IBON's Pinoy Pride Economics Mindset in Arguing Against Pax Silica

As debate rages about Pax Silica, from outright opposition to taking a negotiated stance, I want to write more about it. This time, I decided to look again at the IBON Foundation's logic. A recent article by the IBON Foundation, written by Jose Enrique "Sonny" Africa, asks, "Whose industrialization is it anyway?" It would be time to tackle what IBON just said. This is a rather daring move because the highest educational attainment I have is an MBA, and I'm even starting to wonder even today, "Was my MBA worth the fee?" because I only learned how to invest in foreign stocks while opening a GCash account because I wanted to order shawarma. Right now, I feel like I'm actually learning more blogging here than pursuing a PhD whic might make my brain rot due to how schools prioritize grades over learning. 

Now, going on to the topic, I'd like ot focus on Africa's logic here as an average citizen. Just because I didn't graduate in economics from a prestigious college doesn't mean I'm automatically wrong. In fact, I feel like writing some posts related to IBON's arguments. That's because I just can't seriously take them as an economic think tank that Filipinos should listen to.

IBON begins by talking about sports, probably as an emotional appeal 

Okay, I'm not into sports myself. I just find it funny that Africa even has to start his post with this detail:

Alex Eala stirs Pinoy pride because she’s a genuinely Pinoy tennis powerhouse. Eala is real Filipino talent, developed through years of hard work, training and competition, and whose success truly raises the level and possibilities of Philippine tennis. On the other hand, American Justin Brownlee of local basketball team Barangay Ginebra San Miguel is a gifted player who doesn’t stir the same pride. Like so many imports before him, his excellence strengthens a local team but doesn’t really develop Philippine basketball capability. Spot the difference?

Honestly, this is a plain red herring. So much for people who keep saying that this blog has been engaging in "ad hominem" attacks compared to the "trusted" IBON group. Doing ad hominem attacks is when one chooses to attack the person instead of the argument. It's because it's much easier to "win" by calling someone names like gago, tanga, stupid, buang, etc., than it would be to dig through several sources. Now, we think about the argument that we must raise Alex (who, by the way, trained in Spain for her career) to be a "genuinely Filipino talent" and the American Justin, when both are helping the Filipino sports environment. Justin helped develop Philippine Basketball. Sure, there are pay sites, but we must look at how Justin developed Filipinos for basketball.

Africa's statement becomes baseless even with something as simple (and leisurely) as sports (since I prefer to do cardio and walking to stay fit these days):

His (Justin) naturalization paved the way for him to join the national team, helping end the country’s 61-year gold medal drought in the Asian Games held in Guangzhou, China.

One of his most memorable achievements was Gilas Pilipinas’ stunning victory over world No. 6 Latvia in the FIBA Olympic Qualifying Tournament—breaking a 64-year losing streak against European teams. These historic feats have cemented Brownlee’s status as a national treasure.

Brownlee remains deeply grateful to everyone who played a role in his naturalization.

“I truly appreciate all the senators and congressmen involved in the process. I know it wasn’t easy, but I’m thankful for everyone who made it happen,” he said.

Sure, I don't play basketball as a sport (and I treat it as a weight-loss regimen). However, let's think that Justin's achievements here disprove Africa's apparent paranoia. We see that the Philippines has recovered after a 61-year gold medal drought in the Asian Games and is recovering from a 64-year losing streak against European teams. In fact, the Philippines might never recover from the losses if it weren't for foreign investment in the sports arena. Justin's involvement was just one. 

Another was Filipino athlete Hidilyn Diaz, who trained under Mainland Chinese instructor Gao Kaiwen. Would Hidilyn have achieved that greatness if she just waited for a purely Filipino coach? I dare say not. Filipinos aren't meant to be isolated but to adapt. In fact, the late Lydia de Vega had a career in Singapore, training Singaporean athletes. She was there from December 2005 until later on, before she died of breast cancer at Makati Medical Center on August 10, 2022. This shows that Filipinos are capable of evolving, but only if they don't become stagnant. 

Now, it's time to chop down on IBON's arguments written by Africa

Given that Africa wrote a rather long essay worth 2,686 words, I would prefer to select the arguments that would fit this essay. Now, I'd like to consider how Africa's arguments may not hold water in the context of international marketing. I would like to quote some more quotes that made my head spin. For example, this quote alone from the same essay I'm critiquing now is worth debunking:

We don’t need to guess what foreign-driven high-tech industrialization looks like because we’ve been trying it for over half a century now. Despite large foreign manufacturing investment, Philippine manufacturing is down to historic lows. The stock of manufacturing foreign direct investment (FDI) has grown 12-fold in the last 35 years, from US$1.6 billion in 1990 to US$18.7 billion in 2025.

