First published in Blogwatch.ph
As the President arrives in the United States for his first official overseas trip, he leaves the nation with the same old investment mantra uttered by previous regimes. Indeed, even if the cost of the trip (estimated at P25 million) has been cut, the same price will be paid by Filipinos – depressed wages, high-risk jobs and denial of labor rights – in exchange of the investments that he may bring home.
In his departure statement posted on the government website, President Benigno “Noynoy” Aquino said his US trip is in line with the government’s goal to strengthen public-private partnerships, generate jobs and livelihood, and ultimately to move the country towards economic progress. In the same breath, he sounded like a huckster peddling a nation mired in poverty to foreign profiteers: “The Philippines is open for business.” It’s as if the Philippines has been closed from foreign interests since the Spaniards came.
Obviously, Aquino’s main agenda in his trip is to lure foreign investors to supposedly create jobs for Filipinos and attain progress, which is no different from the agenda of his predecessors. The same promise of economic progress, now only packaged as the “righteous path,” is being used as selling point to once again force the myth of investments into our minds. The reality of globalization however dictates that luring investments means ensuring that wages will be kept very low while beefing up incentives for transnational corporations. That is the surest way to corner investments, aside from other considerations. And Aquino is expected to mouth that bargaining trick in his meet with business executives from the US.
He hinted at this in a separate statement before he left for the US trip. He stressed the need to “rationalize a regulatory system that has been, in many years, a disincentive to foreign investors.” Simply put, the government will further bring down tariff rates and taxes, boost incentives and cut red tape to encourage investors to set up their businesses in the country. This also means further narrowing revenue sources despite the sorry state of the budget.
Based on a recent presentation by the Philippine Economic Zone Authority (PEZA), the government earned only P508.1 million last year from the operation of PEZA-registered ecozones, the primary area for foreign investments. Despite the hype on the supposed huge revenues from ecozones, the amount is only half of the proposed P1-billion pork barrel for the President, and a negligible 0.03 percent of the proposed P1.654 trillion budget next year. And when the government decides to further bring down tariff walls under the pressure of the US, we can expect PEZA’s measly remittance to shrink. Apparently, the Aquino administration’s is willing to show generosity to foreign companies even as it remains bent on imposing budget cuts to the state colleges and universities.
Meanwhile, the worth of PEZA ecozone exports stands at US$23.39 billion from January to July this year. This amount is 1,170 percent higher than Bangko Sentral ng Pilipinas’ projected FDI inflow of US$2 billion for the entire year! Clearly, foreign corporations are reaping huge bonanzas out of their measly investment to the country, highlighting the highly unequal trade under neoliberal globalization which Aquino wants to affirm in his US trip.
The government actively promotes ecozones as key investment areas despite the worst forms of labor rights violations happening inside. A Newsbreak report said that violation of minimum wage standards and contractualization are common in these enclaves, aside from the unwritten “no union, no strike” policy strictly implemented by the government and private partners.
With the signing of the US$434-million Millenium Challenge Corporation (MCC) grant by the US government on Thursday, the US will gain additional leverage in pressuring the country to further open up the local economy to more imported commodities and foreign capital. Under the terms of the grant, the Philippines should maintain “economic freedom” as precondition. Essentially, the awarding of the grant serves as a prelude to worse trade and investment liberalization, deregulation and privatization – policies which have pushed the country deeper into poverty.
There is also no truth in the notion that investments inflows will always result to more wealth circulating in the domestic economy. In fact, it is common practice for TNCs to finance only a share of their approved investments in the country while local banks and prospective partners shoulder the rest of the cost. Such was the case when Toyota Motor Japan decided to put up its local subsidiary in 1988, financing only 34 percent of the capitalization while letting as Metropolitan Bank and Trust Corp. (Metrobank) fill in 51 percent. Another big Japanese firm, Mitsui Corp., financed the remaining 15 percent.
Moreso, foreign investors will never deliver the promise of addressing the country’s employment woes. PEZA ecozones, which currently number at 229 sprawling enclaves and IT hubs scattered across the country, have a direct employment of only 611,058, or a measly 1.68 percent of the total 36.3 million employed Filipinos as of July this year. Even if the current number of ecozones would double within a few years (which is obviously impossible), the estimated additional jobs to be generated would still be not enough to bridge the unemployment gap, recently pegged at a conservative estimate of 2.7 million.
The kind of unstable, high-risk jobs which TNCs bring in is not also what Filipinos need to survive. Recently, the International Labor Organization noted that workers employed in foreign BPO firms operating in the country (most of whom are call center agents) are suffering from work-related problems health problems such as insomnia and fatigue. Despite the hype and prestige the government accords to industry, the BPO sector is also one of the highly vulnerable sectors to the lingering global economic crisis.
Yet it appears that President Aquino will follow former president Gloria Arroyo’s cue of wooing BPO firms to invest in the country. Trade and industry Secretary Gregory Domingo said they will be meeting executives of US-based BPO firms and call center providers during the trip in hope of sealing offshore projects to the Philippines.
As President Aquino formally kowtows to US government officials and business elites this week, the nation stands to suffer more perils from the reaffirmed US ties in the coming weeks.