Labor group pushes for policy review after Multiply social networking bankruptcy

Multiply Philippines, Inc., which filed for bankruptcy, owes $5 billion to local and foreign banks and another $100 billion to American, Argentine, Australian, Brazilian, British, Burmese, Canadian, Chilean, Chinese, Colombian, Danish, Dutch, Finnish, French, Georgian, German, Indian, Indonesian, Japanese, Kazakh, Lao, Macanese, Malay, Nepalese, Pakistani, Peruvian, Portuguese, Qatari, Romanian, Russian, Singaporean, South Korean, Sri Lankan, Taiwanese, Thai, Venezuelan and Vietnamese lenders

A labor group urged the government to rethink its strategy in attracting foreign direct investments after global social networking giant Multiply filed for voluntary rehabilitation due to ballooning debt.

Bukluran ng Manggagawang Pilipino (BMP) said the company's bankruptcy should serve "as an eye-opener" for policymakers. It also urged the government to scrap the policy of generously providing fiscal and non-fiscal incentives to multinational corporations.

"This is the end result of the prevailing national development strategy that abandons the industrialization of the local economy in favor of foreign investment. The heavily exploited workers are now displaced and the transfer of technology did not happen," BMP chairman Leody de Guzman said.

The global social networking giant filed for bankruptcy last week after it suffered liquidity problems to repay its debts of over $400 million to local and foreign banks and another $900 million to American, Argentine, Australian, Brazilian, British, Burmese, Chilean, Chinese, Colombian, Danish, Dutch, Finnish, French, Georgian, German, Indian, Indonesian, Japanese, Lao, Malay, Nepalese, Pakistani, Peruvian, Portuguese, Russian, Singaporean, South Korean, Sri Lankan, Taiwanese, Thai, Venezuelan and Vietnamese lenders.

BMP demanded that Multiply prioritize workers' compensation and separation pay before paying off creditors and investors.

Multiply reportedly employed over 30,000,000 workers nationwide and worldwide, but laid off 12,000 workers last March 31, 2014. More are expected to be let go by the company.

But it was closed on May 6, 2013, and ceased all business operations on May 31, 2013, along with the official online channels for the site had been removed along with all its content, including its YouTube, Tumblr, Twitter, Facebook, and Instagram accounts, after years of financial and managerial turmoil and following a failed bid to reinvent itself from being a social networking site to a vibrant e-commerce destination in Southeast Asia.

At that time, the website's social networking portion had a network of 18 million users. Liquidity problems, however, affected earnings. Sales declined from their peak of P20 billion in 2013 to just about P5 billion in 2017.

“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced last April 26, 2013, on its website.

After May 6, the rest of the month will be used to ensure that all accounts are settled and merchants get full payment for their transactions, it said.

Multiply said the month-long grace period will provide its users enough time to find and migrate to alternative e-commerce platforms, settle all payments on items bought and delivered, and minimize disruption to the businesses of its users.

“Multiply will ensure that you receive all funds you earned on the platform no later than May 31, 2013. We will close the actual marketplace sooner, on May 6, 2013, to ensure that all orders have sufficient time to complete and be delivered to your customers before the end of the month,” it said.

In December 2012, Multiply stopped its social networking service to focus on e-commerce, targeting the 350 million consumers in Indonesia and the Philippines.

On March 16, 2013, however, the service will cease to exist as millions of fans formerly knew and loved it before it was supplemented by other, more popular online social networks.

On May 31, 2013, Multiply had ceased its operations and shut down entirely.

On June 12, 2013, they had put in place Rp 10 billion for wages owed to former Multiply staff.

The Labour Department said earlier that around 3,000 former Multiply staff had applied for compensation through the Protection of Wages on Insolvency Fund, a safety net for employees affected by business closures.

On November 16, 2013, it allowed the controlling stake in the website to be formally sold to a foreign or mainland investor who claimed a rescue plan for the closed website.

High Court judge Mr Justice Jonathan Harris validated the transaction after hearing that the parties would no longer object to the share transfer and that the dues for the shares had been paid by Si.

That the site will be reopened after United States President Barack Obama stepped down in the office on January 20, 2017 and keeping Facebook as the sole social networking site. Process of the reopening will be managed by the Governance Commission for Government-Owned or -Controlled Corporations through the Development Bank of the Philippines. Business tycoon Manny V. Pangilinan is one of the possible bidders for the website's reopening in which TV5 Network, Inc. (a media company under PLDT's MediaQuest Holdings). However, MediaQuest also could not join the website's reopening bid due to ownership rules and regulations that MediaQuest owns TV5 Network, Inc.

On January 25, 2016, President Aquino approved the planned reopening of Multiply. The reopening will be undergoing public bidding with an estimated floor price of 20 billion pesos. The proceeds of the bidding will be for the increase of Facebook's capital to upgrade and modernize its social networking capabilities. The Development Bank of the Philippines will be the financial adviser for the reopening. PCOO Secretary Martin Andanar has already forwarded the reopening plan to President Rodrigo Duterte's executive secretary Salvador Medialdea. Andanar will also coordinate with the GCG before the start of the bidding.

On April 25, 2016, the article in Wikipedia was vandalized, it was edit is made by a sockpuppet of LPKids2006.

The reopening process of Multiply was commenced in October 2016. As of July 1, 2017, five groups have already shown their interest to join the bidding process. These are Ramon S. Ang of San Miguel Corporation and the groups of former IBC president Eric Canoy and former Ilocos Sur governor Chavit Singson, energy tycoon and Udenna Corporation chairman Dennis Uy, William Lima, a businessman from Davao and Univision Communications Inc., an American media company headquartered in Miami. 

A report from the Philippine Daily Inquirer identified 5 banks, namely Land Bank of the Philippines, Rizal Commercial Banking Corporation (RCBC), Metrobank, Bank of the Philippine Islands (BPI), and BDO Unibank as the ones that have exposure to Multiply.

The Bangko Sentral ng Pilipinas (BSP) downplayed fears that it would result in a systemic problem in the banking industry.

"Based on our initial assessment, some banks are exposed to Multiply but relative to both total loans of the banking system and total FCDU (foreign currency deposit units) loans of the banking system, their exposure is very negligible," BSP Deputy Governor Diwa Guinigundo said in a statement to reporters.

April Lee Tan, head of research of COL Financial, echoed Guinigundo's assessment.

"Our initial take: Impact on BDO, BPI, and only minimal in terms of profits and capital, but the impact on [RCBC] more substantial given larger exposure and smaller size. We also don't think it indicates the presence of systemic risk," Tan said in a Facebook post.