Saturday, April 30, 2011

Strengthening institutions

We rightly should be proud that we do many things well. Yet being in a ‘convoy’, we move only as fast as the slowest boat – i.e., we need to raise our consciousness and seek to strengthen our institutions? And institutions start with Juan de la Cruz? The writer is delighted that Dr Jesus P Estanislao’s efforts are dedicated to the cause.

It is heartening to read good news like: (a) Reports The Philippine Star, Apr 18th, “CITEM officially becomes a national event . . . when all design-driven product sourcing . . . shall have been consolidated . . . [thus] an icon of unprecedented unity in a business sector once marked by divisiveness and intense rivalry”; (b) Zest “gave the airline a shot in the arm . . . change is painful for most—if not all—environments, but required if a new culture of excellence is desired.” says the Manila Bulletin, Apr 18th. Institutions are stronger in a broad-based economy given its critical mass, and rising knowledge and competitiveness. It is the opposite of a banana republic, which finds legitimacy in demonizing the imperfections of market economies, for instance, thus lost to the dynamics of its ‘ecosystem’ as exemplified by the Asian tigers? There will always be unscrupulous investors, foreign and local – a reality that is the human condition: love begets love?

The roadmap of ‘Arangkada Philippines’ that the Aquino administration has embraced is designed to create a broad-based economy. It is meant to encourage investors in strategic industries to ante up at levels unheard of in our history, and beyond a handful of local interests. And thus harness into the country the building blocks of competitiveness. But we’re preoccupied cheering our favorite tycoons and/or livelihood efforts – unfortunately proven insufficient, over decades, to enlarge our economic pie, while unwittingly reinforcing a skewed, hierarchical economy and culture?

It takes a village to raise a child – it takes leveraging the global economy to lift 100 million Filipinos? And we can’t compare our problem with that of the US re globalization, i.e., they are losing jobs overseas. That overseas is Asia, where we are. And to partake of its spoils, the ADB is telling us that we need to elevate trade not just locally but, more importantly, with the region – and with higher value-added products, the hurdle to attain competitiveness. And with China the message is different: to raise domestic consumption – i.e., they’ve already attained aggressive levels of investment!

The writer’s Eastern European friends find inspiration in product development (for local, regional and markets beyond) and innovation (i.e., thinking discipline beyond the requisite elements of ‘galing’ and ‘yabang’) from the Lexus story – it takes a village. But it starts with ‘the end in view’, defined simply and with clarity’: “Can we create a luxury vehicle to challenge the world’s best?” [Thus] “posed the Toyota Chairman to his executives”. [And armed with simplicity and clarity of purpose, they organized] “focused groups and market research efforts – several designers rented a home in Laguna Beach, California – to observe the lifestyles and tastes of American upper class consumers. The development process involved 60 designers, 24 engineering teams, 1,400 engineers, 2,300 technicians and 220 support workers.” [Wikipedia] Of course, Toyota has to be committed to dynamism – even empires aren’t guaranteed permanence?

It would take a great number of committed souls – and institutions in the public and private sectors – to lift us up as a nation? The controversial Ro-Ro ports deal seems to mirror the fiasco of NAIA 3 and the Laguna Lake rehabilitation project and that of ZTE? Did it take some number of errant players to mess up these projects thus undermining the wellbeing of Juan de la Cruz? It took an institution to create Lexus – an institution of Japanese men and women that is downright strong, and able to create something tangible to beat icons like Mercedes Benz and BMW in the large US market? The Japanese have learned from the likes of Edison, Gates and Jobs that pragmatic innovation is anchored in the contemporary lifestyle – i.e., consumerism? Should we simply seek competitiveness and ask: Can we create an outstanding 'widget' to challenge the world’s best? And then do our homework like Toyota did? Deng Xiaoping did not confuse ‘Caesar’ (market economy) and from his god (communism)?

And meanwhile a neighbor has upped the competitive ante: “Indonesia to modernize infrastructure and dominate the global seafood market”, WSJ, April 19th. We ought to look at agribusiness (identified as a strategic industry in ‘Arangkada Philippines’) as a vehicle to dominate a specific segment of the global market, not as a livelihood project? To dominate means we have committed souls and institutions – and looking at the versatility of the coconut is a good first step?

