How I Believe FDI Could've Helped the Philippines Cope Up in the Inflation of Agricultural Goods
Instead, we have a lot of naysayers over social media who keep insisting on the age-old lie that the late Lee Kuan Yew and Kishore Mahbubani keep hearing. It's all about how MNCs are just there to rape and plunder the country's natural resources. These fools would just say stuff like, "But Singapore opened up to FDI because of its lack of natural resources." Guess what? Vietnam, a country rich in natural resources, was once poorer than Singapore and the Philippines, and opened to FDI. The late Nguyen Duy Cong aka Do Muoi imitated Singapore in some say and guess where Vietnam is now. A lot of companies have been moving from China to Vietnam ever since Chinese President Xi Jinping's cruel crackdown. Some Chinese businessmen could've moved production to the Philippines as well but chose Vietnam instead. So much for saying that PHP depreciation is the problem when the VND is a much weaker currency.
The idea that the importation of agricultural goods is bad (read here) because it'll kill local farming is stupid. If the prices of onions right now are PHP 700.00--do you think there'll be that many buyers? Farmers have no choice but to sell their wares. Those fools who demand higher salaries and lower costs of goods are the ones that will kill local farming. How can agricultural firms in the Philippines continue if they're forced to pay their workers higher while selling below the cost? Instead, agricultural imports is meant to fix the gap. Agriculture has planting and harvesting seasons. Why do you think it's good to import rice when it's not yet harvest season? Any sensible rice merchant will sell cheap imported rice to keep earning then sell more local rice when it becomes cheaper than imported rice.
All the outrage concerning other countries' prices of onions is something. I wonder did they think that places like Thailand or Vietnam just magically made the prices of onions lower? Then I say, "Well, we can follow Thailand and Vietnam by being more open to FDI." I can only expect to hear answers like, "Are you crazy? You are going to kill our farming! I'm sure Thailand and Vietnam got rich due to protectionism." I ask, "Where is your source." The best answer can be appealing to confidence saying something like, "Trust me bro or you're stupid." They can also cite from sources like IBON Foundation which I just can't take seriously. Other ansewrs can be as stupid as, "But the Philippines isn't Vietnam, it isn't China, it isn't..." then the list can go on.
Doing a pun with good intentions (to my fellow Indian friends who somehow don't mind being called Bumbay) as to how FDI can also help combat inflation
I decided to do some more research on how FDI could help. This time, I decided to get it from India because of the term sibuyas bombay meaning Bombay Onion. Filipinos tend to use the term Bombay either as a friendly or derogatory term. Here's something from FDI India which I believe can help the Philippines:
Role of FDI
Foreign direct investment (FDI) provides the most favorable way to boost a company or a sector. The agricultural industry is among the most crucial segments when it comes to foreign investments since India is predominantly an agrarian economy.
To keep the Indian agricultural system up-to-date with the rest of the world, foreign capital inflow is essential because of the following reasons:
To take advantage of modern scientific and technological advancements – As the world progresses at breakneck speed, our farmers and the farming capacity of the country need to match up to the world. FDI helps in benefiting from the latest scientific research and farming technologies.
To enhance the employment in the segment – As more people are employed in the sector, the agricultural prowess will grow and lead to countries worldwide looking towards the nation for farm products.
To increase exports – The infusion of foreign capital results in the increased productivity of the sector and establishes the country as a leading exporter. India’s total agricultural and related commodities exports are valued at $41.25 billion for FY21.
To provide access to new technologies – With the fast-moving technological age, farmers must be provided with contemporary technologies to help grow production.
India was once a self-reliant or autarkic economy. However, meeting with Lee Kuan Yew changed it. This fateful encounter allowed India to become one of the most powerful nations in the Asian Century:
In 1992, Narasimha Rao’s minority Congress government was forced to change India’s economic policies radically to comply with an IMF rescue package. Rao got on well with my prime minister, Goh Chok Tong, when they met at the Non-Aligned conference in Jakarta in 1992, and persuaded him to visit India with a delegation of Singapore businesspeople. His finance minister, Manmohan Singh, and his commerce minister, P. Chidambaram, visited Singapore to brief me on their changes in policy and attract investments from Singaporeans. Both ministers were clear on how to improve India’s economic growth and knew what had to be done. The problem was how to get it done with an opposition that was xenophobic on free enterprise, free markets, foreign trade, and investments.
