Policy Reliability and Investor Confidence: An Objective Analysis
By Karl Garcia
Investment decisions, especially foreign direct investment (FDI), are influenced by a complex mix of economic fundamentals, governance quality, and domestic policy environments. While factors like tax rates and infrastructure clearly matter, predictability and credibility of policy commitments are often decisive in long-term investor decision-making. When governments alter rules mid-course—whether by withdrawing incentives, renegotiating terms, or reinterpreting commitments—such actions can materially affect investor confidence and economic outcomes.
This essay analyzes how policy inconsistency and mid-stream rule changes impact investor confidence, with a focus on the Philippines, drawing on empirical investment trends, institutional assessments, and broader international precedents.
1. Investment Trends in Context: The Philippines
Fluctuating Investment Approvals and Commitments
In recent years, the Philippines has experienced significant fluctuations in foreign investment commitments. Preliminary data showed that approved foreign investment commitments fell sharply—by 39% in 2024 compared with 2023—as investors adopted a more cautious stance amid changing global and domestic conditions.
Domestic investment approvals also saw volatility. The Board of Investments (BOI), responsible for approving investment pledges, recorded a notable decline in year-on-year approvals in 2025, reflecting both procedural delays and slower approval inter-agency coordination.
Divergent Signals: Strong Approvals versus Execution
Meanwhile, broader metrics suggest a longer-term upward trend in investment approvals, with the Department of Trade and Industry noting a 71% surge in approved investments from 2022 to 2024—largely driven by renewable energy and infrastructure projects.
This dual picture—strong headline approvals co-existing with sharper drop-offs in specific periods—reveals heterogeneous investor sentiment: approvals continue, but timing and certainty have become more unpredictable.
2. Why Policy Consistency Matters More Than Incentives
Predictability as a Core Component of Investment Climate
International bodies and investment analysts emphasize that investor decisions are not driven by incentives alone, but by policy reliability and regulatory consistency. This includes clear legal frameworks, timely approvals, and consistent enforcement of contractual commitments. An OECD review advocated for alignment of investment policy frameworks with global standards to reduce uncertainty and enhance predictability.
A U.S. government investment climate report specifically praised the Philippine Economic Zone Authority (PEZA) for transparency and streamlined services—a rare example of regulatory predictability contributing positively to the investment environment.
Investment Conditions Beyond Taxes
Policy inconsistency often intertwines with broader governance challenges. Analyses point to persistent systemic issues—such as corruption, judicial inefficiency, and regulatory unpredictability—as structural obstacles for foreign investors.
These governance factors affect investor decisions because they alter the risk profile of doing business. Even when incentives exist, unexpected changes to rules or interpretations undermine trust in the overall governance system.
3. The Problem of “Changing Rules Mid-Game”
Policy changes after commitments are made are especially damaging because they affect investor expectations and sunk cost calculations. Investors base decisions not just on current rules, but on how reliably those rules will be upheld over time.
Empirical and International Examples
The international experience illustrates this principle well. In the renewable energy sector, Spain’s retroactive cuts to feed-in tariffs—which had been guaranteed at the time of investment—triggered arbitration claims and investor losses, because the changes undermined the basis on which projects were financed.
This phenomenon is not confined to one sector: across multiple industries, retroactive policy changes undermine long-term contracts and expectations, leading capital to gravitate toward jurisdictions with more stable regulatory environments.
4. Domestic Policy Shifts and Investor Interpretation
In the Philippine context, government reforms like the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act aim to simplify incentives and provide clarity over tax treatments, which should enhance competitiveness.
Likewise, institutional innovations such as “Green Lanes” for strategic investments seek to streamline permits and approvals across agencies to reduce bureaucratic delays—another response to investor concerns about procedural unpredictability.
However, the value of these reforms is moderated when contemporaneous reports show investment pledges declining or when past commitments come under question, as in the case of automotive industry incentives and inter-agency coordination issues that delayed project approvals.
5. Credibility, Governance Reform, and Long-Term Growth
Macro-Institutional Implications
Institutions like the International Monetary Fund note that structural and governance reforms—including those that improve regulatory predictability—would significantly bolster investor confidence and potential growth.
This assessment underscores a core insight: policy consistency and governance quality are integral to the investment climate. Without these, even well-designed incentive regimes may fail to attract or retain sustained investment.
Beyond Headlines: Real Investor Behavior
Investor behavior reflects not just incentives but risk-adjusted expectations. Even if large pledges or headline approvals make economic news, many firms take a cautious approach, considering the risk of regulatory or procedural reversals before finalizing investment flows.
This dynamic is why metrics like FDI inflow stability, contract enforcement reliability, and regulatory consistency matter more than isolated investment announcements.
Concluding Synthesis
Investment flows are shaped by a complex interplay of economic, institutional, and governance factors. In the context of countries like the Philippines:
- Policy predictability and institutional credibility are foundational to investor confidence.
- Mid-course changes to rules or commitments have a disproportionate negative impact on investor risk perceptions.
- Reforms that enhance clarity, streamline approvals, and align with global best practices can improve competitiveness.
- Structural governance issues—such as corruption and regulatory inconsistency—remain key barriers that cannot be solved by incentives alone.
Ultimately, sustainable investor confidence depends less on the generosity of incentives and more on the reliability, coherence, and transparency of the policy environment over time.
The Society of Honor by Joe America 
**In the Philippine context, government reforms like the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act aim to simplify incentives and provide clarity over tax treatments, which should enhance competitiveness.
Likewise, institutional innovations such as “Green Lanes” for strategic investments seek to streamline permits and approvals across agencies to reduce bureaucratic delays—another response to investor concerns about procedural unpredictability.
However, the value of these reforms is moderated when contemporaneous reports show investment pledges declining or when past commitments come under question, as in the case of automotive industry incentives and inter-agency coordination issues that delayed project approvals.**
I recall this was mentioned in earlier recent essays from Karl. I forget the terminology used, but basically simply having a law that addresses the problem doesn’t necessarily solve it. In many cases it gives the illusion of solving the problem but lack of enforcement, etc. makes it more part of Performance government. The CONTEMPORANEOUS REPORTS SHOWED INVESTMENT PLEDGES DECLINING, exactly the opposite of the goal of the CREATE MORE Act.
