The global financial
system is not starved of investable funds and with more and more
economies showing signs of feebleness, people in financial services,
now that the era of the BRIC (Brazil, Russia, China, and India)
countries is stalling, are looking at growth markets where they could
park these funds. “Park” means investment is
single-minded – it is driven by returns not friendship or even
favored-nation status. [And while our CB folks are beaming given
our elevated foreign exchange reserves, economists are livid as the
peso remains fairly strong, a negative for our exporters; while our
importers/retailers are salivating, reinforcing our consumption
economy.] Says Euromonitor International, "[The] N-11
or next eleven are: “ Bangladesh, Egypt, Indonesia, Iran, South
Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and
Vietnam; all 11 countries demonstrate population growth rates above
those of Western developed economies, indicating greater consumer
market potential; large populations represent a wide potential pool
of consumers for businesses to target, while high growth rates mean
that this market will expand rapidly, providing proportionally more
potential customers." How do these countries make hay?
We
just did an investment guide with my Eastern European friends
following the inclusion of Hong Kong and Singapore in their list of
new markets. How should they prioritize investments in the
Asia-Pacific region? The object is to compete and win; and that
demands investing in product development and innovation and people
and market development and, fundamentally, a manufacturing and
technology hub. In short the ecosystem. [To prioritize, compete
and win are inherent to investors. It means investing in the
ecosystem (“sowing”) and thus expanding economic reach
(“reaping”). It is what “inclusive” is as opposed to paying
lip service]. Looking at 15 countries, from Australia to Vietnam,
where do we stand? We are number twelve, ahead of India, Vietnam and
Cambodia, but still in the bottom rungs. And it brings to mind why
Ford relocated to Thailand and why some Japanese companies doing
business in and rethinking China opted for Indonesia over us. And
simply, our economic profile does not sparkle compared to many of
these countries. And it is but a repeat of what we saw after 1992
(Asean integration) when we lost some MNC manufacturing to our
neighbors. Our large population base is negated by our poverty levels
and our fractional GDP per capita compared to our neighbors. And when
one factors in our infrastructure deficiencies and the absence of an
ecosystem that can support strategic industries, our economic muscle
needs to be toned.
We must fix our
problems . . . and fix them fast and faster! We got to do what we
got to do! “What you see is what you get” is the rule of
thumb for investors. Everyone knows power is a fundamental problem in
PHL. We now know that tourism will take years to develop because of
our infrastructure deficits. We are working on over 50 industry road
maps yet the seven industry winners called by the JFC (Joint Foreign
Chambers) have yet to fly, beginning with mining. [Prioritize.
Prioritize. Prioritize.] And while we're pursuing export
promotion and development we must likewise move beyond the nascent
stage of defining what innovation is. [Practice. Practice. Practice.]
Unwittingly, we are falling back on traditional exports (or our
comparative advantage like bananas, i.e., we have the soil and the
climate to grow them) but they don’t necessarily generate
high-margin revenues as in higher value-added products – which
translate to competitive advantage . . . And even “Ayala
Corp., one of the biggest conglomerates in the country, has been
generating a negative or low income from its international businesses
. . .” [Manila
Times, 2nd Nov 2012] . . . And so where will our competitive
advantage come from? Our MSMEs are low-cost industries and as Poland,
Spain, Greece and Portugal have learned, in the 21st century world,
an economy needs more than that: a
nation needs to be competitive . . . which comes from moving up the
innovation learning curve.
If the BRIC nations were
no slam dunk, will we be able to figure out why we’ve had a
“boom-bust” history? Unfortunately, it appears we’re between
a rock and a hard place: the inertia to take things for granted
[vested interest masquerading as love of country?] is powerful
and even worse is our speaking from both sides of our mouth [do
we/don’t we like foreign investments?] either because common
sense [the parable of the talents?] is in fact a rare sense or
closure is not us – “kuro-kuro” is us?
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