SPECIAL FEATURE: RP, INC.
September 28, 2006
SPECIAL FEATURE: RP, INC.. Check it out:(Business World (Philippines) Via Thomson Dialog NewsEdge) Who owns the Philippines? Textbooks say that as citizens of the country, the Filipinos - regardless of ethnicity or social class - are the rightful owners of the land.
But more than being a simple test of Filipinos' level of nationalism, this question is capable of sparking a heated debate. While some will argue that the most important stakeholders are the middle class, others will assert the stake of the masses. Leftists, meanwhile, would bitterly admit that politicians own the country.
But then, given the influence that large corporations wield, one could easily believe that this group is the biggest stakeholder of the country.
"The truism that probably 5% owns 95% of the country holds true till today, especially now that the number of taipans have dramatically increased," BusinessWorld columnist Argee Guevarra said in an interview.
Modern-day thinking would probably agree with this, as reflected in the Ulat ng Bayan survey conducted by Pulse Asia, Inc. last July. According to the study, 41% of Filipinos believe that the country is under an oligarchy, or a government led by a powerful few, and Filipinos cannot do anything about the situation, and another 41% cannot discern what kind of political system runs in the country. This suggests that people do not see much of democracy, that everything is dictated by a ruling class.
On the other hand, De La Salle University Graduate School of Business professor Elfren S. Cruz said foreign firms get a sizeable stake of the country, considering the rise of globalization that allowed for their increased presence and control of industries in the country, not to mention the colonial ties between the United States and the Philippines.
"To a large extent, a lot of the wealth in this country is not just owned by Filipinos; a lot of wealth is owned by foreigners," Mr. Cruz said, which is evident in how foreign food and beverage conglomerates, manufacturing firms, among others, dominate various industries in the country.
The small and medium enterprise (SME) sector, despite accounting for an estimated 99.6% of the total establishments in the country, still cannot claim to have a significant amount of wealth compared to large corporations.
According to a National Statistics Office (NSO) study in 2004, only 32% of the country's gross domestic product (GDP) can be attributed to the SMEs. Mr. Cruz added that SMEs are still not that influential given the small market share that they get.
"[SMEs] have a smaller share of the market. The large companies are the ones who control the market," he said.
Mr. Guevarra shared the same view, saying, "[The influence of SMEs] can be determined through a period of years ... because wealth accumulation has just started. I feel that they are beginning to own part of the Philippines but whether that is sizeable enough will be proven in the years to come."
ABS-CBN Broadcasting Corp. Chairman and Chief Executive Officer Eugenio Lopez III, however, recognized the growing overseas Filipino worker (OFW) sector, considering the large amounts of dollar remittances that currently fuels the economy.
"The traditional concept is it's really the business sector who has a lot to say. But I think that situation has changed dramatically over the years. I think the OFW as a sector now plays a critical role. In that respect we can say that the OFW sector plays a bigger role in terms of the middle class of the Philippines," he said.
Mr. Guevarra also acknowledged that the OFW sector is now "buying back shares" of the country considering the volume of remittances that they send to their families, even more so their purchase of real estate properties.
The real estate industry in fact posted the most accelerated growth rate for the first quarter at 7.2% due to sale of properties to OFWs. Property developers say that this segment is 60% to 75% of their total market. Despite the growing purchasing power of OFWs, Mr. Guevarra said that "these real estate projects are still managed, owned, and developed by these specialized class of taipans."
Indeed, in terms of influence, capability, and wealth, the business sector becomes the unrecognized owners and rulers of the land.
This fact one cannot easily dismiss since it is not exclusive to the Philippines. In his book Understanding Popular Culture, cultural studies expert John Friske gave a universal explanation of how big corporations function in a given society, saying that as the producers of goods and services, they are the ones who set the pace of the business sector. This leaves the people as consumers who are at the mercy of what big corporations have to offer. Because business owners have the capital to produce or manufacture anything they believe the market will patronize, consumers have no choice but to buy what is offered to them.
Given the power of the business sector, Mr. Cruz said that large corporations should be able to contribute to the improvement of the community where they operate in. Corporate social responsibility (CSR) projects may make for a good step to reach out to the poor, but Mr. Cruz added that mere donations are not enough to create a better community.
As Philippine American Life and General Insurance Co. (Philamlife) President and Chief Executive Officer Jose L. Cuisia, Jr. said in his speech at the 6th Asian CEO Insurance Summit in Bangkok, Thailand last February, "It is clear that only when CSR is part of business strategy does it get all the resources it needs, and consequently, makes it [an] effective [tool for the development of the community or country]."
Mr. Cuisia also quoted University of Michigan professor C.K. Prahalad: "When you have good times and profitable times, you can put money into CSR, and in bad times, you can cut it off. But if that is your business ... what do you cut off?"
While people may benefit from the innovations that they offer, big businesses must be able to contribute to national development. Given the case of poverty and unemployment in the Philippines, they should be able to provide jobs even to the poor, even if that means a negative impact on their bottom lines.
"What is the role of businesses? Hopefully, they will be the engines of growth, and therefore create jobs. But businesses will tell you that they will not make money if they will create jobs for the poor. But how do you assure people of dignity? By giving them jobs, not just charity," Mr. Cruz said.
Copyright 2006 BusinessWorld (Philippines). Source: Financial Times Information Limited - Asia Intelligence Wire.
Related Tags: business sector, large corporations, country, sector, business, philippines
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