I had an interesting discussion in one of the FB groups I was added to. For the most part, I just skim through the posts. However, there was a question that was raised which interested me because it echoed the sentiments of those who are in favor of protectionism. The question goes like this:
Is the 60-40 ownership limitation on foreigners the only hindrance to a great Philippines? Why not fight give the ordinary Filipinos a fighting chance. Why not lobby for laws that will empower the poor and the middle class. Foreign investors will not be our saviors, they will just add a little to the number of elites running our country. If we let them in will they fight for the ordinary Filipinos or just join with the Philippines? richest and become part of the Philippines new oligarchs.
The short answer is this ? if we are indeed to give Filipinos a fighting chance and empower the poor and the middle class, we need to remove the 60/40 economic restrictions which keep jobs and goods and services of better value away from the poor and the middle class.
Protected Filipino companies are corporate parasites that live off on consumers? restricted choices imposed by a corrupt Philippine government.
Foreign investors are not necessarily ?saviors? because there can be rotten foreign investors inasmuch as there can also be excellent foreign investors. The ?savior ? is not the foreign investor per se ? but the free and open market which allows consumers to exercise their choice of walking away from business that don?t deliver value. Under a free and open market ? investors local and foreign will not become entrenched because consumers always have alternatives when businesses no longer deliver value.
On the other hand ? a 60/40 regulation which mandates that foreigners must partner with local businesses ? ensures that foreign investors are assimilated by the Filipino elite ? who under the law will retain 60% control of the business. In effect, the foreign investor is made to subsidize the operations of the local Filipino elite ? at the expense of Filipino consumers.
The discussion continued and this point was raised:
As far as i can remember, Filipino consumers have favored imported products and we ascribe quality with the country the are made in. Of course, Made in the USA for Filipinos equals Quality and we don?t mind how expensive. The same goes for products from western Europe. In Asia, Made in Japan also means quality. That is the perception of many Filipinos. Made in Taiwan is a little different. There was a time when Filipinos consumers think that products made in Taiwan are poorly made and and inferior to Made in Japan. Over time, that changed. Now Made in China products are at the bottom although almost everything now is made in China including the beloved Apple product lines (iPhone, iPad, etc?)
Regardless of perception, Filipino consumers buy according to their budget. Filipinos with less budget would be happy to have MyPhone, Torque, etc. while those who have more would choose brands like Nokia, Apple, Motorola etc?
DO Filipinos have limited choices? I think not. I can see more brand of products available to the Filipino consumers than to Swiss consumers in Switzerland for example.
To which I replied, Telecom .. How many choices? 3? Globe , PLDT, and Bayantel.
South Korea telecom .. How many choices? 40?
Retail chains. How many choices? Which lead to the question that really got the ball rolling:
Do you really think we need more malls in the Philippines?
The question was timely considering that Ayala just convinced Itochu of Japan to subsidize Ayala?s Philippine operations.
With that said, let me get straight to the meat of the matter. First off, before anything else we need to distinguish between consumers and producers/suppliers.
The Filipino Consumers? Point of View
Ask yourself, what?s the impact to you the consumer when your choices are limited to lousy and lousier and both are expensive?
Do you think the goods offered in Filipino owned malls are sufficient? And priced competitively? How would you know if you keep competitors out?
If foreigners sell goods at lower rates to Filipino consumers.. thus allowing savings to Filipino consumers ? will it hurt Filipino consumers or does it benefit Filipino consumers because they have more money to spend for other stuff?Do Filipino consumers come first if their choices are restricted to buying from Filipino owned businesses only?
Are all Filipinos business owners? Should Filipino consumers choices be limited to Filipino owned businesses that sell foreign made goods?
Why should government restrictions decide for Filipino consumers that they should buy from Filipino businesses and the limited value provided to consumers?
Why should Filipino consumers be deprived of the value which makes sense to them? So that Ayala (and his shareholders which include the Aquinos, Cojuangcos, the Makati Business Corporatists) can make humongous profits from a captive market? Is that right?
?The Filipino Entrepreneurs? Point of View
If a small Filipino business is willing to have 40% equity only, why should they be stopped from doing so?
Filipinos can be investors too. They need to have all options available on deck. Why should their options be limited to 60% equity only ? what if they don?t have the money to raise the 60% ? echepwera na lang?
If Filipino entrepreneurs can only meet 20% in fund equity, convert their sweat equity into 20% , a blend of foreign investors to come up with 60% ? why should Filipino entrepreneurs be prevented from doing so?
?
The Foreign Investors? Point of View
Doing business is about profit based on providing value to consumers.
Why should foreign investors be forced to share their? revenue with a Filipino partner?
Do you really need a Filipino partner when you can roll out your own operation without needing a partner?
And speaking of greed ? what makes you think the Filipino partner is not greedy?
The Issue of Cost and Price
The discussion then ventured into the issue of cost. The question was
?If P&G or Unilever was established in the Philippines as 100% foreign owned company, will it lower the prices of their products?
