Filipinos Should Take Business Advice from Mahathir Mohamad, NOT Filipino First Policy Advocates
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| Perdana Leadership Foundation |
Mahathir would overturn the idea that FDIs are bad or would kill the "national spirit"
From page 308:
Nevertheless the increase in foreign investments helped to create jobs and so lowered the unemployment rate, which was high at the time. Our approach differed from those of Japan and Korea, where the preference was for acquiring foreign technology for investment by the locals. We did not have local entrepreneurs with the money or the willingness to invest in industries they were not familiar with. It was only after many years that the Malaysians acquired the knowledge and industrial skills to invest in manufacturing. Thus it was through FDI that we succeeded in converting our agricultural economy into an industrial economy and eventually solving our unemployment problem.
From page 334:
Managing a manufacturing industry is very difficult and there was no substantial industry in Malaysia at that time that we could take our lessons from. We went for foreign investments because we did not have locals who were willing to take the leap. Locals wanted to stay within their comfort zones. When there is no competition in the mix, it is easy to get away with low quality, bad management, dirty processes and inefficiency. But in a competitive environment, you must always be on guard. You have to look for ways to improve your product and be more cost-efficient. If you do not, you can be very sure that your competitors will be doing exactly that. Tax protection may provide some comfort but it should not make things too easy and discourage effort. It should certainly not cultivate bad attitudes and habits.
From page 372:
Creating jobs, especially by implementing policies that encourage the creation of private sector work opportunities, is the proper role of government. That was why when Malaysia invited foreign investment, we did not insist on immediately collecting taxes. We were prepared to forgo taxes if the investors created jobs for our people. In our view, no one who was prepared to work should remain unemployed. In fact, the Government was so successful in creating jobs that there are now more than two million foreign workers in the country. We cannot ourselves meet the demand for labour that our economic development has generated.
Did Mahathir wait for Malaysians to become entrepreneurs first, before he opened the economy to foreigners? The answer is a big, flat no. The same goes for Communist China and Communist Vietnam. Reading through those quotes (I might as well save up money to buy his book, which I don't think is available locally in the Philippines), I'm now more than convinced that Mahathir is a grandfather that I should listen to, over the likes of Davide, or Atty. Christian Monsod.
Mahathir practiced a pragmatic approach. Mahathir knew, "We don't have any substantial technology for manufacturing." The meme above continues to make me laugh. I tried asking that question, "Are you sure everything you're using is locally made?" Of course, I should never expect such people to give me a smart answer. I only get insults and more insults from such idiots. "Oh no! It's that question again!" or it can get worse. Some might even say that foreigners "unfairly own" the means of production (read here). It's similar to what socialist hippies from the USA will say that they're simply forced to participate in capitalism to survive. That's because the capitalists own the means of production, not the socialist hippies. Whatever, the excuses are foolish!
Just think how much opportunity loss happened due to Pinoy Pride Economics (read here). The whole problem of Pinoy Pride is that it would rather starve to death than compromise their Pinoy Pride. It's like being a beggar, being offered food by a generous rich person, and refusing said food, even when one is on the verge of starvation.
Filipino businesses should either adapt or die, instead of whining about FDIs
Jollibee is already a worldwide franchise
Some dumb fat bloke said Jollibee benefited from protectionism. However, the Tan brothers, who run Jollibee, would say otherwise. CNBC gives this detail on the Tan Brothers:
In business, there’s nothing like a little healthy competition to keep you motivated.
Only, for brothers Tony Tan Caktiong and Ernesto Tanmantiong, that healthy competition came early on — in the sizable form of fast food icon McDonald’s.
It was then 1981 and the brothers were just setting out on the ambitious dream of creating a fast food empire in their native Philippines when McDonald’s arrived in town and threatened to consume the market with its vast appetite for international expansion.
Jollibee had already grown substantially from what started in 1975 as an ice cream parlor in Quezon City, just outside of the capital Manila. But, with just a couple dozen fast food outlets scattered across the fractured archipelago, it was a small fry next to McDonald’s thousands of branches in the U.S. and international markets.
Jollibee had to face off against McDonald's. This reminds me of a lesson that the late John Gokongwei Jr. learned from his maternal grandfather. This maternal grandfather said to John, "Never fear these giants. They were once small, too." McDonald's was a multinational company. Guess what? Jollibee had become the second fasting growing restaurant last 2024 (read here). ABS-CBN actor (and entrepreneur) Joel Torre even opened a Singaporean branch for his business (read here).
Filipino halal restaurant owners vs. Arab halal restaurant owners
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| Food Craving Reviews |
I wrote an article talking about how Filipino halal resto owners can't blame the Arabs, if their businesses sink into quicksand. I could imagine what Mahathir would've told them. Mahathir might berate them first and foremost over their poor hygiene. Mahathir might say, "You blame the Arabs? Well, the Arabs are innovative and offer better services. Either you improve or your business dies." I assume that's what happened to the halal eatery Mhat Am Kape, near Cebu Eastern College. Unlike Shawarma Gourmet or Hussam Middle Eastern Cuisine, Mhat Am Kape wasn't innovative and offered poor service. Their cleanliness was questionable. If my memory serves me right, I had LBM from trying their food!
