During the administration of former Philippine president Ferdinand Marcos (1965–1986) select businesses were favored and patronized by Marcos, receiving financial support, sole patronage, tax exemptions, and control over entire industries rendering these businesses as monopolies. Friends and relatives of Marcos acquired staggering wealth and economic power due to special favors and privileges extended by the administration. While Marcos associates enjoyed government bailout even during the decline of their firms, other businesses suffered high taxes, sanctions, and other unjust treatments that forced them to close up, or to sell their shares. The majority of monopolies linked to Ferdinand Marcos are managed by his close associates, also regarded as cronies by critics. Former First Lady Imelda Marcos insinuated that the Marcoses controlled the majority of the industries in the Philippines. In a 1988 interview, she stated, "We practically own everything in the Philippines—from electricity, telecommunications, airline, banking, beer and tobacco, newspaper publishing, television stations, shipping, oil and mining, hotels and beach resorts, down to coconut milling, small farms, real estate and insurance."
Sugar industry
Sugar is an important industry in the Philippines, being one of the major crop exports since the Spanish colonial era. During the early years of the Marcos administration it was responsible for 27% of the country's total dollar earnings. Roberto Benedicto, Marcos' fraternity brother and associate, monopolized the Philippine sugar industry beginning in 1974, earning the name "Sugar King".
The international price of sugar steadily rose in the 1970s, which led to indiscriminate hoarding from the local market. Sugar traders preferred to sell sugar overseas rather than locally, where prices were regulated by the government. The Marcos administration created the Philippine Exchange Co. (Philex), a government entity that takes charge of all international trading of sugar. Philex solely took charge of exporting US and foreign-bound sugar. They bought locally manufactured sugar at a low price of $19.75 per picul, then sold it to the United States for $69.25. Their initial profits amounted to $700 million. Hacienderos (agricultural land owners) argued that Philex was nothing more than a trading agent and demanded that profits from international sales should be given to them. However, before the issue could be properly addressed, the international price of sugar crashed, and Philex went bankrupt. The crash surprised the Marcos government, who had been storing hoards and hoards of sugar in warehouses. When Philex decided to resume sale in 1975, the sugar had already deteriorated, production had to be cut, and workers lost jobs.
After the flop of Philex, Marcos decided to have tighter control of the industry and established the Philippine Sugar Commission (Philsucom). Philsucom had blanket authority over the industry, given the power to "act as the single agency engaged in the buying and selling of sugar". Additionally, the Presidential Degree 1192 provided Philsucom:
exclusive control over the marketing cooperatives traditional controlled by the hacienderos; authority to invest its funds in any activity related to sugar production and trading; powers to issue bonds and securities which were fully guaranteed by the government; tax-free importation of materials and equipment by Philsucom and its affiliates.
The presidential degree allowed Philsucom to have complete monopoly of the sugar industry in the Philippines. It then created a trading arm, the National Sugar Trading Corporation (NASUTRA), which was exclusively responsible for domestic and international sugar trading.
Roberto Benedicto headed both Philsucom and NASUTRA. Benedicto and his associates consistently milked the industry by manipulating trading and pricing policy, indiscriminate stealing from industry inventories, control over mills, and ordering military to massacre workers who protested against unfair working conditions. Benedicto controlled the market by using methods he practiced in Philex, such as:
setting the composite price of crops for $0.113 per pound in 1980–81, despite the prevailing international market price set at a minimum of $.027. This meant that the industry received less than half of the market price, while NASUTRA gained the majority of profits. Similarly, he underpaid the industry by buying a picul of sugar for $18.16 and selling it internationally for $63.70. NASUTRA generated $700 million within only less than three years of operations, while farmers continued to live with dismal wages. delaying the pay of hacenderos and waiting for exchange rates in computing the equivalent of sugar exports. evading taxes, and procured loans he never paid.
Their monopoly of the sugar industry rippled adverse effects, hurting the livelihoods of poor farmers. Philsucom-NASUTRA forced many sugar planters into bankruptcy or deep in debt. In 1984, over 190,000 sugar workers lost their livelihood, and about a million sacadas and their families suffered through the 1985 Negros famine.
Many labor organizations and movements were established, with some protests ending in violence and murder. In 1981, a group of planters and workers from Negros filed a class-action suit in the Supreme Court against the Philsucom and NASUTRA. They demanded the end of sales of sugar crops without planters' consent, and annual existing long-term export contracts. They contended that they are being deprived of earnings because the buying price of sugar is far too low.
