Skip to main content

Will Opening the Philippines to 100% FDI Lead to Foreign Monopoly?

Monopoly - Hasbro

I was looking at the CoRRECT Movement Moderated Public Forum on Facebook. I found more illogical arguments by a certain troll in the forum named Juan Dalisay Jr.--the writer of the Superphysics One website. However, this isn't the first argument I ran into as I've seen arguments from Kabataan Partylist and the League of Filipino Students on Facebook. They have claimed that foreign direct investments (FDIs) will lead to exploitation, only they will get rich, that they will rape resources, and an even funnier claim is that they will lead to monopolies. Some people, even fools, should be allowed to defend themselves at CoRRECT Moderated Public Forum than just live in their echo chamber of Facebook pages.

However, Kishore Mahbubani and the late Lee Kuan Yew had long disproven that. The testimony is in the book From Third World to First by Lee himself. Mahbubani said foreign investors create jobs, bring capital, and teach new skills. I wonder if protectionist advocates like IBON Foundation and Philippine Anti-Fascist League have the guts to go to Singapore, have an appointment with the National University of Singapore, and tell Mahbubani, "Foreign investments are bad. It's like allowing yourself to be raped." All the while, Singapore has beaten the Philippines economically for more than 30 years. All the protectionist advocates were proven wrong yet they insist on their error. They need to go to Singapore and tell Mahbubani he's wrong about FDI. If they do, maybe I'll believe them but I doubt Mahbubani will believe them. 

Let's define the word monopoly. Mono is the Greek word for single. Polein is the Greek word for seller. In short, a monopoly means a singular seller. How in the world would 100% FDI (in terms of shares ownership) lead to a monopoly? The advocacy is to let foreigners invest 100% without a Filipino partner. They don't need to split 60% of their net income after taxes with a Filipino partner. Instead, they keep all their net income after taxes after they've as said, paid everything needed such as their suppliers (which will have local suppliers), employees (which will be mostly locals), and the BIR gets the monthly value tax, the quarterly tax, and the annual income tax. The profits are theirs to keep but it's what's left of revenues minus all of the expenses. In turn, when there are more players, it doesn't become a monopoly anymore. How can it be a monopoly if there are many players involved? 

I would like to point out some recurring foreign investments in the Philippines. I know some of these are no longer restricted by the negative list of the Philippines. Some foreign investments have been given exemptions already--something that prevented the Philippines from becoming another Venezuela or North Korea. I'm going to point out multinational franchises in the Philippines. We have foreign retail stores, food chains, services, and so on which are currently allowed on the negative list. The late former Philippine President, Benigno Simeon C. Aquino, did more than invite--he relaxed certain restrictions too. Outgoing Philippine President, Rodrigo R. Duterte, later signed the Public Services Act of 2022. I believe those two measures would help stabilize the Philippines. Hopefully, we'll get an economic charter change that Andrew James Masigan, an economist, so pushes for. That's why I even wrote that I'm in favor of having an economic charter change. Masigan is an economist and has had a better background than that Dalisay Jr. I keep running into on Facebook. 

Let's think about many foreign firms with Philippine outlets. We have different industries where foreign players are in. Did these create a monopoly? Here's a list of some of the foreign players here and there:
  • The milk and coffee shop industry has had several players. Before the milk tea craze, there was already Starbucks before Bo's Coffee Club opened. Sometime after Bo's Coffee Club opened--we've had other players like Chatime, Gong Cha, Yifang, Tiger Sugar, Coffee Bean, and Seattle's Best which are all foreign players. I'd like to congratulate Bo's Coffee Club for standing strong and pray it will reach the multinational levels. 
  • We've got several foreign food chains. McDonald's, Kentucky Fried Chicken (KFC), Kenny Rogers Roasters, Sbarro, Krispy Creme, Pizza Hut, and Shakey's are among the few. Later, local players are like Yellow Cab Pizza (owned by Max's Group which includes my childhood memory of Max's Fried Chicken), La Tegola (which is owned by an Italian but still a Filipino business), ABACA Group of Companies' restaurants, and Jollibee (which is now a worldwide franchise).
  • I go to the technology section of either SM City Cebu or Ayala Center Cebu and find many imported retail stores. You've got Samsung, Apple, Xiaomi, and HP stores. We have local technological providers that sell all imported equipment.
  • We have banks like Citibank, Commerce International Merchant Bankers (CIMB), the Internationale Nederlanden Groep (ING) Bank, and even Western Union. They all end up employing Filipinos and serving Filipinos. If we're going to have foreign investment--we also need more banks eventually to cater to locals and foreigners. 
  • Some hotels in the Philippines are foreign-owned such as Shangri-La, Sofitel, Accor Hotels, and Marriot. 
A big common sense question here (and it doesn't take an MBA to figure it out) is did these foreign investments create what fearmongers say--a foreign monopoly? I don't remember buying my favorite imported products from a foreign monopoly. In fact, I'm still able to get choices whether I want some Yellow Cab Pizza (local) or some Pizza Hut (imported). I'm still able to go to Jolly Bubble for their fruit tea or enjoy a latte from Bo's Coffee Club. No, it's because these FDIs add up to the number of players. An oligopoly is where we have few sellers and many buyers. In FDI, we want to achieve free markets where there will be many buyers and many sellers. There will be more choices as long as players abide by rules such as fair competition laws, intellectual property laws, and labor laws. Of course, it's first come, first served, so the one who gets the reservation gets to do business first. 