Pero di ba pareho lang naman production cost plus. Bakit sila magtataas ng prices na ang basehan lamang ng ownership. Bukod doon ay mas maliit naman ang kanyang capital outlay dahil yung partner na pinoy ang naglabas nung ibang capital. Bakit sasabihin na ?loss? sa isang investor ang share sa profit ng kanyang partner. Hindi kaya masamang ugali yun na gusto nya na solo lang kita. Greed yata ang tawag doon. So how are they better than the oligarchs? but wait? In fact they are already part of the oligarchy.
I answered the question with another question- If P&G has to compete with other foreign competitors (and local competitors) and doesn?t have to give a cut to a Filipino partner.. will they increase prices?
Note production cost is only one component. There are other components of the sales price:
- a) After sales service
- b) Financing terms ? layaways, inhouse credit cards
- c) Customer service at point of sale
- d) Convenience of the shopping experience
- f) The total landed cost ? the choice of suppliers, production, shippers, warehouses, distribution centers, the taxes and fees you had to pay
The sale prices bear the unique imprint of all these factors.
?The Filipino Job-Seekers Point of View
If foreigners operate retail chains in the Philippines, they hire Filipino workers do they not?
Now let?s look at how these protected Filipino owned retailers treat their workers? Look at the treatment of workers in Shoemart / Glorietta / Robinsons / Ayala / Gaisano ( all Filipino-owned by the way) ? 20 years working for the company ? temporary status pa rin. They are laid off every five months ? so they don?t become permanent employees ? with the blessing of the Department of Labor at that. The DOLE?s reason? Because there aren?t enough jobs then the jobs should be shared between the laborers instead of opening the market so more providers can absorb the excess capacity ? unbelibaboy.
So here comes a foreign company who is willing to provide employment for Filipino workers ? and hire them to become full-time employees with all the benefits ? but the 60/40 economic restrictions prevent the Filipino job seekers from enjoying full time employment. Why should Filipino workers be prevented from having better paying jobs? Why should they be made to put up with the ?endo? of Shoemart and Ayala huh?
The retort was
?How sure are you that they will not do the same as the local businesses that you mentioned. Remember, for capitalist, profit is the most important thing. They will loose their advantage if they do not do what the competitors are doing which is not illegal. If you really want to help the workers, start a campaign to end contractualization of employment. A law that makes contractualization illegal would ensure protection of employees from ANY employer.
What makes you so sure they will do the same as the local business? 
To increase market share ? foreign investors will differentiate from local businesses ? that?s called the USP ? Unique Selling Proposition.
The foreign competitor will study the business model of the local competition. For instance the ? perpetual temporary employees leads to : demoralized work force, low productivity, high turnover, high service failures ? which leads to unsatisfied customers. On the other hand ? the company which has a mix of full time employees have more motivated employees, have low turnover, high service excellence ? which translates into satisfied customers ? which turns into revenue ? and bigger market share.
The Issue of Contractualization
Making contractualization illegal will only stop businesses from investing further ? and will lead to loss of jobs. Business should be allowed to do what makes sense to them ? in the end it?s the consumer who decides which business will survive ? and which will go extinct. Business Process Outsourcing aka BPO is contractualization of the jobs in overseas firms to Philippine firms. It?s amusing that folks will demonize local contractualization but line up for jobs in BPO firms.?
Business process outsourcing boils down to this ? focus on your core strengths. Areas which are not your core strength and where you don?t have a competitive advantage will be a source of revenue loss. Therefore, it will be better to have those companies which do an excellent job at the things where you are not competitive. Allowing the continuation of unproductive activities will reduce your revenue and in the long term can lead you to close shop. The bottom line is this ? businesses that don?t provide value will lose consumers ? a free market will make them bankrupt as consumers choose those companies that bring more bang for the buck. A protected market however does not leave consumers any choice but to put up and keep on buying from these corporate parasites.
It?s About the Economy, Student
If the laws are detrimental to foreign and local investors ? and Filipino consumers ? such that more investment and jobs are being created outside of the Philippines. Shouldn?t we be asking ourselves ? why aren?t those businesses and jobs being created here? What can be done to reverse the situation?
We keep foreign investments out ? then we send our workers to work in foreign lands. Then Noynoy brags about the foreign remittances. Meanwhile Thailand, Vietnam, Singapore, Hong Kong, Indonesia, Malaysia opens its doors to foreign investments ? and make more money than we do without having to send their workers in harms way overseas. Do you see nothing wrong with that?
Empowering Filipinos means removing the restrictions on their choices. Filipino consumers and job seekers should have the freedom them to choose between local or foreign businesses ? whoever provides them better value ? and not limited to Filipino businesses only. ?How can you be empowered when your choices are limited? That does not make sense.? Restriction is not empowerment.
So, to answer the main question, Filipino consumers and job-seekers should not expect any new benefit from? Ayala?s entrance into the retail convenience store ? it will be the same bullshit. Ayala?s parasitical business model will continue to live off on Filipino job-seekers and taxpayers, pendejo. 
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