Thursday, May 7, 2009

“Bravo! EPZA, DA, DOE, LGUs”

The recently reported initiatives by the above-subject entities are steps in the right direction; and when realized should generate greater revenues for the country.

As we fine-tune our export game plan our vision ought to be tripling our current export revenues, matching or benchmarking against that of our neighbors: Malaysia and Thailand have exports of over $150 B compared to our $50 B and are larger than our total GDP. (And their poverty rates are at an enviable 5% and 10%, respectively, versus our over 27%).

We will not get there overnight – especially given the current global financial crisis – but we surely can come up with a plan geared for execution that is realistic. We have already ongoing programs in partnership with Japan and Taiwan among others.

The initiative spelled out by the Department of Agriculture is a good model. The size of the industry and the range of products – from basic to higher-value added – should give us a good roadmap: What other efforts must we pursue towards achieving the tripling of our export revenues? How do we prioritize so that we get the biggest bang for the buck?

The more clarity our plan has the better our ability to present our export initiatives to foreign investors and potential partners. They may be able to provide their share of capital, technology and target market but we may need to provide the infrastructure that will ensure efficiency and productivity in the total process. This may include access to production input like raw materials and infrastructure like power and logistics as well as talent.

Knowing what and committing to our priorities will facilitate efforts to invest in requisite infrastructure like low-cost power supply or in the case of tourism, making our attractions accessible.

The efforts of the Department of Energy to explore a variety of energy sources are a must; and not surprisingly the rest of the world is in a similar pursuit.

And the report about various local-government efforts to promote foreign-currency generating industries is welcome development: the key being to achieve competitive advantage. For example, how many BPOs can we have across the 80 cities and 5 municipalities and still achieve critical mass and ensure that they become going concerns? How do we prioritize what services the BPOs should focus on?

If electronics, agriculture and BPOs are the highest revenue-generating industries, they should be the priority; and within each industry we need to figure out what products and services will yield the greatest volume, revenues and profit margins.

In electronics, which foreign or potential partners have a successful global or regional business in high-end electronic products? In agriculture we should make a similar assessment. In BPO the same thing: we ought to plan for higher-valued added services like software development beyond digitization service, as an example. Which BPO partners have the ability to work with us to develop high-end services? Does Microsoft or SAP or Oracle have it? In back-office processing Accenture’s set up may be a good model to build on given broad range of services.

Do we have the skills-set to become world-class software developers? How can foreign partners work with us for us to get there? Should our engineering and higher math education be geared towards computer science, for instance? Should we partner with Stanford University like Singapore did? In reforming our educational system like business and industry in general we don’t have to go it alone.

Competitive advantage is key to sustainable development. And the above-subject agencies are on the right track.

But to achieve our economic goals we need clarity in our objectives so that we can prioritize and focus our efforts: to triple our export revenues to $150 B and drastically reduce poverty.

Why exports? Our local economy is as big as Thailand’s but their exports are 3 times ours and hence their GDP is 1.71 bigger; and their poverty rate is at 10%, much lower than our over 27%. Driving the local economy via homegrown industry may tide families over especially those with sub-par incomes but will not appreciably raise GDP to reduce overall poverty.

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