Last Friday, after reading the article written by Herman Tiu-Laurel through The Daily Tribune titled “‘Opening-up’ RP“, in respond to Peter Wallace’s column titled “Constitutional change now” with a xenophobic rhetoric particular against the Australians, the nationality of Peter Wallace of saying that he should return to the land of “bandits, rogues and garbage”.
I could not control myself but to respond his garbage, miseducated, and xenophobic editorial that was published not just in the internet through the website of The Daily Tribune but also in the conventional print circulation distributed nationwide wherein few could had read his editorial and I have to write his rebuttal in order not to be brainwashed or mislead by a certain Herman Tiu-Laurel.
He writes that our neighboring Asian countries have restrictions in foreign equity ownership in certain economic sectors, except except in sectors where locals have no competence, inclination or capital to venture in. I do agree on that however, he forgot that their restrictions in foreign equity ownership in certain economic sectors have been done through a simple legislation framework that would be easier for them to restrict or relax foreign equity ownership restrictions in certain economic sectors unlike here in the Philippines, wherein our foreign equity ownership restrictions have been stipulated in our 1987 constitution at all economic sectors practically (Article XII, Section 2, 10-11; Article XIV, Section 4; and Article XV, Section 11) or what we known as the 60/40 forced equity ownership sharing in favor of a Filipino individuals or corporations where foreign investors have to surrender their 60% of control of their own capital to a certain Filipino individual or corporation which is riskier compared of letting foreigners invest 100% from his/her own pocket and control what he invest in a particular business.
He forgot to realize that as of July 2012, the Philippines only got $900 million foreign direct investment inflows compared with $800 million in July 2011, a growth of 10.6% but still one of the laggard in Asean compared on what Singapore got in July 2012 of $27.4 billion, slightly 1.9% below compared with the same period last year but still one of the prime destination for foreign investments in Asean.
I will show you a differences between the Philippines and Singapore in terms of its openness on foreign investments according to the 2010 World Bank study, Investing Across Borders:
He writes that the country already has significant surplus in foreign exchange holdings relative to its foreign debt, and P1.8 trillion in savings from overseas Filipino workers, export and BPO sectors held in the Bangko Sentral ng Pilipinas (BSP) paying four percent to keep in its vaults. While I do agree that we have a significant surplus in Forex holding but he did not realize that the money is not meant to be spend for other expenses to our government like social, infrastructure, and many others but the bulks of Forex reserve by the Bangko Sentral ng Pilipinas will be used to cushion our foreign exchange relative with other world currencies from the fluctuations of global economy, therefore our foreign exchange holdings are for the protection of our currency. He says that we have P1.8 trillion savings from overseas Filipino workers but I tell you, Herman, what’s the use of that trillions of pesos of remittances from our OFWs only 15% is meant for investment that would have provide jobs for Filipinos at home while the other 85% is meant for consumption whether needy or conspicuous, you cannot grasp the spending attitudes of most OFWs who went abroad forcibly just to support their remaining families here in our country while causing other social problems like adultery, drug addiction, early pregnancy, and among others yet you are encouraging more Filipinos to go out of our country while not fixing our investment climate so that instead of Filipino workers going abroad, the foreign investors should be the one will come here in our country to provide jobs to millions of unemployed Filipinos, give technical expertise to the Filipino workers, give technological expertise to the Filipino entrepreneurs, and many others. The goal here in order to lure more investors is to give them a better environment so that they will invest here in our country instead of driving them out of our country like foreign equity ownership restrictions in the constitution.
He keeps saying that the money from the Forex reserves, our OFWs remittances, exports, and BPO revenues should be used for productive agriculture and manufacturing enterprises which would necessarily compete and substitute for goods imported today today — local dairy, shoes, clothes, steel, machinery and others. He did not realize that the money the government gained through taxation does not have enough capabilities and manpower on spending it in agriculture or manufacturing and instead, the government cannot fulfill those tasks compared with the private sector in running enterprises as the government had to rely on appropriations not on profit on targeting the market needs or allocating money for improving services. Without real foreign competition in the domestic market as a result of restrictive investment regime stipulated in our 1987 constitution, there is no motivation from the locally-owned enterprise to expand their market or improving their services to the consumers and their workers. His argument that we have no shortage of local capital is useless as long as the people does not have enough purchasing power to spend beyond their basic needs.
In order to have our economy more inclusive economic growth, let us encourage foreign capital, technology, and expertise to enter in our country without much restrictions and with proper regulations so that if there will be more competing companies for jobs in order for their businesses to operate, more unemployed Filipinos will be given an opportunity for employment at home instead abroad as more competing businesses for jobs tends to increase wages over time in order to maximize the labor supply and order for a company to maintain its workers from transferring to other competing companies. Higher wages over time means that there will be an increase of purchasing power among the workers to spend for conspicuous necessities or for establishing a small enterprise to compete with existing enterprises for consumers and workers.
The power of free flow of capital, technology, and expertise are what Herman Tiu-Laurel cannot or maybe will not bother to grasp as he had to defend the interests of his bosses who are afraid of foreign competition that would diminish the profit margin of his bosses, therefore his financial survival while the Filipino people would be empowered with more competition in the economy whether the players are local or foreign.
Herman, you should eat your own words.