Wednesday, April 29, 2015

Banana republic image undermines PHL development

Thank you Sen. Aquino! “For me and for a lot of people, this seems to be one of those … requirements to get to the next level where we can compete with the rest of the world, where countries will look at us, investors will look at us and will not see us as a banana republic but as a country where rules are in place, where regulations are in place and where we can actually use their regulations as parameters to move forward.” [PH needs competition law to level playing field – Sen. Aquino; ‘DROP THE BANANA REPUBLIC IMAGE,’ Voltaire Palaña, The Manila Times, 21st Apr 2015]

“. . . I think what people say when you talk to them and you tell them . . . more options, more choices, lower prices, better for the consumers and you’re fighting monopolies and cartels, definitely people appreciate and understand that. If you’re part of the public discussion . . . that being part of the public discussion will help us, will help the president to put in people that will honor the objectives of this bill and really be able to create that new regime for our country.

“Competition lawyer Anthony A. Abad . . . stressed that the country needs to move forward in putting market rules in place. The government has taken initial steps to liberalize the economy and allow competition . . . But after that, there was no follow-through… What are the rules of the game? When you say free market or fair market, it should be — everybody is competing. What is anti-competition, that’s collusion, cartel … and you use it to exclude other competitors. We need [the rule of] law to be able to determine that.”

Wikipedia: “In political science, the term banana republic is a pejorative descriptor for a servile dictatorship that abets or supports, for kickbacks, the exploitation of large-scale . . . agriculture, especially banana cultivation. In economics, a banana republic is a country operated as a commercial enterprise for private profit, effected by a collusion between the State and favored monopolies.”

“Economists and legal experts said lawmakers should not give in to lobbying from some sectors that aim to water down the proposed Fair Competition Act—which is now inching closer to approval in Congress—through various exemption provisions.” [‘Don’t water down competition law,’ Catherine Pillas, Business Mirror, 21st Apr 2015]

Of course! Newton's third law is at work: For every action, there is an equal and opposite reaction. The more Sen. Aquino appears to get traction, the greater will be the lobbying efforts to undermine the initiative. Sen. Aquino needs more supporters from every sector.

But we like seeing the glass as half full and so enjoy reading reports about PH being a trillion-dollar economy – despite all the “ifs” and caveats! And they are real barriers if we don’t succeed in shedding our banana republic image!

“As a word of warning, the IHS analysis points to the challenge of mobilizing both foreign and domestic investment flows into the manufacturing sector as the long-term outlook for the country’s future development will be heavily dependent on the ability to make the manufacturing sector more competitive . . . A key priority for the Philippines must be to attract greater FDI into the manufacturing sector, in order to boost employment growth and make the Philippines a competitive Asean manufacturing export hub. More FDI inflows will help reduce poverty by boosting jobs growth and household incomes.” [‘PH seen a trillion-dollar economy by 2029 – HIS; EVEN IF GROWTH SLACKENS TO 5.5%,’ Mayvelin U. Caraballo, The Manila Times]

And that’s precisely the point. We Pinoys have yet to sort out, despite being a witness to how nations develop, our ambivalence, that is, should we follow the Asian Tigers and be an open economy and truly attract FDIs? But are we wedded to an archaic set of values, that of a parochial-hierarchical-cacique-oligarchic economy?

“Another key challenge for the Philippines, the study said, is to boost infrastructure investment to create high-quality transport infrastructure for roads, ports and airports, as well as for power generation and transmission—all essential for spurring growth in manufacturing and services.” [Caraballo, op. cit.]

“The country continues to face other economic development challenges such as poverty and unemployment, it added. Poverty and unemployment remain very high in the Philippines, with around 28 percent of the population still living in poverty according to government estimates, while the total number of unemployed or underemployed workers exceeds 10 million.

“Creating a diversified economy with key growth industries that can generate rapid jobs growth will be a key strategic imperative for the government.

“Sustained rapid growth will require continued economic reform to improve the business climate of the Philippines, making it more attractive for FDI into sectors such as manufacturing and tourism, the study concluded.”

Do we have the big picture and the North Star yet? But where is our heart? Are we prepared and committed to support Sen. Aquino so that the competition law does not suffer the fate of the FOI or Arangkada? We can’t keep putting initiatives on the table – aka “crab mentality” – when it means the big picture and the North Star don’t have clarity in our heart . . . and our mind?

In the final analysis, freedom and democracy does not square with an archaic set of values, that of a: (a) hierarchical, (b) cacique and (c) oligarchic economy.

And in the 21st century, parochialism does not square with global competition that demands competitive levels of investment reflected in: (a) world-class technology and innovation; (b) in the building blocks of people, product and market development: (c) in the construct of an economy that yields a balanced portfolio of industry, agribusiness and services; and (d) even more fundamentally, in good governance that can erect the platform for institution-building and infrastructure development.

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