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‘Pakita ko sa Pilipino paano magsampal ng mga bilyonario!’ Featured

LITO MONICO C. LORENZANA
LML Polettiques
18 December 2019
Comments:DISQUS_COMMENTS
NO, Mr. President, you can’t do that! We are a country of non-violent people and the rule of law, however misunderstood, still prevails. Your base may be swayed by populist harangue, still their default action is toward moderation and compassion — altogether noble Filipino traits. Many will tolerate your diatribe, as we ourselves are frustrated with this state of affairs. But your bullying won’t alleviate our frustrations. We too are exasperated like you when we don’t have water when we want it, at the time we need it. And there is something that smells when the suits filed for arbitration in Singapore were done in secret. And the stench even more pervasive when the Philippines lost the case awarding P3.4 billion and P7.3 billion payment to the two water concessionaires (“Aquino, Hilbay agreed to keep water arbitration suits secret,” Roberto Tiglao, The Manila Times, Dec. 9, 2019). The Filipino has been screwed by the past government, perhaps by sabotaging its defense, a “lutong Macao.” Perhaps we were meant to lose the case for monetary considerations. Perhaps!

They blinked!
They surrendered, just like that. But knowing these concessionaires, with this strategic retreat, they will lick their wounds then marshal their forces. That P10.7 billion is nothing to them — a drop in the bucket. They must really be making tons of money on us.

To recall, during your campaign, you labeled these people “‘a cancer on society’ and ‘illustrious idiots’ who flew around in private planes while the Filipino people suffered…the plan is to destroy the oligarchs embedded in the government. I’ll give you an example publicly: Ongpin, Roberto.” (Aurora Almendal, “Crony capital: How Duterte embraced the oligarchs,” Nikkei, Dec. 4, 2019.)

And you did. Your true believers were ecstatic. Even we ourselves, the Centrist Democrats did. But now he’s back and richer than ever. “Far from taking down the oligarchy, Duterte’s attack on Ongpin merely transferred some of his wealth to a more powerful family with whom Duterte has maintained a strong alliance… Gregorio Araneta 3rd, the son-in-law of Ferdinand Marcos” (Aurora Almendal).

This fight was elevated to something personal between you and the oligarchy. But is this really a dispute between you and the oligarchy, or are you just being goaded by populist demands of unthinking free-riders who simply want “freebies”? Alex Magno put it succinctly “… If the populists had their way, they would want water tariffs priced as close to zero as possible (Philippine Star, Dec. 7, 2019).

FVR and privatization
Meantime, you need to understand that these water contracts were perfected long before your watch and President Benigno “PNoy” Aquino 3rd’s administration; at a time when a universal call for privatization of parastatals (electric power, water and other utilities) were called for by multilaterals and international banks as preconditions for concessional loans. This was at a time too when President Fidel V. Ramos (FVR) successfully broke the back of the PLDT Inc.-Cojuangco monopoly ushering in the liberalization of communications, improving services, allowing cellphones and the internet to bloom.

Water privatization was being considered during the closing years of the Corazon “Cory“ Aquino administration, but the serious work started only when the financial crisis of July 1997 hit during President FVR’s time. The contract provisions were thoroughly examined by the organs of government, from the Metropolitan Waterworks and Sewerage System (MWSS), to the Investment Coordination Committee, National Economic Development Authority, Office of the Government Corporate Counsel and Department of Justice before the contracts were awarded to Manila Water of the Ayala and Maynilad of the Lopez families.

Romeo L. Bernardo, who was then-undersecretary of finance under FVR has this to say in his column “Introspective” (Business World, Oct. 13, 2019): “Water security is ensured only when long-term investment and financing for the sector are sustainably and efficiently done to meet the needs of a growing population, the economy and the environment.” And indeed, the two water concessionaires invested a total of “…P105 billion [and more] to upgrade and expand water and sewage network [and] achieved without adding to government’s fiscal burden or public debt exposure.”

Populist demands and govt interventions
But this water security was threatened in the subsequent administrations succumbing to populist demands, with the MWSS itself, “the partner” of the concessionaires, intervening to prevent gradual increases in tariffs and even push for arbitrary reduction in water rates. The medium-to-long-term investments by the concessionaires were compromised. This brought about the inability of the Lopez-owned Maynilad to sustain its operations and sell out to Manny Pangilinan’s group, “a lackey of Antoni Salim, an Indonesian.” (Rigoberto Tiglao, “The Arrogance of an Indonesian Magnate’s Lackey,” TMT, June 26, 2016.)

The international business community “… views the MWSS’ unilateral and arbitrary act of changing the terms or interpretation of the concession agreement, in total disregard of the contractual rights and intent of the parties, with grave concern.” This prompted the water concessionaires to file suits for arbitration in Singapore as they can’t receive fair hearing from our rent-seeking bureaucrats. And we lost!

In retrospect, water distribution, similar to electric power generation and distribution, is still a business where owners must make a profit, though highly regulated. Therefore, only the big guns in the country with enough capital for long-term investment can afford to get into the act. In the first place, tariff was controlled, perforce affecting their bottom lines, but limited to annual maximums; in this case not going beyond the “appropriate discount rate” (ADR). This is where the conflict starts, when government disregards procedures and the concessionaires start cutting corners and camouflaging costs — as in charging corporate income tax (allegedly anomalous) but has been tolerated for years. They have to pay their bank loans on their huge investments. Or close shop and return the concessions to government. And if they do, we are back to government subsidizing water and none coming out from the tap — like the dark days of old — prior to privatization.

Threats and intimidation
“I am prepared to go down as president and self-destruct. ‘Yang mga Ayala na ‘yan, bibirahin ko talaga ‘yan ng economic sabotage.” Your threats already worked. Additional ones are mere theater. Besides, you have the legitimate use of state violence. And these old families understand brute force.

So, my short-term unsolicited advice for the remaining years of your regime. Negotiate! Use the full majesty of your office to review the contracts to make the same fair for our people. You are only good up to 2022, when another election is to be held; and the elections in this country are the basic lifeblood of the oligarchy, not for its democratic intent, but for the opportunity for co-opting candidates in need of funds for expensive electoral campaigns

The alternative to a failure in negotiation is deadly for all. You can rescind the contracts, and they return the concessions. And you could offer Manila Water Co. Inc. and Maynilad Water Services Inc. to another set of oligarchs — those salivating in the sidelines purporting intimacy with your regime. And there goes the Philippine policy of “leveling the playing field for investors.” And we can kiss long-term foreign direct investments goodbye.

Or you can declare revgov — and let the s**t hit the fan!000
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