Getting Loans From China Doesn’t Mean The Philippines Will Automatically Get Lured Into a “Debt Trap”

Getting into a Debt Trap will only happen if:

1. The projects chosen do not translate into greater Economic Output/Productivity and Efficiency for the overall economy because we chose the wrong projects (like pure vanity projects rather than actual economic enablers and economic multipliers). Let’s say we were under Yellow Rule and we borrowed money in order to erect a huge monument to Ninoy, Cory, Noynoy, and Kris with their faces sculpted into a Mount Rushmore-like bas-relief… (Like the one that Marcos made) That would obviously not translate into “economically enabling infrastructure” that would generate greater economic efficiency and enable greater economic activity such as a well-located port in an area with high shipping traffic potential.

2. We continue to prevent job-creating investments from easily coming in, thus rendering useless the infrastructure projects that were funded by said loans. Keeping the 60/40 and other anti-FDI restrictions will continue to keep job creating Foreign Direct Investors and multinational corporations from coming in and generating jobs that could have employed millions of Filipinos and generate billions of new tax revenue to help pay back said loans. We will be shooting ourselves in the foot if we continue to retain those idiotic and anachronistic economic restrictions…

3. We continue to stick to a highly expensive to operate and inefficient form of government such as the current wasteful Unitary-Presidential System in which concentrates most major economic activities in Metro Manila and operates a patronage-based system of pork barrel allocations in order for the Executive branch to buy the support of the separated legislature due to the gridlock prone nature of such a system. The high operating costs of such an inefficient system of government prevents the country from accumulating enough revenue and savings in order to effectively service the loans and become debt-free. The Unitary-Presidential System involves a SINGLE POINT OF FAILURE both in its Unicentric paradigm of having only one single main center in Imperial Manila (where the failure of Imperial Manila becomes the failure of the entire country) and in its power structure as executive power rests essentially in a single entity – the Office of the President. The failure of the single person occupant of that office becomes the failure of the entire government.


Simply borrowing money from China to get stuff built won’t get us into a debt-trap.

We will get into a Debt Trap if we do not change our current xenophobic economic system to make it much more attractive to foreign direct investment and if we do not change our system of government and structure of territorial administration into a combination that is efficient, inclusive, enabling, and distributed.

So in order to avoid falling into the debt trap, we must:

1. Make sure that the projects we fund with loans from any foreign creditor must be well thought-out infrastructure projects that are economic enablers such as transport links, well-located ports/airports that will translate into high utilization, etc. No white elephants, no vanity projects. Bring in as many Foreign Direct Investors as possible to create jobs for millions of Filipinos and produce tax revenues that the government can use to easily pay back the loans…

2. Get rid of all 60/40 and all other anti-FDI Restrictions in the Constitution and even in legislation… Any legislation to restrict the entry of investors must be extremely specific (not generic) and must not affect downstream industries

3. Shift to a Federal-Parliamentary System. FEDERALISM will create a pluricentric, “distributed” Philippines that is not prone to the breakdown of a single point of failure. If Metro Manila has a breakdown, the other urban centers will continue to function and flourish as they do not rely exclusively upon Imperial Manila’s wishes. The Parliamentary System likewise gets rid of the Single Point of Failure issue in government as Parliamentary Governance is collegial, collective, and ensures that there are always ready backups (like a redundant array or a parallel circuit). If the leader is found to be unable to perform his duties properly, his own colleagues can decide to remove and replace him, and since there is a Shadow Cabinet from the Opposition, if an election occurs and the ruling party is replaced by the Opposition, the former Shadow Cabinet becomes the new Government Cabinet and because they had been exposed to the work being done while they were the shadow cabinet, they HIT THE GROUND RUNNING and can immediate take charge with zero downtime as there is no learning curve because they were already exposed.

The one thing about China which is different from Western countries giving out loans is that while the West ties these loans with compliance to their standards (so called “adherence to Western values and Human Rights and Democracy Kuno) China gives out these loans to third world countries in a bid to gain goodwill, especially when no one else is willing to loan out such loans to said countries. China won’t do the due diligence for you, they will just hand you the cash and it really is up to you to make sure you have already done all your due diligence to ensure that you don’t fall into a debt trap OF YOUR OWN DOING as a result of your own negligence.

Now you know…

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