The problem is you!

This administration is either in denial or tone deaf. Let me explain.

The President, the DOF and the DTI have spent the last three years declaring their seriousness in attracting foreign direct investments (FDIs). They even created the Office of the Assistant to the President for Investment and Economic Affairs to help them out. Their goal? To revive the manufacturing sector, which is now in virtual rigor mortis, by attracting foreign capital.

The importance of reviving the manufacturing sector cannot be overstated. As we all know, we have become an economy driven by consumption and government spending and not by production. The share of the industrial sector has shrunk to only 19.7 percent of the economy, with hard manufacturing a meager 5.1 percent. A weak manufacturing base has made us perilously import dependent. Last year, our imports amounted to a whopping $136.59 billion while merchandise exports was only $72.82 billion. The trade deficit is enormous. We rely on OFW remittances, IT-BPO revenues and debts to fill the gap.

As a result, our current account deficit stood at $10.4 billion as of the end 2024. Operating with high current account deficits leads to ballooning debts, a weaker currency, constrained economic growth and economic imbalances.

What does this all mean? It means that if government fails to increase FDIs to boost production and exports, the economy could face a debt and currency crisis while putting a damper on our high growth trend.

This will be catastrophic since we only have until 2048 to become rich. After that, our dependency ratio (or number of senior citizens outnumbering the productive workforce) will work against us. This is why the need to shift to a production-led, export-driven economy is urgent. FDIs are the catalyst for this.

So how has the Marcos administration faired? Badly. FDI attracted by the Philippines was only $8.6 billion as of November, a 4.4 percent increase from last year. The final number should be around $9.4 billion. Meanwhile, Indonesia attracted $55.33 billion, a 21 percent increase from the previous year; Vietnam’s FDIs reached $25.35 billion, up 9.4 percent; Thailand bagged $23.9 billion, a 25 percent rise.

They just don’t get it

For all their pretense of success, what Filipino politicians don’t get is that they are the problem. It is their corruption, entrapments, extortion and bureaucratic traps that compel investors to take their business elsewhere. Nearly all of government, in the national and local levels, past and present, are guilty.

So the President and his economic managers can promote the Philippines until they are blue in the face but no one will invest for as long as politicians view investors as prey and treat them unfairly.

Take the case of Cemex. The Mexican company was wooed to the Philippines by our supposed construction boom. What happened? Government abetted or failed to prevent the deluge of smuggled cement that caused a price distortion. Cemex could not compete with dumped cement from other Asian countries. They had no choice but to sell their operations here.

The same uncontrolled smuggling is what killed our steel, textile, lumber and agricultural industries. Who are the smugglers? Government officials, their dummies and friends.

Example 2. A European investor (who is a personal friend) intended to build a luxury resort with its own water treatment and solar power plant in a Mindanao island. Rather than welcoming the investment, the governor and his officials (all family members) demanded 20 percent of the project cost as SOP (pay-off money) for the “right” to operate in the province. The investor backed out.

The same extortion faced a north American mining company. This time, the local government officials demanded a percentage of gross revenues simply for issuing a license to operate and to stop the harassment. This is done yearly.

Extortion happens in most regulatory agencies where permits and licenses are held ransom for payouts.

And then there is the poor enforcement of contracts. Contractual obligations are reneged or ignored at the whim of Malacañang. Presidents have railroaded the rights of foreign investors when their Filipino friends (or donors) ask to take over the project. This happened with Malaysia’s Genting Group after winning the Manila Hotel bid. It also happened to Hong Kong’s Hutchison Whampoa after successfully going through the bidding process for the Subic Container Port. It happened to Germany’s Fraport AG, although it was government who took over.

Foreign investors can’t even run to our courts for justice. Most judges can be bought and often decide at the pleasure of their political patrons. Moreover, it could take decades for a decision to be handed down.

For road and rail investments, investors are contractually assured of periodic rate increases. But it is not uncommon for regulatory agencies to postpone these increases when it could adversely affect the president’s popularity. This leaves investors facing losses.

Foreign firms are promised VAT refunds for locally consumed goods and services if their outputs are exported. Firms are made to go through bureaucratic hell just to claim these refunds, many have been pending for years. Investors just leave in exasperation.

All these exacerbate the unfavorable business conditions in the Philippines, not the least of which is the litany of steps it takes to get a business operating, insufficient infrastructure, expensive power cost, etc.

Our politicians don’t get it. Their corruption is the problem. Our oversupply of English speaking workers is no longer a strong enough incentive, especially since most are incapable of critical thinking (thanks to our poor educational system). Neither are CREATE and CREATE MORE.

If this administration is truly serious about attracting FDIs, then they should first solve the corruption, harassment, extortion and incompetence among themselves. Only then can they aspire for more FDIs.

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Email: andrew_rs6@yahoo.com. Follow him on Twitter @aj_masigan