Saturday, September 1, 2012

The fewer the better

The piece of Cayetano W. Paderanga, Jr., former director general of NEDA, entitled “Why PPP” (5th August 2012, Business World) reinforces the axiom that especially in major undertakings, “the fewer the better.” “PPP is more than just the financing. It also exploits the efficiencies, the speedy and timely decision making, the single-mindedness and nimbleness of private initiative. It offers the opportunity to pinpoint and implement the strategic and critical projects that support and are interconnected with national infrastructure networks and clusters.”

PPP demands just as or even more stringent requirements from the public sector as ODA and direct government implementation. The institutional infrastructure includes, among others, well-structured rules that are clear and transparent for everyone’s guidance. Transparency, fairness and a level playing field are critical to bringing in the right private sector players and heading off unwanted legal hassles later . . . At the same time, it is important for the government to have an effective planning and programming process to identify and prepare public projects amenable to this mode of implementation . . . With the complexity and size of public projects nowadays and the complicated, interrelated (a "noodle dish") government laws and regulations, one cannot anticipate all of the potential issues in project design, development and contracting . . . For complete and effective implementation, we need to take care of the details "from A to Z."

It is for this reason that we need to develop the bias for the vital few – and not take our “mantra of inclusive” as a given. Our failure to develop over the last half a century is arguably because of spreading resources thinly thus underfunding initiatives and sub-optimizing outcomes in our desire (a.k.a. "crab mentality"?) to please competing ideas, which in reality perpetuates compromise – not necessarily for good but more often than not, for ill – and magnifies our passive culture against a globalized world that, by definition, is competitive.

For instance, to successfully pursue the 7 strategic industries teed up by Arangkada Philippines (c/o the Joint Foreign Chambers) is, by themselves, a big challenge. What more of the 13 industries which the government seems committed to pursue? And even with the seven championed by the JFC, we must still prioritize the industries with the utmost urgency: infrastructure, agribusiness and manufacturing, for example. Because within each of them, there will still be loads of intermediate projects that must again be prioritized until the exercise gets down to their operational nuts and bolts. [And as the Budget or DBM Secretary explained to Congress, while we want to step up agribusiness efforts, we must get their requisite infrastructure done first otherwise we are only throwing good money after bad.] And to truly train a laser-like focus on these top priority strategic industries, the president ought to be the one to cajole execution, and monitor and report their progress.

The private sector’s ability to be more efficient goes beyond the profit motive. It is more because of its ability to focus on the vital few. And as Procter & Gamble has learned, proudly pushing over a dozen billion-dollar brands, for example, in fact resulted in a loss of focus. Put another way, if a global enterprise with a market capitalization approximating that of the GDP of the Philippines, despite being arguably among the best in the business and with their well-developed management and ICT systems, still must focus on the vital few or their core businesses, what more of a nation which, by definition, has a less developed management system?

Unfortunately, being an underdeveloped economy where dominance is celebrated (owing to crony capitalism and monopoly power) we have yet to internalize the power of the vital few – or in our Christian heritage, the Great Commandment. Our challenge boils down to: can we do a paradigm shift? Share-and-share alike is what socialism is about and it has failed miserably. What is called for – if we are to overturn half a century of economic underdevelopment – is political maturity.

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