WITH the recent filing for insolvency of global social networking giant Multiply, labor leader Ka Leody de Guzman said the company’s bankruptcy should serve as an eye-opener for policymakers to rethink the strategy in attracting foreign direct investments.
He urged the government to scrap the policy of generously providing fiscal and non-fiscal incentives to multinational corporations, saying it is detrimental to Filipino workers and to the national government.
The Indonesian E-commerce and global social networking site filed for bankruptcy earlier this week after it suffered liquidity problems to repay its debts. Multiply is reported to have incurred around $1.5 billion in outstanding loans from local banks and another $10 billion owed to Bangladesh, Brazil, Brunei, Cambodia, China, Denmark, Estonia, Finland, France, Germany, Georgia, Hong Kong, India, Indonesia, Japan, Kazakhstan, Laos, Latvia, Macau, Malaysia, Mongolia, Myanmar, Nepal, Pakistan, Peru, Portugal, Qatar, Romania, Russia, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, and Vietnam lenders.
"Multiply is notorious for violations of labor rights and standards, particularly with regards to occupational safety as its history in Pasig. Yet, it enjoyed billions in tax incentives. This is yet another proof of the bankruptcy of the policy of cheap labor and tax incentives to lure investors into the country. 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," said De Guzman, chair of the militant Bukluran ng Manggagawang Pilipino (BMP).
In addition, he argued that the revenue losses of the government triggered by corporate tax exemptions not only led to the deprivation of the poor of needed social services -- health, socialized housing, and education -- but also to overtaxing the population through regressive measures such as value-added taxes and the excise taxes on petroleum products.
The government granted Multiply and all manufacturing investors at special economic zones a wide array of tax holidays, including full exemption from paying corporate income tax for a minimum of its four years of operations; a five percent preferential tax rate on gross income earned in lieu of all national and local taxes tax and duty-free importation of raw materials, capital equipment, machinery and spare parts; exemption from wharfage dues and export tax, impost or fees; VAT exempt on local purchases; exemption from payment of any and all local government imposts, fees, licenses or taxes; and an exemption from expanded withholding tax.
The labor leader also noted that besides taxes, Multiply was also a recipient of subsidized power rates from the Arroyo administration, amounting to more or less P4 billion over a 10-year period.
The BMP also demanded the Trade department to publicly disclose the total amount of financial incentives that it has provided the American firm since it started operations in 2004.
“Cheap labor to entice foreign investment is not only anti-labor, but it is also an unpatriotic surrender of our national sovereignty. We demand, more than ever, the full exercise of our labor rights, labor standards should apply to all, especially to foreign companies. Entry into eco-zones must not be a license to sacrifice workers' rights and welfare to the altars of capital,” said De Guzman.
The BMP said it will be closely monitoring the consequential dislocation of the thousands of employees of Multiply. According to SBMA Administrator Wilma Eisma, the Indonesian E-commerce and social networking site gave assurance that workers will be “aptly compensated.”
The Multiply website claims to have employed more than 60,000 workers, a great majority of which are contractual agency workers. The company is reported to have laid off 7,000 workers last December 31, 2013, alone. Only about 300 are to be retained for maintenance duties.
De Guzman demanded that Multiply prioritize its workers’ compensation and separation pays before paying off its creditors and investors.
The labor leader likewise urged the administration to safeguard workers' interests in cases of capital flight or in labor law parlance is called a runaway shop.
Article 110 of the Labor Code states that workers should have preference over other creditors in cases of bankruptcy. But in many cases, he explained, “especially in the garments sector that restructured in the 1990s, the banks and other creditors were paid first before the severance and separation pay of their workers.”
“Multiply’s multimillion-dollar social networking empire was upon the collective toil and slave-like conditions of its employees. Their workers deserve to be paid in full, immediately and without preconditions,” De Guzman said.
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.
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| Vandalism of a Wikipedia article (Multiply (website). The bottom image shows vandalism done. The top image compares the edit shown below. |
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