Manolo Quezon is #TheExplainer Newsletter - Issue #22: Last Attempt to Amend Economic Provisions
My column for this week is on the President's final State of the Nation Address.
Continuing apologies for our schedule being derailed. We hope to be back on track next week.
This week's Long View
One benefit of having a newsletter is I can contextualize my own work; so for example, this week's column is the end of a long tail of columns: it brings up a topic I have been following literally for years, tracing the story of a scheme. The scheme's to amend the economic provisions of the Constitution, not by means of an amendment which requires a plebiscite, but by ordinary legislation.
The long goodbye | Inquirer Opinion — opinion.inquirer.net
By: Manuel L. Quezon III - @inquirerdotnet
Philippine Daily Inquirer / 04:07 AM July 28, 2021
The State of the Nation Address (Sona), besides being a requirement, is supposed to achieve two things. It’s supposed to highlight what the administration has done over the past year, and justify the money the President will ask Congress to enact as the national budget for the coming fiscal year. A President’s final Sona is meant to sum up the past five years and make a pitch for the public to support the President’s anointed candidate in the next election; what it puts forward by way of the proposed budget is less important; the election year budget, after all, was passed the year before. In other words, the current budget is the election budget; what the President will submit to Congress soon is merely to tide the government over from the transition of the current regime to the next.
The President had three things to achieve, going into his last Sona. To keep himself from becoming an irrevocable lame duck, he has to dangle himself as a potential vice-presidential candidate, while not totally discounting the possibility (though not necessarily greater probability) of his daughter seeking the presidency. In other words, first he had to show he still has what it takes to be a viable candidate or campaign for one. Second, he had to demonstrate he can still inspire the devotion to fuel his or his daughter’s candidacy. Third, he had to show he has a winning pitch to make to the electorate, enough to put rivals on notice they will lose.
This is what we got instead. Alarming visuals of his stumbling upon alighting from the presidential chopper and after bowing to the audience in the Batasan’s session hall—a far cry from the brisk walk and vigorous demeanor of his first Sona in 2016 (followed by complaining of shortness of breath near the end of his remarks). Joking galore, except the applause seemed automatic, so much so that he complained more than once about it, most indignantly when he scolded Congress for their applauding over his announcement that he had to go to the bathroom. “May asim pa” moments these were not. In praising the Senate President—“with due respect to the Senate President, he is a good man, he can become a good vice president. He is holy. Ngayon hindi na siya nahuhuli, noon huling-huli siya”—there was a flash of the old Duterte, leaving you guessing if his compliment was disguising a threat.
But the overall impression, whichever way you look at it, is that the presidency has taken its toll on the vigor of the President. He remains strong enough to make three things crystal clear, in fact passionately so. First, in foreign policy, he recited what the foreign affairs department wanted, only to tear it to pieces in his ad libs rejecting the entire framework of the government on the arbitral ruling and our mutual defense treaty. In other words: the words and actions of our diplomats were rendered worthless. Second, he remains defiant in his so-called “war on drugs” and the way it’s been waged: it remains the fuel for his fire, and one suspects, the core of his pitch to voters. Last of all, while his administration made “a comfortable life for all,” the core of its communications, the President himself, gave it short shrift—the pandemic killed that initiative, and when it came to things like a 10-year validity for driver’s license, the President announced it, then proceeded to spend several minutes explaining why he feels it’s a bad idea.
Perhaps the most momentous thing about the speech, aside from torpedoing the Departments of Foreign Affairs and National Defense, was this: “I would like to renew my call to Congress to immediately pass the amendments of priority legislative measures such as the Foreign Investments Act, the Public Service Act, and the Retail Trade Liberalization Act.” Possible code for amending the economic provisions of the Constitution by means of ordinary legislation. Luckily for the President, plunging attention (2016 views on Rappler: 2.4 million; in 2021: 484, 426 as of Tuesday afternoon) and the historic win of Hidilyn Diaz overshadowed the President’s final report. In politics, luck is as important as any act of commission or omission. Mr. Duterte got a free pass from an athlete whose reward for expressing joy over meeting the President was to be included in an anti-administration matrix by his chief presidential legal counsel.
Email: mlquezon3@gmail.com; Twitter: @mlq3
In my column above, I mentioned that the President made a pitch to amend the economic provisions of the Constitution not by constitutional amendment, but ordinary legislation. I pointed out this effort was coming, last April 14:
Abracadabra | Inquirer Opinion — opinion.inquirer.net
What’s a government facing an election year ahead to do?
Here’s the clincher. On April 12, a letter from the President to the Senate President that the Palace was certifying three bills as urgent. The first (Senate Bill No. 2094) aims to amend the Commonwealth Act No. 146, or the Public Service Act; the second (SB 1156) aims to amend Republic Act No. 7042, the Foreign Investment Act of 1991; and the third (SB 1840) aims to amend Republic Act No. 8762, the Retail Trade Liberalization Act of 2000. The first proposal, if you remember, was floated as a way to allow China’s entry in telecommunications without having to amend the Constitution, by changing the list of businesses considered public utilities that must be 60 percent Filipino-owned. The second proposal obviously aims to do something similar, by changing the so-called negative list, which restricts which business activities cannot be 100 percent foreign-owned; and the third does more of the same amending-without-amendments. Similar measures in the past sought to eliminate the capital and equity requirement for foreigners who want to engage in the retail trade. As one Filipino entrepreneur put it, reacting to this news: “Now I see where more campaign funds will come from.”
