March 8, 2016

2 Friends discuss PH Foreign Ownership Law

The Jumeirah Lakes Towers Free Zone in Dubai, UAE

Umaalis ang mga OFW sa bansa kasi walang matinong trabaho dito, pero alam mo bang pwedeng magkaroon ng OFW-level jobs sa Pilipinas mismo?

This is the continuation of yesterday’s post, “2 Friends discuss Candidate Platforms vs the Oligarchy“.

JC: I still think that we need the oligarchs to keep the economy going. It’s a question of who will the oligarchs be willing to compromise with
TP: Not necessarily. We can loosen foreign ownership laws to fix that issue. Foreign direct investments (FDIs) are capped at 40% kaya kung ako ang porenjer, di ko gugustuhing pumasok. Magtatapon ako ng pera tapos iba didiskarte?

Iwan na iwan na tayo sa FDI. Tingnan mo o.

There are only three countries in ASEAN with absolute foreign ownership restrictions: Indonesia, Cambodia, and the Philippines. I mean, just imagine how difficult Telstra’s saga is. If we somehow loosen foreign ownership laws, then competition can come in. With it comes risks, pero so far, Malaysia and Thailand did well. Ngayon pa nga lang, pinipilay na ng PLDT at Globe ang Telstra.
Your line “we need oligarchs to keep the economy going” works on the premise that they will always have the means of production except labor but if we let foreigners in, the rules change.
Tingnan mo lang ha, Globe and PLDT owns the telecom industry and look at how crappy it is. Bibili ako ng GoSurf50 pero 95% of the time, ni Google hindi ko ma-access.
Now, if we loosen foreign ownership laws, Telstra could easily come in and it wouldn’t have to partner with San Miguel Corporation anymore. Telstra has more than enough capital and expertise to do it by themselves but no, kailangan pang makialam ng SMC dahil batas.
JC: Ok. Conceded. We need to loosen up on foreign ownership restrictions. But this is one of those damn if you damn if you don’t scenarios.
TP: Yes, probably. Para lang ‘yang mago-open ng sari sari store. Alam mong may risk na tatakbuhan ka ng may utang pero ioopen mo parin kasi kulang na kulang ang kita mo.
JC: It’s a matter of having a viable mechanism to ensure that these foreign businesses don’t drown out the local ones.
TP: Correct. Now, let’s ask this question: what is “local business”?
Kasi ‘teh, parang naisip ko di ba, OFW ang main source ng income ng ‘Pinas whether we want to admit it or not. That implies na the masa’s main asset is just labor. Businesses, in the larger scheme of things, are just the domain of those with money and power (oligarchs).
E kung i loosen ang foreign ownership, hindi bat parang we’re just extending the “OFW method” but this time, they won’t have to leave their homes? Watchuthink?
JC: Not necessarily. Kasi you’re assuming that OFWs leave the country for jobs that could have been available here (domestic helpers, etc.). A lot of them go abroad for higher paying odd jobs
TP: Actually, medyo inaccurate ‘day. Most OFWs belong to unskilled labor.
DEFINITION: Unskilled Labor
A segment of the work force associated with a low skill level or a limited economic value for the work performed (human capital). Unskilled labor is generally characterized by low education levels and small wages. Generally, these jobs require a high school diploma only.
SOURCE: Investopedia
TP: It is NOT “a lot of them go abroad for higher paying odd jobs”. Instead, “a lot of them go abroad for jobs.” Period. A vast majority of OFWs are in the Middle-East and that is an easy observation: salesladies sa Dubai, domestic helpers sa Saudi, laborers sa Qatar, etc.
JC: Wait, naguguluhan ako… so what you’re saying is that if we have foreign ownership of businesses here, the OFWs don’t need to leave the country anymore, right?
TP: Not exactly. It’s like, if we have foreign ownership, there will be more jobs, Far more than what the status quo would allow.
JC: Ah ok. given… medyo naguluhan lang ako sa OFW angle.
TP: Imagine mo lang ang base rate sa Dubai (TP used to work in Dubai). I know lots of Dubai OFWS there who work for just Php 25k a month. Actually, a lot lot less. Gasoline boys earn 800 AED, like Php 9k a month. Add the fact that A Dubai 30kphp salary is equivalent to a 15k salary in the PH, even less.
JC: But it doesn’t mean that if we have the foreign ownership of businesses here, these people could come home and make the same amount of money.
TP: We will not make them come home. That’s not realistic. We will just help those who are still here but who will eventually end up as OFWs.
JC: Ah ok. gets.

