Cooperativize the economy!

CONSUMERS DEMAND!
Herman Tiu Laurel
7/25-31/2011



The recent Supreme Court decision on PLDT’s capital structure defining only voting shares as the real ownership shares has upset the apple cart of many foreign-controlled companies. Many of these companies hide behind technicalities to evade the Constitutional provision requiring majority Filipino ownership in several basic and strategic industry sectors.

In my layman’s terms, the Supreme Court voted to define ownership as the voting shares, excluding the non-voting shares.

Actually Foreign ‘Owned’
The PLDT shareholder structure is dominated by non-voting shares overwhelming held by Filipinos, but the voting shares are mainly in foreign shareholders’ hands making the PLDT actually foreign dominated.

I agree with the Supreme Court decision because owning a company is about controlling a company, not just being a shareholder that has absolutely no say in its affairs.

I believe the Supreme Court was wise and judicious in its decision, reading the intent of the Constitutional provision on Filipino ownership correctly.

Article XII on the National Economy and Patrimony states:

“Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth… promote industrialization and full employment … through industries that make full and efficient use of human and natural resources… However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices….

“Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State…. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State.

“The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. …”

The False Premise
The argument invariably raised favoring, allowing, or even inviting or pleading foreign capital into Philippine economic development is that “the Philippines does not have enough capital”.

It is a false premise.

As I have shown in a running debate with the Bangko Sentral ng Pilipinas (BSP), the Philippines does have more than sufficient internal resources to capitalize the agro-industrial and general economic development of the country.

The sources today are: the Special Deposit Account (SDA) set up by the BSP in 1998 as a tool in its financial management and holds up to P 1.7-Trillion today; the Gross International Reserve (GIR) which now amounts to $ 69-B or 12-months cover for trade and imports (when the IMF requires only three months cover), and the Malampaya natural gas earnings now variously reported to be between P 100-B to P 200-B.

The BSP deputy governor retorted on the SDA: “…the BSP does not own (the Special Deposit Account or SDA) and, therefore, it is hardly a ‘disposable’ fund kept idle…”

Use Internal Funds
The following is a number of quotes from private sector financial managers who gives a supporting view against BSP’s claims that the SDA cannot be used, I quote from my columns on the matter: “Marvin Fausto, president of the Trust Officers Association of the Philippines contend otherwise.

“Fausto, in fact, said on Nov. 3, 2010, ‘(the money parked in SDA facilities) should instead be channeled to funding needs, like in infrastructure projects. We need investments. (The money in SDAs) is enough to spur (further) growth.’ Victor Abola, senior economist at the University of Asia and the Pacific, whom I seldom agree with but do in this case, has also said that SDAs are a ‘waste of resources’ and the ‘BSP should lower interest rates for SDAs to free up more funds, from the present 4 percent to 3 percent.’

“We do have internal funds accumulated over the past decade and a half to fully finance our needs, as the entire PPP program of Aquino III requires only half of what the SDA holds.”

Aside from the SDA is the GIR which is kept idle and given to foreign fund managers for placements, earning these fund managers huge commissions.

Controlling Power
The Malampaya fund have been sitting idle with the legislators and other authorities oblivious to it until recently when Senator Recto finally asked, “how much is in that fund?”

Why it has taken them so long to discover this?

Allowing or pleading for foreign capital to take advantage of the Philippine economic opportunities is not a financial or economic one, it is a political one.

The ruling class of this country is an appendage of the foreign power that has controlled this country’s politics for the past hundred years, and they are still the ones controlling the major utilities such as PLDT.

The basic utilities of this country, from communications (like PLDT) to power, water and other infrastructure (with PPP as the flagship today), are businesses that exploit public services extracting profits from consumers and commuters that provide all the capital.

The Wrong Solution
Our fellow columnist Rod Kapunan correctly says, “…all that foreign investors do after they are given a franchise to operate is to demand an increase in their rate on the basis that they need it for their expansion and improvement.

“But once their demand is given, that in effect makes the consumers the financiers of their business.”

This is how PLDT was built, as well as Meralco and many other private utility companies in the Philippines.

But local oligarchy capital is doing the same thing and often in partnership with the foreign capitalists, so the anti-local oligarchy activists are also correct in raising the issue of abuse and exploitation by local capitalist protected by the Constitution.

However, they turn to the wrong solution, which is to open the Philippines to more foreign capital, as the Enrile-Belmonte initiative to call a Constituent Assembly to remove the Constitutional protectionism and open Filipinos to the same exploitation.

What is the solution?

Collective Ownership
The Philippine Constitution, a legacy of centuries of evolution of democratic, republican and nation-state ideology, provides the basis for the correct and most beneficial option for the people.

Since “All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State…” i.e. the People, and since the People have the funds as well as really finance all these public utilities and other businesses related to the national patrimony, the People should take over these industries and run it themselves under consumers, commuters and national cooperatives.

We finance practically everything in the economy so why don’t we all work together and takeover these industries and businesses.

There was an old form of this collective ownership which was “nationalization”, but a new age may require a new concept: “Consumers Cooperativization” revolution!