GUP-AY, HEMSLEY B.

BASTAWANG, MARLEE DELA CRUZ, DAN BRYAN

3:00-4:30 TTh February 21, 2017
EXPOSING THE EVILS OF NEOLIBERALISM IN THE PHILIPPINES SPECIFICALLY DEREGULATION
AS ONE OF ITS CONCEPT USING HISTORICAL APPROACH
CHOSEN READING: “Neo-Liberalism” (Gamble)
In this paper, we are going to expose the evils of deregulation in the Philippines. The said evils are the negative effects or impacts
that had been brought by deregulation. Our approach in exposing the evils of deregulation is historical approach. Through historical
approach, we are going to present the historical facts of how deregulation ruined the Philippine economy. Our source of historical facts
will be the book of Dr. Alejandro Lichauco which is “The Philippine Crisis” published on 1993. Dr. Lichauco is an economist and was a
Harvard economics and law graduate. This paper aims to prove if the said deregulation as one of the concept of neoliberalism is the
main reason why Philippines failed to industrialize during the early 1960’s-1990 and if deregulation is the reason why we were outrun
by our neighboring countries in Southeast Asia in attaining the “Newly Industrialized Country” (NIC) status.
At the end of this paper, we are going to answer the question: Is deregulation as one of the concept of neoliberalism is the main
reason why we failed to industrialize during the early 1960’s-1990 and if it is also the main reason why we were outrun by our
neighboring countries in Southeast Asia in attaining the “newly industrialized country” (NIC) status?
Deregulation happens when the government reduces or eliminates state’s regulations typically in the economic sphere. It is
basically the undoing or repealing of governmental regulation of the economy. Aside from deregulation, we are aware that neoliberalism
have other major concepts which was introduced in the reading like privatization, flexible labor markets, and the cutting of government
expenses for social services. But if we are going to zero in on deregulation then this is our thought.
HISTORICAL FACTS:
There is no significant changes in the Philippines in terms of economic aspect prior to the presidency of Carlos Garcia; the
Philippines remained to be dependent to the USA in terms of economic and political aspect. But during the presidency of Carlos Garcia,
there was a significant change in the economy. The said significant changes in the economy was seen in his policy alone. He introduces a
policy which is famously known as “Filipino First Policy” which gives more opportunities to Filipinos in the business sphere than that of
the foreigners specifically the Americans. This policy was also a respond to the impact of free trade and American Dominance in the
Philippines. Under this policy, the FOREX (Foreign Exchange) Control System was established. The FOREX Control System focuses on
economic protectionism, restriction of capital flights, and the conservation of foreign currency by banning the importation of goods that
had no relation to development or which unnecessary competed with local industries. The FOREX Control System enabled the economy
to overcome financial crisis and more importantly to begin process of industrialization. That was what turned Philippines into an economic
tiger in the 1950’s and launched the country towards NIC status. During this period, local industries became to boom and rise
independently since there is no foreign industries that challenges or competes these local industries.
But everything changes when Diosdado Macapagal (successor of Garcia) were able to deregulate the economy by his Decontrol
Program which lead to the dismantling of FOREX Control System. During the Decontrol Program, protectionism was a less priority in order
to give way to free trade. During the Decontrol Program, massive of imported products flooded the Philippines, increase of foreign debt,
and the Peso was devaluated thus automatically doubled the cost of living. Local industries were subjected to severe repressive conditions
when there was growth of smuggling and massive importation of consumer goods in the Philippines, thus leading to competition with
local industries and eventually leads to the bankruptcy of many local industries. When the Decontrol Program was implemented, the
process of industrialization faces its end. Those are the evils of deregulation.
Despite its evils, “deregulation” was still adopted during the time of Ferdinand Marcos, Cory Aquino, and Fidel Ramos. The main
reason why they still adopted “deregulation” despite its evilness is because of the coercive method of USA through IMF and World Bank.
The IMF and World Bank extends a loan in exchange for the devaluation of our Peso and pledge to do away with FOREX Control System
by imposing deregulation in order to pursue free trade. The acquisition of foreign loan is the main reason why these former presidents
still continue to adopt deregulation policy thus the Philippines ended up in a debt trap because we kept on borrowing and borrowing to
cover the deficits incurred under the implementation of the said deregulation policy. Foreign loan is available as deregulation was in force
or kept implemented to encourage free trade. Because of this, we consider debt trap as the greatest evil of deregulation. But during the
time of Estrada up to the present, the Philippines were able to strengthen its economic protectionist policy.
Is deregulation as one of the concept of neoliberalism is the main reason why we failed to industrialize during the early 1960’s-1990
and if it is also the main reason why we were outrun by our neighboring countries in Southeast Asia in attaining the “newly
industrialized country” (NIC) status?
To conclude, deregulation through Decontrol Program is the main reason why we fail to industrialize during the period of 1960’s-
1990 in the Philippines. As was seen above, the evils of deregulation had prevented the Philippines to industrialize because of the coercive
method of USA. Truthfully speaking, USA wants as not to be industrialized because they want us to become dependent to them politically
and economically and in order for the USA to have a market for their surplus goods for them to keep on profiting.
Deregulation is also the main reason why we were outrun by our neighboring countries in Asia in attaining the “newly
industrialized country” (NIC) status. Thailand, Malaysia, and Indonesia have achieved NIC status earlier than Philippines. We only achieved
NIC status during the 21st century which marked the paramount of Philippines’ own industrial revolution.