Wednesday, April 27, 2011

Fatalism and the human spirit

Pray as though everything depended on God. Work as though everything depended on you.” We all know the quote (from the favorite saint of countless) but does our fatalism unwittingly drop the second linei.e., “bahala na” (loosely translates to ‘que sera, sera’?) comes from “Bathala” or Supreme God?

Beyond the fiasco that is NAIA 3 is the disaster (reports Business World, Apr 18th) that is our airport system – though conspiracy theorists point to Western bullying to explain why our airport has been downgraded? We’ve denuded our forests and upended our ecological system – with Metro Manila, like its airports, at the tail-end in competitive rankings? Our economy is so narrow we have to label livelihood projects as economic development interventions? And major infrastructure projects become the economic panacea trumpeted by every administration yet characterized by influenced peddling and corruption – thus aborted, wasting precious little resources? And then we call on our faith – or is it fatalism that we are invoking? And pushing the envelope we shift to high-gear and wail ideology?

Has our cacique-like culture made our government and economy ungovernable? We put hierarchy – power and authority and the lack of transparency – above all? We’ve prejudged foreign investments as interference, unwittingly indulging in self-flagellation, while the Asian tigers laugh their way to the bank? What can an underdeveloped economy and government do – forced, boxed-in into unsustainable subsidies? It can orchestrate and pave the way for our institutions – if they are committed to nation-building – to attract humongous (not candies to pacify Juan de la Cruz) investments, and harness them towards elevating our technology (and innovation-quotient) to world-class levels and thus the ability to develop world-class talents and products that would win in the global marketplace?

Has our deference to ‘hierarchy’ blurred and confused our aspirations and confidence – and our sense of competitiveness? We don’t have the capacity to compete – that we can’t develop, manufacture and market competitive products beyond our shores? Hierarchy connotes permanence and thus in India successful entrepreneurs do rail against the caste system? Yet even empires don’t have permanence – and ditto for the golden calf? South Korea is giving Japanese cars a run for their money – Japan getting a dose of its own medicine, like they gave the US?

Even the simple peanut which could be bought in the ‘talipapa’ could be raised in value and offered in gourmet shops and the finest hotels of the world? As consumers we know that the supposedly lowly trash bag has raised its value – and welcomed by the Señora – or that even a toilet paper could have a pleasant scent, softness and strength, and raise its value? The writer’s Eastern European friends continue to surprise themselves – moving from a cottage industry to four different business units, doing manufacturing and marketing, from a market of one tiny country to a region many times over. They don’t talk about sunset industries (since even a cell phone unless it moves up to smart phone would be in its sunset as Nokia belated learned) or of being dwarfed and cowed by Western behemoths – i.e., empires are fleeting? They have chosen to compete head-to-head because investments in technology, innovation, talents, products and markets have given them the belief in the human spirit. These are ex-socialists thriving in the 21st century competitive market arena – an amazing story of people who grew up under absolute rule, a system some of us desire?

Isn’t the OFW phenomenon an outcome of cronyism, one of the manifestations of our hierarchical or cacique-like culture – i.e., a major overseas construction project facilitated and won via the crony system? It became convenient because we had earlier raised the walls to ward off investments and technology from the outside – thus haven’t had the industrial base and the critical mass to develop into a robust economy? And our major industry was essentially anchored in a couple of monopolies – commodities, not high value-added products? And today’s reality hurts and blinds?

It is foolhardy to invoke fatalism to raise our competitiveness? And to invoke nationalism cum protectionism following one’s folly – or failure to raise competitiveness – is robbing Peter to pay Paul, undermining the greater good? Competitiveness is a reality that could be attained with hard work or harder work, but not convenience? And it is not about trusting ourselves more than the Maker. It is about being unshackled from the thoughts and the deeds that perpetuate a cacique-like culture and economy – read as hopelessness by the poor, thus turning to fatalism?

Wednesday, April 20, 2011

Raising the bar ten-fold . . .

The writer grew up in the inner city of Manila when ancestral lands were being subdivided – and neighborhood streets were being laid out. And houses had to be literally lifted and moved inside their respective boundaries. And as a little boy the writer saw ‘bayanihan’ in action! That was how folks called it – from the root word ‘bayani’, which literally means hero. He was in awe as their tiny chalet was lifted and carried by the shoulders of the volunteers. With his maternal grandparents’ house, more volunteers came – and they needed steel rollers to move it. And sensing what was to happen he hid from everyone, climbed the back stairs for the joyride.

