Monday, May 31, 2010

Global economy on the mend . . .

It’s heartening we’re again upbeat with exports rebounding.

Before the global recession, our exports were at $49 B, and went down to $37.2 B. And it appears that with the global economy on the mend, we are seeing an uptick in exports that should bring us back to where we were, i.e., a re-grow of 24%. But with some big countries still to regain their economic strides, it’s not surprising that some of us are cautious. (And, unfortunately, there is uncertainty in the Mediterranean, if not the Euro zone.)

And this is where the development of the first Philippine Investment Promotions Plan (PIPP) comes in handy and timely. It calls for “an average 16% growth every year between 2010 to 2014, higher than the 12% eyed in the Trade department’s road map for the past three years”. The Business World article is very encouraging as it continues: “streamlined efforts are especially needed now as competition among investment hosts in Southeast Asia stiffens amid the lowering of trade barriers.

"With the emergence of less costly free trade of goods and parts inside the region, investors such as multinational companies will increasingly see the Association of Southeast Asian Nations as a single market and will reposition their production, logistics and sales networks in the region depending upon pros and cons of each country," the PIPP stated. “It is therefore of paramount importance for the Philippines’ investment promotion to focus on select opportunistic sectors in which the country has competitive advantages to other ASEAN member countries.

“It identified the electronics, business process outsourcing and renewable energy industries as the top competitive sectors but added that more could be added after studies are made. Bernardo F. Angeles, Jr. -- assistant head of the technical working group -- earlier identified other industries the PIPP would focus on: agro-industry, food processing, mining, logistics, aviation, shipbuilding, and tourism.”

That is the heart and soul of the plan. How we define how investors must pitch their proposals is crucial. For example, our electronics exports are largely semi-conductors – it is imperative that investors pursue higher value-added products. (The Indonesian BOI chairman was recently on CNN talking precisely about this imperative!) The key is to produce compelling products so that they are competitive and thus find a bigger market.

The PIPP ought to be shared with the public especially our economists and the JFC (Joint Foreign Chambers) who have similarly done their homework to right our economic ship – because we have no choice but to right our economic ship! For instance, raising our exports generated via aggressive investment and competitiveness will raise our revenues far greater than increasing tax collections even by the most optimistic numbers reported.

Separately, the UPSE forum teed up poverty as an urgent issue, thus: ‘Poverty reduction in East Asia has been quite fast, and the Philippine case appears as an exception’. The good news is we recognize the imperative of aggressive investment and competitiveness. But it is silent about partnering with foreign investors as presented by the JFC – we don’t have to go it alone, nor can we afford it?

The writer has talked about a reverse thought process, i.e., starting with the end in view. Doing ground-up, linear and incremental initiatives for decades haven’t work: (a) they’re confusing development – which must be sustainable – with compassion and crony capitalism, and (b) compromising if not missing our structural problem, i.e., investment and competitiveness? Net, we will be unable to provide even such basics as water and power until we develop discipline in our thought process and focus in our execution – the challenge of Eden?

The bottom line: the test of the pudding is in the eating! But we can’t let the world leave us behind – and so failure is not an option!

Friday, May 28, 2010

Disciplined thought process

We’ve heard it before, ‘back to basics’. But the reality is big and successful enterprises never stray from the basics – because they have a very disciplined thought process!

It was ‘in one ear and out the other’ when Lee Kuan Yew told us that what we needed in order to forge ahead was discipline. The heart of discipline is in the mind, our thought process?

People tend to get ahead of themselves and before they know it, they’ve taken the wrong turn? Pictures say a thousand words and so as a consultant, the writer uses pictures to demonstrate the basic principle that a client may be taking for granted, e.g., succumbing to ‘freelancing’. He recently showed to a group of marketing managers the picture of a horse pulling a cart: the horse pulls the cart, it’s not the other way around’. (‘Of course’, they must be thinking?)

‘You want to beat the hell out of competition – then stop freelancing! Stay with the product concept – or what it means to the consumer in the first place . . . and focus on enhancing, magnifying if not upgrading its attributes, making the product more relevant, user-friendly, accessible, i.e., more becoming! And then you will have a sharper image to drive your communication and execution. Freelancing is not necessarily creative-thinking especially if it gives the obvious answers – which competition can also see. You want to keep the competitive edge – and beat the hell out of competition!’