Here are some photos I took from Mhat Am Kape's Facebook page. This is utterly unacceptable. I showed these photos to some staff members in some halal restaurant owners, the ones owned by Arabs. The crew members of Shawarma Gourmet and Hussam both said that such practice is unacceptable. It's a far cry from the super-clean kitchen of Shawarma Gourmet and Hussam! Thankfully, the place is no longer open. Mhat Am Kape can't whine about Shawarma Gourmet or Hussam. They could've lasted longer if they used sustainable practices. Instead, no one in their right mind, not even their fellow Filipino Muslim, would eat in that kind of place?!
Mahathir, being a tough-talking, brutally frank guy, might even join the Arabs in berating Mhat Am Kape's substandard practices. Malaysia is the home of the halal milk tea venture, Tealive. Hopefully, Tealive will open in the Bangsamoro Region (read why I advocate that here).
What has decades of Filipino First Policy done for the business environment, anyway?
I would never undervalue the 1987 Constitution. It dismantled the legal framework of a repressive regime and established the democratic institutions we enjoy today. For this, I am grateful.
The 1987 Constitution was crafted with the best of intentions. It sought to put the Filipino first in all aspects of governance and to level the playing field amongst sectors and peoples. But it is far from perfect. It failed to consider the importance of foreign capital and technologies and the stiff competition we would have to face to obtain them. In short, its economic provisions were short-sighted.
So despite the Constitution’s patriotic bravado, reserving certain industries exclusively for Filipinos (or a Filipino majority) worked to our peril. It deprived the nation of valuable foreign investments, technology transfers, tax revenues, export earnings and jobs.
The Constitution’s restrictive economic provisions stunted our development for 36 years. From 1987 to the close of the century, Singapore, Malaysia and Thailand leapfrogged in development on the back of a deluge of foreign direct investments (FDIs). During that period, the Philippines’ share of regional FDIs lagged at a pitiful 3 percent in good years and 2 percent in normal years.
From the year 2000 up to the present, Vietnam and Indonesia took their fair share of FDIs, leaving the Philippines further behind. The country’s intake of foreign investments is less than half of what Vietnam and Indonesia realize. No surprise, our exports have also been the lowest among our peers. The lack of investments in manufacturing capacities have left us no choice but to export our own people.
Imbedded in the Constitution are industries in which foreigners are precluded. These include agriculture, public utilities, transportation, retail, construction, media, education, among others. Further, the Constitution limits foreigners from owning more than 40 percent equity in corporations. Foreigners are barred from owning land too. These provisions caused us to lose out on many investments which would have generated jobs, exports and taxes. Not too long ago, we lost a multibillion-dollar investment from an American auto manufacturing company that chose to invest in Thailand instead. We lost a multi-billion smartphone plant by Samsung, who located in Vietnam.
Sure, the Public Service, Foreign Investment and Trade Liberalization Acts were recently amended, allowing foreigners to participate in a wider berth of industries with less rigid conditions. But it is still not enough. The Philippines remains the least preferred investment destination among our peers.
Our flawed economic laws are the reason why our agricultural sector has not industrialized and why food security eludes us. It is also why our manufacturing sector has not fully developed. It is why we lost the opportunity to be Asia’s entertainment capital despite our Americanized culture (Netflix located its Asian headquarters in Singapore, Disney in Malaysia, MTV in Hong Kong and Paramount Studios in Taiwan). It is why our education standards are among the lowest in the world. It is why many industries are oligopolies owned by only a handful of families.
As for the form of government, I am willing to give the federal system a chance. Let’s face it, the current presidential system fails to provide the checks and balances for which it was intended. Senators and congressmen still vote according to party lines, albeit in a much slower legislative process. So yes, I am willing to try a new form of government because 36 years of insisting on a flawed system is insanity.
The world has changed since 1987. Our Constitution must keep up with these changes if we are to be competitive. This is why I support Charter change, except in the extension of term limits of public officials.
The problem with the 1987 Constitution is that it hasn't been amended for the times! The reason why Japan's older constitution is better is that it's a parliamentary system without economic restrictions, embedded within the constitution. Protectionist measures should be done only through legislation, which is pass protectionist measures only when necessary. However, embedding the Filipino First Policy into the constitution makes it difficult to put free trade measures, when needed. As Masigan stated, it has caused the Philippines to be left behind.
Another important thing to note is that Mahathir was also the architect of the Malaysian Tiger Transformation. That's why whenever I meet DDS or Dilawan, I always raise Mahathir. It's crazy to use the late former president, Benigno Simeon C. Aquino III, as a reason not to pursue economic reforms (read here). Some people complained that former president, Atty. Rodrigo R. Duterte, "messed it all up", never mind that there were some things beyond Duterte's control. That's why I always raise that Mahathir ruled Malaysia for more than six years, to achieve the Asian Tiger status. Noynoy only had six years. Who can expect a stable tiger economy foundation if Noynoy (or any president) only had six years to rule? LKY took 31 years to solidify Singapore. Unfortunately, some people will get mad whenever their idols are under attack. That's why I'm even further entertained whenever DDS and Dilawan bicker on social media. Why not have a parliamentary system instead?
Pretty much, Mahathir knew business and economics far better than Filipino First Policy advocates. Mahathir didn't just say things. Mahathir's Malaysia is proof that he's an effective leader. Mahathir doesn't provide advice from an ivory tower. Instead, Mahathir provided it from his experience, learning, and results.
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