I wonder if Africa bothered to compare FDI inflows between the Philippines and its richer Asian neighbors, to see how the Philippines' FDI is still considerably lower than countries like Singapore (Makabayan Bloc's favorite punching bag, because of the late Flor Contemplacion), Malaysia, Indonesia, Communist Vietnam (and its currency, the VND is weaker than the PHP), Communist China, Japan (JPY is also much lower than the PHP), and Taiwan with their FDI inflows are actually much higher than the Philippines?

Honestly, if anyone were to be honest, the FDI inflow of the Philippines vs. its richer Asian neighbors (and honestly, we can never get richer by blaming our richer Asian neighbors) is staggering. In fact, a simple Google search may reveal the gap between the Philippines and other countries in terms of FDI lag. For example, the Philippines only had USD 9 billion in 2025. However, the richer nations like Singapore had USD 150.90 billion, Indonesia had PHP 21.44 billion, Vietnam had USD 20.35 billion (and ot think it's a Communist country), Thailand had PHP 19.10 billion, and Malaysia had USD 15.39 billion. The gap is indeed staggering. Has Africa even considered that data? Did he bother to get the ASEAN Key Figures 2025 report last year?

Africa's statement would certainly make the likes of the late Lee Kuan Yew and Mahathir Mohamad cringe. LKY wrote in his book From Third World to First based on his extensive experience in leading Singapore. What interested me even more was how LKY documented his conversations with Vietnam and China, two Communist countries that realized that isolationism wasn't helping. In fact, the economist, the late Nguyen Duy Cong, aka Do Muoi, consulted LKY to help develop Vietnam from a nation ruled by Vietnam War ideology towards Vietnam's industrialization. 

FDIs didn't do anything or add to development?

This is where I must ask, "Does IBON really understand how FDI works?" This statement by Africa is most likely a half-truth, which is more dangerous than a blatant lie:

In short, after half a century of making semiconductors in the Philippines, we still don’t really have a Filipino semiconductor industry; we have foreign semiconductor firms operating in the Philippines. There is barely any Filipino ownership of the industry, little movement even into the low value-added ATP segment, and certainly none towards its commanding technologies. “The Philippines” exporting advanced technology doesn’t mean Filipino firms, it means foreign firms producing in and exporting from the country.

These sectoral trends track a larger pattern of foreign investment without development in the economy. The stock of FDI in the Philippines reached over US$133 billion in 2025, a hundred-fold increase from just US$1.3 billion in 1980 while rising from 3.5% to over 27% of GDP. Despite the huge increase in foreign investment, which successive administrations have been over-eager to attract, IBON estimates that over half of Filipino families, comprising three-fifths of the population, remain poor and vulnerable, with millions more in precarious lower middle-class circumstances.

This brings us to a critical point routinely overlooked in discussions of investment and development – the nationality of investment matters, and foreign investment can’t substitute for national industrialization policy.

IBON may be trying to frame it as no development. However, if we look at the reality, foreign investors are and should be regulated by reasonable restrictions. For example, these things are part of economic development:

1. Payment of taxes to the Philippines, which in turn increases the revenue of the Philippines.
2. The number of jobs increased, such as with the creation of the IT Park in Salinas Drive, Cebu City.
3. Almost every technology used in Filipino businesses today is purchased from FDIs. It doesn't matter if the equipment is imported, as long as it helps sell local Filipino products. For example, Grab and Foodpanda help expand the Filipino food industry. 
4. FDIs are naturally bound to follow the laws of every country they are in. In the Philippines, do as Filipinos do. In China, do as the Chinese do. In a Muslim country, respect the Sharia laws; don't even think of smuggling haram products!

Does nationality even matter for the national development of the Philippines?

This is the question that needs to be answered. Back in my elementary days, we often discussed colonial mentality. Honestly, the more I think about it, perhaps I'm justified in hating the Filipino subject. If the Filipino subject was taught as all about Pinoy Pride in poems like "Ang Dalagang Filipina" (The Filipino Woman) or in bragging about how "great" Filipinos are, ignoring the systemic decay that led to a dysfunctional society, it gets annoying. I even want to imagine Africa himself as that Filipino teacher, or perhaps he was among those who helped "upgrade" the Filipino subject, where Filipinos are often romanticized, where one can brag that the Marikina shoes are "export quality", or how often people are told to buy Filipino because it's Filipino. 

