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Try Convincing Me 60-40 Isn't a Problem Because I'm STILL NOT CONVINCED


I saw this post shared on Facebook. Fortunately, the person's name has been cropped out, so I don't have to censor it using MS Paint or Affinity Photo. I would like to address why 60-40 is a huge issue. I don't like relying on ChatGPT or any AI for the answers. I would only use AI to help me find the source. Now, I would like to do some common-sense refuting with this. Of course, I'm expecting more people to still be 60-40 apologists. I'm going to present my argument.

First and foremost, whoever this person is (and it's best that I censor his/her name out) has no idea about different types of FDI restrictions

We're already in the Internet age or the digital age. Should we only rely on gossip from a limited group instead of searching for other sources? Are we still stuck with the favorite sources such as the 1987 Constitution framers, faulty DepEd textbooks, biopics, etc.? The person, whoever he/she is, has no idea about the different restrictions in the countries he/she mentioned. Let's think about China, Vietnam, and Indonesia for a start.

Some time ago, I wrote about why FDIs prefer to invest in Communist Vietnam over the more democratic Philippines. One of the things I mentioned is how Vietnam's equity restrictions are rather short. It should be noted that the Vietnamese constitution is rather silent on equity restrictions! Read the link for yourself and tell me if there's even the slightest hint of foreign equity ownership. Instead, Vietnam puts its protectionist measures only in legislation, making it easier to adjust the economy. For example, the banking sector is still restricted in Vietnam to 30% foreign equity. However, it may only be a matter of time before it goes above 49% or even goes to the maximum 70% rule, like a few sectors!

Now, let's go to China's constitution. Any FDI restriction is, again, no surprise, only within legislation. The foreign investment law in China isn't enshrined within their Communist manifesto! China doesn't have that ridiculous 60-40 policy or severe equity restrictions, as long as the Philippines. Isn't it about time for Filipinos to ask themselves how they can pride themselves as a democratic country, while China (and in extension, Vietnam) are Communist countries, who are more FDI friendly? Why do you think more firms decided to invest during Deng Xiaoping rules in China? Not even the Tiananmen Square Massacre (which was a failed attempt to replicate EDSA 1986 in China) stopped China from growing. The Philippines could brag about EDSA 1986, but it still keptthe  Filipino First Policy!

In mentioning Indonesia, the 1945 Constitution of Indonesia (which received several amendments, by the way, and the last amendment was in 2002) doesn't have economic restrictions within its constitution. It's been amended more times than the 1987 Constitution of the Philippines, which is "proudly" unamended.

Does this person know how to Google and look at the ease of doing business? I wonder if this person has been told by that "reliable source"? Who is this "reliable source"? The open-close quotation marks are obvious sarcasm, just in case someone fails to detect it. Would this reliable source be Makabayan bloc members, such as Atty. Neri Colmenares, Teodoro A. Casiño, Raoul A. Manuel, Atty. Renee Co ( and I may not even think of hiring her as my lawyer), Sarah Jane I. Elago, Arlene Brosas, etc.? Would it be from the mouth of any Catholic Bishops Conference of the Philppines member, such as from Archbishop Socrates Villegas' mouth? Would it be from Raissa Espinosa-Robles' mouth? Either way, if their sources are so limited and nothing to back it up, I have no reason to believe them! What's the use of badmouthing my blog, but the sources used to refute it are questionable? That's why I put links in this blog! It's to show where I get my sources!

Second and last, isn't it a hassle for FDIs needing to find two Filipino partners so an FDI can be the "majority" shareholder?

I laughed hard at the statement made by this person. Why should FDIs need to find two Filipino partners to become the majority shareholder? I wrote about how the 60-40 policy is already considered overpriced rent. Why would I want to rent a space in a place where my lessor will ask for 60% of my net income? That would be overpriced rent. The profits are barely half of the revenues! Hasn't anyone seen a sample income statement? 

We need to look into the problem of having to find two Filipino partners. It's already hard enough to find a partner just to do business in the Philippines. How much more two Filipino partners who may presumably own 30-30 each share. To call the 40% the majority shareholder can be problematic. There's a difference between plurality and majority. In the Philippines, most presidents win by plurality, not by majority. An FDI has 40% shares, meaning it's just plurality shares. Why not give them the option to own 100% of the shares (without the ability to buy land, though) or choose to partner with local Filipino partners, as two viable options?!

Whoever made this comment may want to try renting it this way. Let's say I own a building but I'm renting the land. Some malls are built on rented space. I heard Banilad Town Centre (BTC) is renting on somebody else's land. Now, let's say that I decide to rent a space at BTC. Let's say that the owner of BTC (MRO Development Corpiration) and BTC's owner, decide to give me this hypothetical scenario. Let's say BTC says that I must give 30% of my net profit to MRO, 30% of my net profit to BTC, and I keep 40% of my net profit. I only own most of the profit but not majority of the profit! The person's logic is absolutely absurd in so many levels!

Whoever made that comment might want to try that arrangement with the mall and the lot owner, assuming that the mall is built on leased land. He/she should try keeping only 40% of the net income, because 30% had to go to the mall owner, and another 30% had to go to the lot owner. The whole arrangement would be stupid. The mall pays the landowner, not the tenants. The tenants pay the mall owner. The mall deducts what they pay to the lessor from the revenues. The tenant deducts the rent from the revenues. I wonder if this person, whoever he/she is will eventually not complain, because he/she couldn't keep 100% of the net profit after taxes! 

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