What Can The Philippines Learn From Japan's And South Korea's Success In The Midst Of Their Depreciated Currencies

It's common to panic during the phenomenon called currency devaluation. It's no secret that the Philippines has hit its peso devaluation late in former president Noynoy Aquino's term up to President Duterte's term. Before you raise your pitchforks at any of them (or even blame Gloria) let's try and understand the basics of currency devaluation. Also, let's try to think about why some countries like Japan and South Korea have devalued currencies lower than the peso yet they are far stronger economies.

How is Japan's Yen and South Korea's won weaker to the Philippine peso? Let's take a look at the Philippine exchange rate using the Money Converter website:

1 Japanese Yen is equivalent to PHP 0.46693
1 South Korean Won is equivalent to PHP 0.045010

At first, it makes you think, "WOOHOO PANALO ANG PESO!" or "WOOHOO THE PESO IS THE WINNER!" but let's think of another area. Is the Philippines really better because its peso is stronger than both the Japanese Yen and the South Korean Won? On the contrary, the Philippines has a weaker economy even with a stronger currency than both Japan and South Korea. It's time to take a look at some problems and opportunity costs that the Philippines had with peso devaluation.

Here's also an interesting note that you could take note between the Japanese Yen and the Korean Won against the Venezuelan Bolivar and the North Korean Won.

1 North Korean Won is equivalent to PHP 0.057
1 Venezuelan Bolivar is equivalent to PHP 5.04

While North Korea has currency appreciation over South Korea (though the number is very small) and the Venezuelan Bolivar is worth PHP 5.04 but why are South Korea and Japan richer than them? Let's take a simple high school economics lesson to help find out why.

Trade policies between Japan and South Korea allowed both countries with money weaker than the Philippine peso to exceed the Philippines' economy

So how did both Japan and South Korea take advantage of their weaker currencies? Rather than whining about how depreciated their currencies are they decided to take advantage of it. Let's tackle the two countries and how they developed overtime with the basics. You could think about how Japan and South Korea engage in the practice of economic liberalization made both countries powerful in the midst of their currency devaluation.

Modern Japan learned from the now dead Tokugawa Japan's mistake and how Meiji Era Japan caused the Imperial Japanese economy to rise. The Tokugawa era closed Japan's doors to the world. The Meiji Era opened Japan to the world and allowed foreign merchants to do business. Japan didn't lose its sovereignty to the foreigners. After the fall of Imperial Japan and the rise of Modern Japan the Japanese focused on developing the Japanese economy. If it wasn't for free trade then think of how many Japanese inventions we would have missed. There would be no DVD technology used in various media today. There would be rice cookers to make life easier. There would be no Anime and Tokusatsu if it wasn't for Japan's economic liberalization. Competition has helped Japan learn ways to become competitive and the world can enjoy the benefits of Japanese culture.

South Korea just survived from its separation with North Korea. While the Kim Dynasty of the North turned their country into an economic protectionist state under Emperor Kim Il Sung and currently under Emperor Kim Jung Un. What South Korea did was the opposite of North Korea. They took advantage of the devalued Won they had which was even weaker than the Japanese Yen. By welcoming foreign investors it became another progressive Asian economy. By allowing foreigners to compete with their local products they have learned how to be competitive like Japan. You can see the power of the K-Pop culture craze especially with South Korean products like how Samsung is export quality in contrast to North Korea's Koryolink. Today, K-Pop and J-Pop are competitors where consumers can enjoy the best of both worlds.


The PNoy first policy caused the Philippines an opportunity cost during the time of the peso devaluation by not liberating the economy 

How is the PNoy first policy bad for the Philippines? It's a shame to think that Solita Monsod and Noynoy are both economists but they don't see the downside of the 1987 Constitution's economic restrictions has made the Philippines worse after EDSA. It's a shame how Mrs. Monsod graduated from the University of Pennsylvania and how Noynoy graduated from Ateneo De Manila. Those are two schools where I have a very high chance of rejection or barely pass. Yet both still adhere to the stupidity of economic protectionism instead of economic liberalization. They could have taken advantage of the devalued Philippine peso but they chose to lick the boots of the greedy oligarchy instead of thinking about what's going to benefit the Philippines.

What should have been done during the time when the peso devalued under Noynoy's term? Here's what they could have done. They could have focused on strengthening both the export sectors and opening up the economy. The reason is because currency devaluation actually helps the export industry where they can sell at a lower price. It's all about competitive pricing in order to gain more sales in the long run. It was also the best time to open up the economy because of the fact that exports will be cheaper when you produce in countries with lower currencies.

What Noynoy and friends could have checked was how did China and Vietnam get so much into the export market? It's because of the devalued currency is helping China. You can think of it that certain firms produce in China or in Vietnam? Do you know that Vietnamese Dong (which is only PHP 0.0022) is one of the weakest currencies in Asia? Why do you think big time firms end up producing in those countries? It's because of their devalued currency would mean lesser cost and they can sell their exports at a lesser price.

Would have Noynoy realized the downside of devaluation would mean huge debts and imports are expensive then he could have thought of getting rid of 60/40. Did he even think that if there were more foreign investors under his term if he got rid of 60/40? Maybe he thought that David Guerrero's ghastly slogan would be enough to attract foreign investors when it wouldn't. Foreign investors would have been happy if they could have lots of power. I mean think if the Philippine peso is depreciating wouldn't that mean they'll have more investment power in the Philippines because their money has more value than the Philippines?


What President Duterte and his allies should take advantage and right here, right now according to basic economics

Dutertenomics should not be the final point but the beginning of the Philippines' economic recovery plan. Remember the CoRRECT Three Point Agenda is on federalism, parliamentary system and economic liberalization? If you think of it, President Duterte should take advantage of the weaker peso to bring in more foreign investors. He should start by making sure that economic liberalization happens. I guess that's why the Yellow Garbage as well as their desperate allies with people like Antonio Trillanes and Jejemon Binay are at full work? Why do you think the Liberal Party members like Risa Hontivirus and Leila Dilemma are all planning to oust the president? Why do you think Loida Nicolas-Lewis is hypocritically asking President Duterte to step down all the while she enjoys the benefits of free trade in the U.S.? It's because free trade will destroy the foundations of the PNoy Empire in the Philippines.

President Duterte should  really work double time with his allies to open up the economy of the Philippines. Knocking out the Aquinocracy senators is just the start but it's never going to be the end. The Dilawans losing their relevance as well as their newfound allies is just the start. You can think of how Leni Loud Robredo is so hated that if she became president she may have the shortest reign in history. After all, her approval ratings are dropping like crazy so she decides to pull one public stunt after the other. Right now, recount the votes right now. If Leni Loud really won then why is she so afraid of the recount? As you can see  she's got so thick a face that all her skin is so thin that she doesn't want the electoral recount to happen.

This also means not to care about the stupid opinions of economic neanderthals. After all, if people like Toady Casino and Neri Colmenares they want to commit suicide than support economic liberalism then go ahead and be my guest. If they want to believe in their "pambansang industriya" then they should first test their theory on an uncharted island. It's now or never. Take advantage of the Philippines' weaker peso by opening up the economy with reasonable restrictions rather than sponsor the stupidity of economic protectionism.