Rejoicing Over Filipino Businesses Getting 100% Ownership Abroad While Crying Over FDIs Getting Allowed to Own 100% Ownership

The Philippine senatorial elections are on, right? One of the many things candidates (regardless of party) need to hold is the need for economic reform. As  I continue discussing economic charter change, several objections are held. One of the objections is allowing 100% FDI--a subject often subjected to mockery. These mockeries can range from promoting colonial mentality, selling the Filipino to foreigners, borrowing money from abroad (which is definitely not investment, read here), or even the ridiculous notion that FDI includes Filipino women dating foreigners (read here). This time, I would like to address another hypocrisy. This time, it's all about Filipinos who rejoice that Filipino businesses are investing with 100% FDI ownership. All the while, this is crying foul when there's a law passed that will allow foreigners to own 100% FDI ownership, in the Philippines.

This is a meme to expose the hypocrisy. Jollibee has 158 branches in Vietnam, which I assume happened because of franchising. The silly girl above is rejoicing because there are 150 (actually 158 now and may go to 160+ soon) branches of Jollibee in Vietnam. She's saying, "The Philippines has captured Vietnam." However, the silly girl hears the news that Cong Caphe is opening just one branch in Quezon City and she cries, "Waaaaaah Vietnam captured the Philippines." It shows a lack of understanding of what FDI really means.

Last 2022, I wrote an article about the myth of invading other countries through FDIs and OFWs. Do these idiots think that working for other countries mean conquering other countries? Please, working for other countries doesn't mean stealing jobs from their locals. Instead, it's having to work with their locals. If you get the job, by default, you must obey your boss. If you work at Apple in Vietnam, you need to follow what your boss in Apple Vietnam tells you to do. The same goes for Apple investing in Vietnam. Apple must follow the rules and regulations set by the Communist Party of Vietnam (CPV) if it expects to continue doing business in Vietnam. 

When a country allows FDIs to own 100% ownership--it's not selling the country. It's all about allowing FDIs to own up to 100% of their shares ownership. It's all about not requiring foreigners to find a Filipino partner before they can do business. Jollibee most likely used franchising to expand worldwide. Chances are Vietnamese businesses or the CPV franchised Jollibee. Franchising means allowing a business to make money under the the franchisor's business name. That's different from looking for a local partner to split 60% shares of stock. 

Crying foul over foreigners owning 100% of their profits and rejoicing over Filipino MNCs keeping 100% of theirs, sis poor understanding. What's their definition of profits anyway? Do they think that when Jollibee gets profits for its 158 branches, that Jollibee leaves nothing to Vietnam. Meanwhile, in this hypothetical scenario, are they assuming that Cong Caphe getting its profits, means it leaves nothing for the Philippines? 

Business & Plans

It may be because people are confusing profits for revenues (read here). If you think about it, such people may think that profits are the sales for the day. Profits don't belong to the workers, the salary belongs to the workers. It's because profits are basically what's left after the sales have been deducted from all expenses (which includes salaries) and taxes. We have the net profits after taxes. THe sample income statement above shows that sales are deducted from the Cost of Goods Sold (COGS) and then we have all expenses. SG&A would mean Selling, General, and Administrative expenses, which includes all salaries. We have to spend for interest expenses (borrowing money is inevitable), and then when everything is deducted, we have pre-tax income. The taxable income means taxing what's left of income minus all expenses. The result is the net income after taxes, is barely half of the revenues made! That's why the profit doesn't go to the workers but to those paying the workers!

Those on top were the ones managing the money, so they are the ones who keep the profit. Why would employees be entitled to the profit when they receive money from the SG&A expenses? Of course, when employers refuse to pay the employees properly, work quality suffers in return. The agreement is to pay the workers accordingly. Healthy work environment creates healthy workers. Healthy workers are entitled to their salaries, which is part of expense. They don't get any profit-sharing. However, employee shareholders are entitled to dividends during good times. If those on top mismanage the money, they're the ones who get the biggest blame when the company goes south.

It must be understood that allowing Filipino MNCs to invest 100% abroad and 100% FDIs in the Philippines, is a win-win situation. Filipino MNCs are still subjected to foreign laws, even if they aren't required to find a local partner abroad. The same goes for MNCs who invest in the Philippines--they still follow laws even without a Filipino partner. Filipino MNCs will keep 100% of the net profits after taxes when they invest abroad. Letting FDIs do the same in the Philippines is the same thing. Not having too many restrictions will encourage more FDIs, which will in turn mean more taxable income, more employment generated, and filling in the supply/demand gap.