Monday, April 24, 2006

Cha-cha's hidden agenda

By Tony Lopez/BizNewsAsia.Com

I had a talk with industrialist Raul T. Concepcion last week. He is worried about the so-called charter change or cha cha initiative.

There are at least three reasons why RTC and concerned Filipinos like him should be worried.

One is that surveys indicate the Filipino people are against cha cha. Asked if they are in favor of shifting to the parliamentary system, 54 percent of respondents (or 26 million Filipinos) said No. This is according to the Social Weather Stations survey of February 18 to March 4. Only 33 percent are in favor with 13 percent undecided.

Even if you add the 13 percent undecided to those in favor, the total, 46 percent, would still be the minority. Add the three percent margin of error and you get only 49 percent – still a minority.

The other reason is that most Filipinos (64 percent to 76 percent, depending on the region) have little/almost no or completely no knowledge regarding the 1987 Constitution. They are not informed. Being uninformed or misinformed, it will be easy for Filipinos to be manipulated by cha cha advocates.

The third reason is the way cha cha proponents are ramming down charter change. It is thru the so-called popular initiative. Popular initiative was originally, and legally, designed only for piecemeal or provision-by-provision amendments to the Constitution. Not an overhaul or revision as the cha cha advocates want to happen.

Concepcion of the Consumer and Oil Price Watch says “charter change will dramatically, if not drastically, change our form of government.” “It won’t guarantee a better government,” he cautions. “It doesn’t guarantee national unity. Nor a better life for most Filipinos,” he adds.

Concepcion explains:

“Instead of a President as we have now, we will have a Prime Minister. Instead of the President, our leader, being elected directly by the people, the Prime Minister (PM) will be elected by our congressmen who will now be called Members of Parliament (MPs). The PM himself will be a congressman or MP first before being elected PM.”

“In other words, the people will lose their power to choose their leader directly, in a nationwide popular vote.”

“The present Senate will be abolished. With their consent, the senators are demoted to being congressmen.”

“The Executive and the Legislature will blend.” No one will check the PM.

In this what the people want? RTC wants to know.

Some 8.3 million signatures are being gathered by cha-cha proponents to push cha-cha. The so-called the popular initiative is being misused to amend the Constitution wholesale, instead of piece by piece as popular initiative is commonly and legally intended to be.

With cha cha, this is what will happen:

1. Shift from the presidential to parliamentary form of government. The present Congress, 234 congressmen and those senators who want to join, will be converted into an interim parliament until June 30, 2007. The interim parliament will set the date of the first parliamentary election to choose the regular members of the regular Parliament in 2010.

2. Gloria Macapagal Arroyo and Noli de Castro serve until June 30, 2010. GMA shall exercise the same powers as president, except those she delegates to the interim PM. Noli de Castro shall preside in the Parliament, but only for purposes of electing the interim PM. VP Noli will not even be member of the parliament.

3. After 2010, the President becomes a ceremonial figure. The most powerful person is the Prime Minister. The PM is the commander-in-chief and appoints more than 3,000 senior officials.

4. Within ten years from ratification, a federal system begins. The country shall be divided into 11 independent states, along tribal or ethnic lines.

25 April 2006

Email tonylopez@biznewsasia.com

JAZA's long reign at Ayala

JAZA’s long reign


At Ayala Corp., the Rule of 80 is that an executive’s stay must not exceed the sum of his age and years of years of service. In general, retirement age is 60.

Jaime Augusto Zobel de Ayala is only 47. So he has 13 years more years at Ayala if he retires at 60. He was president from 1994 to 2005. He will be chairman and CEO from 2006 to 2019. JAZA will serve for a quarter of a century.

The idea behind the Rule of 80 is to ensure the flow of new blood, infusion of new ideas, the tapping of opportunities and prevent the kind of long reigns that could eventually hurt the company.
In Ayala, however, the CEO tends to have very long reigns.
The legendary late Col. Joseph McMicking, was CEO for 36 years, from 1931 to 1967. During that time, he designed and built what is now Makati. Alfonso Zobel de Ayala ruled for 36 years from 1929 to 1965, Enrique Zobel de Ayala from 42 years, from 1901 to 1943. Before him were two women, Trinidad de Ayala de Zobel, 27 years, from 1891 to 1918, and Carmen de Ayala de Rojas, 22 years, from 1891 to 1913.
It is the post-War CEOs who have made what Ayala is today.
McMicking was succeeded in 1967 by the irrepressible Enrique Zobel who served as CEO until 1983, a total of 16 years. EZ improved on Makati, brought Ayala into agriculture, and converted Bank of PI into a universal bank.
Don Jaime (JZA) replaced EZ. He was CEO for 10 years before turning over the presidency to JAZA in 1994. JZA remained chairman for 12 more years. JZA was kingpin for 22 years – ten as president-CEO, and 12 years as chairman.
JZA brought political activism to new heights, backing Corazon Aquino against his one-time boss, Ferdinand Marcos. Before the dictator’s 1986 ouster, Don Jaime nurtured Ayala during its most trying period -- the economic crisis that ensued from the 1983 killing of Ninoy Aquino. Only Don Jaime’s steadying hand kept Ayala on even keel during the country’s most debilitating political crisis ever.
Taking over from his father in 1994, Harvard-educated JAZA expanded the businesses enormously, pursuing an aggressiveness unusual for a staunchly conservative group. He bidded for 440 hectares of the former army reservation Fort Bonifacio. He lost despite an aggressive price, plus some visioning.
The winning bidder in 1996, First Pacific went into rough financial waters, losing $300 million in development cost, and was forced to give up Fort Bonifacio. JAZA finally got a piece of the the property, 54 hectares, at a huge discount and a paltry $90 million.
JAZA entered new areas-- wireless phone, thru Globe Telecom and Manila Water, and expanded Ayala’s electronics line. Ayala’s property business went mid to low end in response to the rising purchasing power of OFWs and the new middle class. Bank of PI also went mid-market.
In his zeal to expand, JAZA borrowed heavily, lining up as much as $2 billion in financing.
Then the Asian Crisis struck, doubling the peso equivalent of Ayala’s foreign debts. Some $318 million debts must be paid in 2008 and another $217 million in 2009.
Ayala must repay $849 million over the next six years. At the same time, it must spend an average $784 million for capital expenditure. Between 2004 and 2006, it would have spent $2.26 billion capex.
This explains the pressure on the Ayala companies to produce profits and to declare these earnings as dividends to keep stockholders happy and entice new partners as the conglomerate expands existing businesses or enter new ones.

Email tonylopez@biznewsasia.com

JAZA's long reign at Ayala

At Ayala Corp., the Rule of 80 is that an executive’s stay must not exceed the sum of his age and years of years of service. In general, retirement age is 60.

Jaime Augusto Zobel de Ayala is only 47. So he has 13 years more years at Ayala if he retires at 60. He was president from 1994 to 2005. He will be chairman and CEO from 2006 to 2019. JAZA will serve for a quarter of a century.

The idea behind the Rule of 80 is to ensure the flow of new blood, infusion of new ideas, the tapping of opportunities and prevent the kind of long reigns that could eventually hurt the company.
In Ayala, however, the CEO tends to have very long reigns.
The legendary late Col. Joseph McMicking, was CEO for 36 years, from 1931 to 1967. During that time, he designed and built what is now Makati. Alfonso Zobel de Ayala ruled for 36 years from 1929 to 1965, Enrique Zobel de Ayala from 42 years, from 1901 to 1943. Before him were two women, Trinidad de Ayala de Zobel, 27 years, from 1891 to 1918, and Carmen de Ayala de Rojas, 22 years, from 1891 to 1913.
It is the post-War CEOs who have made what Ayala is today.
McMicking was succeeded in 1967 by the irrepressible Enrique Zobel who served as CEO until 1983, a total of 16 years. EZ improved on Makati, brought Ayala into agriculture, and converted Bank of PI into a universal bank.
Don Jaime (JZA) replaced EZ. He was CEO for 10 years before turning over the presidency to JAZA in 1994. JZA remained chairman for 12 more years. JZA was kingpin for 22 years – ten as president-CEO, and 12 years as chairman.
JZA brought political activism to new heights, backing Corazon Aquino against his one-time boss, Ferdinand Marcos. Before the dictator’s 1986 ouster, Don Jaime nurtured Ayala during its most trying period -- the economic crisis that ensued from the 1983 killing of Ninoy Aquino. Only Don Jaime’s steadying hand kept Ayala on even keel during the country’s most debilitating political crisis ever.
Taking over from his father in 1994, Harvard-educated JAZA expanded the businesses enormously, pursuing an aggressiveness unusual for a staunchly conservative group. He bidded for 440 hectares of the former army reservation Fort Bonifacio. He lost despite an aggressive price, plus some visioning.
The winning bidder in 1996, First Pacific went into rough financial waters, losing $300 million in development cost, and was forced to give up Fort Bonifacio. JAZA finally got a piece of the the property, 54 hectares, at a huge discount and a paltry $90 million.
JAZA entered new areas-- wireless phone, thru Globe Telecom and Manila Water, and expanded Ayala’s electronics line. Ayala’s property business went mid to low end in response to the rising purchasing power of OFWs and the new middle class. Bank of PI also went mid-market.
In his zeal to expand, JAZA borrowed heavily, lining up as much as $2 billion in financing.
Then the Asian Crisis struck, doubling the peso equivalent of Ayala’s foreign debts. Some $318 million debts must be paid in 2008 and another $217 million in 2009.
Ayala must repay $849 million over the next six years. At the same time, it must spend an average $784 million for capital expenditure. Between 2004 and 2006, it would have spent $2.26 billion capex.
This explains the pressure on the Ayala companies to produce profits and to declare these earnings as dividends to keep stockholders happy and entice new partners as the conglomerate expands existing businesses or enter new ones.

Email tonylopez@biznewsasia.com

JAZA's long reign at Ayala

At Ayala Corp., the Rule of 80 is that an executive’s stay must not exceed the sum of his age and years of years of service. In general, retirement age is 60.

Jaime Augusto Zobel de Ayala is only 47. So he has 13 years more years at Ayala if he retires at 60. He was president from 1994 to 2005. He will be chairman and CEO from 2006 to 2019. JAZA will serve for a quarter of a century.

The idea behind the Rule of 80 is to ensure the flow of new blood, infusion of new ideas, the tapping of opportunities and prevent the kind of long reigns that could eventually hurt the company.
In Ayala, however, the CEO tends to have very long reigns.
The legendary late Col. Joseph McMicking, was CEO for 36 years, from 1931 to 1967. During that time, he designed and built what is now Makati. Alfonso Zobel de Ayala ruled for 36 years from 1929 to 1965, Enrique Zobel de Ayala from 42 years, from 1901 to 1943. Before him were two women, Trinidad de Ayala de Zobel, 27 years, from 1891 to 1918, and Carmen de Ayala de Rojas, 22 years, from 1891 to 1913.
It is the post-War CEOs who have made what Ayala is today.
McMicking was succeeded in 1967 by the irrepressible Enrique Zobel who served as CEO until 1983, a total of 16 years. EZ improved on Makati, brought Ayala into agriculture, and converted Bank of PI into a universal bank.
Don Jaime (JZA) replaced EZ. He was CEO for 10 years before turning over the presidency to JAZA in 1994. JZA remained chairman for 12 more years. JZA was kingpin for 22 years – ten as president-CEO, and 12 years as chairman.
JZA brought political activism to new heights, backing Corazon Aquino against his one-time boss, Ferdinand Marcos. Before the dictator’s 1986 ouster, Don Jaime nurtured Ayala during its most trying period -- the economic crisis that ensued from the 1983 killing of Ninoy Aquino. Only Don Jaime’s steadying hand kept Ayala on even keel during the country’s most debilitating political crisis ever.
Taking over from his father in 1994, Harvard-educated JAZA expanded the businesses enormously, pursuing an aggressiveness unusual for a staunchly conservative group. He bidded for 440 hectares of the former army reservation Fort Bonifacio. He lost despite an aggressive price, plus some visioning.
The winning bidder in 1996, First Pacific went into rough financial waters, losing $300 million in development cost, and was forced to give up Fort Bonifacio. JAZA finally got a piece of the the property, 54 hectares, at a huge discount and a paltry $90 million.
JAZA entered new areas-- wireless phone, thru Globe Telecom and Manila Water, and expanded Ayala’s electronics line. Ayala’s property business went mid to low end in response to the rising purchasing power of OFWs and the new middle class. Bank of PI also went mid-market.
In his zeal to expand, JAZA borrowed heavily, lining up as much as $2 billion in financing.
Then the Asian Crisis struck, doubling the peso equivalent of Ayala’s foreign debts. Some $318 million debts must be paid in 2008 and another $217 million in 2009.
Ayala must repay $849 million over the next six years. At the same time, it must spend an average $784 million for capital expenditure. Between 2004 and 2006, it would have spent $2.26 billion capex.
This explains the pressure on the Ayala companies to produce profits and to declare these earnings as dividends to keep stockholders happy and entice new partners as the conglomerate expands existing businesses or enter new ones.

Email tonylopez@biznewsasia.com

JAZA's long reign at Ayala

At Ayala Corp., the Rule of 80 is that an executive’s stay must not exceed the sum of his age and years of years of service. In general, retirement age is 60.

Jaime Augusto Zobel de Ayala is only 47. So he has 13 years more years at Ayala if he retires at 60. He was president from 1994 to 2005. He will be chairman and CEO from 2006 to 2019. JAZA will serve for a quarter of a century.

The idea behind the Rule of 80 is to ensure the flow of new blood, infusion of new ideas, the tapping of opportunities and prevent the kind of long reigns that could eventually hurt the company.
In Ayala, however, the CEO tends to have very long reigns.
The legendary late Col. Joseph McMicking, was CEO for 36 years, from 1931 to 1967. During that time, he designed and built what is now Makati. Alfonso Zobel de Ayala ruled for 36 years from 1929 to 1965, Enrique Zobel de Ayala from 42 years, from 1901 to 1943. Before him were two women, Trinidad de Ayala de Zobel, 27 years, from 1891 to 1918, and Carmen de Ayala de Rojas, 22 years, from 1891 to 1913.
It is the post-War CEOs who have made what Ayala is today.
McMicking was succeeded in 1967 by the irrepressible Enrique Zobel who served as CEO until 1983, a total of 16 years. EZ improved on Makati, brought Ayala into agriculture, and converted Bank of PI into a universal bank.
Don Jaime (JZA) replaced EZ. He was CEO for 10 years before turning over the presidency to JAZA in 1994. JZA remained chairman for 12 more years. JZA was kingpin for 22 years – ten as president-CEO, and 12 years as chairman.
JZA brought political activism to new heights, backing Corazon Aquino against his one-time boss, Ferdinand Marcos. Before the dictator’s 1986 ouster, Don Jaime nurtured Ayala during its most trying period -- the economic crisis that ensued from the 1983 killing of Ninoy Aquino. Only Don Jaime’s steadying hand kept Ayala on even keel during the country’s most debilitating political crisis ever.
Taking over from his father in 1994, Harvard-educated JAZA expanded the businesses enormously, pursuing an aggressiveness unusual for a staunchly conservative group. He bidded for 440 hectares of the former army reservation Fort Bonifacio. He lost despite an aggressive price, plus some visioning.
The winning bidder in 1996, First Pacific went into rough financial waters, losing $300 million in development cost, and was forced to give up Fort Bonifacio. JAZA finally got a piece of the the property, 54 hectares, at a huge discount and a paltry $90 million.
JAZA entered new areas-- wireless phone, thru Globe Telecom and Manila Water, and expanded Ayala’s electronics line. Ayala’s property business went mid to low end in response to the rising purchasing power of OFWs and the new middle class. Bank of PI also went mid-market.
In his zeal to expand, JAZA borrowed heavily, lining up as much as $2 billion in financing.
Then the Asian Crisis struck, doubling the peso equivalent of Ayala’s foreign debts. Some $318 million debts must be paid in 2008 and another $217 million in 2009.
Ayala must repay $849 million over the next six years. At the same time, it must spend an average $784 million for capital expenditure. Between 2004 and 2006, it would have spent $2.26 billion capex.
This explains the pressure on the Ayala companies to produce profits and to declare these earnings as dividends to keep stockholders happy and entice new partners as the conglomerate expands existing businesses or enter new ones.

Email tonylopez@biznewsasia.com

Jaime Zobel de Ayala's long reign

At Ayala Corp., the Rule of 80 is that an executive’s stay must not exceed the sum of his age and years of years of service. In general, retirement age is 60.

Jaime Augusto Zobel de Ayala is only 47. So he has 13 years more years at Ayala if he retires at 60. He was president from 1994 to 2005. He will be chairman and CEO from 2006 to 2019. JAZA will serve for a quarter of a century.

The idea behind the Rule of 80 is to ensure the flow of new blood, infusion of new ideas, the tapping of opportunities and prevent the kind of long reigns that could eventually hurt the company.
In Ayala, however, the CEO tends to have very long reigns.
The legendary late Col. Joseph McMicking, was CEO for 36 years, from 1931 to 1967. During that time, he designed and built what is now Makati. Alfonso Zobel de Ayala ruled for 36 years from 1929 to 1965, Enrique Zobel de Ayala from 42 years, from 1901 to 1943. Before him were two women, Trinidad de Ayala de Zobel, 27 years, from 1891 to 1918, and Carmen de Ayala de Rojas, 22 years, from 1891 to 1913.
It is the post-War CEOs who have made what Ayala is today.
McMicking was succeeded in 1967 by the irrepressible Enrique Zobel who served as CEO until 1983, a total of 16 years. EZ improved on Makati, brought Ayala into agriculture, and converted Bank of PI into a universal bank.
Don Jaime (JZA) replaced EZ. He was CEO for 10 years before turning over the presidency to JAZA in 1994. JZA remained chairman for 12 more years. JZA was kingpin for 22 years – ten as president-CEO, and 12 years as chairman.
JZA brought political activism to new heights, backing Corazon Aquino against his one-time boss, Ferdinand Marcos. Before the dictator’s 1986 ouster, Don Jaime nurtured Ayala during its most trying period -- the economic crisis that ensued from the 1983 killing of Ninoy Aquino. Only Don Jaime’s steadying hand kept Ayala on even keel during the country’s most debilitating political crisis ever.
Taking over from his father in 1994, Harvard-educated JAZA expanded the businesses enormously, pursuing an aggressiveness unusual for a staunchly conservative group. He bidded for 440 hectares of the former army reservation Fort Bonifacio. He lost despite an aggressive price, plus some visioning.
The winning bidder in 1996, First Pacific went into rough financial waters, losing $300 million in development cost, and was forced to give up Fort Bonifacio. JAZA finally got a piece of the the property, 54 hectares, at a huge discount and a paltry $90 million.
JAZA entered new areas-- wireless phone, thru Globe Telecom and Manila Water, and expanded Ayala’s electronics line. Ayala’s property business went mid to low end in response to the rising purchasing power of OFWs and the new middle class. Bank of PI also went mid-market.
In his zeal to expand, JAZA borrowed heavily, lining up as much as $2 billion in financing.
Then the Asian Crisis struck, doubling the peso equivalent of Ayala’s foreign debts. Some $318 million debts must be paid in 2008 and another $217 million in 2009.
Ayala must repay $849 million over the next six years. At the same time, it must spend an average $784 million for capital expenditure. Between 2004 and 2006, it would have spent $2.26 billion capex.
This explains the pressure on the Ayala companies to produce profits and to declare these earnings as dividends to keep stockholders happy and entice new partners as the conglomerate expands existing businesses or enter new ones.

Email tonylopez@biznewsasia.com

Jaime Zobel de Ayala's long reign

At Ayala Corp., the Rule of 80 is that an executive’s stay must not exceed the sum of his age and years of years of service. In general, retirement age is 60.

Jaime Augusto Zobel de Ayala is only 47. So he has 13 years more years at Ayala if he retires at 60. He was president from 1994 to 2005. He will be chairman and CEO from 2006 to 2019. JAZA will serve for a quarter of a century.

