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Module 9
The Martial Law

Article One - RATIONALE OF MARTIAL LAW

Preservation of the Status Quo

On September 21. 1972 President Ferdinand Marcos declared martial law,

pointing to the uplift of the peasantry as one of its main objectives. The old
society had to be replaced by a new one where the poor, the underprivileged,
the oppressed would have a better and more human existence. As the
President stated in his book Notes on the New Society of the Philippines:
“The old society had to go; it was no longer workable
and could not be made workable ever again”.
“Hence, the September 21 Movement. Because if
martial law is to be of any lasting benefit to the people and
nation, if it is to justify the national discipline that martial law
requires, a government must lead a movement for the
drastic and substantial reforms in all spheres of national life.
Save the Republic, yes, but to keep it safe, we have to start
a massive effort, an intense organized undertaking to
remake society”.
But was martial law really declared to save and uplift the poor?
Far from saving the poor, martial law was instituted as a means of preserving
the old order and as an instrument to conserve and defend the threatened
privileges of the local and foreign elite.
It must be remembered that by this time the workers, farmers and students
were in a stage of vehement protest, united in a collective effort to drastically
change the old unjust order. Workers, farmers and students massed in huge
rallies in the streets of the big cities, particularly Manila, against the evils that
caused the misery of the poor. The battlecry was loud and clear – Ibagsak
ang imperyalismo, and piyudalismo at ang burokrata kapitalismo (Down with
imperialism, feudalism, and bureaucrat capitalism).
In the barrios farmers were joining organizations aimed at changing the
structure of society. Some joined moderate peasant unions like the Federation
of Free Farmers, while the more radical peasants joined or supported the
NPAs in the mountains.
Even the elite at times rallied behind the masses. The mass media, though
elite owned, devoted more time to the problems of the masses. Congress and
the Courts made more nationalistic laws and decisions, that clipped the
privileges of the elite, especially the foreign elite.
The government was becoming impotent, as it were, to stop the rising tide of
nationalism. The old powers it used to employ in quelling protest no longer
served. The old powers of repression became impotent. The government had
to invent new ones, and this was martial law.
Indeed, with martial law the voice of the masses had become stifled.
Protesters ended up in the prisons of Camp Crame, Camp Olivas and other
military detention centers all over the land, and sometimes were killed.
The Defense Minister Juan Ponce Enrile said in 1980 that:
o 60,000 people had been arrested since the start of martial law
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o Around 90,000 had died at the hands of the government’s military

forces in southern Mindanao.
o While 250,000 homes had been reduced to ashes.
To maintain this massive repression of the people the martial law regime
beefed up its military forces.
o From 55,000 soldiers in 1972,
o The Armed Forces of the Philippines (AFP) rose to a strength of
164,000 in 1977.
o By the end of 1983, AFP strength was estimated to be in the
neighborhood of 250,000
The military budget has also ballooned.
o From an expenditure of $136 million in 1972,
o This rose to $420 million in 1977
o In the 1980’s, the military budget outstripped other kinds of government
spending, with the possible exception of expenditures for education.

US Supports Martial Law

Papers of the US embassy on events immediately preceding martial law have

not yet been declassified. If they would be, I am quite sure the papers would
reveal that Marcos consulted the Embassy about his plan of imposing martial
law and got US support for it. Considering the millions of debt the Philippines
had from the US, and considering too that the Marcos regime would not
survive without US loans, it would have been suicide or, at least, too reckless
an act for President Marcos not to consult and get the approval of the US.
Surely common sense would tell President Marcos that, for his own sake, the
first person to be consulted should be the US ambassador to the Philippines,
key of the economic and military aid that make martial law viable.
In any case, whether the United States was previously consulted or not, it is
certain that US big business and the US government were very happy about
the development.
In similar manner, as sign of approval the US government increased
spectacularly its economic an military assistance to the Philippine
government.
As if on cue, Us-dominated financial institutions also trebled loans to the
Marcos regime.
The US Government supported the Marcos government for here was a
regime that not only silenced nationalist voices through the use of arms, but
opened completely the country’s wealth to full foreign exploitation.