The elections gave us a lot of hope and desire to help the country. And so there is an abundance of ideas. Hopefully the new leadership would not put the cart – it’s poverty, it’s growth, it’s employment, it’s corruption, it’s this, it’s that – before the horse.

They ought to be asking: where’s the horse – where’s the investment and the competitiveness? Manna from heaven doesn’t come every day; we need investments employed productively to produce competitive products and services that will yield the means to address poverty, generate employment and drive growth?

As one economist says, we can’t eradicate poverty – all we can do is to grow at a faster pace. But we can’t grow at adequate levels either given our meager investments nor can we eradicate corruption? Then let’s not define the agenda as such – it puts us back on our carousel, going round in circles?

When we’re talking to an architect or a builder, they will tell us exactly what it takes to build the structure we want. But first they will make sure that we’re talking about the same outcome and attributes – they will show us illustrations of the finished product.

What is the outcome that we want and what are its attributes: a developed economy – one that has enormous investments and competitiveness and thus low in poverty? And to build a developed economy we must aggressively, not passively, seek foreign investments, not only local?

The bottom line: we need a lot of discipline in our thought process? Lee Kuan Yew was not being patronizing when he talked to us about discipline; he was being a good neighbor?

Monday, May 24, 2010

A perfect storm . . .

Why we are where we are? Is it all because of us, all of us – not just corruption or political dynasties or oligarchy or whatever?

There’s no perfect country, no perfect politics, no perfect investor class, no perfect people. That being the case, we need to figure out what our “true net worth” is . . . and raise it up? In short, what counts is what we’ve got after we recognize our liabilities. And that demands a great dose of reality. We shall fail as an economy, as a nation if we take reality for granted. For instance, in our minds, have we erected a formidable wall between us and the rest of the world? Countries that walled themselves in were characterized by utter lack of investment, uncompetitive industry, crumbling infrastructure and poverty. Sounds familiar?

Should we all, together, do something, then? For example, our politicians: we don’t need any more especially after Marcos, those who won’t be able to explain their wealth? Is love of country too much to ask – what nation have we turned out to be? And ditto to our influence peddlers and propagandists?

Our Filipino investors: we need you but no one ought to own the country? Only healthy competition will create a robust, modern, competitive economy and bring prosperity? And with your influence you can get our legislators on board and give our economic managers a wider playing field and open the country up, and demonstrate your mettle – but more importantly gain some respect for the nation, i.e., make us attractive to global investors? There’s a thin line between invoking patriotism and nationalism on the one hand, and creating oligarchy on the other! We can use more foreign investments to drive our economy to competitive levels! Unfortunately, we don’t have a Gorbachev to say such a mouthful?

Our industry: we need to raise our sights and tap outside markets and outside resources to aggressively grow our revenues – i.e., we need to raise our competitiveness by stepping up innovation and product development, pursuing greater productivity and profitability? We don’t have to go it alone?

Our people: it is not job-creation per se that we need? A job that does not add economic value is a “Ponzi” scheme. It’s not the same as Roosevelt’s make-work scheme, which was meant to get an economy (with sound fundamentals) that went bust because of excesses back on its feet – to generate consumption that had ground to a halt. We have a structural problem – a major lack of investment and competitiveness – and what we need are jobs that drive our industry to be competitive. Jobs that do otherwise are akin to a running car with its gas tank leaking – it will conk out because it is not sustainable. The lessons from the former Soviet empire are recent enough to forget. And in today’s news, Greece – where a bloated bureaucracy was meant to take care of the few to the detriment of the common good? (Disclosure: the writer has friends from Greece who can give an earful; and from former Soviet satellites too.)

Our leaders: there’s no need to be patronizing. How should we react when we call importing generator sets and grains as economic initiatives in the 21st century? It’s an indictment of the Filipino – they are reflective of an incompetent or corrupt system or both? As we learn from the private sector, the bias for competence, efficiency and productivity provides no room for corruption? Nor can we keep to transactional, tactical or populist initiatives! They’re akin to almsgiving but miss our structural problem, i.e., investment and competitiveness?

