00:18.7
your conscience or awakened
00:20.7
your conscience and how you dedicated
00:24.3
fighting for economic justice,
00:26.7
which is, we always talk about political
00:30.7
liberties, but we tend to forget about
00:32.4
economic rights and economic justice. That's very
00:34.4
important. And that for me
00:36.6
is a big explanation in my own books and works
00:38.5
while populists and Marcos
00:40.6
in fact returned because there was no economic
00:42.7
justice after the fall of Marcos' dictatorship.
00:45.2
But I think this is a good segue for our
00:46.7
discussion today because we want to talk about industrial policy
00:48.8
because you cannot have
00:50.9
an advanced, inclusive,
00:52.7
growth-creating economy if
00:54.7
you do not have a strong manufacturing sector.
00:57.1
And all the examples we
00:58.3
have in history show that you need
01:00.3
to have a strong state to build the foundation
01:02.4
for a strong manufacturing
01:04.3
sector. Now, the last
01:06.3
time we had something close to a strong
01:08.4
state, we can debate about how do you
01:10.2
define strong state? You can look at
01:12.3
its tax generation capacity,
01:14.2
you can look at its ability to
01:16.2
monitor activities,
01:18.6
to gather data, etc.
01:19.8
But I think the last time we had
01:21.9
semi-developmental state experiment
01:24.1
was really during the Marcos dictatorship.
01:26.6
And the fundamental argument you were
01:28.0
making in the previous episode is
01:29.9
that rightly, we got
01:32.1
rid of the dictatorship, but we
01:33.9
threw out the baby with the bathwater. We also
01:35.8
threw out any appreciation of the role
01:37.9
of the state in building
01:39.5
a strong economy, building
01:41.5
foundations of modern manufacturing
01:43.6
and industry. And then what
01:45.6
happened since then is more like moralistic
01:47.6
economics. All we have to do is just to deal
01:49.8
with corruption and everything will be fine.
01:51.5
When in fact, many of our neighbors are still corrupt
01:53.7
until today, but they're doing far more growth than us.
01:56.0
Before I go to you, I just want to add another thing.
01:59.7
those people who have this illusion
02:02.1
that markets on their own will get it right
02:03.9
and that states are bad. I mean, just look at China.
02:06.1
I'm no fan of China's political system, but
02:08.0
my God, they just launched the fastest
02:09.7
internet on Earth. They're going to
02:11.6
launch the fastest computer soon.
02:14.0
They're already ahead of the West in developing
02:16.0
5G and now 5.5G network,
02:18.1
if not 6G network. Look at the
02:20.2
latest Huawei phones. They're way better than
02:22.1
the iPhones we have, right?
02:23.8
The Mate phones. Look at
02:28.0
EV cars. They're trouncing
02:30.3
the Japanese and already knocking at the
02:32.2
door of Tesla. You think that came out
02:34.2
of what? That came out of
02:35.8
public policy. That came out of
02:37.7
a conscious strategy by the Chinese state
02:40.2
to make sure they dominate the next
02:42.1
generation technologies. And now
02:44.1
a developing country like China with
02:46.1
a per capita income of barely $10,000
02:47.9
is scaring the heck out
02:50.1
of the Germany and the US
02:52.0
and Japan's of this world. I was in Germany last year
02:54.1
and I was in Munich, right?
02:56.0
And the guy said,
02:58.0
in 10 years, they're going to trounce us.
03:00.1
Even the car auto industry where we're really
03:02.1
strong. The Americans are already so scared of the Chinese.
03:04.7
They're imposing all sanctions
03:06.0
on Huawei and all their big industries.
03:07.9
And the Japanese, they're pulling out all of their
03:10.1
cars because everything is being
03:12.1
absorbed by China. So we
03:14.0
discussed forced technology
03:16.2
transfer. But forced technology transfer happens
03:18.2
because of state strategy, right? So
03:19.8
we're not here to glorify China's horrible
03:22.2
political system. But I think we
03:24.1
have to give credit when it comes to economic public
03:26.0
policy. I think China really has a
03:28.0
lot to teach the rest of the developing world
03:29.5
and not to mention what China is doing. It's also
03:31.9
nothing historically unique. I mean, a lot of
03:33.9
late developing countries did things that China is doing
03:35.9
today except on a far smaller scale.
03:38.2
Having said all of that,
03:40.1
Sonny, just to set the tone, right?
03:42.2
In short, the Geely and BYD
03:44.4
and Huawei that you're saying, that didn't
03:46.1
come out of just entrepreneurial spirit.
03:48.2
No, that came from state-back
03:50.1
policy, alright? Just to
03:52.0
get the facts right here.
03:54.0
Now, Sonny, the question I always say is
03:56.0
bakit hanggang ngayon yung mga ibang
03:57.9
oligarchs natin, ilan dekada na,
04:01.7
none of them have built anything
04:03.8
like even VinFast of Vietnam,
04:07.9
a baby oligarch Vietnam just built
04:09.8
few years ago. And that guy right now
04:11.8
with the support of the Vietnamese state, already
04:13.9
has one of the biggest EV
04:15.9
car industries in the world, at least based on
04:17.8
the NASDAQ numbers we saw. At some point,
04:19.9
it was third biggest in the world, just behind Tesla
04:22.0
and BYD, ahead of Porsche,
04:24.0
BMW, Mercedes-Benz,
04:27.9
in short, Vietnam envy.
04:30.0
Bakit sila may VinFast?
04:32.2
Bakit even Vietnam, such a
04:33.9
late, late, late developing country, is building
04:36.0
global manufacturing
04:37.9
brands in the Philippines?
