March 2018
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Philippine natural resources

The Philippine journal of science (1914) (14803480553)Two important trade agreements shaped the US-Philippine relationship after World War 2: The Bell Trade Act (link) and the Laurel-Langley Agreement (link). Let us have a look at them:

  • The Bell Trade Act was passed by the US Congress and approved by the Philippine Legislature on July 2, 1946. In return for $800 million for post World War II rebuilding funds, the Philippines gave the United States preferential access to its markets, pegged the peso to the dollar, currency transfer from the Philippines to the US could not be limited. Most importantly, American citizens were given the same access to Philippine minerals, forests and other natural resources as Filipinos, which necessitated an amendment to the 1935 Constitution.
  • The Laurel-Langley agreement superseded the Bell Trade Act in 1955 and expired in 1974. It was an amendment to it, but still gave full parity rights to American citizens and businesses, who had the right to 100% ownership of corporations in the Philippines. Access to resources was for sure part of it as well, since American mining interests remained from what I have heard.

The trade acts with the USA included a preferential sugar quota – the Bell Trade Act was also courtesy of President Manuel Roxas, a sugar planter. Sergio Osmeña was against it, seeing it as practically undermining Philippine independence. One does wonder about how much the situation in sugar plantations helped fuel some sympathy for the Hukbalahap rebellion which raged.

  • There were for sure foreigners who came to the Philippines for natural resources. Paracale in Camarines Norte was from what I have been told the site of a major Spanish garrison under royal supervision because of the gold mines there. There was an article called “Aves de Rapiña” or “Birds of Prey” in the American period which referred to gold mining around Baguio.
  • But stories of Samar  (link) sound like African blood diamonds – allegedly Marcos was in the bauxite business, Enrile in logging. The Russians say: where there is gold, there is blood.
  • There are speculations regarding the Bangsamoro Basic Law and natural resources, even suspecting Aquino. But older wealth is usually not as greedy as new wealth. Those that have known hunger, fear of hunger, or humiliation are usually those who can’t get enough and can never stop. They want to be rich and important. European nobility only became noble when they had acquired some culture – the first were usually hardly better than bandits or Russian Mafiosi.

Is that everything?

One major premise is wrong here. That it makes sense just to sell raw materials. That is the path of least resistance.

  • Germany and Japan hardly have any natural resources. Could that be the reason why they had to learn to excel at making more out of the materials they get? They are for sure successful?
  • Africa has its blood diamonds. Some Arab oil states look like the paradise Binay is promising, with everything free for citizens. But do they develop themselves, what if oil finally runs out?
  • The Philippines sells even its people – as overseas foreign workers and in business process outsourcing. But does it add any value to its human resources, does it develop people enough?

Interestingly, it is Germany and Japan that I see putting up industrial plants in the Philippines. Stihl (link) recently did in Batangas, and there are a lot more companies, coming one by one. Germany via the K-12+ Project (link) develops the skills of Filipino workers via a mixture of theory and on-the-job called Dual Training System, which focuses on making theory truly applicable.

Can things change?

Now is the Philippines truly progressing? What are the forces for and against progress.

  • The Philippines is often resistant to change, the Filipino a creature of habit, loving his own comfort zone
  • Exposure to the world has changed many things – via OFWs, migrants, BPO workers, tourists, retirees
  • Foreign transplants do sometimes get rejected by the cultural immune system – see Spanish language

Romeo Encarnacion, a business consultant who lives in the USA and was in Eastern Europe (link) has made similar observations to me – that the Philippines is “parochial” – I have said insular.

  • The first Filipinos to leave the islands and see something else were the ilustrados of the 19th century.
  • Others like Andres Bonifacio worked for foreign firms in Manila which was booming due to trade.
  • Today, Filipino OFWs and migrants go the way of Rizal and BPO workers the way of Bonifacio.
  • Plenty of foreigners came to Manila in the late 19th century, including a German pharmacist named Zobel.
  • Foreign retirees, tourists and businessmen today may bring enormous change and new ideas into the country.

