I remembered writing an article on how China progressed overtime with Deng Xiaoping's promotion of economic liberalization in contrast to Mao Zedong's economic policies. Now it's time to really discuss about China's economic liberalization policy vs. the Philippines Rule of 60/40. What makes them so different are the results.
China Unique mentions some things about doing joint ventures in China. These businesses are usually 50-50 up to 90-10. Although China doesn't always allow 100% to foreign investments but they certainly have very flexible restrictions. Just imagine if you can have a 50% and above share with a local partner then that would mean you still have more control. There are specific zones on China that allow 100% ownership in Special Economic Zones. When it comes to owning at least 50% of shares with a local partner, the foreign investors have more or less fair play. It means that both the foreign investor and the Chinese partner are on even plain. When Deng promoted the new age of Chinese economic liberalization in his Communist state focusing more on equity than equality, China began a real great leap forward that Mao failed to implement.
What's wrong with having the 60/40 model for foreign investment? It means that foreigners can only own 40% no more, no less which still puts the Filipino owner with too much control over the foreigner. It's a terribly huge misconception in the Philippines that foreign direct investments means that foreigners will drive all Filipinos out of business and leave them impoverished. It's foolishly viewed as an "invasion" when it isn't because many Filipinos are ignorant about basic economics. The result of the 60/40 policy is that by allowing Filipinos more ownership over foreigners it discourages foreign investment. What's so stupid is that they love protectionism but complain over a lack of jobs. For the umpteenth time, the dream of Heneral Lunatic's self-industrialization is nothing more than a deluded fantasy by those annoying ultranationalist Filipinos. If they want to prove that it works why don't they establish their own separate state?
When it comes to choosing where to invest would you go to China or to the Philippines if you were a foreign investor? Although China wouldn't allow immediate 100% ownership but I can at least get 50% and above share. Even if it's a dictatorial country, having a flexible joint venture package is better than getting stuck with just 40% without any increase in my ownership and command of business. I don't care if David Guerrero keeps saying, "Investing is more fun in the Philippines." A fancy slogan may deceive the gullible but not the experienced person who knows about international marketing. Besides it doesn't mean that foreign companies are pulling themselves out of China doesn't mean they'll move to the Philippines no thanks to 60/40. They'll always have other shores to go to where flexible ownership is encouraged compared to overprotectionist Philippines.
Does the Philippines want to beat China? Then again, open up the economy so the firms moving out of China will have a good reason to move here instead of other Asian countries. If the Philippines will encourage economic liberalization then it will definitely weed out incompetence. Filipino businesses may progress from better service providers and more customers. Meanwhile, those that always want to be incompetent can go ahead and die on their own. When incompetence is weeded out then more Filipinos will be encouraged to be competent. The same happened when China had its economic liberalization. Likewise, the Philippine needs real economic liberalization and stop spoonfeeding the local businesses because it's not helping the country.
Comments
Post a Comment