by Perry Diaz
Today, buko juice is still being peddled in Manila in the same manner 50 years ago. However, in the past five years, buko juice is now being peddled in Asian markets in the United States. Recently, I went to my favorite Filipino supermarket and looked for the canned buko juice. Eureka! I found it in several brand names. But none of which was processed in the Philippines. They were processed in Thailand or Vietnam.
Buko or coconut is grown rampantly in the Philippines. As a matter of fact, the Philippines is the world’s number one grower of coconut. A hardy tree, coconut can withstand the worst typhoons unleashed by Mother Nature and it can grow on just about anything, including water.
With the abundance of coconut, exporting processed coconut products — from buko juice to “macapuno” — should not be a problem. However, the Philippines, due to lack of capital infusion, does not have the means to process its huge deposits of natural resources — from seaweeds to oil. The Japanese and Taiwanese have taken advantage of the Philippines’ inability to process its natural resources by buying raw materials from the Philippines and processing them into consumer products; e.g., rattan furniture, plywood.
Wouldn’t it be good for the Philippine economy to export canned buko juice and other delicacies? How about furniture? The Philippines has one of the best wooden furniture-making industry. However, it is mainly a cottage industry — a mom and pop operation. The Philippines used to have a growing export of rattan furniture. However, the lack of quality control forced the exporters to drop rattan furniture from their product export list. Today, Taiwan has a virtual monopoly of exporting rattan furniture. Since rattan does not grow in Taiwan, it imports the rattan vines from the Philippines where they grow wildly in the rain forests. The rattan, or “yantok,” vine does not grow anywhere else in the world.
Another product that can be made in the Philippines and exported is the baseball cap popularly known in the Philippines as “sure fit” or “shurpit” in the vernacular. People call the cap “sure fit” because it was designed to fit all sizes. At one time, K-Mart placed an order of one million “shurpit” caps. No one took the order. The reason: Nobody was big enough to make one million “shurpit” caps.
This situation where no one is big enough to handle large orders is prevalent in the Philippines’ manufacturing industry. Clothing manufacturing is one of the big industries; however, most of them use antiquated technology and many are small “sweat shop” operations.
In a nutshell, the Philippines needs an infusion of capital to modernize its manufacturing industry. Local sources of capital are drying up fast. Foreign sources of capital is abundant; however, because of the 60/40 rule, foreign venture capitalists are not motivated to invest in the Philippines… for a good reason.
The 60/40 rule applies to the ownership ratio of businesses including corporations; that is, 60% of capital stock must be owned by Filipinos. There is nothing wrong with this provision in the constitution. The major problem is that foreign investors are required to capitalize and pay up their stock subscription 100% while Filipino investors are required to only capitalize 25% and pay up 20% of their capitalized stocks, which means that a Filipino investor needs to pay up only 5% of the subscribed stocks while a foreign investor has to pay up 100% of the subscribed stocks. However, dividends are distributed according to the subscribed stocks. To begin with, the corporation’s operating capital would be less than the subscribed stocks. There is not much to expect when a corporation is operating at 45% of its capitalization.
I brought this issue up with Speaker Joe De Venecia — during the Ramos presidency — when I arranged for him to speak to a joint session of the California Legislature, the first and only time that a Philippine congressional leader addressed the state legislature. He explained to me that it would take a constitutional change to do away, or modify, the 60/40 ratio. He further explained that a “charter change” convention — known as Cha-Cha — had to be convened to make a constitutional change. At that time, a Cha-Cha was deemed too political because of fear among the presidential wanna-be’s that then President Fidel Ramos would change the constitution to allow him to run for another term.
Now, there are again talks of Cha-Cha. However, some of Presidential Gloria Macapagal-Arroyo’s supporters fear that a Cha-Cha might change the form of government sooner than PGMA’s presidential term. Actually, former President Ramos has suggested a constitutional change just a few days ago. It sure made a lot of people nervous. If this has to happen, would it be considered as a “constitutional coup d’etat?” Hey, let’s give PGMA a chance. She’s trying very hard. Even First Gentleman Mike Arroyo is beginning to look serious now. He’s been wearing eyeglasses lately. I am not sure if those are prescription glasses. If they are just for “looks…” Hey! Whatever it takes to convince the Filipinos that the PGMA is really serious about uplifting the economic condition of the Philippines.
Meanwhile, my fellow Filipino-Americans, if you yearn for a real buko juice, you might as well take a nostalgic trip to the Motherland during the Christmas or Lenten season. There is nothing more refreshing than an ice-cold buko juice.