By Hilarion M. Henares Jr.
TO recapitulate in short, the Total Outflow of Funds, specifying in turn, period, scope, profit remittances (P), loan payments (L), royalties and interests (I), and capital withdrawal (W), all as percentages of total outflow:
1956-1965, 108 companies, 95.5 percent P, 2.6 percent L, 1.8 percent I, zero W.
1964-1971, overall statistics, 7.7 percent P, 89.2 percent L, zero I, 3.1 percent W.
1972-1976, overall statistics, 19.2 percent P, 72.7 percent L, zero I, 8.1 percent W.
1971-1976, 31 companies, 51.8 percent P, 21.8 percent L, 26.4 percent I, zero W.
1971-1976, 30 companies, 54.4 percent P, 32.9 percent L, 22.7 percent I, zero W.
It is to be noticed that during the first part of Martial Law, there were more profit remittances proportionately than during the previous period of decontrol. By the same token, repayments of foreign loans have gone down during this first period of Martial Law.
This indicates then that foreign companies were relying more on reinvestment of profits than on foreign loans. This is confirmed by the fact that the 30 companies (excluding Caltex) have reinvested P568.93 million while having an entry of foreign loans actually less than nothing.
To recapitulate in short Total Inflow of Funds, specifying in turn, the period, scope, Investments (I) and Foreign Loans (L), both as percentage of Total Inflow:
1956-1965, 108 companies, 67.24 percent I, 32.76 percent L.
1964-1971, overall statistics, 20.67 percent I, 79.33 percent L.
1972-1976, overall statistics, 30.25 percent I, 69.75 L.
1971-1976, 31 companies, 0.4 percent I, 99.6 percent L.
The above figures indicate that in contrast to the period of Import Control, foreign companies have reduced the flow of new investments into the Philippines, and have relied more on foreign loans and credits for their capital requirements.
Capital requirements, however, were mainly supplied by reinvestments and, to a greater degree, by domestic borrowings.
The following must be noted: in the 30 companies (excluding Caltex) under study, of the total increase of assets amounting to P1,531.07 million, only P2.76 million (0.18 percent) were new foreign investments, a minus quantity of P1 million as foreign loans, P568.94 million (37.16 percent) were reinvestment of profits, and P960.37 million (62.73 percent) were domestic borrowings.
And in the 31 companies (including Caltex) under study, of the total increase of assets amounting to P2,552.87 million, only P2.76 million (0.11 percent) were new foreign investments, P661.22 million (25.90 percent) were foreign loans, P621.94 million (24.36 percent) were reinvested profits, and P1,266.95 million (49.63 percent) were domestic borrowings.
To recapitulate in short the Flow of Funds, specifying the period, scope, Outflow (O), Inflow (I), and the ratio of Outflow to Inflow:
1949-1960, overall statistics, $223.0 million O, $16.2 million I, 14 to one.
1956-1965, 108 companies, $386.2 million O, $58.6 million I, 6.50 to one
1964-1971, overall statistics, $3,017.58 million O, $549.32 million I, 5.49 to one.
1972-1976, overall statistics, $1,631.88 million O, $1,603.75 million I, 1.02 to one.
1971-1976, 31 companies, P588.53 million O, P663.98 million, 0.89 to one.
1971-1976, 30 companies, P656.76 million O, P98.03 million I, 6.70 to one.*
* The initial figures indicated in the 30 companies (Caltex excluded) above seem ridiculous. The P1.76 million Inflow was arrived at by lumping together, in one category, all inflow of foreign loans and investments of P98.03 million and outflow through repayment of foreign loans of P96.27 million. If we recompute our data to readjust Inflow to P98.03 million and add the outflow of loan repayments of P96.27 million to the other outflow categories, then we arrive at an outflow of P656.76 million and an inflow of P98.03 million, or $6.70 sent out for every dollar brought in. A more reasonable figure.
Yet we are inclined to give credence to the overall statistics of the Central Bank, which tell us that during the first part of Martial Law, only $1.02 is sent out for every dollar brought in.
We venture to conclude therefore that during this period, foreign corporations in general do bring in foreign capital as much as they send out, at least as reflected in their financial statements.
One cannot help harboring a suspicion, however, that the strategy of most multinationals has shifted to the practice of transfer pricing as a more subtle and covert method of remitting funds abroad.
Henares, Hilarion Jr. Beggar and King – Make My Day Book 19.
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