04:39.8
Hanggang saan na lang tayo? Hanggang
04:41.8
Ginebra lang yata tayo? I mean, hanggang
04:43.6
Emperador Bayo? I mean, like,
04:45.9
why don't we have those
04:47.4
world-class manufacturing tech
04:49.7
companies? Why not? Let's start with
04:51.8
Marcos. Let's start with Marcos because Marcos
04:53.7
had 21 years to build that.
04:55.9
Why didn't Marcos manage to build
04:57.7
those global industries with 21
04:59.6
years in power? Because our neighbors
05:01.6
were able to do that in that period. Korea,
05:04.1
Taiwan, Japan, within one
05:05.7
generation, a half a generation, they built world
05:07.6
industries. China
05:09.8
also did that. Okay. Wala na.
05:12.0
Na-excite na ako so much. With that
05:13.8
long introduction, Sonny, you can
05:15.8
see how passionate, I mean, how
05:17.1
many people are so passionate
05:20.0
about industrial policy.
05:21.9
I should get the gold
05:23.4
award for the most industrial
05:25.6
policy fanatic guy in the world. Because for
05:27.7
me, it's a matter of pride. As a Pinoy,
05:29.7
I want to see Filipino car brands.
05:31.7
I want to see Filipino electronics brands.
05:33.8
Bakit wala tayo na? Why didn't
05:35.8
Marcos after 21 years
05:37.3
didn't do that? Why? What is the reason?
05:39.9
So this brings us to industrial policy.
05:42.1
Sonny, go ahead. The floor
05:43.6
is yours. Sorry ang dal-dal ko, but I just want
05:45.5
people to know saan galing itong
05:47.4
passion ko for this topic. It
05:49.4
doesn't sound sexy, but it's very important
05:53.9
Well, alam mo, syempre, it's all
05:55.6
about government policy.
05:57.7
I mean, it's so basic. Kasi even our
05:59.7
businessmen, small
06:02.4
businessmen, they will react to
06:05.7
any environment. And actually,
06:08.2
businessmen are the most predictable
06:09.7
folks in the world.
06:11.9
They want to make a profit.
06:13.7
So ganun kasimple lang. And I think
06:15.1
the problem actually with our
06:16.9
economic policy, they
06:19.6
aren't creating the right sort of incentives
06:21.5
for those businessmen to go into
06:23.1
manufacturing, where there's a small
06:25.2
little, you know, cheap consumer
06:27.7
goods, or a laptop, or high-tech
06:29.6
semiconductors, or whatever
06:31.2
fourth generation, fourth
06:33.5
industrial revolution technology.
06:35.6
Businessmen are practical folks. They will
06:37.6
work with what's there. And the problem is,
06:39.7
so I'm going to go back pa ng konti,
06:42.4
it's not so much that the
06:43.5
businessmen are telling the
06:45.4
government to, you know,
06:47.7
open up the economy,
06:49.8
all of that, because some of them
06:53.7
to be open because it affects
06:55.7
their interest. I think the primary
06:57.6
problem is the government has never had a view
06:59.5
to use all the tools at their disposal
07:03.5
Filipino capital and capitalists
07:05.5
to go into manufacturing. And the last
07:07.6
40 years is so important kasi may
07:09.6
instruments naman eh. There's that
07:11.1
in principle, the bias for Filipino
07:13.9
manufacturers, whether big
07:15.7
or small, using state
07:17.5
enterprises to provide subsidized
07:19.8
whatever, energy, transport,
07:23.2
support to industrial projects
07:26.9
calculation are important to actually
07:28.7
develop. Protection from foreign
07:30.9
cheaper foreign goods.
07:33.9
All the other financial
07:34.9
stuff like industrial financing,
07:37.8
foreign exchange support,
07:39.2
other incentives. And nabagit mo
07:42.0
internet, science and
07:45.1
technology R&D support. So actually, all
07:47.0
those things were well known
07:48.8
even as early as the 18th,
07:51.1
19th century. But none of
07:53.0
our governments actually
07:54.9
took it to heart.
07:56.9
To do that, even yung Filipino
07:58.8
first, it was never about supporting
08:01.0
Filipino industry. It was
08:02.8
supporting about business based
08:05.0
on the Philippines, including
08:06.3
American manufacturers, that's a parity rights
08:09.0
counted as Filipino. So even
08:10.9
Filipino first, of course
08:13.0
in the periphery, may mga ilang mga
08:14.9
small Pinoy firms, sapatos, etc.
08:17.4
Nakapasok sila. But the main
08:18.8
beneficiary of Filipino first were actually
08:20.5
American manufacturers here. Pero
08:22.6
setting that aside. So, sobrang
08:24.8
simple nang actually. Tama ke.
08:26.9
The high point of
08:28.8
interventionist powers in the economy
08:31.2
was nung time nung
08:32.5
Marcos' dictatorship. But the thing is,
08:35.1
tail end na yun eh. Kasi sa toko lang,
08:38.9
30s, 40s, 50s, the 60s,
08:40.8
70s, actually virtually
08:42.6
every country in the world had those same
08:44.9
measures naman eh. So,
08:49.0
naging problema kay
08:50.2
under the Marcos' regime,
08:52.7
late 1960s, early 1970s,
08:55.6
nanguna pa siya to roll back.
08:56.9
Those intervention measures.
08:59.5
Nanguna pa siya to give
09:01.1
stuff to foreign investment just to make them come.
09:03.3
Nanguna pa siya to take away tariff barriers.
