Summary
Highlights
The public forum, organized by the Asian Center, Freedom from Debt Coalition, and Sarilaya Development Workers Chapter, focuses on the privatization of governance. It highlights how the Philippines' top oligarchs have captured business and politics, leveraging massive investments in public goods like infrastructure and utilities to influence public rule-setting for their business interests. The aim is to trace the impact of this intertwining of economic and political power on government policies.
Dean Nel Christian Moratillo welcomes attendees, including academics, activists, students, and labor leaders. He emphasizes the lecture's importance in exposing the social malaise caused by the concentration of political, economic, and cultural power in the hands of a small ruling class. Moratillo presents stark figures on poverty, hunger, unemployment, and out-of-school youth in the Philippines, contrasting this with a 32% increase in billionaires over the last decade. He attributes this disparity to a system designed to promote inequality, fueled by the capitalist system's excesses and corruption, often aided by unscrupulous political backers. He concludes with a quote by Hugo Chavez, stating that essential public services cannot be privatized as they are fundamental human rights.
Dr. Antonet Rakisa, a professor of Southeast Asian Studies and Philippine Development Studies at the Asian Center, is introduced. Her expertise includes comparative political economy, industrial and innovation policy, and Philippine conglomerates. Her recent studies cover privatizing governance and oligarchic politics, manufacturing services, and business process outsourcing. She is recognized as a leading political economist in the country.
Dr. Rakisa's talk, based on her study of oligarchic politics, examines the impact of Ferdinand Marcos Jr.'s presidency. She notes that immediately after his 2022 election victory, photos revealed his association with wealthy business oligarchs like Sabin Aboitiz and Kevin Tan. These oligarchs now form the Private Sector Advisory Council (PSAC), which includes the 10 wealthiest Filipinos with a combined net worth of $21.5 billion in 2022. This presence signifies an unprecedented level of access to political power, an ironic development given Marcos Sr.'s martial law declaration, which ostensibly aimed to dismantle the landed oligarchy.
Dr. Rakisa defines business oligarchs as individuals and families at the top of the social hierarchy, whose primary power source is family wealth. Oligarchic politics involves these individuals in governance, mainly through massive investments in public goods and direct/indirect participation in policy-making, to accumulate more wealth.
The speaker outlines key policies since 1987 that promoted private sector involvement in public services. The 1987 Constitution enshrined the private sector as the 'main engine of national growth.' President Corazon Aquino's Administrative Order No. 59 (1988) clarified that government should not compete with the private sector but instead address 'market failures.' Republic Act No. 6957 (1990) introduced public-private Build-Operate-Transfer (BOT) arrangements for infrastructure, offering significant fiscal incentives like income tax holidays and duty exemptions for projects spanning highways, airports, power, and water facilities. President Fidel Ramos further expanded PPP with Republic Act 7718, the Build-Operate-Transfer (BOT) Law, allowing private companies more opportunities through 'develop-operate-transfer' and unsolicited proposals.
Dr. Rakisa illustrates the implications of the BOT law with San Miguel Corporation's (SMC) unsolicited proposal for the ₱740 billion Bulacan International Airport. This project, handled by SMC's subsidiary San Miguel Aero City Inc., includes developing adjacent areas into an 'Airport City,' as sanctioned by Republic Act No. 11506. The project promises extensive development and also involves the ₱148.3 billion Northern Access Link Expressway (NALEX), linking the airport to Metro Manila and Central Luzon. These arrangements allow conglomerates to consolidate investments, extending their influence and profitability by integrating property development with public utilities.
The privatization trend continued with the National Water Crisis Act (RA 8041) in 1995, empowering the president to privatize water utilities. This led to conglomerates like Benpres Corporation (later Metro Pacific) and Ayala Corporation taking over water supply in Metro Manila. The privatization of local water systems accelerated in 2004 with EO 279, followed by NEDA's 2013 revised guidelines for joint ventures (JVs), allowing the private sector full ownership after government payment. For power, the Electric Power Industry Reform Act (EPIRA) in 2001 privatized the National Power Corporation and unbundled the industry, facilitating the entry of private firms like Aboitiz Power and Ramon Ang's SM Global. These policies allow cross-ownership and affiliate sourcing, contributing to high power rates.
The Public Private Partnership (PPP) Code of the Philippines (RA 11966), passed in December 2023, consolidates PPP policies and extends incentives, including government guarantees for market demand risks, debt repayment, and predetermined rates of return. It also grants subsidies and allows private sector takeover of projects after contracts. The code facilitates local governments and state universities undertaking PPPs, furthering privatization. President Marcos Jr. certified the PPP bill as urgent, highlighting his commitment to infrastructure development through PPPs. This trend disproportionately benefits oligarchs, who selectively invest in incentivized sectors like housing, BPO, and renewable energy, ensuring high returns.