Our economists: our paradigms and models need to work. We may not have a George Soros to urge our economists to rethink these models – the point of the article, Twin peaks from The Economist, Apr 15th 2010 re George Soros has left his mark on many economies. Can he do the same for economics?

We are where we are because unwittingly we created a perfect storm?

Friday, May 21, 2010

We can remain among the happiest?

More groups have taken it upon themselves to advance what they thought should be the economic agenda of the new president. Separately, the JFC (Joint Foreign Chambers) have offered the seven strategic industries that could generate billions in foreign direct investments and create millions of jobs over 10 years. And the backdrops to these efforts are the continuing negative assessments we are getting from international agencies: the World Bank, IMF, ADB, rating agencies, etc.

But we’re a free country and pulling these ideas together is always a challenge. We’ve lived through bad economic times many times over. We pride ourselves in being resilient. Yet, smart as we are, we have not moved the needle forward. To appreciate how much the world has gone ahead, the writer invites the rest of us to read the April 17th issue of The Economist re A special report on innovation in emerging markets.

We may want to borrow a page from the private sector when they deal with challenges, and that is, by pulling together a “cross-functional team”. They bring analysts and decision-makers together – analysts can craft plans; and decision-makers can raise their probability of (successful) execution! Of course, in the private sector smart people can miss it too, but they go bust – there are consequences!

The efforts of the JFC are probably more consistent with the private sector model. But we need our economists on board too. Should our economists work with the private sector, starting with the JFC? For instance, given our meager GDP and thus inability to generate the requisite funds for investment – from basic infrastructure of water, food and power to raising our productive and competitive capability – we can’t confine our economic blueprints to parochial options? Every nation that has achieved economic success leveraged the bigger world – and drastically reduced poverty!

We have local enterprises that have successfully ventured into the global arena. And our economists could work with them, e.g., Jollibee, Splash, Rota, Ayala, etc. In this day and age with the world as interconnected as it is, competition can’t be taken for granted. And thus we need to think in terms of developing compelling products and services that will find buyers in the global marketplace.

We need to go beyond being contract manufacturers or contract-service providers. The carabao has to be ahead of the cart. How? We may not have an R&D or product-development heritage but the Taiwans of the world did not have it too – but they were pragmatic to work with the more advanced countries of the world to learn the ropes.

We have to dig deep into ourselves to find out how we can get out of our shell – no man is an island. Our forefathers were brave and smart but they had to learn the hard way that our bolos could not win against the cal. 45!

But it’s a free world and we can opt for the status quo – save the third of us who are hungry?

Sunday, May 16, 2010

Beyond sustainable growth

With due respect to the Business World article – Economic issues for [the] next president – it is a good template but then again is it a classic output of linear and incremental thinking? This kind of thinking starts with the obvious as spelled out in the article, i.e., finding the resources to raise investment and social spending; government interventions in imperfect and/or important markets; how do we reduce poverty and make growth more inclusive, etc”.

The mind plays tricks and starting with the obvious is like stacking “old baggage” that magnifies the barriers we face, and narrows our playing field? As we know problem-solving is brain-storming and generating options, i.e., (a) have a clean slate, widen our playing field and find the nuggets of ideas that could shine a new and brighter light on our challenge; and (b) turn the challenge on its head, start with the end in view, not with the obvious, and set the desired outcome or object.

The object is to be a developed economy – it goes beyond “restoring growth after the crisis”? Our growth before the crisis was dismal – we’re not restoring dismal growth?

The mind plays tricks: that’s why there are winners and losers. And losers could be wondering why they could be beaten when they’re as smart as the next guy? The writer has talked about his Eastern European friends because they were likewise doing linear and incremental thinking; and realized they could be blown away – by competition (i.e., MNCs). And could have walked away from manufacturing? They had all the reasons to be killed: inefficient factory, low-priced products that were selling but not generating healthy margins, cottage-industry level, not world-class, R&D, etc. And history was against them: there were scores upon scores of losers in the private sector (like market leaders becoming followers, if not extinct) as well as in economic development (like promising countries becoming economic laggards). Yet, they kept thinking like winners . . .

