By: Artchil B. Fernandez
The major fallout of Du30’s impulsive governance is to make life difficult and hard for his economic managers and undermine the economic thrust of his administration. This is once again exposed in the issue involving the water concessionaires. In the last two weeks, Du30 publicly lambasted the concessionaires and their owners accusing them of economic sabotage and threatened them with military takeover of the water utilities.
On cue, fanatics and troll army of Du30 launched major attacks against the water concessionaires in the social media. Echoing their cult-god tirades, they viciously savaged the oligarchs who owned the water concessionaires. Fanatics and trolls also called for government takeover of the utilities, questioned their privatization and urged for the abrogation of the contracts entered by the government with the water concessionaires.
Surprisingly, the push back against the fanatics and the troll army is being led by the economic managers of Du30 and the technocrats in his administration. They are not only trying to clarify the misinformation spread by the fanatics and troll army but are exposing their ignorance of the issue.
Contradicting the fanatics and the troll army, Justice Secretary Menardo Guevarra publicly assured Manila Water Co. Inc. and Maynilad Water Services Inc. that there will be no government takeover of the water utilities. He said the government “is not even thinking” of such a move. What happened to Du30’s threat of ordering the military to take over the water concessionaires? If one goes by the statement of the justice secretary, Du30 is all bark and no bite. The fanatics are in for a big disappointment.
But the charge against the fanatics and troll army fell into the shoulder of Finance Secretary Carlos Dominguez III, the leader of Du30’s economic team. On the sidelines of Sulong Pilipinas Agribusiness Summit 2019 in Davao City this week, Dominguez took pains to clarify the government position on the issue of the water concessionaires. He took great care to explain the difference between review and abrogation. What this administration is reviewing the contract of the water concessionaires and not abrogate them. “This is not an abrogation of contract but of a review of the contracts.”
It is also astounding that the Dominguez justified the provisions of the contract that Du30 slammed as onerous. He said in the context of the time, the onerous provisions were correct. “At that time [in 1997], the Philippines was paying 700 basis points over the benchmark of 6 percent. So we were paying a 13-percent interest rate when we borrow. So 12 percent looks OK.”
Dominguez’s statement justifying that the onerous provisions are correct in the context of its time echoes the explanation of former president Fidel Ramos whose administration approved the contracts. Ramos in a letter addressed to Du30 which he made public, asserted that there is nothing anomalous in the contracts. The contracts according to Ramos were above the board.
The “contract correct in the context of its time” line of Dominguez not only contradicts his principal but it also exposed Du30 as an impulsive leader who does not think and study the issue before he opens his dirty mouth. Dominguez is forced to do this for what Du30 did imperil the economic program and policies of his administration. Du30’s reckless statements are also jeopardizing the market and unnerving the business community. Du30 unknowingly sabotaged his economic managers.
It remains to be seen if Dominguez can effectively undo what Du30 did or reverse what his fanatics and troll army are doing in the social media. The technocrats had to hit hard and demolish the misinformation and lie peddled by Du30’s fanatics and troll army if they are to save Du30’s economic program and policies. The negative effect of Du30’s thoughtless action is starting to be felt.
In the last eleven days that Du30 launched his attacks against the water concessionaires, the market value of four companies with an interest in water distribution in Metro Manila, Cavite and Rizal plunged. The companies lost Php128 billion in stock valuation. This is just the beginning.
The repercussion of Du30’s intimidation of the business community is the loss of the Philippine government of its credibility and standing before local and foreign investors. If the Philippine government will not honor the contracts it entered into, abrogate them anytime, and refuse to accept the arbitration it agreed upon, no sane local and foreign investor will do business in the Philippines. Why will they risk their billions with a rogue government? Stability and predictability of policy lure investments.
If nobody invests in the Philippines, what will happen to the country? This is the nightmare Dominguez is trying to avoid and what the fanatics and troll army are naively fanning. Economist and national scientist Raul Fabella warned of the dire consequences of disregarding the sanctity of contracts. “Who will invest long-term if the government can expropriate at will? What private banks will make loans? Only the cronies! Marcos cronies, recall, brought the country to its knees.”
Fabella also reminded Filipinos of the Venezuela scenario. “Autocrats Hugo Chavez and successor Nicolas Maduro made life impossible for the market players and investors who promptly packed their bags for other climes. This emptied the supermarket shelves and brought inflation rate to 53 million percent from 2016! Maduro is waging a war against his own people. No wonder Venezuelans ravaged by hunger started for the border.”
For years the technocrats of Du30 worked very hard to attract investors in the Philippines only to be torpedoed by Du30, his fanatics and troll army. The road to perdition is indeed paved with stupidity and ignorance.