Presto! The solution to the political fiscal woes of the ruling gang. No mere Abracadabra, it is the Avada Kedavra from Harry Potter; no innocent hocus-pocus but a killing curse — fattening up all the wrong coffers, while homeowners are quietly checking home security as more home invasions and break-ins increasingly becomes the community news ignored by the national media.
The prequel to this ongoing tale, was another story: the failed effort to establish a wholly-Chinese-owned 3rd Telco by means of amending the Public Service Act. A story I followed in three columns! They came out in 2017, 2018, and 2019. My two columns (above) this year points to the refusal to die, of the scheme to amend the economic provisions of the Constitution by means of ordinary legislation.
Mixing the sand into the hardened soil | Inquirer Opinion — opinion.inquirer.net
By: Manuel L. Quezon III - @inquirerdotnet
Philippine Daily Inquirer / 05:06 AM November 22, 2017
Jack Ma during his Manila visit did not mention these goings-on that took place after his October visit. But nothing happens overnight so it now becomes clear why, attending a meeting with local telecom partners, he criticized internet service in the country. He was doing so to pave the way for what has been quietly unfolding, and which has now kicked into high gear with a Palace announcement: the entry of China into the telecommunications field as the “third player,” as the Palace put it, when it announced that an agreement to this effect had been signed on Nov. 15 during Chinese Premier Li Keqiang’s visit after the Association of Southeast Asian Nations Summit. The Palace pledged a swift 45-day evaluation period for offers, adding that interested companies will have to comply with the 40 percent cap on foreign ownership of utilities.
For now, but not for much longer. House Bill No. 5828 was passed in early September. It amends Commonwealth Act No. 146 (the Public Services Act) by limiting its coverage to electricity distribution or transmission, and water pipeline or sewerage pipeline systems. What this means, according to critics, is that the amendment effectively removes telecoms, power generation, transport and possibly even broadcast media from ownership restrictions that require such firms to be 60 percent Filipino-owned (or in the case of media, 100 percent Filipino-owned). That the House measure’s sponsors were Gloria Macapagal-Arroyo, Joey Salceda, Arthur Yap, Feliciano Belmonte Jr., and Monsour del Rosario suggested to critics that the bill was meant to benefit the Salim Group and Singtel, which already have a presence either in telecoms, media, or both. But these critics seem to have overlooked the real motivation, which is strategic on the part of the Chinese government.
(Senate Bill No. 1261, a similar measure sponsored by Sen. Richard Gordon, is still pending at the committee level.)
The House bill’s passage comes after months of softening of the ground, so to speak, at the highest level of government. Recall that President Duterte fired Rudy Salalima, first secretary of the Department of Information and Communications Technology, last September on grounds that he was too slow in breaking up the telecom duopoly. DICT OIC Eliseo Rio Jr. has focused on the shortage of cell sites, pitching for government to build towers and thousands of Wi-Fi access points (all requiring equipment from China), and a newly-announced scheme with Facebook to build a new internet pipeline leading to the network to be built by government, which could then be privatized once foreign ownership limits are lifted. NBN-ZTE looks crude in comparison to this scheme.
Tough love from Beijing | Inquirer Opinion — opinion.inquirer.net
By: Manuel L. Quezon III - @inquirerdotnet
Philippine Daily Inquirer / 05:07 AM February 14, 2018
Now, even as Manila welcomes more Chinese investments, it says it is doing so knowing the messy deals from the Arroyo days, particularly the NBN-ZTE and Northrail messes. The solution, according to the government’s current economic managers, is to tell Beijing to be the one to nominate potential partners. This explains how the government’s preferred investor for the third telecom firm it wants to set up, is China Telecom. The firm, according to the Palace, was picked by Beijing in response to the President’s meetings with Chinese Premier Li Keqiang last November. The President has warned the bureaucracy and the courts that he will tolerate no delays in this regard, although other officials have been trying to soothe concerns over the strategic implications of this move by suggesting bidding is open to all interested parties—except the Palace in turn has said others will be welcome, but only if the China Telecom deal doesn’t push through.
The Beijing-centric nature of the deal is further underscored by the National Transmission Corp. (Transco) announcing it wanted to partner with China Telecom and that it was in talks with the National Grid Corp. of the Philippines (NGCP, which manages the national electric transmission system) to use the electric grid’s interplant transmission infrastructure as the backbone for the third telecom player. But, and here is the Beijing angle, the NGCP for its part says it is eager to enter the industry but not as Transco’s partner: After all, NGCP is owned by two taipans (60 percent) and their partner, the State Grid Corp. of China (the “technical partner,” with 40 percent). NGCP says it is willing to allow use of the grid at a minimum or even zero cost—effectively undercutting Transco trying to get into the action, and laying out a sweet deal for China Telecom if it decides NGCP will be useful.
