It's a shame, really, that I didn't think about writing this article on OFWs again. I got somewhat fixated on the gas prices, and my mind was exhausted. I thought about how I even asked, "Will #SahodItaasPresyoIbaba economics even lower down the prices of gasoline?" It's one thing that the Philippines has been overly reliant on the Middle East for gasoline. What I overlooked was the OFW phenomenon again. It was so easy to hype on the OFW phenomenon, like what happened with the Filipino nurse, Ello Ed Mundsel Bello, way back in 2015. The OFW hype would've compounded the Philippine economy's "reliance model" to a whole new level of bottleneck!
Analyzing the bottleneck of relying on the Middle East
It's already a known fact that several OFWs are sent to the Middle East. I even remember running across a presumably retired dancer who would be 64 today, on Facebook. The guy actually bragged about how he was a dancer at the Excelsior Hotel in Dubai. As always, unless a person happens to be a public figure or a public commentator, I will keep the identity secret to preserve one's dignity. The guy said that I'm truly crazy because I commented against the OFW phenomenon. However, the guy right now might be cringing not only because his dancing career may have stalled with age. It might also be because the recent Iran war would be forcing OFWs to vacate the Middle East. We have relied so much on the Middle East that when war comes, there's barely a backup source of income!
I thought about this statement by Manila Times editor, Rigoberto "Bobi" Tiglao, which I'll quote despite how he tends to misunderstand FDI:
FOR decades, the Philippine state has quietly relied on a single, brutally simple formula: When the domestic economy cannot provide jobs, export the worker and import the dollar. This policy has never been formally declared as doctrine, but it has functioned as one. It has kept unemployment politically manageable, propped up consumption and stabilized the peso. It has also allowed successive administrations to avoid the far more difficult task of building a productive domestic economy.
That entire structure is now at risk, not because of internal reform or policy shift, but because of a war thousands of kilometers away.
The Iran conflict is widely discussed in terms of oil prices and geopolitical escalation. What is barely acknowledged, however, is its potential to undermine the very foundation of the Philippine economic model: the dependence on overseas Filipino workers, particularly in the Gulf.
The numbers are stark. The Philippines deploys roughly 2.3 to 2.5 million OFWs in the Gulf Cooperation Council (GCC) — primarily in Saudi Arabia (about 900,000), the United Arab Emirates (around 600,000), Kuwait (250,000), Qatar (200,000), and the rest in Oman and Bahrain. Taken together, around 55 to 60 percent of all OFWs are concentrated in these six countries alone.
Their economic contribution is even more critical. OFW remittances now total approximately $36 billion to $38 billion annually, equivalent to about 9 to 10 percent of the Philippines’ gross domestic product. No serious analyst disputes that without these inflows, the peso would be weaker, consumption would be lower, and social pressures would be far more intense. Remittances are not merely an income stream; they are a structural support of the entire economy.
This is the hard reality that we need to face. Instead, several people keep hyping the OFW phenomenon. Most of those I ran into on Facebook are boomers. As always, I will be respectful of them by not posting them, unless they are public figures. This reminds me that I wrote a short but brutal article addressing that the OFW phenomenon isn't "better" despite the dollar remittance. The OFW phenomenon may look "good on paper," but it has only created real problems in the long run.
Warnings that were given to Filipinos have led to an "I told you so!" moment during the recent Iran War in 2026
The late great Lee Kuan Yew even commented about this in his book From Third World to First:
Mrs. Aquino's successor, Fidel Ramos, whom she backed, was more practical and established greater stability. In November 1992, I visited him. In a speech at the 18th Philippine Business Conference, I said, "I do not believe that democracy necessarily leads to development. I believe what a country needs to develop is discipline more than democracy." In private, President Ramos said he agreed with me that a British parliamentary-type constitution worked better because the majority party in the legislature was also the government. Publicly, Ramos had to differ.He [Ramos] knew well the difficulties of trying to govern with strict American-style separation of powers. The Senate had already defeated Mrs. Aquino's proposal to retain the American bases. The Philippines had a rambunctious press but it did not check corruption. Individual press reporters could be bought, as could many judges. Something had gone seriously wrong. Millions of Filipino men and women had to leave their country for jobs abroad beneath their level of education. Filipino professionals whom we recruited to work in Singapore are as good as our own. Indeed, their architects, artists, and musicians are more artistic and creative than ours. Hundreds of them have left for Hawaii and for the American mainland. It is a problem the solution which has not been made easier by the workings of ta Philippine version of the American constitution.
