Investment are not achievements
President Aquino appeared ecstatic during his last State-of-the-Nation Address, particularly on the subject of investment. He knows that increased foreign investment means that he enjoys the confidence of the business community. For him, his critics can shout to high heavens, and he could not care less. According to him, history will judge him. Paradoxically, that self-serving exhilaration about the economy is not an achievement or something that the people are interested in unless translated to something that could affect their lives.
Increased investment can never be seen as an accomplishment. Rather, it is merely an act of the moneyed class to entrust their wealth in one venture, having in mind it would beget more money. He never told the people that investment confidence came not without a price. He did not mention to his listening audience that his government approved Republic Act No. 10641 or an act allowing the entry of foreign banks to operate 100 percent in the Philippines beginning July 14, 2015.
R.A. No. 10641, amending R.A. No. 7721, provides in Section 2, to quote: “The Monetary Board may authorize foreign banks to operate in the Philippine banking system through any one of the following modes of entry: (i) by acquiring, purchasing or owning up to one hundred percent (100%) of the voting stock of an existing bank; (ii) by investing in up to one hundred percent (100%) of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines; or (iii) by establishing branches with full banking authority.”
Further, Section 5 which amended Section 8 of R.A. No. 7721 provides, to quote: “Foreign banks authorized to operate under Section 2 of this Act, shall perform the same functions, enjoy the same privileges, and be subjected to the same limitations imposed upon a Philippine bank of the same category. The single borrower’s limit of a foreign bank branch shall be aligned with that of a domestic bank. x x x. “Any right, privilege or incentive granted to foreign banks or their subsidiaries or affiliates under this Act, shall be equally enjoyed by and extended under the same conditions to Philippine banks.”
PNoy failed to discern that the principal function of banks is to provide capital. They are not interested in knowing whether the money borrowed would be used to directly invest, meaning the borrower would build factories and provide more jobs for our people, or merely use said capital to engage in speculative trading. The bank would be relying mainly on the interest rate generated than by actually engaging in production, commonly understood as portfolio investment.
By approving said Act, the administration in effect scrapped the economic provisions in the Constitution that would give Filipino investors and businessmen a chance in helping develop this country. Congress practically abnegated on its duty which in the second sentence, paragraph 1 of Section 10, Article XII of the Constitution states, “The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.”
A close examination at R.A. No. 10640 would indicate that it collaterally abrogated Section 10 of Article XII of the Constitution which states, and to quote: “The Congress, shall upon recommendation of the national economic and planning agency, when national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investment.”
Foreign banks can now participate and do any business transaction by virtue of corporate takeover after foreclosure proceedings by their defaulting borrowers, thereby disregarding the limitation on ownership to aliens. This is worse than the hated banking practice that was once prohibited even in the US under the Glass-Steagall Banking Act, which separated investment banking from commercial banking that has been blamed as the principal cause of the economic meltdown in the US, Japan, in Asia in 1998, in Mexico, Argentina, and today in Greece.
This we say because Section 4 repealed, to which Section 9 provides: “Foreign banks which are authorized to do banking business in the Philippines through any of the modes of entry under Section 2 hereof shall be allowed to bid and take part in foreclosure sales of real property mortgaged to them, as well as to avail of enforcement and other proceedings, and accordingly take possession of the mortgaged property, for a period not exceeding five (5) years from actual possession: x x x.”
In short, the law completed the conversion of our economy to one big casino where foreign banks could engage in speculative trading of stocks, treasury bills, sovereign guarantee, collateralize debt obligations, etc. This also explains why the partly government-owned United Coconut Plants Bank is now up for sale, and the coconut farmers are bidding goodbye to the Coconut Levy Fund amounting to P7 billion or $1.6 billion, which now could be transferred by virtue of sale despite the entry of judgment of the Supreme Court decision on September 4, 2012.
Even if we would give it to PNoy that foreign direct investment jumped after he approved the law, what in fact transpired was an increase in the volume rather than the percentage share of the country as an investors’ paradise.
In fact, the Philippines registered the fifth in FDI with $3.86 billion surpassing Cambodia with $1.27 billion, Brunei Darussalam, $908.4 million, and Laos, $426.7 Million. Leading was Singapore with $54,4 billion; Indonesia with $19.2 billion; Vietnam with $8.4 billion; Thailand with $8.1 billion; Cambodia with $1.8 billion and the Philippines with $1.5 billion.
Investment would have no intrinsic value to our people if they are not translated to something they could savor in terms of employment and improvement to their lives. Yet, unemployment remains high at 7 percent while underemployment is at 18.3 percent. As of the last quarter of 2014, hunger has worsened. The Social Weather Stations revealed that 4.8 million families, not individuals, experienced having nothing to eat in the past three months. The latest survey says the 5.7 points higher than the 16.3 percent – equivalent to 3.6 million families. According to the National Statistical Coordination Board, more than one-quarter or 27.9 percent of our population fell below the poverty line in the first semester of 2012. This means his much-ballyhooed poverty alleviation program, Conditional Cash Transfer, was a dud.
Indeed, the oligarchy and the international finance syndicates have all the reasons to applaud the SONA of PNoy for they are now reaping the dividend for their support of their puppet. PNoy did not mention anything like what he has done to improve the lives of the people. He did not even offer a simple solution to the problem about the Metro Rail Transit where thousands of commuters are stranded daily or in improving our transport system to enhance our productive output. Rather, he used his power to institutionalize the corrupt practice of political patronage through the unmitigated use of pork barrel to make a mockery of our democracy which this administration has been hypocritically perorating.