Article Two - FOREIGN NATIONS ASSAULT ECONOMY

Role of IMF-WB

The assault on the Philippine economy is carried out principally through the
intervention of the International Monetary Fund (IMF) and the World Bank
(WB).
The International Monetary Fund and the World Bank are mammoth financial
institutions.
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Besides their capital which is already mammoth by all standards, the IMF and
the WB wield really awesome power from the fact that international
commercial banks follow the directions traced by them.
IMF and the WB dangle their billions as loans to finance-hungry Third World
countries. Well and good, but the problem is there are strings attached to
these loans. Once a Third World country accept these loans it has also to
accept the other conditions that go with it. As the Philippine Central Bank
governor Jose B. Fernandez, said “It’s only by following IMF conditions can
we expect continued support from banks”.
It is important to note here that IMF-WB loans do not cover the cost of an
entire project. The Third World country has to put up counterpart funds. The
IMF-WB thus makes use, not only of its own funds, but of the funds of Third
World countries as well, for projects or programs that primarily benefit the rich
industrial nations.
The basic conditions, imposed by the IMF and the WB on borrowing Third
World countries, are the following
1. dismantling of import controls and the liberalization of foreign
exchange;
2. currency devaluation;
3. limitation of bank credits, higher interest rates and reserve
requirements;
4. control on State spending and deficit, growth of direct and indirect
taxes, increase of prices in public enterprises and doing away with
subsidies to consumers;
5. depression of wages;
6. various incentives like tax holidays, guarantees on profit remittances,
etc., to private capital;
7. opening of all financial economic records to IMF-WB scrutiny.

Incentives for Foreign Investments

The IMF-WB demanded that the Philippines open its economy to foreign
investments, and that many incentives be given these investments. In the
mind of the World Bank, all manufacturing industries for export should not be
encumbered by any taxes, but should function on a free trade basis. As the
World Bank told the Philippine government:

“Ideally, all manufactured export industries should be on a free

trade regime to the maximum extent possible. This involves a) duty-
free importation of raw materials and components; and b) provision of
additional assistance where necessary”.

President Marcos obliged. Laws were passed that opened up practically the
entire Philippines economy to the complete control of foreigners.

Export Processing Zones

The World Bank wanted more privileges for foreign big business, and for this
purpose pressed for the establishment of Export Processing Zones.
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The Export Processing Zones constitute an important step towards the

achievement of the all-out privileged status desired by the World Bank for
foreign multinational corporations.
These are several reasons why the World Bank wants Export Processing
Zones.
1. The first one concerns wages.
 Wages in the Philippines are cheap, but industries in the Bataan
Export Processing Zone are allowed by law to give wages lower
than those given in Manila. Who is the foreign businessman who
would not want this?
 In fact, industries in the Bataan Export Processing Zone make
use of immoral means with the tacit approval of the authorities.
A study shows, for example, that only 50 percent of the workers
there are regular employees. The rest are working as casuals,
who receive an average pay of ₱9.75 per day, without living
allowances.
2. A second advantage industrial firms get from Export Processing Zones
are the excellent site and facilities, leased at very low rates.
 The Bataan Export Processing Zone, for example, is a massive
industrial complex with sophisticated buildings, well-paved roads
and neatly manicured lawns, built by the government at the
astounding cost of US$ 150 million.
 And how much do the export-oriented foreign firms pay for all
these amenities? Little, so little indeed that the total amount
cannot even cover the maintenance cost of the zone.
3. A third reason why foreign business wants Exports Processing Zones
is the availability of cheap, abundant energy.
 Factories need power, and the Philippine government is making
infinite sacrifices to provide cheap power to the foreign firms.
 The most notable example is the nuclear plant being
constructed in Bataan province, where the biggest processing
zone of the country is located.
4. A fourth attraction for foreign big business is the fact that Export
Processing Zones have been constructed as real enclaves, designated
exclusively for the protection of the firms therein.
 Independent from municipal and provincial laws, the zones have
their own EPZ Authority that provides it police protection from
outside elements.
 Experience shows that not only the zone’s police but even the
Army come to prevent, stop, and arrest potential or actual
“troublemakers”.
5. Last but not the least, Export Processing Zones offer foreign and local
firms therein a whole gamut of tax privileges and incentives.

Tariff reduction

An important condition demanded by the IMF and the WB for their loans to the
Philippines is the liberalization of imports through a reduction in the tariffs.
In 1976, the World Bank recommended to the Philippine government a
reduction in the tariff on imported goods.
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Tariff is a tax on goods coming into or leaving a country.

At the 1979 Meeting of the Consultative Group of Creditors, the World Bank
reiterated the demand for the dismantling of the tariff protection.
To understand the World Bank’s interest in dismantling the tariffs, one needs
to bear in mind that in previous years, because of these tariffs, demand for
manufactured goods was met mostly by local production, with only one-fourth
imported.
For the foreign imports to have a larger share of the domestic market, the
tariff has to be dismantled.
And what is galling in the whole thing is that, while the Philippines was being
forced to dismantle protectionist barriers like the tariffs, the rich industrial
nations were putting more and more protectionist measures against the entry
of Third World goods.

