the phenomenal growth of China’s telecoms industry, particularly its worldwide web infrastructure.

In 2001, only 3 million Chinese had internet service (or 0.3 per 100 people); by 2016, 323 million Chinese were being served, or 23 per 100 people. By comparison, only 5.5 per 100 Filipinos have internet service.

Among other things, the biggest and most stark difference between the structures of the Chinese and Philippine telecoms industry is the following.

All state-owned

The three Chinese firms that developed and run the country’s huge telecoms industry—China Telecom, China Unicom and China Mobile— are all state-owned. There is competition as different state enterprises own each of these firms.

The firms’ priorities have not been profits but the expansion and improvement of their services. Profits either go the state (which increases its money to better serve the nation) or are used for the development of their infrastructure.

Ma would be shocked as it is so clear, if not for the neoliberal brainwashing of Filipinos (especially of our economists), that nationals — the state or its citizens — must own and control public utilities, not foreigners.

Yes, capital from abroad is good, but public utilities like telecoms that exploit the industry’s monopoly features (these have captive markets) as well as natural resources (like the radio spectrum) should be reserved for nationals.

The neoliberal champion in the country, economist Bernardo Villegas, keeps harping that China and Vietnam have opened up to foreign investments. What he doesn’t say is that they have not done so for public utilities, especially the telecom sector.

State ownership of public utilities in fact has been the policy and the practice of all Asian nations.

NTT, SK and Singtel

Nippon Telegraph and Telecommunications (NTT) of Japan, SK Telecom in Korea, Singapore Telecoms (Singtel) in Singapore were all state firms monopolizing their telecoms sectors. Only when they had grown to be global conglomerates—after they had taken advantage of their captive market in their countries and the limited natural resource that is the radio spectrum—did their governments allow foreign companies to come in, which to this day have only very small shares in their markets.

Compare that to the situation in our country, really the exception in the region.

The biggest owners of Philippine Long Distance Telephone Co., according to its 2016 report to the US Securities and Exchange Commission, are the Hong Kong-based First Pacific Co. Ltd., controlled by the son of strongman Suharto’s biggest crony, Sudono Salim, and Japan’s state-controlled behemoth, the NTT conglomerate.

Salim’s First Pacific and NTT together own 47.6 percent of PLDT, way past the 40 percent constitutional limit.
Add the 9.6 percent in American Depository Receipts held by US investors through J.P. Morgan Hong Kong Nominees Ltd. and the 19 percent held by foreigners in the Philippine stock market. and total foreign ownership of the country’s biggest telco is 76 percent.

It is astonishing—or maybe not, given their owners’ 100 percent Spanish-American blood—that Ayala Corp. has acquiesced to become just the second biggest investor (with 30 percent shares) in Globe Telecoms. Singtel, owned by a firm of the Government of Singapore, is Globe’s biggest stockholder (and allegedly in total control of the firm) with 47 percent. Together with 17.4 percent held by foreigners through the stock market, Globe Telecom – the second member of the duopoly in our telecom sector – is 64 percent held by foreigners.

It’s a long story how we have come to such a sad situation, which I detailed in my book, Colossal Deception: How Foreigners Control our Telecom. The book’s subtitle points to how these happened: “A Case Study of Corruption, Cronyism and Regulatory Capture in the Philippines.”

“I don’t care who owns our telcos as long as I get good service.” That’s a response I have not rarely received.

But the logic there is a bit like not caring what kind of animal guards your henhouse, even if it is a fox just waiting for his leash to arrive.

However, the proof of the pudding indeed is in the eating.

Our foreign-dominated telecoms sector has become the laggard in the region. According to statistics of the International Telecommunications Union, we have fallen from being ranked 95th in 2008 in the body’s information and communications technology index to 107th in 2016. We have even been overtaken by war-ravaged Vietnam. Malaysia and Thailand are now way ahead of us.

As the accompanying table shows, Akamai’s State of the Internet report for the first quarter of this year shows we are ranked 100th (in a list of 140), with our average 5.5 mbps internet speed, slower even than Vietnam and Indonesia. Note in the table that countries whose telecom sectors are controlled by state firms are those with the fastest Internet speeds.

The situation depicted in the second table, from data of another internet firm Ookla (which runs the very popular is even darker. Countries poorer than us or which have been severely damaged by war have faster mobile or fixed broadband speeds than what PLDT and Globe give us, among them, Vietnam, Kazakhstan, Kenya, Mongolia, Nicaragua, Honduras, Cambodia, Sri Lanka, Bangladesh and Bosnia.

I’ll bet that many readers of this column will even deny that they ever get the average Internet speed here reported in these figures, 12 Mbps for mobile and 13 for fixed broadband.

