PH should learn from East Asian neighbors


“It’s not your salary that makes you rich, it’s your spending habits.” That’s according to Charles A. Jaffe.

Recently, Finance Secretary Carlos Dominguez III had recommended new tax measures to cover our huge debt. The Bureau of Internal Revenue (BIR) is looking at enforcing a tax for streaming services, like Netflix. Ferdinand “Bongbong” Marcos Jr. pitched for a more efficient tax collection at the Bureau of Customs and BIR.

What our country may want to look at is our spending side.

Cielito Habito in his column “Doing a Vietnam” (5/31/2022), discussed the secret that made Japan, Hong Kong, South Korea, Singapore, Taiwan, and recently Vietnam economically successful. Their secret? A very rapid export growth.

The book “How Asia Works” by Joe Studwell has the same theme. It traced the economic success of the three East Asian first worlds: Japan, South Korea, and Taiwan. Their common denominators are:

  • Agricultural surpluses — through land reform, family farms, and extension service. Not plantation or corporate farming;
  • Industrialization — anchored on export;
  • National budget that collapsed on the two above.

The book is like a broken record on the fact that the three countries achieved first world status through industrialization. The incentive all three used is full financial support from the government as long as an enterprise can export. “Export-discipline,” as they call it. They have a policy that their central banks would rediscount a commercial bank as long as it lends to an exporting company.

Kia Motors started out as a nut-and-bolt manufacturer. It eventually metamorphosed into car manufacturing (for export) as a precondition by the government for the continuance of financial support.

Marcos Jr., Rep. Martin Romualdez, and Sen. Migz Zubiri will soon discuss the new administration’s legislative agenda. I hope we could see a shift toward industrialization/manufacturing that is anchored on export discipline. To fund this, we can always shift the budget of the Department of Public Works and Highways (DPWH) toward this endeavor.

DPWH is well known to be a supplier-driven agency. As long as there are contractors willing to give kickbacks to congressmen or DPWH execs, projects will surely not run out. But this is to our detriment—as we can see that good roads are reblocked regularly; riverbanks are plastered with cement; roads are installed with culverts, even if the area is not flood-prone.

The book furthers that South Korea and Taiwan are by no means corruption-free. But they still manage to get rich because of export discipline.

We can concentrate on our comparative advantages, like fruit/coconut byproducts, nutraceuticals, handicrafts and furniture from natural materials, and the like.

Let public-private partnership handle big-ticket infra; let us shift the DPWH budget toward the Department of Trade and Industry. We should spend like the East Asian first worlds.

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