He now realizes where we missed respect for easement rules, for instance. Whether the family knew about them, the writer would not know. But then, it explains why beyond population growth we have made Metro Manila utterly dense – and not environment- nor traffic- or pedestrian-friendly? It requires rules and respect for these rules – discipline, in other words, to address our fundamental challenges? The writer remembers the builder coming to explain to the wife that there would be one less step to the front door in order for the height of the house they were building to be in compliance with village rules. She was not a happy camper – but it is when we take these ‘little things’ for granted that we add fuel to the fire of corruption – and underdevelopment? A cousin related how in a major urban center she had to deal with fire department inspectors because their building was ‘not exactly in compliance’ – but then again, that is our culture: ‘this is my property I can do whatever I please?’

We’re not ready to institute something as fundamental as queuing at a bus stop until Marcos had to follow up his martial rule with the ‘new society’? We always get what we deserve? ‘We’re not ready’ is a convenient excuse? We’re not ready to raise the bar 10-fold for us to be a developed economy? It is a journey but unless we start somewhere we would not be ready – ad infinitum? We’re economic laggards not because of destiny? The open skies policy would remain controversial – and we would be unable to move forward in agribusiness or mining – for that matter, if we don’t call upon our ‘bayanihan’ spirit? It’s not a tiny chalet we’re moving, it’s a huge real estate populated by close to 100 million Filipinos? But who cares – to join hands, be shoulder to shoulder, and carry our yoke to raise the bar 10-fold? We can’t be little kids still simply in for the joyride? Investing in technology and innovation, and talents, products and markets, and developing our competitiveness is no joyride? But to be frozen in time – perpetuating the cacique culture – is such a joyride, on the shoulders of 10 million heroes, a.k.a. OFWs?

We can’t build a broad-based economy if we keep to a very low bar – in every key facet of our life as a nation, from the soft elements of power and authority and insidious corruption to the hard elements of our natural resources? And it appears that the common denominator is our “culture, current knowledge and values, [and] attitudes” as a people? Reports the Business Mirror, Apr 16th, [Given] “the unabated degradation of the country’s natural ecosystems . . . [and] if government would just opt for the conventional Band-Aid approach, in the next 20 or 30 years, everything will be physically the same, if not worse, compared to where the country is now . . . In fact just for reforestation alone, more than $1 billion is needed to reforest the degraded areas in country . . . We cannot just pour in money into the uplands without looking to the culture, current knowledge and values, [and] attitudes of the people. That’s why this is a long-term program . . . In the early 1900s it was estimated that 70 percent of the country was covered with 21 million hectares of forests. Today only around 7 million hectares of forests remain, or 18.3 percent. In the last century alone, the country lost almost 15 million hectares of tropical forests . . .” Have we conceded that the next generation – and beyond – would be like ours?

Next door, the Indonesian BOI Chairman expects his kids to export high value-added products instead of simply digging and exporting coal like his generation is doing. They’ve been working hard the last 6 years: benchmarking and pushing for higher rice production and steel utilization . . . towards industrialization; while incarcerating hundreds in their fight against corruption. And they find inspiration in the Hong Kong story – where they worked hard over 30 years to overcome the scourge!

Sunday, April 17, 2011

Poverty, problem-solving and political will

Business World, Apr 10th: “The Aquino government is moving to address issues that have held back growth but a great deal still needs to be done, the Joint Foreign Chambers of the Philippines (JFC) has showed . . .The organization’s Arangkada Philippines 2010 workshop last March 31 found that at least one proposal for five of seven "big winner" sectors had been acted upon in the four months since an advocacy paper was submitted to President Benigno S. C. Aquino III . . . President Aquino and the government are on track. He has a good team of Cabinet secretaries and agency heads . . . But there are still lots of work to be done."

As a people, we are in agreement that poverty is a major problem? Where we begin to split is in the problem-solving and in the political will? It is important to step back: “Where are we coming from”: what are our beliefs and biases that explain our mindset, and influence our problem-solving approaches and the presence or absence of political will? Human as we are (not unlike the journey out of Egypt?) we’re espousing differing if not conflicting biases? And the human condition that is Juan de la Cruz is magnified by our ‘kuro-kuro’ culture, and reinforced by our belief in a free press? For instance, do we have more or fewer pundits in the Philippines than they have in Washington DC?

