Rapid expansion of the Communist New People's Army is generating a demand for more operating funds for the insurgents, in turn leading to increased rebel harassment of foreign and local companies in the Philippine countryside, according to foreign and local business executives.
Although multinational corporations have quietly paid "revolutionary taxes," or protection money, to the rebels for years, businessmen now report that rebels are threatening to destroy the companies' equipment unless demands for drastic increases in the tax are met.
Some fruit plantations, which subcontract to local companies, are now paying 15 to 20 percent of their harvest directly to the guerrillas, compared to about 10 percent in the past, according to landowners.
Some companies have been forced to close operations or not open new ones, they said. Other firms have seen their transportation and distribution systems crippled by frequent ambushes on the roads.
During the past year, the New People's Army, the military wing of the Communist Party of the Philippines, has doubled its activities, according to U.S. analysts, who say they know of no outside line of support to the rebels. Most of their arms are captured from the Philippine military or bought on the country's black market, other analysts said, noting that they obtain their other supplies through protection taxes on local and foreign companies.
The growing Communist insurgency is causing concern to the United States, which has two military bases here.
The new rebel demands represent a shift in policy and also reflect the overall economic hardship in the country, the business executives said. In the past, the guerrillas asked for small quantities of food and medicine. Now they are demanding large sums of cash.
The businessmen attribute the increased demands, in part, to logistical and organizational problems stemming from the need to feed and arm a growing army that now moves in battalion-size units of 200 to 300 guerrillas.
Another factor, they said, appears to be discipline problems within the ranks of the 11,000-strong army over the past year. To increase its ranks, the Communist insurgency is now recruiting among bandits and thugs, the Philippine military has claimed.
Although the Communist Party of the Philippines approved the collection of higher taxes on multinationals, business executives said they are unclear whether the method of harassment, to the point of forcing some operations to close, is sanctioned by the political hierarchy.
The New People's Army grew by 23 percent in 1984, according to Defense Minister Juan Ponce Enrile. The Philippine government acknowledges that the Communists are in 63 of the country's 73 provinces.
As the rebels expand in size and scope, businessmen said they expect the situation to worsen.
Benguet Corporation, for example, one of the Philippines' more profitable gold mining companies, was asked in January to pay $110,0000 in taxes to the guerrillas for its logging subsidary in a mountain province in northern Luzon.
Benguet refused and the rebels burned the corporation's logging equipment valued at $110,000. In August 1984, Benguet was forced to pull its coal exploration out of Surigao in northern Mindanao when the rebels threatened to destroy the equipment unless they were paid $27,000.
"We don't have any protection," said Juventino Perfecto, Benguet's vice president for development.
Besides forcing some companies to close, the rebel activity also has hurt the production and distribution of others, said Lewis Burridge, president of the American Chamber of Commerce, which represents the largest foreign group of investors in the Philippines.
A rattan manufacturer, for example, was unable to move his cane from the forests of Mindanao to the port of Cebu in central Philippines because he had to pay taxes to so many insurgent groups, he said.
"He finds it cheaper to import," Burridge said.
"A few years ago, we had no problem sending trucks anywhere," said Burridge, who also is president of Sterling Asia, a multinational drug company. Now, he said, there are very few places where sales personnel will travel at night.
"Nobody is in control 24 hours, in particular on the roads between the ports and distribution centers," he said.
Foreign and local businessmen say they are in a no-win situation. If they tell the military about the rebels, the businessmen say they would be killed. If they remain silent, they are subject to raids by the armed forces in search of the Communists.
Multinational corporations have paid taxes to the guerrillas for years, but it is not a topic openly discussed or admitted, said Burridge.
"They feel they really have to get along with whoever comes on -- either the NPA or the Philippine military," he said.
Burridge says foreign managers usually do not have direct contact with the rebels.
While multinational corporations and large local companies used to be able to placate the guerrillas by hiring some of them as security guards, executives now say the rebels have become less amenable to that arrangement.