Thursday, November 1, 2012

The realities of foreign investments

The first reality is we have the least ability to attract them when compared to our neighbors. And that is reflected in how we are reacting (emotional is an understatement) to the news that Manuel V. Pangilinan would retreat to Hong Kong. There are those who believe we pissed him plenty. While others think he was flexing his muscle knowing full well the country needs every dollar of investment.

The second reality has been articulated by President Aquino, thus: “We must have a level playing field.” And in pursuing an undertaking we can't be half-hearted if we are to succeed. And the fact that as a people we are still ambivalent about foreign investments, we are thus into this arena of global competition with our hands tied. We unwittingly are in a shrinking world of our own creation with very few options to overcome the demands of the 21st century? What is that world? Despite lagging in gross investment, the PHL economy is skewed to the same half-a-dozen entities: it is consistent with our cacique-paternalistic model and thus comes with CSR as well as livelihood and poverty-alleviation programs? Thrown in is land reform, farms-to-market roads and stepped-up PPP? And for good measure we have adopted economic stimulus as a tool like they’ve done in the West only to complicate affected infrastructure projects from a finance, audit and legal standpoint, to paraphrase Boo Chanco. [The Philippine Star, 28th Sept 2012]

The reality is a developing economy doesn’t need an economic stimulus per se unlike developed economies – where the economy is efficiently functioning yet in a recession may be unable to sustain demand. A developing economy needs a coherent development plan by definition – i.e., to invest in the requisite building blocks of an economy like basic infrastructure and strategic industries. [Coherent simply means that; our inability to address basic problems like power, NAIA, MRT 3, among others, speaks volumes. There must be something we’re not doing right? It takes a big person to accept his shortcomings, to paraphrase FDR?] We are like a car without the requisite four wheels and so we need more than “fill ‘er up.” A developed economy has all four wheels and filling up the tank makes it run.

The next reality is that foreign investments are not an act of charity. They are a business proposition. In primitive times man’s reflexes were dictated by nature – and so in the hierarchy the lion was king – thus the big guys would bully and exploit the small guys. In the 21st century, man is more civilized and in pursuing a business proposition, the object is a win-win partnership. For example, when the West responded to Deng Xiaoping’s call for “money and technology,” it was meant to be a mutually beneficial undertaking. Was the West stupid (like those of us who responded accordingly) for supporting China only to see China today bullying the small guys? Man can always choose evil over good. But it does not mean that man doesn’t have the capacity to seek the common good – which is not to say it is a cakewalk. Man’s choice then is to dig deep into the human spirit or to rationalize that it is pure naiveté?

First Pacific, which Manuel V. Pangilinan represents, is one of over a dozen entities of Anthony Salim. They are constantly fine-tuning their portfolio of business interests in many parts of the world. And so they have explored partnerships (for instance, like with our group, though it didn’t go forward, more than 20 years ago) and separately acquired and/or sold businesses over the years because each was meant to be a business proposition that contributed to the object of their enterprise. Can they pull out of the Philippines? If the Philex environmental disaster would put their investments at risk and if the graft cases filed against Ongpin, et al re Philex shares would drag them into a PR disaster and beyond, they don’t need that. They had a bad experience in Indonesia surrounding the ouster of President Suharto. They have been burned before and have learned their lesson. [Anthony Salim’s come back…, Businessweek, 3rd May 1999]

Which brings us to our ambivalence about foreign investments, and unwittingly have restricted our options to our favored few and thus are finding ourselves hanging by a thread? We’ve created our own shrinking world and if the consequences still aren't clear, we can only be paying more? But we won’t skip a beat because: (a) it's the price of patriotism or (b) it's a Christian community we live in or (c) it serves our purpose?

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