Skip to main content

You're Complaining About PHP Devaluation But Do You Know Some Asian Powerhouses Have WEAKER Currency?

 
Social media comments can be very toxic, aren't they? Sure, I didn't vote for Philippine President Ferdinand R. Marcos Jr. However, I can't blame him for anything beyond his control. The late former Philippine president, Benigno Simeon C. Aquino III, had nothing to do with the prices of gasoline being lower. Neither does former Philippine president, Rodrigo R. Duterte, have anything to do with the prices of gasoline. We find that the US Dollar (USD) is definitely getting stronger in proportion to the Philippine peso (PHP). Yes, it could reach up to PHP 60.00 or even higher. I remembered experiencing this during the time of former Philippine president, Joseph M. Ejercito aka Joseph Estrada. I really blamed Estrada back then for it even when it wasn't his fault either. 

People can start panicking over the devaluation of the PHP. There are plenty of crude comments on Facebook I wouldn't bother screenshotting them all. Instead, I decided to finally write this economics post which will enlighten us. 

Let's think about Asian powerhouses with a weaker currency

Let's do a bit of a conversion rate between certain currencies against the PHP which is USD 1.00 is equivalent to PHP 58.76. Now, for a list of some currencies weaker than the PHP as of today:
  1. USD 1.00 is equivalent to 144.60 Japanese yen (JPY).
  2. USD 1.00 is equivalent to 1,419.62 South Korean Won (SKW).
  3. USD 1.00 is equivalent to 23,875.00 Vietnamese Dong (VND).
Now, for converting the PHP to these rather depreciated or weaker currencies:
  1. PHP 1.00 is equivalent to JPY 2.46.
  2. PHP 1.00 is equivalent to SKW 24.19. 
  3. PHP 1.00 is equivalent to VND 405.97.
If we convert the JPY, SKW, and VND into PHP then we get an idea of how weak these currencies are:
  1. JPY 1.00 is only PHP 0.41.
  2. SKW 1.00 is only PHP 0.041.
  3. VND 1.00 is only PHP 0.0025.
What we can observe is these currencies are weaker than the peso. Just imagine if you computed the equivalent in dollars for each weak currency with PHP 58.76. This is what we get to show how they're practically disadvantaged against the USD and the PHP is actually a stronger currency:
  1. Japan would need PHP 8,499.2988 to achieve USD 1.00.
  2. South Korea would need PHP 83,442.4244 to achieve USD 1.00.
  3. Vietnam would need PHP 1,403,324.25 to achieve USD 1.00.

So where has the Philippines gone wrong in spite of the PHP being theoretically stronger than the JPY, SKW, and the VND? 

Why isn't the Philippines the richest of these four countries? China may have a stronger currency (Chinese Yuan or CNY) which is worth PHP 8.26. Singapore would have their dollar (SGD) worth PHP 41.14. Yet, we also read that these nations with weaker currencies have better economies than the Philippines? We need to take a look at one thing--the economic policies.

I was reading through the late Lee Kuan Yew's famous book, From Third World to First. It would be interesting to see how Lee Kuan Yew himself had trips to Vietnam and Japan. What truly interested me about Vietnam was the late Do Muoi, founder of the Doi Moi policy. The Communist leader Do Muoi got the economics right whereas a lot of Communists get economics wrong. Like Deng Xiaoping of China, Do Muoi knew what he had to do to transform Vietnam's Communist state into a powerhouse. I still keep reading about how Vietnam did better than the Philippines during the pandemic in spite of a weakened VND. Japan was hit by the Hiroshima bombing but 10 years later--it became another economic powerhouse. 

We can talk about South Korea too. We can talk about the Han River Miracle. I remembered when I wrote about South Korea's difference from North Korea (read here). Now, it's time to think about how South Korea actually beat the Philippines for a very long time. South Korea is now exporting its culture around the world, not North Korea. Have you ever watched Korean shows from North Korea? Maybe, you've been watching shows from China but why none from North Korea? Maybe you're getting a Xiaomi (Chinese) or a Samsung (South Korea) but why are there no Koryolinks? I went to the malls many times and no one sells a Koryolink. 