Even worse, I remember during the Buwan ng Wika program back when I was 10 years old (that would be in 1995), there was a skit of Filipinos rallying to bring down France by shouting, "Ibagsak ang France!" They were supposedly "burning" the French flag. It was during the time when Jacques Chirac, the French president in 1995, decided to pursue a risky nuclear program. Of course, protests were necessary but to demonize the whole of France because of that? Well, that's another story. In the Buwan ng Wika play, some schools even demonstrated their protests by featuring Flor as a heroine.

Now, it's time to go after some incredibly glaring issues in Africa's post. Here's one thing that feels funny and painful at the same time. Now, to quote Africa's post, which, for me think why I couldn't take IBON seriously:

There’s a simple rhetorical trick behind all the Pax Silica excitement, i.e. set up a foreign-owned high-tech factory or an AI data center on Philippine soil and suddenly we are high-tech manufacturers and AI producers.

But the “we” isn’t really us. Pax Silica-driven American and other foreign investors locating in the country will own the factories and technologies, will make all the strategic decisions, will capture all the profits, and will be building the capabilities to keep producing things better. This isn’t development, it is providing the address for someone else’s industrialization.

Why does the nationality of firms and of capital matter so much? Nationality matters because Filipino ownership matters to capture the gains from economic activity in the country. Beyond mere geographic location, the nationality and ownership of investment determines who controls the firm, who has and who builds technology, and whose economy accumulates productive capacity and wealth.

Foreign firms bring potentially useful capital, technology and markets, as domestic cheerleaders always highlight. But decades of foreign investment enclaves shows how they operate through global networks and ultimately make investment, sourcing, technology and production decisions according to their own corporate interests—and not what develops the Philippines which is just another location for them.

In contrast, Filipino firms are more likely to buy from and work with other local enterprises, reinvest and accumulate capital here, develop technologies suited to local needs, and create wider employment and income gains, because their businesses are rooted in the domestic economy. More than foreign investors, Filipino firms should be the primary recipients of government protection, promotion, and support.

This isn’t just speculation. For instance, summarizing decades of development policy, the United Nations Conference on Trade and Development (UNCTAD) put the importance of national industrialization plainly: “A strong and sustained investment drive by national elites [has been] a defining feature of successful development episodes [and the creation of a domestic industrial base].”

It’s also strongly confirmed today when even the world’s largest and most powerful country declares “America First” in trade and investment policy.

This is where plain ignorance is defeating common sense and research. Honestly? I would like to address my list of personal objections. In fact:

1. There's really a poor understanding of what profits are all about. Apparently, Africa is already confusing profits with revenues. It's, in fact, a common problem where we say, "Only FDIs will get rich!" because we ignore the fact that FDIs only get rich based on net profits after taxes.
2. The fallacy that the nationality of the businesses matters much ignores the pragmatic view Deng Xiaoping created. Deng said, "It doesn't matter if the cat is black or white, as long as it captures mice." Saying that Filipino ownership matters because who controls the firm. Never mind that in actual practice, FDIs are under the host country's government even if they own the businesses. The FDI can be from Japan but if it invests in the Philippines, it must serve the interests of the Philippines first.
3. I'll give Africa credit for saying that FDIs are bringing useful capital, technology, and markets. However, the problem is that Africa is saying that these FDIs are "only after their own interests", never mind that if they do business in the Philippines, they are required to cater to the interests of Filipinos even if they own 100% of the business's profits. It's because, again, stop confusing profits with sales!
4. We are also ignoring that when MNCs invest, practicality naturally kicks in. This means that MNCs are ultimately coerced by circumstances rather than law to do the following:
• They would hire local people first because importing the workforce from their country is an utterly impractical logistical challenge.
• They would start buying and availing of local enterprises, reinvest, and accumulate capital in the host country to keep it going. The FDIs would need the capital in the host country. That means FDIs would be required to get the necessary documents and permits. They would naturally even open a local bank account because they need to deposit the money somewhere. FDIs would open that bank account, invest that money, and in turn, it would help local businesses. The FDI may come from Japan, but it may end up opening a Metrobank or BDO account to start.
5. Also, it's amazing how Africa even quotes the UNCTAD, but does he really understand what he was quoting? In fact, national industrialization doesn't require that the majority of the Philippines' businesses be owned by Filipinos. On the contrary, it's all about accepting capital while letting FDIs own 100% of the business (ownership), even if land ownership may be out of the question. Again, did Africa bother to read its sources properly?

