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Vietnam won the revolution, and they had a national industrialization and agrarian reform. What Vietnam's "Open FDI" means that the koriktor (a mockery of Corrector) actually means is that, those are finished products that are sold in the world market.Meanwhile, in the Philippines, we don't have industries meaning that if it's open FDI here in the Philippines, our raw materials will be consumed by the greedy foreigners.
This is just one argument. I've read other arguments that still believe Vietnam is a protectionist state. They may say, "Look at Vietnam! It's a protectionist command economy state! Why is it doing better than the Philippines?" I believe this argument comes from people with distorted views of what FDI means. Since when did a foreign investment involve sexual relations with foreigners (read here), borrowing money from another country (read here), or selling the country to foreigners? A simple definition of foreign investment shoots down such ridiculous thinking!
However, knowing the history of Doi Moi, orchestrated by the late Nguyen Duy Cong aka Do Muoi, one can say that Vietnam actually accepted foreign investment, while it was still growing. Do Muoi struck up an interesting conversation with another great leader, the late Lee Kuan Yew. LKY even wrote this in From Third World to First after he saw Vietnam rise:
In fact, the Vietnamese had made progress. As a result of more contacts with foreigners and greater information on the market economy, ministers and officials had better understanding of the workings of the free market. Greater street activity, more shops, foreign businesspeople, hotels--these were all signs of prosperity in Ho Chi Minh City and Hanoi.
Vietnam went in a different direction compared to the supposedly more democratic Philippines! The Vietnam Briefing mentions this one, a far cry from the overly restrictive policies as stated by the Official Gazette of the Philippines.
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.
That "negative list" in Vietnam is a lot shorter than the negative list of the Philippines! Even more, Vietnam's law on foreign investment also says that these businesses need a minimum entry of 30% but they can own more than 30%. Pretty much, doing agricultural business in Vietnam where one can own more than 30% is more feasible than going to a country that refuses to be flexible with equity restrictions. It's really not feasible to do business with someone who demands a huge slice of the profits from you, now is it?
Even more, to say that certain industries have restrictions for "security reasons" is stupid (read here). It's not as if regulatory laws such as data privacy, environmental laws, and employment laws can't be used. All investors, whether Filipino or foreign, are required to follow laws. FDIs will still be required to pay taxes to continue doing business. That's why I throw the mocking question, "Why aren't people from ASEAN visiting Hilario Davide Jr.? Why are they visiting Kishore Mahbubani of Singapore instead?" Another mocking question I ask is, "If it's true that Carlos P. Garcia made us a tiger economy, where's the memoir to back it up?" LKY didn't only say things but he also proved things. Mahbubani didn't only talk but also walked the talk better than Davide. Davide's statements that the 1987 Constitution of the Philippines is the "best in the world" fall flat in the face of the National University of Singapore (NUS). I could even imagine if Mahbubani had a vacation in Cebu City, ran into Davide (and I believe the two know each other since they were both diplomats), and said, "Man, you're outdated Hilario! You should've joined the World Economic Forum!" Davide might answer, "You know what Kishore, I pity you, Singapore is now a colony of foreign investors!" Mahbubani might even said, "Wrong! You are so dead wrong Hilario!"
The Philippines already has an edge over Vietnam, that is the Philippines is run under democratic principles. However, having a democracy without economic substance is dangerous (read here). The Philippines may have more freedom than Vietnam since the latter is still considered a Communist state. Communism often paints pictures of guns and tanks. However, the Philippines needs to resolve its economic policies. Economic restrictions should be removed from the constitution and placed more into legislation. That would make it easier to restrain and relax at certain times. Israel has a restrictive economy but it's all about financial activities (read here)--not the 60-40 type of policy. I believe the Philippines can do better in Vietnam. However, the extreme restrictions with equity ownership for FDIs really hold it back. It should be considered questionable how a Communist state is outperforming a country that boasts of being a bastion of democracy.
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