Asian Century Journal

An Asian Century Philippines Publication

Nowhere Fund Has Failed To Plan, Communicate; A Failure To Launch

The volatility of investing in the stock market is shown on how Philippine government financing institutions enumerated above have collectively lost P743 million in just three years due to bad speculation.

By Adolfo Quizon Paglinawan

The President can railroad his proposed sovereign fund all he wants, but he must proceed with great caution lest this causes his own Waterloo sooner than later.

In a move to repair the tarnished image of President Bongbong Marcos Jr., Manila Times columnist Rigoberto Tiglao thinks the label “Maharlika” has been the downer.

The columnist wrote: “The use of the term “Maharlika” threw the Yellow but noisy stragglers in this land into an anti-Marcos delirium. According to them, it was honoring the elder Marcos, whom they have hated without end.”

I do not agree. The yellows are history. They do not count.

Call it by whatever another name but thirty-one million voters proved that they installed another Marcos to head government, precisely because they want the New Society that was envisioned by the President’s father.

The central theme of the BBM campaign was “Bagong Lipunan”.

It is more graphic in the vernacular – “May bagong silang. May bago ng buhay. Bagong bansa. bagong galaw. Sa Bagong Lipunan.” (There is a new birth, a new life, a new nation – a new movement for a New Society.)

In fact, the transformation to progress is inevitable.

“Nagbabago ang lahat. Tungo sa pag-unlad.”

What I assert is that the delirium was not anti-Marcos. But where I agree with Tiglao is that “President’s political lieutenants and economic managers have been unable to communicate what the sovereign fund proposal involves in detail.”

The failure to launch has been caused by the failure to render the proper social preparation. And yes, I agree that the President himself overstepped in assuming he could be licentious, given his big majority lead in the polls.

Thus, his first lesson in public administration – first, everything in government involves a process, and second, it always pays to be transparent and accountable, and third, public office is public trust.

PBBM’s thirty-one million is now a critical populace, it does not readily surrender to the elected the card blanche our incompetent leaders from 1986 to 2016 thought the country gave them, that they ruled with greed, rapacity and total disregard of national interest.

Today’s electorate know their interest. And the weight is even heavier because the multitude that ensured a Marcos victory in the 2022 election came from the masa, society’s Classes D and E. They have also become discerning as a result of the pandemic in that things cannot go any worse.

Another fallacy from old business

Tiglao also cited “old business” saying “The proposed SWF will create a platform for the government to actively participate and intervene in the economy, a role which administrations since 1986 have tried to de-emphasize learning the lessons of statist interventionist economic policies.”

This is a distortion of history.

On the contrary Tiglao explains, “The post-EDSA, anti-state tack has resulted in a mediocre economy which has never posted a double-digit GDP growth. In contrast, countries like China, South Korea, Singapore, Malaysia and Taiwan which undertook state interventionist policies zoomed ahead…it is simply an article of faith, unpatriotic capitalist myth for their profit-making to be always unimpeded.”

The sovereign fund may be a form of state capitalism, but state capitalism is not malevolent per se. In fact, the nationalization of utilities during the regime of Marcos Sr. redound to the maximum benefit of the consumers in terms of lower electric bills and periodic dividends.   

True an entity like this sovereign fund, with its capital and clout, can challenge big business foreign monopolies and buy them out, as a sovereign should, especially when these are in strategic industries, like energy and telecommunications, where public interest has been sacrificed in the altar of unmitigated private sector greed.

The oligarchs and their foreign patrons had become so obstinate that in the Electric Power Industry Reform Act (EPIRA) which Gloria Macapagal Arroyo signed in 200. Her idiot law mandated the privatization of government-run power plants according onerous privileges and benefits to the players at the expense of the consumer. Worse, it banned government from entering the business of power generation.

As a result, electricity rates in the Philippines is highest in the Asean and Asia, and one of the most expensive in the world. The blessing in disguise is that the Filipino family has become discerning about their own welfare burdened by the weight of their monthly electric bill.

Juan de la Cruz has become insecure about his future that he has started asking what the government has instore for them. He has heard the same names running our economy, seeing the absence of change in policies and programs throughout the years, but expecting something different to happen.

The ordinary Filipino is asking why the President is putting such fat petty cash fund in the hands of liberal economists headed by Benjamin Diokno, whose World Bank records do not include expertise in investing in the highly speculative stock market?

 The compelling reason why the sovereign fund is doomed from the start is the incompetence of people indirectly trusted with their money.

The monumental evidence is in the chart accompanying this page.

Government financing institutions (GFIs) invested almost a billion at the Philippine Stock Exchange in Manny and Cynthia Villar’s All Home Corporation. The value is down from P851 million all the way to P102 million.

That means 88% of the people’s money, gone to obnoxious behest that is not a collateralized loan but a stock placement.

Not the singer but the song

The reason why there is less trust in how the President has been handling the economy is that he has not levelled with the people what tune he is singing.

The vision of a New Society of his father that he emboldened during the 2022 presidential campaign does not compute in where he has taken the economy in his first six months. By his appointments, in fact, he is telling his electorate that he has given the very people who destroyed Apo Ferdie’s new society paradigm from 1986 to 2016 the steering wheel.

