Skip to main content

When Lego Chose Communist Vietnam Over Democratic Philippines As Its Asian Home

Vietcetera International Edition

It's something when the Philippines says it's a democratic country but it's got very restrictive economic policies. Meanwhile, Vietnam which also calls itself the Socialist Republic of Vietnam is actually embracing free markets (read here). Like the Chinese Communists of China, the Communist Party of Vietnam has decided to embrace foreign direct investment (FDI) as part of its policy. It can be said that the Philippines still embraces it but as what? Unlike the Philippines, Vietnam ironically doesn't place the 60-40 nonsense policy where FDIs can only own 40% of their shares. Besides, it's really very stupid to expect an inflow of FDI while saying that FDIs will need a Filipino partner and they can only own 40% of their net profits (read here). That's why I even wrote an article where I called the 60-40 arrangement to be nothing more than overpriced rent (read here).

What's with Communist Vietnam, really, that Lego chose to establish their factory there? I'd like to mention these words from Vietcetera International Edition. These words truly make me realize how the Philippines (as a democracy) has lost an edge against Communist Vietnam:
Danish toymaker Lego Group officially began the construction of the Lego factory on Thursday, following a momentous groundbreaking ceremony held in Binh Duong Province in southern Vietnam. The factory is estimated to cost $1 billion, the largest-ever investment by a Danish company in the country.

His Royal Highness Crown Prince Frederik of Denmark and Deputy Prime Minister of Vietnam Pham Binh Minh led the ceremony at the 44-hectare site. Lego’s Chief Executive Officer Niels B. Christiansen and Chief Operations Officer Carsten Rasmussen, as well as national and provincial officials, were also present at the event.

“We are grateful for all the support we have received to realize our manufacturing ambitions and look forward to working with authorities and partners to build our factory and have a positive impact on the local economy and community,” said Christiansen.
I still remembered how the late Lee Kuan Yew highlighted Vietnam in one of the chapters of From Third World to First. The great Communist, the late Nguyen Duy Cong (aka Do Muoi), decided to modify the economic model. Like Deng Xiaoping who died in the late 1990s--Do Muoi was the founder of the Doi Moi movement. I really commended the meeting of Lee with Do Muoi. Do Muoi, though a Communist, saw the beauty of the free market. It can be seen how Vietnam is now a manufacturing hub in Southeast Asia. A shame, really, that the Philippines has missed that opportunity as a supposedly democratic country.

Economist Andrew J. Masigan also wrote for The Philippine Star on why he felt Vietnam overtook the Philippines. Sure, I have differing political views from Masigan. However, Masigan has been making sense with how he gives criticism. I would like to share this excerpt from his opinion regarding how Communist Vietnam overtook the democratic Philippines:
The unfortunate reality is that our economy is not structured in a way that allows 7 percent growth. Ours is an economy driven by consumer demand and government spending, not by production. Thus, government needs to spend more to squeeze more growth out of the economy – but doing so would mean acquiring more debt.

However, our economic managers are not inclined to increase the country’s debt stock, as doing so may compromise our investment grade status. The last the Duterte government wants is to end its term with a credit rating inferior to what it inherited from PNoy.

It therefore comes as no surprise that despite an anticipated economic contraction of 9 percent this year, government allotted the lowest stimulus package in the region amounting to just 5.83 percent of GDP. For context, Vietnam’s stimulus package amounts to 10.12 percent of GDP. This means the Philippines will be left further behind in 2021 and 2022.

Our hope is that the leaders elected in 2022 will make that long overdue shift in economic policy.

The new leadership must curate the conditions to allow the millions of low income workers in the agricultural, hospitality and retail sectors to migrate to more sophisticated jobs in the manufacturing or technical services sector. When this is done, the country will naturally shift from being an economy driven by consumption and government spending to one driven by production. A national program must be carried out to widen our industrial base and expand the range of products we can competently produce. We must then climb the value chain in technological complexity, uniqueness and quality.