Export-Oriented Industrialization

Together with its policy of tariff reduction, the United States pushed the
Philippines towards an export-oriented industrialization.
In former decades, the Philippines directed its industrialization efforts to the
demands of the domestic market. It was then called “import-substitution
industrialization”, because it was geared to the production of goods that would
substitute for the imported ones.
The World Bank pushes the Philippines towards an export-oriented
industrialization, because of the profits this brings to the foreign industrial
nations.
There is, first of all, the question of wages. With the laborer’s wages
increasing in the foreign industrial nations, big foreign business relocates
factories to the Third World countries, where wages are cheap
In this manner, foreign big business realizes super profits because of the
cheap wages prevailing in the Third World countries as well as the tax
privileges and other incentives given by these countries for such factories.
In December 31, 1982 Prime Minister and Finance Minister Cesar E. Virata
and then Central Bank Governor Jaime C. Laya also informed the IMF that
the Philippine government was vigorously promoting export-oriented
industrialization through the giving of more tax incentives and privileges.

Financial Reform of 1972-1976

The World Bank likewise pressed for the “reform” of the Philippine financial
system.
 1972 – the capitalization of banks was raised from P20 million to P100
million. Foreign capital was encouraged to invest in Philippine banks so
as to realize the P100 million capitalization.
 1973 – foreign capital was also allowed in other financial institutions: in
loan and savings institutions (PD 113); in pawnshops (PD 114); in
investment and finance houses (PD 129).
 1976 – offshore banking units (OBUs), which are subsidiaries of foreign
multinational banks, were also allowed to do business in the country
(PD 1034).
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1. The World Bank pressured for bigger foreign participation in Philippine banks,
because of the benefits this gives to foreign big business.
 Banks and investment houses are the life-blood, as it were, of the
country’s economy. Whoever controls the banks and investment
houses controls the nation’s economy. Controlling them, foreigners
could monopolize the country’s money for their business interests.
 The “reforms” appeared even more urgent from the fact that of all
sectors, the financial was among the least foreign-controlled. The
Genera Banking Act (R.A. 377) of old had allowed 30 percent foreign
ownership of Philippine banks, but thus became more or less a dead
letter law because there was a conscious effort among Filipinos, to
preserve the banking system free from foreign control. In fact, in the
early 1970s there was a bill pending in congress that aimed to
nationalize all banks.
2. It must be borne in mind that at this time the United States was experiencing
balance of payments difficulties.
3. A reason why the IMF-WB pressed for foreign control of banks and
investment houses was the profit involved.

Financial Reforms of 1980. Universal Banking

Not content with the 1972-1976 financial reforms, the International Monetary
Fund and the World Bank sent in 1979 a joint mission to the country to study
and to revamp once again the Philippine financial system.
As a result of the recommendations of this IMF_WB mission, the Batasang
Pambansa passed in 1980 a series of laws which came to be known as the
financial reforms of 1980. These laws (BP 61 to BP 67) amended major
provisions of several acts governing the Philippine financial system: the
 General Banking Act (RA 337),
 Savings and Loan Association Act (RA 3739),
 Private Development Banks Act (RA 4093),
 Rural Bank Act (RA 720),
 Charter of the Development Bank of the Philippines (RA 85),
 Investment Houses Act (PD 129), and the
 Central Bank Act (RA 265)
Universal banking or unibanking is the most important provision put into effect
by the 1980 financial reforms.
The World Bank wants unibanking because this is to the advantages of big
foreign industrial nations which the World Bank serves.
 With the P500 million required capitalization, it is a foregone conclusion
that much of the banks’ equity would be coming from the big industrial
nations, thereby giving these nations more say and power in Philippine
banks.
 This was seen even within the inner sactum of the Central Bank,
with a number of people there objecting to unibanking, because
of the wise opening it gives to foreign control of Philippine
banks.
 Unibanks facilitate the foreigners’ acquisition of Philippine businesses.
 Unibanks give foreign and local bank owners almost total monopoly of
creadit.
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Unibanks are now a Philippine reality. Realizing the immense benefits therein,
the local and foreign elite established unibanks.

Interest Rates. Reserve Requirements

Besides unibanks, the financial reforms of 1980 included a revamp of interest

rates. The Philippine government
a) Remove all interest ceilings on both deposit and lending rates;
b) Lowered reserve requirements on short-term deposits, and deposit
substitute liabilities of big banks were lowered from 20 percent to 16
percent;
c) Opened a low rediscount rate for non-traditional manufactured exports,
and a high rediscount for traditional exports.
The IMF-WB pressured for these reforms because the reforms were
advantageous to foreign big business. By removing all interest ceilings on
deposits, the people would be encouraged to put more savings in the banks.
Foreign multinational corporations, especially of the US which even now is
experiencing big balance of payment deficits, could then help themselves with
these savings of the Filipino people, borrowing the savings for the financial or
expansion of their business.

