Marina Bay Sands is One Big Foreign Direct Investment

Marina-Bay-Sands-3These days, when you think about Singapore, you imagine a photo of the “three buildings with a boat on top.” If you have friends who have been to Singapore, they prove that they visited it with a photo of them with Marina Bay Sands as the backdrop. For all intents and purposes, Singapore’s new de facto landmark is Marina Bay Sands.

But did you know that Marina Bay Sands is actually the result of Foreign Direct Investment?

Make no mistake, folks… Marina Bay Sands is majority-owned and operated by a foreign entity — an American company called “Las Vegas Sands Corporation.”

But Singaporeans and the Singapore Government have absolutely no issues with the fact that Singapore’s representative landmark is foreign-owned, because they are practical and business-minded and understand that Marina Bay Sands creates lots of jobs, other economic opportunities, and generates a lot of money that gets pumped into the Singapore economy, and a lot of tax revenues. Marina Bay Sands is a premier venue for international conventions, bringing in lots of attendees from all over the world to attend such events, and turning these attendees into tourists who pump a lot of money into the Singapore economy.

Overall, Singapore wins because of Marina Bay Sands because Singapore now has a nice landmark that tourists and visitors associate with the country, lots of jobs were created and Singapore earns a great deal of money from its operations. Singapore is more than happy to receive foreign direct investment for big projects such as this. In essence, Singapore did not need to spend money for this. Las Vegas Sands Corporation took the risk of spending all the money to make this impressive mega-structure.

Singaporeans don’t care that an American company owns Marina Bay Sands because Singapore benefits from it anyway!

This is a far cry from the barriotic-minded attitudes of many so-called “Nationalistic” Filipinos who make an oftentimes overreacting fuss about “national patrimony” when it comes to ownership by foreigners of corporations in the Philippines. Small-mindedness often takes over and prevails in the Philippines and the bigger picture never gets looked at. Instead of pragmatically looking at the fact that inviting in foreign direct investors and multinational corporations will create lots of jobs in such a short span of time for Filipinos based in the Philippines and that these MNCs will bring in technology, skills-training, and know-how that is quite often of a much higher level than what is available in the Philippines, these barriotic-minded “nationalists” (kuno) end up letting their irrationality and emotions take over and all they see is that “foreigners own the companies.” They don’t see the bigger picture in which employees and the wider society are benefiting from the employment generation and the skills and knowledge-transfer that occurs.

But let’s look at Singapore. Singapore’s prosperity is the direct result of Foreign Direct Investment. In fact its very existence as an entrepôt long before its independence in 1965 was the result of Foreign Direct Investment by the British East India Company. After Independence, the late founding Prime Minister of Singapore Lee Kuan Yew realized that the fastest way for Singapore to solve its unemployment problem and develop its economy was to bring in Foreign Direct Investors and Multinational Corporations.

As such, in Lee Kuan Yew’s book “From Third World to First”, he writes in pages 57-58:

“The accepted wisdom of development economists at the time was that MNC’s were exploiters of cheap land, labor, and raw materials. This “dependency school” of economists argued that MNC’s continued the colonial pattern of exploitation that left the developing countries selling raw materials to and buying consumer goods from the advanced countries.

MNC’s controlled technology and consumer preferences and formed alliances with their host governments to exploit the people and keep them down. Third World leaders believed this theory of neocolonialist exploitation, but Keng Swee and I were not impressed. We had a real-life problem to solve and could not afford to be conscribed by any theory or dogma.

Anyway, Singapore had no natural resources for MNC’s to exploit. All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent. Our duty was to create a livelihood for 2 million Singaporeans. If MNC’s could give our workers employment and teach them technical and engineering skills and management know-how, we should bring in the MNC’s.”

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In the preceding excerpt, the late Lee Kuan Yew reveals that he was exposed to the prevailing anti-MNC and anti-FDI mindset that dominated among many Third World economists and ideologues. This is the same mindset that was promoted by Filipino Leftist ideologues such as Joma Sison, Renato Constantino, Alejandro Lichauco, and are continuously peddled by leftist groups such as IBON Foundation, NEPA (National Economic Protectionism Association), and the MAN (Movement for the Advancement of Nationalism), Bayad Muna, and the CPP-NPA-NDF and its numerous front orgs.

But these ideologues cared more about ideology and theory, not much about practicality and real world problem-solving. Lee Kuan Yew, being an extremely sharp thinker felt that such theories may have sounded cute on paper and could stir people’s emotions, but would have likely failed or at best taken a very long time to succeed. He couldn’t afford failure. In fact, his practical-mindedness made him consider the fact that setting up industries required technology, know-how, and financial resources which the local investors & businessmen and even the country’s government did not have.