In short, the next leader must foster an era of rapid industrialization and it must be made a national priority. It starts with fundamental reforms to make our environment more conducive for manufacturing. Unless we pivot to industrialization, we will soon find ourselves falling further behind the development race.

Speaking of Vietnam, I did write about how Jollibee ended up opening its 150th branch in Vietnam. Good News Philippines had given these words regarding Jollibee's expansion in the Communist state:

Jollibee’s opened its first store in the country 15 years ago, one of the first international markets entered by the successful Filipino restaurant chain. The Filipino brand is the only QSR brand to have built and operated its own commissary in the country.

“Vietnam is one of the most important markets for us as it is among the fastest-growing economies in Asia and has a huge young and vibrant population. It is also one of the first international markets we entered in the earlier years of Jollibee. Even if the pandemic sparked many challenges, Jollibee Vietnam has managed to sustainably grow and exceed our expectations. The opening of our 150th Jollibee store is a testament to the special place this country holds in Jollibee’s history and heart,” said Ernesto Tanmantiong, Chief Executive Officer of Jollibee Group.

Jollibee has successfully captured the local market in Vietnam over the years, with 100% of its customers being Vietnamese. Alongside its bestselling crispylicious juicylicious Chickenjoy, Jollibee’s Sweet Chili Chicken has become a hit among the Vietnamese people, with its savory, sweet and mildly spicy Chili Glaze. Another fan-favorite is Jolly Spaghetti, served with its signature sweet-style sauce and beef sausage topped with generous cheese.

The Philippines has so much potential. Once upon a time, the Philippines used to house Vietnamese refugees. However, the great Communist known a Do Muoi made Do Moi. I guess the whole economic movement was named after him. Vietnam began accepting FDIs. Meanwhile, the Philippines was stuck for a long time with the "Filipino First Policy" which I call to be almost identical to Mao Zedong's failed economic policy. The aim of the Filipino First Policy was to make Filipinos hold the majority of the economy. That was also pretty much what Mao wanted--the Chinese to own the majority of the economy. However, the big problem is Filipino First Policy only caused the Philippines to fail. China tried it and the Great Leap Forward was a failure. Deng's economic liberalization and new Chinese socialist mindset worked. Deng got rid of the victi mentality and ended up saying, "Poverty isn't socialism. To be rich is glorious." Hence, began the movement called Socialism with Chinese Characteristics.

Now, it's left behind because of that--not because of corruption, political dynasties, or because of Ferdinand R. Marcos Jr. won against Maria Leonor Gerona-Robredo. It wouldn't matter if Marcos Jr. or Mrs. Robredo won if the Philippines will place remove the excessive restrictions against FDI. If only the Philippines decided to remove the negative list entirely. The Philippines will have more investment which means more income. It will also mean local businesses will have more opportunities to grow. It's time to let the Philippines be more than just a democracy--let it become an economically free democracy. It doesn't matter if the investors in the Philippines are Filipino or foreigners. What matters is that the investors provide jobs, teach new skills, and taxes for the country. 

References

Books

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

Websites

"[OPINION] Vietnam overtakes the Philippines. How did this happen?" by Andrew J. Masigan (November 5, 202)

"Business Times: Vietnam – A New Asian Tiger" by Rosy Huong (February 15, 2022)
https://vietnamtimes.org.vn/business-times-vietnam-a-new-asian-tiger-40033.html 

"$1-Billion Lego Factory Breaks Ground In Vietnam" by Agnes Alpuerto (November 4, 2022)

Labels:

Popular posts from this blog

The Idiocy of Typing Anti-FDI Rants Using IMPORTED Devices, IMPORTED Platforms, and IMPORTED Social Media

