I am increasingly convinced that the worst legacy of the American occupation of the Philippines was the apple—the fruit, not the phone. While I have no first-hand personal knowledge, I would assume that the inhabitants of the Philippines were previously content with native grown fruits like Mango, Rambutan, Lanzones, Mangosteen, and Saba banana.
Since the introduction of the apple, foreign apples are constantly compared to Philippine mangoes. And by Philippine mangoes, I mean Filipinos, the government, the land, the laws, eating with a spoon, telenovelas, the economy, and skin tone.
Comparisons are good if they make you strive to be better and more accomplished. But then you should be sensible and realistic with your comparisons. The average Filipino man is 163.22cm (5 feet 4.25 inches) tall. The average National Basketball Association player is 6 feet 7 inches (2.01 m) tall. Broccoli has significantly less fat than a candy bar.
According to the United Nations Conference on Trade and Development, the Philippines was “the lone economy in Southeast Asia to avoid a contraction in foreign direct investments last year, as FDI inflows to the country went up 29 percent in spite of all the challenges posed by the Covid-19 pandemic. FDI flows to the Philippines, bucking the trend, rose by 29 percent to $6.4 billion.”
That is nice, of course, but the Philippines was coming off a low base and we still lag way behind our neighbors. But maybe there is a reason for that.
“Why can’t we be like Singapore? We need a parliament, a new Constitution, and a Lee Kuan Yew.” Sure. Why not.
Buy maybe Singapore’s FDI had its foundation on a government official gazing out the window at The Istana and seeing a continuous stream of Indonesian tankers filled with crude oil going past Singapore harbor. In the 1970s and 1980s, Indonesia was a significant oil exporter. But they primarily exported crude oil to be refined in Japan and Europe.
So, the Singapore Refining Co. Pte. Ltd. was founded in 1979 to establish a robust value-adding industry around refining, storage, and oil exports.
Another thing that has helped with Singapore’s FDI over the decades is that all the goods that are exported to Asia from Europe has to pass by Singapore harbor and can easily/cheaply be transshipped by land or sea to the rest of Asia and the Western Pacific.
Vietnam is a large manufacturing hub. This “apple” has mighty rivers, and electricity costs eight US cents per kWh. Hydroelectric power accounts for 30 percent of the energy mix. In the Philippines, power cost is 20 cents per kWh. The Philippines has volcanoes, not rivers, and “cheap” geothermal electricity is about 12 percent of the mix. But, unlike with cheaper hydro development, it costs up to $8 million for each geothermal well, with no guarantee of success.
If you want to compare ripe mango with green mango, note this: Thailand is the 12th largest global auto manufacturer. For 30 years, Thailand has imposed an 80 percent import tariff on cars and 60 percent on motorcycles. And for manufacturers, an eight-year tax holiday and 50 percent income tax reduction forever. In the Philippines, passenger car imports increased by 35 percent from 2014 to 2018, with imports exceeding domestic production.
More apples to mangoes: “Mining and quarrying” is 7.6 percent of Indonesia’s FDI and accounts for 7.3 percent of GDP. For the Philippines, it is 0.00 percent FDI and 0.6 percent contribution to GDP.
Mangoes are yellow. Apples are red. If you can’t tell the difference, your brain might be…oh…never mind.
E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.