The lag-time in waiting for local industrialists to emerge from the current pool of businessmen would have meant that many unemployed Singaporeans would have been jobless and poor for a long time. Since Lee needed pre-packaged “ready-to-run” solutions, he felt that bringing in MNCs and Foreign Direct Investors who already had the financial resources, the know-how and the technology to hit the ground running was Singapore’s best chance to immediately create jobs in the shortest possible time.

It helps greatly that the late Lee Kuan Yew and his friend and colleague the late Goh Keng Swee were both highly analytical and highly intelligent skeptics who had doubts when pure theories and ideologies were bandied about without any practical basis. So the anti-FDI and anti-MNC sentiments prevalent among many third world economists did not impress them.

In page 66 of LKY’s book “From Third World to First”, Lee explains:

“We did not have a large group of ready-made entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton (Guangzhou), and other cities when the communists took over.

Had we waited for our traders to learn to be industrialists we would have starved…

It is absurd for critics to suggest in the 1990’s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNC’s. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNC’s in Singapore.”

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As it turns out, Lee Kuan Yew had practical experience as a businessman – particularly during the Japanese occupation. This experience made him understand the requirements of running business operations and understanding certain processes.

This is unfortunately what many Filipino leftist ideologues lack. Most of them have never operated businesses, and many have never worked in real industry. In most cases, they tend to be ivory-tower academics (usually from non-practical fields such as literature), as in the case of Joma Sison. Not understanding how business or industry works, such ideologues are quite likely to talk purely about highfallutin’ concepts such as “sovereignty” or “national patrimony”, but they do not understand the practical concepts of how a manufacturing or other industrial operation must be set up nor do they understand the kind of financial capital, technological know-how and skills-requirements needed to make it work successfully.

Attracting Foreign Direct Investment is the route that Singapore took in solving its unemployment problems because it is the fastest way to get companies set up as MNCs already have existing technology, know-how, and even monetary resources at their disposal. Even Malaysia under Mahathir bin Mohamad also tapped Foreign Direct Investments and MNCs in order to solve their unemployment issues.

From page 308 of Mahathir’s memoirs “A Doctor in the House”, Mahathir writes:

“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.”

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Dr. Mahathir, just like his contemporary Lee Kuan Yew, had also been a businessman during the Japanese occupation, and had developed a keen understanding of how businesses are run. The quote below, taken from page 334 of “A Doctor in the House” reveals how Mahathir had a similar insight with Lee Kuan Yew regarding the fact that the local businessmen in Malaysia (and Singapore) were mostly traders and most did not have the confidence to go into certain new fields in which they were unfamiliar. It was for this reason that it was necessary to invite Foreign Direct Investors and MNCs that had the expertise and the financial resources to set up operations in industries or fields that local businessman had hitherto not had any expertise in.

Here is the quote from page 334, Mahathir writes:

“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.”

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It is therefore foolish for Filipino leftist ideologues and proponents of “National Industrialization” to mindlessly and irresponsibly champion protectionist state-sponsored industrialization when local expertise in properly and successfully executing the operations required in such industrialization is woefully inadequate or non-existent.

The problem of the Filipino leftist ideologues is that they care more about their ideology and dogma than they do about the actual welfare of the ordinary Filipino People. They do not care that their plan for “National Industrialization” is likely to fail because they never cared to understand the prerequisites (financial capital, know-how, technology, etc) necessary to make it succeed, nor do they even care that attempting to make “national industrialization” actually happen can and will take a very long time before majority of Filipinos can be gainfully employed. Filipino leftist ideologues unfortunately aren’t really all that interested in job creation. Their primary goal is in fulfilling their ideological mandate.

In stark contrast, Dr. Mahathir, in page 372 of his memoirs, insists that job creation is of utmost importance:

“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.”

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Singapore and Malaysia are both the two most developed economies of the ASEAN region and both countries relied heavily on Foreign Direct Investments and bringing in Multinational Corporations as a means of creating thousands of jobs in a short span of time and training many local employees to learn new technologies and skills that they would not have learned had the foreign investors not come in.

The single biggest indicator of Singapore’s reliance upon Foreign Direct Investments for job creation and economic development is the fact that Singapore’s new modern landmark is none other than a Foreign Direct Investment itself: Marina Bay Sands.

