It's UTTER IGNORANCE to Say that the Philippines Needs to Self-Industrialize First Before Allowing FDIs to Own 100% Equity
Looking at the favorite source of MARITESes in the world of business and economics
Our industrial backwardness has huge adverse implications. It results in massive domestic joblessness. Buying imported goods supports jobs abroad rather than in the country. Exporting our raw minerals and agricultural resources for processing in other countries creates jobs in those countries rather than here. Our people are thus forced into uncertain informal jobs or to work overseas. The absence of a robust, integrated Filipino industrial sector keeps our science and technology backward, keeps us dependent on foreign goods and services, and prevents us from benefiting from our natural resources. The domestic economy does not generate as much economic surplus as it could which keeps incomes low aside from giving foreign capital undue leverage over national economic policy.
Some people are prone to say that Singapore only opened up to FDI because of a lack of businesses, a lack of natural resources, or that it only opened up after it became a first-world country. Again, those lies can easily be defeated by the book of the late Lee Kuan Yew. What I find annoying is how often people quote IBON Foundation when they can't back up their claims of the "national industry". It's not as if allowing FDIs doesn't develop the nation's industry. IBON's arguments are pretty much what I'd call birds tweeting to each other. They deserve the name. I'm going to really talk about the problem behind the arguments of IBON.
IBON talks as if they don't use imported products. Don't tell me the server they use is made in the Philippines? Why in the world is the IBON Foundation on Facebook? Are their PCs and mobile phones made in the Philippines? I might end up asking, "If you're so nationalistic and you say that buying imported goods only supports jobs abroad, why in the world is your conference full of imported equipment?" I guess they will stutter in silence and call for security than answer the question. I could imagine that might be their dumbest response. It's one thing for me to ask irrelevant questions. However, it would be good to ask about their inconsistency.
Exporting raw materials and agricultural resources is part of the country's income. There's always the keyword with regulation. One could practice LKY's policy of environmentally friendly business practices in his book. When the Philippines exports raw materials and agricultural resources--it's a source of taxable income. If a Filipino farmer decides to export some of his excess crops--wouldn't that balance things out? Do all Filipinos have the space for the extra crops? If the Filipino farmer exports those crops then wouldn't that be extra income for him? If the Filipino farmer will only allow Filipinos to buy his crops then can that work? Absolutely not!
Who says anything about deregulation? LKY called himself a socialist of sorts. However, American socialists are bound not to like LKY because he demands work. Even Communist leader Vladimir Lenin demanded work. The market doesn't regulate itself. Instead, it's all about having a restrictive economy, in the sense that the free flow of capital is regulated whether it enters or exits. Sure, an FDI can invest without a local partner but it can't just get money in and out of the country without any proper restrictions. Israel has no 60-40 policy. Instead, Israel's success is also the strict is that it has a strict budgetary discipline.
That's what IBON Foundation doesn't get or refuses to get. Regardless, the problem of IBON is that it has no clear stand. I think the people there just tweet when they feel like it. Either it's a brilliantly crafted lie or they believe their own lies. Then again there are always people who lie and when people believe the lie--they gain control over the people who buy their lies. That's how the Nazi Party's Joseph Goebbels kept it in power. Adolf Hitler's reign of terror was built on lies. Mao Zedong's reign of terror was also built on lies.
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| Jakarta Globe |
Instead, we need to take a look at the great leaders of ASEAN whose words were backed by results
One keen observer of the sometimes bizarre conduct of our national affairs is former Malaysian prime minister Mahathir Mohamad.
Although retired from government, Mahathir keeps tabs with unfolding events in the region. Revered by his countrymen for the great economic achievements of his period of rule, he keeps office at the penthouse of the Petronas Towers – the highest edifice in the region and probably the world. From there, he observes his bustling capital and contemplates regional developments.
Last week, House Speaker Jose de Venecia called on Mahathir in the course of a five-day visit to Malaysia, swinging across from Kuala Lumpur, Sarawak and Sabah. The visit was primarily intended to conduct consultations with Malaysian foreign minister Syed Hamid Albar on the future of the envisioned ASEAN Community and on de Venecia’s proposal to create an ASEAN Parliamentary Council.
Always forthright in his views, Mahathir was not shy about his opinions on the Philippines, even as he qualified those views with a polite disclaimer about non-interference in our internal affairs.
He bluntly told de Venecia that the "Filipino people need a break."
In the context of their conversation, that "break" is understood as a respite from the hyper-politicking that has plagued our country of late. That hyper-politicking has gotten in the way of our efforts to improve our economy, raise productivity and build a better future for our people.
Hyper-politicking has produced gridlock, endless bickering and neglect of urgent policy actions. It has undermined investor confidence in our economy and prevented willful leadership from being exercised – the same sort of leadership that Mahathir himself deployed in bringing Malaysia up from backwater economy status to that of an "Asian tiger."
Mahathir agreed with de Venecia that a parliamentary system of government could work better in the Philippines because it ensures "continuity in policy and the faster pace of approvals of development programs."
A major factor explaining Malaysia’s success story under Mahathir’s leadership is a responsive government enabled by the fusion of legislative and executive powers in a parliamentary system of government. The dominant role played by the major party UMNO ensured continuity of policy perspectives independent of the fates of individual power-wielders.
When Mahathir retired from politics, there was no uncertainty about the policy architecture that brought Malaysia to tiger-economy status. That policy architecture is not a personal legacy of Mahathir. It is the fighting faith of his party, UMNO, which continues to command the support of the Malaysian people.
