“KILL” OLIGARCHY

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By James Veloso

THE BATTLE against illegal drugs is about to be won. But the war against poverty is still to be fought.

President Rodrigo Duterte’s intensified efforts to curb the illegal drugs trade have brought remarkable results.

According to the government tally: 670,000 drug personalities surrendered, 2,000 suspects killed in various operations by the authorities or summarily executed by unknown assailants and P3.85 billion worth of illegal drugs seized as of August 22.

But his most important challenge – the “eradication” (as the President himself called it) of big business oligarchs that have been sucking the country’s economy dry – has yet to be started.

Oligarchy is the biggest “killer” of our economy and people even when media tell us that the biggest threat to our existence is illegal drugs.

Syndicate

This select “syndicate” of big business conglomerates has long lorded over the Philippine economic and political spectrum, causing untold misery to millions of Filipinos who are forced to endure high prices of utilities and shoddy service.

While illegal drugs have victimized over 1.3 million Filipinos (based on statistics from the Dangerous Drugs Board), oligarchs and their predatory pricing of products has drowned about 100 million Filipinos in poverty.

Monsters in Suits

The President himself has declared that he will destroy the big business oligarchs whom he described as “monsters.”

During an environmental summit in Davao City last August 3, Duterte slammed oligarchs who use their money and power to advance their own interests.

“I am fighting a monster. I am just two months old [into the presidency] but believe me, I will destroy their clutches sa ating bayan,” the President said.

Big words but will the President win this war against the oligarchs in the same fashion he has in his war against illegal drugs.

Signals from the justice system and the media front do not inspire hope.

Last week the government antitrust body, the Philippine Competition Commission (PCC), warned that the buyout by telecom giants PLDT-Smart and Globe of San Miguel Corporation’s telecom arm is bad for consumers.

PCC is doing a review of the buyout by PLDT and Globe of San Miguel Corporation’s Vega Telecom but recent media reports indicated that the Court of Appeals has issued a temporary restraining order (TRO) against the move.

These three business giants, MVP (PLDT-Smart), Ayala (Globe) and Cojuangco (SMC), will not shoot back with live bullets like the drug pushers but bags of ___ to make things happen for them.

This might explain why CA ordered the PCC to stop its review, favoring the two petitioners who asked the courts to stop the government from exercising its mandate of protecting consumers.

But a month on after making those tirades against big business abuses, only “small-time” casino operator Roberto Ongpin, whom the President named specifically, has seemed to feel the full-blown effects of Duterte’s tirades.

Forbes List

The fact that big business tycoons and oligarchs continue to lord it over the country is nowhere more evident than in the recently-released list of “Richest Filipinos” by Forbes magazine last month.

Shopping and real estate magnate Henry Sy once again topped the list, with a net worth of US$13.7 billion.

Sy was followed by John Gokongwei of JG Summit, the Aboitiz family, tobacco magnate Lucio Tan, George Ty of GT Capital Holdings, Jolibee’s Tony Tan Caktiong, Jaime Zobel de Ayala, Enrique Razon, and David Consunji.

Lion’s Share

These big business magnates have managed to capture a lion’s share of the Philippines’ economic boom under the Aquino administration, according to critics.

A report from IBON Foundation last July 2016 disclosed that under President Benigno Aquino III, the 40 richest Filipinos grew from 14 percent of the country’s gross domestic product (GDP) in 2010 to 24 percent in 2015.

The gross revenue of the Philippines’ top 100 corporations – most of them under the wings of the Philippines’ richest – also rose from 59 percent of the GDP in 2010 to 69 percent in 2014, according to the think tank.

“That the net income of the 25 richest Filipinos ($44.1 billion) is equivalent to the combined income of the country’s poorest 76 million Filipinos shows the grossly inequitable distribution of wealth,” IBON stressed in its report.

Ruled by Oligarchs

The fact that a select few control nearly half of the Philippines’ economy is enough to deem the country an actual “oligarchy,” according to most economic and political experts.

In fact, while Filipinos have long believed that they are living under a democracy, in practice, they are actually ruled by business oligarchs who had been “victimizing” Filipinos through their profiteering, BizNews Asia’s Nick Legaspi wrote in June 2011.

Oligarchy, as defined by most experts and lexicons, is described as a power structure in which power effectively rests with a small number of people.

Wikipedia notes that these people “could be distinguished by royalty, wealth, family ties, corporate, or military control.”

It’s a situation that fits the Philippines well, Legaspi said in his article entitled “Filipinos to remain at the mercy of oligarchs.”

Legaspi even cited seven companies in particular that effectively dominated the Philippine economy: San Miguel Corp. (SMC), Ayala Corp., First Pacific Company, SM Investments Corp., JG Summit, DM Consunji and Aboitiz Equity Ventures.

