Rise of the Dutertegarchs

PERRYSCOPE
Perry Diaz

Speaking in front of a group of former communist rebels, President Rodrigo Duterte emphasized his resolve to prevent the wealthy from stealing money from the taxpayers – he’s going to kill these crazy rich people.  His audience must have been delighted to hear that their president would kill their traditional enemies – the oligarchs -- that they have been fighting all their lives.   

Immediately, presidential spokesman and “apologist,” Salvador Panelo, clarified that Duterte’s statement should not be taken literally.  Panelo explained that what the president meant was “kill the desires of the rich to steal money from the taxpayers.”  Was it one of his “dyok only” moments?

But Duterte was not joking when he expressed his hatred of the oligarchs who dominate the Philippine economy.  “The only way to make the country move faster to benefit the poor is really to open up communications, the air waves, and the entire energy sector. Or else, you can count on your fingers the power players of this country. The only way for deliverance of this country is to remove it from clutches of the few people who hold the power and money,” he said.

According to the World Bank, the country’s 40 richest families have accrued 76% of newly created growth in recent years.  And Duterte seems to be on track in keeping a few oligarchs of his choice in control of the economy, which reminds of the Marcos cronies who took over the economy in the 1970’s and 1980’s. 

The oligarchs

 Well, Duterte didn’t waste anytime. Barely four days into his presidency, he went after longtime gaming tycoon Roberto Ongpin, one of the richest oligarchs in the Philippines. 

                Ongpin began his government career as Minister of Trade and Industry during the Marcos era. After the fall of the Marcos dictatorship, Ongpin ventured into land development.  He acquired control of South Seas Oil and Mineral Exploration Co. In 2000, South Seas became PhilWeb, Inc., an online gaming company.  He expanded and diversified his businesses into more land developments that include Alphaland, Balesin Island Club, and other high-end development projects.

                Nobody knows why Duterte singled him out.  Many said that he could have been a victim of the Philippines’ “murky” politics.  Duterte’s incessant attacks on Ongpin forced Ongpin to step down as chairman of PhilWeb.  Eventually, he was forced to sell his shares in PhilWeb to Gregorio Araneta III, the late dictator Marcos’ son-in-law.  Although Ongpin still has other business interests, the PhilWeb sell-off took a big chunk out of his business portfolio.  But at least he survived Duterte’s assault.  He has a net worth of $3.72 billion (12th on Forbes Magazine’s Richest).  Not bad for a self-made billionaire.

Water supply imbroglio

Recently, Duterte has targeted two business oligarchs -- Manny V. Pangilinan’s Maynllad and the Ayalas’ Manila Water – whom he claimed are stealing from the taxpayers. He accused them of price gouging.

But while Duterte wants to “kill” these two oligarchs, he’s open to the entry of another oligarch, Manny Villar’s Prime Water, to replace Manila Water and Maynilad.  Prime Water currently has concessions in several provinces but the transition from Maynilad and Manila Water to Prime Water would make Villar the “water supply king,” the latest Dutertegarch among Duterte’s favored elites.

It’s interesting to note that the Ayalas and Pangilinan, are known supporters of the “yellow” opposition party, which makes one wonder: Could it be the reason why their water supply businesses are targeted for extinction?   

But what caused Duterte to get really mad was a recent ruling by the Permanent Court of Arbitration (PCA) in Singapore, which awarded Manila Water P7.4 billion (US$150 million) in damages in addition to an arbitration fee and 85% of other claimed costs.  Manila Water controls the capital’s so-called East Zone, which covers 23 cities and municipalities, including Makati and Quezon City.

Maynilad, the sole provider of water to six million people in Metro Manila, sought arbitration back in 2015 following the government’s injunction against raising utility costs. The arbitration count awarded P3.4 billion.  It controls the so-called West Zone, which covers 17 cities and municipalities, including large part of old Manila.

Last December 2019, Manila Water and Maynilad told the House of Representatives they would no longer pursue the arbitration ruling.

However, the Philippine government said it would take over the capital’s water distribution services if the two water supply firms refuse to accept the terms of new contracts that will be offered to them.  Panelo said that Duterte would order the cancellation of their present water contracts and order the nationalization of water services in their respective areas of operation.  The existing contracts expire in 2022 towards the end of Duterte’s six-year term, which means that Duterte has to start looking for new concessionaires now if he wants to take control of the situation.  Is Villar still interested in becoming the water supply king?  Now is the time to decide.

Media giant under fire

Meanwhile, Duterte has set his eye on ABS-CBN, the country’s largest media conglomerate, which is owned by the Lopez family.  The Lopezes have ties to the “yellow” political opposition.  ABS-CBN earned Duterte’s ire when it aired critical reports on Duterte’s controversial “War on Drugs” in which thousands extrajudicial killings have been attributed to.

Duterte said that he would seek to block the renewal of the franchise, warning he’ll see to it that it will not be renewed.  During the first congressional hearing, ABS-CBN president Carlo Katigbak publicly apologized to Duterte over the airing of the report.  Duterte accepted the apology; however, he was silent on his support for renewal of the franchise. 

Meanwhile, speculation is rife that Dennis Uy’s ISM Communications Corp. is acquiring the 11,000-employee ABS-CBN when ISM was reorganized into a telecommunication and media holding company.  It could happen before the franchise expires on March 30.    

Uy, in just a few years, bought stakes in more than 50 companies.  Only 46 years old, he is a third-generation Chinese-Filipino.  He is the son of provincial traders who dealt in copra, maize, and bananas.  He is catapulted from a backwater businessman to the newest Filipino on Forbes magazine’s 50 richest.  He is number 22 on the list. He is chairman or director of 27 firms. His net worth is $660 million. 

                He rose to national prominence after bidding for and winning a multi-billion dollar telecommunication concession deal in partnership with China Telecom. His rush to the top has been fueled partly by borrowing. Forbes Asia estimated that he has amassed around $2 billion in debt. As one person who is familiar with Uy had said, “He wants to be the next taipan.”

Political patronage

This development is the latest indication that Duterte is bent on removing the old oligarchs and replacing them with new ones who are loyal and dependent on his political patronage.

With barely two years left in his presidency, Duterte is bent on making changes to the country’s business establishment.  He opened the door to a new wave of businesspeople and Duterte loyalists, who were given access to political power and lucrative government contracts.  The old cronies of the Marcos era are long gone and the “yellowtards” of the Aquinos are fading away while the Duterte cronies – the Dutertegarchs -- are taking over.  There’s a new ball game in town.

With the new set of Duterte cronies in place, it seems that they would be around for the next few years; enough time to entrenched themselves in power and accumulate more wealth.  Needless to say, they’d be on the lookout for who would succeed Duterte after he steps down in 2022.  It’s time to look for a new godfather. But his daughter Davao City Sara Duterte-Carpio is being groomed by Duterte loyalists to succeed him; thus, perpetuating the Dutertes’ hold on power and the Dutertegarchs would remain in control of the country’s business world for many years to come. 

At the end of the day, as Duterte has said, “You can still count on your fingers the power players of this country.”  Indeed, for better or for worse, the rise of the Dutertegarchs is going to change the face of Philippine oligarchy.

(PerryDiaz@gmail.com)