How Does Migrante International View FDI?
A few days ago, I found this quote from the Migrante (Migrant) International page. Some people jokingly call it Migraine International. The headache above gave me a migraine with what its current chairperson, Joanna Concepcion said. When it comes to Migrante, I always think about the late Flor Contemplacion is on their agenda. I guess that's why its supporters (as well as supporters of similar groups) keep saying, "Don't keep mentioning Singapore! Think!" to the arguments. I guess they're still mourning Flor's death, even after she was proven guilty by the competent Singaporean courts. Today is the last day of January 2024. It would be March 15 (which is Flor's death anniversary) any time soon. I feel the need to write this post before the month ends.
There's really the problem of practicing what I call IBON economics.
I believe that Migrante is using IBON as a source. Earlier this month, I wrote an article where I asked on how IBON Foundation views FDI. I feel this article should be a continuation of sorts to that article. Before that, I would like to once again cite from the UP School of Economics to once again prove that the first Marcos Administration was anything but a free trade government:
It is instructive that neither Thailand, Indonesia, Malaysia, nor any major Asian country catastrophically experienced negative growth in the early 1980s. The Philippines was the exception, following instead the example of protectionist and over-borrowed Latin American countries. This suggests that there was nothing unavoidable about the crisis the Philippines suffered, and that it was the result instead of failed policies. In 1977 the Philippines’ total debt was all of $8.2 billion. Only five years later, in 1982, this had risen to $24.4 billion. Thailand’s debt in 1982 was still only half that amount. Thailand and other countries of the region thus avoided a debt crisis and ultimately went on to attract foreign direct investments in export-oriented industries in the now-familiar East Asian pattern. But no such thing happened under Ferdinand E. Marcos, notwithstanding the arguments and exhortations of people like Gerardo P. Sicat (who would cease to be active in the regime by 1980). By the early 1980s, the pattern would be set where foreign direct investments in neighboring countries regularly outstripped those in the Philippines. (The intermittent coups d’etat post-Marcos did us no favors either.)
All this should correct the common misconception that the country’s troubles stemmed entirely from conjunctural “political factors,” notably that it was caused by ex-Senator Benigno “Ninoy” S. Aquino, Jr.’s assassination. One might not even entirely blame the mere fact of authoritarianism itself — after all Thailand, Indonesia, and Malaysia at the time were also ruled by despots of some sort or other, yet suffered no crisis. Rather the Philippine debacle was linked to the misguided policies that were structurally linked and specific to Marcos-style authoritarianism. For all its technocratic rhetoric and rationale, the Marcos regime never took economic reform, liberalization, and export-oriented industrialization seriously; it remained a heavily protectionist and preferential regime (think the cronies and the failed major industrial projects). The availability of easy loans was well suited to the priorities of a regime that thought it could stoke growth without deep reform and slake the greed of Marcos and his cronies at the same time. In the end a corrupt regime fell victim to its own hubris.
I will quote previous sources as much as possible. The first short to fire at Ms. Concepcion's argument is about the first Marcos administration. The Marcos Sr. Years were heavily focused on protectionism, hence the rise of the Marcos cronies. It wasn't a free trade, neoliberal government but it was a protectionist regime. The claim of a free trade Marcos Sr. regime is just as false as the claim that it was a parliamentary regime. The late Benigno Simeon Aquino and the late Salvador Laurel both even challenged the legitimacy. Marcos Sr. was never legitimately installed as prime minister or president. The late Lee Kuan Yew wasn't even impressed at Cesar Virata, whom he called a non-starter, in his book From Third World to First.
Does Migrante International think FDIs include OFWs?
Ms. Concepcion goes on to say that opening up the Philippines to foreign investors, doesn't bring development to the country. She proceeds to say that more and more Filipinos are forced to leave the Philippines and work abroad. This makes me wonder if she thinks OFWs equals FDI. It seems that IBON Foundation is counting OFWs as part of FDI. After all, OFWs are migrant workers, who work abroad, and their source of income is foreign. Do they not even get the definition of FDI? FDI actually means according to Investopedia:
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.
