Wednesday, March 29, 2017

Amateur hour at the White House . . .

“While on the campaign trail, it was easy for Mr. Trump to roundly decry the US immigration system as broken and make a general call for bans and moratoriums. As president, however, his team has had to fill in the details – and it seems they faced some difficulty translating his pre-election rhetoric into policy.

“Mr. Trump's . . . executive order reportedly was crafted without consulting legal aides and enacted over the objection of homeland security officials, who balked at including permanent US residents in the ban. This made for an awkward scene . . . at a New York courthouse, where government attorneys had to defend measures that were creating chaos at airports across the nation.

‘I think the government hasn't had a full chance to think about this,’ said federal judge Ann Donnelly, as she ruled that individuals with valid paperwork on US soil couldn’t be deported.

“In the meantime, however, this has proven to be an embarrassing episode in what looks like a not-ready-for-primetime White House.” [Trump's executive order: Amateur hour at the White House (?), Anthony Zurcher, BBC, 29th Jan 2017]

The Trump White House may be suffering through their Amateur hour [separate and apart from a long-running Republican civil war a.k.a. the inability to govern despite wresting control of DC] but that can’t be said of Vietnam. “It may be one of the smallest economies in Asia, but Vietnam is among those leading the infrastructure race. Vietnam’s public and private-sector infrastructure investment averaged 5.7 percent of GDP in recent years, the highest in Southeast Asia and compares with 6.8 percent in China. Indonesia and the Philippines spend less than 3 percent . . .” [In Asia’s infrastructure race, Vietnam is among leaders, Karl Lester M Yap and Nguyen Dieu Tu Uyen, Bloomberg News, 23rd Mar 2017]

In the meantime, “[T]he Thais are moving to further upgrade their infrastructure, already far ahead of ours as it is. Meanwhile, our own PPP program had in recent years often been said, tongue-in-cheek, to stand more appropriately for “PowerPoint presentations” rather than public-private partnerships in infrastructure development, which is what it really refers to.” [Is our press holding us back (?), Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 24th Mar 2017]

And should we still be surprised to wake up to this news? “Gov’t shifts airport strategy; to develop multiple gateways,” Imee Charlee C. Delavin, BusinessWorld, 23rd Mar 2017. “THE GOVERNMENT is now looking at a multi-airport approach to address persistent air congestion problems and the need to expand the capacity of Philippine gateways in anticipation of more arrivals in the medium to long-term.

“‘To the question of where should our next airport be located, I think the answer is, it’s no longer a dual airport but a multi-airport system,’ Transportation Undersecretary for Aviation and Airports Roberto C. Lim told reporters in a recent interview.”

Is this déjà vu? The writer went to YouTube to listen to Usec Lim speak to the AAPA in November, and indeed he was singing a different tune. Everything was rosy, it was all systems go in PH infrastructure spending including the airports. Recall the decades it took for Terminal 3 to come into being only to be outdated for this day and age.

How many years if not decades have we wasted: (a) entertaining offers for this or for that airport project; (b) figuring out our energy needs; and (c) debating the recommendations of JICA re infrastructure development?

We can’t be the next Asian Tiger ever if we don’t reinvent Juan de la Cruz. It is not the war on drugs or the war on poverty. It is about the law of nature. Individuals and organisms whether an enterprise, economy or nation grow and develop. In other words, PH must grow and develop.

For example, poverty in the rural areas is a function of subsistence farming. And we are in the 21st century where scale and specialization are imperative to be in the game. Pouring money into “farm-to-market” roads to sustain subsistence farming is to institutionalize poverty. We must instead be educating our farmers about scale and specialization. And what we all need is to learn to look outward to Vietnam, for example, not inward and be parochial and insular.

We must sit down and ask: What and who are we? Where is our sense of identity and purpose? Let’s test this on the new perspective re a multi-airport approach. Remember that creativity is simply connecting the dots. But can we connect these dots: energy . . . prioritized infrastructure development . . . rapid industrialization?