What’s shameful is that both PLDT and Globe take Filipinos for fools, telling outright lies. Globe in the materials it distributed for its recent stockholders’ meeting made the preposterous claim that the Philippines is ranked 1st in Asia and Pacific for mobile internet connection speed with its 14 Mbps speed, based on Akamai’s 4th Quarter Report.

But that Akamai report noted that that figure referred to less than 24,000 mobile internet users, a fraction of the over 1 million mobile-internet users. My guess is that perhaps Smart and Globe officials are given super-fast speeds.

PLDT spokesman Ramon Isberto, on the other hand, claimed that his firm is improving its services so that it can now provide 4G LTE speeds of 11 Mbps. The guy’s an ignoramus: the poor countries I just mentioned have speeds of at least 14 Mbps.

Next week, I will explain the mechanisms why the present structure of the telecom industry, as dominated by private foreign monopolists, can never develop it to world standards.

Telecoms in the 21st century is the major economic base for economic growth. We have to take back our public utilities, which the past three administrations gave to foreign monopolists.

Filed under: Manila Times Columns

Only a revolutionary government can overthrow the Philippine oligarchy

TO be frank, I’m still not quite sure whether a revolutionary government will solve our deep problems as a nation. The big risk is whether or not the oligarchy, uniting with anti-Duterte forces and the stragglers of the Yellow Cult, will be able to resist and fight such a revolutionary government, and consequently plunge the country into prolonged strife.

The crucial question is whether President Duterte, with his enormous political support and determination will be able to even just weaken the oligarchy, or the most reactionary section of it, with only the authority he has under the 1987 Constitution and his moral suasion. If he can, there is no need for taking time off from the Constitution.

Sadly, Malacañang after a year in office, does not appear to be the kind of a tightly organized army, using all the overt and covert tools available to it, that is required to fight an entrenched oligarchy. It is almost solely through Duterte’s charisma and political will that reforms are being undertaken.

Our system is so broken. The executive branch in 2006 moved to create a National Competition Council to prevent monopolies. The legislative branch refused to give it the necessary powers. The judicial branch recently, in a case involving the duopoly, PLDT and Globe Telecoms, together with San Miguel Corp., declared that it was not the NCC’s business to meddle in a private transaction. Such is our quagmire.

But that is just one recent illustration of the big hole we are in.

I am yielding the rest of this column’s space to a paper (which I have edited for brevity) by economist Romulo Neri on the urgent need for a revolutionary government. Neri had spent a good part of his life in Congress (as chief of the once-powerful Congressional Planning and Budget Office) and in Malacañang (as socio-economic planning secretary). studying and trying to pursue economic reforms. Neri says he wrote the paper a year ago for a Duterte Cabinet official who requested it.

I hope it sparks discussions on why a revolutionary government is urgently needed and what it can do – or not do – and to debunk the inane claim of a Yellow columnist that the notion of such a revolution is mere romanticism.

The Neri paper follows:

An oligarchic state
President Duterte has come to power on the surge of high popular expectations. Unfortunately, formidable and systemic obstacles stand in the way of achieving these great expectations.

The Philippines is an oligarchic state dominated by powerful business interests who finance elections. These business oligarchs make and break politicians, and overawe a weak, politicized bureaucracy. They dictate and distort public policies to enrich themselves at the expense of the public good through legislative and regulatory capture.

This has resulted in what is described by political economists as a booty capitalistic state, where the political winners and their financial backers help themselves to political rewards and economic rents, which in turn allow them to perpetuate their stranglehold on the State and the economy.

Political economists, both local and international, have blamed our lack of economic and social progress on the economic elite that fostered economic policies that have enriched those in power while impoverishing the rest of the country.

Policy distortions and weak institutions in an oligarchic state discourage job-creating local and foreign investments by making rules unpredictable and unfair since these rules were created to conform to oligarchic interests. They also raise the costs of doing business, such as the costs of power, telecommunications, transport and cargo handling. They have also limited foreign investments and stifled competition, which would have lowered the costs of products and services for both local consumers and enterprises.

Investments can only thrive where rules are fair and predictable and costs of doing business are not prohibitive.

This condition of an oligarchic state is worsened with the tradition of political dynasties and the recent entry of narco-politics. The choice of political leaders is no longer determined by the Filipino people. This undermines the very democracy the Philippine Constitution stands for.

The whole economic structure is also inequitable and needs drastic transformation. Our economic system now has a surplus of funds with the banking system, highly liquid with international reserves greatly exceeding recommended levels, thanks to the remittances of OFWs and the revenues of BPOs and call centers.

However, our international reserves are mostly invested in US Treasury bills, making a poor country like the Philippines lend to a rich country like the US. At the same time, badly needed infrastructure is sorely lacking and the physical environment is severely degraded. The portfolio of national assets clearly needs rebalancing by transforming the excess financial liquidity into more badly needed assets like infrastructure and a safer, more wholesome physical environment.