Business oligarchs have significantly increased their wealth, often doubling or tripling it within five-year intervals, as illustrated by Forbes' richest families list. This rapid wealth accumulation is directly linked to their access to political power and government policies favoring big business. Oligarchs exert influence through social connections, appointments of corporate officials to government positions, and even by running for office. Manny Villar is cited as an example, successfully transitioning between business and politics and securing key government roles for his family, demonstrating how political power is utilized to further business interests. This interwoven relationship ensures that policies are crafted to benefit the wealthy, turning public services into lucrative ventures.
The influence of business oligarchs in policy-making has reached new levels with the establishment of the Private Sector Advisory Council (PSAC), which meets regularly with President Marcos Jr. to discuss policy. This illustrates the deepening entrenchment of oligarchic rule, where the wealthiest tycoons assume governmental roles. Dr. Rakisa explains that this aligns with Jeffrey Winter's definition of oligarchy as 'wealth defense'—the politics of those who command vast material resources to defend and enhance their personal wealth and social positions. Examples include the Department of Finance withdrawing a wealth tax bill after criticism from business groups like the Management Association of the Philippines, and continued plans for privatization of state assets (e.g., regional airports, LRT-2, Bataan Nuclear Power Plant). Business groups also opposed a wage hike, leading to calls for further study from Malacañang, showcasing how their interests influence government decisions.
Dr. Rakisa concludes that under President Marcos Jr., oligarchic politics has become more entrenched, with the richest tycoons assuming government roles. Privatization has transformed public service delivery into big business, creating rent-seeking opportunities and monopoly rights. Government policies consistently favor the private sector, even guaranteeing their profits and covering losses through market failure contingencies. This paradigm undermines the neoliberal claim that the private sector is more efficient, fostering moral hazards where risks are borne by the government and consumers. The fragmentation of natural monopolies, intended to lower entry costs, perversely allows conglomerates to set up distinct companies for related services (e.g., power generation and distribution), leading to cross-ownership, which a critique of EPIRA attributes to the Philippines' high power rates. This highlights how oligarchs maximize gains from essential public utilities, leaving consumers with limited choices and often poor-quality, expensive services.
Rovic Obanil opens the floor for questions. A participant asks about the profile of health privatization's impact on outcomes and access. Another participant, Dwayne Don, notes similarities between Philippine developments and 1980s US plutocracy, asking what it takes to prevent such a trajectory. Dr. Rakisa acknowledges the lack of direct data on health privatization's impact but connects its rise to OFW remittances, which encourage conglomerates to diversify into consumer-driven sectors like health and education. The discussion shifts to plutocracy, with Caloydi de Guzman asserting that money dictates political power in the Philippines, leading to policies favoring oligarchs.
Online participants raise questions on quantifying inequality's economic impact and building economic democracy within the current education system. Dr. Rakisa emphasizes that visible poverty on the streets is enough to acknowledge inequality, while Caloydi de Guzman details the extreme wealth disparity: nine billionaires' combined wealth equals that of 55 million Filipinos. He criticizes the current system where elected officials from elite families create laws that legalize wealth accumulation for the rich and perpetuate poverty for the majority. Rene Afuang stresses the need to reverse neoliberal policies, prioritizing national industries, agriculture, and food sovereignty to avoid dependence on foreign markets and endless debt.
Tita Flor Santos of K4K and Olive of H Philippines advocate for grassroots movements and local economic strengthening. They emphasize translating complex economic issues into simple, understandable language for the masses and fostering collaborations between academics and community leaders. Raquel Castillo highlights the need for sustained popular education to engage youth and communities, especially given the threat to general education in colleges. Caloydi de Guzman reiterates that sectoral struggles alone are insufficient; political struggle at the national level is crucial to dismantle oligarchic and dynastic control, as past victories have been rolled back by entrenched elites.
Caloydi de Guzman emphasizes that without a paradigm shift from neoliberalism, economic policies will continue to favor big business, regardless of corruption. Gina Dela Cruz, an activist, shares her past experiences and emphasizes the importance of community-level organizing and a 'pink tide' movement, drawing inspiration from Latin America. Princess Nemenzo calls for self-reflection and assessment within social movements, recognizing past depoliticization and emphasizing the need for historical and political consciousness, especially among the youth, to strategically confront the pervasive oligarchic system. She highlights the need for unity and a broad agenda that transcends sectarianism, citing the success of the Fair Trade Alliance in uniting labor and nationalist manufacturers.
Dulce Cuna-Natividad delivers closing remarks, summarizing the forum as a lesson in political economy and the distribution of power. She highlights the critical need for collaboration between universities, professors, and social movements at the community level. Natividad emphasizes how the university can make its research more relevant by integrating with grassroots efforts. She concludes by urging collective action against the pervasive commercialization and oligarchic control, stating that the discussion has provided a vital step toward empowering communities and challenging the current system. The forum concludes with certificates of appreciation for the speakers and a call for continued engagement.