In our case, we keep focusing on the obvious, quoting from the article: our “key constraints [are] the culprits: a) a vulnerable fiscal situation, b) inadequate infrastructure, c) weak investment climate due largely to governance concerns”. There’s logic to our thought process but because we haven’t turned our challenge on its head, we fell into a trap thus shrinking our playing field: “Should we still look at the East Asian models, relying more on manufacturing as the big driver. Or is India a more relevant model, i.e., very focused on services, or even Caribbean, i.e., remittances and tourism? Other models?” The object is developing compelling products, it goes beyond manufacturing – “start with the end in view” . . . or we will run out of model countries to emulate? (And the characterization of India is misleading: the number of R&D centers erected in India in partnership with MNCs is mind boggling, 63; and they aspire to market the world’s cheapest car, among others! We don’t want to be like ‘no problem, Jamaica’?) How can we frame our efforts so that we generate more options instead of magnifying our constraints – and not stay with the exact, same mindset which we’ve had for decades?

‘We want to be a developed economy; developed economies are characterized by high investment levels and high competitiveness and low poverty. They aggressively attract foreign investment and have done their homework on defining strategic industries where they could attain competitive advantage, i.e., they drilled down to their core – in pursuit of innovation and compelling products. The public and the private sectors embrace foreign investment as manifested in their policies and legislations.’

The JFC (Joint Foreign Chambers) have helped us define our strategic industries – that will generate billions in foreign direct investments and create millions of jobs – and develop compelling products & services. How do we get there? By partnering with the JFC – not being an island unto ourselves, with ‘very little to no confidence’ in R&D and manufacturing?

But our albatross – a parochial instinct – keeps pulling us inward, and thus falling short?

Thursday, May 13, 2010

Will a new president help us?

None of our leaders was able to deliver on our promise as a high potential (developing) country.

Economic development is about “growing up” – manifesting what it is to be economically developed? For example, embracing investment, competitiveness, revenue, profit or productivity? Or are they some western ideology that is being imposed upon us? How come communists China and Vietnam have espoused the exact, same ideology in pursuit of economic development? Can a new president help us? Or only God can?

Now that Aquino won . . . does corruption go away? Does patronage politics go away? Will there be less people working/allowed at the airport/harbor – or is it why we can’t run a world-class airport or harbor? An airport or harbor teeming with employees and/or entry-pass holders is (a) a security-risk, and (b) unproductive? Productivity is a key building-block of competitiveness that drives revenue and profit – and must characterize our economic life . . . because it also undercuts corruption? For example, a border facility swarming with personnel is a breeding ground for corruption? Should we ask these same questions to every agency, bureau or department, and even private enterprise?

It’s not a surprise our employers want lower wages – if a recent earnings report from a major enterprise is representative of the profitability of our industry. In that sector the global standard is double-digit profits, not less than 5%! What is surprising (and is our key challenge) is why our industry does not raise their sights to meet global competitive, productivity and profitability standards – so that we become world-class and attain developed-country status? It is not in their DNA? And so we better aggressively attract foreign investors with the right DNA? Or does that rub our patriotism the wrong way? It does not the Chinese, the Vietnamese, the Asian tigers?

The writer’s Eastern European friends recently hired an R&D manager, not from a local company but from a western enterprise – an expatriate notwithstanding the availability of local chemists with their PhDs. Because they want someone who has done product development and more importantly commercializing ideas . . . fast . . . many times over! (The local chemists recognize that they still need to learn the ropes; that their chances will come as their employer continues to expand overseas operations, e.g., the home market will come down to less than 10% of revenues.) They want rapid growth, with revenues expanding exponentially, and they want the latest ideas . . . the latest technology, and the most productive workforce (like the managers they hired from western global behemoths that used to ignore them, but have now realized why they were beaten in their own game – manufacturing and marketing) and are not petitioning government for lower wages; but in fact are paying up to attract the talents they need across the region!

This is a bunch of ex-socialists committed to revenue, profit and productivity – founded on aggressive investment and competitiveness! Seven years ago it was a rickety-cottage industry salvaged from an ex-communist facility. Yet amazingly, they are currently working on an acquisition, their 4th strategic business unit – with another smaller project under review, i.e., they’re growing both organically and via acquisition, and constantly elevating their knowledge base and competitive advantage. They want to be global competitors, not local oligarchs?

We were supposed to lead the rest of Asia as a market economy; but today they’re all showing us the way instead, i.e., they tap outside markets and leverage outside resources while we remain parochial – an albatross around our neck – and paying a heavy price for it?