Sayang…we just need to do better.
we must do all to maximize potentials
while others are trying to minimize philippines maybe to frighten investors not to invest here but to invest in other countries, reports are proving to the contrary.
https://mb.com.ph/2026/02/13/philippine-investment-pledges-rebound-in-late-2025-after-year-of-caution
“while others are trying to minimize Philippines maybe to frighten investors not to invest here but to invest in other countries, reports are proving to the contrary.” – Kasambahay
https://mb.com.ph/2026/02/13/philippine-investment-pledges-rebound-in-late-2025-after-year-of-caution
I read the Manila Bulletin article that Kasambahay gave us a link to. I think that the only thing it proves is that the Philippines had a “relatively” good 4th Quarter in 2025 with respect to FDI pledges. And I put in the word “relatively” because I believe from the MB article itself that previous numbers for many years have been dismal. So relative to dismal numbers, a small increase in dollars could be seen as a “good thing” but in the grand scheme of things, the small gains could merely be called “less dismal.”
The Manila Bulletin gives a conditional reason for being optimistic:
>>“Approved investments could improve in 2026 if anti-corruption measures and other reforms related to further improving governance standards are taken seriously, as these are also the basis for the catch up government spending to make up for the soft underspending in the latter part of 2025 due to the political noises largely attributed to the anomalous flood control projects,” Ricafort said.<<
OT but relevant from Kakampink Gerry Cacanindin, his FB post “Roadmap to Redemption”: (it reminds me of many things Joey has commented here from his US Democrat perspective)
Gerry C ha been quoted a lot in the Maritime League
You should invite Aquaman. Jason Momoa has Austronesian roots.
P.S. seriously, Gerry C is one of the best opposition influencer figures.
One of the lessons the US Democratic Party as a whole has not integrated yet is that chasing opinion polls IS NOT leadership. People want leadership and are willing to accept hard truths as long as politicians offer the truth with empathy and without looking down on people. As FDR famously said in his 1933 inaugural address: “This is preeminently the time to speak the truth, the whole truth, frankly and boldly” (First Inaugural Address, Franklin D. Roosevelt, 1933).
Being largely funded by corporate interests has become a problem for the Democratic Party, just as a handful of big donors are a problem in Philippines politics. The Pink Movement was not immune to this capture by monied interests. In many ways Philippine politics is *worse* than American politics since there is rather weak political organization, where it seems like big donors make their bets at the “last minute” (a few months out of the election).
Of course it is harder to build a political organization, especially when there is no existing structure to refurbish in the first place. It makes sense that building an organization off of motivated voters who will help recruit other voters would be more sturdy than big money carpet bombing handouts, rallies, and vote bribes.
it has been done before and it can be done again, unless we do what turkey had done and imposed cyber blackout months prior to election. apparently filipinos bots are hyper famous in the darkweb specialising in misinfo that even pedo jeffry enstien avail of them and pay big bucks to save some famous faces from cyberhits, and bury the truth far below so it wont surface at searches. if the same filipino bots activate in 2028, all the more reason to follow turkey’s lead, no?
sara duterte is defacto opposition comes election 2028, opposing pbbm’s political party. and with the liberals like hontiveros, and some other parties, it will be multi parties again vying for the top spot. and voters will be terribly split several folds. unlike in united states where only two party vie for presidency.
yes, we may not have big bucks for donation to political parties, but we do our hardest bit on the ground and campaign to the bitter end.
The big bucks don’t have a large effect in the US to move votes to the Democratic Party as the Democrats are a big tent party with many competing interests mostly arguing over purity tests about minor variations of how to solve the same problem. Big bucks does help the Republican Party a lot though, due to a party which is homogenous in race and in beliefs through their propaganda machines.
For big tent coalitions having organization is more important than big bucks. So it won’t hurt the pro-democracy, pro-good governance Philippine parties to at least start building those organizations that may be sustained even outside of elections. There are examples of how organizations can be built and sustained in the Philippines, mostly in religious context, but that gives ideas. Quiboloy (KOJC) and Apolinario (KAPA) both built immense organizations off of the small donations of regular Filipino believers.
quiboloy is facing human trafficking charges in united states, his reaches is far reaching, his church have branches in america and his followers have been begging the street corners in new york, and bringing money home to philippines where the exchange rate of the dollar is humongous. customs once intercepted his private plane in hawaii, he was found to be carrying more money than allowed, but since the money was not proceeds of crime but donated or given by kind hearted americans, quiboloy was let go.
quiboloy pay no tax but owned business in phil and was able to sway the political landscape here. lately his fortune has met a reversal and the rest is history.
comes election 2028, quiboloy can be pin up boy of corruption tarnishing sara duterte, an diehard supporter of his.
Yes about what’s happening to Quiboloy. I was referring to how Quiboloy and Apolinario were able to build big organizations off of DE Filipinos though. Those organizations ended up being scams and nefarious but are examples of how large organization building can be done in the Philippines. There are other large organizations that threaten block voting and have politicians paying visits during election time. There is also the Catholic Church which runs a large spiritual and humanitarian organization. I think one of the major conceptual failures of the Philippine liberals and progressives is over-focus on trying to make the Philippines more Western to the point they forget that Filipino organizations need to be built to suit Filipino ideas.
I did see graphs of donations for both VP Leni and Marcos Jr. after the 2022 elections finished, and VP Leni had far more “small” donors, probably individuals from A and upper B classes.
BTW one reason often overlooked when thinking of why VP Leni did not file a protest against possible election cheating is that she had to PAY out of her own pocket for the manual recount needed because Marcos Jr. protested against her VP win in 2016. There was the PISO PARA KAY LENI drive but Comelec didn’t allow her to pay the millions of pesos for that recount with that, so she lent money from Robredo in-laws as stated in her SALN.
