Monday, October 29, 2012

Like in tennis, advantage can shift to the competition

Vu Tu Thanh, Vietnam representative for the Washington-based US-ASEAN Business Council, said Vietnam has lost the reputation it enjoyed a few years ago for being among the most attractive destinations for investment in Asia. Would-be investors, he said, want the government to push through large-scale economic reforms that will weed out the most inefficient state businesses,” Time World, 24th Sept 2012.

Been there done that? For years we’ve lagged the region in foreign direct investments, and would-be investors wanted us to push through economic reforms. Those who have done business in Vietnam would be the least surprised they would shoot themselves in the foot. For the moment they still are ahead of us in terms of accumulated FDIs and hopefully if we keep our noses clean the advantage would shift in our favor.

Competition is a 24/7 reality and countries like us and Vietnam can’t think of competition as a campaign that starts and stops. It never stops. Beyond rigorously addressing the shortfalls in our global competitiveness rankings, it is important to recognize that the critical elements of competition are ticking all the time: somewhere a hundred miles away if not a thousand or ten thousand miles, there is someone investing and upgrading their technology in order to come out with the latest innovation for their product and the learning cycle is simply elevating the skills of their people thus creating an innovation culture that gives them the ability to capture new and dominate current markets. [I wrote this longish sentence after two separate teams of Eastern Europeans had presented their game plans before traveling to Germany and Hong Kong because these markets are keen about their products. In the Philippines we talk about the shrinking global economy because we are yet to internalize what competitiveness is about.]

And thus especially for a nation like us that has been scraping bottom for some time now – i.e., we lag Thailand, Malaysia, Indonesia and Vietnam in gross investment, FDIs, exports and, not surprisingly, have a greater poverty challenge – we must recognize and gear up to overcome this ever daunting challenge. And not applaud our oligarchic model founded on influence peddling and monopoly power and thus dominance in the local market. It explains why, as some legislators have noted, vested interests have been blocking foreign investments – and why we are starved of technology and innovation and consequently are globally uncompetitive, underdeveloped and poverty-stricken.

Thankfully we have the JFC (Joint Foreign Chambers) stepping forward with Arangkada Philippines – designed to raise $75 billion in investments and drive 7 strategic industries that will generate millions of jobs and deliver incremental GDP of over $100 billion. So why aren’t we grabbing and running with Arangkada?
President Aquino’s “daang matuwid” has encouraged foreign investors to give us another look especially now that others have been shooting themselves in the foot. Our own black marks are not few and thus Juan de la Cruz ought to display a greater sense of urgency. And that means we have to learn to operate beyond our own world – call it culture or whatever – and demonstrate that we have brought competitiveness down to our heart and to our gut. For example, we must demonstrate that we can put the power issue to bed! Or do we like to think that we’re market-economy champions and that local investors are already on top of it? Sounds like the oil industry in the US writing the road map of the industry? That is not how the Asian tigers became Asian tigers. Their governments defied the US model and crafted a unified development plan such that in a relatively short period of time they became First-World economies.

The bottom line: resolving our key challenges – power, basic infrastructure and strategic industries – must be our mantra. And the test of the pudding is in the eating. And that means the world especially foreign investors are able to see through the transparency of our game plan – not that we are giving a wink and a nod to our favored few. To foreign investors that is the real story of corruption in the Philippines; but in corporate speak it sounds tactful: “Our policy is to invest in countries where there is a level playing field.”

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