Wednesday, October 16, 2013

Ease of doing business

We have been addressing that challenge for a time now. And if we “start with the end in view,” the bottom line measure of whether we are successful or not is the level of foreign investment that we are able to attract? That is the North Star. And it isn’t about a slew of activity, but which in the private sector, for example, they would call an “overarching value.” And clearly, if we are approaching or approximating what Senator Miriam Santiago called a "failed state," then we can conclude that we have failed in our efforts to raise our ratings in “ease of doing business”? As Senator Santiago explained, a failed state "is caused by rampant corruption, predatory elites who have long manipulated power, and an absence of the rule of law." [Philippine Daily Inquirer, 5th Oct 2013] In other words, we may announce to the world that we have reduced the number of steps, for instance, to set up a business in the Philippines – call it a “one-stop shop” or whatever. But if we are a failed state, foreign investors – as our pathetic levels of foreign investment would show – would ignore us.
And foreign investors don’t have to do extensive research. All they need to do is read our dailies. “Galling . . . What did they lose? President Aquino’s spokesperson Edwin Lacierda is correct to challenge 27 recalcitrant Customs collectors with that question. The collectors . . . were being transferred to the Department of Finance’s Customs Policy Research Office, which was created by Executive Order No. 140 to review tariff and customs administration policies. But apparently, such is the collectors’ fidelity to their jobs that 15 of them petitioned the Manila Regional Trial Court to issue a temporary restraining order on their transfer—and got it.” [Philippine Daily Inquirer, 9th Oct 2013]
“Many of us are led to lament how too many people working in government still seem to find great difficulty with genuine public service, honesty, consistency and even common sense. Instead we find too much of unnecessary hurdles, brazen corruption, arbitrariness and ineptness. While I do believe that “daang matuwid” is making real progress, I can’t help feeling that the road ahead remains quite long indeed.” [Cielito F. Habito
, Philippine Daily Inquirer, 7th Oct 2013]
“Do the latest credit ratings mean that things are going well? Obviously the credit-rating agencies bullish pronouncements “do not reflect the real economic situation of the Philippines,” as noted by the IBON Foundation. The Philippines ranks at no. 138 out of a total of 183 countries on the World Bank’s 2013 “Ease of Doing Business” survey, and at least 28 percent of the population are living below a very low poverty line. It brings to mind the Democratic Republic of the Congo where President Mobutu had a special airstrip constructed for the Concord to use, which he hired to take him on his shopping trips while the rest of the country starved, and where the 2012 GDP growth is forecast at 7.1 percent! The Congo is at position no. 181 on the Ease of Doing Business ranking. I am not seeking to compare the Philippines with the Democratic Republic of the Congo but am trying to make the point that GDP growth forecasts are not only to some degree adjustable depending on how you work them out, but are also not immutable indicators of economic development. They give some broad sort of directional idea but that is all.” [Mike Wootton, The Manila Times, 8th Oct 2013]
“Despite recent fame, growth remains heavily dependent on consumption and investment linked-to-consumption, while being predominantly in the services sector,” BPI’s lead economist Emilio Neri Jr. said. According to Neri, the Philippines is still behind even regional laggard Indonesia in terms of cementing reforms that are needed to sustain the country’s economic pace. The Philippines has seen robust growth on the back of consumption, but gross domestic capital formation is still one of the lowest in the region, and is one-dimensional as it remains largely in the usual suspects of real estate and malls.” [Philippine Daily Inquirer, 9th Oct 2013]
Why aren’t we attracting foreign direct investments like our neighbors are? Juan de la Cruz has the answer or is the reason?

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