I guess that one of the main attractions of foreign investors to China is the 1.3 billion population. It represents a huge potential market and given the status of its economic development some years ago, it also represented a large and cheap labor force. In fact, the anticipated huge consumer market has been and still is slow to develop due to the inherently thrifty nature of the Chinese, and the cost of labor is no longer so cheap due to the enormous amount of manufacturing that has been placed in China—it has, indeed, been the factory of the world. China had attracted about $10 billion of FDI a month in 2012 and prior, but this is now seen to be declining ($7.2 billion in August 2014), according to some observers, due to a less friendly investment environment. There are suggestions that foreign firms are being given a hard time by the authorities and by changing regulations, in order to help local companies.
If there was ever a nation which had been isolationist, it was China, and that was so for thousands of years up to the Deng Xiao Ping period. At the time of the Tangshan earthquake in 1976, the most deadly one in the 20th Century with about 500,000 people killed, Mao Tse Tung specifically refused to accept any foreign aid—“any grave natural disaster can be overcome with the guidance of Chairman Mao,” said the Red Flag Journal. “People have enough to eat and clothes to wear and there are enough doctors to take care of the injured.” “Depend on yourself.”
The Philippines, contrary to the above on the one hand, does not depend on itself, it appeals for foreign aid in the event of natural disasters—for example, Yolanda, with international aid pledges of at least $1.6 billion (about 3 percent of the national annual budget) and much unquantified humanitarian assistance. On the other hand, despite claims of recent government trips to Europe and the USA that were said to deliver new foreign direct investments of over $3 billion into the country, the Philippines retains its FDI-unfriendly constitutional barriers, tightly stitched up local markets overlain with an increasingly unwelcoming bureaucracy.
Despite the requirement of then President Corazon Aquino for US forces to leave their bases in the Philippines in the early 1990s and, thus, end the significant contribution to the economy made by the US military, recent difficulties with China’s aggressive expansionism in the South China Sea have led to requests for the return of the US military to counter the China threat.
The message out of this is that the Philippines needs support from the developed world and will continue to need it for a long time yet. And the support that is needed is not just financial or military. It is more than that—it is the sort of support that will tackle and correct the statement of the National Transformation Council in its Lipa Declaration;
“Unbridled and unpunished corruption and widespread misuse of political and economic power in all layers of society have not only destroyed our common conception of right and wrong, good and bad, just and unjust, legal and illegal, but also put our people, especially the poor, at the mercy of those who have the power to dictate the course and conduct of our development for their own selfish ends.”
The words are rather harsh, and if taken at face value, would have the Philippines appearing as a nation governed without reference to any moral code, whatsoever. It is not as bad as that, there are lots of good people around whose interest is to do the right thing for the right reasons but so often they are overcome by those who prefer to do the wrong thing for their own selfish ends as the national characteristic of fatalistic acceptance comes into play.
There is no doubt that the Philippines is in need of some honest and ethical governance at all levels of society and those people who want to do right have to find some way of overcoming the power of those who are less ethical; prayer, fate and karma will not change things as they need to be changed. Help is needed in the shape of right-minded external advice and influence, which will empower the good guys, and the bad guys who have their own undeniably exceptionally astute entrepreneurial skills will have to turn those skills to developing the economy in a way that benefits everybody.
In order to underscore this opinion piece with a couple of examples; foreign embassies require their expatriate employees to pay their house-help at certain salary levels, significantly above the local levels, multinational companies do not generally get involved in corruption. Establish a truly level playing field divorced from political leverage and protectionist regulations for procurement, for example, and then there will be real competition, prices will drop, and as a result there will be more investment and the Philippines will grow as it should.
Perhaps this is just a pipedream.
Mike can be contacted at email@example.com.