On the Road to Sustainability Without

Compromising Filipino-Owned
Businesses

by:

A Position Paper Submitted to the School of Social Science and Education in Partial
Fulfillment of the Requirements for

The Contemporary World (GED105)

Mapua University
November 2020
 In the current situation that people are facing right now in this world, where
the common practices are slowly turning its backs on us and becoming grievous
threats towards the environment and its people is rampant, it is important to open our
minds towards more sustainable practices that can actually help us in living a better
and healthier life. In order to prolong or sustain our natural resources, it is important
that we strategize and align our ways towards sustainability. With these, the United
Nations came up with 17 Sustainable Development Goals (SDGs), and has replaced
the Millennium Development Goals (MDGs). The SDGs are composed of
incorporated agendas of development and environment (Bexell & Jönsson, 2016).
One of the SDGs is focused on the goal of achieving affordable and clean energy.
Here comes Geothermal Energy as one of the candidates for sustainable energy.
The use of geothermal energy has proven to be cost effective and it is a small
energy source that causes unimportant impacts towards the environment
(Arnórsson, 2020). In an article written by Richter (2020), it was stated that the
Philippines is one of the top contributors to geothermal power, being a country
placed along the Pacific Ring of Fire Zone. Although in 2018, it had suddenly
dropped from the rankings for geothermal countries. Geothermal exploration is done
in order to gather important information of a prospect geothermal location before
proceeding with the drilling process. This is done so that developers are prepared
before the actual development and utilization of geothermal projects (Ochieng,
2013). With that being said, a lot of people- including foreign investors, took interest
in geothermal exploration, development and utilization of projects. The Philippines
should not allow full private/foreign ownership in geothermal exploration,
development and utilization projects because it will prohibit the Filipino owners the
chance to serve their Filipino consumers, and it will also dominate the business
sector and eventually employ migrant foreign workers.

Back on October 20, 2020, Energy Secretary Alfonso G. Cusi signed a

contract which permits full foreign ownership of the geothermal project in the
Philippines (Quinones, 2020). The move that Secretary Cusi made were
unconstitutional because based on The Foreign Investment Act (R.A. 7042, 1991,
amended by R.A. 8179, 1996) which states that 60% of the business should be
owned by a Filipino citizen, and the remaining 40% can be owned by the foreign
investor. It will also have a huge effect on the Filipino business owners and workers.
The economy of the country will also be affected by this. Foreign-owned companies
are stronger, develop quickly, and have considerably higher wage levels than locally
owned enterprises, which often are barely able to earn any profits (Vissak & Roolaht,
2005). Since the foreign owned has more advanced technology than the host
country it is more likely to succeed and grow rather than the locally owned
businesses. Since the foreign own company gives a larger wage, the people working
in the local enterprise will be more attracted to the foreign-owned companies which
will lessen the employee of the locally based enterprise. The competitions of a
locally based business can be affected badly and can suffocate it because of the
growth the foreign owned companies brings. It also affects the investments that a
Filipino businessman can place on geothermal development can be replaced by a
foreign investor since it is now allowed. Due full ownership of the geothermal project,
the government will lose its control on the project since it will now be under the
foreign investors. The investors will have the power on whom they will hire. This will
negatively affect the country because they might not be hiring local people but the
investor is more likely to hire the migrant foreign workers which cause more
unemployment in the Philippines. If the government had not permitted it, a local
business man can inherit the 60% profit rather than a foreign investor will get 100%
of the profit. Also, one of the effects of foreign investment is that the percentage of
having political issues may arise (Regoli, 2018). Here in the Philippines, it is
undeniable that politics play such a huge part in everything. In this country, the
administration is obviously favouring foreigners most especially those who are
Chinese. Examples of those are the Dito Telecommunications and the Chinese-
funded Dam Project. It was quite controversial, especially the construction of the
Kaliwa Dam, because of the risks it posed towards the environment. It was also
against the Philippine Law that protects watershed areas, and the construction will
most likely displace tribal communities in the area of construction (Rinoza & Maitem,
2019). This only goes to show that allowing foreign investors to dominate the country
will compromise the welfare of the Filipino people.

It is true that gaining foreign investors would be of great help and would help
in the boost of our economy; but giving them the chance to set-up their own business
and owning it 100% already deprives the citizens of the Philippines to showcase their
abilities in handling businesses. Filipinos are very much known for paying more
attention to anything imported than those that are local. That’s why the Philippines
should not allow full private/foreign ownership in geothermal exploration,
development and utilization projects because it will prohibit the Filipino owners the
chance to serve their Filipino consumers, and it will also dominate the business
sector and eventually employ migrant foreign workers. Being a Filipino, it is still
important that we, ourselves, feel that we own our country.
References:
Arnórsson, S. (2000). Isotopic and chemical techniques in geothermal exploration,
development and use. International Atomic Energy Agency, 109-111.

Bexell, M., & Jönsson, K. (2016). Responsibility and the United Nations’ Sustainable
Development Goals. Forum for Development Studies, 44(1), 13–29.
doi:10.1080/08039410.2016.1252424

Ochieng, L. (2013). Overview of geothermal surface exploration methods.

Geothermal Development Company, Nakuru Kenya.

Quinones, M. (2020). PH now allows 100% foreign ownership in large-scale

geothermal projects--DOE. Retrieved from
https://pia.gov.ph/index.php/news/articles/1057204

Regoli, N. (2018). 17 Big Advantages and Disadvantages of Foreign Direct

Investment. Retrieved November 05, 2020, from https://connectusfund.org/17-
big-advantages-and-disadvantages-of-foreign-direct-investment

Richter, A. (2020). Geothermal in the Philippines – an urgent revamp of targets and

development needed. Retrieved from
https://www.thinkgeoenergy.com/geothermal-in-the-philippines-an-urgent-
revamp-of-targets-and-development-needed/

Richter, A. (2020). Philippines allows 100% foreign ownership in large-scale

geothermal projects. Retrieved November 05, 2020, from
https://www.thinkgeoenergy.com/philippines-allows-100-foreign-ownership-in-
large-scale-geothermal-projects/

Rinoza, J., & Maitem, J. (2019). Philippines: China-funded Dam Project Gets
Environmental Permit. Retrieved November 05, 2020, from
https://www.benarnews.org/english/news/philippine/dam-project-
10232019153252.html

The 60-40 equity rule on owning a business in the Philippines. (2019). Retrieved
from https://www.duranschulze.com/the-60-40-equity-rule-on-owning-a-
business-in-the-philippines/

Vissak, T. & Roolaht, T. (2005). The Negative Impact of Foreign Direct Investment
on the Estonian Economy, Problems of Economic Transition, 48:2, 43-66