09:05.2
So, like countries like Malaysia, Thailand,
09:07.5
well, of course, Vietnam, may gera, pero
09:09.1
nang tagtagumpay socialist.
09:11.0
When other countries here in the region
09:13.4
were still protecting their own
09:15.2
manufacturing sectors, were still
09:17.0
subsidizing to a fault,
09:19.5
lahat ng mga even
09:21.0
innovation producers nila, nauna
09:22.9
yung Philippines to roll that back. And I think
09:24.9
that's actually our problem kasi
09:26.9
yung the momentum
09:28.5
of taking away those measures
09:30.8
really took flight
09:33.1
after the Marcos dictatorship.
09:35.2
Kasi nga, he used nga all these mga instruments
09:37.4
for yung self-interest.
09:39.2
Which actually a big problem for us sa neto kasi
09:40.7
from this whole range of measures,
09:43.1
if you look at the most recent Philippine development plan,
09:45.6
all the most important policy measures
09:47.3
to develop Filipino industry, wala.
09:49.6
They will say, we want to attract foreign
09:51.3
investment in manufacturing, let's give them
09:53.4
that. But it's not industrialization eh.
09:55.3
Para nga yung naging kwento natin kanina,
09:56.9
you can have foreign investors in the
09:59.0
country. Most foreign investment in the
10:01.1
last 20 years has been in manufacturing.
10:03.6
They base here, they
10:04.9
bloat our manufacturing figures,
10:06.9
but it's not Filipino industry. It's not
10:09.0
developing Filipino technology, Filipino
10:10.9
capacity. They're actually not
10:12.9
hiring that many Filipinos.
10:17.2
Actually, they're importing most of
10:19.0
their inputs, not creating opportunities
10:21.2
for local manufacturers, etc.
10:23.2
etc. So sa amin, it's
10:25.0
the government's lack of vision. And I think,
10:29.2
embrace of the religious
10:37.0
that the only role of the government
10:38.8
is to fix market failures.
10:40.8
Hindi ka nga eh. And there's no, again, there's no
10:43.0
example of any country in the world
10:45.2
in economic history
10:46.8
that developed on the basis of the free market.
10:56.9
40 years ng global industrializing
10:58.3
country, because the market does not deliver
11:00.1
development, the market doesn't deliver industrialization.
11:02.4
Kasi ganoon ka-basic lang sa amin. It's lack
11:04.3
of fundamental vision by our
11:06.5
technocrats, by our politicians.
11:08.8
Of course, you can say, sebak,
11:10.7
eh, they're the ones na susupport
11:12.2
ng mga oligarchs natin eh. They're the ones na
11:14.4
will get the big war chest
11:16.5
to buy. Yeah, that's
11:18.2
there, but if you look back, actually,
11:21.2
hindi naman kailangan
11:23.8
ng democratic process to industrialize.
11:28.0
like you said kanina, it's such a brutal
11:31.3
Okay, let's, you know, let's talk about it.
11:34.8
Yeah, we might end up justifying
11:36.3
authoritarian developmentalism.
11:38.2
I'm not, I'm not.
11:38.9
No, no, because we always heard
11:40.8
that the Likwan new model, I heard that
11:42.9
a lot during Duterte time. Bakit yung mga
11:44.6
katupin natin, except we had dictatorship
11:46.8
and it was horrible, developmentally speaking.
11:50.6
appreciate where you're coming from. Your idea is that the
11:52.8
agent of development is ultimately
11:54.7
the state. Dapat, we have to,
11:56.9
we have to curb our enthusiasm
12:00.2
businessmen doing the heavy lifting.
12:02.9
So, in short, the heavy lifting should come from the state.
12:04.9
I completely agree with you.
12:07.1
But I would slightly disagree
12:10.1
it's not like we don't have an established
12:12.8
history of oligarchic
12:15.3
elements trying, I mean,
12:17.1
regulatory capture, I think it's not
12:18.9
totally myth. I think there is
12:20.9
an interest on the part of many oligarchs
12:23.0
to control the state
12:24.9
in a way so that they can be in charge of,
12:26.9
commanding heights of the economy. I mean, just look at
12:28.9
key sectors, utility sectors
12:30.9
among others. We don't need to name names.
12:33.0
So, I agree with you that
12:34.5
the heavy lifting should be by the state,
12:37.0
but I would also maintain that
12:38.7
not only the Philippines, but in many examples
12:41.0
around the world, including the US,
12:43.1
we have examples of big pharma,
12:45.7
you know what I'm saying, Wall Street
12:47.0
trying to influence legislation
12:49.1
and state regulation, Koch Brothers
12:51.2
for instance, influencing
12:52.8
environmental regulation to push for their
12:55.0
interest. But I do agree, yes, the
12:56.9
first heavy lifting, the big
12:59.0
part really should come from the state, so we
13:01.0
create the market conditions
13:04.7
industrialization. So, in that sense, I agree
13:07.0
with what you're coming from, yeah.
13:09.4
Pero, exactly, yung
13:10.5
difficulties natin sa
13:12.6
internet service right now. I mean,
13:17.1
self-interest of certain
13:19.2
oligarchic interests,
13:21.2
ipapotent talaga nila yan, diba,
13:23.2
against foreign investors.
13:26.9
I think big business,
13:29.6
again, case in point, the most recent
13:31.4
yung talaga pangahawakan natin, South Korea
13:33.2
and Taiwan, they're all
13:35.3
very short-sighted naman eh.
