IT seems that the Philippines operates in an alternate universe, one that’s different from everything else, if what we focus on is any indication.
The following headlines appeared in the largest newspapers of Thailand, Indonesia and Vietnam, respectively, on the same day: “PM Prayut calls for tighter Asean [Association of Southeast Asian Nations] ahead of union”; “RI [the Indonesian minster of trade] lays out new trade policy”; “Vietnam to be a key Apec [Asia-Pacific Economic Cooperation] link”.
Here in the Philippines, the headline that greeted us was: “P-Noy told: Back off from probe.”
But this is the Philippines, where corruption in politics is an important issue. Guess what? The Philippines, once again, is not unique. Underneath the other countries’ headlines were the following stories:
Thailand: “The National Anti-Corruption Commission has declared that it will file charges against former Tourism Authority of Thailand Gov. Juthamas Siriwan, who has been accused of accepting bribes from Hollywood filmmakers.”
Indonesia: “Indonesia’s new Oil Minister Sudirman Said pledged to repair the image of his ministry, which has been rocked by a series of high-profile corruption scandals that implicated several top oil officials.”
Vietnam: “The Ministry of Health created a special taskforce to investigate Bio-Rad—a US firm that admitted to bribing Vietnamese health-care officials for procurement contracts.”
The investigation into the alleged corruption of government officials and their prosecution is a very important issue. But it is not the only issue that the government, especially the legislature, needs to focus on. You have to be able to walk and chew gum at the same time.
There are so many important changes occurring in the world outside the Philippines. It is as if humans have put a man on the moon and the Philippines is still trying to figure out if a flying machine is possible.
Two events could potentially bring literally hundreds of millions of dollars in investments to the country if government regulations and laws were in place to receive these funds. While the government is hyping the “massive” increase in foreign investments, everyone knows that it is more like a little boy telling a fantasy story about killing a roaming dinosaur.
The Japanese yen just reached a seven-year low against the dollar. This is a direct result of the Japanese government’s currency-devaluation policy, which was clearly stated two years ago. At that time, Japanese Prime Minster Shinzo Abe said he had wanted to see the yen down by 20 percent; now that is happening.
Japanese companies with the ability to invest outside of Japan are going to do so as quickly as they can. According to the Department of Trade and Industry, the Japanese maker of stainless-steel vacuum flasks, Thermos Co., is investing P1.62 billion for a new factory in Batangas province. That is a decision that has been in the works, coincidentally, for two years. And we are going to see more of this investment, but not all that we should see.
But why not invest in China? First, China is Japan’s bitter and economically deadly rival, and the devaluation of the yen is aimed to counter some of China’s power. Second, the Chinese banking system is a house of cards that continues to stays upright only because of government intervention.
Speaking of banking, the Group of 20 countries, which the Philippines is not part of, are meeting in Australia. Out of that meeting will come a resolution and proposed individual national legislation to establish conditions to “bail-in” failing banks. As seen in Cyprus in 2012, bank depositors, particularly large ones, will be obligated by law to lose some of their money in the event of a bank failure.
So if you have the equivalent of several million dollars in a bank in Italy, South Africa or Turkey, are you going to leave it there, knowing that you may lose some or all of it, or are you going to look for a country with a more stable and sound banking system, like the Philippines?
But we need a better regulatory infrastructure to take the Philippines off the “Worst Places to Do Business” list in order to attract these foreign funds. Look at the legislature’s record in 2014. The only bill addressing foreign investment is Republic Act 7721 that allows the full entry of foreign banks.
It is time for the country to get back to the business of the economy.
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E-mail me at mangun@gmail.com. Visit my website at www.mangunonmarkets.com. Follow me on Twitter at @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.