The Philippines ought to learn from this and realize that there is nothing wrong with relying upon FDIs and MNCs when it comes to fighting unemployment and developing the economy. It is precisely because so many Filipinos and so-called “intellectuals” have not yet learned this insight that the Philippines continues to have the highest unemployment rate in the ASEAN region and continues to have a chronic dependence on sending OFWs to foreign countries, Singapore included.

The Philippines must immediately remove all of its outdated and barriotic 60/40 restrictions and other anti-FDI restrictions that keep Foreign Direct Investments low.

CoRRECT™ the Constitution NOW!

Here's how bad the level of FDI has been in the Philippines when compared to the rest of ASEAN.

Here’s how bad the level of FDI has been in the Philippines when compared to the rest of ASEAN.

(Singapore was not included in the graph above as its advanced First World status and extremely high FDI figures would dwarf all the other ASEAN countries as Singapore’s FDI in-flows are generally more than twice the highest FDI-inflows in the graph.)

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About the Author

OrionOrion Pérez Dumdum is an IT Professional based in Singapore and is an accomplished and award-winning Stand-up Comedian during his free time outside of his IT day-job and his Constitutional Reform advocacy. Orion won First Prize in the 2014 Magners Singapore International Comedy Festival Best New Act Competition. He also won the August 2014 “Open for Steve-O Competition” that got him becoming the opening act for International Stunt-Comedian Steve-O from “Jack-Ass” in his Singapore tour.

Being an Overseas Filipino Worker himself, he has seen firsthand how the dearth of investment – both local and foreign – is the cause of the high unemployment and underemployment that exists in the Philippines as well as the low salaries earned by people who do have jobs. Being Cebuano (half-Cebuano, half-Tagalog), and having lived in Cebu, he is a staunch supporter of Federalism.

Having lived in progressive countries which use parliamentary systems, Orion has seen first hand the difference in the quality of discussions and debates of both systems, finding that while discussions in the Philippines are mostly filled with polemical sophistry often focused on trivial and petty concerns, discussions and debates in the Parliamentary-based countries he’s lived in have often focused on the most practical and most important points.

Orion first achieved fame as one of the most remembered and most impressive  among the winners of the popular RPN-9 Quiz Show “Battle of the Brains”, and got a piece he wrote – “The Parable of the Mountain Bike” – featured in Bob Ong’s first bestselling compilation of essays “Bakit Baligtad Magbasa ng Libro ang mga Pilipino?” He is the principal co-founder of the CoRRECT™ Movement to spearhead the campaign to inform the Filipino Public about the urgent need for Constitutional Reform & Rectification for Economic Competitiveness & Transformation.

Tacloban Tragedy: A Painful Wake-up Call

Tacloban after Super Typhoon Haiyan

Note: This was originally a status update from FB that went viral. We were able to  get permission to publish it from the lady who was able to speak with several survivors of Super-Typhoon Haiyan (local name: “Yolanda”) particularly the update of her own cousin who was in Tacloban when the disaster happened.

We’ve been instructed by her to edit some areas of the original post, in order to protect the witnesses who recounted their tales. But it is really important that we who were not there on the ground be able to read accounts like this. We’ve also modified some of the formatting and have italicized or set some of the text in bold where the original author sought to emphasize certain words or phrases.

The original Facebook status update was written on November 17, 2013, so please take note that “yesterday” refers to November 16 and calculate other time references accordingly.


     Krizette_FB

Dear friends,

Yesterday we met and talked to six survivors, not including my husband, who only had to survive the aftermath. In truth, for all the images we see here in Manila, all of them say that we cannot fully comprehend the extent of the devastation unless we see it with our own eyes — or smell the stench of death that sticks to clothes.

“The storm only lasted for 5 hours,” says my cousin. Her home, situated in front of Robinsons Place Tacloban and MS grocery, suffered minor damage. It was only after going out to survey the damage that she only fully understood the severity of the situation: Everywhere she looked she saw people walking dazed, frantic, and calling out for loved ones. She is a volunteer, so she walked to the city hall to help out the local government, saw bodies lying by the side. She and other volunteers, she says, repacked goods during that first couple of days. It was also understood that they would be given a pack each. “We saw it loaded in a truck, the truck drove away, and we never saw it again,” she remembers. “The volunteers were also not given anything.” 

Day One, she says, people waited patiently for help. By the end of Day Two, people became frantic. (Imagine finding your family members dead, your house completely damaged, no water and electricity, all compounded by no food.)

The first “looting” at Robinsons grocery was relatively peaceful, says another survivor who does not want to be named. People helped themselves and each other. “They were friendly, you can ask people where the baby food aisle is and they’d even help you go there,” says the survivor. People only took what they needed.

