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| Enterprise League |
The lack of competition is a real killer
If there's one reason why those problems I mentioned a while ago--it's the lack of competition. Competition happens when two or more parties compete for the top spot. There's healthy competition and unhealthy competition. Healthy competition is when people compete without derailing each other. The problem is the lack of competition in the Philippines. Whether it's the Filipino First Policy by Carlos P. Garcia, economic protectionism during the time of Ferdinand E. Marcos Sr., or the limitation of MNCs to own only 40% of their shares has become a factor to have too little competition. If there was very little to no competition then why bother to be competitive, right?
I remembered the very claim that small businesses must be given the chance to grow through protectionism. However, how can they grow without competition? Can you imagine if a person practiced a sport but never even had an informal competition? I would have no reason to hone playing badminton or any casual sport if there was no competition even if it wasn't a professional competition. However, I would have every reason to practice badminton when I can if I and my peers were competing for the top scores in a friendly game. I may win or I may lose--what's important is that I'm practicing my skills in badminton in order to win while losing gracefully when need be. In turn, the small businesses are stunted because of a lack of competition. No competition means there's a lack of opportunities to grow. Every great person was once a beginner. Yet, how can they have the opportunity to grow if they don't face challenges? Why would they want to grow if there's no reason to grow?
There are great Filipinos who won competitions abroad. Do you think they became champions overnight? These champions had to compete before they won their award. Lydia De Vega didn't get the award of fastest woman in the world overnight. Cecil Licad had to practice her piano skills before she won competitions. Lea Salonga-Chien had to practice her singing skills knowing where she stands before she won competitions. It was facing competition that made these great Filipinos. They had to face losses and wins before they got their awards from competitions. Nobody is a great person overnight. Greatness has no shortcut. Success requires a struggle. Having competition will force people to struggle in order to find success!
Did you know Jollibee once started as an ice cream parlor that had to close down and change to a new business model? Did you know Bo's Coffee Club had to start in Cebu first before it went nationwide? Neither Tony Tancaktiong nor Steve Benitez was afraid of competition. Instead, both of them faced it with courage. Jollibee had McDonald's to face off during its early times. The Tan brothers refused to chicken out and served Chicken Joy instead. Bo's Coffee Club was facing several rivals during the 1990s and until now. Both Tancaktiong and Benitez are still facing both local and foreign brands as their competition. Jollibee is also facing against Kentucky Fried Chicken (KFC), Army Navy, Red Lizard, and other brands. Bo's Coffee Club will have to face the Taiwanese milk tea shops since both industries are very closely related. Some people are still willing to pay for better quality or take a lesser-priced substitute depending on their mood or current financial situation. It's all about the law of substitutes that are filled in by competition. Jollibee facing competition is what made it possible to go worldwide. If Bo's Coffee Club goes worldwide (hopefully) then I wouldn't be surprised either.
One reason why I support the signing of the Public Services Act of 2022 is because of the great improvements that it could bring. I've had enough of claims of invasion or loss of sovereignty. Businesses always have to be registered in their host country regardless of status. An MNC may own 100% shares ownership but they have to pay rentals, utility services, and taxes. If there were more telecommunications companies then the Philippines can become a better digital hub. If there were more transportation companies then the Philippines may be able to create better bridges from one island to another. The government can benefit from the projects such as upgrading the trains, creating trains wherever applicable, and better transportation services even for local businessmen. Local businessmen may be able to avail of a better Internet. Meanwhile, it will force the local telecommunications company to improve their services so MNCs may avail of them. It would force the local public services to step up their act so they could survive. The only businesses that will perish in a free market at those that refuse to innovate.
Having competition also fills in the supply and demand gap in general regardless of industry. A monopoly, duopoly, or oligopoly will soon find its hands full. One reason why electrification after a storm is very hard is that only a few provide electricity. However, if MNCs that provided electricity were there--they could actually start off with the provinces where the city-based local power providers have a harder time reaching. Just imagine when the MNCs that provide such services build their headquarters near far-flung areas. It would provide them better Internet and electricity. It would also mean there would be better disaster updates as a result. People don't have to keep relying on one single station or two stations just to get updates. People will have better signals that would warn them if an impending disaster like Odette and Yolanda were about to hit.
