Duterte warning vs. Globe, Smart sends ‘chilling effect’ to potential investors —MAP

President Rodrigo Duterte’s stern warning against dominant telcos Globe Telecom and Smart Communications could scare off potential investors in the country, the Management Association of the Philippines (MAP) said Tuesday.

In his fifth State of the Nation Address (SONA), Duterte threatened Globe and Smart to improve their services before the end of the year or else he would find a way to work with Congress to have them out of the industry should they fail. 

“He gave a stern warning to two of our big businesses to improve their services until December 2020. Otherwise, the President said,  he would take over them with the help of Congress,” MAP president Francis Lim said in a text message.

“Given what recently happened to ABS CBN, this is a clear and present danger to the businesses mentioned. He can make it happen and that sends a chilling effect to business and potential investors,” Lim said.

Duterte also opened his SONA with criticisms of the Lopez family, which owns embattled media network ABS-CBN Corp.

"I am a casualty of the Lopezes during the 2016 elections," the President said.

ABS-CBN was denied its application for a fresh 25-year franchise to operate free-to-air broadcast by the House Committee on Legislative Franchise, which voted 70-11 in favor of network’s rejection.

“What is sad is that he characterized  our present-day businessmen as the same type of oligarchs who took advantage of  the people during the Spanish regime. This is so sad given how Philippine business has managed to grow despite the challenges along the way and how it has been helping the country through the years, which it ably demonstrated during the pandemic,” Lim said.

“To put things in proper perspective, our so-called big businesses still pale in comparison with their Asian counterparts. They should be nurtured to grow further to help generate more jobs for our countrymen and help our country compete with its peers,” he added.

In a separate phone interview, British Chamber of Commerce of the Philippines executive director Chris Nelson noted that the President's speech left overseas investors wanting as details of the economic recovery plan were not thoroughly discussed.

"I think what we're looking for is how is the Philippine economy continuing to reopen, what economic reforms may be included in this forthcoming congress," Nelson said.

"What we'd like to see more detail on as well, if I may say, of course, is when those plans are discussed in Congress, more of the roadmap of the recovery," he added.

The Philippines has continuously recorded an average economic growth rate of 6% in the past several years, but economic managers are bracing for a contraction for 2020 due to the global health crisis.

"I think the Philippines has shown to have high growth rates before. It needs to try and get back on that path, obviously why we believe economic stimulus is very important in addition to your Build, Build, Build programs," Nelson said.

"We have got to look at the fact all across the world, there are obviously challenges from these particular COVID-related economic issues. The economy is obviously slightly different and each country is hoping they can achieve a V-shaped recovery rather a delayed recovery," he added.

Nelson noted, however, that the group welcomed Duterte's remarks on assisting the micro, small, and medium enterprises (MSMEs), as well as emphasis on anti-red tape.

"We're pleased to see that in the President's speech, there was a discussion of supporting MSMEs which is a key issue for us," he said.

The British Chamber of Commerce of the Philippines counts 50% of its members as MSMEs, and constitute 99.52% of total businesses in the Philippines as of 2018 according to government data.

Micro enterprises are defined as those with total assets worth less than P50,000; cottage enterprises with assets worth P50,001 to P500,000; small with P500,001 to P5 million; and medium from over P5 million to P20 million.   

In May, Trade Secretary Ramon Lopez said over 525,000 or 52.66% of MSMEs in the country had to stop operations due to the lockdowns.

In his speech on Monday, Duterte called on the Bangko Sentral ng Pilipinas (BSP) to provide regulatory relief to MSMEs hit by the coronavirus pandemic.

"Supporting MSMEs and SMEs is very important at this stage so we're pleased to see or hear that it was highlighted, but maybe not the specific details," Nelson said.

"We want to make sure our members are able to survive these challenges, and that's why we are very much keen and support any economic stimulus," he elaborated.

For his part, Lim said that the MAP welcomed Duterte’s plea with Congress to pass laws to help business recover from the pandemic.

“He prominently mentioned the CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) and FIST (Financial Institutions Strategic Transfer) bills. Surprisingly, he did not endorse the ARISE bill which is a well-studied bill aimed at effectively addressing our economic problems on all fronts in the shortest possible time,” the MAP chief said.

“As we earlier said, we cannot afford to be behind the curve in putting in place all stimulants that will help our economy recover quickly from the pandemic,” Lim said. —LDF, GMA News