She probably was not going to go on a fishing expedition and used up her money as she simply didn’t have the same war chest as Marcos Jr. back in 2022. BTW I once heard from a rich lawyer on Twitter when I joked to him to run for Congressman that even to run for barangay captain can cost 2 million pesos upwards in PH. Due to the political party system, a municipal candidate in Germany might spend around 30K€ OWN money – the price of a better middle class car, tax-deductible as well.
It seems to me that at least ONE daughter of VP Leni was abroad at any given point in time during her VP term. Someone without the usual, well, security machinery of dynasts might have to take precautions, I thought. Makes sense given how even Mayor Trenas of Iloilo had to run when Duterte tagged him as “shabulized”.
Or how Magdalo (well, military folks) noticed that Sen Trillanes was being tailed in his car when Duterte and Calida tried to void his amnesty given by PNoy.
Even Leni’s “small donors” were actually large donors; the Leni donors were only relatively “small” in comparison to Marcos Jr.’s fewer and far larger donors.
The Philippine Center for Investigative Journalism (PCIJ), who I don’t always agree with, is one of the few organizations that actually took a look at Senate, Presidential and Vice Presidential candidate COMELEC Statement of Contributions and Expenditures (SOCE) going back about 10 years.
In 2022 Leni received 333 donations. 6 donors gave P10 million or more. There is also a bubble chart of the relative size of each donor’s contribution across candidates here:
In contrast Marcos Jr. at 67 donors had fewer donators but each gave big time and we can recall how Marcos Jr.’s campaign war chest dwarfed every other candidate:
Even the US Democratic Party which is partially beholden to corporate interests (though not fully like the Republican Party) and large donations is a formidable small-dollar fundraising machine. Both the Democratic and Republican Parties have fundraising platforms for supporters to donate directly (something the Democratic Party pioneered under Obama).
To put Marcos Jr.’s roughly P625 million war chest into perspective, if half of the Philippine population (~58 million, out of 80 million adults, out of 117 million population) donated P10.78 per head, an opposition candidate can match the 67 big time donors of Marcos Jr. (or a generic dynasty candidate).
Filipinos spend P50, P100, P250 even on frivolous things or donate to their local charlatan pastor’s Land Rover fund so surely they can part with a few pesos to give more honest politicians the funds needed to run a campaign. That would require building an organization instead of just going off of last-minute vibes and rallies where the candidate that has the cash to spread around via local power brokers will win. Though pessimistically, I’m not sure even if there was a fundraising platform available, most Filipinos would be willing to part with even a single peso. The expectation is a one way relationship of “you give me stuff, I don’t need to give you anything,” which is a “jokes on you” situation since once in power corrupt politicians take much more from the public coffers.
OT again but probably interesting in terms of how SEA is between different worlds that are colliding: https://x.com/RnaudBertrand/status/2023002385153720464
Joey probably knows more about the bigger picture, also in general how SEA is intertwined with both the West and the “East” (both US allies like Japan and Taiwan, as well as US rival China) in a shifting economic and political landscape. P.S. I asked ChatGPT and got this summary after some queries:
What kb mentioned about nickel and the new Philindo alliance controlling 1/3 of global supply is important given that it is significant for EV batteries. THAT could be the next great thing after the late 19th century abaca boom where the Philippines had a total monopoly. Hope it is not “prosperity without progress” this time..
continuing to experiment with prompting AI to give me what I need, I now asked ChatGPT to tell me per country what they do – WITH EXAMPLES. Trying to see if this reduces the tendency of AI to just copy whatever is written all over the Internet. Also, to paint a more vivid big picture of what is going on.
Aside from the PRC-captured states of Cambodia and Myanmar (Burma), the overall ASEAN stance seems to be a preference for the US, the West, and the Northern East Asia economies of Japan and South Korea.
Probably important to note where the technology that China manufactures *comes from* — the US and broadly “The West.” What China’s advantage is by now is over 2 decades of manufacturing *line* expertise by pipelining technicians, engineers, infrastructure and industrial construction. But ultimately manufacturing *process* was created by American, Western-based, or Western-aligned multinational firms who develop and provide initial training to Chinese manufacturing firms. Without that Western expertise and technology China is screwed, but China also has leverage as China has built up the line expertise to be able to execute production quickly.
The biggest blocker of moving manufacturing out of China is not that Chinese wages are “low.” Chinese manufacturing wages have been relatively high for a while now. The blocker is that aforementioned line expertise on the production line, which must be developed wherever the multinational wants to move production to. As far as what manufacturing tech China exports and provides financial backing for, it is in the area of line expertise.
I mentioned that Malaysia in the 1970s opened up almost all industries to FDI and started building their own niche expertise then, and as a result Malaysia got rich off of being able to do advanced semiconductor packaging. My PC’s processor is laser etched with “Designed in USA. Manufactured in Taiwan. Packaged in Malaysia.”
Thailand built a niche in advanced mechanical hard drive assembly. Whether Seagate or Western Digital, my hard drives sticker label states “Designed in USA. Manufactured and Assembled in Thailand.” Of course with solid state storage nowadays Thailand was not making as much money in this industry. Recent big advances in multi-track and multi-actuator head technology along with vastly increased areal density in magnetic storage enabling speeds approaching solid state storage that allows good old hard drive tech to continue on.
India had/has a very focused manufacturing plan to localize production with the aim of export. As a result my non-Pro iPhone is “Designed in Cupertino. Made in India.” Samsung and Chinese manufacturers have also moved a lot of production to India. Indian cars suck, but they’ll get there.
Vietnam’s manufacturing strategy was actually informed by sending observers to India, so Vietnam’s strategy mirrors India’s. My iPad says “Designed in Cupertino. Made in Vietnam.” Ditto my AirPods.
