By Hilarion M. Henares Jr.
ON October 5, 1977, Dr. Wilfredo A. Clemente, Director of Technology Resources Center (TRC), contacted a number of economists and academicians for the purpose of writing a book about multinational corporations (MNCs) to serve as a guide for our national policy makers:
• George Aseniero, with a study grant from the Swedish International Development Authority for research on multinationals at the University of Uppsala -- Esteban Bautista, Asst. Head of the Division of Research and Law Reform, at the UP Law Center -- Lilia Bautista, Asst. Minister of the Ministry of Industry, also of the Board of Investments -- Randolf David, Associate Prof. of Sociology and Coordinator for the Third World Studies, at the UP --
• Hilarion M. Henares Jr., former Chairman of the National Economic Council -- Alejandro Lichauco, former Policy Director of the Philippine Chamber of Industries and the National Economic Council -- Merlin Magallones, Associate Professor of Law at the UP -- Ruben Torres, Consultant at the Ministry of Labor, and Professorial Lecturer at the UP Asian Labor Education Center --
• Mamoru Tsuda, research associate for the UP Law Center Project on the Transnational Corporations, Fellow at the Third World Studies, and senior lecturer in Economics and Sociology at the UP -- Federico Laxa, Head of the Economics Group, Technology Assessment and Policy Studies Program, at the TRC --Egidio Cardenas, Ramon Federizon and Macia Gesmudo, senior staff members of TRC.
By 1978 the book was compiled, consisting of nine reports (including two of mine), two case studies and a conclusion. From the beginning, it was in trouble.
The TRC head named Alvendia (no relation to my uncle Carmelino) who served at the IMF, refused to have it published. The UP Law Center offered to do so.
Having refused to contribute an article to begin with, the American Chamber wanted to contribute a critique rendering judgment on the entire book, and hired a hack by the name of MacDougall (later a gold-digger at Fort Santiago) to do it for them.
The Americans were finally able to prevent the publication of the book. This study is part of that book.
We find that during the first part of Martial Law, foreign corporations in the Philippines had a high rate of return on their investments, an average of 60 percent per annum.
That 74 percent of their capital requirements were secured from local sources, only 26 percent from foreign sources.
That of the total outflow of funds, remittance of profits (about 52 percent) constitutes the biggest amount.
That of the total inflow of funds. foreign loans (from 70 percent to almost 100 percent) make up the biggest amount.
In contrast to previous periods when between $5.49 to $14.00 were sent out for every dollar brought in, during the first period of Martial Law, only $1.02 is sent out for every dollar brought in.
It would seem that ``transfer pricing'' is more widely used as a more subtle and covert method of remitting funds abroad.
We wonder, for instance, why in the car industry, two Filipino companies were accumulating profits, while three giant American companies were heavily accumulating losses.
Delta Motors, a 100 percent Filipino company making Toyota cars reported in its 1975 statements retained earnings (accumulated profits) of P11.4 million.
DMG Inc., another 100 percent Filipino company making Volkswagen cars declared retained earnings of P11.3 million.
On the other hand, Ford Philippines, 100 percent American, reported a deficit (accumulated loss) of P4.8 million -- General Motors (100 percent American), a deficit of P40 million -- and Chrysler (a joint venture), a deficit of P4.1 million.
These “efficient” MNCs operated at a loss while small Filipino firms made a lot of money -- is it possible that the losses were being incurred by increasing the transfer price of knockdown parts, and bloodsucking our economy through transfer-pricing??
As in the past, MNCs continue to be extremely profitable, raising most of their capital from our own domestic resources, and sending more dollars out than they bring in, and like Union Miniere in Congo and British East India Co., continue to be chosen instruments of Western imperialism.
So we must have zaibatsus and Hyundai of our own to survive and prosper, instead of the Council of Trent that makes a profession out of treason.
Yet our officials still say with the mindless insistence of a broken record that foreign capital, even more than our own capital, is indispensable to our economic progress.
When will we ever learn that in this world, no one, absolutely no one, can save us but ourselves?!
Henares, Hilarion Jr. Beggar and King – Make My Day Book 19.
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