Monday, April 29, 2013

Misunderstanding Francis

Wikipedia says that “self-immolation has become an increasingly used protest tactic” and on TV the other day, a Bulgarian explained that they started it under Soviet rule indeed as a protest tactic – given the unfulfilled promise of socialism. And recently it happened again – this time to protest corruption.

We Filipinos may unwittingly be embracing socialism given our instincts to be pro-poor? For example, we pushed land reform because we care for the poor. But it has been a failed program considering that farmers have remained poor, beholden to middlemen providing their credit needs – which, unfortunately, many of them won’t be able to repay. And in the case of coconut, the powers-that-be became wealthier while the coconut farmers are still destitute. And so it is understandable if we want to denounce free enterprise if not altogether replace it? Indeed we must denounce our brand of free enterprise if essentially we are recreating the era of the czars with our hierarchical system and structure and thus our lopsided economy?

I have been living and working with ex-socialists for the last ten years and most of them would not want to go back to what they call their “dark ages” – despite the imperfections of the free market. The grandparents who are no longer able-bodied would, understandably, rather live in their assigned housing and get their daily rations of bread and vegetables; and even in wealthy Germany and the US, “poverty in old age” has become a reality – which is why charity-giving cannot be abandoned. But charity can’t be confused with an economic activity – the latter presupposes viability and sustainability if it is to deliver the common good – like we did with land reform, for example.

What have these ex-socialists learned? They don’t pretend to know the discipline of economics but they now believe that because they didn’t pay market prices for bread, for example, the daily ration they got was a mirage. And in the Philippines (with due respect to our bishops – if they’d look up the works of Bernard Lonergan, SJ), do we think that a Magna Carta for the poor would overturn what is fundamental in an economic activity – that of viability and sustainability? That is not what Pope Francis is saying? Having lived through the cacique culture in Latin America, he is denouncing hierarchy and the resulting lopsided economy – thus by example and very early in his papacy is sending the signal that he is not the "Imperial pope" (which once characterized the Bishop of Rome.) If in the Philippines we divided our economic output equally among the 100 million of us, we would all be poor! The problem simply is the pie is too small. Of course, we must do charity works as Christians, but that is not going to drive the economy and enlarge our economic pie. There is not enough to go around.

The way we think of being pro-poor could be short-sighted if we aren’t addressing the building blocks of the economy? In the 21st century, prosperous nations have doggedly attracted investment and pursued technology and innovation as well as the development of talent, products and markets. Ergo: we can’t remain at the level of rewarding and celebrating hierarchy and oligopoly? Nor should patriotism mean erecting barriers to keep foreigners out – especially when our economic engine is largely made up of OFW remittances because other nations have opened their borders to our workers. Unfortunately, Juan de la Cruz struggles to recognize this reality? Nations, big and small, that have open economies attract investment and technology and thus are the most able to compete and generate national wealth. It is not about the size of a country but the openness of an economy!

But it’s natural to see the faults in others instead of learning from and picking and choosing what they have done right? There is no perfect system and no matter how imperfect others are, the reality is we are the economic laggards. Others may need to shape up but we need to shape up even more? President Aquino's "daang matuwid" is in the right direction and is making foreign investors give us a new look – with PHL earning its first ever investment-grade rating from Fitch. Yet we need more than "hot money" that is meant to seek fast returns but not long-term commitment. The acid test – “our coming back to life” – will be the openness of our economy and ease of doing business manifested in the rule of law, sound regulations and world-class infrastructure? Happy Easter!

Wednesday, April 24, 2013

Freedom and the common good

Even Americans find the dynamic between freedom and the common good perplexing which is why despite Newtown the clamor for the second amendment is not about to go away. But the reality is in “civilized America,” there are rules that people instinctively follow. For example, New York, supposedly the paragon of liberalism, taught other cities that smoking is indeed injurious to one’s health – and that it is good public policy to ban it in public places. I was explaining this to restaurant owners in Sofia (Bulgaria) after a couple of them intimated that the EU rule on smoking has been bad for the restaurant business; and that perhaps the rule would be rescinded. And so I asked if they thought New Yorkers were pushovers? And they would only laugh because many of them wouldn’t – ever – want to live in the Big Apple: “they are too aggressive”. That is only if you jump the line and get ahead of them. Respect their space and their time and they behave like civilized folks. And you would see it at the Grand Central Station, for example.

