ONCE a regime change takes place in Stalinist North Korea, the new mandarins will do something as urgent and as predictable as purging the family that kept the country in virtual darkness for generations. This is opening up North Korea to the world, open to capital and to outsiders alike, open to anything that will smell of income and profit. The new mandarins will take that policy of full openness without any qualms and with very few questions asked based on role models – the success stories of countries previously isolated like North Korea that had earlier made that giant leap, that transition.
It will be “To be Rich is Glorious,” Pyongyang version.
Indeed, the countries that have transitioned from rigid state controls to their own version of exuberant capitalism take in foreign capital and investment inflows with reckless abandon, from any source and without much restrictions. And they have been made richer and better by the openness.
North Korea, were we to judge on the experiences of countries that were like it and are now open to global business, will likewise be rolling out the red carpet for those bringing in expertise and capital, never wavering even for a bit.
Will North Korea ever hedge on the issue of full foreign ownership for capital coming in and demand an ownership structure similar to the Philippines? And demand restrictions on what the foreign investors can own?
No. It will not. It will instead say “We want the Vietnam model “wherein most economic sectors can be 100 per cent owned. Or, we want the China model. Despite its jumbo FDI inflows, China allows liability corporations (LLCs) that are 100 per cent owned and operated by foreigners.”
Or, we want to ride on the global trend that is about the unrestricted flow of investments from one country to another.
A global trend which the Philippines ran athwart and definitely not better for it. Sadly, it also is in the Philippines where you can find a thriving section of the intelligentsia that labels any effort to amend the Philippine constitution of its 60/40 provision, and be as open as the former communist countries, as an act of treason.
What is the behind the enduring hold of the 60/40 ownership provision within the policy-making circles and in the national psyche? Despite us being an outlier in this area. And why can’t the move of Speaker Belmonte to amend the 60/40 on restricted economic sectors hurdle a seemingly insurmountable gauntlet? When he is, theoretically, the most powerful member of Congress?
The first reason is this: No one is totally convinced by the FDI-centric argument that is being used by those proposing the amendment to the statutory provision on equity ownership of corporations in media, telecommunications, utilities, mining and the like. That we have been a laggard in FDI inflows is painfully true. Vietnam, which emerged from a long and brutal wars with global powers not too long ago, is way ahead in attracting FDIs. The “kulelat” status in attracting FDIs remains true up to today.
The yearly FDI of China is a full-blown haystack. We are the missing, hard-to-search-for needle in that giant haystack.
But sadly, the proponents of the amendment cannot convince the public based on the FDI narrative alone.
What is missed is the compelling argument that the economic facts have changed. Much as we wish to hold on to a decades-old paradigm on investing restrictions, the rest of the world has moved on into two directions: either into the total lifting of restrictions, or into an 85 percent foreign ownership of choice economic sectors.
A law of the land drafted before Uber, and the attendant disruption, has to respond to a global economy that is disrupted by Uber. Polity cannot just hold on to economic paradigms that have simply lost their relevance. The 60/40 provision and all the faux patriotism it entails should be amended.
The proponents should focus on the specific arguments that can be understood at street level. That a more open economy will help make technology cheaper and more efficient. Telcos will be forced to bring down their rates as competitors from overseas – used to charging the most competitive rates – will come in and invest in path-breaking technologies.
With more investments, the extraction process of minerals will improve from the dig-and -abandon methods.
More media investments will probably lead into additional platforms that are not part of the traditional media. Why, an NPR-like programming that can only come from investors that do not believe broadcast is about telenovelas, and brain-dead talking heads can expose the hollowness of our own talking heads who have been elevated into the niche role of public intellectuals because of a big void on the intellect side.
We are praying for the day Mr. Permed Hair will be exposed for what he is – Hot Air or Gasbag.
Four to five decades back, young men and women vowed to stay in the country – warts and all – to serve the country and serve the people. That vow had a twin – the promise to make sure that key industries were run by Filipinos to ward off foreign pillagers.
Now, our young men and women leave to do work across the globe, in the diasporas that have been the life-savers of the national economy. The second one still holds. It is time for polity to end it.