Friday, March 28, 2014

Self-inflicted wounds?

We absolutely don’t want a repeat in a bigger playing field – that of Asean? “When most of East Asia emerged from colonial rule after World War II, the Philippines was considered one of the new countries with the greatest potential for development. Sadly, things didn’t turn out that way. As much of the rest of East Asia zoomed ahead on its economic miracle, the Philippines got left behind . . . Now, though, the Philippines has become one of the region’s best performers . . . There are, of course, risks that . . . countries [like PHL] will falter, if politics or corruption gets in the way.” [Forget the BRICs; Meet the PINEs,Michael Schuman, Time Magazine, 13th Mar 2014]

It is all about economic development. And the bigger playing field only makes it more challenging? If we couldn’t hack it in our own backyard, how do we do it beyond? What did we do wrong? To be sure, we have our strengths but when every other Filipino is hungry it is simply because ours is an underdeveloped economy? Development presupposes maturity and being able to ask ourselves what we did wrong will stand us in better stead. But shouldn't we look at the positives – and they would go something like: (a) our OFW remittances continue to be strong; (b) our BPO revenue growth rate is explosive; (c) we have 10 billionaires amongst the world’s richest; (d) we are the only Catholic nation in this part of the world; (e) we just dominated the world’s beauty contests . . . and we can all add to the list that makes us look “pogi?”

“It’s late now . . . the country’s high power cost, high minimum wages, outdated machinery and equipment, and the number of holidays are hampering the industry’s competitiveness . . . We are not prepared [for integration]. We have to be up-to-date in our machines . . . Data from the World Trade Organization said Indonesia is the largest garments exporter at $4.5 billion, followed by Vietnam ($4.1 billion), Thailand ($3.5 billion), and Malaysia ($1.8 billion). The Philippines, on the other hand, was lagging at $170 million.” [Garments roadmap in the work, Daryll Edisonn D. Saclag, Business World, 17th Mar 2014]

“The domestic furniture industry is at a crossroads as far as the Asean 2015 economic integration is concerned . . . We have lots of disadvantages . . . Furniture import is at zero tariff already, but when the integration happens more products will enter the market and that will drive down prices . . . [T]he industry is beset with serious disadvantages. One major issue is the total log ban in the country, which deprived furniture manufacturers access to quality wood at affordable prices.” [Furniture industry at a crossroads, Bernie Magkilat, Manila Bulletin16th Mar 2014]

“The three most visible ASEAN banks are Maybank of Malaysia, Bangkok Bank and DBS Singapore . . . [T]he country’s top three banks BDO Unibank, Metrobank and Bank of the Philippine Islands combined have capital worth $80 billion, the size of Bangkok Bank alone. Maybank’s capital is $162 billion and DBS has $317 billion, more than the Philippines’ entire banking capital of $220 billion . . . While the Philippines has done a lot in financial sector liberalization, the other ASEAN economies have opened up more. For example, Indonesia allows 99 percent foreign equity participation although foreign bank branches are limited to just 11. Both Singapore and Malaysia have no limits to foreign equity . . .” [PH’s financial integration and commitments, Lee C. Chipongian, Manila Bulletin, 16th Mar 2014]

“IN ITS penultimate stage, the P-Noy administration has to pass numerous legislative bills that the President and his Cabinet have endorsed . . . Also in the context of continuity, it is in the interest of the current administration to institutionalize matuwid na daan (the straight path) through the legislation of open data and freedom of information . . . Another binding constraint, which is now felt, is the inadequate power supply.” [Protecting electricity consumers, Filomeno S. Sta. Ana III, Yellow Pad, Business World, 16th Mar 2014]

“For his part, BPI Economist Nicholas Antonio Mapa said that infrastructure and manufacturing in different parts of the country are needed as the services sector can only employ as many call center agents and salespersons while the scope for job creation in manufacturing and agriculture is so much more potent . . . Thus, we exhort the government to institute investments in true cost-saving infrastructure and investment projects that will enhance these sectors of the economy . . .” [HSBC cuts PH growth forecast on poor infrastructure, Kristyn Nika M. Lazo, The Manila Times, 12th Mar 2014]

“Imagine what impact $33 billion in FDIs will have on the Philippine economy. That will definitely lead to the creation of hundreds of thousands, or even millions, of jobs. And with the creation of jobs comes higher tax payments.” [The Thais must be very intelligent, The Manila Times, 16th Mar 2014]

What then should the national conversation be about? “PNoy: No ‘ampaw’ should succeed me.” [Manila Standard Today, Joyce Pangco Pañares, Rio N. Araja and Maricel V. Cruz, 14th Mar 2014] PRESIDENT Benigno Aquino III on Thursday said his successor should not be an “ampaw” politician who is only full of hot air . . . Do you know the food called ampaw? It tastes good but it is only filled with air . . .”

Should “ampaw” then be the national conversation?

“There was so much to be plundered . . . that solid institutions . . . and the rule of law seemed a waste of time.” That's Roger Cohen of The New York Times writing about Argentina, “Cry for me, Argentina,” 27th Feb 2014.” Isn't Ps 10-B [or is the true picture much worse?] not much to plunder via PHL's pork barrel system, yet for decades we've had “an energy crisis”? What about basic infrastructure and strategic and competitive industries? Ergo: poverty haunts us despite GDP growth rates over the recent past that were second only to China amongst our neighbors – and we are in shock? Try ampaw?

Erecting a structure (whether a house or a building or an enterprise or an economy or a nation) as architects and builders have shown demands a solid foundation or the requisite building blocks – as in concrete terms – especially when we are an underdeveloped economy with so much unpredictable elements. For example, without energy and basic infrastructure like roads and airports, and strategic and competitive industries that like dynamos ignite economic activity – that are then pulled together and rendered into a perspective like that of a dream house as an architect does it – how do we expect Juan de la Cruz to relate to that structure? All he knows is that for decades he has remained poor and impoverished. It smacks of the lack if not the absence of leadership – but not the ones eyeing the presidency?