There may be enough critical mass soon to make for – hopefully – gradual and sustained change. Unlike before where it was only a minority and the rest remained in Padre Damaso’s Dark Ages. Then it will no longer be the kind of place that made Ibarra fail and Simoun kill himself, make AntiPinoy (link) hate his country, which according to Rizal (link) many Filipinos did even before.

When the ethical abasement of the inhabitants had reached this stage, when they had become disheartened and disgusted with themselves, an effort was made to add the final stroke for reducing so many dormant wills and intellects to nothingness, in order to make of the individual a sort of toiler, a brute, a beast of burden, and to develop a race without mind or heart. Then the end sought was revealed, it was taken for granted, the race was insulted, an effort was made to deny it every virtue, every human characteristic, and there were even writers and priests who pushed the movement still further by trying to deny to the natives of the country not only capacity for virtue but also even the tendency to vice.

I think human resources are the major natural resource of the Philippines. Where they are not being wasted outright, they are still not being sufficiently added value to and developed.

Irineo B. R. Salazar, München, 27. February 2016

27 comments to Philippine natural resources


    The resource curse, also known as the paradox of plenty, refers to the paradox that countries with an abundance of natural resources (like fossil fuels and certain minerals), tend to have less economic growth, less democracy, and worse development outcomes than countries with fewer natural resources. There are many theories and much academic debate about the reasons for and exceptions to these adverse outcomes. Most experts believe the resource curse is not universal or inevitable, but affects certain types of countries or regions under certain conditions.


    It is generally believed that widespread corruption, inadequate protection of property rights and lack of effective constraints on the elite in the Philippines started in the Spanish colonial regime. These are characteristics of institutions whose nature is extractive.

    “Extractive economic institutions do not create the incentives needed for people to save, invest, and innovate. Extractive political institutions support these economic institutions by cementing the power of those who benefit from the extraction [2].”..

    In his recent paper, P.C. Cruz from the UP´s School of Economics says this is the same reason why the Spanish colonizers established such extractive institutions in the Philippines [5]. This is to “minimize the uncertainty brought by high mortality (of the colonizers in the Philippines) and the relatively low wealth generated in the country.”

    Cruz noted that during the Spanish period, the mortality rate on European settlers was 30 deaths in 1000. This was based on the estimate of Sinibaldo de Mas, a Spanish diplomat in the 19th century. Because of the high mortality rate, the colonizers…

    “…demanded extractive institution that would allow them to accumulate as much physical wealth possible in the shortest possible time to transfer back home. The few that settled in Filipinas, mostly clergy, ensured that they lived better conditions than in Mexico or Spain. This was achieved through the creation of institutions that favour the extraction of resources from the people and the state [5].”


    Diary of Francis Burton Harrison March 26, 1936

    Off the coast of Masbate. Fishing was tried by Kerk etc, but the water was too rough. Arrived in the little harbour about 4 p.m. and the whole party went ashore and visited the mill of Masbate Consolidated,–which crushes 800 tons a day and is now being enlarged to 2000 tons,–said to be the largest in the Orient. Apparently it is very efficient and up to date, and seems very impressive indeed.

    Coming hack in the dark, some of us in a small launch were stuck on the bar for 40 minutes in a driving rain. Very glad to get back to the ship–and a bath and dinner! More bridge.

    The mining claims and applications for Masbate cover an area of approximately 8,106.95 ha. The project and tenements were purchased from Atlas Consolidated Mining and Development Corporation (Atlas) in 1995 and the tenement rights were transferred to Base Metals Mineral Resources Corporation (Base Metals), subsequently renamed Filminera Resources Corporation (Filminera).

    In 1936, the Masbate Consolidated Mining Company was formed, incorporating several ofthe smaller mines. The company operated until 1941 but mining ceased during the war.
    There was no significant renewal of mining activity until 1979

  • sonny

    Irineo, Karl Filipinos should do “all the above” regarding our human and natural resources. The first stop is NEDA’s recommendations on those mentioned by Karl and you. Then gather a technology secretariat to sort through the current and future implementations in the public and private sectors. Then design a master economic plan that can be subjected to expert regression analyses until a cogent and coherent plan can be submitted to an executive and legislative coordinating mediator and resource group that will, upon gov’t approval, open to public invitation for bids.