“It only became violent in days three and four, when people had been going for days without food or water and the bodies were still in the streets,” adds my cousin. Another grocery right beside Robinsons Mall, Market Savers, which is set up like Makro or S&R (warehouse style) stationed several armed men in the entrance protecting already-damaged goods. For 3 days, people ignored it. And then because starvation can make you do desperate things, on the fourth day, the guards were overpowered by a hungry, angry mob. Guns were reportedly fired, and some people got hurt.

“People have been neglected without nothing to eat for almost a week, their family missing, and you didn’t see any semblance of government,” says my cousin. Save for the organized criminals who attack the stores with guns and trucks, the ordinary looters only went in the stores days after inaction from the government, and only got what they needed. Another store, a corner mom and pop operation, was also looted, but the owners decided to just distribute the goods by “throwing” them from the second floor of the building. To be fair to the businessmen of the city, they gave away what they had. Another cousin of mine who owns gas stations gave away their gas before heading to Manila. My cousin also told a local official that somebody should go around with a megaphone to announce the schedule of the delivery of food, to calm the masses. “In one ear, out another, “ My cousin says, shaking her head ruefully.

There’s no use sugarcoating this: the government bungled the operations. The local government of Tacloban is ill-equipped; the national government’s attempts are half-hearted at best. I chatted on FB with the wife of the highest official of Tacloban and she believes the help did not come because of politics.” She laments, “They are so evil, they are so mean.” “They” refers to the national government. I shiver to think that President Aquino would intentionally neglect the people of Tacloban because it is a Romualdez bailiwick. But, guess what, I wouldn’t put it past him. Pakabili po siya ng empathy at sympathy, dahil wala po nun ang presidente natin.

Still, because it is human nature to move forward, you can see the first signs of life in Tacloban. Some stores are already opening — yesterday, too, some businessmen who are now in Manila met to discuss the economic future of the city, yet some will be forever boarded up. How can you recover when the chain of supply and demand is broken? The businessmen in the city lost their stocks, which amounts to millions. They have suppliers they are answerable to. Some of these goods were purchased on credit. In one fell swoop, all they worked hard for all their lives are gone, just like that. And then there are ordinary employees who now have no work and no means of income, because the offices will not be open in at least a couple of months. The scenario that looms for most: No house, no food, no money. There are those retirees who spent all their retirement money to finally purchase their own modest houses, and now they have nowhere to live. It’s hunger + helplessness + depression. Lesser people would have crumbled — but Warays aren’t getting sad, they’re getting mad.

Mr. President, people are not statistics. It only took one day—sorry, I meant five hours—for everything to change for them. Waraynons are naturally courageous and resilient, our ancestors after all were warriors, but we need help rising up from the rubble. You don’t think we’re even worthy of one day worth of your attention. You have not stayed even one full day to assess the damage.

Only 29 towns have been given relief—Leyte has more than 40 towns—7 days after the typhoon. The situation may be getting better, but not nearly fast enough for the millions of people at the mercy of a President who may care, but not nearly great enough.


The Wake-up Call

As you may already know, the issue of the national government’s unwillingness or inability to respond appropriately in providing relief to the victims of Supertyphoon Haiyan (aka “Yolanda”) is all related to the low quality of leadership over at the Palace. This is all a result of the election in 2010 of a man who was not only ill-prepared to assume the responsibilities and duties of being the top decision-maker of the country, but was totally unwilling to even try to get himself up to speed.

This was thanks to the dynamics of the Philippine system of government and the way elections occur within a Presidential System. Aside from all the research done by world renowned political scientists which has revealed numerous problems of presidentialism such as gridlock, a tendency to make extensive use of discretionary pork barrel funding, and a tendency towards greater corruption, our Presidential System has unfortunately caused many ordinary Filipinos — including highly educated ones — to tend to vote based on personality and name-recall. Presidential Systems tend to make people care less about platforms, programmes, and principles, and care more about “the personality of the person we voting for” and look at markers like “who his parents were” or “what surname does he have.”

Had we instead had a true Parliamentary System (not the fake/bogus one we had under Marcos’ martial law era or the French-style “strong president” semi-presidential system Marcos shifted to in 1981 when martial law was lifted), the Philippines’ electoral dynamics would have been very different.