The idea behind the Rule of 80 is to ensure the flow of new blood, infusion of new ideas, the tapping of opportunities and prevent the kind of long reigns that could eventually hurt the company.
In Ayala, however, the CEO tends to have very long reigns.
The legendary late Col. Joseph McMicking, was CEO for 36 years, from 1931 to 1967. During that time, he designed and built what is now Makati. Alfonso Zobel de Ayala ruled for 36 years from 1929 to 1965, Enrique Zobel de Ayala from 42 years, from 1901 to 1943. Before him were two women, Trinidad de Ayala de Zobel, 27 years, from 1891 to 1918, and Carmen de Ayala de Rojas, 22 years, from 1891 to 1913.
It is the post-War CEOs who have made what Ayala is today.
McMicking was succeeded in 1967 by the irrepressible Enrique Zobel who served as CEO until 1983, a total of 16 years. EZ improved on Makati, brought Ayala into agriculture, and converted Bank of PI into a universal bank.
Don Jaime (JZA) replaced EZ. He was CEO for 10 years before turning over the presidency to JAZA in 1994. JZA remained chairman for 12 more years. JZA was kingpin for 22 years – ten as president-CEO, and 12 years as chairman.
JZA brought political activism to new heights, backing Corazon Aquino against his one-time boss, Ferdinand Marcos. Before the dictator’s 1986 ouster, Don Jaime nurtured Ayala during its most trying period -- the economic crisis that ensued from the 1983 killing of Ninoy Aquino. Only Don Jaime’s steadying hand kept Ayala on even keel during the country’s most debilitating political crisis ever.
Taking over from his father in 1994, Harvard-educated JAZA expanded the businesses enormously, pursuing an aggressiveness unusual for a staunchly conservative group. He bidded for 440 hectares of the former army reservation Fort Bonifacio. He lost despite an aggressive price, plus some visioning.
The winning bidder in 1996, First Pacific went into rough financial waters, losing $300 million in development cost, and was forced to give up Fort Bonifacio. JAZA finally got a piece of the the property, 54 hectares, at a huge discount and a paltry $90 million.
JAZA entered new areas-- wireless phone, thru Globe Telecom and Manila Water, and expanded Ayala’s electronics line. Ayala’s property business went mid to low end in response to the rising purchasing power of OFWs and the new middle class. Bank of PI also went mid-market.
In his zeal to expand, JAZA borrowed heavily, lining up as much as $2 billion in financing.
Then the Asian Crisis struck, doubling the peso equivalent of Ayala’s foreign debts. Some $318 million debts must be paid in 2008 and another $217 million in 2009.
Ayala must repay $849 million over the next six years. At the same time, it must spend an average $784 million for capital expenditure. Between 2004 and 2006, it would have spent $2.26 billion capex.
This explains the pressure on the Ayala companies to produce profits and to declare these earnings as dividends to keep stockholders happy and entice new partners as the conglomerate expands existing businesses or enter new ones.

Email tonylopez@biznewsasia.com

Monday, March 13, 2006

The virtue of being honest

By Tony Lopez

RECEIVING his Management Man of the Year award recently PLDT chair Manuel V. Pangilinan had one thesis based on his First Pacific experience.

“Those who choose to conduct business in an ethical way will, in the long run, perform better than those who don’t,” he declared.

“Success can only spring from old-fashioned values, values that are transcendent, and endure well beyond the context and circumstance of our time,” he declared, adding “those principles are as fundamental as being honest and truthful—especially with yourself. Being diligent, committed, and hard working will also serve you well in the long-term.”

Pangilinan says: “The challenge to management must be to create a corporate culture that encourages and rewards integrity as much as entrepreneurship.

Management—especially the CEO—must not only be exemplary stewards of corporate assets, they must also serve as the moral compass of the company. A CEO must actively encourage his team to be open and truthful in their decision-making processes and in their internal and public disclosures. We believe that the best insurance against the perils of crossing the ethical divide is transparency.”

Yet, the reason why the Philippines has become Asia’s economic laggard is mainly poor governance. The men and women in charge of Philippine government and Philippine business are corrupt.

Since corruption is excess, it results in inefficiency and waste. Why are streets in the Philippines always in a state of disrepair? Because it makes for good business. When you keep building the same road over and over again, you kept collecting your commission.

That is what is called repeat business. But it is at the expense of the taxpayer.

Pangilinan cites the case of PLDT. He relates:

“Only 7 years ago, PLDT had the habits of a monopolist. It was big, fat, and slow in an industry where changes were accelerating, with a bureaucracy and culture not different from government’s—for example, employees start to queue for lunch at 11:30am, and lights went out at lunch time. Our revenues were under pressure, costs bloated, debts too large, cash flows tight, and credit rating downgraded.

Doesn’t all this sound familiar—PLDT looking just like government?”

What did MVP do? He recalls:

First, we stabilized the company’s fiscal situation.

This meant getting hold immediately of the vital functional areas of finance—to ensure that we had access to all records and obtained a full and accurate view of the financial position; purchasing—we established transparent processes in our procurement; and most importantly, we acquired the position of Chief Executive.

Second, we defined a clear vision for PLDT. I thought that convergence—where telecoms, media, and information technology will merge onto a single platform provided a long-term conceptual beacon for the business, and a sturdy anchor for our future strategy.

Third, we proceeded to put flesh on this skeletal blueprint by identifying our most serious problems, and prioritizing them as to which should be tackled first. Cash flows were critical because debts were high—this meant revenues and collections had to grow, costs had to be reduced, and capex managed prudentially.

Fourth, it was essential to transform the organization’s mindset from being engineers to becoming marketing and customer-centric managers. For instance, when I first reviewed the PLDT budget in December 1998 for the incoming year 1999, I was surprised that the first item for discussion was not sales or revenues—but capital expenditures for equipment! You can probably infer the reason why.

On February 27 this year, PLDT will report a net profit of P32 billion, a record in corporate history. Good governance makes for good management. And good management makes for good profits.

E-mail tonylopez@biznewsasia.com

The age of the Filipino entrepreneur

The age of the Filipino entrepreneur

By Tony Lopez

With its very high literacy rate, skilled workers, a large pool of managers, and a growing consumer market with western tastes, the Philippines should be a natural haven for entrepreneurs. It is not.
One reason is the lack of an entrepreneurial mindset. College graduates leave school thinking of a 9 to 5 job.
Another reason is lack of capital. There has not been much money to spare for small, struggling firms with little track record in the market and management with even smaller track records. And the scarce money that is available comes at a stiff price, higher than the 9 to 12% per year money that big companies are able to borrow.
What to do then?
Develop the entrepreneurial mindset, suggests Jose Concepcion III, CEO of the food company RFM Corp.
“We need to rally behind a national advocacy to push entrepreneurship,” he contends. Moreover, we want our countrymen to take their entrepreneurial drive to the next level. This means seeing that they grow from “survival” micro-entrepreneurs into “opportunity and innovation-driven” SME owners, the young Concepcion suggests.
A group of entrepreneurs have put up the non-profit Philippine Center for Entrepreneurship (PCE) together, Concepcion, with Tony Tan Caktiong (Jollibee Foods Corp.), Joselito Campos (Southeast Asia Foods/Heinz-UFC), Dr. Rolando Hortaleza (Splash Group of Companies), Atty. Felipe Gozon (GMA Network), Socorro Ramos (National Bookstore), Harley Sy (SM Investments), and Vivienne Tan (Entrepreneurs School of Asia, formerly Thames International Business School).
PCE’s concrete goal, says Concepcion, is to spawn the creation of so-called “Go Negosyo Communities” everywhere. These are communities where the academe, business and government sectors are drawn into a triangle of almost seamless collaboration.
“In such an ecosystem,” he explains, “there will be constant networking, mentoring and cooperation among professors, entrepreneurs, industry experts and venture capitalists, with the government providing support through a viable policy infrastructure. Every “Go Negosyo” community will be distinguished by its ability to produce a continuous stream of startup ventures.
PCE would also like to embed strong entrepreneurship lessons into the school curriculum. It is never too early, even for children in grade school, to be exposed to a real enterprise. If the goal is to develop a culture of enterprise and cultivate tomorrow’s competitive entrepreneurs, we must start them young, emphasizes Concepcion.
“Our primary and secondary schools can teach the values and develop the mindsets of an entrepreneur. At the college level, we are looking at how we can assist in the area of curriculum enhancement, providing manuals, training the teachers, and involving real entrepreneurs in the learning process.”
As for the lack of capital, Socorro Ramos, the founder and general manager of National Bookstore, has a very old-fashioned advice: be thrifty, save money, cut costs, buy less jewelry. Especially now, she frets, “when consumers seem to be holding back. They don’t want to spend because they seem worried about something. The trend became apparent second half of last year.”
So what does an entrepreneur do if he has little capital? “Start small,” Mrs. Ramos suggests.
“Most businesses start small,” adds Ben Chan, of the now legendary Bench garments chain. “And don’t be afraid to make mistakes. Just keep of trying new businesses until you succeed,” he advises. He recalls that before Bench, he tried Dimensione furniture and later rattan furniture, which at one point, was the craze in the United States.
Basic to entrepreneurship is taking risk. “You must be willing to take risks,” says banker, industrialist and philanthropist George S. K. Ty, chairman of Metrobank, the nation’s largest lender, and of Toyota Motor Philippines, the country’s biggest car manufacturer.
There is a secret to taking risk. “It must be disciplined,” points out Arthur Ty, 39, vice chairman of Metrobank. “You have to know when you are taking too much risk,” adds Alfred Ty, Arthur’s younger brother who heads the Metrobank group’s property and hotel operations as well as the Toyota franchise. In that sense, explains Arthur, “my dad is very good. He has a way of looking forward into the future which usually is right.” (See Buffett on taking risks, Page 39).
How do you train entrepreneurs? “Start them early,” says Arthur Ty. At ten, he was a messenger boy at Metrobank. This was the time when child labor laws were not yet in effect. Arthur rose through the ranks, becoming eventually, Metrobank’s vice chairman. When he takes over as president in April, he will be the country’s youngest bank CEO.
One way to minimize risk is to work hard. At Metrobank, says Arthur, 12 hours is a typical work day. He notes that current bank president, Antonio Abacan, reports for work at 7 in the morning and usually goes home at way past 7 p.m. Unlike many bankers, Abacan hardly plays golf because he has to spend time with clients.
That’s another secret of entrepreneurship. Service. Give what the customer wants.
Tony Tan Caktiong recalls that the ice cream house that preceded Jollibee in Cubao became successful “because customers were excited by the cleanliness made possible with white glove inspection on the underside of the table, super efficient service shown by serving a glass of cold water even before the customer sat down, and over-portioning of ice cream to the point were actually losing our profit in every scoop we served!”
Tony found out customers were craving for something hot. So he offered hamburgers which soon outsold ice cream. And even when McDonald’s entered the market, Tony was unfazed. “I knew our customers liked our hamburgers. They liked Jollibee’s taste and they kept coming back.” Today, Jollibee outsells McDo by two to one.
For their part, the Ayalas do not believe that just because you are members of the family you must be forced to join the business. “My father wanted to make sure that we were interested, qualified and would be passionate about the business,” says Fernando Zobel de Ayala, co-vice chairman of Ayala Corp., the banking, property and industrial conglomerate.
“When we came in, we were trained as managers and professionals, not as owners,” recalls Jaime Augusto Zobel de Ayala, the president and CEO of Ayala Corp. “We did summer jobs from an early age. I was with the Dept. of Trade and Industry when I was quite young, just before entering college, with a group put up to encourage and help small businesses.”
Fernando and Jaime both worked in a plantation in Davao.
Fernando worked outside Ayala, joining Shell in Brazil. At that time, Ayala owned part of Pilipinas Shell. For his part, Jaime did a summer job with Royal Orion, a London-based merchant bank, before entering college and also did some work at JP Morgan in Paris.
JAZA defines entrepreneurship as the capacity to see an idea, an opportunity, and bring the capital, knowledge, partners and the managerial skills needed to develop and then make it sustainable.”
He adds: “It is also about taking risks, and about failure. The stories of great entrepreneurs, people who have achieved great things show that failure is very much part of their lives.”
“I believe,” Jaime declares, “that an entrepreneurial culture, rather than a purely managerial one, is important particularly in this day and age when change is an important part of our lives.”
Entrepreneurship is often associated with starting small, and is very important at that level, Jaime observes. “But at the same time, you need entrepreneurial spirit at the level of medium-sized industries and on a larger scale, people who are willing to put capital to work and who use their balance sheets and reputation to help build the infrastructure needs of a country.”
To build infrastructure, such as rail, ports, and telecom, “you need not just the multinationals that come in and build,” Jaime Augusto points out, “but also large Filipino companies that have the capacities.”

Email tonylopez@biznewsasia.com

endit

President Arroyo vs. the army

President Arroyo vs. the army


By Tony Lopez

Manila, March 13, 2006 – Having survived the biggest challenged posed by the military against her presidency of five years and one month, Gloria Macapagal Arroyo faces the daunting task of instilling discipline within the top brass and the ranks, consolidating her political forces, and focusing on the economy to bring about political and economic dividends to the people.

But first she needs to know who her enemies are – within the armed forces. It seems the commander-in-chief doesn’t have full command and control of the 127,000-strong Armed Forces of the Philippines and the 130,000-man Philippine National Police.

On the night of Feb. 23 and the early hours of Feb. 24, major elements in both the AFP and PNP were plotting to withdraw support from President Arroyo. They would do so by marching with protesters out to celebrate the 20th anniversary of People Power. The rebel soldiers and policemen were to march in Makati, scene of the protest rally, without their uniforms and possibly, without their guns. Their leader, Army Scout Ranger Chief Brig. Gen. Daniel Lim, was to have announced the mutineers’ withdrawal of support in the afternoon of Feb. 24, during the Friday march in Makati. He was to be joined by First Marine Battalion Commander, Col. Ariel Querubin and PNP Special Action Force head, Chief Superintendent Marcelino Franco Jr.

A military junta would have been in place by Feb. 25, 2006 and snap elections would have been called to choose Arroyo’s replacement. A group of influential businessmen were reported favoring a military action against the feisty president.

Arroyo had been wounded by allegations she cheated in the May 2004 polls. The controversial “Hello Garci” tapes would have been the smoking gun. As a result, 80% of Filipinos want Arroyo out; of that, 7% favored her removal by any means.

The Feb. 24 rally proceeded without much fuss but General Lim was nowhere to be found. AFP Chief Gen. Generoso Senga had placed him under house arrest, incommunicado for nearly a week, until Lim went to the National Bureau of Investigation (NBI) Thursday, March 9 to deny his involvement. “There was never a coup plot,” he declared.

In the meantime, Arroyo relieved early Sunday Feb. 26, the commandant of the Philippine Marines, Major Gen. Renato Miranda and replaced him with a loyalist general, Nelson Allaga, one supposedly involved in the Dagdag-Bawas scheme in the May 2004 presidential elections in Mindanao. Medina’s abrupt removal caused a six-hour stalemate between the group of Marine Colonel Querubin which was covered live by ABS-CBN News Channel.

It is a chilling thought to consider that three of the best-trained, best-armed, and most battle-tested units of the AFP and the PNP are against their commander-in-chief – the Philippine Marines, the Army Scout Rangers, and the PNP Special Action Force. In any of some ten coup attempts in the past 20 years, support of these units had been crucial to the success of any military uprising, whether backed by civilians and the Church, or not.

The Marines and the Scout Rangers were the frontline rebel soldiers in the 1987 and 1989 coup attempts against President Corazon Aquino. Both proved to be bloody and eventually brought the economy down, to zero growth by the time of Aquino’s farewell in June 1992.

Ostensibly, Mrs. Arroyo puts on a brave face. But she is probably doing by now, the ritual resorted to by Cory soon after the 1987 and 1989 coups – pray every night that nothing untoward would break out and that she would still be the president by the break of day.

“The chain of command has already shown itself to be unbreakable and the people can be assured that the great majority of our soldiers are on the side of the Constitution and the rule of law,” declared Press Secretary Ignacio Bunye on March 10. “The president and commander-in-chief leaves to the AFP command and the major services to deal with residual issues of military adventurism and destabilization,” Bunye said.

That’s exactly the problem. You can’t trust the military high command and the major service commanders. Arroyo has just to hang tough. And pray.


email tonylopez@biznewsasia.com

endit

Get rich, put up a business

Get rich, put up a business

How does one parlay P10 million into a P300-million enterprise after five years?
Ask Bryan Tiu, founder of the Teriyaki Boy chain of ten restaurants in Metro Manila 70% of which was acquired for P230 million by the growing Pancake House conglomerate of the Lorenzo family. And to think that Bryan is only 30. He was barely 25 and fresh with a business management degree when he put up the first Teriyaki outlet in Greenhills in 2001, for just P10 million.
Bryan’s Teriyaki Boy was valued by Pancake House at P328 million of which a whopping P274.5 million was brand goodwill, meaning his brand value was growing by an average of P55 million per year.
How does one organize an airline and make it to the big league accumulate 14 million passengers and chalk up P8 billion in annual revenues in less than ten years?
Ask Lance Gokongwei, the genius (he has a double summa from UPenn) son of legendary entrepreneur John Gokongwei Jr.
His Cebu Pacific is today the second largest airline in the Philippines with a third of the market and with the best pricing structure and on-time reliability record among the half a dozen local airlines. This year, Cebu Pacific is expected to ring up profits of P300 million.
Lance offers three reasons for Cebu Pacific’s success story. “We were very focused on customers, we were able to deliver quality service to them. And I am surrounded by very talented managers, very passionate people who work with me.”
So there, the rules of business success: focus on the customer, render quality service, get the right people, and have passion.
And can a college dropout build a business worth P2 billion with just a single product?
Ask Alfredo Yao. He dropped out of Mapua because he needed to work right away and support his family. He first put up a printing press printing packaging materials. Then one day while visiting Europe in 1979, he chanced upon a packaging technology called “doy packs” -- a way to package ready to drink juices by keeping them fresh but easy to drink by the customer.
And to think nobody paid him attention when he was proferring doypacks to local food manufacturers. Undaunted, he decided to produce the juices himself. The rest as they say is history. Today, Yao’s Zest-O drinks generate P2 billion in annual sales.
Those are among the success stories celebrated in this year’s crop of Entrepreneur of the Year awardees handed out by SGV and Co. of the Ernst & Young accounting giant chain, on March 8.
The EOY awards is the most eagerly awaited business recognition program of its kind. It aims to identify, acknowledge, and encourage entrepreneurial people, who through their energy and passion, help bolster the economy, underpin the country’s future and create wealth and employment.
Says SGV Foundation Chairman and President of this year’s 20 finalists: “They play a significant role in their communities. they have helped produce new jobs, and new opportunities that have greatly influenced the way we live. They are the visionaries, leaders and winners in business.”
Capping the evening’s glittering awards rite, Senator Manuel Villar, the first Filipino brown billionaire, delivered an inspirational speech. Villar in the late 1990s had a housing construction business with a market value of $1 billion. Not bad for one who began as a fish vendor in Divisoria.
The senator wondered why the Philippines haven’t progressed all these years. And he has this theory:
“It is because there is bias against entrepreneurship in the Philippines, and that is why, to me, we have not moved forward.”
He elaborates:
“ We were told by our parents to study very hard so that one day we can get a job. And we tell our children to study very hard so that they can have a job, the children of our children.”
“We tell the children that they should study to have a job. And this is passed on from generation to generation to generation, and that is why we have become a nation of employees. We like to serve. We like to be employed.”
“If we cannot find employment in the Philippines, then we go out of the country. And there, in the other countries, we try to find employment.”
In Divisoria, he recalls, “I saw the difference between a Chinese and a Filipino vendor.”
“The Chinese -Filipino, and he would tell me, one day I want to become the biggest this, the biggest that. But when you talk to a Filipino vendor, he would tell you, as soon as my children graduate, I can retire, I will retire.”
“Among us Filipinos, at the age of 30, we are asked, why haven’t you got a job? But among the Chinese, they are asked, why haven’t you got a business, yet?”
“To me, unless you are able to change this, my dear friends, we cannot move this country forward.”
Finally, Villar suggested: “We entrepreneurs should share our thoughts. , it is nice to be on your own. You get the satisfaction of being the master of your fate, the captain of your destiny. Having no boss. That is the kind of feeling that you cannot have if you are employed.”