Have we ever wondered that we couldn't prioritize – be unanimous and put a couple of building blocks to bed yet we all have our favorite initiatives – reflective of crab mentality, i.e., we go to court for our energy and airport woes? In the West they call it spinning wheels – a lot of bravado yet everything stays in place. In PHL we call it “ampaw” – and the reality is we're a failed state?

And so beyond Napoles – and the ever widening pork-barrel scam – how much have we recovered from the Marcos loot, we made an ex-president that was charged with plunder mayor of one of Asia's once premier cities while another ex-president is in hospital arrest for being like her predecessors? What's happening to the country, sighed the late Vice President Emmanuel Pelaez? “Argentina is a child among nations that never grew up. Responsibility is not its thing. Why should it be? There was so much to be plundered.” [Ibid.]

100 million Pinoys shouldn't be surprised – by ampaw or by poverty? Yet we appeared stunned when our playing field has always been skewed to perpetuate a cacique culture – with a little help from media? [Even the RAM boys knew how media was a platform to winning the psych war versus the Marcos regime – i.e., the heart and mind of Juan de la Cruz – and so the fight for the government TV channel was paramount.] And, not surprisingly, oligopoly and political dynasties – with political patronage being the common denominator – have lorded it over Juan de la Cruz? So what else is new? Ours are self-inflicted wounds? And when we elect the next set of leaders we’d be deeper down the abyss?

Sunday, March 23, 2014

The object of the exercise

What does Juan de la Cruz wish for PHL? Do we want to rise as a nation? “According to a US college textbook, World Civilizations, the rise of nations in Europe in the 19th century arose from a complex combination of the forces of liberalism, nationalism and nation-building.” [Why not nationalism (?), Manuel AlmarioPhilippine Daily Inquirer15th Mar 2014]According to the Concise Encyclopedia, ‘Nationalism is loyalty and devotion to one’s nation or country, especially as above loyalty to other groups or to individual interests.’ Thus, a nationalist identifies fully with his country, placing its interests above that of his class, community, region, clan, family and self.”

If indeed we want to rise as a nation, can we put nation above self? “To test the claim that rent-seekers are on the rampage, we have created a crony-capitalist index.” [Planet Plutocrat, The Economist, 15th Mar 2014] “Countries that do well on the crony index generally have better bureaucracies and institutions . . . [M]ost countries in South-East Asia, including Indonesia, Thailand and the Philippines, saw their scores get worse between 2007 and 2014, as tycoons active in real estate and natural resources got richer.”

The good news is our neighbors are not angels; the bad news is we’re the regional laggards? “Banking giant HSBC revised downward its economic growth forecast for the Philippines over the next two years, citing the country’s poor infrastructure which it described as worse than Sri Lanka . . . Based on HSBC Philippines’ Asia Infrastructure Measure (AIM) data for 2013, the Philippines “ranked the last” in quality infrastructure out of the 11 economies it observed in Asia.” [Kristyn Nika M. Lazo, The Manila Times, 12th Mar 2014]

No one said nation-building is easy. We want success without the struggle, we want fulfilment without hard work. Think of certain people who want to make a fast buck . . . Some get by in work by simply coasting along, afflicted with AIDS. No, this is not the sexually transmitted sickness but an acronym for “As If Doing Something”. . . The TRANSFIGURATION of Christcommemorated . . . second Sunday of Lent brings home the lesson that we cannot achieve success unless we work and work hard.” [Transfiguration: No cross, no crown, Fr. Bel R. San Luis, SVD, Manila Bulletin, 14th Mar 2014]

This blog has talked about problem-solving not only because nation-building is indeed complex but it is also an influence from my old MNC company – where at the headquarters people saw problem-solving as adrenaline-pumping – and which I’ve brought to my Eastern European friends: “the best laid plans of mice and men often go awry.” For example, “[J]oint problem-solving revolves around interests, instead of positions, you begin by identifying those interests—concerns, needs, fears and desires that underlie and motivate opposing positions. You then explore different options for meeting those interests . . .” [Try joint problem-solving, Cecilio T. ArilloDatabaseBusiness Mirror14th Mar 2014]

“Joint problem-solving can generate better results for both sides, saves time and energy by avoiding brinkmanship and posturing, and usually leads to harmonious working relationships and to mutual benefits in the future . . . Effective negotiation requires breaking through each of these six barriers . . . your reaction, their emotion, their position, their dissatisfaction and their power, their ideology.”

In an old posting I talked about how we laid out the offices with my Eastern European friends. Every business unit has R&D and marketing; but these two functions are literally bunched together. [And so I’d smile when I read about how PHL government bureaucracy has remained bureaucratic in this day and age of virtual reality.] And beyond these physical arrangements – and it’s an open office environment so all one has to do is call the attention of people within hearing distance to get them plugged in, aside from the small meeting rooms strewn all over the place – the whole planning and execution process is inherently interactive so that the left hand knows what the right hand is doing. It is also about transparency, teamwork, the pursuit of excellence and competitiveness, among others.

A 2010 study by the People Management Association of the Philippines (PMAP) said that 4 out of 10 fresh graduates and young jobseekers were not hired because they lacked “soft” competencies — critical thinking, initiative, and effective communication skills.  Though many applicants were book smart, they appeared ill-prepared for the challenges of the workplace.” [The educated unemployed, Senator Edgardo J. Angara, Manila Bulletin, 15th Mar 2014]

I witnessed how the West had to grapple and bridge the gap between education and industry; and was part of the efforts at my old MNC company. And by extension my Eastern European friends have also espoused the efforts; and it translates to simplifying the planning and execution process, for instance. It demands lots of problem-solving and lots of classroom work – without the ivory tower. And the object of the exercise is crystal clear to everyone – and that is why they signed up to be part of the enterprise. It is the enterprise above self. And people know what’s in it for them.