Of course both India and Vietnam has an enormous amount of basic manufacturing in the textile industry. Well if we look at the Industrial Revolutions of every country which had passed through successful industrialization, mastering textiles was the first step. A willingness to do work for cheaper wages that “higher” trade partners don’t want to do. Then once basics were mastered manufacturing moved onto more advanced products, while the “base” manufacturing remained to provide a stable industrial foundation. Okay, there is a relatively “large” (for the Philippine economy as-is) textile industry in the Philippines, but it doesn’t seem that organized at scale. Filipino elites I’ve discussed these matters in the past seem to think the Philippines can jump immediately to the near top of the value chain. Won’t happen without building foundations.
I think a lot of the older members of the Philippine elite did NOT think those countries that don’t speak English as well as they think they do (and don’t have educations in universities like the big ones in the Philippines which they might seriously have thought of as being US Ivy League level, which recent international college rankings disprove) would overtake the Philippines, much less the Malays and Indonesians whom they might think just “look like maids”.
Pride cometh before the fall but if the present elite does not learn from having overlooked those who built substance before performative appearance, the last deep voiced laugh might come from Africans who especially DDS Filipinos loved to mock, when their countries are ahead of the Philippines.
But of course there are both signs of improvement as well as signs of not yet enough improvement, so we shall see what happens.
P.S. I have anecdotal evidence of the attitude problems of many old members of the Filipino elite re their English and their education.
P.P.S. PNoy was one of the few who was humble and actually tried to do the groundwork to attract investment, best example Japanese car plant – but I still stand by my observation (and PNoy vs. Duterte as examples) that modesty is underappreciated in the Philippines while yabang is given too much respect.
Growing up I also heard the “Malays look like maids” from Fil-Am Boomers who migrated before or right after EDSA. From their telling I was under the impression that the Philippines was basically a slightly-less-rich version of the US which proved to be not true when I wandered outside of that Batangas compound and met informal settlers. My personal joke is “then I went to Malaysia and Indonesia.”
The anti-African sentiment (based on memes, not actual encounters with Africans) is a real thing there among DDS. I heard it again on my last trip. Ironically the repeaters are dirt-poor Filipinos. Well President Lyndon B. Johnson observed once (paraphrased) that if those with a chip on their shoulder yet overcompensate with superiority complex are given someone *lower* than them to hate, they’d empty their pockets in support. I have no doubt that the rising African nations will “get there” before the Philippines does. Those African nations have cultural muscle memory of being previous mighty kingdoms and empires that is real history, rather than a “history” of justifications. Just sad considering all the help the Philippines has gotten over time from the US, later Japan, South Korea, and now also EU. The Africans have little help of that nature. One of my doctors is a Nigerian and he is extremely impressive.
Perhaps one of the faults of PNoy is that he was still trying in a way to make a copy of the possibility that the US offers that the Philippines is not ready for. It is a good and high-minded view that unfortunately, probably won’t work. Maybe it’s time to start exploring ways to find success within the Filipino cultural understanding. The Malaysians have been able to do this, and the Indonesians are catching up though at a slower pace. One observation I would make is that the Malaysians and Indonesians are willing to use Western technology and knowledge to better their countries, but they don’t seek to become “equal” to the West — they instead use it as a tool to push Malay and Indonesian excellence forward.
China may have lost its factory of the world a few notches
but reshoring did not happen as fast as Trump and his tarrif war want to.
China wants to control SEA and eaat Asian supply chain, SG would say over my dead body with Kra Canal so they built their canals to have ease of access to South East Asia.
SG may have lost a bit of its transhipment pinache but they have other advantages.
As to PH it is a work in progress.
Asian Financial crisis let p and g and unliver to Thailand and Vietnam otgers exited to.
I have been told I was a dreamer by an Admiral and I did not take it as an insult (after taking it as such)
I will continue togetherwith you guys to find actionable solutions.
We are not overpopulated only heavy on NCR Cebu Davao, and mayve a few more
but we lack Naval Architects Psychiatrists other fields and if we do have the numbers Doctors to the barrios is just a temporary stop gap
Our farmers are aging no one wants agri scholarships
Small Fishers are boxed out by big fishers
So on and so forth.
The Philippines’ manufacturing challenge is not a lack of talent but a misunderstanding of how industrial success is actually built: while China’s dominance grew less from low wages than from two decades of accumulated manufacturing line expertise, supplier ecosystems, and process engineering—much of its foundational technology originally sourced from the US, Europe, Japan, and other Western or Western-aligned innovators—countries like Malaysia, Thailand, India, and Vietnam advanced by patiently climbing the value chain, starting with assembly, specialization, and mid-stream capabilities before moving toward higher-value functions; Malaysia leveraged early openness to FDI to become a semiconductor packaging hub, Thailand carved out precision HDD assembly niches, India scaled electronics through localization incentives, and Vietnam captured China+1 diversification, all illustrating a recurring historical pattern from textiles to light manufacturing to component integration and eventually design leadership; for the Philippines, the realistic promise is neither leapfrogging nor lamentation but disciplined progression—upgrading from assemblers to co-designers, from ore exporters to partial refiners and circular-value creators, from improvisational ingenuity to scalable innovation—anchored by the true missing ingredient: stable, predictable markets via domestic procurement, long-term industrial policy, ASEAN integration, and reliable demand that convert Filipino capability into sustained income, investment, and technological ascent.
Sorry for a little “challenge”
Aside from Cambodia and Burma being captured States.
This is about China being screwed part.
