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In this
column on Thursday, I wrote about articles in the South
Korean newspaper Chosun Ilbo which said some negative
things about the smaller Asian economies, including the
Philippines. Many of these comments were unjustified and
factually unsupported. I said this was
“Philippines-bashing.”
I
received several e-mails commenting on the attitude of
Koreans toward the Philippines, including from a
Filipino who wrote, “We are living here in Korea and
feel those things. Some even ask: ‘Do you have
refrigerators in your country?’”
Another
wrote of the free-trade agreement that the Koreans want
so that they can export more Korean goods to the
Philippines. Since 2003 we have bought almost $2 billion
more than we have sold to Korea.
Because
of the negative comments about many other Asian
countries, my column ended with what I though was a
satirical, although incorrect, paraphrase of Sen. Juan
Ponce Enrile’s recent comments. “Get out of Asia if you
do not like the way business and government is done
here.”
The
e-mail inbox exploded. “Well, to get to know how
business and government is done in the Philippines, you
just need to read the newspapers. And then you will not
invest in the Philippines.”
And
another; “The Philippines desperately needs foreign
investments. Don’t bite the hand that feeds you. You
need those investors!”
Do we?
Foreign
investment in the Philippines is widely misunderstood.
It is becoming a popular slogan instead of being a
practical economic concept. We live in a world of fast,
nutritionally incomplete food and fast, rationally
incomplete thinking.
Apparently, most people think foreign investment is the
same as a rich ninong (godfather) handing out
pamasko (gifts) at Christmas time. And, of course,
children are cautioned to be polite and respectful for
fear that tito (uncle) will be offended and stop
the giving.
Let me
make my position very clear. The Philippines does not
NEED foreign investment by the definition most people
use for “need” with a sense of desperation and panic.
This investment is desirable, can be beneficial, comes
with its own unique advantages and disadvantages and
should be strongly encouraged.
However,
the issue is more complex than what you usually read in
the newspapers.
The
newfound “wisdom” about foreign investments may come
from the outsourcing companies, emblazoned with the
names of fine foreign firms, such as Convergys. Yet,
Philippine outsourcing started in the early 1990s with
(surprise, surprise) a Filipino company, Saztec
Philippines (Thank you, Alan Fraser. May you rest in
peace), providing data-transcription services to
American companies. Our outsourcing business did grow
with foreign firms partnering with or purchasing locally
owned and operated outsourcing companies.
Do any
of the “Bow before the foreign investors!” movement
members realize that all the malls of the Sy, Gokongwei,
Ayala and Gaisano groups are locally owned? Yes, to a
certain extent, they were built with “foreign money,”
funds that may have been borrowed from the international
banks or in joint ventures. The same applies to the
property companies. But, believe it or not, you may be
shocked to know that the prosperity the Philippines may
have was ultimately built by Filipinos, not the
foreigners.
Foreign
investment is important in three particular situations.
The
first is in an industry that requires a very long-term
and capital-intensive financial structure and where
profits cannot be realized for an extended period. This
perfectly describes the mineral and petroleum
exploration and extraction business.
In this
case, local companies do not have the financial depth to
adequately fund and provide long-term financial support
to this industry. Bring in the foreigners and give them
free San Miguel Pale Pilsen and lechon (roast pork) to
help keep them happy for as long as it takes. Everyone,
foreigner and Filipino, will profit from this
relationship.
Second,
local companies sometimes do not have the complete
necessary expertise, experience and infrastructure to
maximize opportunities. Our outsourcing industry needs
foreign investment to fully exploit the business. An
affiliate of American Airlines started outsourcing in
1983 by using typists in Barbados to key in data from
used airline tickets.
We did
not know the word “outsourcing” then. Foreign companies
like Convergys bought in and had credibility with their
large, existing client base that would trust Convergys’s
opinion of the Filipino ability to do the job. Thanks
for having confidence in the Filipino work force,
Convergys.
SM
investments is collaborating with Sofitel hotels to
build a five-star hotel in Mactan costing P2.8 billion.
Again, expertise and experience, not solely money, is
the motivation for this “foreign investment.”
Third,
need a huge amount of investment capital in a hurry?
Need $15 billion to build the 40-hectare Bagong Nayong
Pilipino-Manila Bay Integrated tourism project? Of
course, you look to foreign investors. That only makes
sense since there is more investment money offshore than
onshore.
This is
a smart investment choice from foreign investors
Malaysian Resorts World Bhd., Aruze Corp. of Japan,
Genting Berhad Group of Malaysia and Bloombury
Investments Ltd. All of these companies will make a
fortune in Philippine-generated profits and create
250,000 local jobs. Have another Super Dry, gentlemen.
We are buying the beer to celebrate our joint venture.
The
Philippines needs a regulatory environment procedure to
attract, easily facilitate and welcome desirable and
profitable foreign investment. Yet, to take the attitude
of a bargirl waiting for the foreign sailors to arrive
is not only degrading but also completely
counterproductive to advancing the goal of economic
self-sufficiency.
Foreign
investment is but another economic tool for a nation’s
prosperity. It is not the only tool.
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