How Protectionism Kills Filipino Small Business

One of my friends in a Facebook conversation explained how protectionism weakens or even kills small/medium sized local companies in the Philippines:

Filipinos who want to expand their businesses but cannot easily get access to huge capital cannot go to foreigners as partners to fork out investment money because of the 60-40 arrangements (At least 60% Filipino ownership limit only 40% maximum for foreign owners)...

Small-time businessmen with good ideas who need to expand therefore NEED TO APPROACH THE OLIGARCHS (rich families who own big companies and participate in politics, even just by funding candidates of their choice)! And then the fricking oligarchs will SCREW the small-time/medium-sized Pinoy business-owner so that eventually, the Oligarch takes over the business and kicks out the original owner.

What's really bad is that the Oligarchs won't even use their own money either... They'll just take out LOANS from the Government (for example, the recent Meralco and PNB loan) using "friendly connections" with politicians, esp. the incumbent president at the time who is oftentimes indebted to them for their financial and manpower assistance during the presidential campaign.

And even if there are willing investors, the same snag is met, as another friend describes:

I bought the protectionism argument before. Then I got to run the family business and was looking for venture capital. We found an angel investor - the terms were split half - and he'll plow the money in - only to hit a wall with the 60/40 provisions.

And thus, small and medium businesses are choked out of the playing field. It leaves the larger, already established businesses (the oligarchs) to rule the industries they're in – making them a monopoly or at least monopolistic competition. This is why not only is it very hard but near impossible to keep aloft a small/medium enterprise in the Philippines. And without more enterprises growing in the country, there are few jobs. People are forced to go abroad and increase the risk of broken families. Not only employees, but small businessmen will just quite and go abroad instead. This is true not only for families with many members; even families with one or two children find it hard to support them with local jobs. Just think of the cost of a good education here. So salaries abroad are better suited for this.

And that is why our country is screwed up, with a lot of poverty, a growing population, broken families and lots of corruption and crime.

"Outsider" comment about the Philippines

In one of my articles at Antipinoy.com, namely "Is the Filipino a Stupid Creature," commenter Outsider (claiming to be a foreigner) left this insightful comment which I believe is worth preserving for its excellent views about our country:

as a foreigner i was glad this article was written in english so that i could get a glimpse into what some filipinos think about their own country. having lived here several years but without much interest in the political history of the PI what struck me in the comments (which have become more interesting than the original article) were the more ‘human’ bits about ‘lack of empathy’ and lack of drive to better oneself through self reliance and community.

i don’t think any particular race is ‘stupid’ and i’ve been to 40+ countries, some of them much poorer than the philippines (haiti, parts of south america and africa, even other parts of asia). what i find consistent amongst the poorest places (not just financially poor) is a culture of; you owe me joe, it’s not my fault, and a resistance to criticism. if we can’t accept criticism then we can’t understand our situation, learn from it, and better ourselves. even if the criticism is racist or wrong, we can still learn why that individual thinks that about us, and use our empathy to understand the world better.

from my own (outside) perspective i find the filipino people (generalization) to be quite quick tempered, they will often act rather than reason something out, they often have very little empathy for their fellow man (i.e. corruption), and many have this feeling of ‘well it’s not my fault so it must be your fault’.

i think it’s also true that we are not all equal, compare a man to another man and we surely don’t all have the same skills, talents, intelligence, genetics and so on. the same goes for cultures and races as a whole. for instance you really only find tribal or aboriginal groups close to the equator (climate), people that migrated north (or far south) had to contend with winters and thus had to adapt, subsistence farming doesn’t work so well when you’re 2 meters under the snow. so i think it’s fair to say that we can’t view all the world’s cultures as being equal – it’s quite likely that due to Spanish blood, rule, geography, whatever that filipinos share certain unique traits amongst themselves that are not as present in most of the global community. some may be positive and other are probably negative (the temper, the grab whatever i can get mentality, the overly nationalistic self-view)

in other ‘poor’ countries i haven’t quite seen this level of greed, or short-sightedness en-masse, one can often get what one wants by playing the long game, or by thinking things through rather than living just for the moment. I tried to start an annex of my company here to give back to philippines and hired the best resources i could find right out of the university, invariably within a year they had left due to ‘tired of working sir’, ‘getting married’, and in one case outright theft. i do believe there is a place for foreigners in the PI, but one can only take so much before moving their business elsewhere. my experiences are similar to other foreign business colleagues, we may come to play golf in the PI or vacation, but not for serious business – and that’s a shame as we can both help each other.

NLP teaches us that we are all just software, our routines, our learned behaviors and learned helplessness, with a bit of effort and discipline we can re-write our own software. one way to do this is to emulate successful traits in others; if you find a successful businessman or father – you see what patterns he’s using and then you do those yourself and thus improve your situation. for example if you see someone who is very fit, you might ask them how they got like that – if they tell you they spend 45min at the gym 5 days a week doing (yada yada) and then you take up those habits – logic says that you should see those results. it’s a nice shortcut to figuring out the world all by yourself… instead – here in the PI i’ve noticed if someone is successful then often the filipinos will just try to scheme a way to take a little bit of that successful resource, by hook or crook, in a parasitic manner. this really is beneficial to no-one. and the ‘host’ will eventually get bitten to death and head off to new waters.

i was just reading an article today that states 95 foreigners were killed between January 2009, to mid-June 2010, it’s really a shame. i’m sure many filipinos don’t care about this since somehow the foreigners deserved it by virtue of having money, being arrogant or whatever and surely the police make few efforts to follow up on these murders… if a people really are so nationalistic and xenophobic to hate foreigners then maybe take the approach of the japanese after the war and LEARN as much as you can from those other cultures and then better yourself and out-perform them as the japanese admirably (and arguably) have…

i can understand why one poster suggested this be re-written in tagalog so that the outside world couldn’t eavesdrop – however i think that this mentality is a prime example of what not to do.

i surely disagree that Filipinos are stupid, but i do think some fundamental shifts have to take place with how filipinos feel about themselves, the outside world, and nurturing some empathy if they want to greatly improve their situation anytime soon.

Anyway, I enjoyed all the intelligent comments on this forum.

Thank you, Outsider, your comment was very intelligent itself.