In Parliamentary Systems, people do not care only about voting for who their local district representative would be but also care about who the party leader is of the party that the local candidate they choose belongs to. As such, instead of looking only at one personality, voters are forced to look at two main people: the local representative who will represent their constituency, and the party leader who will become the prime minister should his party win a majority of all seats. Since a vote for the local representative means a vote for his party’s leader as well, voters tend to think from within a “big-picture” perspective, putting more importance on the the party affiliations of the local candidates they vote for, knowing fully-well that their local candidates’ party affiliation will likely determine who will ascend to the post of Prime Minister, and which party’s members will constitute the Cabinet.

(Let’s take the UK’s example. When a person votes for the local member of parliament in his own district/constituency, he looks at what parties the candidates belong to.

One candidate might be named “John Smith” who represents the Conservative Party while another candidate named “George Jones” may represent the Labour Party. The Conservative Party is currently headed by David Cameron, while the Labour Party is headed by Ed Milliband. If the voter personally likes John Smith, he also has to consider that voting for John Smith represents voting for David Cameron to continue on as Prime Minister. If he doesn’t particularly like David Cameron for whatever reason, then the voter must then take a step back and look at what “John Smith” has in common with David Cameron: being from the same party and having Conservative Political Leanings. Does the voter agree with those political leanings? Well, that’s what the voter will be forced to deal with. Ultimately, in parliamentary systems, voters care a lot more about party platforms and their manifestos simply because of this electoral dynamic.

More importantly, it’s not just about who is going to be the Prime Minister. It’s about who will become the ministers. If a majority of the members of parliament come from the Labour Party, then the Prime Minister and his Cabinet of Ministers will all come from the Labour Party. If a majority of the members of parliament come from the Conservative Party, then the Prime Minister and his Cabinet will all come from the Conservative Party.)

This change in electoral dynamics goes a long way in improving the way people vote. It also changes the way politicians will campaign during elections. Since Presidential Systems are more about the candidates’ personalities and “who they are”, that’s what candidates and politicians concentrate on selling and what they stand for takes a back-seat. But in Parliamentary Systems, where party affiliation is of greater importance, candidates campaign more about what their own parties stand for. There is less of the “epal” credit-grabbing meant to gain name-recall among the populace. Instead, candidates in parliamentary systems are much more likely to talk about the ideas and principles that their parties stand for and plan to achieve as well as the programs and projects their parties plan to implement.

There are many other major advantages to Parliamentary Systems, including the absence of gridlock as well as the ease of replacing non-performing leaders such as ministers or even the prime minister himself. In addition, the Opposition plays an official and active role in scrutinizing the incumbent government’s policies and implementation thereof so that each minister is “shadowed” (aka “followed around” in meetings) by an official opposition counterpart known as the “shadow minister.” Each minister, including the prime minister, is shadowed by a member of the Shadow Cabinet. The Minister for Education is “shadowed” by the Shadow Minister for Education, etc, and the Prime Minister himself is shadowed by the Leader of the Opposition.

Come question period (which is at least once a week in open parliament), the Shadow Ministers each grill their corresponding ministers in government regarding their decisions and their performance. The most exciting question period of the week occurs when the Leader of the Opposition grills the Prime Minister. This constant scrutiny by the Opposition Shadow Cabinet of the Cabinet Ministers keeps all of them on their toes and prevents them from engaging in corruption, since the opposition and its shadow ministers are always in constant surveillance – looking for any sign of wrongdoing by the government that it can exploit in order to discredit the government and use to further their cause in seeking to take over. This constant surveillance by the opposition is why parliamentary systems have been proven to be generally less prone to corruption than presidential systems.

Imagine if we had a parliamentary system in the Philippines. Noynoy, Dinky, and Mar Roxas would be hard pressed to make excuses they way they did in front of journalists. Unlike journalists who tend to ask neutral questions, the opposition shadow cabinet tends to feature opposition leaders who are out to probe, grill, and cross examine government ministers in the open parliament. No more palusots. No more lame excuses. No more tolerance of incompetence. Noynoy or any other vote-magnet puppet simply cannot survive Parliamentary Question Period.

Post-Disaster Economic Reconstruction

It is also necessary that when thinking about the reconstruction efforts of all the affected areas, we must understand that we will need a lot of Foreign Direct Investments as the quickest way to help out in creating the much-needed jobs that will get people who have lost their livelihoods back on their feet.

Look at this graph of ASEAN’s 2012 Foreign Direct Investment in-flows:

2012 FDI in ASEAN

The Philippines is lamentably at the bottom of the ASEAN pile as far as attracting FDIs goes (which explains the high unemployment rate) and the super-typhoon’s destruction has obviously made things much, much worse as far as unemployment is concerned. We have continued to experience a dearth in domestic job-creation such that more than 10 million Filipinos have been forced to find employment abroad as OFW’s and emigrants. Now, an estimated 4 million people are said to have been displaced. How many of them lost their livelihoods? (Now we can see just how badly we need rapid job creation to occur in the Philippines on a massive scale.)

