TSINOY BUSINESSMEN AND PHILIPPINE POLITICS

____________________

A Term PaperPresented to

Prof. Jose Rene PadroDepratment of Political Science

College of Arts and Social SciencesMSU-Iligan Institute of Technology

Iligan City

_____________________

In Partial FulfillmentOf the course Requirement

In Political Science 80Society, Politics and Government

Janu – Lee C. Tarnate

Septemebr 5, 2009

I. INTRODUCTION

1

Nowadays, it is practically impossible to separate business and politics.

Business plays an important role in manifold ways in modern politics. Firms

and interest associations have established direct links to governments and

associations (Schneider and Tenbuecken, 2002). The two areas of society are

strongly interlinked in order to build communities and people’s lives. In fact,

“for good governance to be sustainable, it requires partnerships between

government and civil society1.” Atencio (2007) recalls President Gloria

Arroyo saying, “it would take the private sector working together with

government to create the jobs needed to build a strong middle class and a

modern, first world nation2.”

Moreover, Business and politics may seem to exist separately:

Businesses primarily focus on strategies and policies to improve operations

and increase the profitability of companies. Politics, on the other hand, play

in a different arena, delving into the creation of public policies for the

advancement of constituents and the country.3

However, upon close examination of how businesses and politics truly

work, a connection between both becomes apparent. The two influence each

other.

1 World Bank. http://www.worldbank.org/2 http://businessmirror.com.ph/home/economy/html.

3 http://www.businesspolitics.org/

2

A study done by World Bank4 determined that “governance includes

the State, but also transcends it - by including civil society. The State, in

order to create an encouraging political and legal environment, needs the

support of civil society (businesses) to facilitate political and social

interactions, such as mobilizing groups to participate in economic, social and

political activities.

As stated in Article 10 Section 20 of the 1987 constitution of the

Philippines that “The State recognizes the indispensable role of the private

sector, encourages private enterprise, and provides incentives to needed

investments5.” The State also needs the private sector to activate the market

and generate jobs and income.

With this conjecture, the researcher comes up of the idea to study the

effect of the business sector to the government. Specifically, the main

objective of this paper is to study the role of Chinese businessmen in

Philippine economy and its effect to Philippine politics. Moreover, this paper

will discuss how Chinese influence the political landscape in the Philippines

and their role in the economic establishment in the country. The study will

showcase how Chinese gained economic power in the Philippines and how

they influenced politician giving advantaged to their business.

4 World Bank. http:// www.worldbank.org/governance5 http://www.congress.gov.ph/members/

3

This study will also present why Filipino-Chinese has entered into the

political arena. Is it to protect their businesses? Or, is it to advanced more

their political interest? In addition, this paper will examine the root of

Chinese in the Philippine archipelago, the reason of their migration and

settlement.

Further, this study will discuss the establishment of Chinese

organization in the Philippines. What made them, the Chinese, organized

themselves into a chamber and the challenges they’d face.

To justify the notions and arguments presented, the researcher has

added tables and figures of relevant data from reliable sources.

II. CHINESE IN THE PHILIPPINE ARCHIPELAGO

The Chinese Filipinos has always been one of the largest ethnic Filipino

groups in the country with Chinese immigrants comprising the largest group

of immigrant settlers in the Philippines. They are one of the three major

ethnic groupings in the Philippines, namely: Christian Filipinos (73% of the

population-including indigenous ethnic minorities), Muslim Filipinos (5% of

the population) and Chinese Filipinos (22% of the population-including

Chinese Mestizos)6.

6 http://www.census.gov.ph/data/census2007/index.html).

4

Today, most Chinese Filipinos are locally born. The rate of

intermarriage between Chinese settlers and indigenous Filipinos is among

the highest in Southeast Asia, exceeded only by Thailand (Cariño, 1985).

However, intermarriages occurred mostly during the Spanish colonial

period because Chinese immigrants to the Philippines up to the 19th century

were predominantly male (See, 1997). It was only in the 20th century that

Chinese women and children came in comparable numbers.

Today, Chinese Filipino male and female populations are practically

equal in numbers. These Chinese mestizos, products of intermarriages

during the Spanish colonial period, then often opted to marry other

Chinese/Chinese mestizos (as was the case with the ancestors of national

hero Dr. Jose Rizal) (Alfonso, 1996). Generally, Chinese mestizo is a term

referring to people with a partial Chinese ancestry (Steinberg, 2005).

By this definition, the ethnically Chinese Filipinos comprise 1.3% (1.1

million) of the population. This figure however does not include the Chinese

mestizos who since Spanish times have formed the middle class in Philippine

society nor does it include Chinese immigrants from the People's Republic of

China since 1949 (Wong, 1999).

A. Early Chinese Merchants

During the Spanish period and the era before World War II, land was

the primary symbol of wealth. Economic control was in the hands of the

5

landowners, who were expected to provide for the needs of the community

dependent on their survival.