The previous administration had been bothered by this strategic sector being under heavy Chinese influence: the percentage officially owned by the State Grid, after all, is magnified by the ostensibly Filipino majority being composed of taipans who do business in China, and who are therefore subject to pressure by the Chinese authorities. The solution of the previous government was to insist on Filipinos undertaking technical management of the operations of the grid, which finally took place in July 2016—after the Philippine government declined to renew the visas of 18 Chinese technical experts. But if industry talk is to be believed, even this has been reversed, quietly. Pleading the unreliability of native engineers, the Chinese partner resumed bringing in more Chinese engineers.
Meanwhile, China’s ZTE — remember them? — has been making moves, too, partnering with a Davao-based telco and three other firms to set up a string of 50,000 microcell towers. This suggests a way forward for the China Telecom deal considering how congressional moves to amend the Public Service Act and the Constitution have bogged down. The past Philippine advantage of being free from heavy economic pressure from China is dissipating.
Mountains labored, bringing forth a mouse | Inquirer Opinion — opinion.inquirer.net
By: Manuel L. Quezon III - @inquirerdotnet
Philippine Daily Inquirer / 05:06 AM November 22, 2017
Note that what the President originally had in mind was China Telecom being the new player, inspired by a meeting with Chinese Premier Li Keqiang in 2017. Instead, at the end of the road, China Telecom ended up as a partner in a consortium headed by Dennis Uy — a partnership reminiscent of the Sys and the State Grid Corp. of China (Transco, people all too quickly have forgotten, made a brief, failed bid in 2017 to be China Telecom’s partner for the third telecom scheme).
What happened during this period was the failure of two schemes to make China Telecom the exclusive third player. The first scheme was to replace the 1987 Constitution, either through a constituent assembly — which never got off the ground because the President took his sweet time to appoint a commission to propose a new draft; by the time it was constituted and excreted a draft, the House had gotten impatient and was busy on its own; meanwhile, the constitutional commission’s efforts proved so unwieldy, and possibly eccentric, that lawmakers disdained to take them seriously — or by just proclaiming a revolutionary government, an idea that proved more of a trial balloon on the part of the lunatic fringe in the ruling coalition.
Along came a second innovative proposal, which was to amend the Public Service Act, which would have allowed telecoms to be delisted as mandatorily being majority-owned or even partially owned by Filipinos. By late 2018, the scheme was already being described as dead in the water; back at the end of May, Sen. Grace Poe noted the bill was awaiting approval on second reading in the Senate. But the intervention of the President’s economic team, to pass the increase in the excise tax on cigarettes during the last Congress’ lame-duck session, meant no attention could be given to the bill unless the President certified it as urgent. That certification wasn’t forthcoming. Poe said they’d take up the measure in the forthcoming Congress, but it would have to start the process over, and she intended to propose “safeguards” concerning the entry of foreign investors—essentially marking the bill for a quick death in the next Congress.
The long and short of it is that despite the President’s popularity, and his ruling coalition being a political behemoth, the political beast he’s master of is a picky beast of burden. It can move, in fits and starts, toward any goal that promises more funds for a thirsty ruling majority (read: taxes), but between the opposition of the older telecoms duopoly and disgruntled groups that attempted to bid for a telecoms franchise only to become extras in a predetermined game, it’s less liable to be obedient—not least because the administration has failed to accomplish the changes, either to the Constitution or our laws. The Senate is in the way; so is public opinion; so, it seems, is most of the ruling money.
The scheme has succeeded in the House but has been repeatedly blocked in the Senate. It remains to be seen whether this state of affairs will hold.
Additional Readings
FULL TEXT: Duterte's 2021 State of the Nation Address | Philstar.com — www.philstar.com When I assumed the presidency five years ago, dominant in my mind were dreams and visions of a better life for all Filipinos. I saw them as reachable through the institution of reforms and radical changes in both the structure of government and the mode of governance — changes designed [to yield] responsibility [and] accountability.
Full text of all the State of the Nation Addresses from 1935 to the present.
State of the Nation Addresses | Flickr Photo Album — www.flickr.com
The SONA is a yearly tradition wherein the chief executive reports on the status of the country, unveils the government’s agenda for the coming year. (Best to view as a sideshow)
Thank you!
Your subscribing to this newsletter helps keep up my productivity and for those of you giving of yourselves to help through Patreon, it also makes a big difference to writing morale. As it’s been evolving this newsletter helps me flesh out my ideas, which then get distilled into my column, which then provides at launching pad for expanding those ideas, and so on.
Thank you to those who are contributing to Patreon and thus helping provide the resources required to keep producing this newsletter and podcast.
Consul: Abigail Salta
Praetors: Carlos v. Jugo, Ramon Rufino, Arbet Bernardo
Aediles: Jeric Peña, Steven Rood, Willi, Cleve Arguelles
Quaestors: Joseph Planta, Giancarlo Angulo, Annie Inojo
Their support enables me to devote the time and effort for this newsletter and my podcast. Thank you!