Reasons Why the Philippines is Poor

By Mortz C. Ortigoza

The reasons why the Philippines has an unemployment rate of 1.60 million (Philippines Statistics Authority 2022) and a 1.96 million (PSA) overseas foreign workers (OFW) (where members of the families are dislocated because of joblessness in the home country) among its 114 million population are blamed on the anti-foreign business equity in our Constitution.

Photo of a poor Filipino family. (United Nations)

      Our fundamental law says that “No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, …”. (Section 11, Article XII).

       It is time to change this xenophobic law that only gives 40 percent ownership to foreigners because many member - countries in the Association of Southeast Asian Nations (ASEAN) have dusted us off in snaring foreign direct investment (FDI) that powered their manufacturing firms and exports because they offered 100 percent foreign ownership of their industries.

      It would show that in year 2022 Singapore was the largest recipient of FDI with U.S$141 billion followed by Indonesia ($22 billion), Vietnam ($18 billion), Malaysia ($17 billion), and the Philippines ($9.2 billion) (UNCTAD’s World Investment Report 2023)

 Below is the list of ASEAN in their export feats (Source: SeaAsia 2022):

                      

Below is the list from top to bottom of manufacturing outputs in 2022 of ASEAN:

       Those countries who topped the Philippines on capturing most of the FDIs, export and manufacture products have 100 percent law for everybody to own an industry.

       Look for instance Vietnam: It was called by France President Charles de Gaulle as "ce pays pourri (this rotten country) in the 1960’s U.S – Vietnam War -- despite Vietnam defeating the French in the 1950's war. The country bore the brunt of three times the total bomb tonnage dropped by the allies in World War - II in Europe and Asia when the Americans carpet bombed it. In 1990s it was still behind the Philippines economically but the figures above on number of FDI, output of its manufacturing firms, and exports show Vietnam eclipsed by a mile the lethargic growing Philippines due to its initiative to open up and without turning back its once decadent Marxist economy to burgeoning capitalism.

      Aside from the 100 percent ownership she offered to FDI, the other come-ons of the country are the low corporate taxes, strategic location for trade and investment, stable politics, renewable energy, wide manufacturing hubs, technology, stock market, and real estate.

Vietnam has become a global hub for producing electronics, footwear, textiles, and furniture. The once war torn country’s strategic location, skilled workforce, low-cost labor, and trade agreements with major markets leap frogged it significantly.

Conclusion

      To make the Philippines a draw to more FDIs, we need to amend the economic provision in our Constitution to 100 percent ownership so we can solve if not mitigate our joblessness and stop the diaspora of our citizens abroad because they can be employed in the country, be with their families and shun the downsides of working abroad.

 After the amendment, our government could strategize the industrial and manufacturing hubs in the provinces – for example - so we could compete with the low wages offered by Vietnam, Indonesia and other ASEAN members.