The natural interplay of the free market forces and the economics of pure competition, unimpeded by local restraints and restrictions on the free flow of goods and services across the boarders is the supposed consensus of the general community of nations. Under this arrangement, each and every country will be subject to the same rules of competition. No country shall be favoring a domestic product or service over that of another. Every player will be competing, participating and cooperating in the international playing field. This globalization of the world economy and the liberalization of international trade are the fashionable raison d etre of the World Trade Organization (WTO), the General Agreement on Tariffs & Trade (GATT), and closer to home, the Asia Pacific Economic Cooperation (APEC).
The economic order of globalization, trade liberalization and free market competition is really an economic ideal that is attainable and can only be justly achieved if and when all the players in the economic arena, that is, all the countries in the world economy, are of the same stage, level and degree of economic development. In other words, it is not only a matter of leveling the playing field under which each and every participant will now be subject to the same rules of play. More important is the actual level of the player himself vis-a-vis the other players.
Now, underdeveloped and developing countries such as the Philippines cannot be expected at present to effectively compete with the developed countries because, owing to the latter’s modern state of technology and industrialization, they have better products that they can very well afford to sell at lower prices. With this tremendous comparative advantage of the developed countries over the developing and underdeveloped economies, an unconditional opening up of all the markets of each country, regardless of a nation’s particular state of development or underdevelopment will lead to the total economic domination by the developed countries over their lesser developed counterparts. Opening up the market of still developing economies, without any protective mantle or umbrella to their local manufacturers and industries, will surely spell the destruction of the competitive position of the local enterprises.
To counteract this gloomy forecast of foreign industries dumping and drowning the local market with their consumer products and in the process laying by the wayside our local manufacturing sector, the country must urgently and earnestly adopt defensive measures to survive the coming onslaught.
Firstly, the government and the business sector must at once sit together to figure out ways and means of helping our local enterprises gain equal and competitive standing with their foreign counterparts.
At the very least, foreign companies importing their goods into the country must be required within a certain period of time to enter into joint ventures with Filipino enterprises. Otherwise, they will be charged with protective tariffs on their imports. The ostensible purpose of this move is to protect our local manufacturing industries. At the same time, foreign enterprises will be given their chance to still tap the local market as long as they share their expertise and technology with their Filipino counterparts.
At first blush, this step may seem incongruous with our present commitments under the GATT, the Philippines being a party and signatory thereto. It may very well be reasoned, however, that such a move is really intended to protect also the foreign suppliers because they will not be paid eventually if they persist in continuously selling to us, by way of imports, goods for which we do not have the proper and adequate foreign currency with which to pay.
Secondly, the government must immediately encourage and support private enterprises in the re-tooling of their industries through the importation of vital, modern capital goods and the acquisition of modern technology. This is the most essential step if we want to be technically competitive with our foreign counterparts both in quantity of production and quality goods.
Thirdly, the government, through the banking sector, must forthwith extend long-term, low-interest loans with local money to our own Filipino manufacturers. Such loans will enable them to expand and acquire modern capital equipment and technology that are crucial factors in the expansion of their productivity. Hence the quality of their goods will be improved ensuring their competitiveness with the foreign counterparts. These locally produced goods will then gain the patronage of our own consumers.
Fourthly, the government must initiate and spearhead the immediate identification and inventory of all goods and items imported into the country. The end view is to help and assist our own Filipino enterprises to set up, either by themselves or in collaboration and joint venture with their foreign suppliers, factories and manufacturing plants precisely in these identified areas of production. When such industries are developed, we can avert massive importation of products from other countries.
Finally, the government must, without further delay, thoroughly revamp and overhaul the educational system so as to produce more engineers and science-oriented graduates in sufficient numbers and of superior quality. These graduates shall, in their time, man the ramparts of industry, run the factories and plants and lead the country into economic parity with the best.
Our schools must instill in the hearts and minds of our youth the drive for excellence and the pursuit and love for quality in goods and services.
By supporting the Filipino enterprise to produce more at better quality and at lower prices, our local business sector can then compete with their foreign counterparts at an equal footing. Then it would be said that the government, the educational and business sectors are in symbiosis. By working together with a sense of mission and urgency, they shall repel and avert the economic invasion of the developed economies.
We can then proudly enter the international ring and confidently face our contender at the other end of the corner.
You may write your comments / suggestion at 15/F Equitable Bank Tower Paseo de Roxas, Makati City or through e-mail at HYPERLINK "mail to: rgroxas@lawyer.com" rgroxas@lawyer.com)
(Editor’s note: Atty. Roxas is writing a limited series of articles dealing with financial matters and other important business topics. He is available for speaking engagements on the subject matters of his articles.)