13:37.4
They have to make the profit in that 5-year,
13:39.5
10-year period. So,
13:41.2
whatever lobbying they do is also within
13:43.3
that parameter na
13:44.7
what can I expect to
13:51.7
can I expect? Kasi, may pag-a-vicious
13:53.4
circle. It's true
13:55.2
or not? For termism,
13:57.7
business interest nila.
14:04.0
But the thing is, that's because wala nga yung
14:05.5
government with the convincing, with the credibility
14:07.6
to say, ito ang aming 25-year plan.
14:09.8
Whatever little lobbying you do now,
14:17.6
plan. Of course, it means kailangan
14:19.6
may enough political forces actually
14:21.3
pushing that. But actually, I would also
14:23.5
shift now to the secondary
14:26.9
If you don't have a domestic
14:29.1
entrepreneurial class or enough oligarchs
14:31.4
with that vision as well,
14:33.0
may kayong short-sighted din sila. So, I think
14:35.0
yun ang may kayong vicious circle. Parang masipalagi
14:37.1
dun sa government leaders to have that
14:39.0
vision to create that 25-50
14:41.2
year. Kailangan parang China, di ba?
14:42.9
50 years, 100 years is the future dapat yung planning.
14:45.6
But also, secondarily,
14:47.3
may kata nagsimula yan sa
14:48.5
to be historically correct. Yeah, this started
14:50.8
with Stalin, right? Yung mga 5-year plan,
14:52.9
then 10-year plan, then so on. I mean, the
14:54.7
industrialization. But obviously, again, baka
14:56.9
tagtayo. Again, we're against
14:58.8
their political systems. But
15:00.6
you can always separate the baby from
15:02.8
the bathwater. I think when it comes to public
15:04.6
policy innovation, when it comes to economic policy,
15:07.2
I have a lot of respect for
15:08.7
a lot of countries that may not share
15:10.6
my political values and ideologies.
15:12.7
Now, Sonny, let's go to the last part, which I think
15:14.7
is very important.
15:16.5
What should be the
15:18.6
Marcos strategy? Because
15:20.7
this whole performative
15:28.8
not gonna do it. Because the average
15:30.5
Filipino people, even us, the middle class,
15:32.6
we're all hurting. I mean, for me, it's cheaper
15:34.6
to be in Europe, parts of Europe, not
15:36.5
all, than in the Philippines for my daily expenses.
15:38.8
To be honest, I was saving money when I was in
15:40.6
Madrid earlier this year
15:42.5
than in Manila. So
15:44.5
Madrid is cheaper than Manila in many ways.
15:46.7
That's ridiculous. Because Madrid has
15:48.5
like six times more per capita income
15:50.6
than Manila. So there's something
15:52.2
really troubling with the status quo.
15:54.7
So if the middle class like us is
15:56.9
complaining, my goodness,
15:58.5
kung mga konyo nga nasasaktan
16:00.9
na ngayon, imagine mo yung mga
16:02.5
ordinary na ating kababayan. I mean,
16:04.4
5,000 grocery rate now is
16:06.5
normal. I mean, 5,000 is
16:08.8
a third of the income of many
16:10.7
of our kababayans. This is a crazy situation.
16:13.0
So this is not sustainable. And this could
16:14.8
backfire politically for Marcos Jr.
16:17.1
So whoever is the Filipino president,
16:19.4
hindi pwede business as usual,
16:20.9
complacent economics. Something
16:22.5
drastic has to be done. So
16:25.0
Sonny, what is your take?
16:26.9
What should be the industrial trade,
16:29.1
industrial and trade strategy
16:30.7
of this administration when even
16:32.7
in the United States, Biden and Trump
16:34.9
are competing in terms of support for
16:36.8
labor unions. And recently,
16:38.7
of course, the auto manufacturer labor union
16:40.8
in the U.S. had a big win because both
16:42.7
Biden and Trump are supporting them, right?
16:44.9
So even in the heartland of
16:46.7
neoliberal economics, neoliberalism
16:49.2
is not cool anymore. Industrial
16:50.8
policy is back. Made in America
16:53.0
is back. Make America first is back.
16:55.6
I see that in Germany.
16:56.9
Germany 4.0 industrial strategy.
16:59.1
China has its own version. Lahat
17:01.1
may industrial strategy ngayon. Vietnam,
17:03.1
Malaysia, Philippines lang hanggang
17:05.2
Marlika Fund na lang tayo.
17:06.8
Hindi pwede yan. We have to do something.
17:08.5
So let's go for it.
17:10.5
The floor is yours, Sonny. What should be the
17:12.3
industrial trade strategy for real
17:14.6
development in the Philippines?
17:18.3
with a little bit of a footnote,
17:20.7
U.S. was a heartland of pushing
17:22.5
for neoliberalism, but they're
17:24.3
very hypocritical about that. They're a double standard.
17:26.9
They only opened up as far
17:28.8
as it was their interest. And like you said,
17:31.0
yung defense industry nila,
17:32.8
industrial policy, even
17:34.7
at the height of the globalization era,
17:36.9
huge subsidies for
17:38.7
biotechnology, internet, and all
17:40.7
of that. So ano lang. Important
17:42.8
lang to clarify na they were never
17:44.8
actually practicing the free market even
17:46.6
within. They were only going as far as
17:48.8
it was in their interest.
17:50.2
Are you talking about imperial hypocrisy?
17:53.2
I'm very shocked by that. Of course
17:56.9
Anyway, actually, okay.
18:02.4
it's so basic lang eh.
18:04.0
In terms of a strategy,
18:06.0
it starts with thinking that
18:07.9
we have to have that strategy.
