Welcome President Obama to the Philippines, we need more investments & trade, not just arms & alms

Welcome Pres. Obama, we need more investments & trade, not just arms & alms

I'm inspired by the people I meet in my travels--hearing their stories, seeing the hardships they overcome, their fundamental optimism and decency…They make me want to work to make the world a little bit better. --- Barack Obama

            Welcome to the intellectually brilliant, eloquent and well-intentioned U.S. President Barack Obama to Asia’s most fun-loving country the Philippines. I urge Obama to please prioritize promoting more American investments, trade and tourism here, not just rosy speeches and effusive photo-ops, not just free U.S. military access to our archipelago, not just aid, not just more sales of military weapons.

It is sad that not many of our politicians realize that the true bulwark of national security and the best foundation for our democracy is a vibrant, self-reliant and globally-competitive Philippine economy, not just more new warplanes or ships.

Image above of President Barack Obama sourced from en.wikipedia.org

            President Obama’s desire for a strategic pivot (or “rebalance”, as the White House has seemingly renamed it after supposed panic and complaints from close allies in the Middle East and Europe) to Asia should hopefully be more vigorous economically, not just on the diplomatic, military and political aspects.

Help nudge our leaders to push economic democracy

I hope pro-poor President Obama can nudge our political leaders to push more decisive socio-economic reforms such as a Theodore Roosevelt-style anti-trust law and Senator Grace Poe’s Freedom of Information (FOI) bill. How can our economy be truly dynamic if it is agriculturally semi-feudal and industrially oligopolistic?

Also, on April 22---Earth Day, ecological champion Senator Loren Legarda and director Brillante Mendoza launched a riveting documentary on the destruction of the priceless marine biodiversity in our many coastal areas where millions of the rural poor live. I urge Obama to give technological and financial aid to our environmental projects, especially since logging, mining and other huge extraction of our natural resources grew under U.S. colonial rule and mostly by the multinationals.

Despite the gitzy malls and many new condominiums in our cities, we in Philippine society still have a long way to go economically. True, we’re politically an American-style constitutional democracy, but not yet an economic democracy.

In fact, it was a tragedy that U.S. colonizers had failed to implement agrarian reform and end feudalism in the Philippines the same way they did in postwar Japan under General Douglas MacArthur. I recall reading that MacArthur once even said that if he were a Filipino, he’d most likely have been a Huk rebel in the 1950s.

True, we’ve enjoyed investment-grade ratings upgrades and high economic growth rates, but the benefits have not yet trickled down fast enough. The small and medium-scale enterprises (SMEs) are still not yet very energized. I hope the civil libertarian Obama can nudge our leaders to push inclusive economic growth and help make the Philippines a true economic democracy with a broad-based middle-class.

U.S. once helped build up Philippine economy to No. 2 in Asia

Image above of USA and Philippine flags sourced from finestflags.com

Before at the residence of then U.S. Ambassador Kristie Kenney, I told her that in our ethnic Chinese family’s over two centuries here in the Philippines---including the Spanish colonial era, the brief interlude of Japanese military occupation and the post-war decades of independence---family elders say that the half-century American colonial period witnessed the rise of the Philippines into Asia’s second richest and most developed economy. Can the U.S. again more vigorously support the Philippine economy with preferential import tariffs, more investments and tourism?

            This need for stronger U.S. economic engagement with Asia should hopefully be uppermost in the agenda and priorities of Obama during his trip. We in the Philippines have received the least amount of economic aid, investments and trade from the U.S. compared to the three Asian countries Obama is visiting such as America’s former World War II foe Japan, South Korea and even Malaysia which used to be led by harsh U.S. critic ex-Prime Minister Mahathir.

More USA investments & trade with ex-foe Vietnam than ally Philippines

Image above of overlapping USA and Vietnam flags sourced from flamenkitaviajera.com

Even Vietnam, another war foe which even dealt the United States its first ever military defeat in history, has in recent years amazingly received more American investments, aid, trade and tourists than we here in the Philippines despite our “special relations”, our being the only former U.S. colony in Asia, our being staunchest U.S. ally since World War II, our fluency in American-style English as well as our having better U.S.-style legal and accounting systems here.

