Saturday, September 21, 2013

India hugs front pages for wrong reasons

Does it matter to us in the Philippines? Disclosure: We look at the profile of over 40 countries on an ongoing basis for the benefit of my Eastern European friends (with my old MNC company we looked at over a hundred) as well as the transcripts of “earnings call” of leading global companies in the same industry to benchmark our performance – while constantly focusing on the “vital few” consistent with Pareto’s 80-20 rule – the key being to test one set of data points against the other. Which is not inherent to us Pinoys because we like to look at the glass as half-full – mistaking fatalism for faith?
“THE PHILIPPINES has risen further in an annual competitiveness list, benefiting from continued reforms that have allowed it to record four consecutive years of ranking gains. The WEF, however, noted that the improvements were “coming from such a low base that the country cannot afford to be complacent . . . While transport infrastructure has improved, it “remains in a dire state (84th), especially with respect to airport (113th) and seaport facilities (116th)”
“Similarly, the labor market has become more flexible and efficient over the years, but the Philippines still ranks a low 100th . . . Guillermo M. Luz, National Competitiveness Council (NCC) co-chairman, welcomed the ranking improvement but agreed that more needed to be done. “As our economy becomes more knowledge-based, all parts of the economy such as agriculture will soon become knowledge-based. If we don’t invest now, we will be left behind,” he said. “Inadequate supply of infrastructure, corruption, and inefficient government bureaucracy were listed as the top three most problematic factors for doing business.”  [Competitiveness up for a fourth year, Business World, 4th Sept 2013]
Reports The New York Times, 4th Sept 2013, Falling Economic Tide in India Is Exposing Its Chronic Troubles, by Keith Bradsher: “India had seemed tantalizingly close to embarking on the same dash for economic growth that has lifted hundreds of millions of people out of poverty in China and across East Asia. Its economy now stands in disarray, with the prospect of worse to come in the next few months . . . The economic decline has laid bare chronic problems, little remarked upon during the recent boom. An antiquated infrastructure, a sclerotic job market, exorbitant real estate costs and bloated state-owned enterprises never allowed manufacturing, especially manufacturing for export, to grow strong . . . The root of the problem is India’s failure to create a vibrant industrial base with the strength to export. As Western buyers scour Asia for alternatives to increasingly expensive Chinese factories, India and its enfeebled manufacturing sector are mostly ignored.”
Unfortunately in PHL, there is no clarity on the imperatives of free enterprise, and what competition is. And that translates to our continued inability to create a vibrant industrial base – from our inability to recognize what's implicit in oligopoly and influence peddling to how it undermines transparency and nurtures corruption to why we rank among the most corrupt to how the dots connect to social injustice and immorality as in the wealthiest 50 Filipinos owning over 25% of GDP? In short, a cacique system and structure similar to what the then cardinal, now pope, Francis saw in Latin America and why he entertained Liberation Theology, minus the Marxist bent? Or what Rizal saw, and that is, the “Filipino culture was backward, anti-progressive, anti-intellectual, and not conducive to the “Age of Enlightenment” – which he then refined in Padre Damaso [Wikipedia]? And today they are reinforced by the restrictive economic provisions of the Constitution?
And it explains why a local enterprise with the benefit of oligopoly could get into the infrastructure business or any business for that matter, absent the core competency. Translation: they can't become a competitive player in the region, much less globally, because they bring no competitive advantage – and not surprisingly, Myanmar rejected PLDT at the get-go. And it is the absence of competitive enterprises [e.g., don't we complain about poor Internet service and dropped calls?] that characterizes underdeveloped nations, and where endemic poverty comes from. [And which was why the European Business Awards honored my Eastern European friends, neophytes in free enterprise yet beating their Western competition – and were models at home, because they weren't weaklings.]
Why haven't we addressed something as basic as power? First we need the technology and the financial muscle to carry that out. Yet we've embraced the "quilt-making" business, meaning the Big Boys, and their foreign partners limited by law in their participation, are behind our energy program which by definition could only be Third-World? We're still blind to the Asian tigers that opened their economies to become simply that, tigers – because in the 21st century we still proudly wear our parochial blinders? There is the India model that sooner than later we would be replicating, if we haven’t yet?

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