We know that the worst of America is represented by its politics; and DC is synonymous to US politics. Prof Michael Johnston – world-renowned with his work re business ethics – labels US corruption as ‘Influence Markets’; that of the Philippines, as ‘Oligarchs and Clans’, from his 2005 work, Syndromes of Corruption: Wealth, Power, and Democracy. And he explains: “Philippine corruption is an example of the Oligarch-and-Clan syndrome—one found in countries offering significant and expanding political and economic opportunities in a setting of very weak institutions, but a pattern shaped by historical, cultural, and geographical influences specific to the country. Oligarch-and-Clan corruption is particularly disruptive, in development terms. Because of institutional weaknesses and the power of corrupt oligarchs and their followings, it often faces ineffective opposition”.

Proud of our faith and our educational system of old, Juan de la Cruz opines with self-assurance and certitude? But the tail can’t be wagging the dog – and just like in the Exodus [“Americans of all faiths now embrace the holiday celebrating it”, WSJ, Apr 15th] we need leadership to pull us together? But of course we know and strongly believe what is expected of us? Is it faith or is it ideology?[Catholics] . . . fail to live by the [divine truth] with all the fervor that they should, so that the radiance of the Church's image is less clear in the eyes of our separated brethren and of the world at large, and the growth of God's kingdom is delayed . . .”, so says the Church re ecumenism?

Faith allows us to aspire for holiness? Holiness is to “aim for”, a work-in-process – not certitude – as St Peter, Mother Teresa or Pope John Paul II manifested: ‘Who would cast the first stone’? We are quick to criticize others because they are imperfect or hypocritical – because that is how we measure ourselves? Are we being unfair to ourselves? The five largest economies are far from perfect yet they have made better progress in lifting their people? It is not “perfection” we seek – but the political will to move the country forward? As the bishops say, beyond compassion (i.e., tactical initiatives like livelihood, charity efforts, etc.), we need societal change (i.e., strategic or structural fix)? For example, it is not about giving jobsit is about creating jobs – via a broad-based economy? And so for decades we sincerely believed that the OFW phenomenon was a blessing – it gave jobs to many unemployed Filipinos? Yet it did not set us apart or distinguish us from the typical banana republic – where the few control the economy and where poverty is addressed via dole-outs (or compassion?), perpetuating a pathetic, impoverished economy?

The Aquino administration is working off a concrete platform for development consistent with Arangkada Philippines 2010 – which we appear to support, a product of a broad-based effort to sharply define our economic development roadmap? We must muster the discipline of problem-solving? And until we do we would not have the political will to move the country forward? We’re not in search of a holy grail – we want to pull ourselves up by our bootstraps?

Thursday, April 14, 2011

Stepping up trade and competitiveness

ATIC (Asean Trade and Investment Center) set up to enhance trade, competitiveness,” reports the Business Mirror, Apr 10th . . . “The ATIC should be able to provide the platform that will enable local SMEs to take advantage of the Asean market of an estimated 600 million-strong consumers with a combined GDP of $1.5 trillion,” said Teresita Sy-Coson, one of the newly designated Philippine representatives to the ASEAN Business Advisory Council (ASEAN-BAC) . . . She said they will seek the help of the Philippine Chamber of Commerce and Industry (PCCI) in establishing the ATIC, where SMEs can undertake export and import activities and expand their market and presence in the region.”

It appears we are indeed stepping up trade and competitiveness, building on the Aquino administration’s investment-led economic growth agenda. And with President Aquino expressing our goal to be a developed economy, it is delightful that we are moving to crystallize a simple, clear-cut objective to which as a people we could relate to? (But he ought not to be in denial about poverty – it is real and must ask Juan de la Cruz to dig into the human spirit?)

It is critical that Juan de la Cruz is able to relate to our objective as a nation – because “changes will be difficult not least because corrupt segments of the oligarchy have a stake in the status quo. But broader forces and processes are challenging too”. [Political and Social Foundations for Reform: Anti-Corruption Strategies for the Philippines, Michael Johnston, Sept, 2010, pp. 12-14. This book-project was originally conceived by Roderick M. Hills, founder of the Hills Program on Governance (HPG). It was made into reality by the support of HPG with the active cooperation of the Asian Institute of Management (AIM), et al.]