Monday, May 10, 2010

Revenue, profit and productivity

It’s encouraging that the JFC (Joint Foreign Chambers) are continuing to share the meat of their proposal or the so-called seven big winners – being specific about the level of foreign direct investment ($75 billion) and the 10 million jobs they will generate over 10 years. It would help if they continue to share more details for the edification of the various sectors of society. (But shouldn’t we be plucking a low-hanging fruit, as a knee-jerk?)

If we are to start on solid footing in pursuit of the JFC initiative, we need to be of one mind – that as a nation we value and welcome foreign investment? Because if we don’t, once the ‘rubber hits the road’ we would find ourselves conflicted and in a dilemma? We can’t afford to be of two minds or two hearts in this endeavor – which we’ve manifested over many decades, i.e., on the one hand we welcome foreign investment on the other we unwittingly manifest our unease (that even Filipino entrepreneurs in Vietnam find that country more attractive to investors than the Philippines)? As Pacquiao would most likely say, a punch couldn’t be lacking in conviction? And global competition as an economic endeavor is much bigger than Pacquiao – because the lives of millions of Filipinos are on the line?

For instance, take infrastructure: our tycoons have tossed their hats into this arena – even if they don’t have the expertise other than invoking love of country (Rockefeller loved his country too, but he wasn’t allowed to own it)? Yet, of late, our airport and harbor have been in the news for all the wrong reasons – we have yet to raise them to world-class standards! Infrastructure is always controversy-prone as we saw in the World Bank investigation of our WB-funded road projects. To attract foreign investment in infrastructure, we can’t afford to be less than above-board. What if foreigners are the ones cozying with influence peddlers, then that is not the foreign investor that we need. What we need are those that will raise our competitiveness and thus elevate our economic output or GDP?

In short, crony capitalism must not stand in the way of any major effort to bring in $75 billion worth of foreign direct investment. It is easier said than done given our brand of nationalism and patriotism – i.e., we rail against oligarchy yet we condone it? But international rating agencies can be more critical – or why they downgraded San Miguel following its Petron investment, i.e., what is San Miguel up to? To simply say they want greater returns on their portfolio doesn’t say much – everybody does! The key is: what value-added are they bringing to Petron? Flexing one’s muscle may look good in a small country but in the global arena strategic intent must translate to and yield competitive advantage – i.e., to generate greater returns, but we don’t have a Gorbachev to say so?

We can’t reinvent the road to development: revenue, profit and productivity drive a competitive, sustainable economy – founded on enormous investment and competitiveness? We can’t squeeze blood from stone – with a GDP per person of $3,300 there is no way Filipino “abilidad” can squeeze 10X more from our economic model, and be a developed economy? We can’t generate sufficient investment at levels comparable to the Asian tigers even if we pool all our resources together in the name of patriotism, or despite crony capitalism – Filipino wealth invested overseas is less than $6B, i.e., we have no muscle to flex?

We can’t be tied down to the ‘benefit of the few’ – we have to be tied to ‘the common good’. Our hierarchical culture (i.e., lopsided economic structure) is not dedicated to the common good? Almsgiving does not equate to addressing poverty?

Economic development comes from rising economic output – i.e., revenue, profit and productivity. And they occur when there is enormous investment that elevates a nation’s competitiveness to world-class levels?

Friday, May 7, 2010

Filipino “abilidad”

Countries have their respective versions of Filipino “abilidad” – and national pride makes everyone claiming trait-ownership. In developing countries people grow up “making-do” and thus are able to create things; nonexistent otherwise save for their creativity and resourcefulness – from homemade alcoholic drinks to the “jeepney” or “tuk-tuk”.

The key though is to recognize when an idea or a product is to reach its point of diminishing returns. That’s why competitive strength is assessed by the richness of one’s new-product pipeline, beyond the existing. Marketers grapple with this challenge all the time; and hence have developed a proactive mindset. (Unfortunately, Wall Street did something similar except – disastrously – they missed the requisite tangible-economic value in their creation: they shepherded investors into the “casino”, including supposedly conservative European bankers who did not want to be left out. Greed blinds everyone – no wonder it’s among the 7 deadly sins?)

