Tuesday, October 1, 2013

Mission accomplished – the war or the economy?

The image of the swagger displayed by George W. Bush aboard an aircraft carrier would come back when President Aquino declared that he was in-charge of the Zamboanga armed conflict? Meanwhile President Ramos, schooled as a soldier, expressed concern about "collateral damage" – as contemporary wars have in fact taught the world. On the other hand, President Aquino must be commended for taking the leadership role when leadership is demanded. Thus, the world has applauded his "daang matuwid," as in "kung walang 'corrupt' walang mahirap." He indeed put his finger on the heart of our being economic laggards. In contrast to Ramos, Aquino was schooled as an economist. The challenge is how to push the envelope? He has talked about "the Philippines is back in business" and that oligopoly is not the way to a level playing field, and that competition elicits the best in people, in enterprises and in economies.
If the president could be away from Malacañang to personally direct an armed conflict, he could likewise personally direct our economic development efforts, including addressing oligopoly? And he could start by giving the orders to prioritize, plan and accelerate the execution of infrastructure projects, with power at the top of the priority list? Beyond saying "yayaman lang diyan si MVP" (translates to: awarding them that infrastructure project will only enrich MVP), he ought to put a stop to oligopoly? For example, by amending the "negative list" and thus create room for foreign investment and technology. Speaking from both sides of our mouth has sent the wrong signal to foreign investment for the longest time? We need clarity in our thinking and consistency in our pronouncements and actuations? It's not easy and will demand from Juan de la Cruz to embrace transparency instead of cheerleading and reinforcing subservience to our cacique masters? It wasn't easy for China either to meld communism with capitalism?
If we were able to open the doors to foreign gambling's suspicious characters, should we then pause and consider if in fact the multiplier effect of manufacturing investments especially driven by technology will be greater than gambling, because the latter has a pretty low value-addition? Gambling on Sentosa Island in Singapore came about only after industrialization was clearly in place, making Singapore a First-World economy; and so that locals would no longer take their gambling monies to neighboring countries? Translation: we seem to copy the wrong model instead of the right economic model? Yet didn’t we elect two economists in the recent past?

Moreover, the president could take charge and dialogue with the JFC (they represent foreign investments that we claim we want to attract) in order to confirm or update their 7 industry winners and, as importantly, pull out all the stops and get these industries off the drawing board sooner than later – and usher what we sorely need, a vibrant industrial base? We need “mass and weight” in investment levels if we are to attain competitive advantage in whatever set of industry winners we identify and define. We need some quick hits and wins – because we need at least a generation to approximate a developed economy, and indeed that brings despair. But we can't keep our head stuck in the sand because of crab mentality? Our mental model is in lockstep with conglomerates where a CEO could run 50 companies; but given that we're an oligopoly we've demonstrated no real concern about regional much less global competition? Unsurprisingly, we've institutionalized political patronage and kept our economy closed and restrictive to foreign investment and by extension technology? Ergo: PHL is the least competitive within ASEAN, and its people the poorest. And with due respect, social programs are not the simple answer! Remember Clinton? It’s still the economy!
How do we deal with the 50 industries that are working on their road maps? What is our understanding of “an economy that has a level playing field”? For example, these industries must demonstrate that they have the ability to compete beyond our shores. And that starts with the right products – it is not about seeking government support in organizing foreign roadshows with products that are not targeted to specific consumers or customers, because they have not been defined to match a competitive and winning product promise; and thus such products are guaranteed losers. On the other hand, the right products have (a) committed competitive levels of investment, (b) tapped into state-of-the-art technology, (c) geared to move up the value-addition chain and reinforced by the organization’s innovation culture in order to sustain competitiveness, and (d) in place is the requisite market development infrastructure.
Two expatriates said that we Pinoys: (a) avoid not only conflicts but also problems, and (b) must develop leaders. President Aquino could then demonstrate both leadership and problem-solving in one fell swoop? Or we could instead demonstrate that we are indeed all talk and no action? For example, we need big tickets items like incremental exports of over $100 billion. But we have yet to internalize the 80-20 rule; so we’ve been pushing a zillion things (i.e., our “bida culture”) without “the end in view” thus have missed the bottom line for decades, i.e., our GDP per person remains woeful!

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