Wednesday, October 22, 2014

A fundamental given . . .

And it’s expressed in different ways, e.g., nothing happens in a vacuum or insanity is doing the same thing over and over and expecting different results, are two of them. Precisely why world-beaters are such that they make winning a habit. Do we Pinoys want to truly internalize what competition is or what to be competitive means and what it entails?

And the science says it is not a question of brainpower which we Pinoys definitely have – i.e., the brain is not a static organ but one that expands when demands are put on it. It is about the mindset. And change has to happen within, not without or with extraneous elements – and it applies to all people, not just us Pinoys.

“Philippine economic managers have urged Japanese investors to pour money into the country’s infrastructure in order to sustain the growing economy.” [Japan investors urged to fill gap in PH infra funding, Ben O. de VeraPhilippine Daily Inquirer, 11th Oct 2014]

We don’t control how Japanese investors decide where they pour their money. But we control what we have to offer. Or we can spend advertising dollars to attract foreign tourists with “It’s more fun in the Philippines,” but that won’t translate to fixing the infrastructure deficits that PHL has [because it’s the classic sub-optimization bias to problem-solving.] And if we’re benchmarking our efforts against those of our neighbors, we would know why they’re doing a better job. It is when we address the “why” that is under our control that will deliver results, not merely hoping that foreign investors will pour or tourists spend their money in PHL. And that is a fundamental given – and that the private sector understands and why they invest in the pursuit of “competitive advantage,” while running away from sub-optimization.

What about the president securing billions of investment pledges? How many presidents have claimed that? And that is not judged in a vacuum but against reality – and what our neighbors attract and generate. And haven’t we been doing road shows for years and years and still lag in attracting FDIs? What principles are at work here? When the student hasn't learned the teacher hasn't taught. Similarly, when the buyer hasn't bought the salesperson hasn't sold . . . When all one has is a hammer, everything looks like a nail.

“The [Philippine] government is working to step up investments in infrastructure to be at par with other competing economies and to meet the country’s future growth requirements,” Socioeconomic Planning Secretary Arsenio M. Balisacan said during the Philippine Economic Briefing in Tokyo. . .”

“The Aquino administration aims to jack up infrastructure spending to at least 5 percent of the gross domestic product (GDP) by 2016, from a mere 2.2-percent share in 2012. In a statement Friday, the Investor Relations Office reported that Philippine officials encouraged the more than 400 Japanese businessmen and government representatives at the Tokyo road show to look into the opportunities being presented by the public-private partnership (PPP) infrastructure projects to be rolled out within a year’s time, on top of prospects in the capital markets, tourism and power sectors. The PPP projects are worth $12.28 billion.”

That reads well but what is reality? “Sustaining the economy’s high-growth trajectory requires continued investment in infrastructure,” Economic Planning Secretary Arsenio M. Balisacan told Japanese businessmen . . .” [Urban decay threatens hot PHL economy, Business World, 12th Oct 2014]

“As part of that, the government will pursue its so-called public-private partnership (PPP) program. More than 50 projects are being put out to private builders. Mr. Balisacan also said implementing a P2.6-trillion ‘dream plan’ drafted by the JICA was a top priority. The agency’s plan calls for an expansion of rail and toll road networks to provinces north and south of Manila, spreading economic activity, as well as a subway system for the capital.”

“Many of the projects cited by the Japanese plan are included in the PPP pipeline, but these have moved painfully slowly due to regulatory delays and court cases between rival bidders. Fewer than 10 contracts for the public-private partnership program have been awarded during Mr. Aquino’s first four years in office, with no projects yet completed.”

“And while Mr. Aquino’s intentions are laudable, there is only a limited amount it can do before his term ends in the middle of 2016 . . . Many of these projects are perfectly doable, especially the airports and toll roads... What’s needed is a multi-administration plan... many of them take up to three administrations to finish.”

“Manila residents, in the meantime, have little choice but to count the personal cost of the urban decay.”  And that translates to persistent poverty? What to do?

“At this point, I would like to propose that instead of tackling the wide range of horrendous problems caused by poor infrastructure, such as the truck ban in Manila and perennial flooding, let us take one step back and look at the bigger picture.” [Infrastructure, innovation, information for inclusive national growth, MAPping the future, Ambassador Cesar B., 13th Oct 2014]

“The private sector has the pragmatism to realize that many demands for infrastructure require huge financing, which is always in short supply. This imbalance between requirements and capabilities mandates us to follow the Pareto 80/20 Rule in the decision-tree planning process and use limited resources to tackle the country’s most immediate needs. Infrastructure projects account for a big portion of country’s Gross Domestic Product at the expense of other services, such as social safety nets. These must therefore be well selected and well spent.”

“The doctrine structure follows strategy is often used by management gurus such as Peter Drucker, and Michael Porter when they talk about appropriate structure in corporate organizations. These experts know that the success of any company depends on the choice of organization structure that best meets the needs of the business strategy. Define your strategy first, they say, before we talk about appropriate organization structure. The same approach should be observed in infrastructure development in pursuit of inclusive growth.”

“The country’s infrastructure priorities are well-defined in the Philippine Development Plan. China’s impressive development in the past 30 years is attributed to a series of five-year plans which defined each period’s desired economic outcome and the rank-ordering of infrastructure projects to achieve them.”

“The Philippines, through Neda’s PDP, can make the five-year strategies as the common template to coordinate links for sustainable progress. It is expected that some local leaders will still pursue their own ‘vanity projects’ to build up their image but this is where the private sector, through the NCC, can help the Cabinet Economic Cluster to stay the course of national strategic growth.”

We don’t control extraneous elements – be they Japanese investors or foreign tourists – but we do control what we have to offer and the “local leaders . . . that pursue their own ‘vanity projects’ to build up their image” . . . and it’s called leadership – in the private sector.

And indeed the private sector can be the role model: What is the role of business? Business should be ‘securing itself as the leader (take an actual role) in protecting and improving the system that gives [capitalism] life’. [B]usiness should ‘lead by being innovators developing new business models and strategies and as architect for good gov’t as effective institutions.’ ” [Sustainability in the board room, Flor G. Tarriela, Manila Bulletin, 13th Oct 2014]

“Who should lead and initiate the effort?  Government or business?  In the book ‘Capitalism at Risk, Rethinking the Role of Business’ of Lynn Paine with Harvard professors Herman Leonard and Joseph Bower, they agreed that government play a role but that business should lead the way. Business in so doing ‘should pursue opportunities and develop innovative business strategies, to be profitable and strengthen its foundation.’ ”

“The good thing with business people is that challenges are looked at as opportunities.” And what about doing the same thing over and over and expecting different results?

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