The difference lies with the economic policies. Unfortunately, the Philippines has been long stuck with Carlos P. Garcia's stupid Filipino First Policy. The policy has caused the Philippines to fail. Garcia wanted to make sure that majority of the businesses were owned by Filipinos. There's always the lie I hear that only foreign direct investors (FDIs) will get rich if you let them invest in your home country (read here). Not so surprisingly, one of the framers of the 1987 Constitution of the Philippines, Hilario G. Davide Jr. even said that we must retain the 60-40 to "preserve sovereignty". Once again, it fails because 100% share ownership means that an FDI doesn't need a Filipino partner. It's only people like Teddy Casino of Bayan Muna who still insist it works. However, Lee Kuan Yew called it a third world mentality. Kishore Mahbubani had indirectly refuted Davide Jr. about FDI (read here). Mahbubani knew how to make Singapore a successful model ASEAN country. Sadly, the Philippines has been left behind and corruption in the government isn't the only reason. It's more on the economic restrictions that have been holding it backward. Then again we know corrupt officials also love protectionism because it gives them power. 

That's why I wrote that weaker PHP means economic charter change is an urgent bill (read here). That means mass media companies can now openly receive foreign funding and ownership. I believe that the Public Services Act of 2022 will be key to improving the Philippines' public services. Just imagine if the Philippines will have cheaper services as a result of more public service providers. It's all about supply and demand. Trying to put the utilities into purely government hands will be proven disastrous in poorer socialist states like Venezuela and North Korea. Meanwhile, socialist countries like China and Vietnam are doing better by accepting FDI as part of their policy. That's why I still admire Deng and Do even if these men are Communists. Mao Zedong's ideal society only brought poverty and misery. Deng's new policies made China a powerhouse. 

We need to take advantage of the weakening PHP now. A weaker PHP may be more attractive to FDI. FDIs can stay invested as long as they follow rules such as environmental laws, labor laws, and taxation laws. Follow and the FDIs get to stay and invest. Disobey the rules and the FDIs are treated as bad tenants. Besides, FDI will be more helpful to local businesses in the long run (read here).

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



"Miracle on the Han River Part II, or Regression to the Mean? South Korea’s Economy in Transition" by Yoon-shik Park (December 2014)
Labels:

Popular posts from this blog

Filipino Manufacturing's Golden Age ENDED Because of the Filipino First Policy

Here's a picture from the Dose of Disbelief Page on Facebook. Here's something that it wrote: Filipinos once trusted locally made products more than imports. Before World War II, the label "Made in the Philippines" carried prestige, not stigma, reflecting a strong sense of national confidence in domestic production. Local products such as shoes, cigars, textiles, furniture, and food were often preferred over imports. This preference was rooted in the belief that local goods were better adapted to local conditions, tastes, and were often of comparable, if not superior, quality. This period showcases a strong historical era of consumer nationalism and thriving local industries. We need to look into the context of Filipino history  If we look at the Philippine history timeline , we must account for 1935-1940, during which the Philippines was under the Commonwealth government. Independence was declared from Spain on June 12, 1898. However, there was a transition period w...
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

No Hard-to-Earn Economics Degree is Required to Know That a Welfare, Anti-FDI Philippines is Destined to FAIL

GMA News When it comes to constitutional reform, I'm afraid one of the worst sources quoted would come from the Makabayan Bloc. Some people I face who are so against FDI also want to end the OFW program. The solution comes out rather absurd, as the Philippines must have its own state where it's all beg and beg . It would be like: "Free education for all! No to FDI for schools!"  "Free lunch in school!" "No to open FDI! The government must fund our local production!"  " Increase the salaries, lower the prices of goods! " (which is just plain bad accounting ) That's just a few of the crazy demands that have been given! My favorite question has always been, "Where will you get the funding?" The usual answers can be: " Print more money! " "The government should just make it a law!" "Tax the rich all the more!" which can often be accompanied by, " After all, it's the fault of the rich that p...
Read more

Why I'm Not in Favor of Nationalization of Utilities Mixed with Protectionism

ToonPool There's the call of leftist fools to stop privatization. Many still believe that utilities should be run by nationalization rather than privatization . I've been reading on Facebook where some fools believe that allowing foreign telecommunications companies (telcos) to invest in the Philippines will "risk security". Any telco will risk security if there are no laws to regulate it like the Data Privacy Law. Just because I support private enterprises doesn't mean that I say the government is hands-off. On the other hand, the government has the duty to set rules such as fair compensation, proper employee treatment, safety measures, and the like to make sure that we remain in healthy competition. Some people who keep protesting against the privatization of industries I believe (1) want the government to provide for all the needs of the people (which leads to dictatorship, eventually), (2) have some agenda as to why they're doing it, or (3) these people ar...
Read more

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