Rao visited Singapore in September 1994 and discussed India’s opening up with me. The most difficult obstacle, I said, was the mindset of Indian civil servants toward foreigners-that they were out to exploit India and should be hindered. If he wanted foreign investments to flow into India freely, as in China, they must change their mindsets and accept that it was their duty to facilitate, not regulate, the activities of investors. He invited me to visit India for a brainstorming session with his colleagues and his top civil servants. In January 1996, I visited Delhi and spoke to his civil servants at the India International Centre, and also to businesspeople from their three chambers of commerce, on the obstacles that blocked India’s path to higher economic growth. In a separate one-on-one meeting with Rao, he acknowledged that age-old fears of Indians that economic reforms would lead to unequal distribution of wealth had made it difficult for him to proceed with further changes. He had injected large amounts of money to benefit the people but had been accused by his opposition of selling and mortgaging the country. He highlighted two social issues: India’s slow rate of public housing because funds were lacking and its high birth rate. He wanted my prime minister to help him in his housing program. I had to dampen his high expectations that because of our successful housing program we could solve India’s housing problems. Singapore could provide India with planning but they had to raise the resources to implement the plans themselves.
When I met Rao in the 1980s, he was foreign minister in Indira Gandhi’s government. He was of the generation of independence fighters, in his late seventies and on the verge of retirement. When Rajiv Gandhi was assassinated in 1991 in the middle of an election campaign, the Congress Party agreed on Rao as leader. A sympathy vote gave his party the largest number of seats, although short of a majority. Rao became prime minister and for the first two of five years carried out radical economic reforms; but he was not an energetic young man chasing his own ideas. The impetus to the Indian economy came from Manmohan Singh, his finance minister, who ironically had started his career as a central planner. Rao did not have the conviction to persuade the people of India to support these reforms over the heads of an obstructive opposition. With slow economic but high population growth, India is not about to be a wealthy nation for some time. It has to solve its economic and social problems before it can play a major role in Southeast Asia. It is in Asean’s interest to have India grow stronger and help maintain peace and stability on the Indian Ocean side of Southeast Asia.
For the Philippines to become more export-oriented, we would need to also adopt more modern scientific and technological advancements. As always, we can accept FDI while practicing Lee Kuan Yew's green policy. It's because FDI doesn't always mean environmental degradation (read here). Protectionist economies like North Korea and Venezuela have bigger pollution problems than their productive neighbors. No, North Korea can't blame South Korea for its poverty as a result of its bad economic policies.
The question is would this neglect the local industry? Lee Kuan Yew also said that if the Singaporeans waited until all became industrialists--they would've starved. Would have the late Deng Xiaoping waited for all Chinese to rise up as such--the effects of Mao Zedong's Great Leap Forward (to disaster) would've probably worsened. Instead, it's all about developing the country by learning new skills. It was under Deng's reign that China went from a Great Leap Forward to disaster to a real Great Leap Forward. As Deng would always say, "It's not whether the cat is black or white. It's whether the cat catches mice or not." In my case, I'd say, "I don't care if the ingredients and equipment were local or imported. What matters is that it produces quality Filipino cuisine."
It'd be more beneficial if more Filipino local agriculturists started to learn and adopt more scientific and technological advancements. This doesn't mean giving up on organic or sustainable farming. Rather, it's learning organic or sustainable farming at a better scale. The prices of organic goods may soon drop when the supply is higher and the demand eventually gets lower. The use of modern equipment may soon allow more Filipino agriculturists to jumpstart their abilities. It would make sure that the Philippines should no longer be that wasted opportunity.