Removing all of those anti-FDI restrictions as well as the 60/40 ownership limits in the Constitution (as well as laws) will go a long way in attracting more and more investors to set up in the Philippines and create much needed employment for our people. Bringing in FDIs by removing anti-FDI restrictions has worked everywhere it has been tried and it is the secret of Singapore’s success and ascent into First World status despite having been poorer than the Philippines more than half a century ago. Massive FDI-attraction was the jump-starting spark that got China out Maoist Communist economic lethargy to become a major capitalist powerhouse and the second largest economy in the world, and it is also the key ingredient in Indonesia’s rapid rise within the ASEAN region.

We’re all so happy to receive aid and assistance from other countries but we have to realize that aid is temporary. Asking for aid long-term is mendicancy and that is unsustainable. As such, once it’s time to rebuild the Philippines and all the areas hit by disaster, we will start needing to earn our keep. We will need to work to earn some money for ourselves. Whether we like it or not, Foreign Direct Investments create employment opportunities and these pay salaries. We’re not asking for alms: we’re working for a livelihood.

Does it really matter if the companies we work for are foreign-owned versus Filipino-owned? Think about it — more than 10 million Filipinos are working abroad for foreign employers anyway. Bringing foreign investors in allows rapid job creation to happen in the Philippines so that our people can be with their families and find jobs without having to depart for faraway shores.

But lastly, we also need to make sure that when job creation does happen, it happens in the regions, not in the already overcongested Metro Manila where far too many rural peasants have gone in search of work to end up becoming the capital city’s urban poor. That’s why we need Evolving Federalism (aka “Region-based Decentralization”). We need to empower the regions in order to have the necessary autonomy they need to create their own pro-business economic policies that would be more conducive to fostering economic development and attracting investors – both Filipino and foreign.

Ultimately, when all three reforms are done, the Philippines can truly get back on its feet and turn itself around so that it ceases to be Southeast Asia’s laggard. This is not just about  the reconstruction of the affected areas hit by the recent super-typhoon. This is about doing what we should started to do long ago in order to improve our country as the Philippines has continued to slide and get left behind by other ASEAN countries who used to look up to us.

Super Typhoon Yolanda (international name: Haiyan) ought to be the wake-up call that gets all Filipinos uniting behind this most important reform advocacy. This is, after all, for the benefit of ourselves and our future generations. The selfish Oligarchs and the ignorant anti-reform forces have held us back for far too long. It’s time all Filipinos learned more about these necessary reforms and started pushing for them so that we can achieve our rightful place among the successful and competitive countries of the world. Now is the time to spread the word!

CoRRECT™ the Constitution!

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About the Author

OrionOrion Pérez Dumdum comes from an IT background and analyzes systems the way they should be: logically and objectively.

Being an Overseas Filipino Worker himself, he has seen firsthand how the dearth of investment – both local and foreign – is the cause of the high unemployment and underemployment that exists in the Philippines as well as the low salaries earned by people who do have jobs.Being Cebuano (half-Cebuano, half-Tagalog), and having lived in Cebu, he is a staunch supporter of Federalism.

Having lived in progressive countries which use parliamentary systems, Orion has seen first hand the difference in the quality of discussions and debates of both systems, finding that while discussions in the Philippines are mostly filled with polemical sophistry often focused on trivial and petty concerns, discussions and debates in the Parliamentary-based countries he’s lived in have often focused on the most practical and most important points.

He has a nephew and niece who are related to Noynoy Aquino which is why Orion really wants Noynoy to be able to succeed at reforming the flawed Philippine system via Constitutional Reform. Rather than having his nephew and niece suffer the consequences of being related to Noynoy who is turning out to be a failure, Orion would like Noynoy Aquino to do the right thing and regain the honor he has lost so that his own niece and nephew won’t have to suffer that stigma. Noynoy must get the ball rolling for Constitutional Reform.

Orion first achieved fame as one of the most remembered and most impressive  among the winners of the popular RPN-9 Quiz Show “Battle of the Brains”, and got a piece he wrote – “The Parable of the Mountain Bike” – featured in Bob Ong’s first bestselling compilation of essays “Bakit Baligtad Magbasa ng Libro ang mga Pilipino?” He is the principal co-founder of the CoRRECT™ Movement to spearhead the campaign to inform the Filipino Public about the urgent need for Constitutional Reform & Rectification for Economic Competitiveness & Transformation.

