FDIs Still Prefer COMMUNIST Vietnam Over Philippines, Despite To Lam's Gold Steak Controversy
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| Radio Free Asia |
Vietnamese Minister of Public Security To Lam stopped for a steak dinner in London this week after attending the United Nations climate change conference in Scotland – and ended up serving red meat to his online critics back home.To, thought to be a potential future leader of the Communist Party of Vietnam, was caught on video at the London branch of a luxury steakhouse chain called Nusr-Et, being hand-fed by Turkish celebrity chef Nusret Gökçe, a social media star better known as Salt Bae.Flinging salt in his trademark move, Salt Bae fed To gold-coated Golden Giant Tomahawk steaks in the video, which was posted Wednesday on the chef’s account, Tik Tok @nusr_et, which has around 11 million followers.Ministry spokesman To An Xo sat next to Lam recording the gastronomic feats on a smartphone.
If we're to look into Vietnam Briefing--Communist Vietnam is far more open to MNCs than the Philippines. This is something worth noting:
Investors from ASEAN, the United States and Europeand countries are increasingly moving capital into projects in Vietnam, because of its highly attractive environment, and strategic business location.Vietnam allows 100% foreign ownership in most of its sectors, including trading, manufacturing, IT, education sectors and more. For this reason, the country is viewed as being relatively wide open for foreign investors to enter the market and setup an LLC or other type of business entity.However, a small number of business fields are limited for foreign-investment, and require that a foreign investor form a joint-venture with a local partner. These include:
- Advertising services;
- Agriculture, hunting, and forestry related services;
- Telecommunication services;
- Travel agencies; Tour operator services; Entertainment services;
- Electronic gaming businesses;
- Container handling; Customs clearance services; Auxiliary transport services;
- Internal waterways transport, rail and road transport services.
What's more important to note is that when certain sectors disallow 100% ownership--it's actually more flexible than 60-40. The Vietnam Embassy gives this out:
Article 8
Capital contribution of a foreign party or foreign parties to the legal capital of a joint venture enterprise shall be agreed by the parties and shall not be limited provided that the contribution is not less than thirty (30) per cent of the legal capital, except in cases stipulated by the Government.
In the case of a multi-party joint venture enterprise, the minimum capital contribution to be made by each Vietnamese party shall be determined by the Government.
With respect to important economic establishments as determined by the Government, the parties shall agree to increase gradually the proportion of the Vietnamese party's contribution to the legal capital of the joint venture enterprise.
Article 16
The legal capital of an enterprise with foreign owned capital must be at least thirty (30) per cent of its invested capital. In special cases and subject to approval of the body in charge of State management of foreign investment, this proportion may be lower than thirty (30) per cent.
During the course of its operation, an enterprise with foreign owned capital must not reduce its legal capital.
Unlike the Philippines, certain "protected" industries are submitted to a minimum of 30%. That's a stark contrast to the Philippines' where foreigners can only own up to a certain extent of 25%-40% while other industries must be 100% Filipino-only. As the Official Gazette of the Philippines states, these are far more restrictive than what Vietnam has:
List A: Foreign Ownership is Limited By Mandate of the Constitution and Specific Laws
No Foreign Equity
- Mass media, except recording and internet business
- Practice of professions, except in cases specifically allowed by the law following the prescribed conditions therein
- Professions where foreigners are not allowed to practice in the Philippines, except if the subject to reciprocity as provided in pertinent laws.
- Corporate practice of professions with foreign equity restrictions under pertinent laws.
- Retail trade enterprises with paid-up capital of less than ₱25,000,000.00
- Cooperatives, except investments of former natural-born citizens of the Philippines
- Organization and operation of private detective, watchmen or security guards agencies
- Small-scale mining
- Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone as well as small-scale utilization of natural resources in rivers, lakes, bays, and lagoons
- Ownership, operation, and management of cockpits
- Manufacture, repair, stockpiling, and/or distribution of nuclear weapons
- Manufacture, repair, stockpiling, and/or distribution of biological, chemical, and radiological weapons and anti-personnel mines
- Manufacture of firecrackers and other pyrotechnic devices
Up to 25% Foreign Equity
- Private recruitment, whether for local or overseas employment
- Contracts for the construction of defense-related structures
Up to 30% Foreign Equity
- Advertising
Up to 40% Foreign Equity
- Procurement of infrastructure projects in accordance with Section 23.4.2.1(b), (c), and (e) of the Implementing Rules and Regulations (IRR) of RA. 9184
- Exploration, development, and utilization of natural resources
- Ownership of private lands, except for a natural-born citizen who has lost his Philippine citizenship and has the legal capacity to enter into a contract under Philippine laws.