APEX Industrial Loan

Besides the financial reform of 1980, the World Bank also pushed for a reform
of the Philippine industrial sector. In 1979 the World Bank sent an industrial
mission to the Philippines for this purpose. The mission came out with a
confidential report, entitled “Industrial Development Strategy and Policies in
the Philippines”, with various recommendations on the reform of Philippine
industry. The APEX Industrial Loan was part of the reform.
The World Bank pushed the Philippine government to the APEX loans.
1. In the first place, APEX funds are intended for new and expansion
projects of export-oriented and labor-intensive industries, like mining,
energy, textiles, etc., industries that are either owned by, or are very
important to, the progress of the foreign industrial nations.
2. APEX funds are to be used for the purchase of foreign machineries
and other such goods that are either totally foreign-made or have
foreign components.
3. The rich foreign nations profit from the interests charged on these
APEX loans.

The ADFU

Part of the 1980 reform was the establishment of ADFU or the APEX
Development Finance Unit. The ADFU was to be a special autonomous unit
that would not only administer the $250 million APEX loan that was then being
given, but would also scrutinize and approve all subsequent Philippine loans
from abroad.
Painful as the ADFU was, the Philippine government accepted it. The reason
was the same as always. The threat of a withdrawal of loans, the fear of a
total ostracism from international finance, made the Philippine President,
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Ferdinand E. Marcos, surrender in a silver platter the Philippine patrimony to

the industrial nations, via the World Bank.

Limitation of Credit

Another condition sine qua non of the IMF-WB loans is the limitation of
domestic liquidity, the limitation namely of money in banks and money in
circulation. This of course leads to the limitation of credit, for with limited
money in banks or in circulation, where would clients get credit?
The strictness of the IMF in the implementation of this condition is nowhere
more evident than in the financial crisis that befell the Philippine government
after the assassination of opposition leader Benigno Aquino.

Increased Taxation

Increased taxation is another condition the International Monetary Fund and

the World Bank impose on Third World debtors.
The World Bank, however, is careful in stating that increased taxation must
not be at the expense of foreign big business. There should be more taxes,
but these must come from the local people, not from foreign-owned
businesses. In fact taxes should be decreased as far as foreign businesses
are concerned.
There are several reasons why the IMF-WB pushed for a massive taxation of
the people.
1. The IMF-WB knows the government lives on taxes.
2. It must be remembered that the World Bank pushed the martial law
regime into massive projects, like the construction of a vast network of
roads, bridges, ports, dams, irrigation system, geothermal and nuclear
energy production, etc. these projects were financed both from loans
abroad and from counterpart funds of the Philippine government. Now
where would the government get the counterpart funds or the money to
pay the loans? The answer is obvious – from taxes. The people have
to be taxed massively, for the government to settle its massive financial
obligations.

Devaluation

Devaluation – an official reduction in the exchange value of a currency by a

lowering of its gold equivalency or its value relative to another currency.
The IMF pushed the Philippines to devalue its currency many times.
The IMF justifies devaluation by saying it is the cure to the Philippines’
balance of payment deficits. The devaluation of the peso, so the IMF argues,
discourages imports for, with the now more valuable dollars, imports become
more costly. On the other hand, devaluation encourages exports for, paid as
these exports are in dollars, they give more pesos to the Philippine exporters.
The IMF-WB conglomerate wants devaluation, because it is to the interest of
the rich foreign nations.
1. Devaluation helps conserve the dollars of the industrial nations.
2. Devaluation makes it easier for foreign big business to dominate more
firmly the Philippine economy.
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3. Devaluation increases the profits of subsidiaries of foreign multinational

corporations, through savings in wages.

Direct World Bank Rule

The IMF-WB conglomerate had always tried to put its own people with the
sanctum of Third World debtor governments, to oversee and to influence
economic policies of these governments. Since 1970 an IMF Resident
Representative has been stationed here in the Philippines, to look after the
implementation of all agreements with the IMF, and to look pressure the
Philippines towards policies favorable to the foreign industrial nations.
There were several reasons why the World Bank wanted at this time to have
key people in government.
1. One was the assurance that the Philippines’ ballooning debt which by
this time had reached the huge sum of $15 billion, would be paid.
2. The fear that President Marcos and his men were showing weakness,
any opposition, to World Bank demands.
3. To tame and control Marcos’ business cronies.