“Senator Sergio Osmeña III has finally confirmed what myriad of Filipinos—and even foreigners—have known over the past three years (2011-2013): the lack or absence of competence of Benigno S. Aquino 3rd as President of the Republic of the Philippines . . . What made the disclosure very credible is Senator Osmeña’s being a “key political ally” and a campaign strategist of President B. S Aquino III in the 2010 presidential elections.” [Price of PNoy’s Incompetence, Rick B. Ramos, Insights, The Manila Times, 14th Mar 2014]

That’s not at all surprising. Not even the US could claim competence in its presidents – and why building institutions is imperative, not destroying them like we do via political patronage. And if even in the West where they invented education they have an education problem, what more of PHL? But Juan de la Cruz cannot simplify problem-solving? For example, when we say “nationalism” we mean parochialism which in reality is an ideology? And as the above columnist wrote about joint problem-solving, ideology is a barrier – and why we can’t fix most things?

There are two other elements aside from nationalism quoted above: liberalism and nation-building. “According to a US college textbook, World Civilizations, the rise of nations in Europe in the 19th century arose from a complex combination of the forces of liberalism, nationalism and nation-building.” “Classical liberalism is a philosophy committed to the ideal of limited government and liberty of individuals including freedom of religionspeechpressassembly, and free markets.”[] In PHL because government has been utterly incompetent in providing the basics – as in the rule of law, infrastructure, etc. – we expect it to compensate by expanding its role in industry, for example? Or is this a carryover of our success stories behind oligopoly, i.e., that success comes from political patronage?

“We define ‘nation building’ as a process which leads to the formation of countries in which the citizens feel a sufficient amount of commonality of interests, goals and preferences so that they do not wish to separate from each other.” [] The operative word is sufficient, not absolute, commonality? For example, we can’t define nationalism as parochialism – which wittingly or unwittingly has perpetuated our hierarchical, cacique culture . . . and underdevelopment and poverty? “[O]ne thing that is holding us back is our island mentality – that we think we need to conquer our own island . . . [F]or businesses to be successful, companies must stop being nationalistic to a fault. Don't focus so much on the Philippines. Focus on making products for the world. You don't have to be huge to be global. Have a global mindset regardless of what you do . . .” [Why the Filipino can take the global center stage, Irene Fernando, Manila Bulletin, 16th Mar 2014]

Even if we go by our faith, Christ demonstrated a bias for the “foreign” – the sinners, the non-believers and those from other lands, real foreigners. And thus the parable of the talents was not surprising – it is expected of a “big mind”? And the history of man is one of interdependence. Despite man’s continuing folly – or more precisely, by rogue nations – he has learned to respect territories and the imperative to co-exist, like the barter facility. And as he learns more about his environment, he is confronted with the realization that pollution cannot be contained within territorial boundaries; and so the Indonesians, for example, must recognize the negative impact of local forest practices to the environment and their neighbors.

There is more to globalization than trade. Importantly, it facilitates the sharing and acquisition of knowledge; and it starts with young school kids – right in their classrooms, if not their homes.

What is the object of the exercise? What does Juan de la Cruz wish for PHL? Do we want to rise as a nation?

Wednesday, March 19, 2014

“The conversion of the church . . .”

If PHL is to ever succeed in reforming itself, where should we be looking first? Given that the church is a significant part of our culture, shouldn’t we be looking at the church and its influence on who we are? For example: “In repeated broadsides at the culture of clericalism, Francis tells his fellow hierarchs that they are not to think of themselves as “a royal court” . . . That was just one in a series of blasts he issued in the days leading up to his first-year anniversary on March 13, reflecting an insistent theme of his young pontificate: Bishops are to lead by serving, not dominating. The centralized Curia, too, must not be “an inspector and inquisitor that no longer allows the action of the Holy Spirit and the development of the people of God.” [Pope Francis' Reforms For The Catholic Church May Be Bigger Than Anyone Dreamed, David Gibson, Religion News Service, 8th Mar 2014]

“Hierarchical “careerism” is “a form of cancer,” Francis has said, comparing bishops who strut about in church finery to “peacocks”. . . “Little monsters,” he calls such clerics . . . “I am a sinner”. . . “This is the most accurate definition. It is not a figure of speech, a literary genre. I am a sinner.” And in his landmark exhortation . . . he harped on the need for the conversion of the church: “Since I am called to put into practice what I ask of others, I too must think about a conversion of the papacy.”

Before Francis there was Rizal: Padre Dámaso is one of the notorious characters in the novel Noli Me Tangere. The novel was written by José Rizal, one of the leaders of the Propaganda Movement in the Philippines. Noli Me Tangere (Touch Me Not or "Social Cancer") . . . exposed the abuses of the Spanish friars (belonging to the Roman Catholic Church) and the Spanish elite in colonial Philippines during the 19th century . . . The novel . . . represented the state of Philippine society under Spanish colonial rule. It was intended as a liberal-nationalist wake-up call for the people of the Philippines.”[Wikipedia]

Haven’t we been proudly proclaiming that we’re the only Catholic nation in this part of the world? What do we really mean . . . that we don’t need conversion, for example? “[I]n his landmark exhortation . . . he [Francis] harped on the need for the conversion of the church: “Since I am called to put into practice what I ask of others, I too must think about a conversion of the papacy.”

Like it or not, our reality has been characterized by a culture of dependence on the one hand and condescension on the other? “The culture of dependence first has to be confronted and diminished. To start with, there should be a change in the attitude of politicians, epitomized by [Budget Secretary] Butch Abad’s condescending statement about patronage being inevitable. The masses should not be treated like parasites whose existence depends on the dole-outs of politicians.” [Political patronage, Greg B. Macabenta, Ad Lib, Business World, 11th Mar 2014] “Note that “poverty” is what Abad heaps the blame on for the prevalence of political patronage. What he conveniently failed to acknowledge is that political patronage perpetuates poverty. It’s not even a chicken-and-egg situation, where you can’t tell which came first. Rather, it’s a process of making a bad thing -- like poverty -- even worse through patronage, until the latter becomes the dominant factor in the lives of a populace. Until the people become totally dependent on patronage. Until patronage becomes the means for manipulating, controlling and corrupting them.”