18:09.7
And unfortunately right now, the
18:11.6
Philippine government is not
18:13.0
of the view that industrialization is
18:15.5
important. They're of the view that
18:17.3
there's a track for investment. If they're
18:19.2
manufacturers, good. May bragging rights tayo.
18:21.2
Kasi we can say na we're one of the world's
18:23.6
leading high-tech exporters. Pero sa amin,
18:26.8
strategy, have to embrace the
18:28.8
reality. We need industrialization
18:31.0
policy to develop
18:32.8
the skills and technology, create the jobs,
18:34.7
get the economic surplus, formalize
18:36.7
the economy, use our resources
18:38.8
for our own benefit, instead of exporting
18:40.8
it to the road, et cetera, et cetera. And I think
18:42.5
actually, malaking struggle na yun eh.
18:44.6
But step one yun. If we don't get
18:46.7
there, there's no point about talking
18:48.6
about strategy. Ang difficulty
18:50.6
siguro right now in terms of talking about strategy,
18:52.7
it's always nice to look on roadmaps.
18:55.8
the last great industrializers
18:58.1
were actually South Korea and Taiwan.
19:01.0
China, dagdag mo na rin, pero
19:02.3
sui generis talaga yung China.
19:06.5
there's actually no roadmap
19:08.3
to look on. Kasi things have changed in the
19:10.3
last 40 years. Halimbawa,
19:12.3
in terms of yung ginawa ng
19:13.3
South Korea and Taiwan, they're very
19:16.3
export-driven. Because Cold War,
19:18.6
the U.S. wanted to support South Korea and Taiwan,
19:20.7
bulwark against Chinese communist
19:22.2
expansion, inopen up yung markets dun.
19:24.3
Pero that's not the way right now.
19:26.9
The world is in a long period
19:28.8
of global stagnation since the
19:30.3
2008-2009 crisis, made worse
19:32.8
by yung COVID. So actually,
19:34.8
that export environment that
19:36.5
was wielded well by South Korea
19:38.7
and Taiwan, walanin ngayon.
19:40.6
Isang problem yun. Second context,
19:43.3
that was not even a period of financial
19:44.8
liberalization or globalization
19:46.4
in general. Right now,
19:48.8
global finance has a much stronger control
19:52.3
flows ng finance.
19:54.3
The power of finance to create profits
19:56.6
even without production,
19:58.3
it's so compelling.
20:00.5
So now, we actually have a problem raising
20:02.3
industrial finance, which wasn't the case with
20:04.4
again, the last great industrialized
20:08.6
South Korea and Taiwan. Third,
20:10.9
yeah, let's talk about global
20:12.4
value chains and stuff. Actually, the real problem
20:14.6
with that is, there is an
20:16.5
illusion of manufacturing capacity in the
20:18.4
third world, slash developing countries,
20:20.5
slash non-industrialized world right now.
20:22.3
But the thing is, that layer of,
20:24.3
um, shallow industrialization,
20:27.0
the manufacturing capacity,
20:28.7
they're in our countries, like the Philippines,
20:30.8
they're in Laguna, they're in Batangas,
20:32.5
they're in Cavite, they're in Baguio, but they're not
20:34.5
actually domestic manufacturing
20:54.3
navigate unexplored territory?
21:00.2
we have to want to go somewhere.
21:02.0
At sa amin, ganun ka ba?
21:03.6
The reason of the last 20 years was from state intervention
21:06.1
cities. Don't think it's important.
21:10.4
There's no point talking about strategy.
21:12.4
In the same manner, once they think
21:14.3
it's important, they have
21:16.2
the resources to develop strategy.
21:18.3
But siguro, next point ko na lang doon,
21:20.8
once you decide that you have to
21:22.3
industrialize, once you
21:23.8
accept na the last 40 years of globalization
21:26.3
have changed, kami, hindi sa amin
21:28.5
issue yung mga free trade agreements,
21:30.4
WTO, that's all legalist.
21:32.5
I mean, they always back out of those agreements.
21:34.6
The U.S. can just ignore it.
21:36.3
So sa amin, hindi major issue yung
21:38.0
legal infrastructure, whether
21:44.1
But once that decision is made,
21:46.1
then the state can develop, can focus its
21:48.2
resources to fill
21:50.5
in yung problems na yun.
21:53.8
rely on export markets,
21:55.8
let's rely on the domestic market.
21:57.5
Oh, but we're so poor. Yeah, we're poor
21:59.6
because, one, we're so unequal,
22:01.9
we're not taxing the rich and distributing wealth.
22:04.0
Let's do that. Distribute wealth, distribute income,
22:06.2
expand the domestic market.
22:07.7
Also, financing, oh my God,
22:09.9
may concentration of financing naman sa Pilipinas.
22:11.9
So, let's actually tap that,
22:14.0
use the state to wield, you know,
22:15.7
ibalikin tradition, develop and banking.
22:17.8
Pero third, may problem tayo in terms of
22:19.6
technology. Well, how do you start
22:21.6
developing technology? By doing.
22:23.8
Research and development. Let's invest in
22:25.8
research and development.
22:28.7
Even for mga micro-small
22:30.0
enterprise, mas nimble sila. They can experiment,
22:32.0
they can make a mistake.
22:35.0
mahal naman laking in law and technology. And I think,
22:37.6
in three things na yun, we get the markets,
22:40.2
we have the financing, we have the technology,
22:44.0
don't give everything to foreign investors.
22:46.1
Parang that's like digging a deeper hole
22:47.6
than we're already in right now. Focus
22:49.7
properly, and then even yung mga big business natin,
22:51.9
they realize, okay, this is where we're going to go.
