The big lie: ‘Charter’s restrictions have limited foreign capital inflow’

The move to lift the Constitutional restrictions on foreign investment in public utilities and media is based on false arguments repeated over and over again in the Hitlerian fashion of the “Big Lie.”

These lies have persisted because the powerful foreign firms that control our telecom industry and public utilities have been lobbying for the removal of those restrictions.

Lifting the restrictions would only legitimize their violation of our Constitution for the past two decades through corruption, and entrench themselves in a position of control over our public utilities, forever, so to speak.

Sadly, Finance Secretary Carlos Dominguez seemed to have believed this Big Lie, based on his statements in a forum with Japan’s big businessmen in Tokyo recently. I don’t think President Duterte, with his strong sense of nationalism, would follow the cue of Dominguez, who is after all, the sole big capitalist in his Cabinet.

Duterte so far has only said that the Charter should be amended to change our political system to a federal one. Dominguez is trying to piggyback his pro-foreign capitalist agenda on Duterte’s plan.

Dominguez’s uncritical faith in foreign investment, so typical among our ruling elite, is based on ignorance, or feigned ignorance of the indisputable fact that it was economic nationalism, not globalization nor foreign capital, that helped bring most developed countries, including those in Asia, to their prosperous state today.

One very false argument is that the constitutional restriction on foreign capital in public utilities is one of the main reasons why foreign direct investment (FDI) in the country is low. The second is that a major reason for our economic quagmire is insufficient FDI, a topic I will discuss in the second part of this series.

These claims are utter nonsense and are easily disproven by facts. It is absurd, and downright stupid really, to claim that the constitutional restrictions explain why foreign capital inflow has been low.

As I have argued and presented data in my previous columns, and in my book Colossal Deception: How Foreigners Control Our Telecom Sector*, there has been in practice no restrictions on foreign investment in public utilities. Indonesian and Singaporean capital, in collaboration with the corrupt local elite and government agencies, have de facto removed the constitutional restrictions. Telecom and other public utility firms, in which foreign capital is limited to 40 percent, are in fact, where foreign capital is dominant, not in industries such as manufacturing, in which 100 percent FDI is permitted.

Foreigners are now the biggest owners of our telecom and power industries. The planned entry of the Australian telecom giant Telstra was not blocked by any legal or constitutional restriction; The telcos, very reliable sources disclosed to me, threatened to file suits against the joint venture, which would have locked up its investments in the country for years. Telstra, of course, shirked from such messy legal tangle, and left.

The Indonesian magnate Anthoni Salim controls PLDT (and its mobile-phone subsidiary, Smart), with a total 76 percent of the telco’s capital owned by foreigners.

Singaporean state firm Singtel is the biggest shareholder of Globe Telecom, its 47 percent stake even bigger than the 40 percent held by the country’s oldest oligarchic clan. In total, 73 percent of Globe’s capital is owned by foreigners

It was ignorant or hypocritical of Teruo Asada, co-chair of the Japan-Philippines Economic Cooperation Committee, to claim at the Philippine Forum in Tokyo last week that the Philippines must lift its Constitutional restrictions on foreign capital. In practice, there are really no restrictions to lift.

Next to the Indonesian Salim, who holds 26 percent of PLDT, two firms – the Japanese state-owned telcos, NTT Communications and NTT DoCoMo – comprise the biggest shareholder of PLDT, with 20 percent.

The Indonesian Salim’s empire of public utility firms in the Philippines. Yet, Dominguez still claims there are restrictions in public utilities that need to be opened up? (Chart from the book Colossal Deception: How Foreigners Control our Telecom Sector*)

Japan, in fact, had adopted a nationalist policy before World War II and in the decades thereafter, which gave its state firm, NTT, a monopoly in the telecom industry. Only in the late 1970s, when NTT had become a mammoth telco, even competing globally, that it allowed foreign companies to come in. Even with such liberalization, however, NTT’s firms have total control of Japan’s telecom industry.

It is the same structure of state firms, or those held by their nationals dominating the strategic telecommunications sector, with very little, if any, foreign capital operating in nearly all Asian countries, among them: government companies China Mobile, China Unicom, and China Telecom in the People’s Republic of China; Singtel in Singapore; SK Telcom and KT Corp.; Viettel, MobiFone and Vinaphone in Vietnam.

Only in the Philippines has the ruling class been so lacking in nationalism that it has allowed foreigners to dominate this strategic industry that exploits our natural resources (the radio spectrum) and profits from our huge market. I cannot fathom, for instance, why the Ayalas, one of the richest magnates in the country, would allow Singtel to hold the biggest 47 percent controlling shares of Globe Telecom.

The biggest conglomerate in the country now, one that is public utilities-based, is owned by First Pacific, the Hong Kong-based firm in which Salim is the biggest stockholder, with 45 percent, with the rest of the conglomerate’s shares held by a thousand US and other foreign shareholders. Electricity distribution, water services, management of toll roads, light-railway mass transit system, construction of expressways – it is such public utility firms that First Pacific has been making money from, which, together with its income from PLDT, have generated for its foreigners at least $5 billion from 2000 to 2015.

The problem is not that we have restrictions on foreign capital set by the Constitution. The shameful truth is that, because of corruption and the ease by which foreign and local capitalists control our regulatory bodies, the nation has failed to implement the directives of the Constitution. I have detailed how this has been done in my book Colossal Deception.

Our telecommunications sector is fully controlled by foreigners. But is it efficient? You, dear reader, can answer that question yourself from your experience. I can, however, provide you with data:

We have the second lowest average internet speed in Asia-Pacific, according to the latest first-quarter 2016 report of the Massachusetts-based Akamai Technologies, a leader in the internet industry (see table). Our internet average speed is 3.5 Mbps, below the global average of 5 Mbps. That puts our global rank at 113 among 137 nations. A war-ravaged country like Vietnam and a poor country like Sri Lanka have faster internet speeds, at 5 and 5.4 Mbps, respectively.

Dominguez should first clear such policy announcements with the more nationalistic Duterte. It is he who was elected to office, not Dominguez.

*Colossal Deception book available at most National Book Store branches and at Popular Book Store.
(The last part of my series on Rappler will appear here on Friday.)