Modernizing Philippine Agriculture

The World Bank likewise pushed for the modernization of Philippine

agriculture and its integration with the international economy. To this end, the
World Bank gave the Philippines huge agricultural loans.
In exchange for these loans, the Philippines implemented the World Bank
policy of modernizing Philippine agriculture, integrating it to the international
economy.
The basic reason for the World Bank’s emphasis on Third World agriculture,
including Philippine agriculture, is the fact that First World investments have
more or less saturated the markets of the cities and urban towns. The only
remaining areas, that to a large extent remained untouched by foreign
investments and foreign goods, were the rural villages, particularly the more
interior ones. The vast underdeveloped agricultural areas of the Third World
represented, as it were, the last remaining frontier for capitalist expansion.
The World Bank, in its World Development Report for 1979, give 5 concrete
reasons for its recent strategy on Third World agriculture. All are for the
benefit of the rich foreign nations.
1. The World Bank promotes a productive agricultural sector, because
this “stimulates domestic demand for industrial goods.
2. The World Bank reasons out, a productive agricultural sector “supplies
cheap food for industrial workers.
3. The World Bank adds, a productive agricultural sector “supplies raw
materials for agro-processing industries.
4. The World Bank likewise states, a productive agricultural sector “earns
foreign exchange to finance imports of capital and intermediate goods
for industrialization.
5. The World Bank also states, a productive agricultural sector “facilitates
the development of labor-intensive and medium-scale industrial units in
small town and rural areas.
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The World Bank is astute. It modernizes Third World agriculture, but it sees to
it that the extra income from the increased production end up in the coffers of
the foreign industrial nations.

Green Revolution

In line with its policy of modernizing Third World agriculture, the World bank
pushed the Philippines towards the acceptance and propagation of the Green
Revolution.
The Green Revolution centers on the increased production of rice and corn
through the use of high-yielding varieties (HYVs) and a generous application
of inputs such as irrigation, tractors, fertilizers and pesticides.
The Green Revolution in the Philippines was made possible, first of all, with
the establishment of the International Rice Research Institute (IRRI) in 1960,
in Los Banos, Laguna.
The IRRI invented a high-yielding variety (HYV) of rice, then popularly called
“miracle” rice. The government exerted all efforts and spent huge sums to
spread the HYVs throughout the country. But the catch is the HYVs need
much input of fertilizers, pesticides, irrigation pumps or hydro-electric dams,
tractors, threshers, etc.

The Other Green Revolution

Together with the Green Revolution, the World bank pushed for the “other”
Green Revolution.
The Green Revolution opened the Philippines’ rice and corn industry to
foreign penetration. The other Green Revolution did the same with the other
crops.
Actually both Revolutions are interconnected. If the Green Revolution is
successful and rice production shoots up, more lands could be freed from rice
culture for the cultivation of other crops.
Today, because of the Philippine government’s push for this “other” Green
Revolution, the production of commercial crops increased phenomenally. The
commercial crops area increased in the 1960s by 952,100 hectares, and in
1970-1980 by 1,365,800 hectares. And this is only a conservative estimate.
o We see how banana, for example, grew from almost nothing to
become one of the top ten exports of the country.
o Pineapple production likewise expanded, with only $19.7 million export
sales of canned pineapple in 1971 to $88 million in 1982.
o In 1965, rubber was planted in only 17,000 hectares, while in 1976 this
went up to 55,140 hectares.
o Sugar production increased, with no less than 18 new sugar centrals
built from 1962 to 1967.
o Coffee rose to become the top 15 export of the country in 1983, whie
thousands of hectares were given to the new palm oil industry.
o Feedgrains were also given much emphasis, for the purpose of greater
production of cattle.
Unfortunately these crops are owned, or, to a great extent controlled, by the
foreign industrial nations.
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Article Three - INCREASE OF FOREIGN INVESTMENTS

American and Japanese Capital

Because of the IMF-WB policies explained in Article Two, foreign control of

the economy intensified during the martial law era. Foreign investments
multiplied, with their tentacles reaching everywhere, even to the remote
hinterlands. Their interests have encompassed almost every mineral, almost
every crop grown in the Philippines’ fertile soil. They have made use of
workers and peasants as if they were but cogs in the machine for making
money.
Statistics show, it is American business that leads all countries in investments.
And what makes American investments more weighty is the fact that they are
invested in the Philippines’ most strategic industries:
o $334 million of US investments are in petroleum,
o $531 million in manufacturing of which $137 million are food products,
o $149 million in chemicals, and
o $91 million in electric machineries,
o $77 million in banking; and
o $87 million in trade.
After the Americans, the Japanese hold the biggest investments in the
country. Their record is phenomenal. In 1970 the Japanese investments in the
country did not even reach the one million dollar mark.
Japanese business invests in almost anything it can get profit from, but most
particularly in the extraction and production of raw materials needed by its
factories like iron ore and copper concentrates; in export-oriented industries
producing light manufactures like garments and electronic appliances for the
needs of its own domestic market as well as for markets abroad; and in
industries that provide food for the Japanese people like banana, fish and
sugar.

