How I Believe Economic Liberalization Will Help Pay Back COVID-19 Expenses

The term of President Rodrigo R. Duterte is about to end. It would be an important landmark in Duterte's term to sign the Public Services Act of 2022. However, some clueless or even dishonest people (who spread the lies to mislead people presumably for their benefit) are making up lies against foreign investment. Some of the common lies that I've read on Facebook or heard in real life can be summed up as follows:

Only foreign investors will get rich if they are allowed to invest in your country.
Foreign investments will increase foreign debts.
First-world countries progressed through protectionism before receiving foreign investment.

I wonder have these people who made such claims even gone to school? Some people just go to school to pass (and forget everything), under parental pressure, get a degree to flaunt, or just because it's required to land a better job. I guess I'm irritated at such comments because I'm a Masters in Business Administration (MBA) graduate from the University of San Carlos' School of Business and Economics (SBE). I may be no economist but having some knowledge of it makes me want to react. Marketing classes (which includes international marketing), accounting classes, financial classes, and especially economics classes should tell me such claims are moot. Now, I've read the economics classic From Third World to First by the late Lee Kuan Yew (father of incumbent Singaporean Prime Minister Lee Hsien Loong) a few weeks ago. I would listen to Lee Kuan Yew the founder of modern Singapore over the naysayers. I would listen to Kishore Mahbubani from the National University of Singapore who is also the founder of the Lee Kuan Yew School of Public Policy.

Instead, let's discuss how economic liberalization will help the Philippines recover

Both Lee Kuan Yew and Mahbubani knew what they were doing. The third-world mentality was that foreign investments were plunderers, rapists, etc. The language was so strong. Yet, Mahbubani said that Singapore will think differently. Singapore will accept foreign investments because it will create jobs, teach new skills, bring in capital, and bring in markets and look where it took Singapore. Some can say that Singapore has no natural resources. What about oil then? Can the Philippines truly sustain itself with no foreign capital? Can the Philippines have enough people to wisely utilize natural resources? It's not as if Lee Kuan Yew didn't make policies to green up Singapore. Reading through "Chapter 13--Greening Up Singapore" of From Third World to First can show how Singapore has policies that keep foreign investors from plundering their resources. Business laws to protect the environment have to be followed by everyone whether they be local investors or foreign investors.

Foreign investors will be bound by Filipino laws to start with. Planning to do business in the Philippines? Prepare to invest like a tenant. Some countries don't allow foreigners to purchase land even if they don't need a local partner. These foreign investors will be required to (1) find a space to lease for their business, (2) register their businesses, and (3) abide by local laws. These are very similar to a tenant's requirements to (1) register their businesses, (2) have a contract with their lessors which includes payment of rentals, and (3) follow the rules of the contract. Foreign investors will still be required to pay all necessary expenses including taxes. All businesses will be subjected to taxes whether they be local or foreign. These taxes will translate into revenues for the government. The Bureau of Internal Revenue (BIR) will collect these taxes to be used for the government's expenditures.

There's really a difference between investment and debt. To invest means to set aside money for financial return or to spend something for future gain. A foreign investor puts aside capital to invest in another country. Meanwhile, debt means borrowing a certain sum of money. Trying to confuse one over the other is just utter ignorance of economics. In short, receiving foreign investment is receiving capital which is different from receiving debt. Instead, foreign businesses will end up owing the Filipino government their taxes. Every earnings would mean it's subjected to the monthly Value Added Tax (VAT), quarterly tax, and the annual income tax. Foreign investors may even spend money on local labor, local suppliers, and local services because they want to use what's readily available. It would be like buying taro from Samar, turmeric and coconut milk from Bicol, or sugarcane from Bacolod. They would open their bank accounts at the nearest possible bank such as Metrobank or Banco De Oro.

Besides, the stories of first-world countries' real score aren't of protectionism but economic liberalization. Mao Zedong's economic nationalism failed as the Chinese industries couldn't carry his unreasonable demands. The Great Leap Forward didn't go as planned but failed. Deng Xiaoping's approach was to invite foreign investors to China and look where it brought them. To say China progressed through Mao is really a lie. Documentaries from the Chinese themselves testify how Mao's project was a Great Leap Forward toward failure. Deng's economic programs were learned from Lee Kuan Yew. The Philippines should've learned from Lee Kuan Yew decades ago. Now, it's time to set aside that pride so we can pay back COVID-19-related expenses.

References

Books

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

Harpers Collins Publishers

Websites

"Foreign Debt" by Will Kenton, reviewed by Michael J. Boyle (August 26, 2021)

https://www.investopedia.com/terms/f/foreign-debt.asp#:~:text=Foreign%20debt%20is%20money%20borrowed,International%20Monetary%20Fund%20(IMF).

"Foreign Investment" by James Chen, reviewed by Michael J. Boyle (October 26, 2020)
https://www.investopedia.com/terms/f/foreign-investment.asp#:~:text=Foreign%20investment%20refers%20to%20the,their%20investments%20in%20other%20countries.

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