Did Nixon & Kissinger make China the factory of the world? Richard Nixon and Henry Kissinger engineered the 1972 U.S.–China rapprochement, culminating in Nixon’s visit to China. What they did: ✅ Ended decades of isolation between the U.S. and China ✅ Legitimized China diplomatically ✅ Reduced Cold War hostility ✅ Enabled future trade, investment, and technology flows What they did NOT do: ❌ They did not create China’s export machine ❌ They did not design China’s industrial policy ❌ They did not cause globalization or offshoring The deeper drivers of China’s rise: 1️⃣ Deng Xiaoping’s reforms (late 1970s onward) China’s transformation truly began under Deng Xiaoping: Special Economic Zones (Shenzhen, etc.) Market-oriented reforms Opening to foreign investment Export-led strategy Massive rural-to-urban labor migration 2️⃣ Globalization & Western corporate strategy Firms sought lower labor costs Supply chains fragmented internationally Containerization slashed logistics costs 3️⃣ China’s structural advantages Huge, disciplined labor force Aggressive state-led industrial policy Infrastructure buildout Currency management Scale + clustering effects 4️⃣ WTO accession (2001) China’s entry into the World Trade Organization supercharged exports. 🎯 Bottom line on Nixon/Kissinger They were geopolitical catalysts, not economic architects. Without the opening: ➡ China’s rise may have been slower or different But without Deng/globalization: ➡ China would not have become the factory of the world 🇯🇵 What happened to Japan? Japan did not “collapse,” but its growth model hit structural limits. 🌟 Japan’s golden era (1950s–1980s) Export powerhouse World leader in autos, electronics, precision manufacturing Rapid productivity growth 💥 The asset bubble & crash (late 1980s–1990s) Japan experienced a historic bubble: Skyrocketing land prices Inflated stock market Easy credit Then: ➡ Bubble burst (early 1990s) ➡ Banking crisis ➡ Deflation ➡ “Lost Decades” 🧊 Structural headwinds 1️⃣ Demographics Aging population Low birthrate Shrinking workforce 2️⃣ Deflationary psychology Consumers delay spending Firms hesitate to invest 3️⃣ Competition from neighbors South Korea, Taiwan → electronics China → manufacturing scale 4️⃣ Currency pressures Strong yen hurt exports at times 🔄 Japan’s adaptation Japan shifted toward: ✅ High-end manufacturing ✅ Robotics & automation ✅ Advanced materials ✅ Precision components ✅ Global investment & finance Japan remains: One of the world’s largest economies A technology leader A capital exporter But no longer the singular industrial juggernaut of the 1980s. 🧭 Big picture China’s rise ≠ Japan’s fall They reflect different phases of development: Japan China Mature economy Catch-up industrialization Aging population Demographic dividend (earlier decades) High wages Low-to-middle wage advantage Innovation leader Scale + manufacturing dominance ✅ Final takeaway ✔ Nixon/Kissinger → opened China geopolitically ✔ Deng/globalization/WTO → made China the factory of the world ✔ Japan → bubble crash + demographics + industrial transition
They had cheap labor then., maybe now is a different story.
I wrote this before, but China does not have cheap labor now, especially in high-tech manufacturing.
What China does have that provides a huge advantage are:
1.) Integrated industrial zones where a product goes from sub-supplier to supplier to final assembly, mostly all within the same industrial zone.
2.) Education pipeline from technician, engineer, process management to feed into industrial process.
3.) #2 trains skilled labor force that can switch from making one product to the next quickly.
4.) Sunk costs of multinationals having already invested trillions of dollars into the physical factories and equipment, which need to be recreated if the manufacturing moves out from China.
Deng did initiate reforms that created modern Chinese state-directed capitalism (Capitalism with Chinese Characteristics as they say there). However most of the foreign investment was done after China’s accession to the WTO. China offered a deal: cheap Chinese labor in return for the multinational providing full upfront investment to plant the factory in China. Even though multinationals often had to pay 100% of the investment, while owning less than a majority share of the “joint-venture,” the cheap labor was the biggest driving factor in the balance sheet. Nowadays the biggest driving factor is the built-up skilled labor over 25 years since WTO accession. Multinationals were encouraged to invest in China by American and Western governments who during the Age of Globalization believed that the post-War model of spreading economic benefits would democratize nations, which obviously ended up not working in countries like China that have a 4,000 years history of authoritarianism. Or the 800 year history of Russian authoritarianism for that matter.
Joey
I got that part.
The world would not have chosen China without cheap labor.
Abstract
In recent decades, cheap labor has played a central role in the Chinese model, which has relied on expanded participation in world trade as a main driver of growth. At the beginning of China’s economic reforms in 1978, the annual wage of a Chinese urban worker was only $1,004 in U.S. dollars. The Chinese wage was only 3 percent of the average U.S. wage at that time, and it was also significantly lower than the wages in neighboring Asian countries such as the Philippines and Thailand. The Chinese wage was also low relative to productivity. However, wages are now rising in China. In 2010, the annual wage of a Chinese urban worker reached $5,487 in U.S. dollars, which is similar to wages earned by workers in the Philippines and Thailand and significantly higher than those earned by workers in India and Indonesia. China’s wages also increased faster than productivity since the late 1990s, suggesting that Chinese labor is becoming more expensive in this sense as well. The increase in China’s wages is not confined to any sector, as wages have increased for both skilled and unskilled workers, for both coastal and inland areas, and for both exporting and nonexporting firms. We benchmark wage growth to productivity growth using both national- and industry-level data, showing that Chinese labor was kept cheap until the late 1990s but the relative cost of labor has increased since then. Finally, we discuss the main forces that are pushing wages up.
OT: Excellent mini-documentary on Champa and how modern Vietnam is trying to document the empire they defeated from Singaporean public broadcasting.
From Lê Minh Khái (Prof. Liam C. Kelley, Vietnamologist and professor of Southeast Asian history at University of Brunei):
https://leminhkhaiblog.com/when-the-cham-ruled-the-seas/
“There is clearly a deep historical connection between Champa and Aceh, and I think the distribution of “Pu envoys” in Song dynasty era records points to this. We of course should assume that the Cham were active in places close to their homeland, such as Sanfoqi/Kambuja, but I would argue that they were also clearly active further afield.”
thanks, that is the same series from CNA that has stuff on Sri-Vijaya and Majapahit. I have watched the two, Champa is next on my list, and finally the Sulu Sultanate.
Aceh is of course also intriguing as the last Sultanate of what is now Indonesia to fall, as late as the early 20th century IIRC.
Yes, the Aceh Sultanate spoke Acehnese which is a Chamic language. Prof. Liam C. Kelley (Lê Minh Khái) and other archaeolinguists are postulating that Aceh was a Champa Empire colony, which goes against the Indonesian Malay-centric nationalist theory that claims the Acehnese were originally Cham refugees during one of the periods of Champa Empire territorial recession. So in this newer theory which makes more sense and I believe will achieve scientific consensus on day, the Aceh Sultanate was actually a Champa rump state.
