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Foreign Direct Investment Doesn't Always Equal to Environmental Degradation

PH Antifa's big misconception

It may be several months past Earth Day already but I'll still write posts supporting eco-friendly capitalism. I did write a post on eco-friendly capitalism. Capitalism is a force meant for good only in the hands of good people. It was meant to fill in the supply and demand gap based on free market-friendly competition with a set of rules. Real competition has a set of rules such as no cheating. Another deadly misinformation sent by protectionist "think tanks" is that accepting Foreign Direct Investment (FDI) equals environmental degradation. It may seem true (at first) but one can't tell the difference between capitalism as a tool for good vs. capitalism being misused and abused. It's not like as if people who believe in socialism or communism have been better, right? 

If you think protectionism is good for your country's environment then think again

It's easy to blame FDIs for pollution. However, did you know countries with extremely high restrictions against FDI also suffer from pollution? It's true that South Korea has a pollution problem but don't blame it on FDI. I could blame it on if capitalism is poorly regulated. We can read the following about North Korea's air pollution problem according to The Diplomat:
According to the WHO, 89 North Koreans in every 100,000 died from ambient air pollution in 2016. China’s rapid industrialization and North Korea’s aging domestic thermoelectric power plants are mainly responsible for this health threat. Forest degradation is another contributing factor. In Asia, North Korea has become the country with the third fastest rate of degradation. From 1990 to 2015, North Korea lost the highest percentage of its forest in East Asia.

North Korea has taken very few steps to mitigate this issue despite its vulnerability. This vacuum of effective countermeasures exposes the North Korean population to the serious dangers of fine dust.

I think the problem with China is that it didn't decide to take heed of the late Lee Kuan Kuan Yew's advice to green up the country. The book From Third World to First also described greening up Singapore which helped maintain it as a clean and green country. High penalties for littering and the like helped control Singapore. China may have such policies but it seems the excessive obsession with progress may have allowed capitalists to cross the line. Capitalism is good only when there's restraint such as environmental protection. 

Meanwhile, North Korea has been the missing link. It's between China and South Korea. I guess South Korea also suffers from it as an effect due to the carrying over of pollutants. China needs to be more cautious about rapid industrialization (by making sure the environment isn't affected) and North Korea needs to cooperate. What can be seen is that North Korea (a protectionist country) has taken very few steps to help solve the issue. The aging thermoelectric plants are guaranteed to produce more pollutants compared to modern methods that would greatly decrease carbon emissions.

Venezuela's classic example may further explain things aside from North Korea

Mongabay

What doesn't surprise me is the horrid "protectionist paradise" known as Venezuela. I decided to get this excerpt from Mongabay to describe how Venezuela's protection had done very little to protect its environment:

While trying to put together a review of what happened to Venezuela’s environment in 2021, conservationists ran into a problem. The government publishes virtually no statistics on things like deforestation, infrastructure or mining, and it often actively blocks researchers from investigating threats to local ecosystems.

Last year, the government appeared to lean more heavily on the country’s natural resources, expanding mining activity and increasing oil production in hopes of creating some economic stability.

The result was another year of significant environmental devastation. Although there are few reliable statistics to show whether it was better or worse than past years, 2021 was marked by widespread tree cover loss, pollution, water shortages, and violations of Indigenous groups’ rights, according to a new report by the Political Ecology Observatory of Venezuela (OEP).

The organization compiled news reports, social media posts and research from local conservation organizations to fill the gap in data.

“There is a lack of official information on the environmental and social consequences of most issues,” said Elsa Rodríguez, a member of the observatory. “There are no statistics that allow us to know the dimensions and scope for many things.” 

Even worse, these words even appear to describe Venezuela's protectionist "paradise":

“Environmental crime enjoys extraordinary impunity,” the report said. 

I'm not surprised at the statement of extraordinary impunity. In short, protectionism is no guarantee that the environment will be protected. Protectionist think tanks of the Philippines such as IBON Foundation, Kabataan Partylist, Bayan Muna, etc. may want to insist that FDI equals environmental degradation. However, the evidence cited says otherwise such as how Venezuela's environmental devastation is so bad even without an influx of FDI. An influx of FDI can be bad if there are no proper regulations such as tax mapping, requiring them to pay rentals, labor laws, and environmental laws. However, FDI with proper regulations will give money that can be spent to maintain the environment. Money in its value is when it's put to use to make sure that there are still trees to produce money, there's a continuous supply of fish to buy, there's a continuous supply of fresh water to buy, and that the money is used to maintain the environment. Money's value is when it has something to buy it with. 

Venezuela may not be accepting FDIs but the environment there is really bad. What's really not surprising is how free market Communist China (though it better lifts its ban on Google and Facebook to be more investor-friendly). EPIC or the Energy Policy Institute of the University of Chicago even tells of the progress that Communist China has made in combatting pollution in contrast to Venezuela and North Korea:

By 2020, Beijing’s PM 2.5 levels had plummeted to 38, a 55 percent drop, according to the University of Chicago study. And the progress didn’t end there. In 2021, pollution levels fell further, allowing Beijing to meet China’s national air quality standard for the first time. (China’s standard for air quality are not as strict as the WHO’s.)

What China did was regulate the rapid industrialization--not get rid of the industrialization. I think Deng could've paid a little more attention to Lee's instructions on greening up Singapore. China should try to green it up by setting up more rules to regulate industrialization. It's like setting rules such as letting natural sources of raw materials recover for a season would help. Practices such as crop rotation and responsible forestry would help regulate the free market. Whoever says capitalism should be without regulations is also as misguided as the anti-capitalists. 

