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| 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
"Eco ‘Cha-cha,’ now!" by Andrew J. Masigan
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