Apparently, Ms. Conception thinks that OFWs are also FDI. The definition of FDI doesn't suit OFWs at all! OFWs never want to another country to establish a business or foreign company. Instead, OFWs work in another country, not to establish their own business. An example of a Filipino MNC as an FDI is Jollibee. Jollibee is now operating in different parts of the world. Where Jollibee operates, it's bound by the laws. Jollibee's presence in the UK means that it must follow UK laws. 150+ branches of Jollibee in Vietnam means that the company is bound to the Communist Party of Vietnam. FDIs and OFWs has never been a game of "I invade your country before you invade mine." (Read here) One talks about Filipinos going to another country due to the lack of jobs in their own country. The other is about investors seeking to invest in the world market.
If that's so, I really must cringe and laugh at the argument. Even more, I decided to screenshot this detail of who could be the same Ms. Concepcion of Migrante International:
If so, it becomes even more hypocritical since if Ms. Concepcion (maybe call her Misconception due to her misconception) is that she's grown in a country that benefited from FDI! To say that the US downgraded due to free trade is just stupid. Instead, rising protectionism and poor government spending caused the US to go down. Blame capitalism for the fall of San Francisco? Why not blame the lack of law enforcement? Sure, there are bad police officers but do we defund the police because of some bad police officers? Talk about defunding healthcare because of some bad healthcare workers. What needs to be done is a systemic overhaul of policing--not abolish the police! After all, would you want to call a criminal if you need help when a criminal breaks into your house?
After more than a decade since its establishment, Migrante International continues its consistent and unwavering record of service to OFWs. It now has over 200 member-organizations in over 23 countries, making it the biggest organization of overseas Filipinos all over the world.
That makes the solution proposed is just another dead-end
Nationalization refers to the action of a government taking control of a company or industry, which generally occurs without compensation for the loss of the net worth of seized assets and potential income. The action may be the result of a nation's attempt to consolidate power, resentment of foreign ownership of industries representing significant importance to local economies or to prop up failing industries.
With that definition, isn't that what Marcos Sr. did when he was president? I heard from people that Marcos Sr. seized assets. I think one example is how all media was seized and there was only one channel. It was pretty much like North Korea. I heard how Marcos Sr. seized businesses that he wanted and offered no compensation. Some Marcos apologists I run into on Facebook keep talking about how beautiful it would be if the government provided for everything. The problem is that it would be hit by a supply and demand problem--the same thing that's hitting Venezuela.
What Ms. Conception is recommending is plain economically unfeasible. I can't comment too much on land reform. However, her desire for nationalization of industries is totally stupid. Some time ago, I wrote why I'm not in favor of nationalization of industries mixed with protectionism. With the way she addressed her point--I guess that's what she wants. It's really asking Marcos Jr. to repeat the mistakes of his father. Yes, the Marcos Sr. years weren't the golden years as it was characterized by inflation. Documentation of what the Marcoses brought to Hawaii is really amazing. LKY even quoted in his book From Third World to First about how the Marcoses just got back in, easy-peasy. Some say that the 1987 Constitution of the Philippines was to prevent the Marcoses from returning. Congratulations, it failed! It's because even if Marcos Jr. lost in the 2016 elections against Atty. Maria Leonor Gerona-Robredo, he was still a legislator and he's now the president. I don't know how the allegations of cheating can be proven either. Allegations Mrs. Robredo cheated and now Marcos Jr. having cheated to get their respective seats may just be allegations for all we know.
It's because if the government takes over everything--you can guarantee inflation. It's because supply will be too low and demand will be too high. Can the government really provide for all the citizens? It's not that privatization or welcoming FDI doesn't involve government regulation. Privatization of firms and FDI encourages competition. What regulates the competition is the government. Just because an FDI isn't required to find a Filipino partner, doesn't mean it's not bound to Filipino laws. It's through healthy competition that the supply and demand gap is filled. Services are bad and expensive because of a supply and demand problem. Ms. Concepcion herself apparently thinks shortening supply is the solution. If so, what a misconception!
