Breaking up vested interests

When President Gloria Arroyo presented Thursday "the vision that guides my administration", ideolo-gical extremists gave identical reactions. "Empty talk," screeched militants on the left. "Short on specifics," echoed bankers from the right. Neutrals who listened to her instead of themselves heard differently, though. For them her message was clear. She was declaring war on vested interests – those bank-based conglomerates that choke industries, and agitators who draw mass bases from poverty.

"There can be no falling back," Mrs. Arroyo swore. "Only the vested interests have something to fall back on, though not for long. Either this country moves forward or dies." She then rattled off recent decisions that had earned her "powerful enemies" who, because they vilified her, steeled her to renounce political ambition and pursue a program of "reform and recovery" in the last 18 months of her term. Those enemies are forewarned.

Her foremost peeve was Piatco. When London’s Corruption Index rated RP as having turned more venal in two years, the Makati Business Club was first to rail against official inaction. Yet when she scrapped the onerous, because graft-ridden, piatco contract, the club was the first too to heckle her for allegedly scaring investors. That’s how vested interests work. The club’s head is also the lawyer of Piatco’s controlling partner.

Next on Mrs. Arroyo’s list was Meralco. Days before the Supreme Court ordered the utility to refund customers overcharges since 1994, the 16-percent controlling partners sought Finance Sec. Jose Isidro Camacho’s help to avert bankruptcy. He had to; government holds a bigger 26 percent, through three state banks, and Malacañang-administered SSS and GSIS. Politically näive about leaving papers around, he faxed Meralco a template earlier used for PNB: Government could take over majority board seats, in keeping with its larger shareholdings, until things stabilize.

Unknown to Camacho, Meralco had filed a last-ditch plea painting economic meltdown if it was made to refund P28 billion. Still, the Court ruled against it. The controlling partners asked Mrs. Arroyo for a quiet meeting that same night. The template was brought up over dinner, and the partners promptly objected to it. Hearing it for the first time, Mrs. Arroyo instructed Energy Sec. Vincent Perez to study the matter further. Word leaked of the meeting. Opposition senators loudly imagined the President arm-twisting the partners for campaign funds. Militants accused her of protecting the oligarchs. Others insinuated she got advance, thus illegal, info on the impending Court order. The partners went to the press crying "shock" with the takeover scheme. Yet all Mrs. Arroyo did was hear them out. For she needed to weigh their views with her duty to protect Meralco’s 75,000 small shareholders. Much more its three million customers in Luzon, and 25 million SSS and GSIS members nationwide.

The Meralco experience burned Mrs. Arroyo, the way the furor over purchased power adjustments did last April. She learned enough lessons, perhaps, in dealing with the same partners who also control the Maynilad water concession. Maynilad had petitioned government in June for a rate increase from P15.65 to P34 per cubic-meter. But sensing that regulators were contemplating only P26, it suddenly surrendered its franchise and sued government for refund. Maynilad claimed that it never asked for an increase, but for reprieve from paying concession fees. Yet it has not been paying such fees since April, totalling P4 billion to date.

In her speech the President twitted other endless critics, the vested interests. For, they called her greedy with land reform when she in fact had talked her husband’s clan into giving up 700 hectares of sugar haciendas in Negros. They accused her of politicking just because she released much-needed tax shares to local officials, including the Opposition. They linked her spouse to the Public Estates Authority overpricing even after she fired its officials. Lastly, she upbraided those who constantly block urban decongestion – squatter syndicates, and churchmen who hold vast tracts of land yet oppose relocation.

If the President wasn’t specific enough for anxious vested interests, her new economic planning chief has been so in press interviews. And that should serve as additional forewarning.

Of particular concern to Sec. Romulo Neri is the rice cartel. For some strange reason, the National Food Authority imports million tons of rice right during harvesttime. "Farmgate prices drop, the cartel buys cheap, then sells high during the lean season," Neri explains. Everything is done at the expense of NFA, which runs on tax money, and rice farmers.

Also in Neri’s cross hairs are the corn and sugar cartels, although he says these would be tougher to break up. Domestic price of sugar is double that of the world market. Sugar barons have a protective wall in the form of the Sugar Regulatory Commission, which grades imports for higher tariffs and local produce for higher prices, too. Any which way, the barons win.

Neri lists other reform targets – cement and garment dumpers, drug firms that resist cheap medicine imports, airlines that ditch open skies, car assemblers that won’t use more local materials, and port monopolies. Not only trade cartels, but also back-to-Stone Age environmentalists who decry any form of mining, are in for a fight.

Mrs. Arroyo, in a follow-up speech on Friday, made special mention of items in Neri’s hit-list. She has a RORO (roll on-roll off) solution to port monopolists. Traders have long been crying that because of steep port charges, shipping from Bukidnon to Manila is costlier than from Bangkok. Cattlemen often quip that if only they’d be allowed, they’ll load live steer into airplanes first-class, since it’s cheaper than having slaughtered cows in a ship’s cargo hold. Once Mrs. Arroyo refits the ports, trucks can roll on and off ships to final destinations, instead of having cargo crates loaded and unloaded at every stop by arrastre gangs controlled by local pols.

Too, Mrs. Arroyo said of dumping: No longer would RP be way ahead of World Trade Organization and ASEAN Free Trade Agreement deadlines in reducing import tariffs. Of mining, long-dormant although "the Philippines holds one of the richest reserves in the world," she saw revival via less restrictions. "I will reduce to bare minimums the national government requirements for doing business," she vowed. "Officials, be they local or national, are the last people who should second-guess a business activity."

Vested interests have strangled the economy far too long that people have come to accept them as immutable facts of RP life. That’s why there are "too many poor, too many jobless, too many homeless people around," the President noted. She saw urgency in the need to break the chain: "You cannot postpone eating well, drinking safely, learning useful things and having gainful work. Only those who exploit the weak bargaining position of the poor believe the poor can wait."

Mrs. Arroyo’s reforms can finally alter centuries of economic rule by a few favored families and firms. Question is: Will the 18 last months of her term be enough time to undo 180 years of elite control?

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