Indeed we are seeing the coupling together of the pieces that would elevate our consciousness . . . of the imperatives of investing in technology and innovation, and in developing talents, products and markets – if we are to truly step up trade and competitiveness. The Aquino administration appears to be following on the ‘Arangkada Philippines 2010: A Business Perspective’ from the JFC (Joint Foreign Chambers) – “[It] contains measures on how to realize the projected $75-billion foreign direct investments and 10 million jobs in the next 10 years from seven priority industries”.

Focus and priority are the hallmarks of successful major undertakings, and it is heartening that the Philexport “has unveiled core strategies to sustain remarkable export performance . . . and hit the $120-billion mark in export sales by 2016.” This is the quantum leap that we need to markedly raise our economic output – and address poverty. Proudly we’re pursuing invaluable anti-poverty efforts, but as a group of Fil-Am doctors confided, they’ve realized that their medical mission to the country is “Band-Aid treatment” – not the answer to our woes. [When the writer introduced Pareto’s Principle to his Eastern European friends, he narrated the story of the Pharisees and scribes – that before Pareto there was Jesus Christ. The principle is both scientific and biblical. He stopped there and didn’t want the confusion between “faith” (i.e., personal) and “ideology” (e.g., ‘holier than thou’ – not consistent with pluralism and ecumenism)? For example, Deng Xiaoping was able to distinguish and leverage market economy, not constrained by ideology?]

The road ahead is not paved with gold. In our country, “Influence has tended to run from top-down, accountability to flow upward, and political support to be bartered for short-term benefits. Indeed, the dominant impression, to one outside observer at least, is of a state and society that may be extensively intermingled in terms of personal connections, yet all too often disconnected in terms of official duties and accountability. On a day-to-day level, particularly during election campaigns, interactions between citizens, politicians, and officials can be intense yet shaped by short-term, what-can-you-do-for-me expectations. At that level it is difficult to say exactly where “the state” ends and private domains begin—and thus, to say what standards of behavior and performance should apply—since personal connections and dealings are so dominant. With respect to the formal public processes of development and governance the country finds itself in an “expectations trap” in which governing elites demand relatively little of citizens, and citizens expect little from government. Such dynamics not only hinder nation-building; they sustain corrupt dealings too, as officials who accomplish little are not only tolerated but effectively left free to pursue their own schemes.” [ibid] The writer could not say it better.

Monday, April 11, 2011

“Business models” are dynamic

Business models like plans are dynamic? Yet dynamism itself is informed by the mindset? It’s not surprising that as a nation we may be in a transition mode given the new direction of the Aquino administration – to push an investment-led economic growth agenda? We may have done BOT or PPP projects before, but the administration’s efforts appear different. For example, “pocket open skies” is a bold new direction – bolder without “pocket”? And it is to be expected that we’re in a dilemma – compounded by the issue of reciprocity that ought to be ironed out?

In Middle America immigration is perceived as froth with danger. Yet the likes of Bill Gates and Mayor Bloomberg are championing immigration. ‘We are dynamic-thinking Americans but we don’t like immigration?’ We buy open skies – or do we see it as froth with danger?

Kennedy knew he was treading ‘unchartered territory’: “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive . . . and none will be so difficult or expensive to accomplish. But in a very real sense, it will not be one man going to the moon--if we make this judgment affirmatively, it will be an entire nation. For all of us must work to put him there.” And earlier, when Eisenhower pushed the US highway system – to replicate the German autobahn – it planted the seed of development. Both leaders had visions, and mindsets clearly ahead of their times.

"The first generation starts a business. The second generation runs it. And the third generation ruins it." Fairly or unfairly, there is a perception about family businesses – that the revenue stream may not be rigorously tested for sustainability, and the business model is constrained by the mindset especially when it is successful? McDonalds, Dunkin Donut, Starbucks, Apple, IBM, among others, realized that success would not be sustainable if the business model is not dynamic? But then again, a new one demands greater investments in technology and innovation, and in talent, product and market development? For instance, Cisco, once a tech darling, concedes it needs to “fix its portfolio – we have lost our focus, discipline and . . . operational execution, and are slow to make decisions”.

So we have done our version of the US highway system with the open skies policy – what to do next, beyond ironing out the reciprocity issue, and the requisite infrastructures like airports, roads, bridges, etc.? We have to pursue investors, local and foreign, that would “populate that highway system”? What would be the equivalent of McDonalds or Hilton Hotel or Dairy Queen or A&W or Exxon-Mobil or Levis in terms of an open skies policy?