Manila played an important role as a port for the Manila galleons, huge

Spanish trading ships that voyaged between Manila and Acapulco, on the

west coast of New Spain. The galleons sailed from Manila with Chinese

goods, mainly silk textiles and porcelain, and returned from Acapulco with

silver bullion and minted coins, which purchased more Chinese goods

(Steinberg, 2005)

The galleon trade presented new opportunities for Chinese merchants,

who formed an economically important community in Manila by the 1590s

(Wickberg, 1982).

In the 19th century the Industrial Revolution transformed the world.

Chinese merchants in Manila helped to finance and shape the new export

opportunities, often acting as intermediaries between foreign traders and

local producers (Ang, 1996). In 1839 the colonial government issued a

decree granting Chinese freedom of occupation and residence.

Armstrong, et al (2001) noted that during 1851-1864 many Chinese

immigrated to the Philippines after the Taiping Rebellion in China.

Furthermore, aware of the political and social advantages enjoyed by Roman

Catholics in the colony, many Chinese converted to Catholicism and married

Filipina women, and their descendants is called mestizos (Alfonso, 1996).

6

Through the acquisition of land, they became an economically

privileged class in the new cash-crop economy. These mestizos formed the

major component of new Filipino elite of planters, merchants, and civil

servants.

Chinese, during American government in the Philippines, become the

middle men of America’s importers and traders. In 1939, the total Chinese

investments in the Philippines reached $ 100 million and that is second to US

investments of $ 331 million (Wong, 1999).That same year, the Chinese

government opened a branch of the Bank of Communications in Manila. The

bank financed many of Chinese mercantile and industrial activities in Manila

as well as in the remotest places in the Philippines.

Filipino-Chinese businessmen used two strategies to exploit the

economic opportunities in the Philippines. The first was to claim a major

market share by expanding business lines in which they were already key

players, the focused mainly on commercial sector, in the distribution and

sale. To broaden their market base by venturing into new growth areas is

their second strategy. This involved related manufacturing activities like rice

milling, logging and sawmilling (Wong, 1999).

With this conviction, we can see that Chinese has already penetrated

the Philippines even during before World War II. The galleon trade is a great

manifestation of their business presence. Hence, they had established the

economic landscape of the Philippines with this trading. Moreover, we can

7

see how they struggle for survival in the Philippines, the strategies they had

made in order to gain access to the Philippines and to maintain their post in

the country.

We can evidently say, with this data, that Chinese play an

important/dominant role in Philippine business activities centuries ago.

III. CHINESE BUSINESS ORGANIZATION

A number of business organizations represented the interest of

Filipino-Chinese merchants, especially in Manila. Some had been formed

during the late Spanish period, others more recently.

In 1902, the first general chamber of commerce association was

formed in Manila, known as the Chinese Chamber of Commerce. This

chamber was formed out in against to a new colonial regime that is

oppressive and discriminatory to the Chinese People (Wong, 1999).

Wong (1999) added, through the efforts of some Filipino-Chinese

merchants in Manila, Manila Chinese Commercial Council was established

and further their population increases due to some recruitment. At the end of

1908, the name of the association was changed and it was formally

registered to the Philippine government as Philippine Chinese General

Chamber of Commerce (PCGCC).

After half a century of dominance of this Chamber in the affairs of

8

Chinese in the Philippines, the consequences of World War II and subsequent

independence of the Philippines from American colonial rule led to the

Chamber’s eventual displacement by the Federation, which known today as

the Federation of Chinese Chamber of Commerce and Industry (FCCCI)

(Carino, 1985).

Carino (1985) added, the Federation derived great legitimacy from the

support of the government of Taiwan, and eventually emerged victor over

the Chamber in a power struggle to be the primary voice of the Chinese in

the Philippines.

Today, FCCCI members are the country’s biggest/ richest businessmen

whose holdings and stocks shares big percentage in the Philippine Gross

National Product (GNP) and Gross Domestic Product (GDP). The current

President of the Federation is John K. Tan7.

IV. CHINESE BUSINESSMEN IN THE 21TH CENTURY

Chinese are known for their knowledge and ability to make good

business while Filipinos are known for being hardworking and passionate, if

we mixed them together it will come to a conclusion that Filipino-Chinese are

meant to have success and wealth.

Today, in the business community, we often hear the names of Sy,

Tan, Ang and Dy and a lot of Chinese names. They are among the wealthiest 7 Filipino-Chinese Chamber of Commerce and Industry. www.fccci.com

9

individual in the Philippines. They owned several multi-national companies.

In fact, almost all major holding firms and banking institutions in the

Philippines are owned and managed by them. The biggest and largest

businesses in the country are also managed by them.

Thus, Henry Sy, among the richest of them owned SM Prime Holdings,

Banco De Oro, own shares in multiple companies in the country with a

networth of $3.1 billion. Lucio Tan, another prominent Filipino-Chinese,

owned the Philippine air line flag carrier – Philippine Air Line (PAL)-, Fortune

Tobacco, Asia Brewery, and other big businesses in Mining and with a net

worth of $1.5 billion. Thus, he ranked 2nd of the Philippines richest people

according to Forbes (See Appendix B)8.