“Unfortunately, through the years, we have repeatedly bowed to self-interest groups when new programs are introduced to move our country forward. Whenever departure from the status quo comes up, self-interest groups stand in the way of progress. And with hired glib tongues and strong political connections, they have been able to keep the status quo; they have retarded and stunted national progress and our economic growth... Enough is enough!”[Hostaged by spoiled brats, Romeo G. David, Map Insights, Business World, 10th Mar 2014]

How do we confront the dichotomy of dependence and condescension? For example: Growing up . . . her [Chelsea Clinton’s] parents would . . . routinely challenge her to debate them on issues . . . “It taught me early on, particularly as a girl and a young woman, not only was it OK to have an opinion and point of view, but I was expected to have an opinion and point of view.” [Chelsea Clinton challenges tech crowd to help others, Rick Jervis, USA TODAY, 11th Mar 2014]

If the church needs conversion, what about PHL?

I’ve spent more than 25 years as a professional outside the Philippines – where I logged 20 years – and if I have a bias, it is because I have internalized what an egalitarian society is about. And so I could relate to the worldview of an expatriate in the Philippines. Wrote Mike Wootton, The missing piece in the Philippine economy, Views from a Brit, The Manila Times, 11th Mar 2014: “I do not think that investment incentives alone are the means of stimulating long-term industrialized development. Incentives are a bonus, it’s the business environment that is critical and the business environment in the Philippines is significantly less sophisticated than the advanced gizmos that you can buy would indicate. Technical and commercial competence, knowledge and skill are grossly undervalued in the Philippines, purely because money is such a powerful facilitator and for as long as the structure of the Philippine economy remains so enamored with money, then long-term job and export creating investment will just not happen. The oligarchs need to raise their game and government such as it is needs to recognize and properly value and prioritize knowledge and skill above those so coarse and basic “big bags of money.”

Could Francis inspire us to seek conversion? “In his first year in Rome, Pope Francis' comments on everything from gays to atheists have gotten most of the attention, but his aggressive efforts to reform the Vatican's scandal-scarred financial apparatus show he's not all talk. What has happened is nothing short of an earthquake in the internal governance of the Holy See . . . The biggest structural change to the Roman Curia in nearly half a century. Francis has gone full-speed ahead and Vatican finances are going to get cleaned up.” [Not Just Talk: Pope Francis Cleans Up Finances in First Year, Tracy, 13th Mar 2014]

“From a secretive bank accused of money-laundering to corrupt purchasing contracts, the Vatican's business operations have been a source of intrigue and embarrassment for a church with 1.2 billion members worldwide. For a short time, regulators stopped the Vatican from accepting credit or debit cards . . . There was also the Vatileaks scandal with new allegations of financial skullduggery and cronyism. One example: The Vatican paid $741,000 for a nativity scene in St. Peter's Square, twice the going-rate, according to a leaked document. This man [Francis], who comes from — as he put it — the ends of the earth and had no intention of doing this job, he is a freer man to deal with this. The fact that this is likely going to be a short pontificate means he doesn't have to think about the long game. He can get it done now.”

“Francis has certainly not wasted any time in demonstrating that when it comes to the Vatican's money, he means business. In June, he named a trusted aide to supervise the bank and weeks later axed its director and his deputy. In January, he ditched four of the five cardinals tasked with overseeing the bank, including Benedict's secretary of state, Cardinal Tarcisio Bertone.”

“The pope is the only stockholder for the bank, and he fired the board of directors . . . When you take those away from the people who had it before and give it to an entirely new body run by an outsider known to be a no-nonsense guy, you have created — at least in Vatican terms — a real earthquake. These people are supposed to be holy, and they're stealing! If you want people to put money in the basket, you want to make sure they know their money is used efficiently and well and for good purposes.”

Friday, March 14, 2014

Does PHL need a Francis?

“[A]s important as such structural and policy moves can be, church leaders and Vatican insiders say the 77-year-old Francis is really focused on a more ambitious (and perhaps more difficult) goal: overhauling and upending the institutional culture of Catholicism.” [Pope Francis' Reforms For The Catholic Church May Be Bigger Than Anyone Dreamed, David Gibson, Religion News Service, 8th Mar 2014] “Francis, they say, is bent on converting the church, as it were, so that the faith is positioned to flourish in the future no matter who follows him to the throne of St. Peter.”

We Pinoys ought to be proud of our culture but what about our hierarchical, cacique culture? What about the backwardness that Rizal saw over a hundred years ago? What about the culture of impunity? Wrote Atty. Romeo PefiancoReform laws on deaf ears, Manila Bulletin10th Mar 2014: The five acts enacted against corruption have not provided a mechanism to enforce them in a manner that people can call fast and efficient.  Only Erap was convicted of plunder some six years after the case was filed, but was promptly pardoned to run for president in 2010 and was elected mayor of the nation’s capital in 2013 . . . Without new judges, prosecutors, and court personnel, reform legislation cannot be enforced fast – like sending crooks to jail in five years or less from filing of complaints.  Permanent reforms should be enforced within the fastest time frame to convince dirty little crooks in government that WE mean business now and here.”

In short, do we need a Francis to upend the institutional culture of PHL? How many Pinoys believe that hierarchy – reflected in political patronage and political dynasties and oligopoly – is so embedded in the culture that it is cast in stone? Cardinal Tagle has called the faithful to change our culture and that is consistent with what Francis apparently is pursuing? “[W]oe to those churchmen who have been used to life at the top, and enjoy the view a bit too much.”

“Some in the Roman Curia” — the Vatican bureaucracy — “say, well, this pope is old so let’s wait a bit, and things will return to the way they were,” said the Rev. Humberto Miguel Yanez, a fellow Argentine Jesuit, who heads the moral theology department at the Gregorian University in Rome. “If this is the attitude, then his words and his reforms don’t mean anything. I think conversion is the most important thing, and that explains why Francis speaks every day, why he preaches every day.” [ibid.]

Bureaucracy. Bureaucracy. Bureaucracy. From Cielito F. Habito [Director-General of the National Economic and Development Authority and Socio-Economic Planning Secretary during the Ramos administration] in Paradigm shifts in agriculture, No Free Lunch, Philippine Daily Inquirer11th Mar 2014: The needed shift in focus from the production system alone to the entire value chain won’t happen for as long as the rest of that chain outside of the farm is considered the domain of the Department of Trade and Industry (DTI). Such turf compartmentalization will not work in a government not known for strong inter-agency coordination.” Didn’t the administration organize the “economic cluster” within the cabinet precisely to put economic development front and center of their agenda? To overcome bureaucracy, the private sector knows one response: leadership! Or simply, a Francis?

