To invest money, time and effort in some business venture implies that there is an expectation of making a profit, a “return.”

It’s what capitalism is all about, it’s all a gamble but in developing business it is a bit more of a comprehensive contributor to economic development than just putting a pile of chips on red or black at the casino—mind you putting your money on red or black may also contribute to economic development, but in a different sort of way, like spending the winnings at Louis Vuitton.

The Philippines needs foreign direct investment but it appears that there are some people who are not wholly convinced about this; new barriers to foreign direct investment keep appearing to add to the already long list of barriers. The Foreign Investment Negative List defining areas in which foreign investment is not allowed or restricted is growing longer. No foreign interest can own land and most business opportunities are restricted by the constitutional 60/40 rule. On a more personal basis, foreigners cannot get car loans—not trusted I guess. It seems that foreigners are welcome so long as they just spend—like sending US Navy ships to Subic to be repaired and provisioned, but to profit, to take, to achieve a return is not really acceptable.

Leaving aside the challenges of the nightmare bureaucracy in public and private sectors, inefficiencies (e.g., PLDT who cut off your service before they even send you a bill !!) and politicized rule of law, investors will only invest if they can see that they will more likely than not achieve a return on their investment. If you doubt that, then better not to bother. There are strong systemic indications that the Philippines does not actually want foreign direct investment, it wants people to spend but not to take. The signs are too many and too obvious, look at the uncertainties over mining for instance.

If Tesco (a major UK supermarket operator, the world’s third biggest) for example, with its operations already in 14 countries including Malaysia and Thailand, were to be allowed to open for business in the Philippines, then they would employ their staff on terms and conditions that reflected the socially responsible attitudes that their corporate culture requires. This would mean paying decent salaries and giving decent and secure jobs. They would be overwhelmed with applicants many of which would come from the local supermarket chains. Everybody would have to raise their employment terms and conditions. Not too good for the local operators.

Business in the Philippines is for Filipinos and those with power and influence don’t really like competition, they don’t really like to share, and they like to do their business in the usual Filipino way. About time for a “wake-up call” I think. On corruption, which is a large part of doing business in the Filipino way, whatever is done little will change if the Philippines business environment continues to keep itself exclusive. Other business models are needed and they will only come by allowing foreign involvement and management of foreign invested businesses; continue to keep them out and not only will the economy not develop as it needs to so as to overcome the current shortages of opportunity and the fast growing population, but the traditional Filipino business methods will also be sustained.

There is nothing wrong with some economic protectionism, government has to do this to ensure fair opportunity for its citizens, but in today’s globalized world (how I hate that term!) there is no place for excluding foreign investment and foreign competition. It is necessary and it’s healthy, and it is the best chance of reducing corruption and making the Philippines more efficient. To fight against this, to make the place unattractive for foreign investors is to give in to the greed of the entrenched business community and there is absolutely no future for the nearly 100 million Filipinos in that.

Outsiders will see the latest movements in the expansion of the negative list, the new rulings on foreign ownership and ever increasing restrictions on foreigners and their involvement in business, and the trumpeting about the domestically generated strength of the national fiscal position as politically motivated restrictions to serve local interests protectionist needs, and as fostering a creeping national xenophobia. They will conclude that the Philippines has no real interest in changing its ways, they will look for their returns elsewhere, and life will go on as long as it can as it has done for the last 30 years.

Time to allow some new blood to enter, for surely opening up will help to move the Philippines forward to where it once was and along the road towards advanced economy status.

Mike can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it.