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Wednesday, February 4, 2015

HEAVY DEPENDENCE


The economy welcomes the presence of the companies of the Liem group of Indonesia. Metro Pacific, the Philippine subsidiary, is everywhere but it has not ventured into any area that incurs high risk. 

The full management control of the Philippine Long Distance Company (PLDT) in spite of presumption that in a public utility a foreign investor’s equity is limited to 40 percent, borders on security of the state.

So does the concession of the water system west of the capital. Metro Pacific has expanded its business in the Philippines. It is in the toll-road system. It has acquired the most popular bread maker. 

Because the law prohibits foreign ownership in media, it’s presumed the investments in Business World and Philippine Star are personal to Manuel V. Pangilinan. Still, he owes loyalty to his bosses in Indonesia. He does not meddle in the management of the two newspapers. But he is a big part of it. 

The possibility of using the two newspapers to promote and protect the Indonesia business interest in the Philippines is a dire possibility although there are no signs that Pangilinan has a mind to go that far. 

Pangilinan is a skillful investor. MVP’s group practically runs Philex Mining a public utility. However, foreigners can own all of the shares of mining operation if it enters into a financial and technical agreement with the government. Pangilinan’s  Indonesian bosses are in critical areas like water and communications. His personal – presumably –interest in media including a popular TV channel is a   shield that may well be used to protect the bigger investments of the Liem Group in the Philippines. 

None of these is to say the Indonesia investments in the Philippines, almost solely handled by MVP is not in the public interest. After all, the government has been campaigning for foreign investments. 

The Liem group through Metro Pacific is taking a big risk investing in the Philippines with hardly any invitation. It came here almost solely on the word of Pangilinan. He proved to his bosses in Indonesia that investing in the Philippines is a good idea in terms of making profits. 

Metro Pacific is involved in power generation, a business that may also be considered critical to national security. 

The Liem Group of Indonesia, represented in the Philippines by Metro Pacific and its numerous subsidiaries has its fingers in many pies. 

In fairness, however, all investors – local or foreign – had the same opportunity that the Liem Group took advantage of.  Pangilinan might have been remarkably smarter than his competitors.

He saw for his Indonesian bosses what many Filipinos or foreigners did not see.

Still, there might be a need for reasons of national security, to disperse vital public utility projects to as many as possible.

There are no signs that the Indon group has designs that border on national security.  Theirs, like the rest, is a matter of cost-benefit ratios.  Pangilinan saw the costs.  He saw bigger profits from the costs.

That, and no other are the reasons the Metro Pacific Group, has expanded into many areas in the Philippines.

Their first venture was winning the bid for the military land in Fort Bonifacio, privatized by government as vital to the economy.  

It should come to everybody’s mind that the Philippines gave the Americans Parity Rights in 1947.  Americans were considered as Filipinos except for suffrage.  Clearly, the intention was to attract more US investments in the Philippines.  They were the first owners of PLDT.

After it was Filipinized at the expiration of the Parity Agreement, the Filipinos took over.  Today a large part of it is in the hands of the Indonesian investors headed here by Pangilinan.  

The sad part is other foreign investors were discouraged precisely because Americans were treated like Filipinos.  In fact, they owned PLDT, a public utility which, under the 1935 Constitution should be in the hands of Filipino citizens or Filipino-controlled corporations.

As if nothing changed with the expiration of the Parity agreement, PLDT is now effectively managed by Indonesians headed by Pangilinan. Benguet and a few other mines were completely owned by Americans.  They were practically the only foreign investors in mining. 

Other foreigners were limited by the Constitution to 40 percent equity.

The lesson that must be learned from the presence of the Liem Group in the Philippines is the necessity of amending the Constitution to lift limits on foreign investments.

Our view has always been the limits on what are described as businesses that must be controlled by Filipinos is one big factor that discourages foreign investors.  Public utilities and exploration of natural resources are the most risky business ventures.  Worse than that, the Filipino investors never had enough funds to take the risks.

It should dawn on so-called nationalist – strident in their words and actions but never had much to make a dent on businesses where foreigners are limited to 40 percent – important to the economy is the production of a product, creation of jobs, payment of taxes and contributions to the gross international reserves.  


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email:amadomacasaet@yahoo.com
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