Migrante still fits what LKY would call third world mentality. As I was reading From Third World to First, he had to deal with the development economists of his day. That means these guys were big shots at the schools and universities of Singapore back then. Isn't it the same problem in the Philippines? Instead, LKY proved them wrong! I'd like to share these words for the nth time:
Pages 57-58After several years of disheartening trial and error, we concluded that Singapore's best hope lay with the American multinational corporations (MNCs). When the Taiwanese and Hong Kong entrepreneurs came in the 1960s, they brought low technology such as textile and toy manufacturing, labor-intensive but not large-scale. American MNCs brought higher technology in large-scale operations, creating many jobs. They had weight and confidence. They believed that their government was going to stay in Southeast Asia and their businesses were safe from confiscation or war loss.I gradually crystallized my thoughts and settled on a two-pronged strategy to overcome our disadvantages. The first was to leapfrog the region, as the Israelis had done. This idea sprang from a discussion I had with a UNDP expert who visited Singapore in 1962. In 1964, while on a tour of Africa, I met him again in Malawi. He described to me how the Israelis, faced with a more hostile environment than ours, had found a way around their difficulties by leaping over their Arab neighbors who boycotted them, to trade with Europe and America. Since our neighbors were out to reduce their ties with us, we had to link up with the developed world-America, Europe, and Japan-and attract their manufacturers to produce in Singapore and export their products to the developed countries.The accepted wisdom of development economists at the time was that MNCs were exploiters of cheap land, labor, and raw materials. This "dependency school" of economists argued that MNCs continued the colonial pattern of exploitation that left the developing countries selling raw materials to and buying consumer goods from the advanced countries. MNCs controlled technology and consumer preferences and formed alliances with their host governments to exploit the people and keep them down. Third World leaders believed this theory of neocolonialist exploitation, but Keng Swee and I were not impressed. We had a real-life problem to solve and could not afford to be conscribed by any theory or dogma. Anyway, Singapore had no natural resources for MNCs to exploit. All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent. Our duty was to create a livelihood for 2 million Singaporeans. If MNCs could give our workers employment and teach them technical and engineering skills and management know-how, we should bring in the MNCs.
Page 66
Our job was to plan the broad economic objectives and the target periods within which to achieve them. We reviewed these plans regularly and adjusted them as new realities changed the outlook. Infrastructure and the training and education of workers to meet the needs of employers had to be planned years in advance. We did not have a group of readymade entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton, and other cities when the communists took over. Had we waited for our traders to learn to be industrialists we would have starved. It is absurd for critics to suggest in the 1990s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNCs. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNCs in Singapore.
Pages 68-69
If I have to choose one word to explain why Singapore succeeded, it is confidence. This was what made foreign investors site their factories and refineries here. Within days of the oil crisis in October 1973, I decided to give a clear signal to the oil companies that we did not claim any special privilege over the stocks of oil they held in their Singapore refineries. If we blocked export from those stocks, we would have enough oil for our own consumption for two years, but we would have shown ourselves to be completely undependable. I met the CEOs or managing directors of all the oil refineries-Shell, Mobil, Esso, Singapore Petroleum, and British Petroleum on 10 November 1973. I assured them publicly that Singapore would share in any cuts they imposed on the rest of their customers, on the principle of equal misery. Their customers were in countries as far apart as Alaska, Australia, Japan, and New Zealand, besides those in the region.
This decision increased international confidence in the Singapore government, that it knew its long-term interest depended on being a reliable place for oil and other business. As a result, the oil industry confidently expanded into petrochemicals in the late 1970s. By the 1990s, with a total refining capacity of 1.2 million barrels per day, Singapore had become the world's third largest oil-refining center after Houston and Rotterdam, the third largest oil trading center after New York and London, and the largest fuel oil bunker market in volume terms. Singapore is also a major petrochemical producer.
To overcome the natural doubts of investors from advanced countries over the quality of our workers, I had asked the Japanese, Germans, French, and Dutch to set up centers in Singapore with their own instructors to train technicians. Some centers were government-financed, others were jointly formed with such corporations as Philips, Rollei, and Tata. After 4 to 6 months of training, these workers, who were trained in a factory-like environment, became familiar with the work systems and cultures of the different nations and were desirable employees. These training institutes became useful points of reference for investors from these countries to check how our workers compared with theirs. They validated the standards of Singapore workers.
In short, Migrante is ironically still third-world minded even as it has branches in first-world countries. I wonder what its OFW members do in those countries? Trying to conquer it? Maybe, trying to enjoy the benefits of that country but not want it for the Philippines? One must question what its motives are.
