Confusing Foreign Direct Investment for Foreign Imperialism for the Bajillionth Time
I guess those fools of the Philippine Anti-Fascist League (and many of its deluded supporters) either refuse to get it or are blatantly lying. Almost every rally held by what many believe are CPP-NPA legal fronts also confuses foreign investors for foreign invasion or even foreign imperialism. Once again, do I need to say that 100% FDI ownership is all about the shares and not land ownership? What makes it even more hypocritical is that they are actually recording these things on imported media. They're sharing their anti-FDI rants using imported devices, imported platforms, and imported social media (read here). When I do ask them on Facebook, they say how can they take them seriously and that they're "simply forced to participate in capitalism". Did anybody (especially those they call "evil capitalists") force them to buy the expensive Apple equipment when they could've settled for Xiaomi or Huawei?
A simple research on the dictionary will tell us that imperialism and investment are two different things. Let's do some simple definitions that we can get from simple dictionary meanings. I decided to go to the online Merriam-Webster Dictionary to get the usage for both words.
What does imperialism mean?
- "the policy, practice, or advocacy of extending the power and dominion of a nation, especially by direct territorial acquisitions or by gaining indirect control over the political or economic life of other areas"
- "broadly: the extension or imposition of power, authority, or influence"
- "imperial government, power, or authority: an imperial system"
- " the actions by which one nation is able to control other usually smaller or weaker nations"
The usage of imperialism:
In contexts dealing with the domination of a people or area by a foreign power, colonialism and imperialism are often used together with no real distinction in meaning. Used separately, however, each of these words can take on a slightly different emphasis. Colonialism comes from colony, and tends to be applied in contexts addressing the effects that colonialism has on the lives of those living in colonies. Imperialism is closely related to empire and therefore tends to place more emphasis on the ruling power and its intent to expand its dominion, as well as on the expanded empire itself, with its distinct parts subsumed under the banner of the dominating force.
As for the etymology of imperial, this is what the website gives:
Middle English imperial, emperiall, borrowed from Anglo-French & Latin; Anglo-French emperial, imperiall, borrowed from Latin imperiālis "of the Roman emperor," from imperium "supreme administrative authority, power exercised by a Roman emperor" + -ālis -AL entry 1 — more at EMPIRE
What does investment mean?
the outlay of money usually for income or profit : capital outlayalso : the sum invested or the property purchased
Now, for the meanings of the word invest:
- "to commit (money) in order to earn a financial return"
- "to make use of for future benefits or advantages"
- "to involve or engage especially emotionally"
Meanwhile, we can also get the meaning of what direct investment really means:
investment of capital in physical assets or in ownership of a whole enterprise —contrasted with portfolio investment
In short, foreign direct investment (FDI) means that a foreign company would invest its capital in physical assets or in the ownership (equity) of the whole enterprise. A portfolio investment is a purchase of securities. These securities can be individual stocks, bonds, mutual funds (which can mix stocks and bonds), exchange-traded funds, real estate investment trusts, and cash equivalents (such as certificates of deposits or savings accounts).
Now, to further expound the meaning of FDI
For a better definition of FDI, here's what it means and I'm afraid anti-business fools will just dismiss it as "evil capitalist propaganda" on expensive imported equipment:
Foreign direct investment (FDI) is an ownership stake in a foreign company or project made by an investor, company, or government from another country.
Generally, the term is used to describe a business decision to acquire a substantial stake in a foreign business or to buy it outright to expand operations to a new region. The term is usually not used to describe a stock investment in a foreign company alone. FDI is a key element in international economic integration because it creates stable and long-lasting links between economies.
Investopedia also shows how FDIwork which I'm afraid will just be dismissed (but I'm going to share it anyway) as again, "evil capitalist propaganda" (and they love to quote arrogant Communist scholars from YouTube and ironically, their blogs whether it'd be free domain or not, while insulting me for being here on Blogspot) without understanding it:
Companies or governments considering a foreign direct investment (FDI) generally consider target firms or projects in open economies that offer a skilled workforce and above-average growth prospects for the investor. Light government regulation also tends to be prized. FDI frequently goes beyond mere capital investment. It may include the provision of management, technology, and equipment as well. A key feature of foreign direct investment is that it establishes effective control of the foreign business or at least substantial influence over its decision making.
The net amounts of money involved with FDI are substantial, with more than $1.8 trillion of foreign direct investments made in 2021. In that year, the United States was the top FDI destination worldwide, followed by China, Canada, Brazil, and India. In terms of FDI outflows, the U.S. was also the leader, followed by Germany, Japan, China, and the United Kingdom.
FDI inflows as a percentage of gross domestic product (GDP) is a good indicator of a nation’s appeal as a long-term investment destination. The Chinese economy is currently smaller than the U.S. economy in nominal terms, but FDI as a percentage of GDP was 1.7% for China as of 2020, compared with 1.0% for the U.S. For smaller, dynamic economies, FDI as a percentage of GDP is often significantly higher: e.g., 110% for the Cayman Islands, 109% for Hungary, and 34% for Hong Kong (also for 2020).
Company ownership stake doesn't involve land. Instead, it's all about that an FDI holds a certain percentage because they may or may not want to get a local partner. The idea of 100% FDI company ownership is that these companies can invest in the Philippines without the need for a local partner. The problem of the FDI inflow is severely limited by the 60-40 agreement or even blocking certain industries from investing. That's why the salary in the Philippines isn't that high.
Even worse, some people are confused between foreign investment and foreign debt (read here). Sri Lanka's problem wasn't foreign investment but foreign debt. A debt is when a country borrows money from another country. Foreign investment is when foreigners invest their capital into the country, to establish a business in the country, which in turn that income is made into taxable income. FDIs only get rich based on net income after taxes (read here). Sri Lanka's problem with China was a loan that it couldn't pay back and not investments. In an investment, when a company loses, it will move away. In a debt, a government must pay back that money because it was borrowed.
This also becomes a stupid trend when people think FDIs vs. OFWs is a battle for domination (read here). I guess some people still believe that OFWs are "conquering other countries" and so are Filipino businesses. Why all the cheers for Jollibee hitting the world market while crying foul when FDIs enter the Philippines? Jollibee has now 150 branches in Vietnam yet the country has not been conquered one bit by the Philippines. Do I need I mention that Vietnam has been chosen as the next destination for a LEGO factory (read here)? Even more, I learned the late Lee Kuan Yew cherished the Filipino workers in a Netflix documentary. I guess those anti-Singapore fools are still too sentimental over Flor Comtemplacion believing she was wrongfully executed.
What happens is that FDIs are regulated by the government, with or without the 60-40 policy. Even if FDIs may operate without a Filipino partner, there would still be requirements such as:
- They need to find a place to rent. They do need to secure a space to rent and they must present their identification papers (such as immigration forms, passports, and the like) to their tenants.
- They need to secure their business permits which would require some processes. They would need stuff like the contract of lease, their valid IDs, health cards, and other requirements. This would also mean getting the employee their benefits such as paying their employees' social security.
- They are still obliged to follow labor laws, environmental laws, the Consumer Protection Act, and any set of laws required to keep the Philippine business environment safe and sound. Laws that are designed to prevent local businesses from exploiting employees are also set to them.
- They are still obliged to pay the necessary taxes such as the VAT, withholding taxes, quarterly, and Annual Tax Return. They can get tax deductibles from operation expenses.
