Wednesday, June 29, 2011

The AmCham speaking frankly

Full disclosure: Almost 30 years ago the writer sat in one of the committees at AmCham – and the task was to ensure that American companies in fact pay market-competitive rates, i.e., better than local rates. [Reports Business Mirror, Jun 19th: “The secret to success is people management”, and explains “why US management rules the world”.] But that is what competitiveness is about: investing in talent as well as product and market development on top of aggressive investment in technology and innovation? But over the last 8 years the writer has been in Eastern Europe and guided a couple of Eastern European companies to compete in the EU market, against Western interests, and even hired away some of the latter’s talents. And it was under the auspices of the USAID – but that’s what free enterprise is about, fair and square, no handicapping or sense of entitlement that hierarchy or rank brings? And thus China is today able to flex its muscles . . . after leveraging the global economy. Granted they’re still learning the ropes? But so is the US in more ways than one – and even their supposed values are aspirational and forward-looking? And they admit to the greed that took the global financial system down; and the failure to lock up the culprits?

And with the Eastern Europeans the writer is among those preaching the imperative of competitiveness – i.e., competitiveness is about investment . . . but beyond capital. Thus the competitiveness rankings are simply the score. Similarly, poverty is not the cause but the effect [or the score] of a failed economy?

Why are we uncompetitive – and poor? Because we pursued competitiveness not as free enterprise is designed to be and celebrated “competitive edge” as a reward of a parochial and hierarchical system that is unwittingly protectionist, on the backs of 10 million OFWs? It protects the few and/or the hierarchy but leaves 30 million Filipinos hungry? The model limits foreign investments and misses that they come in many forms: capital, technology and innovation, and people, product and market development? It is disconcerting that our gross investments lag those of our neighbors. And it gets worse given our uncompetitive R&D investment levels and capacity. We need a radical shift – think beyond consumption and outside the box and think global. And favor investments that raise our technology and innovation quotients. It’s the 21st century?

Is it surprising to hear from AmCham then? Business Mirror, Jun 18th: “There is too much bureaucracy [and] red tape, and the Philippines is quite protectionist . . . The Philippines is moving too slow. This country reformed slowly than most Asian countries. Many of its laws and regulations are no longer in tune to the present setup . . . If it were up to AmCham, what some Filipinos regard as the “nationalist” provisions of the Philippine Constitution or Philippine laws would be repealed as soon as possible for being “irritating and out of tune” with the times. These provisions include the 60-40 division of any foreign-owned company in the country; the barring of foreign businessman from owning land; and the disallowing of foreigners to enter the retail-trade business in the country.

Remove these barriers, and one day you will wake up like Malaysia. It’s strict for bad business but wide open for foreign direct investments . . . Malaysia opened its economy in the last 25 years. The result made the country the second most developed nation in Southeast Asia . . . The Philippines has tremendous opportunities to grow because of its God-given resources. That is our fearless forecast. We’ve been here for over a hundred years, and we will stay here to witness our expectation for your country . . . AmCham . . . remains very bullish about the Philippine economy and identified seven core industries that would soon make it big if given the needed push and support. These industries include agribusiness, business outsourcing, creative industries, infrastructure, mining, manufacturing and tourism.”

Of course, to be competitive means to pursue the profit motive? It is this surplus that generates the benefit of free enterprise, i.e., it feeds the investment cycle and when truly successful becomes a virtuous economic circle. [The Bernard Lonergan, SJ, Institute addresses this point, the convergence of economics, ethics and theology.] Some are toying with other isms because “free enterprise” in the Philippines failed given massive poverty? The writer’s ex-socialists friends wonder when they read about our gripes. They can distinguish free enterprise from oligopoly – which still confounds them? And why they opened the media to Western interests – they had associated media with the old Communist-propaganda machine. They are in search of authenticity? What about us?

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