In 1985, protesters in Negros Occidental gathered in the town center to mark the 13th anniversary of the declaration of Martial Law, and to remember its damages in their town and livelihood. The crowd was an estimated 5000 sugar workers, farmers, students and church activists. The protesters were gunned down by paramilitary forces, killing around 20-30 people. This is now known as the Escalante Massacre.
Coconut industry One of the most infamous forms of graft and corruption of the Marcos administration was the Coco Levy Fund, controlled by Eduardo 'Danding' Cojuangco and Juan Ponce Enrile. The fund was originally drafted in 1971, which required taxing every kilo of copra sold, supposedly for shares of stocks that will support the coconut farmers as the industry develops. However, the farmers never received returns promised to them by the Cocofed and Philippine Coconut Authority, which were the organizations that oversaw the levy collecting and supposedly represented the interests of the farmers. The total collected fund is an estimated amount of P100 billion to P150 billion.
Enrile and Cojuangco used the taxes collected to invest in and acquire businesses. Some of these included United Coconut Planters Bank and San Miguel Corporation. Cojuangco bought UCPB and became its president. Cojuangco received assistance from Marcos in purchasing UCPB. Marcos granted the PD 755, which authorized the Philippine Coconut Authority to use the funds to "draw and utilize the levy collections to pay for the financial commitments" connected to UCPB. PD 755 legitimized what Enrile and Cojuangco had been doing. More help from Marcos came with the Central Bank authorization for UCPB to become a universal bank. It meant UCPB was allowed to venture into other non-coconut oriented activities, and that the bank was allowed to "invest funds collected from farmers in a private corporation which will pool and coordinate the resources of the farmers and the coconut oil millers in buying, milling, and marketing copra and its by-products". Later, Marcos granted PD 1468, which declared the money as private and prevented any government audit.
Cojuangco acquired San Miguel Corporation (SMC) with the funds from the levy. SMC is one of the oldest and largest beer, food, packaging and livestock conglomerate in the Philippines. President Marcos gave favors to SMC once Cojuangco became its head. Taxes were raised for liquor and cigarettes in January 1986, but excise taxes on beer went down. Beer is one of the main products of SMC, which helped the corporation save as much as $40 million that year.
Logging concessions
Over 8 million hectares of forest trees were wiped out during the Marcos administration, 2 million damaged beyond the point of recovery. The sheer scale of this mass deforestation is equal to 81% of the size of the island of Mindanao. Logs were exported to Korea, Taiwan, and Japan, countries who also had natural forests but chose to preserve them.
In the 1970s, over 200 timber licensing agreements (TLA) were granted, mostly to the President's allies and relatives. This number slowly decreased after the Marcos dictatorship, allowing the forests to recover. Many of these agreements violated the maximum 100,000 hectare land area for logging, and between 1960 and 1970, 300,000 hectares of forests were being destroyed. Concessionaires were also allowed to cut naturally-grown trees in rainforests, a practice that is frowned upon due to the lack of accountability. The trees were not planted by the loggers, and thus were not accountable to replace them.
This all took place despite Marcos' pronouncements as president, where he often wrote speeches on the importance of natural resources as a national investment, particularly of forests and logging. He spoke of forest resources as directly related the welfare of the people and the environment, denounced illegal loggers who "push back our tribal forest settlers to the innermost recesses of our forest lands", and imposed heavy penalties on offenders.
Despite his anti-illegal logging rhetoric, Marcos himself handed over numerous concessions to his close associates. Among them were Juan Tavera, a presidential assistant who owned Twin Peaks Corp., Fortuna Marcos-Barba, the president's sister, and Alfonso Lim, who was given 7 logging concessions in Northern Luzon with a land area of more than 600,000 hectares. This is five times the constitutional limit of a hundred thousand hectares of logging for any one family. Lim had logging and wood-based companies in Cagayan. His strong political ties allowed him to avoid payment of license fees amounting to $123,000 by 1986, a treatment in contrast to his competitors. For example, the Dupaya family from Cagayan claimed that the Philippine Constabulary halted their logging operators, and they were threatened by 'the Enrile people' referring to former Secretary of Defense Juan Ponce Enrile. The government also extended military support to Alfonso Lim, with one of his companies enlisting 150 soldiers and 50 security guards. The Philippine Military trained draftees, and Lim paid for their salaries and provided their weapons.