22:53.8
My long-term state lies. I'm going to support
22:55.9
whatever Philippine state is doing for the
22:57.8
Philippine economy. Tapos, yun nga, we have
22:59.9
to feel our way through it kasi
23:01.1
super bagong mundo talaga to. Not even
23:03.7
talking about the wars, not even talking about
23:05.7
a new financial crisis. I mean,
23:08.3
other stuff's gonna happen. Not even talking
23:09.8
about yung mga fourth
23:12.2
industrial revolution technologies. AI,
23:14.3
biotech, quantum computing.
23:16.1
But yun nga, Sonny, that's precisely
23:17.7
why we cannot use the 20th
23:19.8
century industrial
23:21.8
policy strategy for the 24th
23:23.8
century. In fact, not only 21st century, but
23:25.6
the post-American 21st
23:27.7
century. This is an era of rise
23:29.6
of China. This is an era of rise of all
23:31.7
sorts of different new technology
23:32.9
superpowers, right? Rise of India even
23:35.6
to a certain degree. So we cannot
23:37.6
use the same template as before.
23:39.6
We have to have a 21st century industrial
23:41.4
policy that takes these new realities
23:43.7
into consideration, including artificial intelligence
23:45.9
and the impact it will have on business
23:47.6
process outsourcing in many sectors of us.
23:49.6
Kaya nga sabi ko eh, whether you want it or not,
23:51.6
we need to change. We need to come
23:53.6
with a radical economic strategy because
23:55.5
the status quo is unsustainable. It's just
23:57.5
not going to work for the 21st century.
23:59.7
Call centers, they're going to be threatened by
24:01.5
artificial intelligence.
24:05.9
But the thing is,
24:08.2
pero may basic pa rin sa economy.
24:11.9
We need to industrialize. And actually,
24:13.6
industrialization nga, hindi naman kailangan ng mga goods
24:15.5
you can pick up and drop on your foot. It could be actually
24:17.6
capital intensive,
24:20.1
knowledge intensive ng mga industrial
24:21.4
products, maybe even services. Pero,
24:23.6
baga ba't nag-change yung mundo
24:25.1
in terms of the exports, finance, and technology?
24:27.7
Actually, maganda yung point about China.
24:29.5
But that also means, nashot na yung door eh.
24:31.6
Kasi in a lot of ways, industrialization
24:33.4
is a positional good eh. Like, how do you compete
24:37.7
manufacturing prowess
24:39.8
sa mga lower value-added goods? Parang,
24:41.6
is there a point for you even to try to compete?
24:43.8
Siguro wala nga. Kaya nga, focus domestically.
24:46.1
Tapos, super underestimated,
24:49.4
industrializers in the past,
24:51.5
they had a strong sense of nationalism,
24:53.6
hindi na sa vision ng mga tao,
24:55.9
ng leaders nila, even sa
24:57.7
public. And I think, yung nga eh,
24:59.5
you have to invest in that. I mean, that sense of
25:01.5
nationalism, saan come from anywhere,
25:03.8
it has to be prodded.
25:05.6
And glorifying FDI,
25:08.4
diminishing of what Filipinos
25:09.8
can do, that's not the way to go eh.
25:12.0
So, parang sa amin, ang daming
25:13.6
elements na sa FDIP would put in place,
25:16.0
exacto. With changed global conditions,
25:18.1
you can do the roadmap from what South
25:19.7
Korea and Taiwan did. But what
25:21.6
hasn't changed, you have capital,
25:23.6
it has to produce,
25:26.4
it needs technology,
25:27.9
it needs a market, the state
25:29.8
can support certain capitalists
25:32.2
to produce for the
25:33.9
domestic market. And then,
25:35.8
what do we have control over?
25:37.5
Our own country lang eh. We have to grasp
25:39.8
that eh. We have to have a sense
25:44.1
beyond territorial sovereignty
25:45.7
over mga intrusive foreign powers.
25:48.3
We have to have a sense of economic sovereignty
25:49.7
as well. At yun ang nakaka-
25:51.9
frustrate, people,
25:53.6
glorify FDI. Parang magic bullet
25:55.7
siya. But to clarify din,
25:57.6
even China, we have more
25:59.6
FDI as a share of GDP.
26:01.9
Wait. We have more FDI
26:03.8
as a share of GDP than China.
26:05.7
We have about 23-24% equivalent
26:12.4
China, mga 12-13% lamang.
26:14.1
So, ano na yun? Shares,
26:15.7
puputampayan instead of going
26:21.5
That's funny. This is similar to the
26:23.6
debate over corruption. Obviously, I mean,
26:25.4
corruption is a really bad, evil thing. No question about it.
26:27.9
No, this is a debate in terms of what kind
26:29.7
of FDI you're bringing in. Because if this is a kind
26:31.7
of FDI that brings good quality jobs,
26:34.3
this is an FDI that comes with some
26:35.6
R&D collaboration. This is some
26:37.7
FDI that comes with a certain degree of
26:39.5
inbuilt and not so inbuilt
26:41.5
technology transfer. Why not?
26:43.4
So, I'll get your point.
26:47.1
should be interrogated.