Get rich, put up a business

Get rich, put up a business

How does one parlay P10 million into a P300-million enterprise after five years?
Ask Bryan Tiu, founder of the Teriyaki Boy chain of ten restaurants in Metro Manila 70% of which was acquired for P230 million by the growing Pancake House conglomerate of the Lorenzo family. And to think that Bryan is only 30. He was barely 25 and fresh with a business management degree when he put up the first Teriyaki outlet in Greenhills in 2001, for just P10 million.
Bryan’s Teriyaki Boy was valued by Pancake House at P328 million of which a whopping P274.5 million was brand goodwill, meaning his brand value was growing by an average of P55 million per year.
How does one organize an airline and make it to the big league accumulate 14 million passengers and chalk up P8 billion in annual revenues in less than ten years?
Ask Lance Gokongwei, the genius (he has a double summa from UPenn) son of legendary entrepreneur John Gokongwei Jr.
His Cebu Pacific is today the second largest airline in the Philippines with a third of the market and with the best pricing structure and on-time reliability record among the half a dozen local airlines. This year, Cebu Pacific is expected to ring up profits of P300 million.
Lance offers three reasons for Cebu Pacific’s success story. “We were very focused on customers, we were able to deliver quality service to them. And I am surrounded by very talented managers, very passionate people who work with me.”
So there, the rules of business success: focus on the customer, render quality service, get the right people, and have passion.
And can a college dropout build a business worth P2 billion with just a single product?
Ask Alfredo Yao. He dropped out of Mapua because he needed to work right away and support his family. He first put up a printing press printing packaging materials. Then one day while visiting Europe in 1979, he chanced upon a packaging technology called “doy packs” -- a way to package ready to drink juices by keeping them fresh but easy to drink by the customer.
And to think nobody paid him attention when he was proferring doypacks to local food manufacturers. Undaunted, he decided to produce the juices himself. The rest as they say is history. Today, Yao’s Zest-O drinks generate P2 billion in annual sales.
Those are among the success stories celebrated in this year’s crop of Entrepreneur of the Year awardees handed out by SGV and Co. of the Ernst & Young accounting giant chain, on March 8.
The EOY awards is the most eagerly awaited business recognition program of its kind. It aims to identify, acknowledge, and encourage entrepreneurial people, who through their energy and passion, help bolster the economy, underpin the country’s future and create wealth and employment.
Says SGV Foundation Chairman and President of this year’s 20 finalists: “They play a significant role in their communities. they have helped produce new jobs, and new opportunities that have greatly influenced the way we live. They are the visionaries, leaders and winners in business.”
Capping the evening’s glittering awards rite, Senator Manuel Villar, the first Filipino brown billionaire, delivered an inspirational speech. Villar in the late 1990s had a housing construction business with a market value of $1 billion. Not bad for one who began as a fish vendor in Divisoria.
The senator wondered why the Philippines haven’t progressed all these years. And he has this theory:
“It is because there is bias against entrepreneurship in the Philippines, and that is why, to me, we have not moved forward.”
He elaborates:
“ We were told by our parents to study very hard so that one day we can get a job. And we tell our children to study very hard so that they can have a job, the children of our children.”
“We tell the children that they should study to have a job. And this is passed on from generation to generation to generation, and that is why we have become a nation of employees. We like to serve. We like to be employed.”
“If we cannot find employment in the Philippines, then we go out of the country. And there, in the other countries, we try to find employment.”
In Divisoria, he recalls, “I saw the difference between a Chinese and a Filipino vendor.”
“The Chinese -Filipino, and he would tell me, one day I want to become the biggest this, the biggest that. But when you talk to a Filipino vendor, he would tell you, as soon as my children graduate, I can retire, I will retire.”
“Among us Filipinos, at the age of 30, we are asked, why haven’t you got a job? But among the Chinese, they are asked, why haven’t you got a business, yet?”
“To me, unless you are able to change this, my dear friends, we cannot move this country forward.”
Finally, Villar suggested: “We entrepreneurs should share our thoughts. , it is nice to be on your own. You get the satisfaction of being the master of your fate, the captain of your destiny. Having no boss. That is the kind of feeling that you cannot have if you are employed.”

Sunday, January 01, 2006

On leadership

The book, Lasting Leadership (by Wharton School Publishing) lists 25 great business leaders in America and narrates what you can learn from the “Top 25 Business People of Our Times.”

No. 1 on the list is Intel co-founder Andy Grove (Ph.D. University of California at Berkeley 1963).

Instead of a large company like Bell Labs, he joined Fairchild Semiconductor, a West Coast upstart where he worked under the legendary Gordon Moore who led the company’s research operations. Grove’s joining Fairchild was considered out-of-the box thinking. Five years later, Grove and Moore left to form Intel.

At Intel, Grove’s leadership was marked by unconventional thinking, imagination and integrity.

Grove said “my proudest accomplishment has been to contribute to the creation of a company that has helped put a billion PCs into people’s hands.”

Another legend is Warren Buffett of Berkshire Hathaway. In addition to his genius at spotting good investment opportunities, he is influential for one thing—his moral stature and integrity.

Equally remarkable was the late Sam Walton who built a single store into the greatest retailer in the world and Fortune 500’s largest company. His legacy, according to the book, is that “a single person can make a huge difference in an industry.”

Unconventional thinking, imagination, integrity, making a difference. These are qualities so valuable in the Philippines today, considering the state of its politics and the condition of its economy.

In the last 30 years, the Philippines chalked up the slowest growth per capita in the whole of Asia—a disheartening 0.75 percent per year. Today, the Philippines has one of the worst income inequality ratios in the world and one of the worst incidences of poverty in Asia.

The Philippines has a GDP per capita, in terms of purchasing power parity (what the national output person can buy in terms of domestic prices) of $4,321.

But Thailand has $7,595, Malaysia $9,512, and Singapore $24,481, and China $5,003. Twenty-five years ago, the Philippines was much richer than these countries.

In 1982, the Philippines already had a per capita income of $1,000 while China had about $350. Today, the Philippines still has a per capita income of $1,000—the same as China now. In other words, China caught up by tripling its growth rate while the Philippines stagnated.

One explanation for such dismal failure: Flawed leadership. China has good leaders. The Philippines has had bad leaders. China’s leaders, from Chairman Deng Xiao Ping to President Hu Jintao, have been bold, visionary and people of awesome integrity. The Chinese leaders delivered. The Filipino leaders failed. China restored Shanghai’s old glory as a modern metropolis in just the last ten years. That’s boldness and vision. Today, China is the second richest country on earth (after the United States) in terms of purchasing power parity.

What to do then?

Our leaders must reform, cope and deliver.

President Gloria Macapagal Arroyo has all the qualities of a bold and brilliant leader. An economist by training and by choice, she has a master’s in economics from Ateneo and a doctorate in economics from the University of the Philippines.

But there are questions about her integrity to a point that she may go down in history as a lying, cheating and stealing president with the worst popularity and trust ratings of any Philippine president. She will do anything to stay in power and survive as president.

Thankfully, during her watch, the economy has revived (tripling its growth rate from 2001 to early 2004) and as the year ended, the stock market was booming and the peso against the dollar hit a two-and-a-half-year high. So GMA can deliver.

For his part, Fidel V. Ramos is emerging as an elder statesman dishing out wisdom and advice from the standpoint of someone who has served his country well, so-called scams and scandals during his watch, notwithstanding. In recent months, he has become the moral force putting the country together especially during the crucial hours of the crisis of July 8, 2005.

On the other hand, ousted President Joseph Estrada, who has spent more time in isolation than the years he served as president, remains the symbol of a people’s yearning to be free from the bondage of poverty. His political capital is his immense popularity and the growing perception that he was a better president than GMA.

We got email from Jennifer Luy, the corporate development manager DPL Management Services of Del Monte Pacific. She said “MCI Inc [of the Lorenzos] bought Inc 28.73 percent stake from Del Monte Holdings and sold this together with its existing 21-percent stake for a total of 49.7 percent stake to NutriAsia for US$206.5 million. The total shares acquired by NutriAsia was 49.76 percent and not 78.49 percent as was reported in your article [of last Friday].”

E-mail tonylopez@biznews-asia.com

Arroyo will be both President and Prime Minister

THE Consultative Commission’s Committee on Transitory Provisions is pushing through with the grand plan to cancel the elections of 2007 and to have all incumbent elected officials to continue in office beyond 2007 until 2010. President Gloria Macapagal Arroyo is also going to be the interim prime minister, from 2007 to 2010.

Section 7 of the proposed Transitory Provisions of the draft Constitution of 2006 provides:

“The elections scheduled in 2007 shall be cancelled and the terms of office of all elective officials shall be extended to June 30, 2010, coinciding with those of the incumbent President and Vice-President and the twelve Senators elected in 2004. The first election of Members of the Parliament and the first local elections under this Constitution shall be held on the second Monday of May 2010.”

Section 8 provides: “Upon ratification of this Constitution, the Senate and the House of Representatives are replaced by an interim Parliament that shall exist immediately and shall continue until Members of the regular Parliament shall have been elected and shall have assumed office following an election as provided in the preceding section. The interim Parliament shall have the same powers and its Members shall have the same functions, responsibilities, rights, privileges, and disqualifications as the regular Parliament and the Members thereof.”

Adds Section 9: “The Members of the interim Parliament shall be the incumbent Members of the Senate and the House of Representatives, one-third of the Cabinet, with portfolio, and thirty persons, experienced and experts in their respective fields, shall likewise become Members of the Parliament upon appointment by the President.”

Here are the rest of the Transitory Provisions:

“Section 10. The incumbent Vice President shall initially convene the interim Parliament and shall continue to exercise his powers and prerogatives under the Nineteen Eighty Seven Constitution.

“Section 11. The interim Parliament, by a majority vote of all its Members, shall elect on interim Prime Minister. He shall be a Member of the Cabinet.

“Section 12. Under the direction and supervision of the incumbent President, the interim Prime Minister and the Cabinet shall exercise all the powers and functions and discharge the responsibilities of the regular Prime Minister and Cabinet under this Constitution.

“Section 13. In the interim Parliament, the incumbent President shall exercise the powers vested in the head of state and the head of government under this Constitution, except the power to dissolve this Parliament, until the expiration of her term on June 30, 2010.

The incumbent President and Vice-President shall be subject to the same disqualification and manner of removal as provided in this Constitution. In case a vacancy arises by reason of removal, resignation, permanent incapacity or death of the incumbent President, the incumbent Vice-President shall become the President.

“Section 14. This Constitution shall take effect immediately upon its ratification by a majority of the votes cast in a plebiscite held for the purpose and shall supersede all previous Constitutions.”

Two things obvious from these provisions: one, there won’t be elections in 2007 and two, the president, Arroyo, will control the interim parliament whose members shall come from the present 236 congressmen and 23 senators. Since GMA’s party controls the House and the vote of the 23 senators, as MPs, shall be diluted, she becomes the frontrunner candidate for interim prime minister.

And to ensure that GMA gets elected as PM, the Con-Com allows her to appoint one third of her cabinet with portfolio (seven out of 22) plus 30 “experts” as MPs, for a total of 37 “insurance” votes. About 195 of the House members are allied with Speaker Jose de Venecia, a key supporter of President Arroyo.

At the same time, GMA remains the regular president until 2010. She becomes even more powerful being both president and prime minister.

Vice President Noli de Castro, meanwhile, becomes presiding officer. Finally, he gets a job.

***

Why did San Miguel Corp. agree to join venture with Joselito “Butch” Campos to buy control of Del Monte Pacific? SMC and Campos have put up NutriAsia Pacific Ltd. SMC owns 42 percent while Campos 58 percent but the latter must sell out to the beer and food giant in five years. NutriAsia has acquired for $206 million 49.76 percent of Del Monte Holdings from MCI (the former Macondray and Co.), the holding company of the Lorenzo family that used to own Del Monte Pacific.

Not many people know about it but Del Monte Pacific owns Great Lakes Fresh Foods and Juice Co., the premium fresh fruit juice company established in 1994 in Tianjin, China. In effect, San Miguel has entered the lucrative China juice market. Also, Del Monte operates in India. So now, San Miguel has a foothold in India.

Great Lakes has expanded from 12 people in 1994 to 190 today, “working together to make the best juice in the universe”. China is the world’s largest fruit producer, being No. 1 in apples, No. 3 in citrus and a leading producer of bananas, pineapples, pears, lychees, and kiwi.

E-mail tonylopez@biznewsasia.com

The new chief justice of the Supreme Court

On December 21, 2005, the nation had a new chief justice, succeeding Hilario “Jun” Davide who retired December 20 after serving as the Chief for seven years.

Davide’s watch was remarkable for three things. The first is the unconstitutional removal of Joseph Estrada as president initially on the ground that there was a vacancy (there was none) in the presidency on the night of January 19, 2001 and later, on the ground that Erap had constructively resigned because he had discussed the matter of resignation with his then Executive Secretary Edgardo Angara who in turn wrote a diary which in turn was written about by Amando Doronilla whose article in turn was used as basis by the Supreme Court justices. Normally, a news item is considered hearsay.

This is not even considering the fact that it appeared in the Philippine Daily Inquirer. Now, I understand why the justices keep saying the Supreme Court is not a trier of facts.

The second is the intemperate interference by the high court into matters that are purely business or economic decisions. If you are a businessman, you cannot decide where to locate your petrochemical plant. You are not even sure that after winning a bidding for a hotel, it will be awarded to you. You are not sure that after winning a bidding to supply computers to the Comelec, you will not lose the contract. Or after finishing an airport without the government spending a single centavo, you are sure you will operate it.

This behavior of the Supreme Court, along with the penchant of lower court judges to issue TROs, is one of the biggest stumbling blocks to the entry of foreign investments in the Philippines. As a result, the Philippines missed two major waves of investment migration—first, before the 1997 Asian Crisis and second, after that Crisis.

Now, Vietnam and Myanmar get more investments than the Philippines does.

The third is the justices’ refusal to allow themselves to be impeached. Even a sitting president, now matter how depraved he or she may be, allows himself/herself to be impeached by the House. But not the justices, especially the chief justice on an issue as material as the whereabouts of the judiciary development fund which is taxpayers’ money. This is not to say Davide has no integrity. As his official biodata says “he is known to maintain his professional competence and integrity.”

I had predicted that Artemio Panganiban would be the chief justice after Davide. A man of probity and intellect (FEU Law, cum laude, 1959; No. 6 in the bar), he is a prolific writer—1,000 full-length decisions, ten books plus several thousand minute resolutions in the last ten years, with “no cases left undecided.” His fields of interests or expertise, if you may, outside of law, include mathematics, economics, business, accounting, canon law, and even biosciences. He is a devout Catholic.

The other serious contender was Reynato S. Puno (UP Law 1962, master of comparative law, Southern Methodist University; finished the academic requirements for a Ph. D. in judicial science, University of Illinois).

He is considered the intellectual of the Court and his writing prowess cannot be belittled. At 53, he joined the high court. He is a Protestant.

Both Justices Panganiban and Puno have served President Arroyo well.

Art was the one who cajoled Chief Justice Davide late afternoon of January 19, 2001, a Friday, into doing something about the People Power at EDSA. It seems that the justices were worried that there could be bloodshed and that a new government could conceivably abolish the Supreme Court. So fear of losing their jobs and losing the country was in the minds of the eminent jurists. By early morning of January 20, 1001, Panganiban and Davide had made up their minds: Erap had to go.

Communications were relayed to the camp of then Vice President Arroyo to prepare for her takeover “as acting president.” By 11 a.m. of Saturday, January 20, Mike Arroyo was heard over the radio claiming that he had “heard” President Estrada had resigned.

Davide and Panganiban herded the entire court to EDSA for Arroyo’s oath-taking.

In a subsequent decision, written by Justice Puno, the Supreme Court upheld the legitimacy of the Arroyo government.

Art was made chief justice because he would retire anyway in December next year. By then, he would be succeeded by Justice Puno who will retire in 2010. So everybody is happy.

What would be Chief Justice Panganiban’s first major decision? It is to rule on the constitutionality of the House of Representatives voting itself into a constituent assembly, with or without the Senate, to amend the Constitution to make PGMA both president and prime minister. Among other things, of course.


E-mail tonylopez@biz news asia.com

The evil that men (and women) will do

A GROUP of seven commissioners has submitted a Minority Report objecting to the proposals advanced by the majority of the 55-person Consultative Commission to recommend constitutional amendments. They object to the parliamentary system and unitary legislature plus federal system. They favor the present presidential system.

The seven are: Anthony Acevedo, Rene Azurin, Donald Dee, Gerry Espina Sr., Jose Leviste, James Marty Lim, and Jose de Villanueva. They worry that fusion of executive and legislative powers will result in abuse.

They say there is no connection between a parliamentary system and economic growth. In other words, even a presidential system can produce economic growth. Thus, while Malaysia and Thailand, both parliamentary systems, are growing, so do South Korea and Taiwan, both presidential.

People should really be worried with what the Con-Com has recommended to Congress.

The majority adopted a parliamentary system with a single-chamber parliament that will come into being by middle of 2007 with its members coming from the 236 congressmen and 23 senators of the present 13th Congress. In addition, President Arroyo has the power to appoint an additional 30 members or “experts” plus one-third of her cabinet with portfolio. There are about 22 cabinet members with portfolio, those with line departments. One-third of that is seven. So seven plus 30, GMA has 37 MPs with her beck and call.

Not since the parliament of Indonesia under the dictator President Suharto had such a thing happened to any country in the ASEAN. Suharto was allowed to appoint 50 generals as members of his parliament. But at least in Indonesia at that time, they had no pretensions about being a democracy. In our case, we do pretend to be a democracy. And we are about to install a one-woman rule.

In the case of the strongman Ferdinand Marcos, at least he conducted elections to choose members of the Batasan Pambansa or Parliament. And to ensure there was an opposition party, in 1978, he funded an opposition party, like the Pusyon Bisaya of Cebu from where the then relatively unknown Hilario Davide came and was elected member of the parliament or Batasan.

To Marcos’s credit or dismay, Davide and Co. behaved like real oppositionists. That’s the risk you take when you conduct an election. You never know what kind of people get elected.

Perhaps, President Arroyo or her subalterns in the Con-Com are painfully aware of that fact. So their solution? No elections. Just convert the present Congress—all 236 congressmen and 23 senators—into an instant parliament. It will serve from 2007 to 2010.

To ensure nobody complains, all other elected officials—provincial governors and their vices and members of their Sanggunian, city and town mayors and their vices and members of their city and town councils will be automatically reelected, without benefit of an election, and serve until 2010. They get a bonus of three years. Some 17,000 such officials will benefit, thanks to GMA’s Con-Com none of whose members were elected by the people. This scheme will also ensure approval in a plebiscite of the proposed charter because the LGUs will work for its ratification.

What does GMA get in return? She gets a compliant parliament. More importantly, she legitimizes her rule—as president until 2010. And if that is not enough, the Con-Com allows her to seek election as Prime Minister. She is sure to become PM because the interim Parliament is loaded with her followers.

This is the evil that men (and women) do. We will have members of the Parliament not chosen by the people. And since that Parliament will consider tax proposals, we will have taxation without representation. In the history of decent countries, taxation without representation is a cause for a revolution.

The Supreme Court it seems will be involved in this charade. Lawyers tell me that under the present Constitution, a declaration of war by Congress requires the “vote of two-thirds of both Houses in joint session assembled voting separately.”

