Philippines to fry in own fat — again
AN OUTSIDERS VIEW |
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Ken Fuller |
In The Untold Philippine Story, published in 1967, Hernando J. Abaya remarked that “where before we were fried in American lard, we now fry in our own fat!” What he was referring to was the tendency of foreign investors to raise their capital on the local market instead of bringing it with them.
This tendency, which had existed earlier, was intensified in the 1960s by the USA’s balance of payments problems occasioned by the war in Vietnam, and US companies were now under “explicit instructions from no less than the US government” to borrow locally and to “remit to the US as much of their earnings as possible.” (Alejandro Lichauco, “The International Economic Order and the Philippine Experience.”)
Bancom stated quite bluntly: “(W)e continue to advise local borrowings as much as possible, as long as possible and at the earliest possible time.” As one example, the Ford body-stamping plant in the Bataan export processing zone was established at a cost of $22 million, every cent of which was raised locally. The Manila Times published a study demonstrating that foreign companies were remitting $2.50 for every dollar invested; by 1969 this ratio had widened to $7.08 for every dollar invested. In 1966, while US companies invested $9.2 million abroad, the capital outflow from the USA was only $2.7 million. In the Philippines, the net outflow of capital reached $1 billion a year in 1966.
In 1977, when the Central Bank attempted to impose debt-to-equity ratios on foreign companies seeking peso loans, US Ambassador William H. Sullivan gave the game away by protesting with remarkable frankness that such a scheme “would work against multinationals who come to the Philippines with nothing but a company name and a logo.”
Why this history lesson? Well, because it seems to be repeating itself..... MORE
Source: The Daily Tribune
URL: http://www.tribuneonline.org/commentary/20101123com5.html
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