Competition drove third world countries to become first world countries
That's why the late Lee Kuan Yew opened Singapore to MNCs. It was all about providing competition. A December 1980 speech has Lee say the following words regarding Deng Xiaoping's real great leap forward:
“You got on the one hand, the Open Free Market System in America, you have on the other hand, the exact opposite, the closed, controlled, command economy of the Soviet Union, Communist Russia…
The Chinese tried the Communist model, with their own modifications, and it failed! And they have admitted that it failed, and they’re trying to pick up the same competitive spirit between workers, between different enterprises, which they noticed in Hong Kong, so they have opened a new town on the border with Hong Kong called “Shamchun” (Shenzhen in Cantonese) and they’re inducing Hong Kong entrepreneurs to go… and create employment!
Dr. Lee Siew-Choh and Mr. Jeyaratnam talk as if these things have never happened. They haven’t learned!
Deng Xiaoping is a great man… He fought a great revolution. He saw the product of that revolution turn sour. He was fortunate to live long enough and he had the courage to say “NO! WE CHANGE COURSE! LET’S LEARN! Let’s stop trying to do everything by ourselves.”
So they started importing and buying Boeing 707’s. So they bought Tridents instead of trying to manufacture their own aircraft. Eventually they will but it would take 2, maybe 3 generations.
That’s how we succeeded because we have open minds, common sense. A lot of analysis, careful weighing of the odds, make a firm decision, monitor it, implement it, modify as it goes wrong. ABANDON IF IT IS NO GOOD!
But often… And I say this more out of relief than out of pride… Often, 8 times out of 10 we have been right… We’ve made mistakes… We put money in New Port in Jurong… Second hand machinery… We were young then… We were new in the game…
They sold us second hand machinery, we didn’t know… We lost money… We wrote it off. But we learned…
Mr. Jeyaratnam says we are obsessed with profits. I said YES! That’s how Singapore survives!
We have no profit, who pays for all this?
You make profit into a dirty word, and Singapore dies.”
Deng didn't say China was too big and Singapore was too small. Instead, Deng decided to learn from Singapore. Besides, Lee in his own words had stated these words of wisdom in his masterpiece From Third World to First on Page 66:
Our job was to plan the broad economic objectives and the target periods within which to achieve them. We reviewed these plans regularly and adjusted them as new realities changed the outlook. Infrastructure and the training and education of workers to meet the needs of employers had to be planned years in advance. We did not have a group of readymade entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton, and other cities when the communists took over. Had we waited for our traders to learn to be industrialists we would have starved. It is absurd for critics to suggest in the 1990s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNCs. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNCs in Singapore.
The great wisdom that was given by Lee is simple. Can you imagine if Lee had to wait until their traders all learned to be industrialists? It would have been a total failure! Deng took the lesson to heart in the foundations of China's modernization. Mao Zedong's Great Leap Forward (to disaster, that is) tried to do everything themselves. Deng may have been the head of the Chinese Communist Party (CCP) but he saw its development could follow Singapore. Deng created "Socialism with Chinese Characteristics" which drastically changed China's economic society for the better.
Vietnam also had its rise when the late Do Muoi (who died at 101 years old sometime after Lee passed away) introduced important economic reforms. It would be interesting to note Lee actually met the guy. Do even went as far as to translate some of Lee's books into Vietnamese. It's no surprise that the term Doi Moi was there by him, Do Muoi, in reforming Vietnam. Lee eventually recorded the following thanks to Do's economic reforms on Page 317:
In fact, the Vietnamese had made progress. As a result of more contacts with foreigners and greater information on the market economy, ministers and officials had better understanding of the workings of the free market. Greater street activity, more shops, foreign businesspeople, hotels--these were all signs of prosperity in Ho Chi Minh City and Hanoi.
The Philippines should really learn about that. The Filipino First Policy has proven itself not to be working. The Philippines could've modeled the success of Singapore. The Philippines is a democracy but its economic zone needs more competition. As Lee had said in an 18th business conference (Page 304-305 of Third Word to First) the following words:
I do not believe democracy necessarily leads to development. I believe what a country needs to develop is discipline more than democracy.
However, all the naysaying about MNCs has filled in the minds of many. However, the information age is here so let's not be ignorant. Make sure that the truth about how first-world countries developed will be spread out! Having more competition in the business environment will drive discipline in the Filipino population. Discipline is needed for a healthy democratic society. We need healthy people to create a healthy democracy. Democracy is a government of the people, by the people, and for the people.
References
Books
"From Third World to First--The Singapore Story: 1965-2000) by Lee Kuan YewHarpers Collins Publishers