However, proposing amendments to or revising the Constitution does not have such a requirement. There is no mention of a vote of both Houses in joint session assembled and voting separately.

The Constitution merely says “an amendment to, or revision of, this Constitution may be proposed by (1) The Congress, upon a vote of three-fourths of all its members; or 2) a Constitutional convention.”

The legal team of Speaker Jose de Venecia interprets this to mean he can call a joint session. If the Senate refuses to join, the Congress, meaning the House of Representatives, shall constitute itself into a constituent assembly and consider amendments to the Constitution. The House needs only three-fourths of its 236 members to get approval of the Con-Con recommendations. That’s 177, a number quite easy to muster considering Speaker Joe’s legendary persuasive powers and President Arroyo’s political largesse.

E-mail tonylopez@biznews asia.com

Careful, there is a Bill of Duties

Finally, somebody sends me by e-mail a copy of the missing draft of the proposed 2006 Constitution made by the 55-person Constitutional Commission.

In addition to the Bill of Rights, it has a new section, called Bill of Duties under Article V. It sounds to me like a lot of BS—You have to defend the State, contribute to its development and welfare, cooperate with the duly constituted authorities in the attainment and maintenance of the rule of law and of a peaceful, just, humane and orderly society.

I interpret such provisions to mean you have to fight the New People’s Army, the separatist Moro Islamic Liberation Front, and people designated as terrorists by the state. You have to be a partner of the police and the military in going after criminals and lawless elements. (What if the police and the military are the lawless elements themselves?) And if there is so much lawlessness all around (there is), country remains poor (it is), and the people are impoverished (majority of the people are), it will be your fault. You did not contribute to the country’s development and you did not cooperate with duly constituted authorities in the attainment and maintenance of the rule of law and of a peaceful, just, humane and orderly society.

So if you don’t like your President because he or she is nonperforming, incompetent or corrupt, you cannot complain because under the Bill of Duties, you are part of the problem. Besides, you are supposed to cooperate with the duly constituted authority, which the President is. And if your favorite bureaucrat is corrupt, it is your fault. You did not participate actively in public and civic affairs and contribute to good governance, honesty, and integrity in the public service, and the vitality and viability of
democracy.

Does that mean I have to join JoeCon’s Namfrel or Jaime Zobel de Ayala’s Makati Business Club or Donald Dee’s, Mike Varela’s, Jun Ortiz Ruiz’s (they take turns, if you didn’t know yet) goody-goody Philippine Chamber of Commerce and Industry? What about the famous Rotary Club of Makati? Or being a trustee of the First Gentleman Foundation?

And if citizens have so many duties pala, why do we have a government? Will it have anything to do outside of those not assigned—as duties—to citizens like us?

Remember what newly minted Chief Justice Artemio Panganiban said on television? Duty is something you cannot escape from. You can divorce your wife or husband. But duties? No way, Jose. Gosh, one day after Christmas, I feel like being pro-government and patriotic.

For your intellectual delectation or to humor yourself, here is the Bill of Duties:

ARTICLE V BILL OF DUTIES

SECTION 1. It shall be the duty of every citizen to be loyal to the Republic of the Philippines, honor the Philippine Flag, defend the State, contribute to its development and welfare, uphold the Constitution and obey the laws, pay taxes, and cooperate with the duly constituted authorities in the attainment and maintenance of the rule of law and of a peaceful, just, humane and orderly society.

SEC. 2. The rights of the individual impose upon him the correlative duty to exercise them responsibly and with due regard for the rights of others.
SEC. 3. Citizens and the State shall at all times respect the life and dignity of every human person and uphold human rights.

SEC. 4. Citizens shall participate actively in public and civic affairs, and contribute to good governance, honesty and integrity in the public service and the vitality and viability of democracy.

San Miguel Corp. has bought majority of Del Monte Pacific Holdings, owner of one of the oldest consumer brands in Asia (more than 100 years). SMC has acquired 42 percent of NutriAsia while Joselito “Butch” Campos of United Lab has 58 percent, but that’s just for appearances, it seems.

NutriAsia has acquired controlling interest of Del Monte Pacific but the stake could be increased to 100 percent because San Miguel has made a tender offer to buy all the remaining stockholders outside of the holdings of Macondray and Co. (or MCI) of the Lorenzo family. Del Monte is being relisted in Singapore giving rise to an SMC proxy IPO.

San Miguel has the right to increase its stake to 51 percent anytime it wants to. SMC was able to line up blue-chip financing—$85 million from HSBC, $80 million from the government Development Bank of the Philippines, and $50 million from Banco de Oro.

Why did DBP lend to SMC? It was afraid Del Monte, which has been based in the Philippines, would be moved to Indonesia, home base of the First Pacific, the failed bidder from Hong Kong.

Why did SMC buy Del Monte? SMC is the largest beverage company in the Philippines (it owns 65 percent of Coca-Cola Bottlers Philippines which in turn owns a number of beverage brands, aside from Coke). Del Monte, in addition to its pineapples, is a beverage company. Del Monte operates in China and India. So now, San Miguel is in China and India.

E-mail tonylopez@biznewsasia.com

Junk the Con-Com draft

IT is now abundantly clear the draft Constitution made by the 55-person Consultative Commission appointed by President Arroyo is not going to be the panacea many people have expected it to be.

In fact, the revision of the Constitution will bring about more problems than it is trying to solve.

People are going to lose many of their freedoms or have them in a much diminished form.

They won’t have an election in May 2007 and not having elected them, they will have leaders who are illegitimate and without a mandate. People won’t be able to elect their president or prime minister directly—a contravention of the widespread clamor for voters to choose their leaders directly thru the ballot and not by proxy, through their parliament.

And if the draft Bill of Rights (Article IV) is adopted, long-cherished freedoms like free speech, free expression, free press and peaceful assembly will be diminished, if not curtailed, because their exercise must be “responsible”.

There are a number of reasons why the draft Constitution is bad.

For one, the Con-Com was given very little time to do its job. Its December 15 deadline was too tight for the panel to do a thorough job. And I like to think a few of the commissioners were, to use a cliché, pinabili lang ng suka, and ended up writing the basic law of the land.

For another, the Con-Com was headed by the wrong guy, former University of the Philippines president Jose Abueva.

Aside from the fact that the good dean is known to be pikon, he did not have the balance, objectivity and impartiality of a head of a collegial body. He pursued his own private agenda which is shift to the parliamentary system, abolish the Senate, and adopt a federal system of government. He won on the parliamentary system and abolition of the Senate, but lost on the federal system.

Abueva is anti-people and anti-democratic at heart.

He is also an elitist. He wants the prime minister, the president and the members of the parliament to be college graduates. But how many college graduates are there in this country of 85 million? Did you know, many of our well-known tycoons (and publishers) did not finish college. My parents, our parents, didn’t finish college. It was war time remember?

Abueva wants (as do majority of the Con-Com) the May 2007 elections cancelled and give some 17,000 incumbent elected officials a term extension of three years until 2010.

He thinks citizens are to blame for the poor state of the country and the poor quality of its governance.

So inserts a Bill of Duties in the draft Constitution.

He thinks governance is a matter of paying taxes.

So the Bill of Duties lists paying taxes is as the No. 1 duty of a citizen.

The Minority Report on the proposed 2006 Constitution of the Philippines

13 December 2005


Her Excellency
Gloria Macapagal Arroyo
Malacañang Palace
Manila

Dear Madam President:

We, the undersigned members of the Consultative Commission, wish to express our serious reservations about the adoption by the Commission’s majority of the recommendation that the country should now shift from our present presidential form of government to a parliamentary form, and from the present unitary structure of our Republic to an eventual federal structure.

We are of the considered opinion that the positions taken by the Commission’s majority on these issues are based on deeply flawed and faulty arguments. We are also of the opinion that the system of ‘consultations’, as conducted, did not allow for an adequate airing of the relevant issues and that the results being reported by the Commission cannot therefore reflect the informed opinions of those ‘consulted’. Moreover, we feel that the Commission’s interpretation of the results of said ‘consultations’ is highly questionable.

Obviously, changing the nation’s Constitution is not a trivial matter. We believe that any proposed amendments to the nation’s Constitution should be logical and reasonable responses to specific concerns and/or systemic deficiencies. We believe that any proposed changes must be firmly anchored on a logical and reasonable belief that these will accelerate the pace of economic development, improve the standard of living of the Filipino people, and promote the general good.

Further, we believe that any attempt at constitutional reform must be based on a full understanding of the real problems that such reform should – and can – solve, and that such understanding requires a genuine consultation with as many sectors of Filipino society as possible. We believe that, in such an attempt, an honest and serious effort to solicit and hear the opinions and sentiments of all interested Filipinos should be made. We do not believe that such an effort was made.

For the record, we summarize below our major objections to the proposed shift to a parliamentary form of government. We bring these up here because these very serious objections were never fully dealt with – and were even cavalierly brushed aside – by the proponents of the parliamentary form.

1) The fusion of the executive and legislative branches of government in a single body – Parliament – concentrates too much power in the hands of politicos. The power of the Prime Minister and his ruling coalition in a parliamentary government to decide on projects, appropriate the funds needed for these projects, and then implement these projects effectively gives them discretion over the entire national budget (except of course for debt servicing and other fixed expenditures), and there are few checks to control possible abuse. The so-called ‘internal checks’ that might originate from the opposition parties in Parliament are believed inadequate and probably work only in theory, particularly in the Philippine situation where party affiliations are rarely based on hard principle and politicians often belong to the same social circle. Even in countries with mature parliamentary systems, abuse of the enormous power vested in parliamentary governments is actually fairly common. Cronyism tends to flower in a parliamentary environment.

2) The inherent instability in the tenure of the Prime Minister and his utter dependence on the votes of the other members of Parliament for his stay in office from one day to the next enshrines ‘horse trading’ and ‘transactional’ decision-making as the parliamentary way of governance. The ability to change leaders frequently and at any time is not a virtue (as proponents of the parliamentary form claim), but a very serious shortcoming. Because a parliamentary government can fall any time a sufficient number of members of Parliament withdraw their support from the ruling coalition, the Prime Minister and his ruling gang are forever hostage to the demands of every member of Parliament. Thus, the decisions that can be expected to be made by a parliamentary government will usually cater to special interests and will often be short-term in orientation and probably inconsistent with other decisions. And, because members of Parliament are elected by local constituencies, the special interests they will promote will rarely be expected to be congruent with the larger national interest.

3) It is not true that it is their form of government that makes other countries perform better economically than the Philippines. There is no established connection between form of government and economic performance, or between the parliamentary form and the rate of economic growth. In fact, for every country with a parliamentary government that is racing ahead of us economically, one can cite a country with a presidential system that is doing as well or better. Here in Asia, for example, Malaysia and Thailand, which have parliamentary governments, are growing faster than we are, but so are South Korea and Taiwan, and they have presidential governments. (China and Vietnam, both economic racehorses, are not even democracies.) The economic performance of a country is a function of its economic policies, resource endowments, and certain environmental conditions, not its form of government. In fact, in a parliamentary system, it is much more difficult for government to adhere to economic policies that are right for the country as a whole because such are often in conflict with the special interests typically represented by members of parliament. Of course, all politicians represent special interests. This problem, however, is compounded in a parliamentary system because the fusion of executive and legislative power in the parliamentary form simply puts too much power in the hands of politicos.

4) Given that even those who advocate the parliamentary form concede that political and economic power in this country is too concentrated (in less than 1% of the population), the obvious appropriate response should be to adopt ways that disperse power, not ways that concentrate it further. Thus, a shift to a parliamentary system is a totally inappropriate reaction to the country's present political and economic realities because it concentrates power even more, instead of spreading and diminishing it. Moreover, it allows such concentrated power to be wielded more easily and more effectively than is possible in a presidential system where the executive and legislative branches remain separate.

5) A statistic often cited by pro-parliamentary advocates is that there are more parliamentary governments than there are presidential ones. If that is intended to be an argument, it is an irrelevant one unless one first establishes the premises that, one, parliamentary governments are more successful than presidential ones, and, two, that such successes are the result of the parliamentary form. Neither of these statements can be supported. That there are more parliamentary governments than presidential ones is simply the result of Great Britain having had more colonies than anyone else.

6) The huge expenditure required of a presidential candidate in a national election is said to be a major reason why there is so much graft and corruption in government. It is then argued by proponents of the parliamentary form that, because elections in a parliamentary system are local ones and the expenditures required of candidates are much less, the subsequent need to ‘recover’ campaign expenditures through graft and corruption is also less. The whole argument is simplistic. Graft and corruption happens because of a mix of many factors including poverty, greed, a cultural predilection for ‘arreglo’, the availability of opportunity, and weak monitoring systems and law enforcement. The more important point, however, is that solutions to this problem do not require a change in the form of government. Electoral reform that includes campaign expense subsidies and judicial reform that makes catching grafters and administering justice more effective are means that are not dependent on the form of government. Besides, elections in a parliamentary system for someone who desires to be Prime Minister may not turn out to cost much less (and might even cost more) than running nationally in a presidential election. It should be borne in mind that candidates for Prime Minister may reasonably be expected to substantially finance the campaigns of the district candidates who he expects will vote for him and form part of his coalition in Parliament. In addition, the need for a Prime Minister to retain his support means continuing expenses in terms of projects and business favors.

7) It is not true – as proponents of the parliamentary form like to claim – that the ‘legislative gridlock’ built into the presidential system is the reason why this country has not been able to keep economic pace with its high-performing neighbors. This argument simply cannot be supported by historical fact. There was no legislative gridlock at all during the Marcos years and yet it was during this period that the Philippines fell behind its neighbors in economic performance. There was hardly any legislative gridlock during the Aquino years and the Philippines fell even farther behind. The Philippines’ failure to keep pace with its neighbors has been a consequence of protectionist economic policies, peace and order problems, and too much government regulation and bureaucracy. ‘Legislative gridlock’ is actually a special and recent problem.

8) Governance is an acquired skill and doing it well requires climbing up a learning curve. All nations making the transition from tribal or autocratic systems of government to representative democracy must navigate this learning curve, whether they are led by their respective histories down the presidential path or down the parliamentary path. Filipinos have been negotiating the learning curve of a presidential system for the past one hundred years or so and, as a result, have acquired considerable familiarity and experience with its nuances, its strengths, and its weaknesses. In fact, because of this experience, most Filipinos already have strong opinions on what features of this system of government need modification or correction. This will not be the case with a parliamentary system. In shifting to it, Filipinos must begin again at the bottom of the learning curve. That is, of course, justifiable if there are compelling reasons and clear benefits for making the shift. In this case, however, no clear benefits to the nation as a whole can be demonstrated by those who propose our adoption of a parliamentary government. And the reasons are apparently compelling only to a few.

With respect to changing from a unitary structure to an eventual federal structure, our main objections are also enumerated below. Likewise, the advocates of the federal structure have been unable to respond adequately to these objections.

1) The devolution of power to local governments can be accomplished without resorting to ‘federalization’. What local government officials repeatedly say they want are the power to deal with local issues and local projects at the local level (without having to get approval from ‘Imperial Manila’) and the automatic release to them of their shares of national tax revenue. But local autonomy is already provided within the framework of the existing Constitution and this includes the power to impose local taxes that accrue exclusively to the local government units, the entitlement to a fair share in the utilization of natural resources within their areas, and the automatic release to local units of a just share in national tax revenues. Any problems and shortcomings particularly with respect to the size of the share of local governments in national tax revenues or in the benefits derived from the exploitation of natural resources within their boundaries, or in the release of these shares to them by the national government can be addressed by simple legislation and administrative fiat. There is absolutely no need for the creation of another territorial and political subdivision – the independent federal State made up of a group of provinces – in order to address those issues.

2) The aforementioned creation of new territorial and political subdivisions in the country will be (in the words of one commissioner) an ‘administrative and fiscal nightmare’. The introduction of a whole new layer of government (the federal State’s) will increase complexity, bloat the bureaucracy, and increase spending on government. (Each federal state will have a separate state government, a separate state legislature, and a separate state judiciary.) This means more government rather than less, and we object to this on ideological grounds. The additional autonomy that federal states might gain over that which the existing provinces, cities, and municipalities could have under an enhanced local autonomy code is of dubious benefit. It is not worth the additional problems and expenditures that ‘federalizing’ will entail.

3) Most of the proposed new political instrumentalities will not be financially viable, at least for many many years. In a federal setup where each state is presumably on its own, conflicts may therefore arise because the few affluent states could balk at transferring significant amounts of their resources to the many marginal ones. If this is not managed properly, the country’s problem of uneven area development could very well intensify.

4) Another area of potential conflict is how the servicing of our large foreign debt will be allocated among the various individual states. Clearly, the few revenue-rich ones will be forced to bear a far larger burden than the many revenue-deficient ones and this could be a continuously contentious issue. Should these revenue-rich states start refusing what they may perceive as an unfair burden, it could very well jeopardize the country’s ability to meet its international debt obligations and this could have catastrophic consequences. This sharing of the foreign debt burden is actually a dangerous problem which might even trigger talk of secession.

5) The above issue will also arise with respect to the sharing of the expenses of the central government including the maintenance of the armed forces, the national police, Congress, etc. Invariably, revenue-rich states will be forced to bear a proportionately larger share of the burden and they may eventually feel that this is unfair and begin to insist on a more even distribution. Again, this can be a source of dangerous conflict.


6) Almost all existing federal republics in the world are made up of previously independent states that decided to band together in order to share the expenses of government and of national defense and security, to supplement each other’s resources, and to build larger, more viable markets. Even today, the move toward the consolidation of small units into larger groupings (e.g., the European Union) continues for the purpose of sharing resources, enlarging markets, and increasing global competitiveness. In contrast, the proposed ‘federalization’ of the Philippine Republic is aimed at artificially forcing the break-up of an already small unitary unit into even smaller units. This hardly makes economic sense.

7) The ‘federalization’ of the country could reverse any progress already made toward inculcating in every Filipino the idea of being part of one Filipino nation and one Filipino community. Instead of promoting the idea that we are one people, dividing up the country into groupings most likely based on common or similar dialects could very well return us to tribal modes of thinking. This could be fatal to any attempt to engage the whole nation in concerted efforts to achieve ‘national’ purposes. ‘Federalization’ could very easily lead to the eventual break-up of the Filipino nation.

For the reasons cited above, we wish to express our sincere conviction that the constitutional changes that will be presented to the Filipino people by the Commission – and perhaps subsequently by Congress – will not be beneficial to the nation as a whole and will only aggravate the problems the country now faces. We are concerned that the Filipino people are about to be stampeded into an action – ratification – that they will not have had time to contemplate and consider fully.

We would like to emphasize that we are not against constitutional change and we believe that several changes are necessary to address real problems. We believe however that such changes must be the right changes. The often-heard statement that ‘the presidential system has failed us, therefore we must change to a parliamentary system’ betrays a very superficial and shallow kind of thinking. Making the wrong analysis and settling on the wrong choice of changes will only make our situation worse than it already is. We believe that shifting to a parliamentary form of government and to a federal structure are precisely the wrong kind of changes.

In the light of the foregoing and in the light of our own individual objections to the conclusions and recommendations approved by the majority in the Commission, we regret that we are unable to sign and endorse the Commission’s Final Report.

In lieu of this, we are submitting to your office a working draft – with annotations – of an amended Constitution that we feel better represents the kind of change that we would like the Filipino people to consider. What we propose is to retain our existing presidential form of government with a unitary structure, but with some modifications. These modifications include limitations in the prerogatives of public officials, electoral reforms, additional modes of removing or recalling elected officials, reforms in the Judiciary to make the administration of justice more effective, a more powerful Ombudsman (reconstituted as an Anti-Corruption Commission), clearer definitions of peoples’ rights, enhanced local autonomy, and economic reforms.

On the matter of economic reforms, we strongly support the liberalization of the economy and the removal of citizenship restrictions on the exploitation of natural resources, the operation of public utilities, and the ownership of mass media, advertising companies, and educational institutions. We also support the lifting of the restrictions on foreigners owning land. In general, we support provisions that are consistent with an open economy, free competition, and minimum regulation.