The Malay-centric nationalist theory is Islamo-centric and carries heavy religious undertones which those who follow the spread of Islam into Austronesia know of course happened relatively recently. There is a single clan of Muslim Chams that “escaped” into Cambodia following the final destruction of Champa during the Vietnamese march south who intensely follow this extremist Sunni ideology. The other Cham clans still live in their ancestral lands and co-exist relatively peacefully with the Vietnamese and other ethnicities; most are moderate Sunni Muslims, the rest are Hindu. Btw a Cham “clan” was analogous to a Philippine ancient barangay, but rather than being a neighborhood-sized “polity,” the Cham clans were proper small states with rajahs, their own far-flung trade networks and internal politics, but submitted to the Champa Empire rajah-of-rajahs (Mandala system).
I asked ChatGPT to have a look at the insecurities this article says impede investment and the most important part of the answer got was this:
I would even add: the often prevalent Filipino attitude that foreigners are fantastically rich should be outgrown, replaced by the understanding that investors are takng a risk by investing – and anything that makes that risk easier to calculate is good for investment.
**I would even add: the often prevalent Filipino attitude that foreigners are fantastically rich should be outgrown, replaced by the understanding that investors are taking a risk by investing – and anything that makes that risk easier to calculate is good for investment.** – Irineo
Maybe another reminder Filipinos can give ourselves is that we are not the only place where foreigners can invest. We do have competition.
“prevalent Filipino attitude that foreigners are fantastically rich”
This mentality even among elites is why foreign ayuda is sought out rather than large investments. The investments touted by Philippine media are in fact a pittance compared to what neighbors attract, and are in industries that can be uprooted in whole and moved on short notice (like BPO and other service-related investments).
Multinationals *know* China is fabulously *corrupt.* Multinationals *know* China will attempt to *steal* their IP to make knock-offs. But investments still happen there because the corruption and business climate is stable — investors look for known quantity, not uncertainty which drives up risk.
I remember a while back Filipino friends were sharing with me articles of the factory campus riots in India in the context of laughing at those “dumb Indians.” Well, at least India was able to attractive massive factory complexes which provide hundreds of thousands of jobs. The problems which caused the riots were ironed out and things are humming along nicely now with Indians building high-tech gadgets. When does laughing at the misfortune of others becomes laughing because one is crying?
I couldn’t help it this time, I asked ChatGPT to write a Tom Wolfe style satire again on the wrong kind of Filipino pride and its many manifestations:
I now asked ChatGPT to create a more enhanced story with a historical progression and a mix of Rizal’s El Fili style modernized into teleserye:
Haha, this article by Cito Beltran is partly true but also typical in many ways: (it is about his daughters being in Germany)
https://www.philstar.com/opinion/2023/09/18/2297013/grass-greener-not
– I don’t know if the German countryside’s connectivity is as bad as in remote Philippine provinces, even if indeed it can be sketchy in trains, inspite of them having WLANs inside by now.
– Well, the “girls” are clearly NOT digital nomads who have heard of eSIM. Or that the SIMs with load at Amsterdam airport are overpriced.
This is as true as what Joey mentioned about Indian factories.. but India HAS its factories and Germany HAS its trains. Ehem.
– stores can be open all night in Berlin, up to 10 p.m. in Cologne and up to 8 in conservative Bavaria. Sunday is indeed the day when you can only buy stuff at train or gasoline stations. A product of a decades-old agreement between churchgoing Conservatives and labor-friendly Social Democrats.
– we at least HAVE sidewalks that one can genuinely walk on, and jobs for small store owners – even as malls are also getting more over here.
– Yes, zoning laws and rules as to how many people can live in a place are enforced here. What people from warm countries might not realize is how quickly MOLD grows inside if there is too much moisture in a closed place over here. The other side of the short days is that in Northern Germany where they presumably were (IKR based on the sunrise and sunset times they mentioned) one can have summers where sun rises at 5 a.m. and sets at 9 p.m.
—–
I also once found a FB comment by Ninotchka Rosca amusing that she could not buy any food at 3 a.m. on a Sunday morning in Geneva, Switzerland amusing and had to make do with the nuts in the hotel minibar. Berlin at least has the night life and many big towns have the immigrants who still sell food at night.
An author who lives in Queens, NYC is used to something else, obviously.
—–
The vlogs of nurses in Germany nowadays or Pinoy truckers in Eastern Europe show another side of the Filipino experience, definitely less privileged..
The opinion piece by Cito Beltran is certainly discouraging vis a vis elite Filipino thinking — Beltran was one of the biggest proponents of Leni in the 2022 cycle.
• It is harder to blanket open farmland with cell signals, not in terms of signal travel distance (which is easier on flatter, unobstructed land), because there is less economic incentive for a mobile provider to put up cell towers in places with sparse customers compared to even small towns. The same situation exists in American open farmland. Which is *not the same* as Philippine provinces where there are sizable populations but weak cell signal.
• A bit surprised that Beltran’s daughters did not figure out in 2023 how to use eSIM. When in Europe I use Saily, Airalo, Holafly, depending on whichever is cheaper. I set up the corresponding app beforehand, download the eSIM profile and when I land I’m good to go. iPhones and Galaxy phones after 2020 definitely can use eSIM. The cost the “girls” paid was mostly the cost of the physical SIM card. Probably this has to do with the Philippines behavior of visiting a physical store (7-11 or sari-sari store) to buy SIM cards and loads, rather than going through an app. Then again (frustratingly hard to set up) eSIM service only became sort of available in the Philippines in late 2024 on Globe and Smart, and there is still no eSIM service for gadgets like my Apple Watch or iPad.
• A bit weird for Beltran to comment dismissively on German train schedule and aircon train cars when the Philippines has basically nonexistent rail infrastructure compared to even small, poor, post-Soviet Balkan countries. What trains is he riding on in the Philippines? Hah.