“The DTI is largely involved in the industrial strategy, but the Department of Foreign Affairs should also be included to take care of government treaties that may be affected in the auto roadmap. The DOF is also necessary to address tax incentive issues.” [Auto roadmap should encourage local assembly – Nissan,Bernie Magkilat, Manila Bulletin9th Mar 2014] “Toshiyuki Shiga [the second highest ranking official in Nissan Motor Co. Ltd.] who spearheads Nissan’s overall ASEAN operation, was alarmed that the share of imported CBU packs now dominates the domestic market with 60 percent share while the share of locally assembled cars is going down to 40 percent.”

“The Philippine situation runs counter to the trend in the region where locally assembled cars are at a high of 90 percent than imported CBUs. Indonesia and Thailand alone, their share of imported CBU packs is less than 10 percent of the market. Locally-assembled cars also account for 87 percent of the Malaysian car market . . . Shiga further noted the highly underutilized production capacity of the domestic industry. At present, the industry has a total production capacity of 200,000 units, but there are only 70,000 to 80,000 cars being produced by local assemblers.”

Did we say that we are crafting the road maps of 30 industries, including auto? And agribusiness too? But road maps don’t magically turn an industry into a competitive industry. And that is why inherent in the pursuit of major undertakings is to prioritize and focus. And in a market economy that means: (a) there is a market locally and/or overseas; (b) that the industry has defined a portfolio of products that is and will be competitive and deliver perceptible value; (c) that the industry has an appreciable impact on PHL economic output or GDP; (d) that it can tap and create the requisite supply chain – and linkages – to sustain the enterprise. In other words, a market economy is not defined by either local or overseas market per se but by competitiveness and the ability to win in a broad marketplace like ASEAN, if not beyond. The key being to generate the optimum returns in order to create a virtuous circle. Think of MNCs whose market values are a multiple of their revenues.

And, as importantly, the enterprise has the ability to fix things or solve problems. For example, it appears that PHL aviation doesn’t meet the yardstick: “In the process of desperately trying to apply wishful thinking to make a seven-year embarrassment go away and see Philippine air carriers welcome to expand their business in the US again, [Civil Aviation Authority of the Philippines (CAAP) Deputy Director General] John Andrews has—apparently—misled his staff and management colleagues and impugned the integrity of the Federal Aviation Administration.” [CAAP completely loses its grip on reality, Ben D. Kritz, The Manila Times, 10th Mar 2014]

“While the purchase of new rescue equipment—while a little on the expensive side—is probably useful, it does nothing more than highlight the painful problem with the CAAP’s approach to the nagging FAA downgrade issue: Rather than do the hard work to address the shortcomings auditors have repeatedly and in excruciating detail explained to the CAAP, the agency stubbornly persists in trying to change everyone’s mind with window-dressing and boastful remarks. It hasn’t worked yet, and certainly won’t work now that Andrews may very well have destroyed much of the goodwill of not only the agencies he needs to impress, but his own people as well.”

Between the culture of impunity and bureaucracy, if not incompetence, what we truly need is a Francis? Otherwise, good governance and economic development shall be just a myth – and poverty the reality – to Juan de la Cruz?

“The Oxford Business Group (OBG) expects the economy to sustain its robust growth of 6.5 to 7 percent this year. They consider the Philippines a success story on the back of government’s emphasis on transparency, good governance and increased competitiveness of local industries. They note how President Aquino’s push for a more open, fair and just economy has gained widespread buy-in among civil servants and the general public. This has been the foundation of the country’s success, they assert.” [The Oxford Business Group’s forecast for PH, Andrew James MasiganManila Bulletin, 9th Mar 2014]

“But of course, if there is a yin, there is a yang. Amid OBG’s positive prognosis, they also identified the economy’s weaknesses and the factors that could impede growth . . . These warts are the reason why we are one of the last choices of foreign investors in the region. An estimated $120 billion of FDIs flowed into ASEAN last year and the Philippines’ share of the pie was barely four percent. [Does Juan de la Cruz recognize the import of that?] The OBG’s Philippine Report provides an accurate snapshot of the business conditions in the country.” But will PHL ever have a Francis?

Wednesday, March 12, 2014

Nice guys finish last . . .

And softies are even worst? “The difference lies in the culture of the Filipino people. It is a soft, forgiving culture.” That’s a quote from Lee Kuan Yew courtesy of Ramon J. Farolan (Lee Kuan Yew on Philippines, Philippine Daily Inquirer, 26th Sept 2011.)

There are two recent articles that should wake us up: (a) Senate Offshore Tax Cheating Report Skewers Credit Suisse And U.S. Justice Department, Janet Novack, Forbes, 26th Feb 2014; (b) Why Russia No Longer Fears the West, Ben Judah,, 2nd Mar 2014. In other words, when a competitor sees blood, it attacks – not celebrate prematurely? What is our worldview in light of global trade, and nearer home ASEAN integration – where three of our neighbors dominate regional trade?

“We’re poor Bulgarians; we can only sell our products at 50 euro cents.” That was one reason while my original role was that of consultant, I agreed at the request of my friends to run the sales force for two years, but only: “this is your company, you don’t want me running it for you.” These were very smart people and yet realized they still had to earn their stripes in global competition. And in Singapore recently, so that our new Singaporean team would indeed sing from the same hymnal, we explained how we built the company: We keep it simple; we are about creating value. Don’t get the mistaken notion that because we’re from a poor Eastern European country that we’re driven by costs. Indeed we’re thrifty that we like natural lighting so we don’t have to turn on the lights. And the Singaporeans had to giggle; but they could relate to it since many new buildings in Singapore are green.

Creating value starts in the mind. And it is how innovation comes about. And why this blog talks about thinking and thought processes. With ASEAN integration, we Pinoys have to be more mindful and conscious of our assumptions and biases, especially our thought processes? Like it or not, we are being thrown into the den of wolves. Nice guys finish last!