- Operation of public utilities
- Educational institutions other than those established by religious groups and mission boards, for foreign diplomatic personnel and their dependents and other foreign temporary residents, or for short-term high-level skills development that do not form part of the formal education system as defined in Section 20 of Batas Pambansa (BP) No. 232 (1982)
- Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-products thereof, subject to a period of divestment.
- Contracts for the supply of materials, goods, and commodities to Government-Owned and Controlled Corporation (GOCC), company, agency or municipal corporation
- Operation of deep-sea commercial fishing vessels
- Ownership of condominium units
- Private radio communications network
List B: Foreign Ownership is Limited for Reason of Security, Defense, Risk to Health and Morals, and Protection of Small and Medium Scale Enterprises
Up to 40% Foreign Equity
- Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police (PNP) clearance:
- Firearms (handguns to shotguns), parts of firearms and ammunition therefor, instruments or implements used or intended to be used in the manufacture of firearms;
- Gunpowder;
- Dynamite;
- Blasting supplies;
- Ingredients used in making explosives:
- Chlorates of potassium and sodium;
- Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11), calcium, and cuprite;
- Nitric acid;
- Nitrocellulose;
- Perchlorates of ammonium, potassium, and sodium;
- Dinitrocellulose;
- Glycerol;
- Amorphous phosphorus;
- Hydrogen peroxide;
- Strontium nitrate powder;
- Toluene; and
- Telescopic sights, sniper scope, and other similar devices.
However, the manufacture or repair of these items may be authorized by the Chief of the PNP to non-Philippine nationals; provided that a substantial percentage of output, as determined by the said agency, is exported. Provided further that the extent of foreign equity ownership allowed shall be specified in the said authority/clearance (RA No. 7042 as amended by RA No. 8179).
- Manufacture and distribution of dangerous drugs
- Sauna and steam bathhouses, massage clinics, and other like activities regulated by law because of risks posed to public health and morals, except wellness centers
- All forms of gambling, except those covered by investment agreements with Philippine Amusement and Gaming Corporation (PAGCOR)
- Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000
- Micro and small domestic markets that involves the following:
- Advance technology as determined by Department of Science and Technology (DOST)
- Endorsed as a start-up or start-up enablers by Department of Trade Industry, or DOST
- Employ at least fifty (50) direct employees with paid-in equity capital of less than the equivalent of US$100,000
Where would I want to invest if were an MNC? Do I want to invest in the Philippines which claims to be democratic (and I'm not going to completely berate the 1987 Constitution either since there are still some good things) or would I invest in Vietnam? I would rather invest with To Lam despite his controversial gold steak in London. It's because Vietnam's restrictions with MNCs are reasonable. I can start a business with a 30% entry point in certain sectors but I can own more than 30% or own more than 50%, even if I can't own 100%, in the "protected sectors". That list is very minimal compared to what the Philippines has. Vietnam may have the Communist flag blatantly displayed everywhere compared to the Philippines The Communists in the Philippines don't really have much visible presence. However, even a Communist flag here and there in Vietnam hasn't discouraged investors. When Deng Xiaoping and Do Muoi invited investors--the countries were still labeled as Communist countries. Vietnam has no land ownership but it has no equity restrictions that are too unreasonable, unlike the Philippines. I still don't want to let foreigners own land in the Philippines, because I view them as tenants. I don't want to sell my space to the lessors either.
I do support a fight against corruption. I believe corrupt officials need to pay. That's why I'm in favor of charter change because the 1987 Constitution is already as obsolete as Windows 95. That's why there's always the need to amend it as stated in Article XVII. That's why I even ask if people are willing to amend the 1987 Constitution by either rewriting or removing Article XVII, to make it unamendable. Even some crazy old man I met on Facebook, still believes that excessive restrictions are a huge weakness. Some people who are against complete charter change, still favor economic charter change. Atty. Antonio Carpio, for one, is in favor of economic charter change. Hopefully, Atty. Carpio will favor complete charter change.
What I want to emphasize is that even if the Philippines will have a huge crackdown on corruption--it wouldn't invite much FDIs. What's the use of jailing every corrupt person in the Philippines (if that's even possible) while still upholding 60-40? The fight against corruption isn't an economic panacea. It's just one part of keeping the economy healthy from people who steal from the national budget. The problem for MNCs is not politicians who steal from the national budget. The problem for MNCs is all about the excessive restrictions with ownership and the ease of doing business.