Infographic: Solutions to the Root Causes of the Pork Barrel

Baboy-Barrel

Many Filipinos want to get rid of the Pork Barrel. But as mentioned in a previous article, it is necessary to understand the root causes of this “contraption” in order to come up with a truly effective solution.

We at the CoRRECT™ Movement have come up with an infographic that aims to educate netizens in a step-by-step manner exactly how the Pork Barrel came to be and what solutions are necessary to address those root causes in order to totally eradicate the corruption-prone pork barrel as it exists.

Please feel free to pass this infographic around to as many people as possible in order to promote a much deeper understanding of the issue among a wider population.

Making the economic comeback w/ higher private FDI

Dr. Gerardo Sicat

(taken from the Philippine Star – originally published: 13 June 2012)

by Dr. Gerardo Sicat

As economic opportunity knocks on the country, the question is how to maximize the gains for the social and economic good.

“Two needed market reforms.”

There are two market reforms that can bring us to the front ranks of high growth countries. These reforms concern, first, the attraction of private foreign capital in critical sectors of the economy and, second, the improvement of flexibility of the labor market to create greater employment.

I have written extensively on these topics on previous occasions. I will try to introduce new arguments in support of these reforms as much as practicable. (Today, I discuss FDI policy.)

“Broadening the capital base of the economy.”

The improvement of the flow of private foreign capital has to do with the liberalization of the constitutional restrictions on foreign capital.

These restrictions deal with provisions of the constitution with respect to special sectors of the economy: land, natural resources and public utilities. In terms of the corporate framework, the restrictions are summed up in the “60-40” equity rule favoring Filipino over foreign capital participation.

The policy as it stands permits all foreign investments to come to the country except those that are specified in Foreign Investments Negative list. This list enumerates specific economic activities where foreign equity is either limited or banned. But direct incentives to promote specific investments rest mainly with the BOI, further constrained by the restrictive economic policies pertaining to foreign capital.

“President Aquino’s position on the ‘60-40’ rule?”

It is unfortunate that when asked pointedly during the talk that he gave before the alumni group of US business schools recently, President Aquino replied that he felt more “nationalistic” on this issue, implying that he does not intend to work to amend this provision.

The President can speed up economic growth by directing more foreign direct investments to the country through the liberalization of these provisions. The question cannot be put aside. New investors will always ask the same fundamental questions, and they compare our answers with what other countries do. Why not simply do away with the issue?

Nationalism has been used as main cover of the standard argument in support of these restrictions. While indeed the economy has grown, because of the limitations imposed by this policy, the nation’seconomic growth has been limited and less inclusive.

The benefits of development have been confined to a smaller segment of the population. In this respect, the policies have hampered growth, thereby reducing employment and productivity at home.

“Wide gaps in investment needs.”

Today, the big gaps in services exist in public utilities, transportation, and infrastructure. Despite our good natural endowments, there is also under-investment in the natural resources industries and in agriculture.

These are sectors in which the involvement of private foreign capital leaves much to be desired. Energizing private foreign capital to invest in these sectors would imply providing greater leeway to allow foreign capital to move into these sectors.

“PPP participation is narrow.” 

A most noticeable aspect of the PPP (public-private partnership) projects is that there is limited participation of private foreign capital in them.

Many of the infrastructure projects require huge financing and also a high level of technical capacity of the main contractors. And private foreign capital is in search of good investment projects because of low world demand.

A liberalization of the rules regarding the constitutional restrictions – which could only be amended by a concerted effort to deal with the issue through constitutional amendment – would line up more players to the PPP infrastructure projects pipeline of the government.

A consequence of this provision is that foreign capital will seek Filipino partners to do their job well. In their homeland, Filipino enterprise can leverage their contributions to the projects even if in the process they allow a larger proportional inflow of foreign capital and foreign expertise to get the job done.

Solving the infrastructure problems of the country has a sizable impact on raising the country’s economic productivity, thus accelerating the growth of the whole economy. The sooner the better.

“Raising Philippine international competitiveness.”

A perverse outcome of the “60-40” investment rules in the availment of BOIinvestment incentives is that we have promoted relatively weak national firms in the domestic economic sector. This is a setback since we are entering a new stage of competition within the larger free trade ASEAN market.