The argument is just nonsensical. I wonder where such people get such ideas? If it's a monopoly then why are there many sellers to many buyers? Singapore had long disproven it. Malaysia had long disproven it. The Philippines should be more open to FDI to avoid monopolies or oligopolies. What we need is more healthy competition to develop the local business industry. The only businesses that will die, whether local or foreign, are those that don't innovate. 

References

Books

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

Videos

"The Singapore economic model - VPRO documentary - 2009"  by VRPO Documentary (September 8, 2018)

Websites

Labels:

Popular posts from this blog

COMMUNIST Vietnam Has Defeated DEMOCRATIC Philippines Again This 2025

Cổng thông tin Trung ương Đoàn TNCS Hồ Chí Minh A few days ago, I wrote about warning Filipinos that they shouldn't wait for more unmitigated typhoon disasters, before realizing that the Filipino First Policy isn't working ! There's a statement that says, "Just because being tanga (inattentive) is libre (free), doesn't mean you should be tanga!"  Analyzing the different policies: why policies  matter I found a Business World article, written by Cesar Polvorosa, Jr., on my Facebook news feed discussing the Vietnamese economy . In fact, it would be better to share some hard truths that the article offers about what really went wrong with the  democratic Philippines compared to Communist Vietnam : DIVERGENT ECONOMIC MODELS  Vietnam pursued an export-oriented manufacturing strategy which has proven significantly more successful over the past half century than the Philippines’ service-heavy, remittances-dependent model . Export performance alone tells a compe...
Read more

The OFW Working Abroad and Their Family on Christmas

It's a few days before Christmas. I don't like December because of heavy traffic, some people prefer Christmas shopping at the last minute (since procrastination is a common habit in the Philippines), the stress of year-end work, and December is the end of the year's cycle. I decided to write this entry. There's nothing wrong with celebrating Christmas or having a good time. The problem comes when one celebrates beyond one's means (read here ). That means having extravagant Christmas parties that require a music band that one can't afford, inviting the whole village, etc. when one can't afford it. Speaking of which, these incidents remind me of OFW families. I remember a study presented at the University of San Carlos. If I remember correctly, it was done by accounting students. It was a study showing the spending habits of OFW families. Outstanding Filipinos Worldwide Facebook Page Here's a meme on Facebook that I found. For the sake of non-Tagalog spea...
Read more

Having the BADLY NEEDED Tenacity to Hold My PSEi Related Investments During INEVITABLE Paper Losses

I decided to do a portfolio review, especially because Christmas to New Year is around the corner . I thought about checking my AXA Chinese Tycoon Fund. For the sake of confidentiality , I wouldn't give out the exact loss. I was tempted to sell my AXA Chinese Tycoon Fund (which was at a paper loss , not an actual loss) and go for cryptocurrency . However, after looking at the ghost of Quadriga-CX Crypto Scam  made I said, "I need to stick to what Warren Buffett said about the stock market." Buffett's advice doesn't require an MBA or even a PhD in business administration to understand them. Instead, I was looking at these lessons that Buffett such as: If I'm not willing to open to own a stock for 10 minutes, I shouldn't think of owning it for ten years! Definitely no day trading for me! The stock market is a device that transfers money from impatient people to patient people. I have to be more patient as the stock market inevitably corrects itself, unless t...
Read more

External Validations, like Masters and Doctorate, Mean NOTHING with a LOUSY Education System

I have the tendency to use my MBA as a license to avoid criticism. It's a real problem that some people use their credentials and/or academic achievements to try and win an argument. One incident I wrote about was Rep. Raoul Abellar Manuel flexing his "smarts" by using his cum laude degree to win the argument . It was all about how I would often say, "You're the moron because I have the MBA and you don't." There are times I felt like taking an MBA would make up for my "moral shortcomings" during high school when I was barely passing (and the passing rate was 80% , which is rather high), that I wasn't having honors, and that there was this saying, " Thou grades shalt determine thy future! " That, of course, has led to the reality where cheating is prevalent .  I wanted to make a review. I took my MBA in 2011 and graduated in 2014. I always felt that the MBA program was what I needed to become "invincible". It was also at ...
Read more

Economics 101: Pre-Colonial Philippine Natives Already Did Business with Foreigners

Art by Hugo Yunzon It's finally August or Buwan Ng Wika (Month of the Language), though it may be better to call it Buwan Ng Kultura (Month of the Culture). Buwan Ng Wika programs tend to focus more on the uniqueness of several types of Filipino people. What I recall back in my high school days (late 1990s) is how I was asked to play an "American" in a Buwan Ng Wika program. There were also other people asked to portray the Chinese traders, Arab traders, Indian traders, and the Japanese occupation. It would be good to do a review of the pre-colonial Philippines. The name Philippines was derived from the Spanish king, King Philip. Back then, the natives were called Indios which sounds very similar to Indonesia . Yes, most Filipinos are either Malay or Indo. A look at the Indonesians and Malaysians would have one mistake them for Filipinos. A note is that the Chinese population there usually speaks Hokkien.  From Purdue Filpino --here's some basic information about Fili...
Read more