Huwebes, Oktubre 3, 2019
I remembered having an argument with somebody who only knows how to spend but not to save and investment money. When I talked about foreign investment - that stupid person only said that, "Only the foreigners will get rich if you let them invest 100% in terms of ownership! 60-40 is better because it limits the competition!" What they don't see is the analogy of foreign investors and the Filipino government. The Filipino government is the lessor and the foreign investor is the lessee.
It's time to give this scenario of being a businessman looking for space to rent. You certainly don't have the money to buy land but you certainly have money to pay rent, right? You've finally found an area where you know there are lots of potential customers. You finally found a space for rent. You finally met with the lessor. However, the lessor has one condition before you can rent the space. He or she says that you can rent in the space if you let him or her own 60% of your business. That means the profits of the businesses must be split 60-40 between the lessor and the lessee. Would you rent in such a space? I wouldn't because it would totally rob me dry when I wanted to rent a space so I can have space to do business.
Let's put that into contrast if your landlord allowed you to own 100% ownership in terms of intangible assets. Your landlord has no shares whatsoever in said company. All he owns is the land you're doing business on but he has no authority to close down your other branches - except the one that's standing on his ground. The only thing you really need to pay for is the exact amount assigned to you instead of giving 60% of your earnings to your landlord. You only need to worry about the increase in rent as stipulated by the contract. If your monthly rental is let's say PHP 107,000 (and increase follows as stated by the contract) for a huge space then you have to agree to pay it. The only reason why you're getting kicked out is that your safety deposit is good as negative or you did something unethical and illegal.
The same principle applies to foreign investors and the Filipino government. The Filipino government doesn't lose its sovereignty by not getting 60% of the shares with foreign investors. The foreign investors are charged accordingly with their fees such as paying the right taxes and following by-laws. It can also be seen that the landlord of the building didn't lose ownership of his building by letting people rent his building. Instead, he gets more money with people paying rent based on cubic meters even if he doesn't get 60% of the shares. It may not be fast money but the bigger your area - the bigger the rent, right? If a mall owner didn't lose his building to tenants then what makes you think the Filipino government will lose the Philippines to foreign investors owning 100% in terms of intangible assets?
So where would you want to do business? Would you do business where your landlord demands you to give 60% of your profits to him or would you do business where your landlord charges you a reasonable rental fee? If you're in favor of 60-40 when you might as well give 60% of your profits to your landlord then!