How come you have wide roads and highways but you drive so slow compared to us Europeans?” The 55-mile rule was arrived at because it is the optimum speed to attain the fuel consumption ratings of cars. “But aren’t all those rules stifling? We had to suffer under strict [communist] rules for decades that today we don’t want any more rules.”

In the Philippines we’re proud of our freedom taking for granted that freedom and the common good are two sides of the same coin? We’re critical of the West for their materialism and greed yet there are simple rules meant for the common good that we ourselves take for granted? For example, why can’t government collect badly needed tax revenues? And consequently the task of governing has become even more daunting?

And the higher we are in the hierarchy – where rank indeed has its privileges – the more we can take these rules for granted? But that is exacting a heavy price on Juan de la Cruz via a culture of impunity, anarchy, underdevelopment, widespread poverty, etc.?

Democracy presupposes maturity – which is what the rule of law is about. That if there are people who cannot operate in an “honor system” there is the equalizer in the rule of law. And not surprisingly, foreign investors value the rule of law. How deep a hole are we in? In the latest Global Opportunity Index we rank near the bottom (no. 88 out of 98 countries) in the ability to attract foreign investment: “The index answers a pressing need for information that's vital to a thriving global economy. What policies can governments pursue to attract foreign direct investment (FDI), expand their economies, and accelerate job creation? What do multinational companies, other investors, and development agencies need to know before making large-scale, long-term capital commitments? The costs and conditions of doing business are central to the FDI equation. Natural resources and hardworking people have great value, of course, as do a sophisticated banking system and healthy industrial base. But countries that invest in their infrastructure, suppress corruption, and maintain sound regulations can claim important advantages.”

We may have more billionaires today but that doesn’t mean foreign investors would bet on us; in fact we are generating the exact opposite image. They don't want to touch us with a ten-foot pole – and thus we’re missing not only a big chunk of investment but also technology which drives 21st century innovation. That only means that in the foreseeable future our economic pie would remain small no matter how much pro-poor we want to be – because of the lopsided economy we’ve unwittingly perpetuated with our values of hierarchy, oligopoly and political dynasties? Unfortunately, it takes time to reinvent yet we need to start somewhere . . . somehow . . . sooner than later?  

Friday, April 19, 2013


While government walks the delicate line between the affordable and the necessary as far as energy sources are concerned, still it could look just a little farther out of the box and anticipate an energy future that is truly self-sufficient, clean, and renewable.” [Former Senator Atty. Joey D. Lina Jr., Manila Bulletin, 19th Mar 2013] This is the kind of challenge that demands more than incremental thinking – we need our version of the “Manhattan Project”?

Back in Eastern Europe after my annual extended yearend-break, my friends, unmistakably, have their eye trained on the future, more than ever. And so the excitement was palpable as we ratcheted up product development and innovation efforts – to aggressively compete especially in the developed markets of Asia and the West. They’ve finally gotten over the blinders that they could only sell consumer-packaged goods at 50 euro cents – “because we’re poor Bulgarians” – and are instead giving their creativity free-rein. And it didn't feel that I had gone on holiday since I travelled with them around Asia. [When I first came to Eastern Europe one question they kept asking is: “Does the free market have its rules?” I emphasized transparency. That competition ought to be fair and square. That those who couldn't compete under those conditions and would game the system instead would mirror the unfairness they experienced under their communist rulers. And when the Great Recession came about, they realized what that meant – that greed as in unbridled capitalism can undermine a system that is meant to be egalitarian. Thus the rule of law must indeed be inherent – and the US legislators that have been keeping the heat on Wall Street are to be applauded.]

