Chino Taipans Hurting RP Economy

FRANKLY SPEAKING
By Frank Wenceslao


I'm elated in learning my previous column "The Lucio Tan Story" was posted online by PNC magazine, an organ of Philippine Military Academy graduates that lifted it off Perry Diaz's USA-Balita.

The news coincided when Pamusa organizers, supporters and volunteers (anonymous supporters) emailed agreement to support implementation of the Comprehensive Agrarian Reform Enhancement and National Food Security Program ("Program") to address the rising fuel and food prices caused by growing demand for oil that supply couldn't cope with.

Funding the Program relies on recovering Marcos' and cronies' ill-gotten wealth the Presidential Commission on Good Government has failed for over 20 years. After almost two years of investigation the recovery can be hastened by PCGG granting Pamusa a Special Power of Attorney and evidence on who have custody of the illicit assets and their whereabouts which we've proposed since last year.

Pamusa intends to recover Marcos' equities in the companies of Chino businessmen such as Lucio Tan, Henry Sy, John Gokongwei and others that without his favors couldn't have achieved the incredible growth of their businesses and overseas investments. They've thus far kept the latter below PCGG radar.

For instance, Sy's mall building program began when Marcos approved the lease of the public land for the site of Sy's first mall (SM City EDSA) and other accommodations. Marcos wouldn't have done the favor without being guaranteed 60% equity in Sy's proponent-company as Tan did I discussed in his story.

Fortunately for Sy the 1986 EDSA Revolt intervened. The question is: Has Sy acquired the SM City EDSA's site from whom and at what price? If not, which office has granted him continued lease and is receiving how much rental?

The Chinos aren't helping the Philippine economy to grow. In fact, they're hurting the economy by exploiting and stunting the growth of small and medium enterprises (SMEs). In other countries including USA, SMEs are the backbone of national economy and biggest employers of low and middle income workers.

The Chinos raise capital on SMEs' backs by squeezing their prices to rock bottom supplying goods and services for their downstream industries and retail merchandising. They defer payment up to 90-120 days enough time to sell the goods, deposit cash receipts in their banks and loan out 4-5 times the amount depending on CB reserve requirement at market interest rate.

They've had multilayered profit centers from SMEs' prices for supplying goods and services, interest on payments due SMEs loaned out by their banks and their retail profits. With taxes on the profits evaded, Sy continues his incredible expansions and acquisitions.

The Chinos' exploitative business practices are nauseating. While waiting to be paid, SMEs either borrow on their receivables from the Chinos' banks with interest, of course, or are victimized by predatory lenders at usurious interest to buy their needs and meet payrolls in order not to interrupt operation.

How could SMEs grow in this hand-to-mouth existence, create new jobs and effectively contribute to national economic growth?

By building a series of malls without evidence of capital build-up from other investors, it can be concluded that out of such profits and unpaid taxes, Sy's family has increased equities in San Miguel Corp. where they have 2 board seats, acquire control of China Banking and Equitable Bank and high-end property development such as Tagaytay Highlands, etc.

BIR and SEC officials are either sleeping or surely in the take without finding out where the funds are coming from used by Chino businessmen for business expansions, acquisitions and overseas investments without significant investments of other local and foreign shareholders and continue to maintain control of their companies.

It therefore begs a question: Are they paying correct taxes or, like Tan, they have billions of pesos in deficiency taxes?

All of which is why the Philippine economy is like a carnival ride that goes up and down to suddenly stop at the same place. Foreign investments come in trickles because these businessmen use Filipino citizenship for convenience to crowd out foreigners by corrupting government to put up high tariffs and barriers to competitors while they squeeze SMEs like sugar cane. RP loses foreign investments to other countries where they are more welcome and investors don't have to go through unfair competition and bureaucratic maze to do business in the Philippines.

Thanks to UNCAC and Bush's initiative to internationalize efforts to combat public and corporate corruption, the Chinos should show the funds they've used to capitalize and start up their companies, expansions, acquisitions and overseas investments are in the realm of statistical probability. Or the funds are what the USDOJ and FBI define as "income of illegal origin concealed, disguised, or made to appear legitimate (main objective); and to evade detection, prosecution, seizure, and taxation" used as basis to combat organized crimes, terrorist organizations and public and corporate corruption.

Obviously, the Chinos have been involved in public and corporate corruption since Marcos time to the present; hence, they can be sued to recover their fruits of corruption and deficiency taxes under US laws mandated by Bush's initiative to enforce the UNCAC. This is a golden opportunity for GMA to exercise leadership, take these big shots to account and bring them to justice.

Pamusa has "think-tankers" who're former employees of Chino businessmen and had hand-on experience how they exploited SMEs. These Pamusa volunteers now work with US federal, state and local governments, big corporations and private think-tanks and are the sources of information I put together into Pamusa's studies.

This is payback time. Our think-tankers want Pamusa to help GMA turn around the deteriorating Philippine conditions as this is the best way overseas Filipinos can help suffering relatives and friends at home. GMA should direct PCGG to send Pamusa the SPA and evidence against people keeping Marcos' and cronies' ill-gotten wealth.

The Ombudsman and Presidential Anti-Graft Commission should likewise send their evidence even though not proven yet in court against those accused of violating the Anti-Graft and Corrupt Practices Act during post-Marcos administrations that stole public funds, foreign aid and loans salted abroad which can be recovered faster under US laws.