According to the U.S. Embassy in Manila: “The United States is among the Philippines’ top trading partners, and it traditionally has been the Philippines’ largest foreign investor… The stock of U.S. foreign direct investment in the Philippines exceeded $5 billion.”

In January this year, a firm identified with America’s prominent Rockefeller family announced a massive new investment in Vietnam. Rose Rock Group, a Rockefeller family-backed alternative investment management firm, said it shall help develop a $2.5 billion residential and hotel project in on the south-central coast of Vietnam.

This Vung Ro Bay development shall cover 200,000 square meters (2.15 million square feet) and to be developed with Vung Ro Petroleum Co. This huge undertaking will include 350 marina berths, hotels of over 760 rooms, 4,300 residential apartments, 100 townhouses and retail shops.

            On bilateral trade, the U.S. Embassy in Manila said: “The Philippines was the United States’ 33rd largest export market in 2012 and its 35th largest supplier. Goods exports totalled $8.1 billion; goods imports totalled $9.6 billion.” Two-way trade between theU.S. and the Philippines totalled US$17.6 billion. In comparison, bilateral trade volume between former enemies U.S. and Vietnam in the same year 2012 totalled US$ 24.890 billion dollars.

            President Barack Obama, let us substantially expand bilateral economic relations between the Philippines and the U.S. and help in our war against poverty.

Foreign direct investments plunge 83% in August

My Comments?

We in the Philippines need to urgently reform our anti-investor and quite xenophobic constitution, especially its antiquated economic provisions.

Marketing efforts and political reforms are not enough, we need to boldly push progressive and globally-competitive structural reforms in the Philippine economy to catch up with our Asean and Asian neighbors.

Wake up, our Philippine politicians and leaders! Even our historic strategic ally and former colonizer USA is pouring more foreign direct investments to their former war enemy and still officially Communist Vietnam than here to us in the most pro-American nation of the Philippines!

Here's the latest news report from Rappler.com:

(Photo of skyline of Makati financial center, Metro Manila, the Philippines)

by Rappler.com Posted on 11/12/2012 7:06 PM  | Updated 11/12/2012 7:06 PM

MANILA, Philippines - The global economic slowdown has dampened August foreign direct investments, an indicator of investor confidence and traditional sources of jobs.

Data from the Bangko Sentral ng Pilipinas showed that the net inflow of foreign direct investments (FDI) plunged 83% to $13 million in August from from $76 million a year ago.

"This reflected investors’ relatively cautious stance due to weak global economic prospects and financial strains in the advanced economies," the BSP said in a statement on Monday, November 12.

Key sources of FDI in August were the United States, Australia, Netherlands, United Kingdom, Japan and Bermuda.

This brought the cumulative FDI in the first 9 months of 2012 to $1.038 billion, 61% higher than $644 million a year ago.

FDI, hot money that go to the capital markets, and remittances from Filipinos working abroad have kept the Philippines' balance of payments in surplus. - Rappler.com

Can the Philippines be a pivot state, instead of a shadow state, with a truly independent foreign policy?

Here's a thought-provoking essay by American scholar, strategic & global political risk analyst, Stanford-educated Columbia University professor, Eurasia Group (a top global political risk analyst & consulting firm) President  Dr. Ian Bremmer in the Harvard Business Review:

Which Countries Will Rise to the Top in a Leaderless World?

by Ian Bremmer  |  11:21 AM May 30, 2012 Harvard Business Review

Over the years, the phrase "emerging market" has become all but meaningless. No group that includes China, Argentina, Kenya, the Philippines, and Romania can possibly qualify as a single coherent class.



To pick the likeliest winners in this vast category, Jim O'Neill of Goldman Sachs has given us the BRICS (Brazil, Russia, India, China, and now South Africa), the "Next 11" (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea, and Vietnam) and, more recently, MIST (Mexico, Indonesia, South Korea, and Turkey). Robert Ward of the Economist Intelligence Unit has added the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa.)

(Photo below: Jim O"Neill of Goldman Sachs coined "BRICS")



But all these constructions include a dizzyingly diverse set of economies that don't have much in common, and in any case the market conditions inside these countries tell only part of the story. In order to understand which nations are likeliest to emerge, we also need to look at changes underway across the global landscape.