26:49.8
But I don't think we should also throw out the baby
26:51.5
with the bathwater in the sense of all FDI is
26:53.4
bad. So, bring in the
26:55.5
quality investments. And this
26:57.5
is what Mahatir told me. Because I want to end
26:59.5
on this note. Because I think we can have more and more
27:01.5
discussion about this in the future, hopefully under better
27:03.4
conditions. No, no. I mean,
27:05.7
my thing is like when I was talking to Mahatir and he was
27:07.4
talking about Chinese investment, he said, we're not against Chinese
27:09.4
investments. We're against the bad Chinese
27:11.4
investments. We want the high quality Chinese
27:13.3
investment. And I think that should apply to everything. And in the
27:15.4
Philippines, I know you're not inside China,
27:17.6
you know, debt trap, all of those stuff
27:19.2
which I never believed in. Because you can only
27:21.5
have debt trap when there's actual investments.
27:23.4
We already had more of a pledge trap.
27:25.7
But we're at the same time not...
27:26.8
It's up to us to make
27:29.6
investments that come in good.
27:31.3
They're not bad on its own.
27:33.2
They're predictable. They're there to make money.
27:36.9
Make money from us. But we also need
27:43.2
It's all about setting the terms.
27:45.5
It's all about exercising agency.
27:47.2
It's all about having a sense of national development
27:49.4
over the next 50 years.
27:51.1
How does the Philippines survive in the
27:53.4
first century? A serious question.
27:55.5
As climate change, artificial intelligence,
27:57.4
all of these things are coming up. So I appreciate
27:59.5
what you're saying here. What you're saying, Sonny, is
28:01.4
yes, many new things are coming up. New fancy
28:03.7
things. But don't forget the basics.
28:05.6
Which is exactly why we're having this conversation.
28:07.3
The basic is create industries
28:09.3
that provide quality jobs
28:11.0
on a long-term basis for
28:13.3
more and more Filipinos that doesn't have to
28:15.2
require perfect American English
28:17.3
like in call centers. It doesn't
28:19.4
require connection with
28:20.7
ganitong may-ari ng business. Because only
28:23.3
the manufacturing sector, if you look at the studies
28:25.1
by Danny Roderick, Ha-Jung Cha,
28:27.2
there's so much literature on really
28:29.4
the secret to upward mobility
28:31.6
for all countries in history
28:33.5
with the exception of Gulf, Arab-rich
28:35.7
oil countries or some of these
28:37.3
exceptional cases, is through
28:39.1
manufacturing. Do not forget that.
28:41.2
And guess what, Sonny? Even in India right now, that's
28:43.2
a conversation. I've been in conversation with some Indian
28:45.1
friends. We had a forum in
28:46.9
Vietnam earlier this year. And
28:49.1
they were saying in India, that was our mistake. We
28:51.0
over-relied on services and call centers.
28:53.3
To generate the growth. That was never
28:55.1
enough to take care of our middle class.
28:57.4
Never mind, you know, taking care of a billion
28:59.0
people. So now they're trying to get
29:01.0
into manufacturing. But as
29:03.1
just you said, we cannot do it like
29:05.0
before. Because the world is different right now. We should
29:07.0
have done this in 1980s and 90s.
29:09.1
Right? Sabi niya. But we have to
29:11.0
do a catch-up and we have to be creative about it.
29:13.0
So on that note, thank you very much
29:14.5
Sonny. Don't worry about it. I
29:17.0
do genuinely believe. I hope this is just the
29:19.0
beginning of it. So maybe every month or so, babalikan
29:21.1
kita. Let's continue this conversation.
29:23.3
I think we can also bring in other
29:25.3
friends, hopefully, on better internet conditions.
29:27.5
Lelo, among others. People who think outside
29:29.2
the box. Because I think in the Philippines,
29:31.4
the problem is that the economic discourse is still
29:35.6
So, you know what I'm saying?
29:37.1
So, you know, it's
29:39.2
still that classic orthodox, new
29:41.2
liberal, Chicago school stuff. Hindi pa
29:43.2
sila nag-upgrade eh. No? I mean
29:45.3
you go to New York University of Schiller
29:47.2
talking about institutions, behavior, economics.
29:49.8
You go to many parts of the
29:51.3
world. They're already talking about industrial policy, industrial
29:53.3
strategy. Hindi pa na. So, actually
29:55.3
our economists, a lot of them are good students, but
29:57.3
good students of outdated textbooks.
29:60.0
If ever those textbooks were really
30:01.3
reasonable. On that note,
30:05.2
Go ahead. Any last words?
30:07.3
Any last words before we close this episode?
30:09.5
But hopefully just the beginning of a new series of
30:11.1
conversation on an economic
30:13.1
strategy for the 21st century for the Philippines.
30:17.6
para sa politics natin, let's assume
30:19.4
everyone wants the best
30:21.2
for our country, even our economists.
30:23.3
So, sa akin lang, it's an appeal.
30:26.0
Be more open-minded.
30:27.7
Be more open-minded beyond the
30:29.3
textbooks. I know the appeal,
30:31.4
the lucidity, the
30:32.8
coherence, the endorphin rush
30:35.3
na things fall into place
30:36.5
in the textbooks. But in the real world, hindi talaga
30:39.2
ganon. So, sa akin, I do
30:41.3
start from a notion that even
30:43.2
our technocrats, even our intellectuals,
30:45.7
even our schools of economics,
30:47.5
we all want the best for the country.
30:53.3
So, sobrang basic lang.
30:55.1
Let's accept the positive experiences
30:57.2
of so many industrialized countries over the
30:59.3
centuries, and then adapt to
31:00.8
21st century conditions. And I think yung nga,
31:03.2
mag-usap tayo, let's move
31:05.3
forward. And I think unless
31:07.1
that conversation is there,
31:10.5
the free market, the gospel of neoliberalism,
31:13.8
hindi sa talaga mayali nige. So, super welcome
31:15.4
yung talk na ito, interviewing Richard.