The attached working draft provides, we believe, logical and appropriate responses to certain problems that have been identified as plaguing Filipino society (at least insofar as a Constitution is capable of addressing such problems). We would like to emphasize, however, that it is offered here not as a final product, but as a starting point for discussion by all interested Filipinos. For this purpose, we will make this working draft available to all interested entities, civic and professional groups, schools, and media outfits, so that anyone interested can review it and make comments and suggestions.

This submission is our collective contribution to the “great debate” on charter change. We hope that you will find it enlightening and useful.

In closing, please accept our sincere thanks for having given us all the opportunity to be part of this significant development in our nation’s history.


Very truly yours,


ANTHONY Y. ACEVEDO RENÉ B. AZURIN


DONALD G. DEE GERARDO S. ESPINA, SR.


JOSE P. LEVISTE, JR. JAMES MARTY L. LIM


JOSE D. VILLANUEVA



CC: Senate President Franklin M. Drilon
Speaker Jose C. de Venecia Jr.



RBA: 13dec2005


Minority Group Report – Working Draft of Revised Philippine Constitution

Proposed Revision of the 1987 PHILIPPINE CONSTITUTION


MAIN FEATURES OF WORKING DRAFT:

1) The presidential form is maintained, and the executive branch of government remains separate from the legislative branch (Congress).

2) As it is at present, the President and the Vice President will be elected nationally for a term of six years. The President cannot be reelected.

3) The qualifications required of a candidate for the position of President or Vice President shall now include a tertiary educational degree and public service experience of at least one full term as Governor of a province or as a member of Congress, or at least three years as a senior official (Bureau/Agency head or higher) in the executive branch of government.

4) The existing two chambers of Congress are fused into a single chamber. Congress will be made up of Regional Representatives elected by region and District Representatives elected by legislative district. There will be two Regional Representative per region and one District Representative per legislative district (set at a ratio of 1 for every 250,000 population, no limit on number).

5) The qualifications required of a candidate for the position of member of Congress shall now include a tertiary educational degree.

6) The Speaker and Deputy Speaker of Congress and the Chairmen of all standing Committees of Congress will be chosen only from the Regional Representatives.

7) The terms of the members of Congress shall be three years. There shall be no term limits for the members of Congress.

8) Elective office, except that of the President and Vice President, will be open to all citizens (not just natural-born ones).

9) The present Supreme Court will be broken up into two: a new Constitutional Court (7 members) and a Supreme Court (9 members). The Constitutional Court will have jurisdiction over constitutional issues, conflicts between government units, and impeachment cases against elected officials. The Supreme Court will remain the highest court for resolving private legal issues. Both Courts will sit only en banc.



10) The administrative supervision over the lower courts that is now being performed by the Supreme Court will be transferred to the Judicial and Bar Council which will be reconstituted as a new Judicial Commission. This is done to free the Supreme Court and allow it to concentrate on its adjudication functions.

11) The Commission on Human Rights is reconstituted with additional powers as a new Constitutional Commission called the Rights Enforcement Commission.

12) The Office of the Ombudsman is reconstituted with additional powers as a new Constitutional Commission called the Corruption Commission.

13) The power of the President to appoint officers in the Armed Forces is limited to the positions of Chief of Staff and the Major Service Commanders.

14) Additional restrictions are placed on appropriating and disbursing discretionary funds.

15) The fundamental rights of citizens are strengthened.

16) The old Regalian doctrine under which the State owns natural resources is replaced with a doctrine of State stewardship.

17) Free enterprise, open market competition, and private initiative are enshrined as principles of national economic policy.

18) All citizenship restrictions for the ownership of alienable land, the exploitation of natural resources, the operation of public utilities, the ownership of mass media, advertising companies, and educational institutions, and the practice of professions are removed.

19) The unitary (meaning, not federal) structure of the Republic is retained, but local autonomy is enhanced.

20) There will be additional modes of removing public officials: by judicial impeachment through a case filed in the Constitutional Court and through recall elections upon petition by 12% of voters who voted in the last general election in the subject area (the whole country in the case of the President).

Top business stories we missed

A number of newspapers have had their Top Ten Business Stories of the Year 2005. All of them missed among the three most important stories as regards business and the economy.

These are: 1) Gloria Macapagal Arroyo survived as president of the republic despite the July 8 coup attempt; 2) SM Investments Corporation’s $528 million initial public offering – the largest IPO ever in Asia and of course, in the Philippines; 3) Ford Motor Company’s decision to invest P1.1 billion to produce flexible fuel engines in the Philippines for export to Asia and the rest of the world.

A fourth major business story is the ascension to chief justice job of Senior Associate Justice Artemio Panganiban. Among the justices of the high court, he is the one most friendly to and most knowledgeable about business and technological trends. He penned the ponderous decision on mining that in effect allowed foreigners to invest in mining, a reversal of the previous Supreme Court ruling on the issue. Chief Justice Panganiban will be good for business and the economy.

Mining, along with IT and tourism, will be the cash generators of the economy. This is in addition to remittances of OFWs which in 2004 are estimated to reach a record $12 billion.

That GMA remains our president is the defining moment of 2005. It settles the issue of leadership. Investors and businessmen will now know who to deal with. This explains the unusual strength of the stock market and the equally unusual strength of the peso. Investors have begun to park their money in the Philippines. The peso has reached a 30-month high against the US dollar not only because of the huge OFW remittances but because I suspect hidden wealth – both stolen and illegitimately earned – has begun to flow back into the Philippines. How can you explain the fact that the Philippines has been incurring current account surpluses?


Meanwhile, the SMIC IPO is an indication of new life stirring in the moribund Philippine equity market and catapults SM Investments into the ranks of the largest companies in the Philippines in terms of market capitalization.

Macquarie and BDO Capital priced the deal at P250 a share selling 115 million shares raising P28.75 billion (US$528 million). Of the total shares sold, 80 percent went to overseas investors in pre-trading allocation.

SM Investments is a Philippine conglomerate involved in shopping malls, retail, banking, real estate and leisure. Henry Sy’s group is the dominant player in retail, owning 50 percent of the country’s shopping malls and the largest land bank in the Philippines. Its bank, Banco de Oro, is also one of the fastest growing banks in the Philippines.

On the other hand, Ford Motor Company of the US will invest P1.1 billion or $20 million to put up a flexible fuel engine plant at its sprawling Santa Rosa complex in Laguna.

Ford Philippines will produce 100,000 engines over the next five years valued at about US$100 million. Start-up is due in first quarter this year with full production to begin before the end of 2006.

"We expect that this new investment by Ford will take the Philippine automotive industry to its next level of development by establishing its leadership in the Flexible Fuel technology in the region," Ford corporate vice president Peter Daniel, the concurrent Ford Asia Pacific and Africa president, said in the statement.

"Flexible Fuel technology is part of Ford's global vision on innovation, and with this investment Ford intends to build the Philippines as its ASEAN (Association of Southeast Asian Nations) Center of Excellence in Flexible Fuel Technology," he added.

Currently, Ford has more than one million ethanol-powered cars and trucks on the road. In North America, four new vehicles are planned for 2006 that will largely run on ethanol, increasing the production of these vehicles in 2006 to as much as 250,000 units.


"Our view of doing business here remains positive, as we continue to grow our existing exports operations and increase capabilities with our new engine manufacturing project," Daniel said.

“We expect that this new investment by Ford will take the Philippine automotive industry to its next level of development by establishing its leadership in the flexible fuel technology in the region,” said Daniel. “Flexible Fuel technology is part of Ford’s global vision on innovation, and with this investment Ford intends to build the Philippines as its ASEAN Center of Excellence in Flexible Fuel Technology.”

Last December, Daniel paid a courtesy call on President Macapagal-Arroyo in Malacañang to formally inform her about the investment and express appreciation for the support the government has given to Ford's operations in the Philippines. His visit is generally seen as an indication of the importance of the Philippines to Ford’s growth strategy in Asia Pacific.

“Our view of doing business here remains positive, as we continue to grow our existing exports operations and increase capabilities with our new engine manufacturing project. We also have confidence in the capability of our Filipino workforce which has significantly contributed to the success of our export operations," Daniel told the President.

Email tonylopez@biznewsasia.com

ConCom will do more harm than good

Con-Com abridges the freedoms of speech, expression, press and peaceful assembly


It seems the 55-person Constitutional Commission is going to do more harm than good to the people, to the country, and specifically, to us, journalists.

We already know that the body, composed of people who were not elected by the people but who are now trying to do social and economic engineering without the people’s mandate, is recommending the cancellation of the May 2007 senatorial, congressional and local elections.

Instead, incumbents get a free additional three years in office, until 2010, without the benefit of an election. This No-El (no election) is an outlandish, anti-people and anti-democratic idea and every democracy-loving Filipino must rise in arms (if need be) to defend the people’s right to choose their representatives and their leaders in a free, fair and honest election.

The No-El proposal is defended by the Con-Com commissioners notably by Dean Jose Abueva and a certain Atty. Romela M. Bengzon, on the ground that the country would save as much as P22 billion if no elections are held.

Since when did democracy have a peso price? Besides, the P22 billion will be spent by politicians, not by the people, and part, if not most of it, is stolen or jueteng money anyway. Democracy has a price, yes, and it is measured in terms of sweat, tears and blood of the people, not in pesos.

So election is one way of redistributing or returning wealth to the people, money that belongs to them in the first place.

Can you imagine the multiplier effect of P22 billion of consumption money? I estimate it to be about eight times or P176 billion (equivalent to how many times your favorite bank can lend your deposit earning a measly sum). For one thing, sales of beer, soft drinks, t-shirts, Jollibee and McDo, appliances and other consumer products go up every campaign time.

More importantly, we have already seen the destabilizing effect of having for leaders who are perceived as not having been elected by or without the mandate of the people.

An unstable political situation in turn results in an unstable economic situation. And an unstable economic situation turns off investors. Just how much investments, foreign and local, was held an abeyance at the height of the Garci tape and impeachment controversy? Incalculable. In fact, operators of restaurants and owners of malls tell me their sales went down during that time and it was only a few days before and after Christmas did consumer spending pick up.

I am disgressing from the main point – which is that the Con-Com has actually abridged press freedom,

Under the present 1987 (Section 4, Article III, Bill of Rights), “No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances.”

In the draft constitution by the Con-Com, Section 4, Article IV, Bill of Rights), “No law shall be passed abridging the responsible exercise of the freedom of speech, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances.”

My God! The Con-Com has just abridged four of our most cherished and valuable freedoms --- speech, expression, free press and to assemble peacefully to seek redress for grievances.

This was done thru the simple expedient of adding the words “the responsible exercise of” before enumerating the four freedoms – of speech, of expression, press, and the right of the people peaceably to assemble and petition the government for redress of grievances.

What constitutes responsible exercise? Who determines responsible exercise? The President? Congress? The Judiciary?

In ordinary logic, once you define something, you limit it. Once you add an adjective (like responsible) to the exercise of freedom, you limit it. Therefore, the Con-Com has just abridged or curtailed our freedoms. This is outrageous and journalists, in fact, all freedom-loving Filipinos must hold the Con-Com, collectively and individually, responsible for a grave and unpardonable crime against the people.

How come suddenly we have tyrants in our midst? They are people who otherwise in ordinary circumstances (like elegant dinners and cocktail parties) seem sane, educated, and responsible. Why did we have to fight the Spaniards, the Americans, the Japanese and our own made-in-the-Philippines tyrants just so we will lose our freedoms to a bunch of people many of whom we do not know from Adam and who are now trying to rule our lives, restrict our freedoms, and dictate our destiny? Surely, there is a remedy for such tyranny and a process to defend what is our birthright. And the name is rebellion.

Email tonylopez@biznewsasia.com

Monday, October 03, 2005

Lucio Tan and UE

Lucio Tan and UE

As a leading institution for the teaching of business management and accounting and finance, the University of the East could be expected to practice what it was preaching.

In 1990 that was not the case. At that time, “UE’s finances were in a mess. Fiscal controls were thrown out of the window,” recalls banker Panfilo O. Domingo, a 1950 business graduate. The school had reached its nadir, its reputation tarnished, its future bleak.

“The university’s lawn on Claro M. Recto was converted into a mini-Divisoria with some 100 stalls and even a moviehouse,” winces Domingo, who was by management for help, he being an alumnus. He was shocked that the Maharishi cult of India had acquired 60 percent of the university. The university had accumulated deficit of P58 million and debts of P110 million. In other words, the money of the major stockholders’ (like the Cancio and Bocaling families) had run out.

Bulletin publisher Emilio Yap extended a P27-million loan to shore up the uni-versity’s finances. The loan was backed by real properties of UE. He wanted the university. He should have asked for an assignment of its shares, not the properties.

That mistake enabled beer, tobacco and banking taipan Lucio Tan to enter the picture. Upon the advice of P.O. Domingo, he initially bought 22 percent of UE, plunking P20 million.

Tan later plowed an additional P45 million to buy the company’s unissued shares and increase his equity to 71 percent. The investment turned out to be one of the best he has made. The taipan put in another P65 million and paid UE’s debts of P110 million, for a total investment of P175 million. Today, UE, with its retained earnings and landholdings, is valued at P3 billion.

“The university is now sound financially,” Domingo gushes with pride. Retained earnings have amounted to P358 million as of end-March 2005, representing profits plowed back into university for expansion and modernization.

UE intends to become one of the leading universities in the country. It will be Tan’s legacy.

Aside from its traditional forte of business management and accounting, UE intends to excel in such fields as information technology, medicine and dentistry, nursing, and maritime technology. UE also wants to be a leading center of arts and culture “to complete the education of the management man,” says the UE CEO Domingo.

UE is credited for training among the country’s best professionals, managers and entrepreneurs. They are not as flashy and flamboyant as alumni from La Salle and Ateneo. But they are equally good, if not better.

Domingo, UE CEO for the last 15 years, himself epitomizes the best qualities of a UE alumnus. During his stint at the Philippine National Bank, it was the biggest in Southeast Asia and Domingo was named Asia’s top banker.

Between 1990 and 2000, UE’s gross revenues increased 415 percent from P115 million to P591.8 million, a frenetic average annual gain of 37.7 percent. The rise in profits was even more dramatic during the same 11-year period, by 1,559 percent, from P4.2 million to P69.7 million, for a spectacular average annual increase of 142 percent. UE chalked up cumulative profits of P321 million, doubling the money that Tan invested in the school.

Return on equity more than tripled, from 3.6 percent in 1990 to 12.3 percent in 1996, 13.5 percent in 1997, 10.5 percent in 1998, 12.6 percent in 1999, and 12.4percent in 2000. Assets also more than tripled, from P239 million in 1999 to P750 million in 2000, reflecting the owners’ sustained capital infusion and capital expenditures to improve facilities. In the past three years, however, revenues slowed down—P618.96 million in 2003, P613.55 million in 2004 and P628.14 million in 2005, increasing just 1.5 percent a year. Operating income was P7.4 million in 2003. That was reversed into a loss of P1.63 million in 2004 and an even bigger loss of P5.84 million in 2005.

Declining enrollment, rising costs and a difficult economic environment are taking their toll on the university. How did Domingo turn around UE? Three things—equity infusion, no debts and fiscal controls.

“We are now debt-free,” says the UE chair and president. As of March 31, 2005, UE had a net worth of P802.72, including retained earnings of P320 million. Domingo imparts three principles essential to running a viable university enterprise. One, “you must have a strong equity base,” he says. Two, “there should less reliance on loans. The expansion of the university must be through capital contribution.” And three, “you must enforce fiscal controls.” Tight budgeting and planning are also Domingo’s innovation. “I am planning and results-oriented,” he says.

With UE’s finances in good order, Domingo is now focusing on three things—how to arrest the drop in enrollment, improving faculty quality and planning for the 21st century.

E-mail tonylopez@biznewsasia.com

Is Gloria Arroyo a tyrant?

I do not believe President Gloria Macapagal-Arroyo will declare martial law or impose emergency rule. She is not a tyrant. Having experienced how martial law drove her father, President Diosdado Macapagal, into ignominy if not penury, GMA should be the last to entertain thoughts of emergency rule.

“I’m tired of chasing the bully around the schoolyard,” she told an assembly of baranggay officials of Central Luzon Thursday last week. That’s psy-war, pure and simple.

Everybody is tired of bullies. In GMA’s case, she herself sounds the like the bully she is talking about in the school-yard. She was a professor of economics. So she uses the school metaphor. But it is the wrong metaphor and should not be used when you are the one accused of lying, cheating and stealing. In the school, these are prohibited acts and drilled into a student’s mind till boredom comes.

You are a bully if—despite Social Weather Station’s disturbing findings that 79 percent of the people want her impeached, 63 percent want her to resign and 51 percent want her ousted by People Power—you insist on ruling with an iron hand. Threats, intimidation and the use of force are standard weapons of tyrants and unwanted rulers.

When you are unpopular and use these weapons, you open yourself to threats, intimidation and the use of force. If protesters, rather than being heard, are gassed, truncheoned, arrested with the flimsiest of reasons or even murdered, you become not just a bully. You are a tyrant and a dictator. And people have no more patience with such rulers and their ilk.

First a restive people resort to prayers, then peaceful assemblies, then mass actions and eventually violence. The military reacts with its own violence. The result is civil war, then a revolution.

Soon, the tyrant is ousted. Lucky our own kind of tyrants, they are not killed by the mob nor their relatives shot by musketry. They are allowed to go on self-exile and a kind of house arrest, with most of their loot virtually intact.


E-mail tonylopez@biznewsasia.com

What Charter Change can do



VIRTUAL BUSINESS
By Tony Lopez
What Charter change can do


The 37 or so members of the President Arroyo’s Consultative Commission have been given three months to finish their job, which is to amend the present Constitution drafted in 1986.

The commissioners have their work cut out for them, literally, by Speaker Jose de Venecia’s 236-member House of Representatives which two years ago drafted a constitution to replace the present one. That draft calls for a shift to the parliamentary system and a federal form of government, doing away with the presidential system which, probably by coincidence, has resulted in the slowest economic growth in the last 30 years in Asia, bar none—a per capita growth of less than 1 percent. Bangladesh and Myanmar did better, economically.

Whether the commission will shift the country to the parliamentary system or retain the rambunctious presidential system, I do not care. To me, it does not matter what kind of government we have as long as we have good men running it. Unfortunately for the Philippines, we have had a series of corrupt, or incompetent, or worse, both kinds of presidents in this country in the last 40 years ruining it to the point of irreversible perdition. Our presidents have damned us to extreme poverty never seen anywhere else in Asia.

Culturally in Southeast Asia, Filipinos are the most brilliant and most literate among the region’s diverse peoples. We are No. 2 in literacy, with 92.6 percent of the people able to read and write. Only the oil-rich sultanate of Brunei has a higher rate, but infinitesimally, at 92.7 percent. Yet per capita, we are the worst performing, economically. How do you explain that? It is a question of leadership.

We have had a series of bad presidents in the last 40 years. Half of our presidents should have been shot against the wall for corruption, incompetence, or both. Yet, the relatives of one want to give him a hero’s burial. Another masquerades as a Mother of Democracy. One goes around the world proselitizying about good governance. One remains hugely popular. And one refuses to quit.

They all have one thing in common—their administration was marked by corruption, most of it in unprecedented scale. Much of the Philippines’ money is in flight, and the factors of production are meeting abroad—not here. They are, in elementary economics—capital, labor, entrepreneurship.

The only factor of production inside the country is land, and that is because land is not portable. Otherwise, it would have been brought out too.

That is why we have about $80 billion of wealth stashed abroad. We have eight million workers abroad. And most of our taipans and tycoons have investments abroad. In this sense, the Filipino is the truly global citizen.

Why is this so? They are scared of our government, wary of our presidents.