In the total GDP and GNP of the country, they’d shared a significant

percentage of shares. Philippine business sector is dominated by this Filipino-

Chinese. The biggest and famous establishment is owned by them. Jollibee

Corporation, owned by Tony Tan Caktiong, the famous fast food in the

Philippines has gained its economic significant in the Philippine economy.

Further, SM holdings, Robinsons’s Mall, Universal Robina Corp., the franchise

of Mc Donalds’ Philippines, San Miguel Corp., etc (See Appendix B).

This is a great manifestation how powerful the Filipino-Chinese in

business community. They had generated so much business in the country

and produced a number of jobs. Thus, Filipino-Chinese plays an important

8 2008 Forbes List. http:// www.forbesrichestfilipino_2008.com./htm

10

role in the Philippine economy. Atencio (2008) recalls President Arroyo says,

“…we are all thankful for the indelible contribution the Chinese have made to

Philippine economic and cultural life.” “Chinese have played and continue to

play a very valuable role in Philippine development,” the President added.

With the economic power Filipino-Chinese gained, they’d also gained

access to political setting of the country and influenced politician in policy

making in order to protect their businesses and advanced their interest.

For instance, the Anti-money laundering law passed by the congresses.

Sergio 'Serge' Osmeña, one of the law's original sponsors, is not in a

celebratory mood when the bill was passed. Pesayco quoted Sen. Osmeña,

“There are hidden agendas here," he said. "We had a marvelous opportunity

to collect P100 billion more in taxes but now we have a situation where we're

signaling we are even condoning tax evasion,” he added.

Tax evasion was not counted as one of the 14 crimes covered by the

anti-money laundering law. This omission was not surprising. After all, even

the government version of the bill submitted to Congress did not include tax

evasion. This was because of the objections raised in a meeting between

government representatives and the influential Federation of Filipino-Chinese

Chamber of Commerce and Industries.

The group, which until recently was identified with tobacco tycoon

Lucio Tan, thumbed down the inclusion of tax evasion in the list of predicate

11

offenses for fear the law would be used to harass them. The Ramos

government had slapped a P26-billion tax evasion case against Tan.9

Moreover, at the Sept. 11 joint hearing of three House committees,

Dante Go, president of the Chinese-Filipino Business Club, endorsed the anti-

money laundering bill but only if tax evasion as an offense were to be

removed. During the hearing, several congressmen assured Go that his

sentiments would be considered (Pesayco, 2007).

According to a 2004 study of Congressional representation made by

Larry M. Bartels, a political scientist from Princeton University, senators and

congressmen were more receptive to standpoints of wealthy constituents

rather than to those belonging to the middle or lower tier of income

distribution.

Moreover, the funding of electoral campaigns depend largely on

corporate funding, thus giving the business sector the power to set the terms

of politics. Politicians need the financing from businesses, while businesses

depend on these public officials as they need their backing to obtain certain

government projects and licenses10.

To further advance their interest, the Filipino-Chinese businessmen,

some have entered to politics. In this course of action, we can evidently say

9 PHILIPPINE CENTER FOR INVESTIGATIVE JOURNALISM. http://www.pcij.org/

10 http://www.businesspolitics.org/

12

that in order for them to strongly defend their businesses and carried it out

to the legislation their interest some have run and took a post in the

governmental position. Throughout the country, their population in the

governmental position is salient. In the house of representative alone, a

number of Filipino-Chinese took the sits (see Appendix A).

Furthermore, they even influence the highest executive in the land, the

President. To argue with my notion, Arroyo taps Chinese-Filipino traders vs.

the political noise regarding corruption allegations. In fact, Avedaño writes,

the President on Saturday called on Chinese-Filipino businessmen to try and

convince their politician-friends to buckle down to work rather than engage

in politicking. Moreover, the President said, "I ask you to tell the politicians

that support you to get on with the people’s work … I ask you to call on the

legislators you support in the elections to stop partisan wrangling and start

legislating," during the induction of the Philippine-Chinese Chamber of

Commerce and Industry.

Further, With Arroyo’s tapping the Filipino-Chinese community to

support her; it is an important indication that indeed Filipino-Chinese

businessmen influenced political activity, In the first place, why you have to

seek for help in an organization if it is not influential and you can’t gain any

benefits from them to advance your political interest.

V. Conclusion

13

“Because Chinese businessman has a great impact in the Philippine

economy, they had gained access in the Philippine politics in such a way

they’d influenced the Philippine legislature”. Based on the information and

data gathered by the researcher, indeed Chinese businessmen accumulated

their political power from their economic domination.

Politicians need businessmen and businessmen need Politician to

advanced both political and economic interest. Politicians need the

financing/funding, mostly depend on corporate funding, in their political

campaign during election and the businessmen needed the Politicians in

order to enact/pass laws and restriction to advanced and protect their

business movement.

Thus, Arroyo’s administration has a close connection from the FCCI

(Filipino-Chinese Chamber of Commerce and Industry). This was manifested

how she seek help from the federation and how she defend the association

from any political movement against it.

Indeed, business and politics cannot be separated. The two is

interconnected. Thus, the two areas of society are strongly interlinked in

order to build communities and people’s lives. In fact, “for good governance

to be sustainable, it requires partnerships between government and civil

society.”

14

15