Banana

From virtually nothing before martial law, banana is now one of the top ten
exports of the country.
Three American multinational firms control the huge banana business:
o Del Monte’s Philippine Packing Corporation, which corners about 28.1
percent of banana production in Mindanao;
o Standard Fruits Co. (STANFILCO), owned by the American Castle and
Cooke conglomerate, corners about 34 percent of all Philippine banana
exports; and the
o American giant United Brands.

Pineapple
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Pineapple production likewise expanded with martial law.

Needless to say, the pineapple business is the exclusive preserve of two
American firms:
o Del Monte’s Philippine Packing Corporation, and
o Castle and Cooke’s Dole Philippines.
These two companies took advantage of the country’s wealth.

Rubber

The Philippine rubber industry had always been dominated by three American
firms:
o B.F. Goodrich
o Goodyear Tire and Rubber Company, and
o Firestone Tire and Rubber Company.
Like pineapple, rubber had been a pre-martial law business, but it expanded
in the post – martial law era.
The three American tire firms not only had the markets all to themselves, but
they also raised prices at will, even if production costs did not warrant it.

Tobacco

Tobacco business today is mostly that of the Virginia leaf variety which, as we
have seen above, was painstakingly promoted by the Americans since
colonial times, to supplant the flourishing Philippine native tobacco industry.
During the period of martial law, Virginia leaf tobacco production increased
phenomenally while that of native tobacco went down.
Virginia-leaf tobacco world business is controlled by the Americans and the
British, especially the British American Tobacco (BAT).

Sugar

Sugar constituted the third largest export of the country in 1982, with $403
million in exports sales.
Foreign domination of the sugar industry is multi-layered.
o First, there is their control of the sugar central, the machineries of
which were bought from the foreigners with loans that also came from
them
o Secondly, foreigners dominate the refining of sugar.

Coconut

Before the entry of UNICOM (United Coconut Oil Mills) to the coconut
business, the foreigners’ control of the coconut industry was almost total. The
Filipinos, it is true, were for the most part owners of the coconut lands. But
the processing and exportation of coconut products were all in the hands of
foreigners.

Agricultural Inputs
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In the field of agricultural inputs – fertilizers, pesticides, herbicides, tractors,

threshers – the foreigners are likewise supreme.
Planter’s Products Inc. dominates the fertilizer industry, supposedly a Filipino
firm.
In the field of tractors; it is enough to look at their brands to know who control
the business.
In the manufacture and sale of pesticides, foreigners also have the
upperhand.
And what is worse, these foreign multinational corporations sell pesticides
banned in the home country. And in this they have the backing of their own
governments.
Evidently, for the US government and the foreign multinational corporations,
what matters is profit, even though the sale of banned pesticides endangers
the lives of people, animals and fish in the Third World.

Corporate Farming

In conjunction with its drive for increased production in rice through the use of
HYVs, irrigation, fertilizers, insecticides, tractors, the government introduced
Corporate Farming in 1974. General Order no. 47 requires all corporations in
the Philippines, with at least 500 employees, to engage in the production of
rice, allowing the firms to acquire plantations for this end. It is the thinking of
the government, that big corporate rice farms can produce more rice than
small ones.
Corporate farming unfortunately is land reform in reverse. For centuries
tenants sought for the ownership of lands, sustaining even revolutions for this
purpose. The martial law regime gives vast lands instead to the big
corporations, to the detriment of the small tillers of the soil.
Corporate farming has displaced thousands of tenants. Making use of
machineries, as most corporate farms do, farmers get rejected, their work now
being replaced by machine.

Corn

In accordance with World Bank desires, the government went into an

increased production of feed grains.
Yellow corn production benefits the foreign multinational corporations and
their local partners. Their profit comes, first of all, from the hybrid seeds being
used in the fields. Unlike the white corn whose seeds are produced by the
farmers themselves, yellow corn seeds have to be bought from the foreign
multinational corporations and their local partners, who alone grow and
process such seeds.