While traveling around Asia one evening, we were taking in as much of the skyline of Singapore from the Sands SkyPark over cocktails when my Eastern European friends asked how much Singapore had changed. And a New Yorker overheard us and introduced himself: "I am a PhD student at the National University and next to me is my professor." The West has been critical of Singapore's highly centralized form of government, yet lately there has been a softening (as this young New Yorker demonstrated in opting to pursue his graduate work in this city-state) with more and more Western firms choosing to set up shop in Singapore over Hong Kong especially after the latter reverted from British to Chinese rule.

And very recently on Al Jazeera TV they featured the ongoing protest in Singapore, against the plan to increase the population by 30%, and thus immigration, being an economic imperative. And much of the objection had to do with the expected strain on the infrastructure. And so the government has been explaining that, as history would bear out, they'd always factored infrastructure development in their forward-thinking and planning process. But then again, perfection is not of this world; foreigners may be in awe of Singapore’s infrastructure but it doesn’t mean that the locals are.

The College of Cardinals elected a Jesuit in Pope Francis, and since we Pinoys appear to mirror the church – especially its hierarchical orientation – the hope is finally we would be less so? And especially after Francis shunned his Vatican-provided car for a minibus and joined the rest of the cardinals, for instance? We don't have to be banished like the Jesuits once were – just to recognize that rewarding hierarchy, oligopoly and political dynasties undermines the common good?

Of course, we need leadership and imagination too?

Tuesday, April 16, 2013

Competitiveness remains abstract

It isn’t surprising if we strongly believe that we are inherently competitive being a witness to the incessant "wars" within industries like telecoms and airlines, among others, and even banking (where micro-finance has become an advocacy because it addresses the 80% of the population that have no access to formal banking services.) The challenge though is for us to extend that competitive spirit beyond our shores – outside our comfort zone so that we develop the sense of urgency, among other imperatives, demanded by the 21st century. In the meantime Singapore and Hong Kong continue to make waves because of their ability to sustain their competitiveness. Ergo: the world is not going to wait for us. They can only magnify our economic infirmity – i.e., widespread poverty – no different from our neighbors before they became Asian tigers. If they can do it there is no reason we can’t!

We need a bigger economic engine – not make-do with what we’ve got – if we truly want to be ahead of the curve. Our broader economy remains narrow which is why we are unable to create the requisite ecosystem that is competitive and sustainable – one characterized by world-class levels of investment, technology and innovation, and talent, product and market development. To be sure, MSMEs do have a positive impact on the economy and there will be those that are scalable and thus have the potential to attain critical mass and leverage economies of scale. Yet the challenge remains: for Philippine businesses, big and small, to develop products and/or service that are world-class. And that presupposes tapping the requisite inputs from wherever – but Juan de la Cruz is yet to wrap his head around this 21st century reality? We can’t invent everything nor should we reinvent the wheel? Or even to price products to suit the “bottom of the pyramid” if doing so makes the product uncompetitive. Try Starbucks?

When we look at the players in telecoms, airlines or banking, they belong to the same dominant enterprises that make up our oligopoly. And oligopoly like OFW remittances and our more recent pursuit, gambling, can't be the platform of our economy. The evidence: we've remained markedly underdeveloped! And it is not instinctive to reconcile that a parochial and inward-looking economic model nurtures a lopsided economy especially when hierarchy, manifested in the "country-club culture", for example, recognizes exclusivity or discrimination in the first place.

The local dominance of our major enterprises would only reinforce our lopsided economy – i.e., dominant players have generally no compelling need to compete globally and invest in world-class technology and innovation as well as in product and market development. The evidence: our Third-World level of internet services, among others, and even the mediocre products we put up with but would easily dismiss when we’re overseas. That is the reality behind our poor standing in the global community – from competitiveness to governance to economic freedom. If we had a true, open economy our major players would have been honed to compete with the world's best, and their playing field would have extended beyond PHL. And that would have elevated our capability as an economy and as a nation – and we would have raised our economic output several times fold and be more than an underdeveloped economy.