Bulatlat It's very easy to open Facebook (or any related platform) and find lots of stupidity , right? There have been idiotic comments I find on Facebook such as FDI is this and that. We can find "thought leader groups" such as Alliance of Concerned Teachers, Anakpawis, Anakbayan, Bayan Muna, IBON Foundation, Kabataan Partylist, League of Filipino Students, and Philippine Anti-Fascist League (PH Antifa) who keep ranting about FDI as this and that. I even remember somebody dared to say that FDI caused Egypt to dry up. Ironically, North Korea and Venezuela, two protectionist countries, have very bad pollution problems. I'd blame it that they don't have the money to do a clean-up drive. How can you clean up a polluted river without the right equipment? How can you expect better power efficiency with outdated equipment that keep coughing up, cough, cough, lots of black smoke?  All the talks on social media can be very funny. The big irony is that all calls for "...
Read more

Get Stuck with EDSA, End Up Like Nokia

  Yes, we should never forget what history teaches us. A classmate of mine, back in high school, wrote a simple and blunt essay called "History: A Teacher". I doubt he still has a soft copy, given it was already more than 20 years ago. I'd like to quote Duterte critic Andrew James Masigan wrote this in  Philippine Star --something that should remain relevant: I would never undervalue the 1987 Constitution. It dismantled the legal framework of a repressive regime and established the democratic institutions we enjoy today. For this, I am grateful. The 1987 Constitution was crafted with the best of intentions. It sought to put the Filipino first in all aspects of governance and to level the playing field amongst sectors and peoples.  But it is far from perfect. It failed to consider the importance of foreign capital and technologies and the stiff competition we would have to face to obtain them. In short, its economic provisions were short-sighted . So despite the Constitut...
Read more

It's Incredibly Frustrating to Discuss Economics with an Overspender

Overspending is just bad economics, isn't it? Economics is defined as the following for the sake of a review of high school basics: Economics is a social science concerned with the production, distribution, and consumption of goods and services. It studies how individuals, businesses, governments, and nations make choices about how to allocate resources. Economics focuses on the actions of human beings, based on assumptions that humans act with rational behavior, seeking the most optimal level of benefit or utility. The building blocks of economics are the studies of labor and trade. Since there are many possible applications of human labor and many different ways to acquire resources, it is the task of economics to determine which methods yield the best results. Economics can generally be broken down into macroeconomics, which concentrates on the behavior of the economy as a whole, and microeconomics, which focuses on individual people and businesses. It had me thinking of 2016 wh...
Read more

[UNPOPULAR OPINION] Why People Power Anniversary Should Be a Special Working Day Instead

  As a blogger, I shouldn't turn on the PC in hopes of becoming popular . It should be to turn on the PC and blog to make a difference . Right now, I think about the controversy when President Ferdinand "Bongbong" R. Marcos Jr. declared the 1986 EDSA Revolution's anniversary as a working holiday . The call for some of the "minority lawmakers" is that they want to return the People Power Anniversary to a regular holiday once more. There are times I feel like, "Should we let it be a regular holiday again, so as not to repeat the Marcos dictatorship?" Sadly, the real answer is that the Philippines has been relying too much on EDSA , so it's practically ending up like Nokia . I was thinking about the reality of February being the most hectic month. February only has 28 days (and February 25 is near the month's end ). I thought that the Philippines also has too many national holidays more often than not. In fact, the Inquirer article written by...
Read more

Talking Economics with an Overeating Glutton

Two years ago, I wrote an entry about why discussing economics with an overspender is frustrating . Now, I was looking at certain fat people who say really dumb things about economics. Just recently, I was looking at a certain fat idiot (fortunately, he only has 1K+ followers) who posted on Facebook that not only will the parliamentary system cause the Philippines to become a dictatorship, but he also says that changing economic provisions will cause the Philippines to collapse and the country to fall into the hands of foreigners. I won't name the person out to avoid getting personal. However, the person is apparently very fat and he blames capitalism day in and day out. The person even says that businessmen do nothing and it's the employers that do everything. Has that fat slob ever heard that businesses are run by bosses and that if the bosses do screw up, they're the ones who are the most answerable? The employees are the cogs and the boss runs the cogs. I was looking at...
Read more