The best evidence of this can be found in our department stores, grocery shops, and in the hardware and construction supermarkets of the country. Goods that are made in other ASEAN countries can be found that give us tough competition. Our locally made products tend to be more expensive in these stores and sometimes suffer from comparison.

These are products produced for home consumption and for the domestic market. Sometimes we find products that they produce which we do not make at home. The countries that have welcomed foreign direct investments with less restrictive conditions compared to us.

The joint venture enterprises and FDI owned companies in these other countries have managed to encourage firms that produce goods that are of high quality under competitive international pricing. These products could have been produced in the Philippines but the foreign investors had moved to the other countries where they located their factories.

“Integrating the industrial export sector with the domestic economy.”

Another perverse consequence of the “60-40” is the disconnect that exists between the domestic industrial sector and the export sector. The export sector imports raw materials to process them for export.

Our record in industrial export has been reasonably successful. However, we have not developed greater depth in domestic industrial sector because of restrictive policies on joint ventures. The result is that there is very low domestic procurement ratio for industrial export firms.

There are not enough world class FDIs and domestic firms that produce for the local market. The foreign investment promotion laws have segregated domestic enterprises with the enterprises that produce for exports.

This is unlike in Thailand, Malaysia, and now, also in Indonesia and in Vietnam! PEZA-located firms prefer to buy their inputs from world supplies rather than from domestic firms because the latter do not have competitive sources of supply if they exist at all in the domestic economy.

Of course, the evidence for this is simply that PEZA has succeeded more in inviting foreign direct investments compared to the BOI. And PEZA has only a more recent history compared to that of the BOI which dates back to 1967.

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The author’s email is: gpsicat@gmail.com. Visit this site for more information, feedback and commentary: http://econ.upd.edu.ph/gpsicat/

Dr. Gerardo Sicat is an economist who advocates bringing in more FDI and MNC’s as a means of increasing the number of jobs in the Philippines by removing the anti-FDI provisions in the economy that have caused the Philippines to remain poor and unable to provide jobs to its people.

 

‘Sensya na po, Sir…’

Tara, party!

Once upon a time, may isang galanteng gustong mag-imbita sa kanyang mga kaibigan na mag-party sa bahay…

Mr. GALANTE: “Uy mga kaibigan, MAY PARTY AKO SA SABADO!! Kainan, Inuman, Kantahan, Sayawan… PUNTA KAYO SA BAHAY, HA…”

Pagdating ng Sabado…

(Sa gate ng bahay, may bouncer.)

GUEST: “Nandito kami para sa party…” 

BOUNCER: “May dala ba kayong 10,000 pesos?”

GUEST: “HA? Anong 10,000 pesos? Akala ko ba party ito?? Inimbita kami eh.”

BOUNCER: “Sensya na, may 10,000 pesos na entrance fee sa party ni boss…”

GUEST: “Teka, eh siya mismo ang nag-imbita sa amin na pumunta rito tapos ngayon hihingan niyo kami ng 10,000 pesos na entrance fee? Sira-ulo ka ba?”

BOUNCER: “Sensya na po Sir, nakasulat po sa rules and regulations ng bahay ni Boss na pwera lang sa mga kamag-anak, lahat ng papasok dito sa bahay niya ay dapat magbayad ng 10,000 pesos entrance fee. Eto po Sir oh, eto ang Handbook namin. Kita niyo po…

Page 23, line 5:

“Everyone who is a non-relative (within 3 degrees of consanguinity) may not enter the premises, even if there is a party, unless they pay the standard entrace fee of 10,000 pesos.”

GUEST: “Walang hiya naman, nag-imbita ng party eh yun pala may entrance fee!! Sira-ulo pala yang boss niyo!! Doon na lang kami sa ibang party pupunta, at least OPEN HOUSE sila!

BOUNCER: “Sensya na po, Sir, yun po kasi ang nakasulat sa Rule Book namin eh. Tagasunod lang po kami…”

bouncer

Yan ang kwento ng Pilipinas…

Mag-iimbita ng mga “FOREIGN INVESTORS” na pumunta raw sa Pilipinas.

Pagdating ng mga investors sa Pinas, meron palang mga RESTRICTIONS sa Constitution na nagsasabing kelangan muna silang maghanap ng local partner…

Kamot-ulo si investor: “AKALA KO BA INIMBITA NIYO KAMI NA MAG-INVEST, eh bakit kayo may mga kalokohang restrictions na yan???”

Tuloy, pumupunta na lang sa Singapore, Malaysia, Indonesia, Vietnam, Cambodia, India, China ang mga investors… Kawawa naman ang Pinas…

Read more about the issue by clicking here!