Rewarding behaviors is how they become an instinct – and thus a culture. And having rewarded behaviors (e.g., influence peddling and the resulting oligopoly) that we thought were consistent with our assumptions, beliefs and values would explain why we can't seem to break the status quo? And while we are well-informed about management techniques, for instance, these competitive tools are confined within our narrow parochial boundaries – instead of being tested out in the bigger world. How can we internalize the meaning of competitiveness? As a Filipino businessman laments, “We seem to be happily stuck in our consumption economy. But what have we to show in terms of world-class products that we can market to the bigger world? And while we may attract foreign investments to our special economic zones, for example, our efforts must extend even further, to creating a broader ecosystem that will generate higher value-added products and services and thus command a wider market.” That is not a cakewalk; and to add insult to our injury our neighbors are not about to let their guards down. Singapore and Hong Kong, in particular, have been raising the bar in response to the challenges of the 21st century making certain that they keep their top-tier rankings in global competitiveness. What now . . . Juan de la Cruz?

Saturday, April 13, 2013

We have our hands full

[A] ‘shadow report’ by Social Watch Philippines called ‘The Other MDG [Millennium Development Goals] Report: Winning the Numbers, Losing the War’ warned that the problem is “much more serious than what the government is prepared to admit . . . [W]hile the government had the conditional cash transfer program to ensure that families continue sending their children to school, the manner of choosing beneficiaries does not seem clear to them. Many of the truly poor are still not reached.” [Left behind, Adelle Chua, Manila Standard Today, 15th Mar 2013]

DOTC Secretary Jun Abaya . . . suggested that the private sector is also to blame for the delays in [major infrastructure] projects . . . I got the impression that Sec. Jun is overwhelmed by the enormity of his tasks and helpless in the face of the inertia of the bureaucracy. For example, I asked him why LTFRB is unable to enforce its franchise rules and cut the number of buses on EDSA by at least half when it is so obvious there are more than needed . . . I think Sec. Jun is overwhelmed by the demands of his DOTC assignment plus his other duties as a top official of the Liberal Party. He also seems pretty much a captive of the DOTC bureaucracy.” [DOTC: Private sector also to blame, Boo Chanco, The Philippine Star, 15th Mar 2013]

To understand why . . . all you really need to do is drive around Metro Manila and you will find proof enough that Filipinos regardless of what tribe, religion, province or economic status they come from, have such a sense of entitlement . . . Some call it arrogance, some call it bad attitude, but it could also pass as being “Filipino”. I’m sure this will piss off some of you, but my intention is just that: to piss off enough people into facing the issue and at least admit to ourselves that we all share this “negative cultural gene.” [Ours is not ‘a beautiful mind’, Cito Beltran, The Philippine Star, 15th Mar 2013]

In the meantime, the world is reading: “Singapore most innovative city in Asia Pacific: study.” [Yahoo News, 11th Mar 2013] “Today, Singapore is bold, fast and successful -- and Singapore Inc will follow the same path. Singapore has no other choice; it must adapt and lead change if it is to remain relevant in the 21st century,” said Damien Duhamel, Solidiance managing partner for Asia Pacific . . . The report suggested that a favorable innovation habitat is best exemplified by the following: (1) Rich availability of educated and skillful human talent, enabled by diversity and life amenity; (2) Knowledge creation produced by the tertiary education institutes, firms, and government; (3) Proper level of city liveability and the tolerance that its society possesses towards deviant norms and failure, along with their ability to sustain culture and value; (4) Technology advancement and innovation ecosystem facilitated by the government; (5) Favorable regulatory framework set by the government to sustain the city system; (6) Global integration and the city’s orientation towards the future, indicated by a high level of the city’s connectivity and environmental sustainability.”