We must not sink deeper into our “Dutch Disease” and ever celebrate the 10% of GDP generated by: OFW remittances, the BPO industry and tourism. They are a given. And in the case of Palawan tourism, it must be upgraded via a toilet-facilities campaign.

Our mantra must be to aggressively drive national income. It is beyond taxation. It is to make the pie bigger as President Ramos used to say.

How? Here’s a premise to bear in mind that comes from the Ateneo Economic Briefing in 2015. The economy is still skewed to specific regions: Luzon, from Hacienda Luisita down to Metro Manila and Calabarzon account for 2/3 of the economy; but with Cebu and Davao plus Cagayan de Oro, altogether they would represent the bulk of PHL’s $300-B economy.

Given our local output is comparable to our neighbors, the gap we must cover is the export sector – the key behind the success of the Asian Tigers. But it is not enough to simply set a target of 2X current levels. On the other hand, MSMEs geared for local consumption is not the answer! They will generate livelihood enterprises but will not elevate us to Asian Tiger status – and we will still be an oligarchic economy.

Indeed, the export picture is not rosy. The top 10 PH exports account for 80% of total receipts ($56.3-B) but the net trade surplus other than (a) Electrical machinery, equipment (at $4.5-B) and (b) Wood (at $2.3-B) is less than $1-B for each sub-sector. []

Sadly, the sound economic fundamentals our economic managers speak to is a symptom of our Dutch Disease. And it will not make us the next Singapore or Asian Tiger.

If we were an MNC or a Fortune 500 company, how do we attack these givens and rapidly raise revenues – before Wall Street hammers us for incompetent management? We must start where there is mass and weight present to jumpstart and generate power. It is the laws of physics. Sadly, contrary to “crab mentality.”

Which means, figuring out how we can exploit these vital few revenue drivers: Luzon, from Hacienda Luisita down to Metro Manila and Calabarzon account for 2/3 of the economy; but with Cebu and Davao plus Cagayan de Oro, altogether they would represent the bulk of PHL’s $300-B economy.

And what products and/or services? Beyond (1) Electrical machinery, equipment and (2) Wood are: (3) Optical, technical, medical apparatus; (4) Ships, boats, (5) Fruits, nuts; (6) Ore, slag, ash; (7) Gems, precious metals; and (8) Animals/vegetable fats, oils, waxes.

Two major exports yield negative trade surplus but can generate employment and develop our technology platform – which cannot be overemphasized – must therefore be a focused as well. They are: (a) Machinery including computers; and (b) Vehicles. And they generate substantial export receipts, $7.8-B and $1.4-B, respectively.

To support these industries, we must establish where (in the above regions, which includes the Visayas and Mindanao) they must be housed and then create an ecosystem geared for global competitiveness. We must rigorously assess if our products are indeed global winners – and then expand the portfolio to create a critical mass of competitive products. [And here we may need foreign technologies and even FDI.] And the acid test is: what human needs must they be sensitive to, the object being to raise man’s wellbeing – and make us superior to competition. It is what the value chain is about.

Then we must connect the dots of: (a) energy; (b) prioritized infrastructure development (including airports, ports, logistics, etc.); and (c) support industries. Imagine regional hubs supported by a network of auxiliary industries – including those beyond the hubs but makes sense logistics-wise to feed into the primary industry.

That is how the economy – not via political patronage and its inherent tyranny – will spread out, and encompass agribusiness . . . and more so as the economy generates greater and greater revenues from globally competitive products.

And crucial to remember is scale and specialization are imperative – not subsistence enterprises. As well as the 21st century skill sets that we must learn: 1) collaboration and teamwork, 2) creativity and imagination, 3) critical thinking, and 4) problem solving.

With due respect to Usec Lim, is it about time we Pinoys learn the above skill sets? And more to the point, the economic managers can set the example by teaming up and collaborating among themselves.

“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]

“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

“National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists . . . A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.” [The Competitive Advantage of Nations, Michael E. Porter, Harvard Business Review, March–April 1990]

“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” [William Pollard, 1911-1989, physicist-priest, Manhattan Project]

“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]

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