Are we protecting our entrepreneurs?

Rudy Lubis, an entrepreneur from Batangas engaged in hog and poultry raising, describes his business as “merely afloat.” And he blames the government’s lack of support for this state of affairs.

He and many other businessmen like him feel that they are not getting enough support from the government and even worse, that government is “killing” their businesses. Instead of helping the local entrepreneurs develop their businesses and make them into a thriving and highly competitive industry, the government allows big-time foreign investors to come and compete with our local entrepreneurs. According to Rudy, a big business group from Thailand is investing more than a billion pesos in the Philippines to put up a huge hog production facility in Concepcion, Tarlac. This investment is a big addition to the earlier investment of Thailand in the Philippines worth P2.36 billion in an aqua feed mill plant in Capas, Tarlac.

In promoting this foreign investment, the Secretary of the Department of Trade and Industry (DTI) said that the project “shall boost the opportunities in the food sector particularly in the hog raising industry. A steady supply of hogs will ensure stable prices for the public as consumer confidence continues its upswing recovery.”

But many people do not seem to share the optimism of the DTI Secretary. Here are a few sample messages recorded in the PCARRD Message Board: “This is a disturbing and devastating news for all hog raisers, small and large scale operations alike. Even the viajeros will be affected. Eventually CP foods can monopolize and corner all aspects of the hog business” (D. Vega, April 08, 2010). “I agree that there are going to be jobs created by this foreign company, but on the flip side, this foreign company will eventually kill its competition, meaning, yung mga small, medium at large scale na piggery farms. How are we going to compete with this “foreign company? Paano na yung kabuhayan natin? I can see this “foreign company” monopolizing the hog industry in our own country. In my opinion that is a huge price to pay to create perhaps several hundred jobs. We have to find a way or we are doomed” (D.Vega, April 9, 2010). “Personally, it is a decision to dump waste in the Philippines and bring home dollars to their country. The government will not be very strict on foreign investors because we have lots of manpower and low cost labor” (atongaksaya, U.P. Los Banos, April 8, 2010).

Another major “killer” of our local entrepreneurs is the government’s seeming indifference to the uncontrolled importation and smuggling of goods that compete with local products. One developed country in Asia would rather grow apples and grapes in her own land even if these would cost more rather than import them for less cost. Why? Because developing local agri-based industries, even if it means higher costs in the short run, will lead to the very real prospect of making these same industries very viable and high yielding in the long run.

The Philippines imports rice because our leaders argue that it costs us less than if we produce rice locally. This is of course if we subscribe to the oft-repeated mantra that the country has a rice shortage, when the reality is large quantities of rice are rotting in our government warehouses. We also see in the local markets imported pork, beef, chicken and even vegetables.

By allowing the importation or failing to stop the smuggling of these agricultural products, we kill the chances of our local producers and traders to succeed. And it is not only in agriculture that the government seems to be failing in its job of developing local industry. In the area of car manufacturing, we have never given our local entrepreneurs a fair chance to develop themselves into a big, thriving and self-sustaining industry. Instead of supporting them through soft tax incentives and marketing assistance, government just left them all alone to fend for themselves. Worse, we allowed the entry of several multinational companies to establish assembly plants and distribution centers all over the country. With this kind of scenario, how can our local entrepreneurs like Sarao and Francisco Motors ever have a fair chance of developing themselves and allowing them to get a fair share of business in the market?

The government could have extended to them the necessary support. The government could have adopted a very nationalistic policy of requiring all government offices to buy at least 50% of their vehicle requirements from Sarao and Francisco Motors. Surely, with this magnitude of government support, these two car manufacturers could have easily succeeded in their business. It could have allowed them to start manufacturing cars, vans, passenger buses and cargo trucks.

More than 40 years ago, in terms of economic standing, we were ahead of Singapore, Hong Kong, Thailand, Indonesia and Malaysia. The Philippines was second to Japan. Our rice technology was the model for every country in the world, such that rice experts from abroad wasted no time in coming here and training at the International Rice Research Institute in Los Banos. Our car manufacturing industry was the envy of Asia because we were producing world class automotive products that were exported all over the world. We had a firm government program in place that ensured that every vehicle that rolled out from the assembly lines of the major multinational companies based here had to have a certain percentage of local content.

But today, all these gains are gone, swept away by inept and short-sighted officials. We are now the bottom dwellers in terms of economic standing in Asia. This concern becomes even more important considering that the total value of our imports in 2011 amounted to $60.14 billion while the total exports amounted to $48.04 billion or a difference of $12.10 billion. The only way we can increase our exports is to increase our productivity. The only way we can increase our productivity is for the government to support local industries, particularly the small and medium ones. They should be given soft loans, tax incentives and marketing assistance. Before local industry is ready to compete with the big ones, the government should restrict and monitor the entry of foreign investors, particularly if their entry would compete and kill small local entrepreneurs. If our imports will always exceed our exports, then we will not see any promising economic development picture ahead of us. “We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them” (Discourse of the Commonwealth of this Realm of England, 1549).

Is the government being fair to our local entrepreneurs? Is it giving them the same business incentives that it is extending to foreign investors? According to Rudy Lubis, all they need is a fair and reasonable playing field where all the players, both local and foreign, are given the same opportunity and incentives to do business and succeed in this country. How many other “Rudy’s” are there in the country today? How long will they last, given the very “negative” support they are getting from the government? How can we make the Philippines a strong economic force in Asia just like what it was more than 40 years ago? How can we catch up with our more successful neighbors in Asia?

Proverbs 16:11 says it very well: “The Lord demands fairness in every business deal. He sets the standards.” If would be well for government to realize that it is up to them to adhere to standards of fairness according to what the Lord judges as right and true.

(Nonoy Dalman, a lawyer, is a member of the CFC International Council and was formerly Commissioner of the Commission on Audit.)