THE PHILIPPINES must focus on developing its own agriculture and industry and de-emphasize the pursuit of foreign direct investment (FDI), a progressive-leaning think tank said.
“Gone are the days when experts (and) foreign investment will save you,” IBON Foundation Executive Director Jose Enrique A. Africa said in the think tank’s Birdtalk forum.
Mr. Africa said that foreign investment has become less of a factor in recent years due to increased protectionism.
“More countries are closing than opening over the last decade because they are protecting their economies (from a possible recession).”
Philippine foreign investment is currently three to five times bigger compared with South Korea, China, and Taiwan during their economic takeoff in the 1970s and 1980s.
“They did not obsess over foreign investment. They developed their agriculture and industries with protectionist measures, with regulation, (and) with state intervention.”
Rosario Guzman, IBON’s research head, said the government can strengthen domestic production by directly purchasing from farmers and fisherfolk, creating price supports, providing free crop and climate insurance, and giving farmers subsidized cold storage.
Ms. Guzman also said that the Philippine poverty is fourth-worst in Southeast Asia. Median wealth is P140,000.
“Prices are higher than they should be in the Philippines because of privatization,” Ms. Guzman added.
Utilities, transportation, power, water, telecoms, education, health, and housing in the Philippines are mostly handled by the private sector.
“Privatization has normalized high out-of-pocket and household expenses for otherwise government-provided social services supposedly for free or at an affordable price,” Ms. Guzman said.
“Government would rather collect from the poor and the middle class based on their consumption, taxes, than confront the billionaires,” Ms. Guzman mentioned.
Excise and value-added tax are equivalent to 3% of gross domestic product, while corporate income tax is 2.8%, Ms. Guzman said building the case for a wealth tax.
Mr. Africa noted how the Philippine Development Plans of past administrations have taken neoliberal approaches, leading to the decline in agriculture and manufacturing.
The Philippines has the fourth smallest manufacturing sector in the region. In the 1960s, its manufacturing sector was the largest in the Association of Southeast Asian Nations (ASEAN).
“The most formal economic activity is manufacturing and industrial activities,” he said, noting that a small manufacturing sector and industrial activity would translate to a larger informal economy.
Informal workers living off irregular salaries, with no benefits and contracts, account for 70% of the jobs in the Philippines, a situation exacerbated by the pandemic.
“Foreign investment is not development,” he said. “We’re giving (foreign investors) all the incentives, they’re making money from us, but they’re not contributing to national development.” — Beatriz Marie D. Cruz