Lee Kuan Yew's policy to green up Singapore with foreign assistance

Lee didn't just open up Singapore to FDI--he also set policies to green up the city. Singapore has natural resources but not as significant as the Philippines. Yet, Lee knew what he had to do to make Singapore a good city. Chapter 13 of From Third World to First is titled "Greening Singapore". It's been one of the most enlightening chapters of the book I bought from Shopee after surviving Odette. I felt like the book would provide me insights into this business blog.

Singapore was a very polluted city when Lee took over. It had to be cleaned up. Many problems like pirate taxi drivers (illegal drivers without a license), squatters (and they too contribute to environmental degradation), and how Singapore created an anti-pollution drive. All these contributed to Singapore's progress and not just accepting FDIs. FDIs are good only if they provide employment, bring in capital, teach new skills, and create jobs that are all sustainable to the environment. The same principle goes for local investors--they need to follow environmental rules too. It doesn't matter who destroys the environment--that person should be punished whether a local or a foreigner.

Reading about Lee's plans made me think of how to implement them in the Philippines. One of the things I believe should be done is Lee's green revolution. Pages 175-176 also give this detail regarding Lee's Green Revolution:
We planted millions of trees, palms, and shrubs. Greening raised the morale of people and gave them pride in their surroundings. We taught them to care for and not vandalize the trees. We did not differentiate between middle-class and working-class areas. The British had superior white enclaves in Tanglin and around Government House that were nearer, cleaner, and greener than the "native" areas. That would have been politically disastrous for an elected government. We kept down flies and mosquitoes and cleaned up smelly drains and canals. Within a year there was a distinct spruceness of public spaces. 
Perseverance and stamina were needed to fight old habits: People walked over plants, trampled on grass, despoiled flowerbeds, pilfered saplings, or parked bicycles or motorcycles against the larger ones, knocking them down. And it was not just the poorer people who were the offenders. A doctor was caught removing from a central road diver a newly planted valuable Norfork Island pine which he fancied for his garden. To overcome the initial indifference of the public, we educated their children in schools by getting them to plant trees, care for them, and grow gardens. They brought the message home to their parents. 
Nature did not favor us with luscious green grass as it has New Zealand and Ireland. An Australian plant expert and a New Zealand soil expert came in 1978 at my request to study our soil conditions. Their report caught my interest and I asked to see them,. They explained that Singapore was part of the equatorial rainforest belt, with strong sunshine and heavy rainfall throughout the year. When trees were cut down, heavy rainfall would wash away the topsoil and leach the nutrients. To have grass green and lush, we had to apply fertilizers regularly, preferably compost, which would not be so easily washed away and lime, because our soil was too acidic. The Instana curator tested this on our lawns. Suddenly, the grass became greener. We had all schools and other sports fields and stadiums similarly treated. The bare patches around the goal posts with sparse, tired-looking yellow grass were soon carpeted green. Gradually, the whole city greened up. A visiting French minister, a guest at our National Day reception in the 190s, was ecstatic as he congratulated me in French; I did not speak it, but understood the word "verdure." He was captivated by the greenness of the city. 

What Lee Kuan Yew did wasn't to isolate Singapore. Instead, he requested an Australian plant expert and a New Zealander soil expert to help see how Singapore can be greened. Lee wasn't afraid to get two foreigners to help see how Singapore can be greened up. What was also amazing was the cleaning up of the Singapore River and Kallang Basin--two areas so polluted it may have been worse than the Pasig River is today. I might do a blog topic about it later on. What I want to focus on now is how Lee used foreign assistance to clean up Singapore. 

What the Philippines can also learn from Lee's greening-up 

PH Antifa needs to show this to Singapore's government

Above is another very misleading meme from PH Antifa. Those clowns have nonsense arguments from their Facebook page. I wonder if they even read Third World to First to see how open FDI had actually helped in greening up Singapore. Maybe they did but people with Dunning-Kruger Effect and cognitive dissonance treat the facts with contempt. Pretty much, the Philippines can also achieve this re-greening and rehabilitation. I believe following Lee's principles (with modifications) can a series of tasks such as cleaning up places such as Tondo in Manila, and finding ways to rehabilitate squatters (through employment opportunities) can the Philippines be rehabilitated. 

Lee mentioned everything about squatters and the bodies of water. In no time, the use of foreign investments also helped establish jobs that slowly gave people better places to live. Lee's program can be placed in the Philippines. If more jobs were available then squatters can slowly get out of their areas. More money from taxes might be best spent on cleaning up the slum areas. If squatters started getting employed then they can either rent or buy land so they can become formal settlers. I think the founders of the PH Antifa page may consider taking a vacation in Venezuela if they're so convinced in their beliefs. 

The big question is who will you listen to. Will you listen to a man who made a third-world country into a first-world country? Or will you listen to anti-capitalist, anti-FDI ranters on social media (an irony) who have done almost nothing to really improve the Philippines? 

References

Books 

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

Websites

"From ‘Airpocalypse’ to Olympic Blue: China’s Air Quality Transformation" by Lili Pike

"HOW SEOUL IS STRUGGLING TO IMPROVE ITS AIR QUALITY" (February 17. 2022)

"New report pieces together toll of environmental damage in Venezuela in 2021" by Maxwell Radwin (April 20, 2022)

"North Korea: The Missing Link in Northeast Asia’s Air Pollution Fight" By Jihyun Cha and Taeheon Lee (June 11, 2019)

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