When an idea or a product reaches its point of diminishing returns, its value goes on a decline; and in much of the developing world, this is not readily accounted for – like efficiency, for example. Because labor is relatively cheap, the imperative of “optimum return on resources” is missed. Thus, instead of pushing economic activity to be productive and generate greater output, it is being sub-optimized – to the detriment of the common good? And this drag on productivity is magnified as the rest of the world steps up innovation and competitiveness – thus explains our rising poverty and continuing slide, i.e., we’re now compared to cellar-dwelling countries?

It needs a lot of maturity to recognize that even the brightest idea can go stale: parents learn that they are the ones maturing when they meet their ‘aha’ moment – and let go – because the daughter is of age? Or it takes a lot of maturity to recognize that sitting on one’s laurels is foolhardy? We have to keep fighting the instinct of “materiales fuertes” – it can set us up for failure – and move up the value chain especially in key exports?

On the other hand, there are fundamental givens; and it is likewise foolhardy to reinvent them – i.e., “don’t reinvent the wheel”? For example, we don’t have to reinvent the characteristics of a developed economy or what we ought to pursue – i.e., “ramp up investment and boost our competitiveness”?

The jeepney was a great idea for its time . . . but with the arrival of diesel fuel that feeds its inefficient engine it has polluted Baguio (and messed up the pine trees), once the cleanest city in the country. Of course, population explosion did not help Baguio either! (Sadly, it can also be said of Davao, Cebu, Iloilo, etc.)

The bigger challenge still is invoking Filipino “abilidad” when unwittingly we are simply unprepared to take the hard decisions – because we may be stepping on toes? And so it boils down to: can we step on toes? For example: it’s 2010 not 1946, where are we on running a world-class airport or harbor? The PCCI invoking retaliation (re EU ban) is misplaced pride? In a community whether local or international or the church, we have to abide by accepted rules and conventions? “Paki” is no magic word in global competition?

At the end of the day we may have already unwittingly made the choice – that we prefer a tropics-like (or a 365-day paradise) quality-of-life because we cherish spontaneity? Are we apt for a more proactive way of life? For example: we wouldn’t tolerate power outages if we had a temperate climate and couldn’t afford to be without heat in the winter?

The bottom line: we are among the happiest people on earth; while a third of us are hungry, and a few are kingmakers – thus perpetuating a lopsided economic structure? And it’s a matter of choice? So long as we make it with our eyes wide open? Like, what are we passing on to the next generation?

Tuesday, May 4, 2010

Winning against the odds

“We will raise prices to lift revenue-volume and attain critical mass; we will spend money to make money!” Tell that to a bunch of ex-socialists as a competitive imperative and they give a blank stare?

Of course to raise prices if the product is uncompetitive is a formula for disaster! In much of the developing world the imperative of innovation is not yet compelling: how do they develop a dynamic, inquisitive and forward-looking outlook? Until they do, developing competitive products is not on their radar screen? In fairness, to the handful of tycoons, it is instinctive – and thus explains their ever growing success.

Spending more money to make money? Or investing – or why developing countries need to internalize the dynamic of investment (including foreign, because the bigger the better) and competitiveness and the resulting elevated output/economic activity or GDP?

But should we distinguish between the ‘common good’ and the ‘benefit of the few’? We are an underdeveloped economy going by the acid test of development – i.e., GDP per person. On the other hand, given the size of our population, local-premier businesses are thriving. But that’s more a function of access to capital in a developing country where there’s a crying need for products and services not obtaining in the developed world – i.e., there’s an inherent room for growth (and thus JPMorgan says it’s bullish on the country, over the short-term). Yet outside the country they don’t have a competitive edge and thus have not raised our competiveness?

The legislative agenda offered by the UP (OU) to the new administration is a great template. Yet – if the Business Mirror editorial said it all – is it a classic output of linear thinking? Breakthrough ideas don’t come from linear and incremental thinking? They come from turning the challenge on its head – by starting with the end in view. How do Apple and innovative companies do it?

“We must be out quick with a product that is becoming – it must be user-friendly, accessible and relevant.” Is that what the iPhone (or the iPod, the iPad or the MacBook) is all about? We can pose a similar challenge about our economy: “We need our GDP per person up to $30,000, to attain developed-country status – that is a long ways away from our current $3,300. Because developed economies are high in investment and competitiveness and low in poverty? How do they do it, e.g., the Asian tigers – they attract enormous foreign investment and thus elevate their competitiveness that drive export and raise GDP, and reduce poverty?”