    • I think that the DTI/DOST startup initiative is the way to go… because nowadays new stuff can just come up without central planners having any idea of it…

      • sonny

        Very good insight on how reality works. Our schools, I feel unwittingly, have created an oligarchic/aristocratic academic culture. By this I mean a culture that seems incapable of spreading knowledge more broadly. True there is a built-in hierarchy that is formed ‘intra-muros’. The ideal is to have many of these campuses country-wide and create an economic demand for the services of the products of the schools such that a dynamic complementarity, ‘extra-muros,’ is effected rather than the underemployment level that I see for the young graduates. Like clapping with only one hand. Just my feeling.

        • When U.P. became the U.P. System with campuses nationwide having more autonomy, there was some spreading out… same thing happened to Philippine Science High School which used to be only in Diliman. Ateneo also has it’s nationwide campuses now which are becoming more significant… so there is some spread. I think the economic rise of especially Cebu and Davao may create more demand, and weaken the predominance of (very crowded!) Manila which is a good thing for nationwide development.

          Now France is known for its centralist and (meritocratic) elitist approach… but it is not as innovative as Germany and the United States, which have the good schools spread out over the country. Depending on the subject you have leaders and laggards among German universities as well… but it does not necessarily set one back in terms of career opportunities if one is from a “non-top level” institution, because one can prove one’s mettle in other ways. Those who don’t get in the door in the big companies have possibilities in small- and medium-sized firms, can stay there or work their way up, it is not like you have a stamp on your forehead. Which is another reason why I see SMEs as very important – they can give places to people with unusual biographies, sometimes they have ideas that challenge established firms. Being underemployed is never good… it can mean losing touch with the qualifications one has learned within just a few years, quickly making one’s degree useless.

          • sonny

            Your magic term, Irineo: strands and more strands, the Philippines has more than keys and reefs, she has islands and islands. Everything and everybody help. I am aware that science high schools, not unlike PSHS, are sprouting in MetroManila. These thrusts must be strongly encouraged and enabled beyond the levels that are operating now.

      • sonny

        I found a good lesson for our country in the history of the creation of the academic powerhouses in America: MIT, Caltech, Stevens Inst of Tech, Carnegie-Mellon, Rennselaer, Cornell, UPenn, UChicago, Northwestern, Harvard, Princeton and many more were founded/funded by both religious and secular philanthrophists who made their money in industries but “paid back” into the system that produced more good seeds in turn. Pangilinan & Gokongwei seem to get the idea. I fantasize about a balik-dunong on the part of alumni groups. Notre Dame & Georgetown come to mind. (Sidenote, I came across our valedictorian via internet being the president of an enlightened Taguig academic institution. Modest but definitely in the right direction.)

  • – Nick Joaquin…

    THREE LAYERS of wealth have accumulated since the turn of the century and Senator Aquino identifies these layers with lands, politics and banks.

    “When the Americans came, a group of young lawyers started titling lands: this was the beginning of the big estates. Gregorio Araneta, for example, became the lawyer of the Tuason family that claimed this tremendous tract of land from Sampaloc to the Marikina Valley. The original source of the Philippine fortunes was, therefore, land—either Spanish grants, like the Ayala estate, or the acquisitions titled during the 1900s.

    “The second generation of Filipino wealth came from government connections. In the 1920s when Quezon was financing his independence missions, certain people got choice contracts from the government, like the Teodoros of Ang Tibay, the Madrigals of the shipping line.

    “Then we have a third generation of millionaires: those who got concessions from government financing institutions, like the sugar barons. The Philippine National Bank was set up and it financed practically the entire sugar-mill construction of the period. The movement was from Negros Occidental to Iloilo and the sugar barons—the Lopezes, the Javellanas, the Aranetas—started taking over virgin forest.”

  • karlgarcia

    Singapore is a small country that is running out of water,here is the solution.

