FDI is not colonization

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MIKE WOOTTON

MIKE WOOTTON

I’ve been trying to encourage foreign direct investment in the Philippines for quite some years. Whilst I think in some small way these efforts may have stimulated some investment, including my own personal investments, I must say that they have not been the success or acted as the magnet for further investment that they perhaps could have been. The Philippines is not an easy business environment for all sorts of reasons.

FDI is often portrayed as an assault on sovereignty, it stimulates thoughts about colonization and that foreigners will be taking advantage of the Filipino people in order to make profits for shareholders that go out of the country. It can begin to look like some sort of rape or economic colonisation. There is some justification supported by case examples for all of the foregoing thoughts.

The Philippines and other nations with sizeable populations and high unemployment would find it difficult to stand alone depending solely on their own resources. The hippie commune model of self-sufficiency of the 1970’s is not really sustainable. Nations need to buy things that they can’t produce themselves and in order to do this they need to sell the things that they can produce themselves. Sell agricultural products to earn money to buy fertilizer to produce more agricultural products for example. In order to buy and sell internationally they need (in order to avoid having no markets) to maintain trade relations with other nations. Such trade relations are themselves areas subject to political influence on an international scale.

Not all FDIs are bad; most of them produce opportunities for decent jobs and technology transfer or skills training in addition to its need to use and pay for local resources to build factories, or power stations or even infrastructure in order to make and distribute or export its production. FDI produces economic activity and it helps to develop an industrial infrastructure which local capital seems very unwilling or unable to do. If the OFW community is to be able to find jobs at home to utilize the skills they have learned or improved whilst working abroad and get paid at a similar level to their overseas incomes then absent somehow stimulating the local capital market to industrialise, such an initiative must found on FDI. If the OFW community is to be able to find jobs at home to utilise the skills they have learned or improved whilst working abroad and get paid at a similar level to their overseas incomes, but stimulating the local capital market to industrialise is not easy, then such an initiative must be found in FDI.


It’s easy to find very negative commentary on foreign mining and the involvement of Indonesians in telecommunications. Similarly, its commonplace to find government changing the terms of investment deals with foreign entities long after such deals were have been made and relied upon in making big investment decisions [Shell Malampaya for example]. their shareholders, for that is the prime purpose of business, are many and varied. The Philippines has many attributes which that are attractive to those multinationals or even smaller potential foreign investors. To welcome Such investments would provide, in most cases, decent work.

Multinationals are not in the habit of employing people on a probationary basis for a few months and then laying them off before they have to make them permanent employees. Reputable multinationals provide good quality and safe working conditions and they have training schemes for staff to improve their skills. They even set levels of pay for the domestic help of their employees and crate demand for schooling of an international standard for their employees’ children. They generally do not cut corners.

It would be very difficult for the Philippines to grow, as it needs to, without good chunks of FDI. To piggyback on foreign technology and methods is not to sacrifice national strength or national pride; it is a means to an end of improving the lives and opportunities for Filipinos at home. The Philippines cannot develop in isolation from the rest of the world; any attempt at domestic industrialisation would take several generations to come to fruition, if at all. Use the opportunity, welcome FDI and make sure that the Philippines use it in order to make some fast development progress in a controlled way. Rejecting foreign investment or worrying investors for nationalistic aims is certainly not a recipe for success. Look around the world; there is FDI all over the place everywhere and usually in some way it has helped to stimulate national development.

Mike can be contacted at mawootton@gmail.com

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