The Republic beat 15 other cities in the region, including second-ranked Sydney and third-ranked Melbourne . . . The study was done to prove if a city has developed an efficient innovation environment. Six main categories -- human talent, knowledge creation, technology, society, government and global integration -- were used to measure the level of innovation per city.”

Consider the above yardsticks and it wouldn’t be surprising that we are underdeveloped – and suffer from widespread poverty? We’re still about rewarding and celebrating hierarchy, oligopoly, and political dynasties – thus our lopsided economy – and clearly out-of-sync with the 21st century? And so neighbors couldn’t help but give us a scolding: “Minister Akio Isomata of the Japanese Embassy’s economic section said the Philippines “cannot afford to be complacent” amid the optimism generated by its standout growth rate of 6.6 percent in 2012 . . . Yes, it’s lagging behind. You cannot afford to be complacent in your current place. Of course, the economy is very strong now. The achievement, performance is admirable in the last two years I think. No doubt about that” . . . He cited a congested logistics infrastructure, including roads and ports, expensive and unstable power supply and the delayed release of tax refunds as major concerns among Japanese investors.” [Tarra Quismundo, Philippine Daily Inquirer, 15th Mar 2013]

Tuesday, April 9, 2013

Who cares about the environment?

A group of real estate brokers, subdivision and socialized housing developers called on the Senate to stop the passage of the proposed National Land Use Act outlining new policies on land use and development.” [Manila Standard Today, 12th Feb 2013] And writes former Senator Atty. Rene Espina, Manila Bulletin, 11th Feb 2013: “. . . based on historical records . . . many of our appointed officials who were supposed to plan out and expedite the reconstruction of a new City of Cebu and Manila [after the US Armed Forces defeated the Japanese Imperial Army in our country] by approving a new city plan became instead the leaders of the status quo [underscored]. This was true of what was then the Cebu City Planning Board. Some of its members were real estate owners. Thus when there was an attempt to build new modern roads that went through the demolished burned buildings, the city planning board would object to its implementation. Indeed we lost a golden opportunity to have roads that would be better suited to handle the traffic of the future.”

The gap of almost 70 years between these two events didn't matter. The human condition still sought to prevail. And it appears we are big fans of "the status quo”! And we are unmistakably paying the price, like it or not. We want to be the next Asian tiger? But are we prepared to unequivocally challenge the status quo, for instance? Do we know where we want to be and commit to pursue the common good? We kick and scream about the absence of "inclusive growth" yet we all feel like privileged? It is either below our rank or we are poor Juan de la Cruz and deserve compassion? To our horror we have been witness to silent anarchy but anarchy nonetheless because we have ignored the rule of law? Yet we remain proud of our faith but which is why a Jesuit friend would simply ask: "Is it "plastic"?

"It's more fun in the Philippines" was how a friend tried to liven up the predicament we were in: driving along SLEX from Alabang on our way to Greenhills to respond to a mutual friend's dinner invitation on a Friday evening, we kept driving along South Expressway as heavy traffic prevented us from making a right turn until we found ourselves closer to Santa Mesa then Broadway and from there took Ortigas. People probably don't notice it anymore, particularly property developers, but "density" is the word – and it would apply to Baguio too where we visited a couple of weeks earlier or to other metro areas elsewhere in the country. (And no wonder respiratory ailments are on the rise.) And the following Tuesday, as luck would have it, traffic on C-5 turned it into a virtual parking lot that we missed a 6 PM appointment. And driving from Bonifacio Global City one morning and again one evening towards Ayala Avenue would indeed confirm that "It's more fun in the Philippines."

As my friend would recall, it's not only us in Metro Manila that are paying the price, people in Compostela paid a heavier price. They had visited twice as a group to provide medical and other assistance to families who were still housed in temporary facilities – and in some cases had family members perished in a recent storm ("Pablo".) Their group (that included rescue teams from Malaysia) would lament that Manila seemed to have forgotten about Compostela – as they themselves experienced heavy rains, and flooding, when they were there. And then we read real estate folks are again defending the status quo, fighting land-use legislation! When will we recognize that the 21st century demands dynamism, not status quo?