• A lot of Beltran’s commentary focuses loosely on Filipino expectations of convenience (and service that provides convenience). Well, perhaps the rich in the Philippines can afford to exploit low-cost labor to live in convenience, but for the rest of the Philippines who also love the convenience of 24/7 stores, buying single-serving items and single-use sachets, convenience has a heavy cost. I’ve tried fruitlessly to explain things like “Why not buy a bottle of shampoo?” then to be replied “A bottle costs more than a sachet.” Well duh, but the price per ounce/mL is much cheaper if one buys a bottle of shampoo, same for buying a pack of cigarettes instead of single sticks, a package of shaving razors rather than one razor at the sari-sari store, and so on. I explained stuff like “on payday you should buy the larger size, then spend the rest on whatever you like,” only to watch that person buy a few sachets and blow the rest of their pay on one day millionaire. It’s hard to save money when convenience is king in the Philippines.
well, it is quite often exactly the level of a lot of Filipino journalism. If one looks at the satire I posted, just a BIT more advanced than the stuff Filipino diplomats or overseas Titos actually said behind closed doors or at barbecues in the 1990s and 1970s. With notable exceptions!
Kuya Grab is always on time in Metro Manila, and the rest of the public can eat cake while waiting for the MRT.
I recently read that Philtranco has gone broke after over a century, do overland travellers just fly or take aircon busses now?
That is typical of many elite Filipinos abroad. It is the senyorito mentality influenced by American consumerism.
The sachet mentality is Austronesian yolo, or as some UP anthropologists might say, “culture of abundance” as opposed to Western “culture of scarcity” haha.
AFAIK Yanson Group has been larger than Philtranco for quite a while and operate in every province under different acquired subsidiaries. Five Star is also a large transport conglomerate based in Luzon. The larger transport conglomerates are owned by (surprise!) Chinoys. Regional transport companies like D’Biel in Zamboanga del Sur/Zamboanga del Norte are typically owned by political families (surprise x2!). I have noted that for every rural LGU that was underdeveloped and having residents that were DE, the local mayor’s family, who live in mansions, almost always seemed to curiously have total control of the businesses in the sentro, goods and transport in/out of the LGU via v-hire owned by the same family. V-hire companies are usually owned by smaller political families.
Most regular Filipinos travel overland by bus. The old “deluxe” (non-aircon) buses are now the affordable fare, on falling apart vehicles. Aircon buses are more common nowadays and people seem to prefer those, aside from those who get motion sickness, or the related nausea caused by unreplaced cabin air filters (aircon buses can sometimes smell worse than deluxe buses with lowered windows). Air travel is still out of reach for the vast majority of Filipinos who never have a chance to travel far from home to begin with.
Not sure what those UP anthropologists are on about with regards to “culture of abundance.” That seems like another attempt to romanticize bad choices and not making an effort to educate people that buying larger amounts is almost always cheaper in the end. Perhaps at one time in the distant past a Filipino could just eat what the forest provided, planted some random root crops, eaten wild coconuts, or pilfered a chicken from a neighbor. Well sometimes Filipinos still do that. A friend’s tambay cousin invited me to join him on a tirador (slingshot hunting) trip during my last stay. If he can’t catch small birds or frogs to eat, he suggested we ask for food from his mother or lola, lol.
I think romanticizing bad choices is an issue with the old guard but (I hope) not with the younger ones. It IS true that “Luzviminda” had abundance in 1521 with maybe at most 2 million inhabitants and a basic standard of living, but that old abundance already was challenged in the 19th century (think of many landless peasants who became bandits then) and the last time I saw chickens raised in UP Balara or heard pigs slaughtered there was in the early 1970s..
Dr. Gideon Lasco for instance says that the Philippine attitude to littering is due to how all packaging before was biodegradable (it was in the provinces, when I think for instance of suman from Bikol in banana leaves) but he as a mountaineer (and someone offering mountain hikes as a side hustle) is certainly NOT someone excusing littering. One can’t stick to adaptations that were valid in the past but no longer fit present realities, people must adapt. If for instance European cities hadn’t invented modern hygiene like Munich for instance did (Dr. Pettenkoffer being a famous proponent) just because the old way of dealing with human waste etc. worked in old villages, they would still be full of cholera like Munich was in the 19th century. Just like densely populated cities required different ways of dealing with things by the 19th century, the modern way of life in the Philippines including the present population density requires new ways.
The “abundance” narrative might just be another Filipino romanticization of the reality — a culture of subsistence. While it can be argued that in the past Filipinos had “more space” by which to subsist off the land, I also think this may be a flawed academic view. In many provinces, but especially acutely in Mindanao, there is plenty of “space” yet the inhabitants don’t seem to have any initiative to even farm subsistence crops.
On my recent trip I visited the land of a lola in Mindanao who inherited that land from her late husband. When the lola was younger she had a love of planting randomly seeds from fruits she ate. Now the land has a lot of rambutan, durian, jackfruit, coconut, breadfruit, and so on. Unfortunately her children and most of her grandchildren are not as industrious. A handful of grandchildren were able to “get out” with the help of the eldest granddaughter and work overseas, rarely coming back. The rest just wait for remittance, ayuda, eat well when there is food, and eat from the fruit trees if there isn’t food. The land is overrun with weeds and shanties in which family members live. Perhaps something “broke” generationally, because starting with the children’s generation (~60 years old and younger), they forgot how to even subsist off the land. Not an uncommon story in provinces closer to Manila, much less further away. I don’t think most affluent Filipinos even know this exists beyond vaguely abstract understanding by those who mean well.