The legislative agenda from the UP (OU) exercise talks of bridging our budget shortfall (sounds like Clinton?) by rationalizing taxation and administration; and pursuing infrastructure development, among other things. That is well and good. But we’re dealing with decades-old challenges: we need breakthrough ideas? The biggest revenues come from greater output of products and services – we’re not a multi-trillion dollar economy like the US where balancing the budget creates a big bang? The Business Mirror editorial stopped short of ignoring the ideas from international agencies – because we want something suitable to our needs! For example: we need “to ramp up investment and boost our competiveness”?

What are the drivers of a competitive, sustainable economic activity – revenue (and loads of it), profit and productivity? For example: (1) developing our strategic industries that will attract foreign investors, and drive and expand our economic pie – the point made by the foreign chambers, (2) prioritizing and upgrading our basic infrastructure (of water, food and power) plus those that will support said strategic industries and (3) pursuing the enablers/arresting the barriers of progress: competitiveness, corruption and economic freedom?

It’s time to turn our economic challenge on its head – we’ve beaten it black and blue? The pie is too small?

Saturday, May 1, 2010

Focus like a laser

The writer has had a continuing interaction with academia (and think-tanks). And thus while it takes time (to read voluminous research notes and materials) he has enthusiastically mentored a couple of PhD candidates. Where he’d focus them is in the construct of their hypotheses. Surely they could teach the writer loads about the requisite stochastic or algorithmic exercises to test these hypotheses – especially in Eastern Europe where they have an abundance of quants or quantitative analysts.

“Why does the US beat Europe in innovation, especially in commercializing more and bigger ideas (a Belgian friend asked the writer many years ago)? Granted they spend more on R&D – but beyond that, they bring a different perspective in idea generation”. That is the typical starting point when the writer is focusing a PhD candidate in developing a hypothesis! (We ought to seriously ask ourselves the same question because we don’t have a product-development heritage? But more to the point, decades after the world adjudged us a high-potential country, how come we’re still underdeveloped – we can’t keep running round in circles?)

“They ‘start with the end in view’ – instead of filling their thoughts with immovable barriers they expect to encounter along the way” (the “knee-jerk” the writer observes in developing countries – as opposed to a “can-do” attitude)! While algorithmic exercises are inherently linear, constructing a hypothesis should not be – because the object when describing the end goal is clarity!

When clarity is established at the get-go, the way forward is much clearer. Perceived obstacles are put in perspective as opposed to turning them into insurmountable barriers. Net, energy and enthusiasm must not be compromised and undermined by negative thoughts!

Do we wish to internalize what the World Bank, the ADB and Moody’s (and the foreign chambers) are telling us about our economy – that our goal is to be a developed economy; and such an economy is characterized by high investment levels and high competitiveness and low poverty? They are “starting with the end in view”! (But our comfort zone is in linear and incremental thinking?) Do we wish to apply academic rigor to their hypothesis?

Do we find their hypothesis too simplistic – thus too good to be true? Or do we foresee loads of obstacles – thus unrealistic?

As Bill Gates says in awe, simple is the genius of Warren Buffett. But of course there are barriers – i.e., corruption and crony capitalism! But they are man- or Filipino-made? We should take personal responsibility in slaying them: “give to Caesar the things that are Caesar’s and to God which are God’s”? We can’t keep passing responsibility to our “muchacho” . . . and then asking for “awa ng Diyos”: (1) we have to learn to focus like a laser – so that these perceived barriers turn into an obstacle course that can be navigated, (2) given a mindset that is dynamic, inquisitive and forward-looking, and (3) as importantly, defeatism has no place in development work – or in winning or success, for that matter.

The writer has talked about our culture of compassion and inclusion – does it make it difficult for us to focus like a laser? Because to focus is to be “suplado” – i.e., we will be forced to prioritize and make choices, “for or against”? Yet we can be “suplado” given our “seƱorito-muchacho” culture? So we can be “suplado” in the positive sense – with the view to expanding our economic pie and bring prosperity to Filipinos?

And let’s get off that carousel?