In the meantime we expect to be the next Asian tiger? There is no free lunch! Yet free enterprise doesn't mean free-rein as the world witnessed how Western greed (which coincidentally went manifest in the housing-credit bubble) brought about the Great Recession. But can we declare ourselves pure especially given our disregard of the environment – while at the same time failing in our fundamental responsibility of nation-building . . . of the common good? Are we doomed? Until we realize that there is no one to pass the buck to . . . except to our children and our children’s children?

Thursday, April 4, 2013

Coming around

We hopefully are finally coming around to bite the bullet. There will always be an excuse especially when change and political will are called for. But when widespread poverty has become synonymous to PHL and, sadly, we are already being benchmarked against rogue nations, do we really have a choice? Didn't we in fact want to move the country forward many times before and the rest of the world even applauded us for 'people power'?

We are supposedly smart people – and a US legislator acknowledged that much when he reminded other legislators that if it were otherwise, we could not have produced a Rizal, and paved the way to our independence – yet we've found ourselves lost in the forest . . . because the common good wouldn't define us? How to explain our lopsided economy? Our thought leaders seem to be recognizing that OFW remittances and consumption and even gambling aren't the building blocks of a competitive and sustainable economy demanded by the 21st century? Common sense tells us that investment and technology are fundamental to a competitive and sustainable economic activity. And we don't have them in spades. So what to do? We don't like rules and so we would rather thrive in the exceptions? And so instead of firmly establishing PHL as an open economy, we opted to be a contortionist – accommodating a slew of exceptions? And not surprisingly the Philippine Constitution is one of the more complex ones when compared to those of our neighbors?

Yet the rule of law seems to desert us. And it can be a simple work rule. As one columnist said we don't even man the PAL international arrival area with enough customs officers – yet we tell visitors "It's more fun in the Philippines"! Can we say we truly have traffic rules, for example? We don't like rules, we thrive in chaos? And not surprisingly efficiency and productivity are not associated with PHL? Bureaucracy is? Corruption is? There are critical parameters that we must satisfy. Our end goal – and there is no two ways about it – is to be a developed nation. We have "to lift all boats" and not be satisfied with charity works. Charity was never meant to drive an economy. It’s again the exception, not the rule – or our instinct to compromise because of our "paki" culture? And at the very least we must be committed to the rule of law. Simply, developed or advanced nations share one thing in common and that is the rule of law.

Likewise advanced nations are characterized by investment and technology manifested in their world-class infrastructure as well as leadership in innovation and people development and thus their global market reach and influence. If we are to bite the bullet we must then recognize our limitations – and they are profound. And that means we must learn to thrive not in the exceptions but in the rules demanded of advanced nations – not rogue nations. For example, we must renounce the cacique culture and oligopoly and instead embrace an open economy in order to bring the world to us: starting with investment and technology. Like a broken record, but it's worth repeating, it is about the "parable of the talents."

We need advanced nations to be in bed with us; specifically, to commit investment and technology as we craft our energy blueprint, for instance, as well as the requisite infrastructure for an archipelago like ours. And, as importantly, to develop the supply chain of a select few strategic industries like agribusiness, e.g., coconut and fisheries, or the seven (7) strategic industries offered by the JFC (Joint Foreign Chambers). They are crucial in our industrialization efforts.

It is encouraging that our thought leaders are talking about the imperatives of focus and execution. Indeed they are critical if we are to move forward as an economy, as a nation. And Howard Schultz, the Starbucks CEO, may be an inspiration: "Our strategy was to do more of what had worked in the past. But we were not pushing ourselves to do things better or differently. We were not innovating in lasting ways . . . It was as if we were running a race but no longer knew what we were running for . . . Starbucks was on the verge of a defining test that we would fail if we did not look in the mirror, acknowledge our blemishes, and undertake transformative, even disruptive, change.” [Onward, Rodale, 2011, p.35]