The Slippery Slope Arguments of the IBON Foundation on Charter Change
I may have confused national industrialization with the nationalization of industries. If so, I would have to edit. A simple definition of industrialization by Investopedia is:
Industrialization is the process of transforming the economy of a nation or region from a focus on agriculture to a reliance on manufacturing. Mechanized methods of mass production are an essential component of this transition.The positive characteristics of industrialization include economic growth, a more efficient division of labor, and a growth spurt in technological innovation.
Philippine resources and possibilities are immense yet the domestic economy is more than ever unable to produce the goods and services needed by the people, relying instead on foreign producers and technologies. Ironically, many of the foreign goods and services we buy are actually produced using Filipino resources and labour power. There is also massive denationalization of manufacturing with foreign transnational corporations accounting for two-thirds (65%) of manufacturing output.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.
The proposal of IBON given back in 2016, doesn't realize that for a nationwide industrialization to occur, it must open up its economy. Instead, they give some backward thinking. The points I highlighted would suggest that IBON recommends that Filipinos should first learn to do everything themselves. With how I never learned much in business school, it's only normal that some people who graduated from either business or economics, believe in what IBON says.
Once again, let me quote from the late Lee Kuan Yew, who Migrante International presumably hates because of their ever-mourning for the late Flor Contemplacion (read here). Here are some things from LKY's From Third World to First:
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.
Did Singapore have to wait until its businesses became stable before they opened up? According to LKY, not at all. LKY also set up other policies that helped Singapore such as the Green Singapore Policy, cleaning up corruption, and other similar stuff. LKY knew he had a lot of work to do because Singapore was still a dump of an island when he had it.
IBON's advice would fit into what LKY calls a third-world mentality. Did LKY wait until Singaporeans develop this "national industry" or did he open it to FDI and set a reasonable number of rules? In fact, in a December 1980 speech, LKY also gave this advice to stop doing everything ourselves. The Philippines should take heed of it:
“You got on the one hand, the Open Free Market System in America, you have on the other hand, the exact opposite, the closed, controlled, command economy of the Soviet Union, Communist Russia…
The Chinese tried the Communist model, with their own modifications, and it failed! And they have admitted that it failed, and they’re trying to pick up the same competitive spirit between workers, between different enterprises, which they noticed in Hong Kong, so they have opened a new town on the border with Hong Kong called “Shamchun” (Shenzhen in Cantonese) and they’re inducing Hong Kong entrepreneurs to go… and create employment!Dr. Lee Siew-Choh and Mr. Jeyaratnam talk as if these things have never happened. They haven’t learned!Deng Xiaoping is a great man… He fought a great revolution. He saw the product of that revolution turn sour. He was fortunate to live long enough and he had the courage to say “NO! WE CHANGE COURSE! LET’S LEARN! Let’s stop trying to do everything by ourselves.”So they started importing and buying Boeing 707’s. So they bought Tridents instead of trying to manufacture their own aircraft. Eventually they will but it would take 2, maybe 3 generations.That’s how we succeeded because we have open minds, common sense. A lot of analysis, careful weighing of the odds, make a firm decision, monitor it, implement it, modify as it goes wrong. ABANDON IF IT IS NO GOOD!But often… And I say this more out of relief than out of pride… Often, 8 times out of 10 we have been right… We’ve made mistakes… We put money in New Port in Jurong… Second hand machinery… We were young then… We were new in the game…They sold us second hand machinery, we didn’t know… We lost money… We wrote it off. But we learned…Mr. Jeyaratnam says we are obsessed with profits. I said YES! That’s how Singapore survives!We have no profit, who pays for all this?
You make profit into a dirty word, and Singapore dies.”
That's why I want to ask. What did IBON really contribute to the Philippines to make it stand out? It was founded in 1978 and now it's 2024. What has it really done? Meanwhile, LKY wrote a book based on a a nation he can be proud of. IBON can only afford to dream of its own version of a national industry. Meanwhile, LKY built Singapore's national industry by any means necessary, even if it meant asking for help from foreigners. That built the credibility because results speak louder than words.
