Saturday, May 2, 2009

Genesis of this blog

The above chart is revealing: how we compare with our neighbors, who not too long ago were looking up to us as a model – with Vietnam catching up fast.

I started writing to engage columnists and newspaper editors at the end of a trip to the Philippines over Holy Week in 2008 – to echo the frustrations expressed by friends and relations that were much louder and more intense than prior trips.

My first thought was: with so much talents and skills how could the country be the basket case of Asia? Are we simply too nice as a people?

Since then I have kept abreast with local news and opinions and It seems that the views about the economy can be summarized as follows:
  • Our leaders failed us – they are too preoccupied with their own selfish interests; despite People Power corruption still reigns and reigns powerfully
  • Capitalism failed us – capitalists and foreign investors are not unlike our leaders, they have only enriched themselves and exploited the resources of the country
  • We remain a resilient people – we have created a new and bigger middle class with over 10 million OFWs and their families; and at home we are able to make do with homegrown entrepreneurship
  • Yet, our poverty rate remains among the highest in the world; and hence our Christian compassion has become an advocacy

I have shared my reaction (at times strongly reflecting the frustrations I am echoing) to prevailing views through my letters to newspapers and am posting them in this blog; and will continue doing so in the hope that I am able to offer a different perspective – how can we restore our robust economic standing and achieve our goal of drastically reducing poverty?
  • My perspective has been formed principally by my experience: while educated and pursued the first 20 years of my career in the Philippines, I have lived and worked in the U.S. and Eastern Europe and done business globally over the last 20 years.
  • I am a witness and a participant to how other countries are able to progress as the world becomes more interconnected; and achieve the goals of economic development that every nation aspires for.
  • I maintain a home in the Philippines and cherish the Filipino lifestyle; and would not want one generation to the next to be faced with economic woes

Three imperatives for improving the Philippine economy

To achieve economic growth at sustainable levels and move towards full-employment and drastically reduce poverty, the public and private sectors should cooperate to tackle three underlying problems:
  1. Inadequate or low investments (when measured against Asian tigers), e.g., proactively seek and raise foreign direct investment given historical gap (i.e., low savings rate and low GDP) in investments
  2. Negative balance of trade, e.g., focus on high-value added industries to achieve competitive advantage, i.e., proactively seek and partner with global players with state-of-the-art technology
  3. Inadequate support structure, i.e., fund key economic drivers, e.g., infrastructure to support strategic industries, legislative reforms to encourage investments, human resource development and education reform

The barriers we face:
  1. Ideological bias – our view of being free and independent imposes barriers that sub-optimize the benefits of the new global economy especially foreign investors and technology; our saving grace is our modern-day tycoons who are leveraging the global economy
  2. Low expectations – in the process we pursue the next best thing, i.e., low-value added economic activity, e.g., supplying labor to the rest of the world as opposed to competitive products; we remain a consumer-driven economy and have ways to go to become an investment-led economy – that is key if we are to achieve a quantum leap in our GDP
  3. Hierarchical culture – unwittingly we are perpetuating or reinforcing our long history of a hierarchical culture, e.g., we tend to suspect the intentions of foreign investors instead of dealing and negotiating with them as equals, e.g., drawing up an economic plan that mirrors a business proposal that is mutually beneficial to investor and host country – this demands a culture that is transparent


  1. I especially agree w/ #3. My business partners and I are trying to invest in The Philippines and the "short range" thinking of Filipinos back home is hindering their growth. Growing up as a Filipino-American, I am accustomed to the thinking of "integrity will pay off" and I will gain a life-long customer/client that will sustain my income. But Filipinos back home have a short range mentality that they'd rather make their money upfront by the lack of integrity and through cheating and not think that honesty and integrity will bring a customer/client back over and over. It's very frustrating.

  2. Dear Mr. Encarnacion, it is quite interesting that we have arrived at quite similar conclusions - my background is different though, I am an IT specialist and your thoughts on these matters way more precise. There is a lot for me to read here, may I invite you to have a look at the relatively simple thoughts in my blog: Best Regards, Irineo B. R. Salazar