On investments

My item yesterday on foreign investments drew positive responses from readers. Why don't we get investors to come in? Why not?

I talked only of direct investments which may come from outside Negros or outside the country which we call foreign investments. Or from within Negros itself which will be a local investment.

From outside the country is an investment like that of ethanol plant. From outside Negros will be that of Danding Cojuangco's and from Negros itself will be like that of Sammy Palanca's pooling of resources with Luis Ong and Alfonso Tan to form Bredco.

No country ever progresses without the infusion of capital, foreign or domestic that can provide opportunities for employment.

I wrote of this yesterday following Gov. Joseph Marañon's serious campaign against graft and corruption. Capital, foreign or domestic, is always afraid of three things, rampant graft and corruption, militant labor, and antagonistic press.

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In 1964-65, that's 40 years ago, while in a graduate school in U.E. my baby thesis was foreign investments. The raging controversy then was President Diosdado Macapagal's foreign investments bill that was passed but was watered down by leftists, calling themselves nationalists.

It was in that study that I was exposed to capitalistic economics and its merits against socialistic or at that time communistic ideals.

In that study, the nationalists argued against the bill pointing out countries impoverished by foreign capital which siphoned out profits earned, citing Cuba whose sugar industry was exploited by American investors and Ecuador whose petroleum industry gave good earnings to American capital.

But a deeper study showed Cuba was under a corrupt Fulgencio Batista regime and Ecuador suffered from the same corrupt regime that failed to develop its own industries. Even today its capital, Quito, is poor.

But other countries, well run and administered like Singapore, Taiwan, and HongKong developed the country from its income from investments.

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China could have been still in the Dark Ages were it not for Deng Hsiao Peng's Four Modernizations that, among others, invited foreign capital because of its big market.

Investors could see a very big market, one Chinese to drink only one bottle of Coke a week, the consumption will be bigger than the U.S. consumption. The investors were also promised a controlled labor force, not militant, and the press is tame. And no expropriation of foreign capital like what was done in Cuba by Fidel Castro.

Where else can an investor find this? So, investors rushed to China and today China is the fastest growing economy in Asia.

Among the provinces, Negros Occidental has the biggest market, outside of Cebu. And if you add Negros Oriental, it is the biggest.

And our people have the buying power, better compared to other provinces. And Cebu is already saturated. Compared to Mindanao, our peace and order is also much better.

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And in my study 40 years ago but which has not changed until now, no country progressed not only because of foreign capital. Foreign capital is just an instrument to have the local shy capital come out in the open. It is still domestic capital that develops a country or a province. Our people can raise that if there is a good investment environment and government support.

Gov. Marañon's hog, cattle, goat, and even chicken dispersal is an encouragement to investment. Recipients of these projects will get their money from the piggy bank to buy feeds to earn more. That's investments in a small way. Money in banks or piggy banks don't earn much.

That is why in the Keynesian monetary theory interest in banks is made low so that people will use their money in investments where they can earn more. And interest rates on loans are also controlled to encourage borrowing for investment.

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I reiterate what I wrote yesterday. That investors are always afraid of graft and corruption in the bureaucracy, a militant labor, and an antagonistic press. But with good leaders, serious in promoting the entry of foreign capital or even the coming out of domestic capital can take care of this.

John Maynard Keynes, English economist in 1936 authored a theory of preventing financial crisis and unemployment by adjusting demand through government control of credit and currency.

The U.S. economic boom is continuous. Credit a Keynesian economist Allan Greenspan, chairman of the Federal Reserve System since 1987 and retired only recently. Greenspan succeeded another outstanding chairman of FRS Paul Volcker.

Greenspan earned plaudits worldwide when he successfully pumped liquidity into the market to avert a free fall into recession after Wall Street share crashed in Oct. 1987.

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Those interested in reading Keynes, get his "The General Theory of Employment, Interest and Money." And also read French economist Jean Baptiste Say whose Say's Law maintains "that the sum of money paid to the factors of production, chiefly in rent, salaries and profits for the marketing of an automobile is enough to purchase it."

This is where investments help the economy. Everybody gets a share.*

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