YOU can’t blame President Duterte for blowing his top when he was told that the Ayala-owned Manila Water Co. Inc. had asked Finance Secretary Carlos Dominguez 3rd to pay ASAP the P7.4 billion that an arbitration panel in Singapore had awarded the firm just two weeks ago.
The panel ordered the Philippine government to compensate the firm for the alleged losses it incurred from 2015 to 2018 from slashing the tariffs it charges its customers.
How the hell could that arbitration panel have ruled that way? How the hell could Manila Water allege that, when its own financial reports show that its net income from 2015 to 2018 totaled P25 billion. In fact, its average annual earnings in that period was P6.2 billion, increasing from the previous four years’ (2011 to 2014) P5.6 billion (See table).
In fact, Manila Water was so profitable that during those years that it claimed the government had been making it lose a lot of money, it paid out to its shareholders dividends of P7 billion. From 2006 to 2018, profits from the monopoly that was put in its owners’ banks totaled P16 billion. Manila Water has indeed been so profitable that its share prices have increased five times, from P6.2 in 2006 to P28 in 2018.
The two water concessionaires — Manila Water and Maynilad Water Services Inc. — have in fact been so profitable, or have been engaging in so much profit-seeking, that they have set up water distribution companies — which however are not monopolies — in other countries. Manila Water has operations in Vietnam, Indonesia and Thailand, and Maynilad in two Vietnam provinces.
And Manila Water still wants to wrench another P7.4 billion in taxpayers’ money, ordered by a three-man panel of foreigners in Singapore, the country of the Ayalas’ biggest partner in Globe Telecom Inc., the Singapore Telecommunications Ltd. or Singtel?
If that’s not overflowing greed, I don’t know what is.
Maynilad, on the other hand, mainly owned by the Indonesian oligarch Anthoni Salim, could even be greedier. How could Maynilad claim to the arbitration panel, and then to the Singapore Supreme Court, that it lost P3.43 billion from 2013 to 2017, when during that period it made P37 billion in profits? From 2009 to 2018 in fact, it reported total profits of P64.6 billion — bigger than the other monopoly’s P55 billion.
Yet, Maynilad had the gall to petition another three-man panel in Singapore to order the Philippine government to pay an additional P3.4 billion for losses it incurred because the Metropolitan Waterworks and Sewerage System regulatory office refused to bow down to its demand to raise its tariffs?
The monopoly profits of the two companies that supply one of the most basic needs of humans, water, which a state is mandated to provide, in the past 10 years to 2018 (for which I was able to get data) amounted to P120 billion, according to their annual reports.
At an annual rate of P12 billion in profits, this monopoly supplying water is one of the most profitable businesses in the country. Some would call that insane.
And here’s what would further make Duterte blow his top: Half of Manila Water and Maynilad’s profits are pocketed by the globe’s richest foreign capitalists.
Given metropolitan Manila’s income distribution, 80 percent of its customers are from the lower classes and the poor who, because Manila Water and Maynilad are monopolies in their sector, are powerless to demand reasonable prices for that essential commodity called water.
Who pockets the billions of pesos in profits of the two firms, made possible because these are monopolies distributing water to the lower classes?
In the case of Manila Water, one of the richest companies in the country, Ayala Corp., gets 43 percent of its profits. Nearly that much, 38 percent, goes directly to foreigners through their holdings of Manila Water shares in the stock market.
But foreigners actually get 53 percent of Manila Waters’ profits, as foreign entities (the biggest of which is the Japanese Marubeni Corp.) own 36 percent of Ayala Corp., so that they get this much from Ayala Corp.’s 43 percent income share.
In the case of Maynilad, 53 percent goes to the Hong Kong-based First Pacific Co., Inc., half of which is owned by the Indonesian tycoon Anthoni Salim, with 27 percent going to DMCI Holdings Inc., mainly owned by the construction-based Consunji clan. Foreign ownership of Maynilad could even be as high as 60 percent because a subsidiary of Marubeni Corp. of Japan has a 4 percent share, while DMCI Holdings has 15 percent foreign ownership.
Manila Water and Maynilad are owned mainly by foreigners, with the richest Filipinos as their partners, milking the 20 million residents of metropolitan Manila and several adjacent provinces about P12 billion yearly.
Now you understand why Duterte is so angry with these water firms, and the oligarchs profiting from them, so much so that he said he’s willing to die fighting these exploiters, even if this only sets a precedent that a president can fight them.
In nearly all countries in Asia (except tiny Singapore), public utility firms, because these provide crucial basic services to their citizens are owned by the state. Many of the world’s biggest companies became big — such as the State Grid Corp. of China, Nippon Telegraph and Telephone Corp., Singtel — because they were monopolies, and therefore had captive markets.
Privatization has been the curse of the two Yellow regimes of Cory and Ramos, which were brainwashed by Americans with their neoliberal ideology, and in turn brainwashed the country that government is forever inefficient and corrupt and that it is better for the private sector — the oligarchs really — to run utility monopolies.
Instead, as in water and electric power industries, privatization has led to foreign control of strategic public utilities and with their oligarch-partners have only demonstrated their overflowing greed.