We may want to relish our GDP growth rates over the recent past being next only to China – that is, if we have the time amid a horde of wolves? Wittingly or unwittingly, our biases (or is it our proud culture?) make us respect sacred cows like oligarchy – which in the West is the equivalent of the 1% that has undermined democracy? And in our case, it has made us dirt poor and the region’s economic laggards? Self-respect should make us tougher – not subservient?

“De Ocampo fears for PHL becoming a regional laggard . . . He [the former Finance Secretary and Philippine Veterans Bank Chairman] has apprehensions the Philippines will become a “saling pusa” or a country that tried, but failed, to be one with the countries that merged harmoniously with its neighbors as intended under the regional integration plan set to begin in 2015,” Genivi Factao, Business Mirror, 7th Mar 2014. “The sad thing is that regardless of our level of preparedness (or the dismal lack of it), there really is no turning back now. The Asean integration has been on the table for quite some time now and countries such as Singapore, Malaysia, Indonesia and Thailand have already prepared long and hard for it. They are ready. And true to form, we have not even gotten our act together yet. We’re not talking yet about how exactly do we position ourselves in the Asean community; we’re still stuck in the discussion about whether we should join or not, as if not joining is an option. Last I looked, most of our leaders seemed to still be in denial about our lack of options.”[Our state of unpreparedness, Bong Austero, Are we there yet (?), Manila Standard Today, 9th Mar 2014.]

The good news is the faults of the West come in spades – and they’re spelled . . . g-r-e-e-d. “I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It's purely about how we can make the most possible money off of them.” [Why I am leaving Goldman Sachs, Greg Smith, The New York Times, 14th Mar 2014.] The hypocrisy is palpable yet . . . “The West is blinking in disbelief – Vladimir Putin just invaded Ukraine. German diplomats, French Eurocrats and American pundits are all stunned. Why has Russia chosen to gamble its trillion-dollar ties with the West?” [, Why Russia No Longer Fears the West, Ben Judah, 2nd Mar 2014]

“Western leaders are stunned because they haven’t realized Russia’s owners no longer respect Europeans the way they once did after the Cold War. Russia thinks the West is no longer a crusading alliance. Russia thinks the West is now all about the money . . . We are not talking big money. But very big money. None other than Putin’s Central Bank has estimated that two thirds of the $56 billion exiting Russia in 2012 might be traceable to illegal activities. Crimes like kickbacks, drug money or tax fraud. This is the money that posh English bankers are rolling out the red carpet for in London.” 

“A new report from the Senate’s Permanent Subcommittee on Investigations estimates that Credit Suisse Group AG helped as many as 20,000 U.S. taxpayers evade billions of U.S. tax, but says that so far the U.S. Department of Justice has gotten the identities of only 238 of those account holders.”[Forbes, Senate Offshore Tax Cheating Report Skewers Credit Suisse And U.S. Justice Department, Janet Novack, 26th Feb 2014]

We want to address poverty? We will have even worst poverty if we don’t stand up to the wolves – that is, rapidly make ourselves a wealthier economy? That doesn’t equate to greed – and in fact it is what nature is about, i.e., growth and development? And why people and nations develop – into First-World or egalitarian societies; while underdevelopment is characterized by a hierarchical, cacique culture. Which is our real problem, not poverty? Poverty is the effect, not the cause?

Do we have a doctor in the house – to remind us of cause and effect? And if we want to invoke our faith, we were made to the image and likeness of The Creator – we were “the chosen people” not discriminated against nor meant to be “kawawa”? It will not happen overnight as this blog has quoted international institutions – it will take us at least a generation even at a 7% annual GDP growth rate. But we won’t have a prayer – or a ghost of a chance – if we continue with same old, same old: the vicious circle from populism to paternalism to tyranny to inequality and back? And as my late maternal grandfather – who like Rizal joined Freemasonry – would summarize it: Where is the backbone of Juan de la Cruz? How else to explain a culture of impunity?

How do we get cracking? First we have to learn what it means to be focused and dogged; and that presupposes that we don't have a zillion balls up in the air! In other words, in competition, we have to adopt the mindset of a world-class athlete. And at that level of competition that means to be laser-like! Focus means getting power and infrastructure up the sooner the better? And dogged means to prioritize; it does not mean 30 “competitive” industries, for example! Not surprisingly, the Joint Foreign Chambers teed up “the seven big winners.” Not even Germany can make as many as 30 industries competitive – and that is not an indictment but science as in the Pareto principle. But we have yet to jettison crab mentality? If they are not, focused and dogged better be in our lexicon? Nice guys finish last!

Monday, March 10, 2014


“In his daily homily Pope Francis spoke of the harm done when Christians don’t practice what they preach, noting that this incoherence leads others away from the Church and often brings scandal . . . When there is no Christian coherency (lack of unity of life), and you live with this incoherence, you’re giving scandal. And the Christians that are not coherent are giving scandal, the Pope said in his Feb. 27 Mass.” [Manila Times, Where was God when Abad or Enrile or Drilon okayed PDAF disbursements (?), Rene Q. Bas, Publisher-Editor, 2nd Mar 2014]

Do we have any chance at coherence? It‘s noteworthy that there are efforts to do just that: “Regionally tailored industry roadmaps must be dovetailed with the national industrial blueprint to strengthen the viability of local businesses and industries in light of the impending economic integration of the ASEAN economies by 2015.” [Reg’l industry roadmaps integration urged, Manila Bulletin, Bernie Magkilat, 28th Feb 2014]

Will Juan de la Cruz heed the call? “Miriam flays colleagues for sitting on key bills,” Manila Times, Neil A. Alcober, 2nd Mar 2014. And from Babe Romualdez: “After all our big talk about attracting investors, many of them are hesitant to touch the country with a 10-foot pole as far as investments in mining are concerned because of the uncertainty and instability that clouds the industry. For one, the government imposed a moratorium on any new mining contracts (including renewals and expansions) in 2012, coupled with the continuing delay in the issuance of a new and definitive mining policy.” [‘Mining’ our own business, BABE’S EYE VIEW, The Philippine Star, 2nd Mar 2014]