These conglomerates, according to Legaspi, have tended to create “little corners of their own” in the Philippines’ business sector and “hardly get out of their own spheres of industries, apparently realizing that if they resort to competition, they will fall.”

“In general, we see no competition among the oligarchs because of the role of the oligarchs is chasing after profits,” Legaspi quoted political science professor Benito Lim. “There is no crossing of swords resulting in big competition except for the PLDT-Globe dispute.”

High electricity rates

No better example could be given of this monopolistic tendency of Philippine oligarchs than in the Philippines’ power sector.

For years, the electricity industry in the Philippines has been dominated by big conglomerates such as the San Miguel Corporation and Aboitiz Power (power generation) and First Pacific’s Meralco (power distribution).

A 2013 report from Rappler cited SMC as the country’s biggest power producer, accounting for 22 percent of the total sold to the grid (2,545 MW sold in 2011). Aboitiz Power comes in second (2,350 MW), and the Lopez group third (2,150 MW).

However, in terms of capacity of all existing power plants, Aboitiz remains the biggest power producer, according to Rappler.

This is based on "installed" capacity of 3,426 MW, accounting for 21% of total power sold to the grid. Aboitiz Power also runs several independent power players (IPP) that sell to state-run National Power Corporation (Napocor).

Meanwhile, in terms of power distribution, Meralco holds nearly half of the Philippines’ power-distribution network, accounting for 55 percent of electricity sales nationwide, 75 percent in the Luzon area alone.

Power Sector Monopoly

Loopholes in Philippine laws have also given way to “cross-ownership” between distribution utilities and generation companies – ergo, the whole process, from generation to distribution, is controlled by a single company.

A 2015 report by economist Bienvenido Oplas pointed out that Meralco, while primarily acting as an electricity distributor, has also entered into the power-generation sector through its subsidiary, Meralco PowerGen Corporation (MGen).

MGen is now in the process of building two power plants in Quezon, targeting a portfolio of 3,000 MW by 2020. Aboitiz, on the other hand, also operates three distribution companies – Visayas Electric Co., Subic Enerzone Lima Enerzone, and the Davao Light and Power Company.

This monopolization of the power sector, among other reasons, has largely resulted in the Philippines’ having the most expensive electricity rates in Asia.

Among 14 cities in Southeast Asia (plus Australia and New Zealand), Manila has the third highest electricity rate, according to a 2013 paper published by Singapore’s Lantau Group.

It is of no surprise that many industries left the country, relocating their business to countries offering much lower cost of power.

And many of them investing in Asia have skipped our country for the same reason.

“We cannot expect manufacturing and industrialization to grow in the Philippines given our cost of power,” experts said.

Political Clout

When you have economic clout, then you can also exert political clout, as most experts have agreed. And in the Philippines, these oligarchs have used their massive resources to resist government legislation aimed at containing corporate greed.

It’s the exact reason why all previous attempts to amend the 1987 Constitution have failed according to former Senator Manny Villar.

“They’re happy with the present setup now and they will not allow the Constitution to be tampered with,” he said in Legaspi’s article.

“We always look at foreign investments but we don't look at the local, the small entrepreneurs, who are unable to borrow, unable to access credit because our banking system is controlled by five or six families and they are happy investing in ROPs [government debt papers] or lending to big industries,” the senator related. “Right now that is our banking system - it's a cartel and it's getting fewer and bigger through consolidation.”

And with these groups also effectively controlling Philippine media (for example, First Pacific, through its Philippine counterpart Metro Pacific Investments Corp., holds full control of TV5, Phil. Star and Business World, as well as sizable shares in various newspapers across the country), they are in a capable position to sway public opinion – and people’s choice of leaders.

“The trouble is that all these are done under the cover of democracy,” Philippine Star columnist Carmen Pedrosa lamented in 2010.

“We delude ourselves that we are democratic and we have elections to prove that. There will be few who will accept that if we were to think it through, elections merely vote in or vote out leaders from the same small pool of oligarchs or would-be oligarchs.”

“Anger Vote”

But as the Filipino saying goes, “napupuno din ang salop.” That’s exactly what catapulted Duterte to an unexpected victory last May.

His election was propelled by an “anger vote” – a vote of people finally fed up by massive corruption in government, resulting in widespread poverty.

This corruption is caused by oligarchs who have their people in sensitive government posts to do their bidding.

The ball is now on the President’s hands to replicate his successful campaign against illegal drugs and use his mandate to free the people from the clutches of “big business.”

If the President wants inclusive growth in the economy, it is imperative he has to “kill” the country’s oligarchs albeit not literally.

By the way, the top Filipino oligarch is said to be an Indonesian. How he conquered that throne is another story.