  • karlgarcia

    The landfill and the garbage dump is the leading source of precious metals,aluminum,tin,plastic waste.
    we must find technologies for landfilll mining and ewaste recycling,of course find ways to avoid methane explosions.

  • karlgarcia

    Most precious metals end up in electronics,then to e waste,then landfills then to China.

  • This is the most recent article from Maria Adam’s Travel Europe (a Filipino who lives in France and is probably married to a Frenchman): – she has been more places than me and wow her blog is truly eye-opening. – used to be called “A Pinay in Europe”.

  • It takes money within one’s grasp to change dramatically, I think. When college leads to a career as a scientist rather than cop or security guard, for instance, people will see education as an opportunity rather than a function. So as the Philippines grows wealthier, which the nation should unless the new President is really really stupid, change will pick up speed. Now some things won’t change. There will always be lots of beaches and storms, and Filipinos I suspect will always be fun loving and fundamentally happy. But the Jeepney will go away, traffic will become more orderly, flaws in sidewalks and streets will diminish, government officials will stop asking for bribes, and complexions may, slowly, slowly become more pale.

    • That is what makes Dual Training so attractive – you go to school and get on-the-job training, usually the company that trained you will take you because they already know your way of working and you know them. It is win-win, practiced for centuries in Germany, and here it is usually a source of major shame if you are not “übernommen” (taken over) by the company that trains you how much more of a motivation is that in an Asian “shame-based” culture? Since 2009, water fittings manufacturer GROHE has cooperated with Don Bosco Mondo e.V. with a view to helping young people better their lives. To date some 780 young people in Mumbai, India, have been given the opportunity to start a new life as a result of this collaboration. The successful GROHE Dual Tech aid project has now also been launched in Manila-Tondo in the Philippines, where a new training facility was opened on 24 October. 2015. The engagement of German firms in the Philippines is on a massive scale I am only slowly discovering – could it be that like the Japanese, they are fed up with the way China deals with the companies that set up shop there? I only have the indirect feedback of a German BPO boss in Manila via a contact of mine, that German bosses like the Filipino attitude of being eager to learn new things and work hard if you just teach them and treat them well.

      Plus the Westernized attitude which is due to colonialism but makes certain things more familiar ground, easier to deal with (and a lot friendlier) them than say with Indonesians and Vietnamese? Of course Germany might take the best as migrants, the population pyramid suggests it, – this is about nurses for the many old people over here, and possibly some who stay to pay into the social security system which might go bankrupt if there are not enough young people to pay into it. The first nurse recuitment over here was in the 1970s with some strange recruitment agencies whose role was rumored but never investigated, now it is too late to go into that as the statutes of limitation have elapsed anyway and everybody has found a reasonably good life. I have seen among Pinoys here that crabbing tends to stop once people have a stable life, even if it is at a modest level. – this is about the K-12 Plus training at the San Pedro Relocation Center National High School, again like the Grohe Tondo project focusing on the poor… wasn’t there something like that on the Statue of Liberty… “give me your poor, your hungry”? German bosses like to say the somewhat hungry are good, they work harder than those who are already well-fed. Sounds cynical but it isn’t opportunity like you wrote is a big driver.

      Just like refugees from the former Eastern parts of Germany which became Czech, Polish and Russian (Silesia, Pomerania, East Prussia, Sudetenland) helped make Bavaria into the modern state it is now – they knew they would NEVER get anything back and worked like hell, are even recognized as Bavaria’s “fourth tribe” by conservatives – refugees in Munich today own a lot of shops and restaurants – a Tamil grocer, an Uyghur restaurant owner family are just a few of those that I know who are thriving. Malcolm Gladwell made a case about how many of today’s very clever Wall Street bankers were descended from Eastern European Jews, that many of them had parents who were in the sewing and clothes business in New York’s East End (?) and how they learned what Filipinos call “abilidad” (business acumen in the positive sense of the word) from those backgrounds? In the same way, simple people getting opportunities, then SMEs and Negosyo Centers, are I think the key to a real boom with much money earned.

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