Tuesday, February 10, 2015

Forward thinking . . . and a game plan

Bangkok is not perfect. As an extended family, we flew in to Bangkok in three separate groups and the taxi fares from the airport to our hotel were three disparate amounts. Between Bangkok traffic and opportunistic taxi drivers, who knows why? Still, their airport puts ours to shame and the level of activity would match those in more developed countries. And going around Bangkok via their public transportation system isn’t that different from these places either. Yet Thailand’s GDP per capita is just a fraction of Singapore. But it’s still more than twice that of PH. Given Thailand isn’t wealthy, we can understand why half of our people say they’re hungry and poor. That’s our story . . .

President Aquino may want his cabinet members to spend time in Bangkok to see for themselves what we’re missing. Singapore may be too far advanced and may discourage them but Thailand is more doable and could inspire them. Japan and China many years ago did something similar, sending teams to Europe to learn about progressive Western ways and “successful capitalist practices.” And both China and Japan in fact succeeded and together with the US, the three are today the world’s largest economies.

We may not realize it but our inward-looking bias hasn’t helped us. We keep reinventing the wheel instead of learning from others. For example, Thailand is the Detroit of Southeast Asia and hence their supply of automobiles has contributed to Bangkok’s traffic. But they believe their work isn’t done yet. They believe that an efficient public transportation system will make Bangkok a commuter’s city, and New York comes to mind. And so they’re stepping up the efforts and extending the rail system (which they call a multi-year mega project) into the suburbs. And the potential is not lost to developers: new high-rise residential buildings are sprouting to complement the rail project. It’s forward-thinking no doubt or what Steve Jobs simply called connecting the dots.

How do we do such forward-thinking – and connect the dots – in the Philippines? Consider the following news reports re our infrastructure efforts: “DOTC quibbles anew on MRT3,” Rosalie C. Periabras, Manila Times, 8th Feb 2015. “LRT-2 is profitable, so why bid out operations (?),” Jarius Bondoc, GOTCHA, The Philippine Star, 9th Feb 2015. “A clueless bureaucrat (?),” Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 9th Feb 2015.

Are we equipped – in our hearts and our minds – to populate the 21st century? It is not about hiding behind studies. “Study after study,” to quote a journalist, hasn’t taught us how to move forward as a nation.

“THE Department of Transportation and Communications (DOTC) is quibbling anew on what to do with Metro Rail Transit Line 3 (MRT). It earlier said it would buy out the current operator but it is hamstrung by the fact that Congress did not allocate a budget for the buyout . . . This time it said it is studying the proposal of Metro Rail Transit Holdings Inc. (MRTH) to extend operations over MRT3 for another 15 years.” [Periabras, op. cit.]

Study and more study? “A liar needs a good memory, goes a Latin adage. But that’s lost on officials of the Dept. of Transport and Communications. Last Jan. 8 at the House of Reps, U-Sec Jose Lotilla made a big disclosure. DOTC commuter railways – LRT-1, LRT-2, and MRT-3 – are earning more than enough from ticket sales to cover operations and maintenance. The admission was a blow to Lotilla’s boss Sec. Joseph Abaya. Only three days earlier Abaya had hiked train fares 50- to 90-percent on the pretext of soaring O&M costs. Rep. Neri Colmenares discovered that first discrepancy.” [Bondoc, op. cit.]

If we don’t hide behind a study, there is always the option to lie? “We all know that the problem of congestion at NAIA is on account of its single working runway. (They have stopped using the other cross runway for safety reasons.) Even if we build 10 terminals there but if there is only one runway, planes will still have to fall in line to take off and circle around to land. That is simple and logical even laymen should be able to understand.” [Chanco, op. cit.]

I remember a friend telling us, “If you have a dinner appointment in Makati at 7 on the Wednesday that you are returning from Cebu, better get a much earlier flight. Most flights are delayed an hour.” Lo and behold, we thought we were comfortably buckled awaiting takeoff in Mactan when the pilot interrupted our thoughts: “We are being asked to hold for 45 minutes because of traffic congestion in Manila.”

I tried a simple analogy to explain where we are as a nation to folks in Cebu and suggested to imagine going through layers while putting up the building blocks of an economy. It starts with infrastructure. And when they're extensive enough, we can overlay a set of strategic industries – that are competitive and will reach far and wide. Because industries need a platform. And then visualize an ecosystem that will sustain them. That means we need science, technology and education over the longer term – borrowing a page from the playbook of Deng Xiaoping. 

And because we’re missing said layers and building blocks, we’re confronted with: “But here our question for Mr. Fuji: If the existing investment incentives are so great in the Philippines, why did Japanese companies invest over $10 billion in Thailand in 2013 and only $1.2 billion in the Philippines?” [Foreign investment incentives: What to change, Business Mirror Editorial, 8th Feb 2015] “We have examined both countries investment laws and incentives. The major difference is that the list of excluded types of business is much less in Thailand and Thailand allows up to 100 percent foreign ownership unlike the Philippines which requires 60 percent local ownership.”

Surprise, surprise! Isn’t that an old song? And so my wife and a brother-in-law would ask: How could the Thais build a transportation system like this? They know that I covered Thailand for 10 years as an MNC regional manager. And had shared with them that we put up a regional facility in Thailand, after visiting different Asian countries where we were shown their respective “special economic zones.” It’s about the ecosystem.

Think 360 degrees. What would make a special economic zone truly attractive to investors? For example, power is one and at the other end is the port from where to ship products out. And between the site and the port are roads and bridges, and in some countries also navigable rivers and rails. There is also the soft elements. Take the Bureau of Customs and its culture of impunity, which is how Pinoys working on cruise ships explained why industry bosses avoid the Philippines. In sum, an ecosystem connotes efficiency, productivity and sustainability.

But are they what we value? Or is our parochial, hierarchical system and structure most preeminent? And the evidence: “We have examined both countries investment laws and incentives. The major difference is that the list of excluded types of business is much less in Thailand and Thailand allows up to 100 percent foreign ownership unlike the Philippines which requires 60 percent local ownership.” [Business Mirror Editorial, op. cit.]

And when it gets down to developing a game plan if not formulating a vision, our kneejerk is to employ “Pinoy abilidad”? Which is in fact reactive and short-term – not proactive and strategic and long term? See above re “DOTC quibbles anew on MRT3” and “LRT-2 is profitable, so why bid out operations (?)” and “A clueless bureaucrat (?)” . . .

Ergo: “Before investing in PH, Japan firms raise nagging issues,” Amy R. Remo, Philippine Daily Inquirer, 7th Feb 2015. “[T]hey continue to stress the need for the government to address pressing concerns, such as lack of adequate infrastructure and high power costs, which are necessary to create a more conducive environment for trade.”

Is it our cacique culture or inability to formulate a vision and forward-think or is it incompetence or a culture of impunity? Infrastructure projects are mired in delays and rebids, challenges and whatever, but what’s truly behind them? True or not, after being in town over the last few weeks, I would still be dumbfounded to hear: “Do you know the story behind NAIA 3? Imagine how many administrations had a hand in it. If behind every infrastructure project is such impunity, what do you do if none of the spoils comes your way having arrived late to the party?”

We took a tour to Ayutthaya (old Siam) and I was reminded of how we were stuck in Bangkok traffic many years ago – when we were with our daughter, then a grade-schooler. Today they have the expressway, and they make the journey even more interesting, the return to Bangkok is via a river cruise. And the boat is more upscale than the one my wife and I took in New Orleans last summer. Why does Thailand attract investors and tourists much more than we do?

How do we face the 21st century? Doing it the same old way – over and over again – is insanity?

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