• Liberalizing the economy a tough sell in PH

    Ben D. Kritz

    Ben D. Kritz

    AT the end of last week, the IBON Foundation (if I was part of the mainstream media it’s become fashionable to revile, I’d refer to them as the “left leaning” IBON Foundation) released the results of a survey they conducted in early September that found Filipinos overwhelmingly reject the idea of greater foreign ownership of bits of the Philippine economy.

    While the precise degree of public resistance to expanded foreign ownership may be debatable – the results for the questions in the survey ranged from 69 to 88 percent against – the overall picture is likely accurate: Despite what economists, the business sector, most progressive commentators, and with a few exceptions, government leaders have been asserting for years, most Filipinos are not buying the idea that greater liberalization of the economy would lead to greater prosperity.

    That general conclusion is reliable for a couple reasons. First of all, surveys tend to be exercises in confirming biases; IBON evidently believed that most people really do not support greater liberalization, and devised a survey that would provide evidence for that. Again, even though the numerical results are likely variable – a different random sample of the same size would almost certainly generate different numbers – the gulf between “favor” and “disfavor” is so vast that the basic result is unquestionable. Second, the basic result agrees with anecdotal evidence from ordinary people in different areas. If you want to find out what the actual majority of the country thinks, hang around at the local city hall, in a canteen at the market; their opinions tend to be very different from those in a Starbucks in the metropolis, and the former vastly outnumbers the latter.

    The Filipino people are for the most part very skeptical of foreign ownership, because the experience of the common tao with foreign ownership has been largely unpleasant. The areas where foreign ownership has been clearly an upgrade from local control, such as in the BPO industry, are rather narrow and outside most people’s experience; what they have personal experience with instead are the areas where foreign ownership has been exploitative, resulting in obnoxiously high utility rates (in the case of the power industry), obnoxiously high rates AND atrociously poor service (the telecom sector), environmental degradation and meddling in local politics (most of the mining industry), dangerous working conditions (shipbuilding), and indentured servitude-level wages (agriculture). Add to that the hundreds or thousands of individual foreign entrepreneurs who give aliens a bad name by finding ways around the laws to engage in various forms of small-time profiteering, and the conclusion that most people draw is that more foreign ownership is precisely the wrong solution to the economy’s top-heavy exclusiveness.

    This obviously presents a bit of a dilemma for the Duterte administration. President Duterte has said he favors liberalizing the economy, although he has not been particularly vocal about it. His perspective seems to be more practical than anything; economic growth, particularly in areas like infrastructure and manufacturing that he has made key policy objectives, is going to require foreign investment, and since the foreign investors have for the most part cited the current restrictive environment as a discouraging factor, loosening those restrictions seems to be a logical choice.

    But, Duterte owes his position and ability to do anything to popular support, and not the country’s ruling class, so any move that clearly goes against public sentiment is going to be hard for him to carry out.

    Duterte may be able to avoid forcing the issue, however. As has been pointed out, the present investment restrictions are already not much of an impediment to determined investors – which has been unfavorable to the people of the Philippines in several instances – so simply formalizing some of the loopholes in areas where foreign investment could be allowed to expand in a controlled way might be a better option. It would certainly be faster than waiting for the legislative process to drag through the process of amending the Constitution, if that even happens, which seems unlikely at this point. And specific, targeted liberalization can also be rolled back once it has served its purpose, whereas a constitutional provision is obviously much more difficult to change.

    As to whether the public sentiment is correct or not, that is an irrelevant debate. In my opinion, it’s shortsightedness on a national scale, but on the other hand it is hard to argue that what foreign ownership has been allowed has been good for everyone. In any case, since this is still ostensibly a democracy, the will of the people is government’s guide; if that is not what leaders who think they know better want to hear, then their task is to change those perceptions.



    Please follow our commenting guidelines.

    1 Comment

    1. The so-called “nationalist” only hinders growth and progress. I believe people in the rural areas are mostly open to investors. They want jobs, and basically money to buy food and make their lives a bit better. Nobody is investing, hence there is not much cash going around. People are just blankly staring waiting for a miracle to happen in their lives. In the end, if investors will f**k you, the bottom line is it does not matter on the nationality of who f**ks you; whether it is a white d**k, or a yellow d**k, or a black d**k, or even a fellow Pinoy’s brown d**k; your a** still gets f**ked by any of these color. So those pro Pinoys doesn’t mind if they get screwed; just as long (and I mean “long”) that it is a Filipino d**k.