How much should we pursue FDIs? “The declared motive is to open the country to greater amounts of foreign direct investments (FDI), which would supposedly be forthcoming once we lift the ownership provisions. This would create employment and end poverty. Sounds good?” [Solita Collas-Monsod, What's the motive for Cha-cha, Get Real, Philippine Daily Inquirer, 1st March 2014] “This argument was brought up also in the previous attempts, and was answered. Let’s start with the empirical findings that historically, FDI played only a minor role in the growth of most high-performing Asian economies. Between 1967 and 1986, Taiwan, Korea, China and Japan’s FDI were less than 2 percent of their Gross Domestic Investment (GDI). Hong Kong, Malaysia and Singapore weren’t much better off: FDI greater than 5 percent. More recently, except for China and Singapore, FDI in East and Southeast Asia comprise less than 10 percent of GDI.”

On the other hand, ‘Restrictions hamper FDI growth,’ Business Mirror, Catherine N. Pillas, 2nd Mar 2014. “Because of these restrictions, Dr. Rogier van den Brink, World Bank lead economist for the Philippines, said the Philippines is only capturing 6 percent of the Southeast Asian FDI inflows from 1995 to 2012 . . . FDI for the Philippines are expected to be 24 percent higher than the estimated $2.1 billion by the end of 2013, or at $2.6 billion.”

Coherence, oh coherence . . . “[T]he association appealed for more government support for the industry, which continues to be the country’s biggest exporter with a more than 40 percent share of all merchandise exports. SEIPI officials in earlier interviews said there were four constraints to the semiconductor and electronics industry’s recovery: expensive low-quality power, poor infrastructure, high cost of labor, and removal of government subsidies.” [SEIPI think tank to identify new revenue sources, growth market, The Philippine Star, 2nd Mar 2014]

“Electricity consumers pay for ‘cost of incompetence’ (First of two parts),” Manila Bulletin, Myrna Velasco, 28th Feb 2014. “There’s hell of a price to pay for incompetence – and the electricity consumers are being held as strategic pawns.”

“The unpleasant truth is that: the EPIRA had been on constant assault . . . All of those exercises turned futile though and even the oversight Joint Congressional Power Commission (JCPC) had not mustered enough appetite and conviction to look at those alleged abuses in the law’s implementation. Had they done their jobs that soon, the troubles of the industry could not have reached the proportions it is currently enmeshed with.” [Policy flux: Is amending EPIRA the only way? (Part two), Manila Bulletin, Myrna Velasco, 1st Mar 2014.]

“The business community is sounding exasperated . . . Industry leaders highlighted the need for President Aquino to step-up decision-making and the implementation of reforms needed to make economic growth inclusive . . . The Joint Foreign Chambers of the Philippines estimated that, to achieve results, the country must focus on faster development of the seven “big [industry] winners” and move twice as fast.” [Editorial, Reforms = jobs, Philippine Daily Inquirer, 4th Mar 2014]

“[B]uilding the institutions needed to sustain democracy is slow work indeed . . . Although democracy . . . may be a “universal aspiration” . . . it is a culturally rooted practice . . . [D]emocracy makes simple things “overly complicated and frivolous” and allows “certain sweet-talking politicians” to mislead the people . . .” [The Economist, What’s gone wrong with democracy, 1st Mar 2014.]

“Buffett speaks: Highlights from his annual letter,” 1st Mar 2014, Associated Press. “[Y]ou must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick 'no'. . . Buffett acknowledged making mistakes in the past. Buffett said some of Berkshire's businesses deliver very poor returns. I was not misled: I simply was wrong in my evaluation of the economic dynamics of the company or the industry in which it operated . . . Citizens and public officials typically underappreciated the gigantic financial tapeworm that was born when promises were made that conflicted with a willingness to fund them.”

To step up to our biases (and mistakes?) and keep things simple, does Juan de la Cruz need to learn critical thinking? “Critical Thinking” just means absorbing important information and using that to form a decision . . .” [Thorin Klosowski, Lifehacker, 6th Feb 2014] “[T]his is similar to something like theSocratic method . . . Regardless of how you approach it, the end goal is to learn to think critically and analyze everything . . . It's important to always ask yourself why something is important and how it connects to things to you already know . . . When we talk about critical thinking it's impossible not to talk about the fact that we're pretty bad at recognizing biases in our own thinking. We're all biased about information whether we realize it or not, and part of critical thinking is cultivating the possibility to see outside those biases.”

And, of course, we need the right leadership. We keep saying that Singapore and Malaysia, because of Lee Kuan Yew and Mahathir, aren’t true democracies – and, of course, China is not? Didn’t Marcos upend democracy in the guise of a new society except that he failed miserably? Wrote Ramon J. Farolan, Lee Kuan Yew on Philippines, Philippine Daily Inquirer, 26th Sept 2011: “The difference lies in the culture of the Filipino people. It is a soft, forgiving culture. Only in the Philippines could a leader like Ferdinand Marcos, who pillaged his country for over twenty years, still be considered for a national burial. Insignificant amounts of the loot have been recovered, yet his wife and children were allowed to return and engage in politics . . . Some Filipinos write and speak with passion. If they could get their elite to share their sentiments and act, what could they not have achieved?”

“But if democracy is to remain as successful in the 21st century as it was in the 20th, it must be both assiduously nurtured when it is young—and carefully maintained when it is mature.” [The Economist, What’s gone wrong with democracy, 1st Mar 2014]

The ball is in our court. The sooner we accept reality and deal with it the better for Juan de la Cruz?

Friday, March 7, 2014

Bad results are frustrating . . .

“Aquino scolds execs over power failure,” read a news item, Manila Times, Joel M. Sy Egco, 24th Feb 2014. Unfortunately, we are in for more bad results: ‘Our best isn’t good enough,’ Palace Admits Inadequate Gov’t Response To ‘Yolanda’ Disaster, Manila Bulletin, Genalyn Kabiling, 17th Feb 2014.