The Apo took the nation to the road to self-reliance, an egalitarian regime that was really benign socialism, with state capitalistic modes manifesting in how he nationalized power, out of the clutches of oligarchic control onto delivering cheap power rates.

This, in turn, was meant to level the playing field onto 11 derivative industries that would serve as the backbone of the country’s manufacturing muscle, delivering a balance agro-industrial growth.

That was intended to spell productive and vibrant economy, not the service economy that Aquino the mother to Aquino the son has bequeathed to us, where the oligarchs and their foreign collaborators have hostaged profits at the expense of the many who are poor.

The promise of continuity of the Duterte gains is also not manifesting. As against a boost in infrastructure and trade with China as a strong partner that the mayor from Mindanao left him, the foreign affairs discussion has been dominated by the geopolitical biases of the Americans.

We are not at war with any other country. There is no need for posturing as China dominance does not threaten us, but encourages us.

The testosterone that American boys in our military establishment pumps in the discourse is all a waste of goodwill, and may even make us an unwilling target of a nuclear attack.

We do not need five more American bases, in fact we do not need any of them to secure the country from any outside conflict. We believe in diplomacy in solving our disagreements with any other state, our Constitution tells us to take the road of peaceful means.

The use by the United States of Philippine bases, ostensibly for strengthening our capability to weather and respond to natural disasters hovers between a hot-air balloon and hogwash. Being a proximate neighbor, China is in the best position to serve that purpose.                   

We have no right to arrogate debris of a launch outer space vehicle to ourselves. International law obligates us to return them to the launching state, which is their owner.

We are free to buy heavy helicopters anywhere else than Russia, if we are also stupid to forfeit P2 billion of our tax payers money for defaulting on an valid supply contract.

Defense Officer-in-Charge Jose Faustino Jr.’s moronic statement that we will support the US in the event of a Chinese invasion of Taiwan, has outrageous implications. China is not an enemy of the Philippines and the United States has no right to interfere in our and China’s internal affairs. This is in fact a serious affront to the policy of the United Nations under the One-China Policy of which the United States and the Philippines are both signatories.

But President Marcos Jr. is silent about these announcements by members of his cabinet, involving geopolitics.

Collaboration must be strategic

His perceived dalliance with the United States points to an unprincipled and ambiguous, instead of a genuine independent foreign policy.

For instance, while it is true that more than 75% of global transactions have been completed in US dollars since 2008 and the US dollar has also accounted for more than 60% of foreign debt issuance and 59% of global market reserves, the dollar’s grip on all markets and instruments have been gradually declining in recent years.

The Chinese renminbi (yuan) isn’t exactly a planned alternative, but geopolitical and macroeconomic trends support its rise to dominance.

Since 1450, there have been six major reserve currency periods. Portugal dominated the global reserves until 1530 when Spain became stronger. Currencies issued by the Netherlands and France dominated world trade for much of the 17th and 18th centuries. But the emergence of the British empire made the Pound Sterling the reserve currency until the end of the First World War. The U.S. dollar displaced the pound just as America gained economic superiority over Britain.

The most popular currency for global trade and cross-border commerce emerges as the de facto reserve currency. This is the asset or currency that most central banks across the world prefer to hold in reserve, which is why the dominant asset earns the label of “reserve currency.”

This year, Chinese leaders made it clear that they wanted to boost the renminbi’s profile as a reserve currency. China’s economy and trade flows are large enough to support such a move.

This is where PBBM’s priorities should be directed.

What is he doing about the stalled joint oil exploration deal with China?

What is he doing about the ratification by the Senate of our signature to the Regional Comprehensive Economic Program that has been due six months ago? RCEP is the first free trade agreement among the largest economies in Asia, including China, Indonesia, Japan, and South Korea, and we are whistling in the wind!

What is he doing about sourcing cheap Russian gas through China?

What is he doing to reduce the price of energy for both residential and commercial consumers so that our investors do not move to either China, Vietnam, Thailand and Indonesia?

Will he able to finally launch a credible economic program after he meets Xi Jing Pin in China on the first week of 2023? – A year that promises to be more difficult for world economy.

Remember, motherhood statements are no longer honored by the 31 million.

PBBM must be directive, and must present precise goals and viable roadmaps.

<strong>Adolfo Quizon Paglinawan</strong>
Adolfo Quizon Paglinawan

is the anchor of Ang Maestro – the Unfinished Revolution at Radyo Pilipinas1, co-host of Opinyon Ngayon at Golden Nation Network Television, a political analyst, and author of books.

His third book, The Poverty of Power will soon be off-the-press. It is a historiography of controversial issues of spanning 36 years leading to the Demise of the Edsa Revolution and the Rise of the Philippine Phoenix.
Paglinawan’s past best sellers have been A Problem for Every Solution (2015), a characterization of factors affecting Philippine-China relations, and No Vaccine for a Virus called Racism (2020) a survey of international news attempting to tracing its origins.

These important achievements earned for him to be named one of the 2021 international laureates for the Awards for the Promotion of Philippine-China Understanding.

Ado, as he called for short, was a former press attaché and spokesman of the Philippine Embassy in Washington DC and the Philippines’ Permanent Mission to the United Nations in New York.

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