It is in this light that we should view the work of Mrs. Arroyo’s constitutional consultants. Amending the charter should bring about two basic things—bring closure to our politics and open up the economy. All other amendments are just Christmas decors in relation to the impact of these two.

Closure means forgiving all our presidents who tortured or murdered their countrymen and who stole billions of pesos or dollars, not necessarily from the treasury (“Just how much can you steal from the Treasury?” President Marcos told me once), but through shady deals and countless acts of omission and commission. Let Marcos be buried at Libingan. Let Cory Aquino remain Mother of Democracy and keep her Hacienda Luisita. Let us forget about scams under Fidel V. Ramos. Let Joseph Estrada free. And let GMA rule until 2010. Let us recognize the legitimacy of their presidencies, whether they won big or won small or used Garci tapes, whether their votes were properly counted by a Comelec that couldn’t count.

But by God’s grace and forebearance, let us by 2010, start with a clean slate. And let capital come in by opening up the economy—property, utilities, mining, the media, to name some. Let us encourage the return of stolen capital by declaring amnesty with say, just ten percent tax. And let us give all Filipinos tax amnesty.

Then maybe, this nation can be great again, as Marcos once promised, or we will have a strong republic, as GMA once declared.

E-mail tonylopez@biznewsasia.com

Wednesday, July 13, 2005

The Truth Commission on President Arroyo

Published in The Manila Times Business June 27, 2005

VIRTUAL BUSINESS
By Tony Lopez
A truth commission


AFTER the peaceful rally of the political opposition on June 24 and the canceled protest march of ex-generals on Saturday, the country enters a period of critical consolidation.


The political opposition is consolidating its forces.


What is remarkable about this consolidation is that the forces of the left, the right, the studentry, and the middle ground have united against what they perceive as their common enemy, Gloria Macapagal-Arroyo, and a common cause, her removal.


Sen. Panfilo Lacson has finally found common cause with the forces of Fernando Poe Jr. The former crime fighter and national police chief provides organization, platform, logic, rhetoric and not to be sneezed at, military intelligence, to the disparate pro-FPJ groups, led by Mayor Jojo Binay of Makati, Congressman Chiz Escudero and Rez Cortez. Ping took away anti-GMA votes from FPJ in the May 10, 2004 election. Had he run as the actor’s vice president, Ping would have been president by now.


For the first time since 1986, antiad­ministration forces have a common foe. Not since Ferdinand Marcos has this happened. It does not bode well for GMA who has triggered so much dislike and outrage to the point that everybody is now ganging up on her. The students’ Valentina placards portray her as “President Evil,” a takeoff from the computer game, “Resident Evil.”


The exceptional holdouts seem to be the Makati Business Club and the Catholic Church both of which are now divided between pro-GMA and anti-GMA forces.


This is because of two reasons: one, both the MBC and the Church are too proud to admit they made a mistake in backing GMA in January 2001 and May 2004 and two, they don’t know or rather, don’t like the president’s replacement under the constitutional succession order—the vice president, the Senate president and the House speaker. I cannot recall any vice president who has suddenly become so unpopular and suspect in so short a time as Noli de Castro.


For someone who started the 2004 vice-presidential campaign with a 30 percent vote advantage (this was at that time based on 30 million voters, equivalent to nine million votes) and winning by just 800,000 votes over Loren Legarda, VP Noli has indeed suffered a massive loss of popularity. GMA is the most unpopular President ever and Noli is the most unwanted vice president ever. Is there a connection? Does GMA’s unpopularity rub on Noli? Usually, when the president is unpopular, the vice president is not equally disliked.


Political parties that otherwise were sympathetic to if not allied with GMA are now distancing themselves from her. They include the Liberal Party and the Nacionalista Party and the group of former Defense Secretary Renato de Villa who used to be GMA’s executive secretary. The Ship of State is sinking and these groups have shown an artful way to jump.


Even Corazon Aquino was initially perceived to be against GMA by making a very neutral statement, calling for prayers, calling for finding the truth and by visiting FPJ widow Susan Roces at the height of Gloriagate.


The Great Tabako, Fidel V. Ramos is playing the usual enigmatic middle ground but two ranking men currently or formerly associated with him are active in the oust-GMA movement—retired Gen. Fortunato Abat and former finance secretary Jun Enriquez, both of whom have been accused of inciting to sedition.


To break the stalemate, the emerging consensus is for a “truth commission.” This is favored by Cory Aquino, by Fidel Ramos, by the MBC, by the Catholic Church, by the military, and by constitutional purists.


Patterned after the probe bodies that looked into the 1989 and Oakwood coups, the commission shall investigate allegations of jueteng payola to the President’s relatives and the Gloriagate tapes. Is she the voice in the tapes.


If so, was she really cheating. If she cheated, by how much. Would the cheating have changed the outcome of the May 2004 election?


In the 1986 election Marcos was accused of cheating but the electoral fraud was not enough to change the outcome. The strongman still won by a comfortable margin, by 300,000 votes instead of the official two million votes, over Cory Aquino. Just the same, Marcos was ousted by People Power. In late 2000 Joseph Estrada was accused of receiving illegal gambling payoffs, manipulating the stock market, and taking bribes that were deposited in a secret bank account. Nothing was ever proven outside of hearsay evidence. Just the same, Erap was ousted and has spent more time in isolation (4 years) than in the presidency (30 months). What undid Marcos and Estrada was popular perception and that was good enough to remove them.



E-mail tonylopez@biznewsasia.com.

The Legacy of Cardinal Sin

Published in The Manila Times June 29, 2005

VIRTUAL BUSINESS
By Tony Lopez
The legacy of the house of Sin

The nation buried Cardinal  Jaime Sin Tuesday (June 29, 2005), in a three-hour ceremony that was solemn, sonorous, timorous and humorless. The high and the mighty of the government, led by President Arroyo and Vice President Noli de Castro, and of the Catholic Church, led by Archbishop Cardinal Ricardo Vidal of Cebu and Archbishop Gaudencio Rosales of Manila, and leading prelates from Asia were in attendance.


Cardinal Sin leaves a legacy in three areas—in the finances of the Catholic Church, his political activism and his impact on the national economy.


Before Sin took over as prince of the Roman Catholic Church in 1976 and as president of the Catholic Bishops Conference of the Philippines in 1977, the local Catholic Church was one of the richest in the world. It had substantial investments in blue-chip companies like San Miguel, Bank of Philippine Islands, Ayala and the Cardinal Santos Medical Center. It owned Philippine Trust and Monte de Piedad, in the name of about 100 bishops. Those investments are gone. Philtrust was bought by publisher Emilio Yap. Monte de Piedad was bankrupted by graft and is now known as Keppel Bank.


The Medical Center was taken over by the Chinese and is now one of the best equipped, for the money, hospitals in Metro Manila, second perhaps in quality of equipment and medical personnel to St. Luke’s which is also Chinese-managed.


The norm now in churches in the national capital is two collections per Mass—one for the local church and another for the mother church. Sin was not as good a financial manager as the late Cardinal Rufino Santos. Santos rebuilt the Catholic Church from the ravages of war, renovated the Manila Catholic Cathedral and at the time of his death, the Church owned at least three major banks. Those banks are gone.


Cardinal Sin brought political activism to the extreme. He employed a press secretary and a full time close-in photographer and gave calibrated interviews, mostly to foreign correspondents like me.


He brought down two once hugely popular presidents, Ferdinand E. Marcos in February 1986, and Joseph “Erap” Ejercito Estrada in January 2001. Their successors are two of most controversial and unstable presidencies ever. The record of Corazon Cojuangco-Aquino and Gloria Macapagal-Arroyo as chief executives is mixed at best. In a sense, you can say Sin was the father of People Power.


However, People Power didn’t bring about good governance nor sustainable economic growth.


During 14 years of martial law, Sin was the beacon to whom Filipino Catholics looked up to for guidance and courage. He stood up to the dictatorship. With the media muzzled and the military pampered, having become Marcos’s private security agency, Sin was often the lone voice of dissent and righteousness. As early as 6 p.m. of February 22, 1986, he was on the radio summoning the throng to EDSA, lending credibility and mass power to the revolt of Defense Secretary Juan Ponce Enrile and Army Col. Gringo Honasan. The Armed Forces vice chief of staff, Fidel V. Ramos, gave support at 2 p.m. of the same day but it was very late in the day when he went to Camp Aguinaldo to join Enrile on national radio and television. As early as October 2000, Sin was asking for the resignation of Joseph Estrada following revelations by Northern Luzon warlord Chavit Singson that the president was the lord of all jueteng lords.


Despite People Power, the Philippines degenerated from being the second most robust economy in Asia into the region’s economic laggard. Per capita growth ground to 1.2 percent, from 1975 to 2002, the slowest in Asia, bar none, per statistics of the World Bank.


Poverty incidence doubled from 15 percent to more than 30 percent. The number of poor doubled to more than 30 million. This happened at a time when the Church policy was “a preferential option for the poor.” In the countryside, young priests became communist guerilla commanders and parishes their virtual headquarters. Today, the same 200 elite families that control the economy and the politics of the country remain ascendant.


During Sin’s cardinalship, population growth, at a frenetic 2.3 percent a year, or 1.9 million babies a year, became one of the fastest in the world.


Sin justified his political activism by claiming that all human activity has a moral dimension, a right and a wrong. I suspect that at one point, he entertained becoming president of the Philippines. In fact, many times, he acted like one.


Ultimately, however, the biggest immorality in this country is not jueteng, not the thieving people in the government, not the private affairs of many prominent people. It is the massive poverty of the people.



E-mail tonylopez­@biznewsasia.com

President Ramos to the rescue

  




 


 

 



Friday, July 08, 2005
VIRTUAL BUSINESS
By Tony Lopez
Ramos to the rescue

Former President Fidel V. Ramos gave yesterday an easy way out for embattled President Gloria Macapagal-Arroyo.


He doesn’t want Mrs. Arroyo to resign nor be toppled by People Power or a coup. He also wants Noli de Castro to stay put as Vice President. He wants her to remain in Malacañang but only for 10 more months as head of a caretaker government until a new parliamentary government headed by a Prime Minister takes over on June 1, 2006.


This is the gist of Ramos’s paper, “A Call to Duty: What the Nation Must Do” delivered before the Rotary Club of Manila yesterday and a copy of which was forwarded to President Arroyo in the morning.


Ramos said he would see President GMA either today (Friday) or Saturday about his proposal for a Constitutional Assembly and a High Commission of about seven eminent people who will examine the Philippine situation and recommend strategic solutions, what he calls policy reforms, executive actions and private endeavors.


Basically, the High Commission will recommend amendments to the Constitution for adoption by Congress, which shall constitute itself into a constituent assembly to adopt the amendments to the Charter within two months from September 1, 2005.


Among these changes are: a shift to a parliamentary form of government (Ramos says the US-style presidential system has not worked for us, looking at the past 100 years), electoral reform to prevent the kind of Comelec we have now, elimination of turncoatism and dynastism (which he defines as having a relative in government up to the fourth degree of consanguinity), judicial reforms to speed up the dispensation of justice and reinforce the sanctity of contracts (this is a dig at the Supreme Court which he says has become “intrusive” into matters purely economic or business), and socioeconomic reforms to promote human development.


Ramos recalled situation in France similar to what the Philippines is experiencing now. In 1958 the Fourth Republic, he said, reading a briefing paper, “was tainted by political instability, its failures in Indochina and its inability to resolve the Algerian question.” On May 13, 1958, French rebels had seized government buildings in Algiers. Their leader, General Raoul Salan, commander in chief of Algeria, declared “Vive de Gaulle!” De Gaulle responded he was “at the disposition of the country.”


I was in the eight-man panel assembled by the Rotary to ask questions of the former President. I asked Ramos if he was our de Gaulle. He called my question foolish. He said he was not interested to be prime minister, which he said, is a lower position than president of the Philippines (who is both the head of state and the head of government). But he added, President Arroyo could run as a member of the parliament (representing perhaps Pampanga, Pangasinan, Cebu, Iloilo or even Lanao del Sur) and get herself elected prime minister. Of course, she will have to contend with an Assemblyman Ramos from Pangasinan, Assemblyman Jose de Venecia from Pangasinan, Assemblyman Eduardo Cojuangco Jr. from Tarlac, Assemblyman Panfilo Lacson from Cavite, Assemblyman Manuel Villar from Las Piñas, Assemblyman Frank Drilon Drilon from Iloilo, Assemblyman Juan Ponce Enrile from Cagayan, Assemblyman Rodri­go Duterte from Davao, or even Assemblywoman Corazon Aqui­no of Tarlac or Assemblywoman Susan Roces of San Juan, to name a few.


Ramos’s proposal is interesting for two reasons. One, it goes beyond the current investigation into the jueteng payola and electoral fraud scandals, thus sparing Mrs. Arroyo the ignominy of being found guilty of the charges and being booted out of office forcibly for it. Second, it provides a strategic solution to festering problems of petty partisanship, bad governance, massive poverty and underdevelopment.


The betting in business circles, a fellow Rotarian confided to me yesterday, is that President Arroyo won’t last beyond the end of this month. Indeed, no president has ever defied the outrage of his/her own people. In 1986 Ferdinand Marcos was accused of electoral fraud. In just 18 days, he was gone. In 2000 Joseph Estrada was accused of taking jueteng bribes. In just four months, he was gone. In both instances, the guilt of Marcos and Estrada was never proven.


Now, Mrs. Arroyo has been accused of jueteng payola and electoral fraud. Surveys by SWS and Pulse Asia show she has become the most unpopular and most hated president in history. In the popular perception, she now appears to be worse than Marcos. 


There is a problem though with Ramos’s proposal. To get it going, the scheme requires the cooperation of President Arroyo and of Congress. If Congress doesn’t cooperate, it could end up being abolished by a new revolutionary government that would forcibly take over the government. If Mrs. Arroyo ignores the proposal, Ramos says, “We will know what to do.”



E-mail tonylopez@biznewsasia.com

Good Manners and Right Conduct and why you should worry about the Philippines

Wednesday, July 06, 2005

 
VIRTUAL BUSINESS
By Tony Lopez
GMRC and why worry?


La Salle and Ateneo came  out with completely different stands on what to do with President Gloria Macapagal-Arroyo. La Salle is the current basketball and volleyball champion. The Christian Brothers otherwise produce very good wines when not praying, teaching and helping manage businesses. The Jesuits and La Sallians pray to the same God and as far as I could determine at press time, are both Catholic. So how could they come up with two divergent views as regards PGMA?


La Salle is asking President Arroyo “to voluntarily relinquish her post so that a constitutional process of succession may proceed.” La Salle has nine schools. The constitutional successor is Noli Boy de Castro, a banking graduate of UE. The UP Law School is also urging GMA to resign. By resigning, Mrs. Arroyo, La Salle said, will be making “a personal sacrifice for the nation’s interest.” The Ateneans, on the other hand, are telling GMA “it’s up to you Ma’am whether you want to resign or not.” Of course, she will not resign.


Do right and wrong have shades of grey? Wrong or evil by any other name or religion is wrong or evil. I remember a classmate of mine in senior high school. He was accused of cheating. He was not. Just the same, the teacher gave him a failing grade. As a result, he was disqualified for graduation honors.



There is a moral crisis sweeping the country. And I blame a major failure in the school. Schools no longer teach good manners and right conduct (GMRC).


When I was in elementary and high school, this was major subject. You couldn’t graduate with honors if you get low grades in this subject. GMRC was one-third of the weighted general average. The subject was supplanted by “Maka­bayan”—a hodgepodge of subjects covering social studies, community life and the study of Filipino.


The three major values taught under GMRC are honesty, cleanliness and diligence. Honesty means you don’t lie, you don’t cheat, you don’t rob and not tolerate those who do. A liar is a sibling of a thief. Cleanliness means personal hygiene and keeping your surroundings clean. You may be poor but still be neat. And cleanliness is next to godliness. Diligence means you study hard. PGMA has instructed schools to give emphasis to the teaching of English, science and math. If you are diligent, you don’t need to be told to study English, science and math. Diligence makes it a habit for one to study English, science and math.


Is it a coincidence that during the times when GMRC was being taught in public and private schools the Philippines had one of the most robust economies in Asia and we had a succession of decent presidents?


Similarly, Harvard and the other Ivy League business schools in America stopped the teaching of Ethics. Decades later, there was an epidemic of corporate abuse and accounting scandals on the scale of Enron and Worldcom.



Look at the record of presidents from Ferdinand Marcos to the present. Marcos, a brilliant lawyer, ended his 20 years as President with zero economic growth.  Corazon Cojuangco Aquino, a plain housewife, ended her six years and four months with zero economic growth. Fidel V. Ramos, a bright West Pointer, ended his six years with zero economic growth. Joseph Estrada, an actor and third year engineering dropout, had declining economic growth by the time he was ousted in January 2001 after 30 months in office. Now, we have an economist, GMA. The economy posted its best economic growth in 15 years in 2004. But for the first quarter, the economy has started to slow down, at 4.6-percent GDP growth, compared with 6.4 percent in the first quarter last year. At the rate things are going, the economy will show a slower growth this year of five percent or less.


Our presidents start well and end up badly. We have tried nearly all kinds—a brilliant lawyer, a plain housewife who is a mathematician, a West Point soldier with engineering and MBA degrees, a college dropout with best acting awards, and now a PhD. economist.


During their presidencies, per capita income remained the same, at $1,000.


Actually, even if the president were a dog, the economy will keep moving forward and creating one million jobs a year. That’s how strong the economy is. Its output is worth $85 billion, making it as big if not bigger than the economies of Singapore, Pakistan, or Egypt. In purchasing power parity, the Philippine economy is worth $409 billion, the 25th largest in the world, bigger than 130 other countries.


So why worry if our president is an Arroyo, Estrada, Noli de Castro or—a dog?



E-mail tonylopez@biznewsasia.com

The coming deluge in the Philippines

Published in The Manila Times Virtual Business July 4, 2005

By Tony Lopez
The coming deluge





THE Supreme Court giving  due course to the petition of opposition legislators and NGOs to declare the expanded value-added tax law unconstitutional opens a Pandora’s Box of problems which could give rise to a number of things all of which bad for the people.


If the Supreme Court declares the law unconstitutional, it will force Congress to review the law, amend it, and cure its defects, or not enact a new tax law all, which means no higher VAT.


Without the new VAT law, government won’t be able to collect additionally, between P48 billion and P80 billion annually. That will alarm the international community that will then downgrade our credit rating, which in turn, will turn off investors and creditors.


The Arroyo administration won’t have the money to deliver basic services and the President has been under immense pressure to deliver if only to make good her promise to, well, be a good President if only to validate her claim she didn’t cheat.


The E-VAT law has two major defects.


It authorizes the President to increase the VAT from 10 percent to 12 percent. This is undue delegation of Congress’s exclusive power of taxation. The Senate originated the idea that corporations must pay higher corporate income tax of 35 percent instead of 32 percent. All tax laws must originate from the House, not from the Senate.


Considering the current political climate, the Supreme Court may not be inclined to declare constitutional what seems patently unconstitutional. Besides, the tribunal has had a huge credibility problem lately.


It is the one court that installed Gloria Arroyo as president and will now reap the consequences of her unpopularity.


So declaring the E-VAT law unconstitutional opens a way for the high court to gain pogi points with the public. Ours is a very political Supreme Court, and a very partisan one. When it comes to its own survival, it attends to its own interest. SWS acceptance ratings have not been very kind to the high court of late, and the justices are painfully aware of that fact. Besides, if there is a revolution, the justices will find themselves jobless.


Even the US Supreme Court, the grand daddy of all high courts, is not immune from political pressure. That is why there is so much tension and speculation with the retirement of Sandra Day O’Connor and the expected early retirement of the ailing 80-year-old Chief Justice William Rehnquist. Such vacancies are rare and President Bush sees an opportunist to tilt the Supreme Court’s ideological bent to his frame of mind.


