(Bloomberg) -- President Rodrigo Duterte is cracking down on some of the Philippines’ biggest businesses, pushing a populist agenda that’s endearing him to his supporters while putting off investors.
The nation’s stock market has dropped as much as 11% from its 2019 peak and valuation has fallen to its lowest since 2011 relative to peers as Duterte stepped up his attacks last month. The 74-year-old leader whose drug war has killed thousands saw his popularity hit a new high last quarter.
The benchmark index fell 1.6% on Tuesday, its second straight day of decline. Duterte is scheduled to have a televised interview with his spokesman later Tuesday.
Scrutinizing contracts and forcing concessions for taxpayers, as Duterte is doing with water companies, bolsters his appeal to his support base, said Calixto Chikiamco, a director of the Institute for Development and Econometric Analysis in Manila. “He could ratchet up those attacks even more to warn businesses” not to back politicians going against his bet in the 2022 presidential vote.
Here are some of Duterte’s tirades against big business:
An arbitration victory requiring the government to reimburse Manila Water Co. 7.39 billion pesos ($145 million) for delayed tariff increases was the start of Ayala Corp.’s recent nightmares.
Duterte last month ordered the renegotiation of the contracts of Ayala’s Manila Water Co. and Maynilad Water Services Inc. which were extended by a previous administration until 2037.
Since Duterte’s attacks, Manila Water’s market value has shrunk to nearly half its size as of Tuesday, even as it dropped the arbitration award and promised not to increase the rate this year.
Those concessions didn’t appease Duterte, nor his spokesman Salvador Panelo, who on Jan. 19 said he will look into a land lease contract of Ayala Land Inc. with state-run University of the Philippines. The property company lost 61.1 billion pesos in market capitalization in three days after Panelo’s comments, even as it said it would welcome a “transparent review and assessment” of the deal.
Ayala and Pangilinan
Duterte recently attacked Ayala and businessman Manuel Pangilinan, chairman of Metro Pacific Investments Corp. which is the biggest shareholder of Maynilad, which provides water services to half the capital Manila, and PLDT Inc.
Shares of Metro Pacific and Ayala Corp. sank further after Duterte said on Jan. 17 their venture’s elevated mass transit contract would be reviewed next.
“The Philippines has been gravely fooled by the rich people in the Philippines. Just like Ayala and Pangilinan who own Globe and Smart,” Duterte said on Jan. 23. referring to Globe Telecom Inc. and PLDT’s Smart Communications Inc.
“They are all thieves, those sons of b******,” according to the official transcript of his speech. Panelo said people shouldn’t take Duterte literally and that contracts would be respected except for those disadvantageous to the public.
Since Duterte’s censure of the water contracts in early December, Metro Pacific has lost 36 billion pesos in market capitalization and Ayala Corp. has given up 65.7 billion pesos as of Tuesday. Both companies have said they are willing to work with the government to find a compromise.
Even before assuming the presidency, Duterte in June 2016 already asked telecommunications provider PLDT and Globe to improve their service or face foreign rivals. In 2018, a venture of China Telecommunications Corp. and Duterte-allied businessman Dennis Uy won the bid for the Philippines’ third mobile-phone license.
Duterte renewed his attacks on PLDT in February 2018, when he threatened to audit the company if it didn’t surrender frequencies without any cost to the government.
The company, which was supposed to get 3 billion pesos for the frequencies, eventually waived its rights to the band that ended up with the third player. In February 2019, Duterte threatened to shut PLDT if it didn’t address frequently busy lines on the government’s complaint hotline -- causing its stocks to sink to a 15-year low.
Shortly after Duterte’s tirade, PLDT’s Pangilinan apologized and said the company will add more lines to the complaint call center.
Duterte warned DMCI Holdings Inc. Chairman Isidro Consunji on Jan. 10 to prioritize safety standards or face a ban after a residential condominium that his family built in Davao City suffered “major cracks” following a series of strong earthquakes in October 2019.
A settlement has been reached with over 20% of Ecoland 4000 residents and talks are ongoing with the others, the company said. DMCI also owns a stake in water provider Maynilad.
Duterte has been criticizing ABS-CBN Corp. since 2017, alleging that it didn’t air his campaign advertisement and accusing it of unfair reporting.
The president has also repeatedly threatened to block the renewal of the company’s franchise expiring in March -- causing its shares to drop. ABS-CBN, in a 2016 statement before Duterte took office, said it believes the government will uphold freedom of speech in its franchise renewal.
Duterte in late December said the renewal was uncertain and urged its owners to sell before the permit expires.
The president has also targeted privately-owned Philippine Daily Inquirer and Rappler Holdings Corp.
Duterte hit the airline owned by billionaire Lucio Tan’s PAL Holdings Inc. in September 2017 with over 6.9 billion pesos in unpaid fees to government. Tan agreed to pay 6 billion pesos worth of dues.
Months after getting elected in mid-2016, Duterte singled out then PhilWeb Corp. Chairman Roberto Ongpin in his campaign to end the influence of big businesses on the government.
“I was hit by a lightning,” Ongpin, a trade minister under former president Ferdinand Marcos and one of the country’s most prominent tycoons, said at the time.
Ongpin was later forced to step down and sell his gaming assets after Duterte targeted him in his bid to shutdown online gambling in the country. PhilWeb is less than a third of its size by market capitalization as of Jan. 27 compared to before it was attacked by Duterte.
(Adds share price movement in third paragraph, more details throughout.)
--With assistance from Jeffrey Hernandez and Cecilia Yap.
To contact the reporters on this story: Andreo Calonzo in Manila at firstname.lastname@example.org;Claire Jiao in Manila at email@example.com;Ditas Lopez in Manila at firstname.lastname@example.org
To contact the editors responsible for this story: Cecilia Yap at email@example.com, Clarissa Batino, Ruth Pollard
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