If Malaysia had a presidential system of government, Mahathir might have never become its leader. Tough-talking, brutally frank and often abrasive, this man could not win a popularity contest.
Even if, hypothetically, Mahathir was elected president of a Malaysia under a presidential system, the man might not have accomplished what he did in a parliamentary setting. The legislature would have obstructed his most dramatic innovations. His team might have spent precious time and energy attending endless congressional investigations. Other aspirants to the top-post might have constantly conspired to cause his failure or smear him in the public eye as a means to undercut his base of public support.
The phenomenon of a Mahathir – or a Lee Kuan Yew, for that matter – would be difficult to imagine outside the framework of a parliamentary system of government. That system of government encouraged the full development of political parties that, in turn, built public support for innovative policies. The parliamentary form, along with the strong party system it fosters, ensure the cultivation of an ample supply of prospective leaders ready to take over and provide a consistent and reliable quality of leadership,
After all, the emergence of strong nations and strong economies is a process that requires generations of leaders. It is a process that takes longer than a single political lifetime.
It is, likewise, a process that requires the reliable institutionalization of political commitment to a strategy for progress. A national project of achieving a modern economy is, after all, a task that is too large even for the greatest of leaders to undertake singularly. It is a task that requires the sustained effort that only a committed party can ensure.
Without diminishing the personal qualities of great Asian leaders such as Mahathir or Lee Kuan Yew, it remains that their feats of statesmanship could not have been done without the strong network that only a stable political party could provide. The parliamentary form of government ensures superior conditions for evolving that stable network.
When Lee Kuan Yew, and later, Mahathir Mohamad, reached the point when it was best to withdraw from their leadership roles, the transition was never traumatic. The process was never uncertain. The continuity of the policy architecture was never in doubt.
When Mahathir endorses the parliamentary form for us, he is not offering an opinion from the ivory tower. He is speaking from the vantage point of a successful leadership episode. He is speaking with the richness of experience of what this form of government has made possible for him to accomplish despite the adversities his people had to face.
Great leaders do not fall from the heavens and perform overnight miracles of national development without a stable governmental platform.
At the risk of sounding tautological: great leaders can only emerge from political and institutional conditions that make great leadership possible. The most important characteristic of those conditions is that they do not rely on the mysticism of leadership and do not fall prey to the destructive tide of personal ambitions as well as personal jealousies – both of which are in abundance in our politics today.
Since I'm not talking about the parliamentary system here but economic liberalization--I'm going to focus on what LKY and Mohamad said. To summarize both points, both LKY and Mohamad reveal the real problem of protectionism. Just imagine if Jollibee itself was so pampered. Some fat American fool I met on Facebook said that Jollibee won because of protectionism. Unfortunately, that fat American fool doesn't see Jollibee faced competition and it wasn't just McDonald's. Mohamad even admits the sad truth that a lack of competition makes people complacent.
Even Communist leaders like Deng Xiaoping and the late Nguyen Duy Cong aka Do Muoi (who died last 2018) finally understood it. LKY met with both Communist leaders and they learned from him. Deng ushered in a real Chinese national industrialization by accepting FDIs. The same happened when Doi Moi hit Vietnam like a super typhoon. Even Mao Zedong said that there's a need for struggle. I guess Deng and Do Muoi realized that the best way for their businesses to succeed is to make them struggle against FDIs. Deng even declared that socialism isn't poverty and that to be rich is glorious. Deng declared the need for work to participate in the socialist state. Vietnam's Doi Moi also did the same. Both political entities gave social credit based on hard work. Those who do not work do not eat.
Which Filipino businesses will perish due to FDI? Will all of them perish due to FDI? If that were true then why has Jollibee, who started out as a small tiny bee, become an MNC now? Jollibee had to contend with the likes of Wendy's and McDonald's. Bo's Coffee Club has faced off against several American coffee shops and it's still surviving. I wouldn't be surprised if Bo's Coffee Club would become an MNC eventually. Do you think those FDIs were always the big companies they were? John Gokongwei Jr., even in his old age, remembered what his maternal grandfather told him about big companies. The Milo quote is, "Great things start with small beginnings." Lucio Tan Sr. was once a janitor before Asia Brewery got established. Those who will perish are those who refuse to innovate.
To say that the Philippines needs to provide the FDI for their equipment is stupid. Don't tell me that the FDIs wouldn't provide what they can't get in the Philippines by themselves? For example, if Apple invests in the Philippines, they will bring their own machinery. FDIs will still end up buying locally sourced raw materials and get locals to do the job. It's because they want to use whatever they can use. It's stupid if the FDIs will invest, only to bring their labor force from their home countries, and only sell to their citizens. If that's the case then many MNCs today would collapse. Instead, I'm seeing these FDIs are providing jobs to locals as well as products and services to locals. Local businesses can even avail of the new machinery of FDIs to further build up their businesses.
As I mentioned, if you know how to play with competition, you can win it. A Filipino business can see FDIs not as threats but as opportunities. They can see where new technology can help them. It would be learning new skills and new technology. It may also mean replacing broken down, environmentally dangerous practices with environmentally friendly practices. It would also mean getting better technology to expand the business. It would also mean getting new customers to buy your products. In the end, FDI, when done right, can really help the country. As LKY would say it, "Free market with proper regulation."