Coffee

Coffee became an export item with the incentives provided for by the martial
law regime.
Coffee business primarily profits foreign multinational corporations and their
local partners, controlling as they do both the production as well as the
processing of coffee.
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Palm Oil

Palm oil is a new industry in the Philippines. The martial law regime is
developing it with such vigor that, if implemented as planned, the industry
could well rival the phenomenal growth of the banana industry.
Foreign big business controls the palm oil industry.

Cattle and Meat Processing

The martial law regime, under the prodding of the World Bank, works for the
expansion of the cattle industry. Vast spans of lands are provided for the
raising of cattle.
The foreign elite control the Philippine cattle industry.

Wood

Wood products have always been one of the top 10 exports of the Philippines.
There have been more exports of lumber and plywood than logs in the more
recent years, due to the government’s recent policy of exporting processed
wood products.

Industrial Free Farming

The martial law regime has opened up a new field of investment for the local
and foreign capitalist through the development of industrial tree plantations in
the deforested lands.
Because of the profit potential, the elite established industrial tree plantations,
particularly in Mindanao.
The ones who suffer, as always, are the small people. Industrial tree farming
has already caused the ejection of thousands of farmers from lands that had
been converted to tree plantations; and more will be evicted the fuller the
efforts of corporations and government become in the expansion of industrial
tree farms.
Farmers who were not evicted have generally agreed to the corporation and
to the government imposed condition of planting industrial trees on the farm.

Fishing

The Philippines is rich in fishing resources. Its total fishing ground consists of
some 212,160,231 hectares of sea and fresh water, filled with about 2,400
different kinds of fish, mollusks and other fishery products.
Before the coming of martial law, it was the Philippines’ official policy to
develop the country’s fishery resources for the needs of the Filipino people.
Martial law changes this. Presidential Decree No. 704 allows foreigners to
exploit Philippine waters.
Japanese capitalists have also come to make joint ventures with Filipino
corporations for the catching of fish.
 15

The Japanese capitalists are interested in these joint ventures, not only
because of the profits involved in the catching of fish, but also because they
get the first rights to buy the fish caught.
The exportation of huge volumes of fish to foreign countries like Japan, has
caused scarcity of fish in the Philippine market, particularly the best species of
fish, with the consequent rising in fish prices. The common people, already so
poor, thus find it increasingly difficult to buy and eat fish.

Semi-conductors

Semi-conductor devices were never an export product before martial law. But
due to martial law’s export-oriented drive for the production of non-traditional
manufacturers, semi-conductors rose to become the no. 1 top export of the
country in 1981, 1982, 1983, accounting for $634 million export sales in 1981
and $764 million in 1982.
The production of semi-conductors is labor-intensive, involving the hands of
many laborers. To produce these in the First World countries where labor is
so costly, means huge expenses on the part of foreign big business. Foreign
big business thus transfers the manufacture of semi-conductors and other
such labor-intensive electronic parts to Third World countries where wages
are cheap.
Workers in the electronic industry receive low wages. Female workers are
preferred because, as one report states, they are more docile and are less apt
to cause trouble than men. In other words, they have greater pain tolerance
for the terrific migraines that accompany electronic work.

Garments

Until recently garments were never among the top 10 exports of the country.
But due to the combined efforts of the World Bank, the rich industrial nations,
and the privileges and tax exemptions offered by the government to garment
exporters, garments became the no. 2 top export of the country in 1983.
The making of garments is labor-intensive, requiring the hands of many
workers. Because of the very high cost of labor in First World countries,
foreign big business transferred their garment factories to the Third World
where labor is cheap.
As a result foreign big business controls today the garment business in the
Philippines through the establishment of subsidiaries here, or through
contracts with local garment firms.
Foreign big business gains three ways in the Philippine garment business
o First, it gains from the many tax exemptions and privileges given by the
government to the garment export-oriented firms through such laws as
RA 3137 or the Embroidery Law, R.A. 6135 or the Investments
Incentives Act, and R.A. 5186 or the Exports Incentives Act.
o Secondly, foreign big business profits from the low wages given to the
workers.
o Thirdly, foreign big business gains from the smuggling and transfer
pricing so rampant in the garment industry. Raw materials (fabric,
button, zippers, lace, labels, thread and other accessories) are sold at
an overprice to the local company, while on the other hand finished
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garments are bought by the foreign mother company at cheap prices,

resulting in big gains for the foreign company.