We live in a crisis-prone age. In the past 44 months, we've endured the dips and gyrations of an international financial crisis, the worst economic slowdown since the 1930s, a wave of turmoil across North Africa and the Middle East, and Europe's worst crisis of confidence since the Second World War. Unfortunately, we can't expect smoother sailing in years to come because, for the first time in seven decades, we now live in a world without global leadership.






In the United States, a war-weary public is focused on jobs and debt, and taxpayers tell pollsters that America should focus on problems at home and mind its own business. Across the Atlantic, Europeans' fears for their economic future diminish their interest in the world beyond the region. America and Europe have overcome adversity before and are well equipped over the long run to do it again, but that won't happen this year or next.



Nor are China or other emerging powers ready to fill the leadership vacuum. Each of them faces too many complex development challenges at home to accept more costs and risks abroad.

So we've entered a period of transition. The old order, call it a U.S.-led G7 world, no longer reflects the true international balance of power. But there is not yet a new order to take its place. That's why global markets are in for an extended (and tumultuous) period of transition, one that's especially vulnerable to crises that appear suddenly and from unexpected directions. It's a G-Zero world.

Investors and business decision makers must understand this problem if they are to spot the era's winners, losers, opportunities, and risks.

The countries that are best positioned to prosper are those that are resilient as well as strong. Over the past 30 years, the winners were those states that adapted to profit from Western-led globalization. But in a world where no country is willing and able to play the consistent global leader, governments have to create more of their own opportunities. Bet on states that have good options.

That's why pivot states, those able to build profitable relationships with multiple partners without becoming overly reliant on any of them, are the likeliest winners in the G-Zero era.

Brazil will continue to enjoy excellent trade ties with the United States. But China is now its largest trade partner, helping Brazil's economy ride out the U.S. slowdown with minimal damage. NATO membership gives Turkey lasting influence in Brussels and Washington, and many in the Arab world look to Turkey as a dynamic, modern Muslim state. Add its position at the crossroads of Europe, Central Asia, the Middle East, and the former Soviet Union, and Turkey has a range of political and commercial options. As in Brazil, this advantage helps absorb the sorts of shocks that are now all too commonplace.







Asia is home to several pivot states. Indonesia, with nearly 240 million people, enjoys a well-diversified economy with trade ties balanced among China, the United States, Japan, and Singapore. Vietnam receives most of its aid from Japan, its arms from Russia, and its tourists from China; its biggest export market is the United States.









Not all pivot states are developing countries. Far-sighted policy ensures that Canada is now less vulnerable to a slowdown in the United States. The percentage of Canada's exports to countries other than the U.S. jumped from 18% in 2005 to more than 25% just four years later, and Canada now draws nearly 40% of its imports from countries other than the United States. British Columbia exports more to Asia than to the U.S.




The likeliest losers in this more volatile world are shadow states, the opposite of pivots, those whose political and commercial possibilities are determined almost entirely by a single powerful partner. Mexico's largest sources of foreign currency are oil sales, tourism, and remittances from nationals working abroad. In all three cases, the vast majority of that currency comes from the United States, and there's no evidence that will change anytime soon. The fates of its economy and standard of living are linked tightly with the health of its giant neighbor.

Shadow states aren't like Cold War-era satellites, countries where government was thoroughly dominated by a foreign power. Mexico's domestic- and foreign-policy choices are determined by its political process, not the demands of a domineering sponsor. But when compared with Canada, Mexico's commercial opportunities and the speed of its development are largely defined by conditions inside one foreign country.



Ukraine, another shadow state, wants to escape Russia's gravitational pull and become a pivot state, preserving relations with Moscow while building new ties with Europe. In fact, Kyiv wants to ink a free-trade deal with the European Union. But Russia has threatened to sharply increase the price of natural gas shipments to Ukraine and throw up new trade barriers if Kyiv moves forward with Europe. The EU, for its part, will end trade talks with Ukraine if it joins a customs union with Russia. Ukraine can't win because it can't pivot. It lacks the strength and independence to improve its bargaining position with either side.






In years to come, the BRICS will go their separate ways, and half the N11 is as likely to implode as to expand. Instead, it's the G-Zero order that will determine the next generation of winners and losers, and resilient pivot states are the countries best positioned to prosper.

Ian Bremmer

Ian Bremmer is the president of Eurasia Group and author of Every Nation for Itself: Winners and Losers in a G-Zero World.