The Subic Bay Bankruptcy is Being Used to Stifle a Pro-FDI Approach to The Philippine Economy

Hanjin Heavy Industries and Construction, the South Korean company that had operated shipbuilding facilities at Subic Bay, has filed for bankruptcy and is preparing to liquidate its Subic assets. This has set the stage for what should be an open, transparent and competitive bidding war to see which company will take over where Hanjin left off. But as is the case both at an international level and a domestic level across many nations, the tired old “security” argument is being invoked to stifle a genuine free market approach to getting the best operator available to take over operations at Subic.

Of course, no security threat canard regarding The Philippines would be complete without dragging in the Chinese boogie man. Naturally therefore, the idea that a Chinese company might purchase Hanjin’s former assets at Subic has caused a minor “scandal” among those who have convinced themselves that China has the same military designs on Subic Bay that the United States once consecrated.

The reality is that Subic Bay is no longer a military asset but a civilian one and as such, it would go against the principles of a free and fair open market to exclude companies deriving from any nation based on the real or perceived geopolitical stance of any particular foreign government. In any case, as President Rodrigo Duterte and President Xi Jinping have embarked on an historic win-win cooperation initiative over the mutual exploitation of resources in the South China Sea, the very narrative being promoted in Sinophobic circles regarding a possible Chinese company operating in Subic Bay, remains one that runs contrary to the positive, respectful and rules based win-win relations between today’s China and today’s Philippines.

But while the Sinophobic narrative is old, the anti-FDI (foreign direct investment) narrative is taking on a new and heightened meaning. President Duterte has recently reaffirmed that one of his main goals for national reform is removing what he calls the “anti-business” elements of the 1987 Constitution. This is certainly a reference to the infamous 60/40 rule prohibiting foreign direct investors from owning a controlling share in their own investments in The Philippines across multiple sectors.

Although the pro-reform, pro-economic growth President Duterte has wisely stretched the limits of the 1987 Constitution’s anti-FDI clauses, there is only so much he can do without pushing through meaningful constitutional reform which will open up a new era of foreign investment coming into The Philippines – the same way that welcoming FDI provisions resulted in economic miracles in Hong Kong, Singapore, Malaysia and after 1978, in mainland China.

And yet, because naturally, no government officials want to look week on security issues, the Philippine government is clearly under pressure exerted by external anti-Chinese forces which seek to preserve a generally closed door policy to free-flowing FDI under the guise that a pro-FDI constitution would lead to some “Chinese conspiracy”. In reality, these arguments have nothing to do with security as it does not involve the defence sector. Instead, Sinophobic posturing over Subic and other assets in The Philippines is just the latest scare tactic to stifle genuine debate about the virtues of a pro-FDI economy.

The fact is that China wants what almost every Asian nation wants – to expand its economy, create wealth and do so on a win-win sustainable basis. Most non-Asian companies want the same. The problem is that because of America’s neo-Cold War mentality against China, the US has shown that it is willing to use the might of the state in order to crush free market competition from Chinese companies. This has become self-evident in the US war against Chinese tech giant Huawei.

For a country like The Philippines, ordinary people stand nothing to gain from the government hypothetically attaching itself to any great power rivalry. Because of this, Duterte’s preferred stance of neutrality is the best option in terms of foreign relations and in terms of economics. Beyond this, it is quite frankly the duty of The Philippine government to allow for as much FDI as reasonably possible in order for more Filipinos to receive good jobs locally, something which itself will pave the way for the next generation of home-grown industrialists and innovators.

There is nothing to fear by allowing Chinese companies to tender bids to operate at Subic Bay anymore than there is in respect of other Korean companies, domestic companies, Japanese companies or Emirati companies. Which ever foreign or domestic company can offer the best job creating and growth stimulating deal for the Filipino people should be able to come into Subic Bay and re-start production as soon as possible.

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