Maybe the “biodegradable” excuse for littering is just that, another Filipino excuse that romanticizes such behavior that no longer works in the modern day. Of course until relatively recently no one thought about biodegradability. About a decade back I had a chance to visit the Lal-lo shell middens located along the Cagayan River with a University of California paleoanthropologist friend. Across the world shell middens were one of the earliest examples of segregating refuse from living areas, starting in the Neolithic Age. Certainly Neolithic hunter-gathers of many cultures recognized the importance of removing waste in order to limit disease, prevent unwanted dangerous animals from approaching inhabited spaces and if anything else, to limit unpleasant smells. Lal-lo is a Neolithic Negrito site, so separating refuse for sanitary reasons did exist in the Philippines *before* the arrival of Austronesians. Even today Negritos, who are discriminated against as “primitive” (though less so nowadays), take care to keep their surroundings clean and orderly. Perhaps the Austronesian culture which was one of expansion, exploiting and conquering new territory which proved to be so successful to expand the Austronesian sphere from Taiwan to Island SEA to Mainland SEA to the far reaches of Madagascar, Polynesia and beyond is a culture that does not concern itself that much with preserving the land. Which ended up being a problem when populations were became effectively sedentary.
Hmm, there are indeed (older, Western) theories I have read that temperate zones are place where it wasn’t TOO EASY to survive like in the tropics nor TOO HARD to survive like for Inuits, and thus these places developed the most. Maybe the Philippines indeed originally had little incentive to do more than live off the land, though the extreme critique that the logo of GRP implies, that of a person waiting for fruit to fall into his mouth, is probably a bit too much.
Still don’t really have any real idea of agriculture, never having followed rock legend Mike Hanopol’s advice to plant kamote for self-improvement, but I did discover and interesting outdoor exhibit of “Hochacker” or ridge and furrow architecture on a hike four years ago, showing how hard it was for villages in the so-called Dark Ages, around 8th century in Bavaria, to eke out just enough to eat with what they had.
https://en.wikipedia.org/wiki/Ridge_and_furrow
another thing I discovered on the web some years ago is that the heavy plough (I only found this article now about it being introduced between 8th and 11th centuries in Europe) made it possible to increase agricultural yields north of the Alps where soil is harder than around the Mediterranean. I haven’t looked too deeply into how better agricultural practices for instance found by Benedictines (very active here in Bavaria) furthered prosperity here.
https://www.ebsco.com/research-starters/history/heavy-plow-helps-increase-agricultural-yields
There is often the critique that those who make all kinds of theories about how the old Philippines was do too little field work to verify their assumptions, with the rumor that interdisciplinary work in the Philippines barely exists (Xiao Chua told me in a chat “don’t get me started” when I asked him if it is true that UP departments gatekeep too much from one another) so do they verify using archaeology or studying still existing indigenous practices?
Just around three years ago I visited Bozen in Southern Tirol. It fascinated me how different groups of scholars had reconstructed every detail they could about Ötzi, the Copper Age man found very well-preserved nearby in a melting glacier some decades ago. His genetic profile (similar to modern Sardinians), what he had last eaten, his physical condition, every implement and piece of clothing he. And the one thing that made him “Copper Age”, a blade that was made a few hundred kilometers south as per all the evidence that the technology had not yet reached the Alps by the time he died. The serious effort undertaken in finding out all that could be found out impressed me – as opposed to the often lazy assumptions made by those theoretically trained to be the nation’s scholars in the Philippines, and how the gatekeeping cliques over there often reject those opposing their almost set dogmas. The entire truth is more interesting though.
time for me to actually read this article that has passed my feed and even come as a recommendation from academia edu, that sounds a bit like your hypothesis and might be true.
Click to access blench%20austronesian%20taipei%202014%20agric%20failed.pdf
back to the 8th century Bavarians who probably had similarly meager means of subsistence as the related Germanic tribes of back then, as well as the Goths and Vikings – the latter indeed having some incentive to raid, I assume they were not just looking for warmer places to lie in the sun like German and British tourists of today in Southern Europe, obviously there was a progression towards more effective sedentary living. Munich became a hub for food logistics way before it industrialized, the late 19th century central abbatoir (also built to stop people from the unsanitary practice of killing animals in their backyards and dumping them on squares together with the content of chamberpots, Munich’s poorer quarters had a genuinely “dugyot” reputation before) and the early 20th century food market were fascination to me when I lived nearby. The point being that the past should not hold anyone back or be used as an excuse.
P.S. I skimmed the 28 page paper and asked Gemini for a summary of the content, getting this:
the foraging part is interesting and seems consistent with the cultural “muscle memory” with regards to agriculture that seems weak in the Philippines, also how a lot of remontado subcultures there reverted to foraging or practice agriculture but at a very basic level. By contrast, I think of how strong the agricultural muscle memory was among Germans and Scandinavians who migrated to the Midwest or Pennsylvania.
Of course both those who think the Philippines is condemned to eternal backwardness as well as those who invent a glorious past have fallen prey to what is called essentialism, which is of course wrong, what isn’t there yet can be learned and knowing what one doesn’t have can be a prelude to acquiring it.
Vast space owned by Masters who claimed as far as the eyes can see and had feuds with those who.claimed the same even if it is his sibling. Now as to land reform poold land is a good idea until the devil in the details showed up.
Pooled land probably only works at subsistence level. The ridge and furrow fields of 8th century Bavaria had entire villages working together to just be able to eat, though the place I hiked in four years ago still had a line of trees growing where the ridge and furrow once had been.
Spanish era land documents only mentioned the neighboring lands and who they belonged to, early land sale documents of the 1870s I happen to have had affidavits to prove someone had tilled the land for at least thirty years as proof of ownership before documents, I think it was in the 1890s that they added the land area in “solares” and in the 1900s of course the Americans introduced Torrens titles, but every legal change was a chance for landgrabbers as well.
Thanks
That’s tremendous, Irineo. Thanks for starting my day with hearty laughs. Chatty bird, plodding buffalo, onward toward the horizon!
Welcome. I am amazed at how ChatGPT writes given the right prompts.
Luv it
https://www.kapitbisig.com/philippines/noli-me-tangere-the-social-cancer-by-dr-jose-rizal-a-complete-english-version-chapter-31-the-sermon-english-version-of-noli-me-tangere_752.html/page/0/6 what we did when we isekaied ourselves into the Noli was also memorable (bold section):
(starting from the relevant passage of Padre Damaso’s sermon where you almost fell asleep)