Many of the Court’s decisions have been decided in close five votes to four, like on the separation of church and state, affirmative action and gay rights, and abortion (remember Roe vs. Wade?). I was surprised the US justices even debated on such minor things as to whether The Ten Commandments should be displayed on government property. Allowing so (it was allowed last week) implied endorsement of Christianity. If the US is not Christian, so be it. At least their presidents know when to resign (for a crime like attempting to bug an opponent’s convention center) and know when to pay atonement for their sins of the past (for a crime like misplacing one’s cigar in the wrong hole). So the addition of one or two conservative justices (meaning pro-Bush) will tilt the balance of power at the bench.


Chances are the E-VAT law will be sent back to Congress. That is when the problem begins. A new tax measure may not have the same sympathy as did the E-VAT Law because it becomes a new battlefront between the administration congressmen and the opposition, on top of the on-going jueteng and wiretapping investigations. My bet is that Congress will give priority to its wiretapping probe if only to calm the crescendo of protests in the streets, inside churches, and in increasing number of corporate board rooms.


The nation is afire with the issue.


Not surprisingly thus, industrialist Raul Concepcion urged Congress yesterday to immediately repeal the expanded value-added tax law when it convenes this July to eliminate its objectionable provisions which the Supreme Court may find unconstitutional.


At the same time, Concep­cion is urging every taxpayer—businessmen, politicians or ordinary citizens—to immediately correct their 2004 income-tax return to avail themselves of a virtual tax amnesty whereby anyone who pays tax at least 20 percent higher than what he paid in 2003 as income tax is excused from tax investigation.


He appealed to Congress to exercise the highest degree of statesmanship, set aside partisanship and correct deficiencies in the E-VAT law.


Concepcion warns of dire consequences: a rapid peso deterioration, a credit downgrade and loss of investor confidence.



E-mail tonylopez@biznewsasia.com

President Arroyo's amazing cabinet members

VIRTUAL BUSINESS Manila Times July 1, 2005
By Tony Lopez


President Arroyo's amazing cabinet members


One of the most remarkable things about this administration is the quality and dedication of President Arroyo’s economic team. I hope she keeps its members despite the impending Cabinet revamp or rigodon.

I am speaking in particular of Finance Secretary Cesar Purisima, Trade and Industry Secretary Juan Santos and the incoming Bangko Sentral Governor Amando Tetangco, who is scheduled to be sworn in, barring a last-minute revolution, this Monday.

Purisima is running after tax evaders, smugglers and people who refuse to pay the new expanded value-added tax. He has even included Mrs. Arroyo’s brother-in-law, Congressman Iggy Arroyo, as among the subject of his tax investigation though he has not included the President’s son, Mikey Arroyo, who has declared a P73-million networth despite being a neophyte congressman and not having completed schooling. Mikey perhaps can give his barkada tips on how to build a nest egg while you are young—and powerful.

Cesar thinks there could be a budget surplus as early as 2009 with the revenue from e-VAT, the campaign against tax evaders and smugglers, debt management, stricter discipline imposed on government-owned and -controlled corporations and privatization of government assets. Twenty-three cases have been filed against suspected tax evaders, which include a number of high-profile individuals like actresses and Agriculture Secretary Arthur Yap, a lawyer and an economist, who resigned yesterday effective upon the naming of his replacement. Art must have been very frustrated. He meant well but was unfairly targeted in the name of tokenism.

Once a case is filed in court, Purisima warns, “there is no more room for compromise.” The accused, of course, can win in the courts, as what taipan Lucio Tan has done. As for smuggling, well, the biggest suspect is about to leave the country for an extended vacation.

For his part, DTI Chief Johnny Santos projects a 10-percent growth in investments this year over 2004 during which investments increased 271.3 percent, and a 10-percent growth in exports to $43.6 billion. The Philippines, he says, is moving from being a hub for call centers to one more strategic—for software design and engineering for which the country has the people.

The economy is exceptionally resilient, assures Santos. Indeed, it is, considering our troubled past and our troubled politics. The reason for the resiliency is the $8 billion to $9 billion remitted annually by OCWs. My contention is that the economy is so big and so strong that even if the President were a dog—sometimes I think, considering the kind of presidents we have had in the past quarter century, it is better than this country had no president at all—the economy would continue generating one million jobs a year.

Economic growth has kept pace with most of our East Asian neighbors, says Johnny. Profits of publicly listed companies have increased 51 percent. Investment approvals (by Board of Investments and Philippine Economic Zone Authority) increased 153 percent in January to May, and by 115 percent in manufacturing.

The problem is addressing the main factors in the cost of doing business. One is fuel. Oil has reached more than $61 a barrel. Oil is a major cost component. George Drysdale of the agriculture group bearing their name says you use oil for fuel and for plastic packaging and their costs have gone up.

Another cost is energy. Power will go up this July because of VAT. Because of higher fuel cost and VAT, airlines are charging at least 10 percent more for domestic fares. Tollways too are raising rates.

Also a major cost factor is infrastructure, which is grossly inadequate.

Finally, the imponderable—corruption. An American Chamber survey says 88 percent of its respondents cited corruption as “a source of high dissatisfaction,” along with poor infrastructure.

This is why the current political turmoil is so unsettling for investors. They don’t know whether to deal with the present administration or wait-and-see until the next administration comes in. That way, they pay bribe only once.

Remember the Piatco? Its troubles began when a new administration came in. Now, Purisima says the government will expropriate Terminal 3. Cheng Yong of Piatco wants payment of at least $500 million, including “miscellaneous” expenses. Government wants to pay only $350 million, without the “miscellaneous” expenses. Guess where the difference went.

Item: Panfilo O. Domingo has taken over as president of the University of the East, in addition to his post as chair. With the takeover, the purge of ranking “gay” academic executives from UE is now completed.

Note: After the above column appeared in The Manila Times july 1, 2005, Cesar Purisima resigned as finance secretary and Juan Santos resigned as secretary of trade and industry (July 13, 2005)

For comments e-mail tony­lopez@biznewsasia.com

Slow motion coup in the Philippines a gainst President Arroyo

July 12, 2005


Slow motion coup

Something new has been added to the Philippine political lexicon – the slow motion removal of a sitting president. The coup is purely civilian – so far.

In just a week, from July 4 to July 8, President Gloria Macapagal Arroyo lost her major support groups. The academe. The civil society. The Protestant Church. Big Business. The bulk of the Catholic Church. Corazon Aquino. Fidel V. Ramos seems supportive but he wants Arroyo to be in office until June 2006 only. The unkindest cut came from the nine cabinet members who resigned last July 8, capping five days of hectic maneuverings designed to force a slow-mo ouster of Arroyo and the installation of Vice President Noli de Castro.

The coup de grace could be delivered with two developments – the further rise in crude price, possibly to $70 per barrel and Catholic bishops coming out in full force against Arroyo, with priests denouncing her every week in their homilies. In his time, not even the strongman Ferdinand Marcos could stand that kind of pummeling. Marcos had strong support bases, unlike Arroyo now.

Mrs. Arroyo has been dealt a serious if not mortal blow by the resignation of the Purisima Nine – Cesar of Finance, Juan Santos of Trade and Industry, Florencio Abad of Education, Corazon “Dinky” Soliman of Social Welfare, Emilia Boncodin of Budget and Management, Rene Villa of Agrarian Reform, Raphael Lotilla of Energy, Imelda Nicolas of the National Anti-Poverty Commission, Teresita Quintos-Deles, the presidential adviser on the peace process. They handled the anchor programs for the Arroyo administration to succeed – fiscal reform, investments, education for competitiveness, power reform, agrarian reform, poverty alleviation, and the peace process. You cannot have an effective government without these programs. The resignation of Guillermo Parayno of BIR and Alberto Lina of Customs derails Arroyo’s revenue enhancement program.

Taxpayers can now say they did not pay the right amount of taxes because of “lapse in judgement”. If Mrs. Arroyo can insist she should be forgiven for attempting to cheat in the elections, more so should taxpayers for attempting to cheat in their taxes. A vote has a higher premium than a tax payment.

The masses never liked nor accepted Mrs. Arroyo as president. More so now that she has been exposed by wiretaps recently made public to have called a senior official of the Commission on Elections urging him to ensure a one-million-vote margin over her opponent, the late actor Fernando Poe Jr.

In addition, witnesses before a Senate committee investigation claimed her husband, First Gentleman Jose Miguel Arroyo, their son, Congressman Juan Miguel “Mikey” Arroyo, and her brother-in-law, Congressman Ignacio “Iggy” Arroyo, received monthly bribes from jueteng gambling lords. This was on top of persistent rumors the father and son tandem, Mike and Mikey, were into all kinds of rackets and deals, a clear abuse of power and influence.

Even before the illegal numbers game jueteng bribery and electoral fraud wiretapping scandals broke out, 55 percent of the people, according to a Social Weather Stations poll last year believed she cheated to win the May 10, 2004 election. As separate survey by Pulse Asia said 59 percent didn’t believe she was their legitimate president. Survey after survey showed people don’t feel Mrs. Arroyo has done as much for them as did her predecessor, the ousted President Joseph Estrada.

So why has Arroyo not been booted out of Malacañang, the riverside presidential palace? Two reasons. One is that people have not turned out in massive numbers on the scale of People Power I and II that ousted two sitting and otherwise popular presidents, Marcos in February 1986 and Estrada in January 2001.

The other reason is that the military is playing it neutral this time, unlike in 1986 and 2001. Again, for two reasons: one, the military does not see the numbers in the protesters for it to take the side of the people, and two, it doesn’t have the credibility to mount a coup against what is perceived as a corrupt and hated administration. The military itself is tainted by massive corruption. It has neither bark nor bullet, literally.

People seem to have grown weary of People Power. People Power I and II did not bring about their much ballyhooed benefits which are good governance, alleviation from poverty, and sustainable prosperity.

Between 1986 and 2001, poverty incidence remained 34% and the number of poor people more than doubled, from 12 million to 28 million.

A Pulse Asia survey last June said 71 percent of the people consider themselves poor. SWS said 15 percent of the people (or at least 12 million) suffer from hunger – the first level of extreme poverty.

Email tonylopez@biznewsasia.com


endit

GMA fights on two fronts

July 13, 2005

Fighting on two fronts

With the slow motion coup in full, well, motion, Gloria Macapagal Arroyo now has to fight on two fronts – political and economic. The economic crisis has exacerbated the political crisis, and the political crisis in turn has given rise to the economic crisis.

One solution to the political crisis is impeachment. This is very obvious from the statement of the 100-strong Catholic Bishops Conference of the Philippines (CBCP).

The bishops didn’t ask Arroyo to resign. Neither did they discourage those who want her to resign to stop, nor Arroyo herself from entertaining resignation thoughts.

The prelates of the Catholic Church are telling the congressmen to get on with the impeachment. Impeachment will be bad for the President. The trial will be like the Truth Commission itself. Charges against the President will be bribery (for jueteng) and betrayal for the public trust (for electoral fraud). Witnesses will claim relatives of the President, namely, First Gentleman Mike Arroyo, First son Mikey Arroyo and brother-in-law Ignacio “Iggy” Arroyo, received bribes from illegal gambling syndicates. Sandra Cam has already claimed it was retired police general Restituto Mosqueda who trained Iggy Arroyo to sign as Jose Pidal, the fictitious owner of a secret bank account where excess campaign contributions were parked. The resigned economic managers will probably be summoned to testify on corrupt deals and projects. Senate President Frank Drilon has already complained of what he calls “colossal corruption at customs” that has bothered him for months now and of the overpriced 32-km NorthRail project. It costs $503 million or $15.72 million (P880 million) per kilometer with the locomotives provided by a Chinese company with no experience in railways. Resigned DSWD Secretary Dinky Soliman has hinted of testifying on something fishy, under oath “when the proper time comes”. I am sure resigned Customs Commissioner Bert Lina and BIR Commissioner Guillermo Parayno know of other corrupt deals. The idea is to portray Arroyo and her relatives, in fact, the entire administration, as corrupt.

As for electoral fraud, there will be a parade of witnesses detailing how the military tapped calls to Comelec Commissioner Virgilio Garcillano, how payments were offered and received, and how the electoral returns were manipulated. The idea is to portray Arroyo as a cheater, a fraud, a bogus president. The hearings will be blockbuster daily events, beating the ratings of telenovelas “Kampanerang Kuba”, “Enkantadia” and “Darna”. They will be held while protests and outrage spill into the streets because of high prices of nearly everything – galunggong, pork, chicken, gasoline, LPG, electricity, EVAT or no EVAT.

The Purisima Nine – Cesar, Juan Santos formerly of Trade and Industry, Florencio Abad of Education, Corazon “Dinky” Soliman of Social Welfare, Emilia Boncodin of Budget and Management, Rene Villa of Agrarian Reform, Raphael Lotilla of Energy, Imelda Nicolas of the National Anti-Poverty Commission, and Teresita Quintos-Deles, of the presidential adviser on the peace process, can do a lot of damage to the President, if they opt to be naughty. Precisely because of the high credibility of these economic managers, the two major credit rating agencies, Fitch and S&P, have downgraded the Philippines’ credit outlook, from stable to negative. In effect, the country’s creditors – and investors-- are being told: “Watch out, run at the first sign of trouble.”

This week, two big rallies are scheduled on Ayala Avenue, in Makati, the business district. The images of angry protesters massing weekly in the heart of the country’s financial district will be carried around the world by cable television. The effect is to portray a country in turmoil because of a corrupt and an unpopular president.

In the meantime, President Arroyo herself won’t be able to undertake reform initiatives, for a number of reasons, making her a lame duck.

One, she doesn’t have the economic managers to implement them. Two, since the bishops have not asked her to resign, she will now feel obligated to enforce the Church’s economically crippling population policy. The Church is one reason why the Philippines’ per capita growth is the slowest in Asia in the last 28 years. There are just too many mouths sharing a rapidly shrinking economic pie and I am not referring to the grafters in government. Three, since the military played it neutral in Friday’s (July 8) coup, it will now have the power to ask for additional budget for pay increases, benefits, and purchases of military hardware, making them compete for scarce funds that otherwise should go to social services. Fourth, the congressmen will have to be pampered (with say prompt releases of their pork barrel money and “loyalty” bonuses) so they don’t sign the impeachment sheet. Finally, the poor have to be placated, with expensive subsidies on rice (state-owned NFA incurred a P27-billion deficit last year), electricity and fuel (our power and diesel pricing has shades of Robinhood).

Email tonylopez@biznewsasia.com


Wednesday, June 15, 2005

GMA's concrete legacy

June 13, 2005


Overpasses


Allegations of illegal gambling payoffs to her relatives and cheating to win in the May presidential election have seriously damaged President Arroyo’s credibility, made her the most unpopular president ever, and triggered calls for her resignation or face ouster, by one of three means, a snap election, a military coup or a people’s revolt. The worst political crisis since January 2001 has battered the stock market, the peso and the people’s faith in their government.

What this means for business is that the President no longer has the political capital to push thru much needed fiscal and economic reforms.

It is doubtful whether GMA can jack up the value added tax to 12 percent by January next year to raise additional tax revenue to plug the budget deficit. A 12 percent VAT would hike the prices and rates of nearly everything – electricity, water, telecommunications, transportation, basic goods, raw materials, finished goods, and services. Don’t believe that BS that since unprocessed fruits, vegetables, seafood and other agricultural products are not subject to VAT, they won’t increase in prices. Price increases, in turn, will trigger an inflation spiral which will fuel more outrage from an already angry people.

Can President Arroyo afford such a scenario? She is a practical politician. And given the present situation, the name of the game is survival. Why use up the little political capital you have if by so doing, you undo your own presidency?

Thus, for the next two years at least, we will have a muddling through effect. The President will live day by day, hoping for the best and preparing for the worst.

This is the same situation that Corazon Aquino was into shortly after the bloody December 1989 coup. Every night, she prayed that there would not be a coup when she woke up the following morning. And every morning, she thanked God that nothing untoward took place the night before.

The result was paralysis, until the last six months of Cory’s term when she remembered she would leave nothing concrete as a legacy. So she summoned Ping de Jesus to build half a dozen overpasses in Metro Manila in record time. Ping delivered and for that, he was decorated with the highest award given a Filipino citizen.

So perhaps this early, GMA’s planners should prepare blueprints for overpasses. They are very good projects. They have short gestation, are easy to execute and create a lot of impact. In the case of the Ortigas-EDSA overpass, it is very useful giving photographers and rallysts a balcony view during People Power ceremonies. By the way, who is GMA’s Ping de Jesus?

We need overpasses in the South Expressway up to Alabang, from Balintawak going straight to San Jose del Monte Bulacan, another to Antipolo from Cubao or Ortigas, from C-5 to Fort Bonifacio, from Roxas Boulevard to Juan Luna, from Roxas Boulevard straight to the NAIA terminal, and in a few other places. These are just off-the-cuff-ideas. Maybe, GMA’s handlers can think of better places.

The Social Weather Stations survey from May 14 to 23 found that 59 percent of Filipinos were dissatisfied with Ms Arroyo's performance while only 26 percent were satisfied, for a negative 33 percent net satisfaction rating. In the SWS survey of Feb. 25 to March 10, this year, Mrs. Arroyo had a performance rating of -12, 48 percent dissatisfied and 36 percent satisfied.


In the May 10 presidential election, Gloria Macapagal Arroyo won by a margin of 1.12 million votes over Fernando Poe Jr. She got 12.9 million or 40 percent of the vote, while Poe 11.78 million votes or 36.5 percent. The 3.5 percent is the smallest margin ever scored by a presidential winner.

On the other hand, broadcaster Noli de Castro garnered 15.1 million votes while opposition vice presidential bet Loren Legarda received 14.2 million votes, a difference of just 882,000 votes. Legarda is contesting the results before the Presidential Electoral Tribunal (PET) which has given due course to her protest. Poe also filed a protest but the Supreme Court, acting as the PET, dismissed it soon after the actor’s death last December.

A post-election SWS survey showed 55 percent of the people believed Mrs. Arroyo cheated to win. A separate survey, by Pulse Asia, another respected pollster, said 59 percent of the people do not believe Mrs. Arroyo is a legitimate presidency.

According to retired army chief and Defense secretary Fortunato Abad, President Arroyo is not like Ferdinand Marcos or Joseph Estrada who peacefully relinquished power to avoid bloodshed. “GMA will not give up without putting up a fight,” predicts Abad.

A bloody revolution? We never had one before. We had picnics. But there is always a first time.

Email tonylopez@biznewsasia.com

endit

Visiting the United States

June 8, 2005

Random travel notes


It is not difficult to visit the United States. Visitors do not undergo the kind of nightmare they
imagine beforehand when entering the most security paranoid nation on earth.

On the day we landed in Las Vegas, May 26, the immigration officer was polite. He asked my daughter
Ciara how long she was going to stay in the US. Two weeks, she replied. Then he noticed from her
passport that she gave up her green card and promptly gave her six-month stay. The only requirement was the fingerprinting of her two index fingers. If your finger is dry, the computer takes time to record your fingerprint and you have to apply a glue-like gel to wet your finger for the computer to work properly. I underwent the same procedure. It was no big deal.

The US Customs whisked us thru without any questions asked. There was no tedious unbundling of our
luggage, item by item.

Las Vegas doesn’t seem to have heard of terrorism. Visitors in hotels are not searched personally by
surly and burly security guards nor are they made to pass thru metal detectors. Las Vegas is America at
its liveliest and freest before Sept. 11. This city of chance and glance doesn’t seem to have changed at
all. There is after all, no business like show business and Las Vegas is one big show business.

On the flight to Tampa, Florida from Las Vegas, we had to remove our shoes, put them on plastic bins,
together with everything with metal on it, coins, keys, watches, cell phones, belts, and wallets, as
well as our coat or blazer. Removing your coat or blazer can be a problem for some women, especially if they are scantily dressed. In our case, there was no rigorous checking of our luggage to search for guns, drugs or any illegal material. Our pieces of luggage were simply x-rayed and that was it.