31:17.5
Thank you very much.
31:18.5
Thank you, Stanley. I actually
31:20.1
like that intervention. Just to be clear, I mean, there are
31:22.1
many economists in the Philippines.
31:23.3
I highly respect, including, actually,
31:25.0
Arsenio Balisac, and I think, you know, he could be
31:26.9
a good source for agricultural
31:28.9
economics, among others. He has done a good job, in my opinion,
31:31.2
at least in NEDA, considering everything.
31:33.2
Emmanuel de Joss, Medalla,
31:37.5
I mean, there's so many great economists.
31:39.3
My own professor, Munsud, yung
31:41.0
daughter ni Jokno, naging professor natin.
31:43.2
I mean, so, there are many people I can
31:45.2
talk about. Si Justine talaga.
31:46.7
Justine, yeah. Even Jokno himself,
31:48.4
back in the day, was really the industrial, export
31:50.2
oriented kind of guy. So, you know,
31:52.1
I hope people don't take it for granted.
31:53.3
I hope people don't take it wrong. Ako medyo karinyo brutal ako.
31:55.3
But I do that also to my own profession.
31:57.3
I do that to also people of my background.
31:59.1
People who do foreign policy. People who do West
32:01.0
Philippine Sea. People who do media.
32:03.5
You know, people who do political science and
32:05.0
economics. You know, this is from a position of
32:07.0
love because we have many smart, great
32:09.1
economists and all. Many of them are patriots.
32:12.2
You're absolutely
32:12.9
right, Sonny. We're not here to
32:15.0
alienate people. Although, I'm sorry, minsan,
32:17.1
medyo karinyo brutal ako. But actually, this is
32:19.0
to build bridges and interdisciplinary
32:20.8
public policy discussion.
32:23.0
And no one should have a monopoly over this.
32:25.6
So, yeah, all due respect,
32:26.9
you're right to the economics profession
32:28.9
and all. We're just talking about a certain subset
32:31.2
of problematic approach to
32:33.1
economic policy, which I hope we'll get rid
32:35.2
of and move forward because everyone
32:37.1
else is doing it across the region.
32:39.0
So, thank you so much, Sonny, for saving my skin there
32:41.0
because I think I really also had to make that caveat
32:43.1
very clear because madali ako ma-misunderstood
32:46.5
mahilig ako maging spicy.
32:50.8
So, thank you, Sonny,
32:52.0
for saving my skin.
32:53.0
But I'm genuine. I honestly say, yes,
32:55.0
I have a lot of respect. That's why I may drop because
32:56.7
these are people I deeply respect.
32:59.3
Emmanuel DiGiul's works have been a great
33:01.0
inspiration. Fabelia's works have been great.
33:03.4
Medali is actually a Facebook friend.
33:05.5
He's a fantastic guy.
33:07.3
You know, the Joknos,
33:08.7
marami tayong minamahal dyan sa Jokno family.
33:10.9
So, please don't get it at the personal level.
33:12.9
This is more of a general. In fact, even with Jerry Sikat,
33:17.1
this discussion with Lelo about how
33:19.0
Jerry Sikat also tried to push for industrialization
33:21.3
but his argument is, by the time
33:22.9
na nagsimula sila, medyo late na under Marcos.
33:25.2
Now, they should have done that in the 60s pa.
33:27.5
But anyway, we can have a long discussion.
33:29.2
So, I'm fair. This is not a
33:31.0
personal attack on anyone. I hope, please,
33:32.8
don't take this personally. Because when people
33:35.0
attack people on foreign policy
33:37.0
experts or people attack, you know, I don't know,
33:39.2
journalists and all, I don't take it personally.
33:41.2
Easy na. Easy na.
33:42.4
Because, you know,
33:47.8
Because I criticize.
33:48.8
I said, you know, so this is not
33:50.9
impersonal. This is really about us moving it.
33:52.9
Because I don't have to say this is about the country.
33:54.8
And please, if there are people who have
33:56.5
other data, alternative data or analysis
33:58.8
that shows the paucity of my
34:00.9
analysis or Sonny's point of view, please
34:02.9
go ahead. More than happy to talk to our economy's friends
34:04.9
among others. So, yun lang. Yun lang. But
34:06.6
I just had to come a little bit forcefully
34:08.9
and strong, Sonny, because you can see
34:10.8
I'm passionate about this. And you can see
34:12.7
something has to be done.
34:14.7
Something has to be done. And a photo
34:16.8
up with Elon Musk, it's not enough.
34:19.0
Right? Something has to be done with that.
34:21.0
But I hope we get the Tesla
34:22.4
here in the Philippines more
34:24.1
once we fix electricity and all of the
34:26.7
basic infrastructure problems. Because
34:28.3
ano naman, Silvio, may Tesla ka, mahal naman
34:30.4
na electricity, di ba?
34:32.3
On that note, thank you very much, Sonny. I hope you
34:34.6
appreciate also, you know, what we're doing here
34:36.7
under imperfect condition.
34:38.7
And this is just the beginning of the conversation,
34:40.6
God willing. So, maraming salamat, Sonny.
34:42.6
And talk to you soon. And guys, don't worry.
34:44.6
Final version of this, we're gonna get it out
34:46.8
in the coming days.
34:48.5
Hopefully, mas maganda yung finalized version.
34:50.6
Hindi ganon ka-choppy.
34:52.4
But I think the latter part of our discussion
34:54.5
was pretty clear enough
34:56.5
despite all the challenges. Salamat, Sonny.
34:58.8
God bless and talk to you soon.
