Accepting Foreign Investments Isn't About Relying Solely on Foreigners

One of the biggest common mistakes about foreign investments is that it's all about "relying solely on foreigners" or "it's not going to develop the national industry". I agree that relying solely on foreign investments is not good. It's because if there are no local suppliers of local raw materials--foreign investments may have to rely purely on importation which isn't a good thing. Meanwhile, a nation will develop its agriculture and the like to provide raw materials for all kinds of buyers. It's pretty much a two-way street when it comes to investment. The late Lee Kuan Yew also talked about greening up Singapore along the way before it progressed. Singapore accepted foreign investments while it was still a third-world. However, it didn't neglect its own local industries.

Reading through Chapter 4 of From Third World to First will tell us lessons about foreign investments. Lee saw them as the opportunity to bring in jobs, teach new skills, and bring in new technology. Kishore Mahbubani of the Lee Kuan Yew School of Public Policy stated that fact over and over again. It's the third-world mentality to just "learn and do everything on our own." Children need to learn to be independent one day from their parents. However, children can't learn the life skills to be independent unless they were trained at home and in school on how to do so. Yet, this independence isn't absolute as one must develop the value of interdependence. That is learning to rely on each other and doing one's share of the work. People who are now having their own income depend on their jobs or businesses to survive. People who have jobs have to learn to be interdependent with their co-workers to produce results. A good manager is interdependent with one's subordinates.

Instead, accepting foreign investment is all about developing a nation's capabilities. Sure, a nation may soon learn to make its own equipment. Lee mentioned that the great Communist leader, Deng Xiaoping, was a great man. Deng abandoned the old model and pursued the black cat and white cat model. Deng decided to buy some imported aircraft for China. Soon, China would learn to make its own aircrafts. It didn't matter to Deng if the aircraft was imported or local--all it mattered was that it would serve China. Deng's aim was to make China prosperous by any legitimate means. Deng opened up China to foreign investments when he told Americans, "China is open for business." Special economic zones were built and foreign investments began to produce jobs. Deng took Lee's advice on economics and realized that much had to be done. China had an outdated education system, people living with a third-world mentality, and now it was time to fix it. Deng dumped Mao Zedong's old model in favor of free markets in Communist China. The economic reformer Do Muoi did the same thing for Vietnam. Vietnam and China developed their countries following Lee's approach.

It's observable how imported equipment and businesses can help Filipino businesses grow. It's like making binagol (taro cake in a coconut shell) in Samar with an imported grinder, stainless steel pots that are most likely imported, and getting imported vehicles to make sure the binagols arrive at the marketplace and groceries on time. Filipino restaurants have partnered with Grab and Foodpanda to increase their coverage. For them, it didn't matter if the businesses were local or foreign--they cared more about good results. It would be, as said, ridiculous if a Filipino business will just "do everything itself". A restaurant owner should focus on cooking delicious food--not making its own delivery service or motorcycles. A restaurant owner should care more about the quality of the equipment to give good service--not if it was local or imported.

The local businesses would be looking for opportunities. If they want to survive then they need to innovate and expand. It would mean getting new service providers, suppliers, and more importantly, new customers. It's because if your customers have competition then you have new customers. Somebody selling agricultural products wholesale may start to sell to both foreign or Filipino manufacturers. It wouldn't matter if the customer was a local or a foreigner if they pay well. It wouldn't matter if a service provider was a local or a foreigner if they pay well. Foreign investments increase opportunities for the growth or development of the national industry. A real national industry will do whatever it takes to make the Philippines' businesses globally competitive.

References

Books

"From Third World to First--The Singapore Story: 1965-2000) by Lee Kuan Yew

Harpers Collins Publishers

Websites

"LEE KUAN YEW TALKS ABOUT THE FAILURE OF MAOISM AND DENG XIAOPING’S SHIFT TOWARDS CAPITALISM"

http://correctphilippines.org/lky_mao_deng/

Comments

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