Sam Walton comes to mind: the business model of his General Store, retailing, dates back to the Wild Wild West, founded on the 3Msmen (employees), materials (merchandise) and money (investment). And he clearly moved up the value chain, incorporating logistics into his business model, and adopted the more expansive 5Ms – adding machine and method, investing heavily in ICT. Retailing is a low-margin business and thus must leverage economies of scale, i.e., exploit ICT in order to optimize efficiencies and margins – while satisfying the rigors of the 4Ps or marketing mix: the right product portfolio, competitive pricing, placement (i.e., a chain operation) and promotion. (It’s a great example of lateral as opposed to linear thinking – which innovation in an enterprise or undertaking requires!)

To assume “materiales fuertes” (or products, business models or plans) are perpetual . . . would sentence us to economic laggards? It is translated in our tendency to monopolize – and thus not surprising is the acquisition by PLDT of Sun-Digitel? Haven’t we seen it before – in sugar, coconut, etc? Now we’re saying that coconut farmers, for example, need not be poor – i.e., it was asserted that the farmers were the beneficiaries? In fairness, PLDT-Sun is not quite the same – but we ought to guard against old mindsets and business models that bring about self-inflicted wounds? It is important to recognize that competition is innovation – not monopoly? And monopoly in our culture is oligarchy – the control of the economy? And unwittingly – proud of our patriotism – we protect the “Brahmans” from foreign competition . . . and expect the 10 million-strong OFWs to fend for themselves and compete in the global marketplace? They’re no pariahs – we call them heroes?

Friday, April 8, 2011

Moving on . . .

We have mountains to scale but we’ve done it before. It’s just that we have different ones to scale – for example, innovation and competitiveness? Our positive experience from the Great Recession hasn’t translated to a rising standard of living and reducing poverty? On the other hand, competitive economies may have had a blip, but they were able to ride the waves, Singapore, being one of them? Of course, we could choose to lecture the West about greed? But what we want is to move forward, paddle our own canoe – not be holier than thou, nor blame others?

Innovation is simply responding to and anticipating man’s lifestyle. Unfortunately, that is what consumerism is about too. And if we don’t trust man’s free will then we would be against consumerism? We send our kids to exclusive schools because we want them protected – and of course, give them the best? The residents of the garden weren’t shielded from the serpent despite being naïve to the world?

Thailand has kept the ‘tuk-tuk’ . . . but also responded to and anticipated man’s lifestyle – it has become the “Detroit of Asia”: “a vast area 120 km (75 miles) east of Bangkok, where durian orchards have given way to car plants over the past decade and vehicles are made for export to more than 200 countries”, says Reuters. "The fabric is there. You can't just drop an assembly plant into nowhere and think that cars would just magically pop up. There has got to be the right environment that brings high-quality cars."

The lesson of Eden: Morality can’t be ‘legislated’? Teenage pregnancy is not a Western monopoly – adolescents learn the ropes? Of course, good education gives us a ticket to the upper tier in the hierarchy – where the challenge to decide, say, “do we make or buy”, is diminished if not eliminated? We can buy the best butlers, the best chauffeurs, the best schools, the best clothes, the best toys, the best vacation, the best everything? And then we turn around and say that an iPod is bad, for instance – because it represents the worst of consumerism? But then we’re paying a heavy price in innovation and competitiveness – because we have yet to develop the instinct?

Edison pioneered the pragmatic view of innovation – which was carried on by Gates and Jobs: ‘A phonograph in every home’; then ‘a computer in every home’. It was simply to respond to and anticipate man’s lifestyle. And after Menlo Park came Route 28 and Silicon Valley. Foreign enterprises have joined the bandwagon and established innovation centers in these technology hubs – or replicated them in their countries. And pioneering marketers adapted Maslow’s hierarchy of needs in pursuit of innovation, beyond going by economic classes – e.g., while Nokia pursued lower-priced cell phones especially for China and India, which cost the CEO his job, Apple kept moving up the value chain, and maintained leadership by responding to the lifestyle consumers valued, ease and convenience.