More Filipino First Policy rhetoric, only to cause it to become Filipinos last

It's time to look at this statement by Africa, which really shows how IBON is still stuck with Carlos P. Garcia's proven-to-be defective rhetoric:

The alternative starts with asking the right question. It’s not how to make high-tech foreign investment come to the Philippines but how to make foreign investment a genuine tool for Filipino industrialization and development.

The policies for doing this are well-established in the economic history of the original imperialist powers, other industrial capitalist countries, Socialist economies, East Asian development states, and virtually every country that has made any kind of industrial progress. 

This is where Africa may be confusing things. If we look into his rhetoric, it falls under the either-or fallacy, or false dilemma. For one, the high-tech foreign investment may arrive in the Philippines while looking at them as tools for Filipino industrialization and development, such as:

1. Every tax the high-tech firm pays is for the Filipino government. This will allow for the funding of public projects like roads, bridges, improvements to public schools (which are often underfunded), and the government office's improvements. For example, I remember going to the BIR office at Pardo, and I was amazed that their new office is just so much better than the old building.
2. Whenever high-tech firms arrive, Filipino businesses naturally get new stuff to work with. This can be helpful in agriculture (such as what Vietnam did, as well as the Masarang Foundation) and native delicacy manufacturing (such as using tools that can grind ingredients faster, such as a stainless steel grinder, or Bongbong's Piaya uses high-tech equipment). Filipinos don't necessarily need to create smartphones that are of Filipino brand, but I'd welcome to that idea. The smartphones can help the businesses grow.
3. Africa may be ignoring that Vietnam and China invited high-tech FDI and made them tools for the development of their Communist parties. Vietnam and China didn't say, "FDI caused us to lose because we didn't have a local version." Instead, both Communist countries understood that their ideology had to evolve or become obsolete. In fact, when an FDI invests in a country, that country becomes the direct recipient, and the country starts to get the jobs, taxes, customers, and the like. 

Even more, Africa adds this ignorant argument to the mix:

For instance, in the Philippine Pax Silica framework agreement supposedly to be signed in November, the Marcos Jr administration could assert a few basic principles. We will favor Filipino firms and protect infant industries. We will insist on Filipino ownership and joint ventures. Foreign investors will be required to transfer technology and source more inputs domestically. Government procurement will be used to develop Filipino producers. We will uphold the rights of Filipino workers and enforce strict environmental safeguards. We will decide which foreign investors can operate in the ESZ, Luzon Economic Corridor (LEC), and elsewhere. And we will trade and cooperate technologically with whichever countries we deem best to advance Philippine development.

Pax Silica may yet bring more factories, exports, investment and high-tech jobs, but, given the Philippine government’s outdated economic policies, this is just providing the address for the industrialization of the US and other foreign countries. We’ve been hosting foreign investors for decades, and it is long past time to stop confusing their industrialization with ours. Our land, labor, natural resources and public funds should first and foremost be used to build Filipino industries, technology, and productive capacity.

The shiny cutting edge high-tech Pax Silica may indeed be different this time. Unfortunately, the way things are going, it will be different in the sense of a new level of dependence and making real Filipino industrialization even harder.

To conclude, I would like to cite these objections:

1. How many times do I need to say that ownership of the business is a totally separate issue? FDIs can run a business without a Filipino owner, but they are still required to pay taxes, pay proper salaries, get registered, and follow every local law. 
2. The problem with insisting on joint ventures (again) is that it promotes overpriced rentals. For the nth time, try convincing me that 60-40 isn't the problem, because it's certainly the problem that clogged up FDI inflows.
3. The requirement to transfer technology is already a step closer to what the late Idi Amin Dada did in Uganda. Idi Amin confiscated the businesses of Asians and gave them to Ugandans. The same problem was also done when Adolf Hitler seized the wealth of the German Jews and gave it over to Germans who weren't Jewish. Sure, IBON isn't suggesting a Holocaust or expulsions. However, I'm afraid they may be a step closer to the examples I just gave.
4. The idea that the land, labor, natural resources, public funds, etc. should be "first and foremost" used to build Filipino industries, technology, and productive capacity is also practically spoon-feeding businesses. If you keep feeding the child even if they can feed themselves, you know what happens. The child never learns to feed themselves!

In reality, the Philippines' real outdatedness is the Filipino First Policy. As I love to say it, there's zero room for Filipino First in the Asian Century.