Only the very rich have benefited from this financial liquidity through low interest rates to large corporate entities which borrow by the hundreds of billions, which further allow them to multiply their accumulated wealth.

On the ownership and entitlements side of the national balance sheet, the very rich dominate the national claims on resources, while the vast majority own little with the poor having minimal assets. The general public has little access to common entitlements, such as good education, health services, safe streets, clean air and public parks, and are highly vulnerable to environmental disasters.

The President has little time to deliver on his promises. The challenges are formidable, and constitutional, legal and institutional obstacles stand in the way. Extraordinary measures are clearly needed.

Infrastructure projects need to be implemented fast. The economic costs of Metro Manila traffic alone is P2.6 billion a day, to increase to P6 billion by 2030. A year’s delay in infrastructure to relieve Metro Manila traffic means economic costs exceeding P1 trillion.

However, following standard procurement regulations and bureaucratic risk aversion– particularly the fear of being charged by the Ombudsman, and expenditures that will only be disallowed by Commission on Audit–discourage swift and decisive implementation of badly needed projects by well-meaning bureaucrats. In the meantime we have overly relied on foreign and donor funds for vital projects when local funds and contractors are readily available.

To enhance our ability to finance infrastructure and other development projects, we can transfer a substantial portion of our excess international reserves into a sovereign wealth fund to be invested in sound Philippine development projects with high economic and preferably high financial returns. We will need to overcome Bangko Sentral ng Pilipinas regulations for this to happen.

Building new urban centers
We will need to build new city centers and urban corridors to decongest our overcrowded urban areas, especially Metro Manila. This may entail developing the less flood-prone upland areas into environmentally sound human settlements areas and for ecotourism, while building urban and industrial corridors in Luzon towards the Pacific coast.

It will require extraordinary presidential powers to proclaim upland areas as alienable and disposable for habitation purposes, but within strict environmental guidelines, with at least 5 percent of the uplands reserved for forests and nature reserves.

Healing our people
Extraordinary social mobilization is also needed to resolve the problem of drug addiction running to millions of Filipino victims. The problem cannot be addressed through standard rehabilitation measures alone. Mobilizing drug addicts into rehabilitation camps to replant forests and regenerate severely damaged coastal environments will address the problem at the scale needed to make any significant impact. The military will have to be mobilized for this rehabilitation program.

The drug rehabilitation program will dovetail and synergize into the reforestation and environmental regeneration program since both require mobilization of human resources, and in the case of drug addicts, for their betterment while they work on improving the natural environment.

This could be patterned after President Franklin Roosevelt’s highly successful (and highly popular) Citizens Conservation Corps where 6 million poor young Americans were mobilized to plant 3 billion trees all over the United States during the Great Depression era.

The key to removing the oligarchic capture of our political system is public financing for electoral exercise to remove the dependence of national candidates on big business contributors.

Ordinary taxpayers should be allowed to contribute a small portion, say 2 percent of their tax payments to a political party of their choice. This can also be matched by State funds to wean away political parties from big election contributors while allowing political parties to choose candidates on the basis of merit. This will also strengthen the Philippine middle class which religiously pay their taxes as employees or small entrepreneurs and professionals.

The middle class is a base support for any functioning democracy and good governance based on sound institutions. While the poor will seek favor and protection through dole-outs and patronage and the oligarchs through their control and distortion of rules, the middle class can only seek refuge in the uniform application of rules by sound institutions. Strengthening the middle class will set the foundation for our sound democracy with properly functioning institutions.

Constitutional reforms
The constitutional reform process should be started and directed towards a unicameral parliamentary and federal system of government. Parliamentary government systems are more supportive of a strong and professional bureaucracy and more responsive to public sentiment.

A revolutionary government will be declared to overcome the constitutional, legal and institutional obstacles to the President’s ability to deliver on his election promises and the high public expectations within his term of office.

The main rationale for these measures is to minimize implementation delays which are severely costly. An advisory and consultative council with representatives from each province will be convened to replace the existing legislative bodies as a transition measure.

A grassroots-based political party system with clear development agenda will have to be formed. Political parties will be united by common development goals and projects, both local and national, that will develop local communities and support poverty alleviation and job creation while improving the business and investment environment at the national level.

Certain regulatory agencies such as the Commission on Elections, the Ombudsman, Commission on Audit, Energy Regulatory Commission, and the National Telecommunications Commission either have stood in the way of effective and timely project implementation, or have been captured by oligarchic interests. Their interventions and decisions therefore tend to be contrary to the best interest of our country and people.

Filed under: Manila Times Columns