Will there be more scolding from the president? This blog has talked about how the private sector manages major challenges including pursuing restructuring in extreme cases. Unfortunately, in politics and public administration, denial is a convenient response given the multitude of constituencies that must be appeased. For example, those from the opposition, whenever they see blood, would most likely pounce on the administration. The problem with denial is when leadership becomes hostage to a make-believe world, and problem-solving is undermined if not abandoned.

It is noteworthy that the administration admits to inadequate government response in Yolanda. And the focus on getting key infrastructure projects going (while unwelcomed by the riding public) will be a big boost to productivity – which we have long forgotten being key to raising competitiveness and economic output. Still, given crab mentality and mistrust, there will always be projects that would suffer delays, e.g., Mactan airport.  Recall NAIA 3 – or have we forgotten? Mistrust is typical in underdeveloped nations, forgetting that the rule of law is why productivity, efficiency and competitiveness characterize First-World societies.

And when incompetence, if not anarchy, is a way of life, the seed of corruption . . . would sprout and then nurtured . . . until it becomes a monster. “DOTC $30-M extortion: Czech exec's affidavit. The $30-million extortion from Czech train supplier Inekon was in the news again last week,” GOTCHA, Jarius Bondoc, The Philippine Star, 26th Feb 2014. For decades Juan de la Cruz has taken incompetence and anarchy – best exemplified by Metro Manila streets – as a given because we're a Third-World country? “In catch up mode, daw! Senate Finance Committee chairman . . . announced a Senate investigation on the do-nothing DOTC,” DEMAND AND SUPPLY, Boo Chanco, The Philippine Star, 26th Feb 2014.

The good news is our neighbors are more developed than PHL so that indeed we have greater room to grow. And which also explains our attraction to the global community . . . yet so convenient to forget . . . and makes problem-solving efforts suspect? Of course, we must take the good with the bad. But it doesn't mean we're having a free lunch. The magnitude of the dollars to rebuild Tacloban is so great that even friendly nations are asking tough questions – i.e., we can’t expect handouts and must justify the project. And to simply say – given our compassionate heart – that we must give food, shelter and sanitation doesn't go far enough to justify such a project. We have to address beyond the symptoms . . . the real need.
If we want to connect the dots: populism per se breeds paternalism which in turn emboldens tyranny thus our cacique culture . . . which comes full circle to inequality. In other words, every time we invoke our supposed mantra of inclusion, we are back to square one. (And it is a microcosm of why PHL remains underdeveloped?) And precisely why political dynasties are more entrenched in provinces where poverty is greater and paternalism is a way of life. [“On average, there are more dynasties in regions with higher poverty, lower human development and more severe deprivation,” Philippine Daily Inquirer, Editorial, The time is now, 1st Mar 2014]

Reality. Reality. Reality. “Ukraine needs to show that it can absorb foreign aid and not waste it . . . It cannot be that [the E.U.] will organize huge funds for Ukraine and Ukraine will continue to waste this money by, for example, corrupt governments and oligarchs,” The New York Times, Tentatively EU weighs its options on support for a new Ukraine, 25th Feb 2014.

Sounds ominous? An underdeveloped economy, whether Ukraine or PHL, has to rely on the goodness of others but such aids aren’t ever absolute – which is just as well because self-respect is simply that, self-respect. And why development is about growing up – i.e., the problem with underdevelopment is that people behave mirroring that reality. And thus the world expects China, for example, to behave not like an underdeveloped economy being today's second largest economy. (While in the case of Russia, having botched the promise of being among the BRICS – succumbing to the easy path of oil wealth and oligopoly as opposed to a thriving modern and industrialized competitive economy – it needs to protect itself from within, as from its own self-image, and play the bully.)

It’s not a perfect world. And precisely why man must respond to his challenges – and he has over the centuries demonstrated that indeed The Creator endowed him with the character and the talent. And in this day and age the private sector, for example, continues to do its share. Take MNCs with operations in Venezuela, they are taking the turmoil in stride while taking a currency hit. And which is likely to happen with Ukraine too. Still, like in managing a portfolio – be it products or markets or countries – enterprises must be able to optimize their efforts in order to deliver acceptable net outcomes.

And optimization applies even in geopolitics. We in PHL appear to wonder if the US, for example, will defend us if China would invade. “I’m not going into hypothetical. I will just simply state again that we understand our obligations under Mutual Defense Treaty and we will live up to those obligations, Admiral Harry Harris Jr., commander of the United States Pacific Fleet,” I have two hands, COMMONSENSE, Marichu A. Villanueva, The Philippine Star, 26th Feb 2014. And that, of course, is something we would take as a cliché?

If aids aren’t absolute, what more of wars? Despite the military prowess between the two of them, the US and the EU cannot be fighting every war – including the atrocities the world sees in Syria, for instance. “Nixon envisioned a future in which more cordial relations among the major world powers -- the United States, the Soviet Union, China, Western Europe, and Japan -- would allow for ventures profitable to all,”“To many who had watched Richard M. Nixon build his political career as a Communist fighter, it must have seemed the ultimate irony. On July 15, 1971, Nixon announced on national television that he would become the first president ever to visit the People's Republic of China, a nation which had remained isolated from the West since the Communist   revolution in 1949.” [And to this day despite China’s saber-rattling, they continue to work with the West. For example, and it may not be surprising given the slowing of their economy, they are tapping the US for expertise from the private sector.]

On the other hand, The Gulf War (2 August 1990 – 28 February 1991), codenamed Operation Desert Storm (17 January 1991 – 28 February 1991) was a war waged by coalition forces from 34 nations led by the United States against Iraq in response to Iraq's invasion and annexation of Kuwait.” [Wikipedia]

Bad results are frustrating. And what is even more crucial is for us to keep our eye on the ball – of responsibility. No one can do the job for us. Wrote Roger Cohen of The New York Times, “Cry for me, Argentina,” 27th Feb 2014, “In psychological terms – Buenos Aires is packed with folks on couches pouring out their anguish to psychotherapists – Argentina is a child among nations that never grew up. Responsibility was not its thing. Why should it be? There was so much to be plundered . . . that solid institutions and the rule of law . . . seemed a waste of time.”