TP: Teh kung may green card ka na at rooted ka na don sa lugar mo, bat uuwi ka pa? Di ako ganun kagaga, Hahaha.
JC: Hahaha, kaya nga naguluhan ako eh. But isn’t that already happening right now? With BPO (business process outsourcing).
TP: BPOs are a temporary solution. Call center salaries are going down. Kaya nga si G*** (TP’s jowa) left the call center industry. Dati, you can earn like 20k a month and the cost of living is just half of today. But these past several years, salaries have fallen and cost of living has risen.
BPO is a temporary solution. It will last for as long there is no technology that will strip the need for labor, pero just look at Directory Assistance (DA) call center accounts. Dati ang dami nyan pero ngayon halos wala na dahil may automated system na pang-sagot ng DA.

We need to create an economy that thrives on its own. But there is no real program that promotes entrepreneurship right now.
JC: True.
TP: So far, our main source ng GDP ay BPO, OFW, and Manufacturing. The last one ay largely owned by PH oligarchs. I want an Australia, where SMEs run the country.
BRIEFER: Role of SMEs in Australia
Today Small Medium Sized Enterprises employ over five million Australians, or 63% of all workers. There are over 1.2 million SMEs representing over 96% of all business and 33% of GDP. It makes them Australia’s largest employer. Of the 1.2 million SMEs in Australia, more than two thirds employ between one and four people.
There are over 100,000 businesses with an annual turnover between $2M and $100M accounting for $16 billion or 9% of commonwealth revenue. During 2002/03 there were 47,000 new SMEs to market and between the years 1983 – 2000 the number of SMEs grew by 3.5% as compared to large business employing 200 or more which grew by 2.0%.
 JC: So ano connection nyan sa foreign ownership?
TP: If we let Foreigners in, competition rises, prices down and service quality up. Prices down means more disposable income for the regular Pinoy. More disposable income means more money for the masses to play with. They can spend it on, say, education, or even as capital for starting new businesses.
The risk, however, is Walmartization.
DEFINITION: Walmartization
From the word “Wal-Mart”, a large chain store in the United States. Walmartization is a colloquial term that refers to when a large chain store moves into a region and devastates local businesses driving displaced workers into low paying chain store jobs.
In general, it’s when big businesses come in and destroy existing small-/medium-scale business.
JC: Yeah. Medyo neutral proposal kasi yan e. Tabla ang pros and cons. It could also kill off existing local companies.

TP: You’re right, but if we can allow foreign ownership of high-tech, capital-intensive business, then we will have something going. High-tech capital-intensive businesses are out of reach of regular pinoy entrepreneurs anyway. We can also copy UAE (Dubai, Abu Dhabi, etc) business model, where 100 percent foreign ownership is restricted to special economic zones (Free Zones), then that’s even better.

I mean, seriously, I don’t care if Henry Sy goes broke as long as the regular Filipino is in better shape.
JC: Yeah. Agree ako sa Dubai model.
BRIEFER:  UAE Free Zones
In geographically defined “Free Zones (FZ)”, Dubai allows 100% foreign ownership, income tax exemption, ownership of properties, confidentiality of business, allows businesses to open bank account in Dubai. There are several free zones in Dubai, such as Jebel AliDubai Media City, and theJumeirah Lakes Towers.
Sa UAE FZ model na ito, pwede ang absolute foreign ownership pero nasa loob ka lang dapat ng FZ. Lahat ng businesses na nasa labas ng FZ ay may FDI restrictions pa rin. This way, small businesses sa city center ay protected from extreme competition.
The nice part of this is local Pinoys can get jobs in these free zones. Essentially, kung may FZ sa Pinas, parang nag OFW ka na rin pero hindi mo na kailangang lumabas ng bansa. Yung mga economic zone ngayon sa Pinas, (e.g. CEZA, CEPZ) may FDI restrictions pa rin.