Oil

Oil business is a monopoly, nay a cartel, of the government and four

American oil firms.
The American firms have the majority share of the total Philippine oil market,
65.50 percent, while the government’s Philippine National Oil Corporation’s
Petrophil has a 34.50 percent share, as of 1981.
Caltex Philippines Inc. holds a 27.00 percent share; Filipinas Shell, 21.05
percent; Mobil, 16.71 percent; and Basic Landoil, 0.74 percent.
The government has been very condescending to the American and British-
Dutch oil companies. Instead of simply importing all the oil requirements of
the country, and thereby doing away with the foreign oil companies, it allows
instead the latter to have a majority share of the Philippine oil market.
Furthermore, the government continues to accede to the request of these
foreign oil firms for continued increases in the price of oil.
The basic reason for this condescension is the regime’s dependence on the
United States for loans and aid.

Drug Industry

A look at the drug industry of the Philippines shows two characteristics:

1) That it is under almost total foreign control;
2) That it is not a true drug industry, but at best an importing-
compounding and packaging business.
The foreign drug companies profit from the industry,
1) Through royalties from patents and licenses.
 Subsidiaries pay the mother company huge royalties, more often
bigger than the profits of the subsidiaries themselves. And, even
if the subsidiaries supposedly lose, the mother company is
never deprived of these royalties. In fact, in case of loss the
reason often lies in the fact that subsidiaries pay exorbitant
payments and royalties to the mother foreign company.
2) The foreign drug companies profit through the over pricing of raw
materials.
3) Foreign drug companies and their subsidiaries also jack up exorbitantly
the prices of medicine through the clever use of brand names.
4) Foreign drug companies increase profits by selling even dangerous
drugs that have been banned in the home country.

Tourism

The martial law regime promotes tourism with all the power in its command.
The tourism industry is likewise under the control of foreign big business.
Foreign multinational corporations control the airlines, hotel chains, credit card
companies, advertising agencies, banks, travel agencies, communication
companies, restaurant and entertainment chains serving the needs of well-off
tourists from North America, Western Europe, Japan and Australia.
 17

Mining

The Philippines is very rich in mineral resources. The country’s total mineral
reserves, as estimated in 1980 by the Philippines’ Bureau of Mines and
Geosciences, are placed at over 32 billion metric tons.
The Philippines holds the distinction of being the world’s
o no. 5 producer of gold,
o no. 7 producer of copper,
o no. 5 producer of chromite, and a
o major world producer of nickel
It is also the largest copper producer in Southeast Asia.
All kinds of incentives are given by the martial law regime to both foreign and
local investors in the extraction and exploitation of the country’s mineral
resources.
Needless to say, the Philippines’ mining industry is today under the control of
foreign big business, especially American and Japanese.
1) Foreign big business controls the mining industry through the equity
they placed in the various mining concerns.
2) The foreigners control the Philippine mining business through the loans
they provide the mining concerns.
3) Foreign capitalists profit above all from the metals shipped to them,
which they process and re-sell as finished products, at high prices.
It is not hard to surmise why the rich foreign nations are determined to corner
all the raw metals coming from Philippine mines.
Foreign big business needs raw metals for its industries. Out of them the
foreign factories churn out the processed products that make these nations so
rich and powerful. Without them factories of the First World grind to a halt.
But strategic raw metals are getting scarce in the industrial nations. Their
innumerable factories, making continuous use of these metals, steadily
deplete their own reserves, raising fears that a day would come, wherein the
rich foreign nations would no longer have mineral resources of their own.
To forestall this danger, the rich foreign nations make it a policy to conserve
their own mineral resources, and import instead from the Third World
countries all the metals needed by their factories.

Banks and Investment Houses

Foreign participation of the Philippine banking system expanded with the

coming of martial law. Contrary to the nationalist trend of pre-martial law times
that wanted to preserve as much as possible the Philippine financial system
from the clutches of foreign big business, the martial law regime opened it
wide to foreign monopoly control.
The foreigners’ participation in the Philippine financial system is seen,
1. In the fact that four big foreign banks are in the Philippines, namely
Citibank, Bank of America, Hongkong and Shanghai Banking
Corporation, and the Chartered Bank.
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2. Foreign multinational banks abroad have equity holdings in local

commercial banks.
3. Foreign business also controls the biggest finance companies in the
Philippines.
4. Foreign big business also has its hands deep in the Philippine
Investment Houses. Investment houses handle the underwriting of
securities, and are active in the money market.
5. Foreign big business also has Offshore Banking Units (OBUs) in the
Philippines, making business transactions not only with non-residents,
as offshore banking is supposed to be, but also with residents, through
round-about procedures sanctioned by the Central Bank.
6. Foreign banks also have representative offices here.
Clearly, the Philippine economy is in the hands of the foreign and local elite
through their possession of banks and investment houses. These elite make
huge profits, not only from transactions, proper of banks and investment
houses, but they also enjoy the power, through their control of the Philippine
banks and investment houses, to use the savings of the Filipino people to
invest in more businesses, for their further profit.