By Louise P. Abesa
It was my meal break at Ross Dress Store and I had to take my sandwich quick for I was yet to buy a new pair of rain or storm pants to tide me through rainy days in the Salem-Keizer district of Oregon, USA. Retail Associates who work at the store take advantage of the 20% discount on all of the store’s items as job perk.I tried on several pairs of different brands. The ones that I liked, I took with me while queueing to pay. When I was at the counter, I instinctively chose the one with the Under Armour label. After the purchase, I studied the inside label and it says “Made in Philippines/Fabrique Aux Philippines/Hecho En Filipinas”. I thought my guardian angel did a great job in prompting me to choose the Under Armour storm pants because exports from the Philippines boost the country’s economy. This little anecdote took place in the last quarter of 2022.
The Philippines posted a balance of payments (BoP)surplus of $642 million in December 2023, reversal from $216 million shortfall in November, according to a statement from the Bangko Sentral ng Pilipinas released on January 19,2024. The balance of payments surplus occurs when a country’s total exports are higher than it’s imports. This helps to generate capital to fund it’s domestic productions for local consumption. With a surplus in it’s BoP, a country can also lend funds outside its borders (source: Vedantu, April 21,2020. https: //www.vedantu.com).
A country’s balance of payments can be impacted by some social and environmental factors such as population growth and natural disasters. A rapidly growing population can lead to an increase in imports, while a natural disaster can disrupt trade flows and cause a decrease in exports (ref:vakilsearch.com).
The Philippines’ exports fell in December 2023, contrary to expectations of economists (ref: firstmetro.com.ph). But Overseas Filipino Workers’ (OFWs) remittances picked up in December 2023 after hitting the lowest in six months in November due to geopolitical tensions in the Middle East and a stronger peso against the dollar (ref: bworldonline.com). Hopefully the manufacturing sector can contribute more to the country’s exports in 2024.
To support industry growth, the Philippine Trade and Industry Department launched the inclusive Innovation Industrial Strategy that focuses on growing globally competitive and innovative industries. Industry 4.0 strategies of the government which include use of Artificial Intelligence (AI), the Internet of Things (IoT), and 3D printing, will raise productivity, decrease production expenses and boost output quality. Hopefully, again, the Artificial Intelligence will be put in good service of the people, though, even in the countries we export them to. It is good to note that the Philippines has an advantage of lower labor costs and the advantage of the quality of it’s workforce, factors which companies consider when building a manufacturing hub. So far, however, the country continues to be import-dependent on raw materials and intermediate goods such as basic food products, even rice, and other consumer goods, and it is difficult to sustain a balance of payments surplus.
The manufacturing sector needs to diversify to increase export revenues but to increase production output, we need to attract more direct foreign investors like Under Armour, Inc., which is an American sportswear company that manufactures footwear and apparel headquartered in Baltimore, Maryland, USA. As reported on December 12, 2018, a good chunk of the company’s production has been shifted to Indonesia, Jordan, Vietnam, Cambodia, and the Philippines (ref: finance.yahoo.com).
Rappler has reported on January 24, 2024 that President Ferdinand Marcos, Jr. has now publicly warmed up to the idea of an economic charter change, a year after saying it’s not his priority.President Bongbong Marcos said, “The 1987 Constitution was not written for a globalized world. And that’s the way where we are now. We have to adjust so that we can increase the economic activities in the Philippines. We can attract more foreign investors.”
The President is now open to a discussion on full foreign ownership of corporations “except in critical areas, such as power generation, media, and all the strategic areas that we cannot allow to be influenced by a foreign entity, be it a corporation or another country”.He disapproves of foreign ownership of land “because the value of land will go up, and old residents in the area won’t be able to pay for the real estate tax”.
The House of Representatives under Speaker Martin Romualdez’s leadership first started pushing for charter change in January 2023. There has been a move to use local political districts to come up with People’s Initiative to amend the constitution. The move has been stopped by the 24 Senators themselves and the Comelec en banc (Philstar by G.K. Cabico, January 29, 2024) (philstar.com). The CBCP has this to say as regards the People’s Initiative: “While the thought of People’s Initiative is remarkable, we urge our Filipino citizens to exercise heightened discernment when evaluating movements like this specific People’s Initiative as it appears to lack authentic public initiation but is instead instigated by a select few wielding significant power.” (livinglaudatosi.org.ph).
Senator Koko Pimentel clarified that under the People’s Initiative, Senators and Congressmen will vote jointly on charter change proposals, instead of separately as two houses of Congress, which will dilute the Senate’s vote of 24 members when combined with the House of Representatives’ over 300 lawmakers. (ABS-CBN News, 30 January 2024).
The House of Representatives has committed to support and adopt the Senate’s Resolution of Both Houses 6 (RBH6) on amendments to specific economic provisions of the 1987 Constitution. If the country’s constitution would allow full foreign ownership of corporations, more foreign investors will provide secured jobs to more Filipinos. Full foreign ownership would be an option just in case it will be provided by law. But foreign corporations like Dali,the Everyday Store based in Switzerland, could always opt for partnership with Filipino investors (www.dali.ph). Dali creates well-paid jobs for the community within Dali and through their local suppliers. The successful implementation of operations delivers a high return on invested capital for investors not only in the Philippines but even in other countries where Dali has ventured like Poland, Turkey, and Colombia.
While the Duterte Administration has liberalized the economy without amending the Constitution, Benjamin Diokno acknowledges that more can be done. The former Finance Secretary wants to open up education and media to foreigners. For land, he favors long-term leases over ownership (ref: PH economy open even without charter change but more can be done – Diokno by Ralf Rivas, April 4, 2023 rappler.com)
As a consumer and as someone who has worked as a retail associate in Ross Dress for Less, Inc. in the US, I think having more foreign direct investors who would bring their corporate culture to the country for the good of Filipino workers is something to consider seriously. Dali, the Everyday Store, for instance, challenges local retailers like Puregold to lower the prices of the most essential household items. Besides, big foreign corporations provide health insurance to their employees and their dependents. Big retailers provide discounts on the items that they carry to their employees.