It is encouraging that we are crafting legislations that would promote science and technology. Yet we have to recognize that we are playing catch up . . . in a very big way – and must pursue development in parallel, e.g., with partnerships, and with urgency? But is anything big also bad – because they would take advantage of us?The automobile cluster in Rayong (Thailand) is a small city, spread across 3,450 acres and packed with 25,000 employees toiling out of mammoth factories including those belonging to nine of the world's top 10 automotive suppliers.” [ibid] And unsurprisingly, Deng Xiaoping tells American businessmen, “China needs your money and technology,” reports the New York Times, Feb 20, 1997.

It is important to recognize that “technology” and “expensive” in the same sentence is incongruous and anachronistic – because it undermines creativity and competitiveness? We’ve been in stop-gap mode for decades – i.e., OFW remittances or the new middle class – which we won’t overcome with incremental thinking? Structural fix, not unknown to Deng Xiaoping, is founded on competitiveness – from investment and innovation to talent, product and market development. Our economic fundamentals won’t raise our revenues 10-fold – if we are to be a developed economy. What we need is a portfolio of competitive products and markets tapped and won, not the “old and tried and tested policies that only make matters worse,” so says Dr Rojas?

Tuesday, April 5, 2011

The bishops raise the mindset issue . . .

A religious sister stayed for a few weeks in an urban poor community. With each scene of abject poverty she encountered, she would inevitably say, “Kawawa naman!” (What a pity!), writes Roberto E. N. Rivera, S.J. in the Daily Inquirer, Mar 27th. The Filipino mindset is centered on compassion? The bishops are introducing to both clergy and laity “a novel analytical tool that involves looking first at the prevailing ‘ideas’ or mindsets which allow certain sectors to be marginalized within society. It entails examining ‘resources’ to see how the presence or absence of material goods and control over them can aggravate or alleviate poverty. It also requires looking at ‘intelligibility,’ i.e., the whole area of culture, to see how cultural presuppositions reinforce prevailing patterns of marginalization. Finally, the framework recommends an examination of ‘shifts,’ of the possibilities of changing configurations of ideas, resources and intelligibility in doable ways so as to effect societal change.”

While ex-NEDA chief, Dr. Sixto K. Rojas, says: “. . . given the development track that the Philippine economy has treaded in the past 40 to 50 years, there is now no more room for resorting to old and tried and tested policies that only make matters worse.” (Business Mirror, Nov 28, 2010)

Taking the path of least resistance is the safest and most convenient – it is human nature? For many years, our nation’s government has lived beyond its means. We have promised ourselves both low taxes and a generous social safety net. But we have not faced the hard reality of budget arithmetic,” writes N. Gregory Mankiw, a professor of economics at Harvard, in the New York Times, Mar 26, 2011, It’s 2026, and the Debt Is Due: A presidential address to the nation — to be delivered in March 2026.

Our bishops are challenging the clergy and the laity to effect societal change – while talking about resources and culture. For many years given our culture that promotes power and authority, we’ve unwittingly perpetuated an oligarchic economy where power resides in the few? And worse, we’ve kept to our parochial bias? We want foreign investments but are putting up all imaginable hurdles – because “they would take advantage of us and our workers”? Yet 10 million OFWs who keep our economy afloat rely on foreign employers?

Raising our standard of living is a major enterprise. And the bishops are saying: we need to shift our frame of mind and approach to the enterprise? “Pinoy kasi” has not worked for us. To embrace a new mindset requires “unfreezing” old beliefs and assumptions – i.e., biases elbow out new thinking? To be intractable whether due to history, culture, tradition or whatever dooms the effort from the get-go? For example, the US Catholic Church found out that compassion for errant priests was wrong – sexual abuse went unabated given a “culture that promoted power and authority”, says a priest. [New York magazine, Mar 28th] Put another way: take transparency for granted at our peril? [And why the Vatican wants the Vatican Bank to look at transparency?]

In a major undertaking one needs a well- but simply-defined endpoint? And the challenge to us, Filipinos, is how to overcome our instinct of inclusion and compassion – and learn to focus? Man is not smart enough to juggle numerous balls – and pet projects that could compromise and diminish the undertaking ought to be eliminated? The enterprise won’t be perfect but the reality is ‘perfection is the enemy of excellence and innovation’ – whether in the world’s largest economies or in private enterprise, e.g., the US, China, Apple products, etc.? Something we, Filipinos, have to come to grips with? Thus, it is not unexpected if the Aquino administration would fumble the ball in pursuit of its investment-led economic growth efforts. What it needs is resolve – it took Hong Kong 30 years to eliminate corruption, says the Indonesian BOI chairman, who clearly does his homework; but the key is they worked hard to succeed! [To nitpick is expected, especially from past administrations – what a comic relief to hear their shtick! Babe Ruth hit a career .342, and only the 10th best, yet an icon; he hit a homerun at the Rizal ball park, and only after Lou Gehrig.]

