Thursday, July 16, 2015

Competitiveness; not a culture of entitlement

In an earlier posting this blog talked about PHL pursuing a Japan Inc. (or Singapore Inc. or China Inc.) model by focusing on and establishing a competitive platform via the 7 industry winners from the JFC. But beyond that, why competitiveness even when it means that there will winners and losers? Because in the real world there is no free lunch! Surprise . . . surprise . . . it took us more than 20 years to pass a competition law! Still, “The Philippines is among the more restrictive economies in the Southeast Asian region when it comes to foreign direct investments (FDIs), a recent study by the Economic Research Institute for Asean and East Asia (ERIA) showed.” [Philippines among most restrictive in SEA on FDI, Danessa O. Rivera, The Philippine Star, 2nd Jul 2015]

Can we reconcile our ambivalence notwithstanding the demands of the real world? Or is it about Pinoy abilidad – which informs our perspective of freedom and democracy and by extension the free market? In a highly globalized and competitive 21st century world, it is conviction not ambivalence that matters.

What about compassion? Compassion is in the dismantling of an oligarchic economy, tossing the values inherent in a hierarchical system and structure! Yet we don’t need Robin Hood but a system that is more egalitarian, not patronizing. We can’t have a competition law on the one hand and be inward-looking – and among the restrictive economies – on the other! In other words, political patronage and oligarchy are the first in line in our culture of entitlement. Yet we took it for granted because it is our normal? As the Greeks rather belatedly realized!

“Search for top ASEAN companies launched,” James Loyola, Manila Bulletin, 7th Jul 2015. “We are working towards strengthening SMEs in our country. They are the backbone of our economy,’ said PLDT Chairman Manuel V. Pangilinan, who heads ASEAN BAC Philippines.”

Does it ring a bell? “The so-called ‘MVP’ group of companies—dubbed after the initials of its public face and chief executive Manuel V. Pangilinan—has emerged as one of the biggest conglomerates in the country today, its newest and the most aggressive. Yet the real ownership of this vast conglomerate has been kept hidden from the public eye. Until now.” [The Indonesian billionaires behind the ‘MVP Group’: UNMASKING AN EMPIRE, RIGOBERTO D. TIGLAO, The Manila Times, 2nd Jun 2015; First of a series]

“The conglomerate is dominantly owned and controlled by Anthoni Salim, 66, heir to the fortune of his late father, Soedono, who was the biggest and closest crony of the late Indonesian strongman Suharto during his 33-year regime. “MVP” has miniscule shares in the conglomerate. That the group has strived to make it known by that name, as will be explained in this series, is for a specific purpose.”

Is that Pinoy abilidad? We’re neither here nor there? We keep/don’t keep FDIs out? Is it the root of Philippine corruption that explains our mockery of the rule of the law?

“An increase in competitiveness translates to more investments, jobs, wealth creation and the widening of the middle class. This is why the NCC role is crucial to national development. The current board has done an impeccable job not only in terms of improving competitiveness but more so in showing us how to effect reforms quickly and effectively. This is why the current structure of the NCC, including its private sector representatives, should be spared from any changes in government leadership. With luck, they can start on Gameplan 4.0 to put the country in the top 10% of global competitiveness ranking.” [The National Competitiveness Council: the silent champion of change, Andrew James Masigan, Manila Bulletin, 7th Jul 2015]

Can we in fact aspire to be in the top 10% of global competitiveness ranking? Not if we keep playing games? “A new competition law at last (!),” Francis Ed LimPhilippine Daily Inquirer, 25th Jun 2015. “It took Congress more than 20 years to pass a competition law. I vividly remember having attended Senate committee hearings presided by former President GMA as a senator in the early 1990s. Since then, I took special interest and got involved in the formulation of the law, having practiced antitrust law when I worked in a law firm in Washington, D.C. and being of the belief that we need a good one for the country.

“The antitrust bills that found their way in Congress proposed to adopt different policy approaches—from the very strict ones to the very liberal ones. After several Congresses, our present Congress passed what I think is a balanced version that takes into account the welfare of the consumers without sacrificing the need of our businesses to expand to make them competitive with their counterparts in the region.”

Will the new competition law be able to deal with Pinoy ambivalence? But we mean it this time? “PH creates 2 innovation hubs, targets at least 20 start-ups,” Bernie Magkilat, Manila Bulletin, 7th Jul 2015. “The creation of the innovation hub will be a critical component in the drive to boost the Philippines’ ranking in the Digital Evolution Index (DEI), which ranks countries in terms of their readiness for the quickly expanding digital economy.”

“The Philippines is one of the so-called “break-out” nations in the recent global DEI study conducted by the US-based Fletcher School at Tufts University, using data from 2008 to 2013. The country stands alongside China, Malaysia, Thailand, and Vietnam as one of the ‘rapidly advancing countries’ in the global digital topography.

“The Philippine innovation center is patterned after the innovation districts around the world – the likes of Silicon Valley in the United States, Block 71 in Singapore, and MaGIC in Malaysia. It aims to foster the advancement of technology and innovation in the country with critical support from the government, the academe, and the private sector.

Can we celebrate yet? “Doing business beyond borders,” Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 23rd Jun 2015. It takes shedding the common inward-looking, defensive posture of many of our firms, in favor of an aggressive outward-looking one, to realize that many of us are creating ghosts where we could otherwise be finding ‘gold mines.’”

“Wanted: enabling government,” Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 16th Jun 2015. “We actually have a law—Republic Act No. 9178 or the Barangay Micro Business Enterprise (BMBE) Law of 2002—that seeks to attract small businesses with less than P3 million in assets to come out from the shadows of the informal or underground economy . . . That is all good in theory, but it turns out that in most places, the BMBE Law is the best-kept secret in town, especially in the city or municipal hall itself. In our own barangay office, no one has even heard of it (or at least that’s what the people there claimed).”

What can we learn from the private sector about competitiveness? An ambivalent athlete who can’t put his heart in his sports can’t be a champion. In other words, we are either a restrictive economy or a competitive economy. Yet winners – in good times and in bad – in a truly competitive market are those responsive to man’s well-being. It is not art for art’s sake. Or technology for technology’s sake.

The technology of Samsung, for example, is as good as if not better than the iPhone. But how come Samsung seems to be missing a beat? Apple products have been conceived from the middle-class upbringing of Steve Jobs. It was his partner, Steve Wozniak, who was the techie. But Jobs knew he wasn’t the only one who wanted to change the world. He grew up with other kids tinkering with gadgets that could open endless possibilities. And he wanted to create a tool – that today we call an Apple – that would help people change the world.

What is competitiveness then? It starts with an idea like that of the desire to change the world. But even an idea needs investment. Steve Jobs sought investors for his venture while he and his friends developed the technology for the Apple 1. And then they had to learn and equip themselves to create other innovative products – meaning, self-actualizing or responsive to a person’s rational, emotional and experiential needs. And it didn’t stop there. They had to develop a supply chain like no other, and the local and global market for Apple. And today we have the Apple Store and the iTunes online store.

That’s a competitiveness path that we need to internalize: from an idea to investment to technology to innovation . . . to people, product, supply chain and market development.

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