LKY already warned Filipinos to open the economy decades ago. LKY died on March 23, 2015. It's sad that many Filipinos only quoted him about the Marcoses but not the economy. These were the warnings from LKY that Filipinos have ignored (and I'm talking as a Filipino of Chinese descent), and many are paying dearly for it:
15. The second task is to free the economy from controls and monopolies. Rigoberto Tiglao wrote in the Review, “It has become obvious to economists now that the ‘nationalist industrialisation’ rhetoric has benefited only a group of inefficient oligarchs – including some heading US-owned firms – from beer brewing to soap manufacturing to appliance assembly. While the Aquino administration had backed down under pressure from lobby groups, and revised its original and more drastic Executive Order 413, the new tariff liberalisation programme will bring down the average effective protection rate for Philippine industries from 25% to 21% over a four-year period ending in July 1995. The tariff barriers had been a major element of an intricate web of regulations that have shackled Philippine entrepreneurs and only nurtured the favoured few cartels and monopolies, from banking and telecommunications to shipping – who have thrived through their privileged access to licenses, franchises and concessional loans.”
16. Tiglao was hopeful: “However, the economic performance of the Philippines’ ASEAN neighbours , which had sought foreign investments, has gradually resulted in the sea change in national attitudes …” There was “easy passage of the Foreign Investment Act of 1991, which basically lifted all restrictions, except those that are in the constitution, on foreign investments.”
17. The experience of Malaysia, Thailand and Indonesia is especially relevant. From the 1950s to the 70s, their policies were like those of the Philippines. They protected their markets to establish import substituting industries. Products were poor and growth was slow because there were monopolies and no competition. By the early 80s, at first, Thailand, and next Malaysia, changed policies. They learned from the policies of the NIEs where foreign investment and export-oriented growth made for booming economies. Thailand and Malaysia started to deregulate and liberalise. They allowed 100% direct foreign investments. They cut down protection and opened up their industries and services to competition. Through the infusion of technology and high quality management from successful countries like Japan, the NIEs, America and Europe their goods and services became internationally competitive. Their economic growth bounced from 3-4% to 8-10% per annum. A few years later Indonesia also changed policies. They are now pressing ahead with deregulation and liberalisation to open up their economy and make their products internationally competitive.
18. Foreign investors would not have gone into Thailand, Malaysia and Indonesia if they had not got their macro-economic policies right. They cut their budget deficits which brought inflation under control. This restored confidence in their currencies. Malaysia and Indonesia have reduced their budget deficits to 2% of GNP or less since 1987, to less than a third of previous deficit levels. Thailand has been running budget surpluses. The Philippines must press forward with fiscal reforms which President Aquino began in 1991 under IMF conditionality. The big problem is that taxes especially income taxes are not collected. Therefore investors fear that the Government cannot control future budget deficits and inflation. Further, if it cannot raise tax revenues, it will be unable to put in place the necessary infrastructure. Next, Filipino savings must and can be raised. Indonesia, with a lower per capita income level than the Philippines, had a national savings rate of 33% in the last five years. The Philippines had only 17%. Indonesia therefore achieved a much higher investment rate of 36% compared to the Philippines’ 20%.
19. The Ramos Administration has started deregulation and liberalisation. These initial moves must be followed up. It has to be systematic with a publicly announced timetable during which the protective barriers enjoyed by the industrial and the services sectors will be dismantled, and foreign competitors allowed in. Then you will find that Filipinos can perform just as well as Singaporeans or Thais or Malaysians. If the Philippines stick to old policies, because vested interests are too powerful to overturn, then Filipinos will continue to lag further and further behind her ASEAN neighbours.
20. If the Ramos Administration can make ordinary Filipinos understand that politics is not simply elections with singing, fiestas and giveaways, but that it is about their lives, jobs and wages, homes, schools, hospitals, the situation can change dramatically. When ordinary Filipinos know that the country’s stagnation and their joblessness is because of vested interests, corrupt politics and general disorder and lack of confidence, they will agitate in support of those who want to establish law and order and discipline, cut high tariffs, quotas to licensing and other restrictive monopolistic practices, in order to get investments to give them jobs. They will put pressure on Congress to clean up their act, to demolish barriers which are depriving Filipinos of the progress enjoyed by their neighbours. Even China and Vietnam now offer very liberal incentives and full foreign ownership. The Philippines has a lively and rumbustious press and television. They should undertake this vital job as their national duty.
It was the time of the analog era. It was that era that allowed trials to become limited. However, in this digital age, one fatal wrong move in the court could result in years and years of shame. Take for example, two trials in the Philippines gone wrong. It was easy for the late Judge Martin Ocampo to get away with dismissing the 30+ witnesses who knew that Francisco Juan G. Larrañaga was in Manila when the Chiong sisters disappeared. Retired judge Amelita G. Tolentino also flat-out refused to give Hubert Jeffry Webb the benefit of the doubt, of a DNA test. However, these types of behavior may no longer hold water in court. The analog era is over, and it's the digital era. The Internet is now a place not just to upload ideas but also to question ideas. As I type this one, I submit this blog post to the scrutiny of the Internet. The same can happen when Pinoy Pride economists upload their ideas. Pinoy Pride economists should be ready to defend their ideas to scrutiny, just like I'm getting ready to defend this when it goes on the Internet!
Pretty much, are we going to wait until World War 3 before we stop supporting Pinoy Pride economics?!