Foreign investment flows fuel economic expansion in Southeast Asia. The Philippines, alas, gets a very small share of this inflow – a factor that might constrain our growth into the medium term.
Growth is important. It is the only way to bring down poverty rates. The rising tide, as they say, lifts all ships.
Also, we need to maintain a certain rate of growth to outpace our mounting national debt. A large portion of next year’s budget will go to debt servicing, even as our legislators have produced a draft budget that maximizes looting and limits the productivity of our economy.
There are many things that inhibit the flow of investments into our economy. Our infrastructure is poor. Our policies are constantly shifting, depending on the swirl of domestic politics. Corruption levels are scandalously high. Power costs are intolerable, especially for energy-intensive industries. Our labor costs, given efficiency levels, are comparatively high.
There are other factors that deserve more attention in making our economy more attractive to investments. We have a small corporate sector and a tiny capital market. Access to capital is therefore more prohibitive.
We ordinarily imagine direct foreign investments as money coming in raw and directed to stand-alone projects. This is why our leaders make so much about going abroad to lobby large companies to invest in the country. We designed policy reforms such as the CREATE MORE Act to provide incentives for stand-alone investments.
There are abundant opportunities to draw investments through joint ventures, however. But to draw these investments, we need corporations that are well-run, innovative and imaginative. The better governed our corporate sector is, the more joint venture investments we could attract.
Recently, a Filipino company, Concrete Stone Corporation (CSC) owned by rising business magnate Francis Lloyd Chua, partnered with Singapore-based SMEC, the designer of the iconic Marina Bay Sands. The partnership aims to reduce the high logistics costs for construction aggregates to bring down building costs in the economy.
Inefficiency raises costs. Solutions for better efficiency in supplying construction needs produce sustainable business models.
The CSC-SMEC partnership will pursue various strategies to bring down the high construction costs that inhibit our economic expansion. Among these are: promoting the usage of precast and modular technologies, creating multiple production sites throughout the archipelago to help developers and building a modern fleet of vessels to more efficiently transport construction materials.
CSC built a successful business bringing down construction costs. The company operates its own ecosystem producing precast concrete so that developers do not have to rely on imports. It invested in a network of ports strategically located throughout the archipelago. A sister company, Industry Movers Corporation, now has a fleet of vessels transporting precast concrete products more economically all over the country.
Empowered by its partnership with SMEC, Chua recently acquired majority ownership of Asiabest Group International, a shell company that has the Philippines’ best-performing stock. This company was formerly owned by Tiger Resorts Asia Ltd., operator of the Okada Manila.
With continuing infrastructure and property development forecast to boom into the long term, the partnership looks forward to robust growth in its solutions-oriented business.
Frankenstein
A former very senior government official texted me, complaining that my description of the proposed 2025 budget (“Tainted,” Dec. 21, 2024) was too tame. The more appropriate description for this corrupted document, he said, was “criminal.”
What the bicameral committee submitted to the President, in the hope he would sign it without much examination during the flurry of the holiday season, is a monstrosity. It will be appropriate to call it a Frankenstein budget. No cosmetic corrections to this scandalous document will suffice. It needs to be completely recast.
So scandalous is this proposed budget that retired senior officers of the AFP issued a detailed manifesto denouncing it. This manifesto is unprecedented. The opinion of the retired officers always mirrors that of the active officer corps.
The President’s own sister, Sen. Imee Marcos, delivered a compelling speech denouncing the manner this budget was commandeered and railroaded. That speech is available on YouTube. It must be watched by every Filipino concerned about the nation’s future.
The document submitted to the President needs to be completely reconfigured to avert budgetary disaster. Commandeered by the politicians, the bicameral committee version defunds mainline agencies that deliver actual governance and transfers hundreds of billions in taxpayer money to the control of legislators. Talk about a silent coup against the Executive branch.
It does not seem there will be enough time in the next week to recast this scandalous budget. It will take weeks, if not months, to remedy this silly excuse for a national budget. So horrible is this document, it is completely vulnerable to a constitutionality challenge.
If no acceptable GAA is ready by Dec. 31, the Constitution commands that the 2024 budget be reenacted. Everyone will suffer because of this. But that is immensely better than accepting the folly that the bicameral committee crafted and both chambers ratified.
This will not be the first time the previous year’s budget is reenacted. But this will be the first time reenactment happens because of the depravity of our legislators.
Our politicians must be called to account for this outrageous attempt to commandeer the entire budget and convert it into one large pork barrel.
We have been betrayed by our own elected representatives.