A US company has gotten the exclusive right to manufacture locks that can be decoded or opened by TSA airport security, no matter what kind of combination you apply to your locks. Without these locks, TSA simply destroys the locks on your luggage to inspect it. The monopoly locks sell for $8 apiece at Wilson’s Leather, $9 at Samsonite outlets, and $14 at airports. The numbers on the locks are not luminous nor large enough for anyone with an eye problem to see in the dim light. As far as I know, these locks are not yet available in Manila.
***
The chairman of the US Securities and Exchange Commission, William Donaldson, is stepping down this June, becoming in the past 28 years, the SEC chief with the second shortest stint. The one with the
briefest was his predecessor, the other George Bush appointee, Harvey Pitt, who served for 18 months, from Aug. 3, 2001 to Feb. 17, 2003 and who was generally acknowledged as one of the most ineffective (and I say one of the most useless) SEC chairmen.

Donaldson, (BA from Yale, MBA from Harvard) who became SEC chief on Feb. 18, 2003, leaves a good legacy. Though a Republican, he allied himself with the two Democratic SEC commissioners to push for reforms. According to USA Today, Donaldson required hedge funds to register with the SEC and allow SEC inspectors to audit books, stripped away some of CEOs’ power to control how board members are nominated, made mutual funds’ boards more independent and cracked down on
payments to brokers who promote funds, and required brokers to fill buy and sell orders at best possible
price available on all stock exchanges.

Under Donaldson, the SEC forced Richard Grasso, the imperial president of the New York Stock Exchange to disclose in 2004 his lump sum accrued payment of $187 million. The disclosure of the huge payment, which was tantamount to abuse, led to Grasso’s resignation.

I wish that kind of arms-length attitude could be said of our own SEC. Did you know that the disclosure web site of the SEC for public companies is run by the Philippine Stock Exchange? You inquire for materials disclosed by listed companies to the SEC and you are directed to the PSE web site. How can the PSE, which is regulated by the SEC, run the disclosure web site of the SEC, which is the regulator? Only in the Philippines.

You need a password to access what is disclosed by listed companies at the PSE web site? Unless PSE
gives you the password, you cannot save nor print the information. Why does one need a password to access what should be public information disclosed by listed companies? It defeats the whole idea of disclosure.

For comments or reaction, email tonylopez@biznewsasia.com

Things are looking up in the Philippines

Things are looking up

By Tony Lopez
tonylopez@biznewsasia.com

Were it not for the clouded political climate, things are looking up, economically and demographically.

So say Albay Congressman Joey Salceda and Ayala Group CEO Jaime Augusto Zobel de Ayala. Salceda is one of the president’s economic advisers. JAZA heads the Philippines’ oldest conglomerate, Ayala Corp. which is 170 years old.

The government has money. Or expects a lot of money in the pipeline from four major sources: privatization, P300 billion, increase in the value added tax, P125 billion; savings in lower interest rates, P40 billion, and administrative reforms, P20 billion. That’s a total of P485 billion – “the biggest mobilization of resources for the government since Ferdinand Marcos tapped petrodollar loans in 1974-1979,” quips Salceda.

This is why in the remote possibility that Gloria Macapagal Arroyo is removed from power, her successor will be very lucky. He or she has P485 billion to look forward to. The amount is half the national government budget for 2005.

Among companies or businesses being privatized by the government are: the electricity transmission pipeline of the National Transmission Corp. which on a good day could be sold for P250 billion, reckons Salceda, double the $2 billion initial estimate of TransCo President Alan Ortiz; the 37 percent Coco Industry Investment Fund/SSS/GSIS ownership of San Miguel Corp. valued at P70 billion; and the 40 percent share of Masinloc valued at $562 million. From these three alone, Salceda says, P66 billion is doable. Indeed, the government’s equity in San Miguel can be sold to Kirin Brewery of Japan which has been aggressively buying shares in the past few months.

***

In a recent presentation before a select group of investors and executives in Singapore, JAZA explained why investors should pay attention to the Philippines.

Manila’s consumer market is vibrant, he asserts, because of OFW remittances. Filipinos are creative. “”Our innate creativity is unparalleled in Southeast Asia,” JAZA contends. But adds, “we haven’t done enough to build that up and turn it into a competitive advantage.” He relates: “In my conversations with people around the region, I always have very positive feedback about the quality of our fashion design, software, animation, music, many fronts. I don’t think it’s been developed enough.”

And there’s what JAZA calls the demographic dividend which is exemplified by the huge number of Filipinos being deployed for overseas jobs.

“We should not be embarrassed over the exodus of our workers. They have a great role to play in the demographic revolution that's happening right now,” says the headman of one of the Philippines’ oldest conglomerates. “You've got aging populations in the developed countries; world population growth is heading for an absolute decline. This will greatly affect the global distribution of labor, which will increasingly favor countries with younger populations like the Philippines…In 2005, the number of people of working age (in the Philippines) is projected to constitute 61.8 per cent of the population. This is projected to rise to close to 70 per cent by 2025. The implications of this very unique demographic structure have not been grasped by Filipino policymakers.”

Harvard-trained JAZA laments: “We have under-appreciated the strengths that we have as a people and as a country.” After China and India, the next boom, he predicts, will be in the Philippines – in the next ten to 15 years.

It is in the area of demographics that the Philippines can enjoy a competitive advantage. A young population means a high ratio of working population and reduced government social spending for those of poor health and the aged. It means the country can take care not only of its own aging population but the aging populations of many developed countries. Millions of Filipino caregivers can bring in billions of caring money into the Philippines. Combined with effective government policies, a young population can stimulate economic growth.

The government and indeed, the world, have not fully grasped the implications of the Philippines having a young, vibrant population.

Winces JAZA: “Our share and influence in global trade has become minuscule. And in the various world fora, we are, at best, just a part of the chorus,” In one recent World Economic Forum, there were only two Filipinos –JAZA and his younger brother, Fernando, the CEO of Ayala Land.

“The problem, really, is parochialism,' JAZA says. “One can point a finger at the way we conduct our politics in the Philippines, but basically, it is parochialism at all levels that is the problem. Bottom line is, in economic terms, we still have the tendency to wall ourselves off from the rest of the world and believe that we can survive.”

That in sum is our problem – politics and parochialiasm. And the best way to approach them is ignore them.

Email tonylopez@biznewsasia.com

endit

The beginning of the end

June 15, 2005

Gloria-gate: When does the end begin?


By Tony Lopez
BizNewsAsia at biznewsasia.com
Allegations of illegal gambling payoffs to her relatives and tapes indicating she cheated to win in the May presidential election have seriously damaged President Arroyo’s credibility, made her the most unpopular president ever, and triggered calls for her resignation or face ouster, either by military coup or a people’s revolt. The worst political crisis since January 2001 has battered the stock market, the peso and the people’s faith in their government.


Miguel Arroyo, the husband, Pampanga Congressman Mikey Arroyo, their son, and Negros Congressman Ignacio “Iggy” Arroyo, the brother-in-law, of President Gloria Macapagal Arroyo receive monthly payoffs from jueteng or illegal lottery operators. She herself masterminded the massive cheating in the May 10, 2004 presidential elections to ensure that she gets at least a one-million-vote margin over her rival actor Fernando Poe Jr. This fraud was conducted mostly in Mindanao and done in connivance with ranking officials of the Commission on Elections. It makes Mrs. Arroyo a bogus president and being one, must resign.

This is the ineluctable conclusion one makes if one were to make sense out of recent revelations scandals involving the Macapagal Arroyo administration.

The scandals were triggered by disclosures of a jueteng bag woman from the Bicol region, Sandra Cam, by others involved in the illegal numbers game, and by Lingayen Archbishop Oscar Cruz. Cam said she delivered P500,000 to Mikey and P400,000 disguised in gift boxes to Iggy Arroyo last December at the Congress session hall. Explaining the discrepancy of P100,000 in the amount given to Iggy, Cam said there was a typhoon (“bagyo”) and jueteng had stopped in Camarines. To which the Negros retorted, “walang bagyo, bagyo. Ang pinagusapan ay pinagusapan. (“What storm? A deal is a deal!”).

Not surprisingly, the uncle-and-nephew Arroyo tandem denied ever receiving money from Cam. They threatened to file libel charges against Cam. But the witness declared, “ I’m ready to face them in court. Even if I am slapped 1,000 cases, I won’t recant.”

Even more damaging, Cam said it was former Bicol Philippine National Police regional police chief Restituto Mosqueda who trained Iggy Arroyo “for weeks” to sign as “Jose Pidal”. Iggy had owned up to the Jose Pidal account secret bank account to which about P270 million of excess campaign fund contributions were allegedly deposited. Sen. Panfilo Lacson had claimed the account belonged to First Gentleman Miguel Arroyo. He asked the Senate to revive the Jose Pidal investigation. Mosqueda was the chief of the PNB crime lab who certified that the Jose Pidal signature was indeed Iggy’s.

On the other hand, the allegations of electoral cheating were documented in a mysterious tape recording the bugged conversations of President Arroyo during a one week-period from late May 2004 to June 6, 2004, with Comelec Commissioner Virgilio Garcillano and her former presidential aide, Edgar Ruado, who is now chief of staff to Congressman Iggy Arroyo. The original of the tape was supposed to have run for three hours but excerpts from the incriminating conversations were put on another tape and circulated, amazingly by Presidential Spokesman and Press Secretary Ignacio Bunye who denounced the tapes as part of a destabilization plot to unseat President Arroyo. He bandied before the Malacañang Press Corps two tapes, one the original and the other, the edited, condensed version. He confirmed that it was indeed the president talking in the tapes.

Instead of discrediting the tapes, their release by Malacañang added a patina of virisimilitude. Having become a public record, the tapes were gingerly played and replayed over nationwide radio and television broadcast. A survey by the highly rated “Debate” show on Channel 7 Thursday, June 9, said 77% of listeners believed the tape and only 23% didn’t.

Belatedly, the palace disowned Bunye. The press secretary’s disclosure, said Executive Secretary Eduardo Ermita, was a knee-jerk reaction that was not cleared with either the President or the cabinet. Bunye disappeared for two days and surfaced Thursday afternoon. He said he was not now sure whether the female voice in the tapes were Mrs. Arroyo’s.

Amid what is now known as the Gloria-gate, the opposition launched a major political offensive. “She (Mrs. Arroyo) has lost the mandate of heaven,” sneered former President Joseph Estrada, “she should resign as she has clearly lost the trust and confidence of the Filipino people.” “It would be extremely difficult for her to govern,” he pointed out, noting that surveys have shown 59% of the people are dissatisfied with her and only 26% are satisfied.

That is the lowest ever satisfaction rating scored by a sitting president, making Arroyo the most unpopular president in history.

The private polling firm Social Weather Stations said its survey from May 14 to 23 found that 59% of Filipinos were dissatisfied with Ms Arroyo's performance while only 26% were satisfied.

In the SWS survey of Feb. 25 to March 10, this year, Mrs. Arroyo had a performance rating of -12, 48% dissatisfied and 36% satisfied.

Not even President Joseph Estrada, who was ousted amid charges of widespread corruption in his administration, experienced such a low performance rating during his three-year stay in office, said the Philippine Daily Inquirer.

Senate Minority Leader Aquilino Pimentel said it was time for Mrs. Arroyo to resign. He explained: “With a credibility rating several notches below zero, with corruption snapping at her heels, and with a clearly questionable electoral mandate, she no longer has the integrity or the moral ascendancy to continue sitting as president.”

Vice President Noli de Castro should also resign, Nene Pimentel said, “to clear the way for the holding of a new presidential election.”

Resigning, Pimentel pointed out, is better that a coup or impeaching the president. A coup could result in a military junta while impeachment is a tedious process where a technicality could let Mrs. Arroyo scot free.

“A new election for the presidency and vice presidency is the most feasible thing to do under the circumstances. The country cannot go leaderless for a week, much less for the next five years,” Senator Pimentel stressed.

In the May 10 presidential election, Mrs. Arroyo won by a margin of 1.12 million votes over FPJ. She got 12.9 million or 40% of the vote, while Poe 11.78 million votes or 36.5%. The 3.5% margin is the smallest ever scored by a presidential winner.

On the other hand, de Castro garnered 15.1 million votes while opposition vice presidential bet Loren Legarda received 14.2 million votes, a difference of just 882,000 votes. Legarda is contesting the results before the Presidential Electoral Tribunal (PET) which has given due course to her protest. Poe also filed a protest but the Supreme Court, acting as the PET, dismissed it soon after the actor’s death last December. His widow, Susan Roces, said she would bring the issue instead before the people.

A post-election SWS survey showed 55% of the people believed Mrs. Arroyo cheated to win. A separate survey, by Pulse Asia, another respected pollster, said 59% of the people do not believe Mrs. Arroyo is a legitimate presidency.

Amid the mounting calls for her to quit, Mrs. Arroyo stood her ground. Appearing at the popular DZRH radio station morning of June 9 she asserted: “I will not allow myself to be brought down by those people seeking my downfall. Nor will I allow myself to be weakened by those who seek to weaken my government.”

As to the allegations of graft involving her family, Mrs. Arroyo reiterated, “No member of my family is above the law.”

In the national capital, the Armed Forces of the Philippines and the PNP went on red alert, ostensibly to ensure order in connection with the 107th Republic Day anniversary celebrations. Militant groups involving leftists, Church activists and students, scheduled mass protests on June 11, the eve of the celebration.

Meanwhile, an army colonel, Ricardo Morales, commander of the 404th Brigade based in Mawab, Campostela Valley sent email to his fellow Philippine Military Academy alumni. “The time has come for all good men to come to the aid of their society. The time for talking is over; the time for action is now. The next ‘coup’ will be peaceful and open. Enough of leaders who talk about reforms but do not understand what they are saying. Enough of this organizational stupidity,” he blogged thru the Internet.

Morales, of PMA class 1977, was the officer who informed then AFP Chief of Staff Narciso Abaya, that a son of the then Major General Carlos Garcia was held by US Customs for bringing in $100,000 without declaring the money. Months later, the US government sent the documents to the Ombudsman triggering a full-blown investigation. General Garcia now faces plunder charges though he has not been put behind bars by the anti-graft court Sandiganbayan. Plunder is non-bailable.

On calls for her to resign to pave the way for snap elections. “I am saddened. I want to keep on working but there are people whjo are preventing me from doing so. They want to unseat me, or undermine my capability to run the affairs of this nation,” Mrs. Arroyo told a national broadcast over DZRH.

She also expressed confidence the military would resist any coup attempt.

While allegations of jueteng payoffs may have hurt the presidency, none is more damaging that Mrs. Arroyo’s alleged involving in electoral cheating.

In one part of the transcript, during a conversation on May 29, 2004 at 9:43 in the morning, the president is overheard asking an official, designated as “Gary”, “so I will lead by more than one million (votes)?” “We will try our best. As of the other day, we had 982,000.”

Mrs. Arroyo eventually won by a margin of more than one million votes.

With reports of jueteng payoffs and electoral fraud and her rising unpopularity, it is doubtful whether Arroyo can govern effectively. Congress has given her the mandate to raise the value added tax from 10% to 12% by January next year.

Given the bitter political atmosphere and questions about her legitimacy as president, Mrs. Arroyo will be playing with fire if she slaps additional taxes on the people, unless she wants to expedite her own political demise.

If not enough taxes are raised, however, basic services will continue to deteriorate, infrastructure will decay, and investors will shy away from a country unable to get its act together. Already, the Philippines is the slowest growing country in Asia.

In the last 27 years, the Philippines posted a per capita growth rate of 1.12% -- the poorest in Asia. The number of poor doubled during that time, to 34% -- the official figure as of 2000 until government statisticians “corrected” to just 24.7%.

Still, a survey by Pulse Asia says 74% of the people say they are poor, while another poll by SWS says 55% consider themselves poor. SWS also says 15% of Filipinos are hungry – that’s almost 13 million Filipinos.

No wonder, the people hate their president and want to change their government.

Saturday, April 30, 2005

Why the Ayalas make money from water

May 1, 2005 Tony Lopez


Liquidity from water


Very likely, Manila Water will get the West Zone water concession of the Lopezes’ Maynilad Water. The Ayalas, owners of Manila Water, seem to have the backing of the government. They have the track record. They have the organizational and financial wherewithal. A rehab plan has been submitted to a local court which will now decide on it. It gives the opening to Manila Water to make a bid.

The brothers Fernando Zobel de Ayala and Jaime Augusto turned around Manila Water from a money-losing company (losses of P38 million in 1997 and P67 million in 1998) into a hugely profitable operation. Cumulative profits from 1999 to 2004 amounted to a whopping P3.4 billion, 1.7 times what the Ayalas invested in Manila Water as equity. Of course, they put the right man in Manila Water, Antonino Aquino, 57, a 12-year IBM veteran before he moved to Ayala Corp. as computer systems manager rising to managing director of Ayala Corp. and CEO of Manila Water.

Also, the Ayalas have the blue chip name to line up partners who know the business and can help with the cash, as well as the reputation to borrow cheap money. East Zone was financed with six percent long-term money. You cannot find a better group to run Maynilad’s money-losing West Zone concession.

Why did the Ayalas make money on their East Zone concession and the Lopezes didn’t on their West Zone?

To start with, the Lopezes absorbed 90 percent of the debts of Metropolitan Waterworks and Sewerage System (MWSS). That’s equivalent to $800 million. The Ayalas took in only $80 million of MWSS’s debts in 1997. Naturally, when the peso devalued by more than 100 percent, the $800 million became a gargantuan P42 billion instead of just P20.8 billion (at P26 to $1) in 1997. The $80 million inherited Ayala debt ballooned only from P2.08 billion to a manageable P4.2 billion.

Manila Water also got 2,000 kms (since increased to 2,674 kms) of MWSS pipes which were newer than those of Maynilad’s 2,400 kms most of which were obsolete and useless. In terms of people being serviced, Manila Water got the households with better income – Makati, Pasig, Mandaluyong, Marikina, most parts of Quezon City, the business areas of Manila, and emerging bedroom and booming towns like San Juan, Taguig (the new Makati), and towns east of Manila in Rizal. All the major business centers went to Ayala – Makati, Ortigas Center, Araneta Center, Libis, and now bustling Fort Bonifacio in Taguig, bastions of new and traditional wealth where nearly every high-end home or building has a pool.

Maynilad Water, on the other hand, got most of the great unwashed of Metro Manila, the squatters in Pasay, Caloocan, Malabon, Navotas and Manila, citadels of filth and proverty where nearly every nook has cesspools of grimy sewage. In fairness though, the Lopezes got booming Alabang, Muntinglupa, Las Pinãs, and Parañaque and the Mall of Asia area on Roxas Boulevard.

In Alabang, you have the ironic situation where the Ayalas’ Alabang Village is within the water system of the Lopezes. The Lopezes are not providing water to Ayala Alabang. The Ayalas, thru Tony Aquino, built their own water system.

Manila Water services fewer people, 5.3 million, compared with Maynilad’s over seven million. Fewer people with more money vs. more people with less money. It is not difficult to see which concession makes more money and has a better future.

By the way, people keep complaining about rising petroleum prices and electricity rates. They should look at the water rates.

Since 1997 when the Ayalas took over the East Concession, water rates have risen by a stratospheric 348 percent in seven years, an average increase of 50 percent per year, from P4.02 per cubic meter to P18 by last January. Think of any business that can increase its price 50 percent each year. There is none.

Maynilad Water, meanwhile, got an increase of only 243 percent during the same period, from P8.78 per cubic meter to P30.15 by last January. The Lopezes got only 35 percent yearly increases. No wonder they returned their water concession.

Because of drought or by design, the Ayalas are actually delivering less water today (1,517 million liters a day) than they did in 2000 (1,6980 MLD). Yet they are making more money. The trick: They simply reduced the so-called non-revenue water (pilfered water and losses) from 26 percent to 43 percent.

For comments or reaction, email tonylopez@biznewsasia.com.


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