The Cha-cha-FDI myth
| DIE HARD III |
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| Herman Tiu Laurel |
A massive campaign has been sustained in recent months to brainwash the public into thinking that the Philippines is wretchedly in need of foreign investments. Its proponents say that a Charter change (Cha-cha) scheme to open up our already globalized property, corporate and natural patrimony rights to foreigners is now of the essence. No less than our leading legislators have aggressively pushed this, with mainstream newspapers echoing their line.
The Philippine Star, in its Aug. 16 “Cha-cha can easily triple investments” story, for instance, quoted House committee on constitutional amendments chairman Misamis Occidental Rep. Loreto Leo Ocampos as saying that “our FDIs (foreign direct investments) will TRIPLE (emphasis mine) from the current $2 billion to $3 billion once these constitutional reforms are implemented.” Well, looking at his faulty “math,” one could already conclude that Ocampos’ FDI projections will be massively off the mark, too.
In fact, the track record of “reforms” by the Philippine Congress for the past 25 years doesn’t inspire confidence at all. It is therefore quite scary that the term is being brandished again.
Consider some of the key “REFORM packages” since the Edsa I “People Power” government, beginning with the Comprehensive Tax Reform Program (CTRP) that supplanted the progressive income tax system with the regressive value added tax (VAT) set-up that transferred the tax burden to the vast majority of middle and low income consumers.
Consider the Trade Reform law passed in the early ’90s that introduced liberalization, deregulation and privatization, which are now a curse on the Philippine economy, spurring uncontrolled fuel and power rate hikes, debilitating peso fluctuations, as well as privatizations that socialize the debts but privatize the profits.
Consider, too, the so-called Electric Power Industry Reform Act (Epira) that raised our electricity rates to the highest in Asia. Aren’t these alarming enough?
Unfortunately, those impervious Cha-cha for FDI campaigners continue to call for the grant of full ownership of any and all businesses — especially land — to foreigners, as well as allowing them unlimited access to our natural resources. They have even spread their sales pitch to the Internet, using as their bogeyman the “privileged, favored and protected abusive and exploitative Filipino oligarchs” who, they say, take advantage of the Constitution’s protectionist provisions to monopolize businesses and keep out foreign capital at the expense of free market competition. What they are silent on, however, is the obvious fact that in many of these oligarch-controlled companies, foreign capitalists are the major partners of local oligarchs and, in certain cases, the ones who actually control these companies through majority voting shares.
Moreover, as these Cha-cha for FDI proponents try to draw comparisons with countries that enjoy high FDIs — notably Vietnam, Thailand, and other Asian countries — to point out that we are lagging behind due to “restrictions,” the truth of the matter is that almost all Asian (including Asean) countries are still “restrictive” or protectionist. Land property rights, in the main, are still not given to foreigners — only long-term leases. Corporate ownership is still limited — such as in Thailand, where it is only up to 49 percent, notwithstanding its latest FDI in 2010 hitting $6 billion, or four times more than the Philippines.
Although Singapore is vastly more liberal, the city-state of only 694 sq. km. (having not much land for others to own anyway with five million in population) is the only exception.
As in the Philippines since Marcos’ time, most Asian countries only allow 100-percent foreign-owned companies to do business in especially-designated hi-tech, export processing zones.
One just has to look at the Asean Web site with its bundled rice stalks logo under Foreign Equity Policies to get an overview of how liberal Philippine policy already is, which I quote: “100 percent foreign equity ownership is allowed in all areas except those in the negative list under the Foreign Investment Act of 1991 as amended.” For Thailand, it states: “The 1972 Alien Business Law grants foreigners permission to engage in certain business enterprises in Thailand only if more than 50 percent of the capital is owned by Thai Nationals. However, for BoI promoted companies, majority foreign ownership is permitted for projects that export not less than 50 percent of sales.”
And while the likes of AntiPinoy.com continuously hold up Vietnam’s apparently lax foreign equity rule to buttress their point, the truth is, a May 2011 US State Department investment climate evaluation states otherwise:
“There are ownership limitations for certain companies listed on the Vietnam stock exchange and service sectors. Foreign ownership cannot exceed 49 percent of listed companies and 30 percent of listed companies in the financial sector. A foreign bank is allowed to establish a 100-percent foreign owned bank in Vietnam but may only own up to 20 percent of a local commercial bank. Individual foreign investors are usually limited to 15-percent ownership, though a single foreign investor may increase ownership to 20 percent through a strategic alliance with a local partner.”
Keep in mind that no sovereign nation will ever give away protection of its interests and concerns, and the privileges of its own people. Also know that other more important considerations, such as the cost of electricity, are what matter in a country’s investment climate.
Thus, Vietnam’s $0.05/kWh power rate is one of its main attractions; same with Thailand’s $0.15/kWh, which are a far cry from the Philippines’ $0.21/kWh. Even Bangko Sentral ng Pilipinas Deputy Gov. Diwa Guinigundo was forced to admit to a select audience that “the most difficult challenge for the national government and the private sector (is) addressing the high cost of power in the country.”
But as he and the rest of RP’s political players who are behind the extant campaign don’t say this out loud to explain why FDIs are shying away from the Philippines, they are simply pulling wool over the people’s eyes as they lie about the real reason for Cha-cha: The sell-out of the country through their many swindles.
(Tune in to Sulo ng Pilipino/Radyo OpinYon, Monday, Wednesday, Friday, 5 to 7 p.m., and Tuesday, Thursday, 5 to 6 p.m. on 1098AM; Talk News TV with HTL, Saturday, 8:15 to 9 p.m., with replay at 11 p.m., on GNN, Destiny Cable Channel 8, on “More Power Outrages”; also visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)
(Reprinted with permission from Mr. Herman Tiu-Laurel)
Source: The Daily Tribune
URL: http://www.tribuneonline.org/commentary/20110819com6.html