TP: But there’s a fundamental problem. The Dubai model is OK  pero we need the other model too, yung opening up ng high-tech capital-intensive businesses. Yung  mga bakal-bote at local Pepsi dealerships, that won’t be for foreigners. Pero ang Internet, semiconductors, yung mga high-tech na magastos umpisahan, open na for foreigners. Parang yung sistema sa Malaysia.
BRIEFER: Malaysia on Foreign Direct Investments
Malaysia removed its all-round foreign equity ceiling of 70% in 2009. Despite the fact that the general cap is removed, foreign equity restrictions remain in certain sectors.
For example, a separate set of regulations is imposed to reserve equity in businesses for ethnic Malays or Bumiputera. The rationale is to increase business participation of the Bumiputera. While ethnic Malays are the majority racial group in Malaysia, they are underrepresented in the country’s business community, which is largely made up of ethnic Chinese and Indians.

JC: And may tieback ba to kay Duterte?

TP: Well, siya lang ang may platform regarding foreign ownership. Other candidates won’t even touch the topic.
JC: Tsk tsk. I knew it! Lol

TP: But Duterte aside, isn’t it reasonable?
JC: Oo naman
TP: Duterte is not the most intelligent guy among the 5. Pero he knows how to delegate.
In US schools they tell their kids “In America, you can be anyone. You can even be the President of the United States.”
As to whether that’s true or not is a matter of debate, pero at least, sila, may delusion. Samantalang tayo ni delusion, wala. Ngayon, sa status quo ng Pilipinas, You can be anyone, pero hanggang governor ka lang.  Because there’s a glass ceiling that separates commoners like us from the ultra-rich ultra-powerful establishment.
I want your child to have as good a chance as anybody else in being a billionaire someday. Right now, he can be rich, but he will never be wealthy. He can be rich like Shaquille O’neal, but he’ll never be the guy who writes Shaq’s cheques.

JC: Keri lang yun basta happy siya. Charot.
TP: Gaga lol that’s not the point.
JC: I know.
TP: HAHAHA. Kasi feeling ko, yung linya ng Pinoy na “Simpleng buhay lang ang gusto ko.” ay subconscious realization na shit is tougher over here and there are some things that won’t really happen.
JC: True. Decent subsistence is enough
TP: Sa EU or sa US, you’ll rarely hear that line from a kid. Kids there dream big. Over here, ang dream lang ay maging OFW, hindi ang maging boss ng mga OFW.
JC: But the kids want to be on Broadway so Keri lang. Haha.
TP: Mali ata wording ko.  I mean, Filipinos have the subconscious realization of the existence of the glass ceiling. So basically, from what I see, Poe/Roxas/Binay is just the status quo, albeit with different players.
So ayon, in as far as platforms go, Mar will perpetuate status quo. Poe will try to change the status quo, but she will fail. Binay, he’s shit. Duterte, it’s a risk, but it’s a risk I am willing to take.
JC: Kaw naman, status quo and some improvements to it naman kay Mar.
TP: Fine, yeah, I won’t take that away. Incremental improvements in the larger scheme of things.
JC: Assuming he is the oligarchs’ boy in every sense of the word, he’d want to make sure that the country doesn’t get screwed
TP: Even Mar admits growth has not been inclusive. What’s up with that?
JC: With Binay, we die. With Miriam, she dies before we do.
TP: Naku feeling ko nga ego trip na lang ang campaign ni Miriam. Isipin mo naman teh, pinagmamalaki na siya lagi ang on top ng University surveys.
JC: LOL. true. And people are buying it.
TP: E kako, kalahati niyan, hindi botante, gaga.
JC: Hahahaha.
TP: Kung ganon lang rin ang source niya ng confidence e magpoll na rin siya sa mga kindergarten. Feeling ko, she was made to run to dilute Duterte votes. A dirty but valid tactic. Kasi from my observation maraming torn between lola and lolo. Kung di siya tumakbo, that’s an easy +2 to 4% on Duterte.

JC: True… what’s their loveteam again?
TP: #DuRiam. Eww.
TP: Kaloka. Pero sa ngayon si Miriam, with 2% preference, parang langaw na lang sa carinderia. #TheTruthHurts
JC: Chrew.