To simply be hopeful and compassionate won’t be enough – we need to effect societal change? We were not ready to pursue industrialization in 1945; “Kawawa naman” if after two generations we still can’t attract foreign investments – and are not ready, willing and able to pursue private-public partnership and fight corruption?

Saturday, April 2, 2011

Political will

It is both top-down and bottom-up. From the top it is characterized by leadership; and from below it is a deep, intense commitment from the people. (It is the opposite of ‘que sera, sera’?) There now appears a brewing political will that as a country we want to be a developed nation – as President Aquino shared with the Singaporeans? Yet democracy is messy. And to mitigate the messiness, elected leaders are meant to reflect the will of the people.

President Aquino appears to exercise executive leadership, and there is a mechanism for him to work with the legislature, and with the judiciary too – without undermining the rule of law? As importantly, the administration’s investment-led economic growth program is supported by the private sector, including foreign investors. But it’s not a slam dunk? For example, stepping up infrastructure development means overcoming obstacles like corruption while ensuring transparency, tapping the right investors, the right builders and the right operators – and the imperative to make these projects viable, going-concerns. And in the case of power supply, there is the source-issue and the competing options, made more complex by Japan’s nuclear meltdown.

And in parallel we are pursuing strategic industries that would give the biggest bang for the buck because raising our revenues or GDP is a critical need – if we are to truly address poverty. (It doesn’t help the poor even if we want to redefine GDP, a classroom exercise!) And these industries, starting with the biggest exports – electronics – must likewise be globally competitive. Our local economy while seemingly robust doesn’t have the same potential as the global or even the regional market. And this is where our political will is challenged. And with OFW remittances driving the economy – and raising foreign exchange reserves and strengthening the peso – there is a view that says our economic fundamentals are strong, Bangko Sentral simply needs to raise the interest rate which it has done?

Yet in a globalized world, economies are sustained by competitiveness. Competitive economies are broad-based, driven by investments in technology and innovation; and talent, product and market development. Thus they generate the means to raise standards of living and ride economic cycles. We are over 90 million consumers and can power our consumption-driven industries. Yet our economy is lagging that of our neighbors – and we are faced with massive poverty? And in our scenario, it is not surprising that: (a) those concerned with poverty believe that our economy is not inclusive; and (b) others think market economy is the problem. Yet overriding them is the imperative for us to aggressively work hard to be a developed economy – i.e., the pie is too small, so says President Ramos? But it doesn’t mean we all have to be entrepreneurs – we need teachers and engineers and scientists and doctors and managers too!

The 5 biggest economies – the US, China, Japan, India and Germany – are all market economies. What got them to attain their revenue levels were their broad-based economies. And new economic powers like China and India have contributed to reducing global poverty. Yet more developed countries like the US have also to deal with poverty; although they have a different set of dynamics – e.g., cost-of-living and competition. To remain competitive, the US must be a truly knowledge-based economy, e.g., aerospace, ICT, biotech, etc. – beyond services and financial engineering . . . and the political will to fix the deficit. And we are a witness to the cost-index phenomenon: many South Koreans have moved to the Philippines, for instance, because of our lower cost-of-living; and for those entrepreneurially inclined, putting up a small business is a lot easier.

The US is not the model to benchmark our efforts against? Yet, it is important to recognize that Science & Technology is at the core of competitiveness – creating something tangible and of value? Ergo: we can’t skip manufacturing and just be a service economy? China and India, and even Indonesia – which is moving up fast – should be our model? And as our mothers would say, “If there’s a will there’s a way!” And what about pursuing a different system – i.e., not market economy? Then we can look at Eastern Europe? Simply put, to thrive in a market economy, we have to embrace not its ideology, e.g., what China has done, but its reality – of investments and their smart use?

Political will starts with being real. We can’t be more unreal than ever – moving from one fiasco to another: NAIA 3, ZTE, Laguna Lake rehab, Ro-Ro ports, etc.? And so the Inquirer blares:PH lags in attracting foreign investors”