“If the Philippines wants to eradicate poverty, it must post a GDP growth of at least 6 percent every year until 2040.” [PHL needs above 6% GDP growth up to 2040 to end poverty–expert, Cai Ordinario, BusinessMirror, 18th Oct 2017]
We aren’t hearing this for the first time, are we? If it sounds like a broken record it is because we’re caught in a vicious circle. And the prescriptions too are not new. But where are we really? “The Philippines has already improved its GDP growth to an average of 6.2 percent between 2010 and 2015. In 2016 GDP grew by 6.9 percent, and in the first semester of 2017, it expanded by 6.4 percent … The challenge for us is really sustaining this particular growth.” [Ordinario, op. cit.]
Left unsaid is for decades and more recently, PH GDP growth has been driven by OFW remittances and the BPO industry. In the meantime, “WHAT a huge disappointment the Duterte administration has evolved into after so much hope and hype were generated from the election … [N]ot much actual progress towards a unified vision with game plan … has been achieved. The drug war has been discredited with outlandish claims of police ‘fighting back’ and investigating vigilante killings that some count as high as 7,000 dead in total … Incredulous statements defending the administration’s performance to date weaken the credibility of the government. You cannot govern effectively for long when credibility is diminished.” [Disappointment and reset, Philip Camara, The Manila Times, 19th Oct 2017]
What vision and what game plan? “We really have to curb down our population growth and poverty will be eradicated in the next quarter of a century. There are hurdles to sustaining that particular growth … Growing the economy … requires making food cheap and accessible for all, as well as boosting the country’s trade and investment growth.
“[F]or one, rice remains expensive, not only for consumers, but also for farmers themselves … The poorest farmers … also suffer from expensive rice since they are consumers themselves … Data showed that this is largely due to high trade costs.
“The Philippines … spends about P36.25 billion a year for poor farmers, who are also penalized by high rice prices. Industry and manufacturing are not really kicking because wage costs can be high when food costs are high; so we really need to do something about agriculture.
“Improve the productivity in agriculture to bring down food costs in order to put pressure and encourage investments in industry and manufacturing … The main hurdle in improving agriculture productivity is agrarian reform, which is one restriction in land ownership in the Philippines.
“If these hurdles in the economy will be addressed and growth will be sustained … foreign direct investments will post a 10-percent growth annually from the current rate of 4.64 percent, while labor productivity will improve 3.71 percent, from the current 0.32 percent.” [Ordinario, op. cit.]
Really? What about other hurdles? “AI poses a major threat particularly to the business process outsourcing (BPO) sector, one of the major pillars of the Philippine economy which employs more than one million Filipinos.
“The government and even the private sector should retrain the work force to address the increased need for advanced technical skills and determine sectors that will help absorb the labor pool that will be displaced …
“The Kinder to Grade 12 program, which added two years to the 10-year basic education curriculum, is a bold solution to address the demands of tomorrow’s jobs, as it incorporates more high-value skills like critical thinking, problem solving, and creativity … Change is that fast so we have to teach them to adjust. By the time they graduate, nothing is useful anymore especially with the advent of artificial intelligence …
“If the world becomes much more protectionist, much more nationalistic, you would see some of those investment flows being curtailed … Likewise … the infrastructure program is ‘one of the best ways’ to attract foreign investment and the government should ‘restart’ the public-private partnership program instead of solely depending on official development assistance ...” [Education overhaul seen critical in responding to threat from AI, automation, Krista A. M. Montealegre, BusinessWorld, 19th Oct 2017]
We seem to have all the answers yet why are we the regional laggard?
“Dr. Mahathir was the Prime Minister of Malaysia from 1981 to 2003, a period spanning five terms. He has the record of the longest serving Prime Minister of Malaysia. During his term, Malaysia experienced rapid growth and poverty was practically eradicated.
“[H]e was the keynote speaker at the culmination of Finex Week with the theme: ‘Breaking Barriers to Competitiveness in the ASEAN Financial Sector.’ Dr. Mahathir’s first point was that when countries that are less developed trade with more developed countries, they are trading with a handicap.
“Ways must be found to compensate for the handicap or else the less developed country will not fully benefit from the trade relationship. The alignment of less developed countries as a trading bloc like the way that ASEAN developed was one way to make up for the handicap of the members for being less developed countries.
“Dr. Mahathir also shared his experiences in taxation and economic development. He said that the right rate of taxation must be determined and adapted to the specific circumstance … He gave a specific example of how his government brought down drastically the taxes on luxury goods. As a result, tourists from around the region came to shop and this created jobs and income.
“Income tax collections on the businesses and individuals participating in this industry ultimately ended up being much greater than the revenues lost by bringing down the tax rates on luxury goods.
“Dr. Mahathir was well known for being a strong proponent of investments in infrastructure … He talked about the highway that his government had built from Singapore to Thailand a distance of over one thousand miles.
“He said that while he let the private sector build and operate the highway, he realized that if they charged toll rates that were too high, many people may not be able to afford to use it and the positive impact on the economy would not be as desired. So he arranged for the government to grant low interest financing for the project proponents of the highway so that the toll rates would be lower.
“The highway turned out to be a big success with businesses going up and thriving along the highway and property prices going up along the areas where the highway passed.
“Dr. Mahathir believed in technology and industrialization. He said that he pushed the Proton car project as a Malaysian car not so much to compete with the car manufacturers of the advanced countries but more to develop the industrial base of Malaysia.” [Dr. Mahathir’s thoughts on competitiveness in the ASEAN region, Valentin A. Araneta, Manila Bulletin, 18th Oct 2017]
That’s what leadership is about. And Mahathir is not speaking for the first time. When Deng Xiaoping sought his views as well as that of Lee Kuan Yew, both said “Beg for Western money and technology.” And Mahathir said the same thing to us.
But are we prepared to listen? Not if we examine how we have mismanaged PH for decades. And that is because we’ve been caught in a vicious circle of our own making. But which we have yet to acknowledge and recognize: That Juan de la Cruz is parochial and insular ... defers to hierarchy and expects paternalism in return ... values and relies on political patronage and dynasties ... and oligarchy.
And why reforms, education for instance, aren’t our cup of tea. The latest findings in education reform call for a growth mindset not a fixed mindset. And beyond teacher-directed learning is learning through discovery, that is, by developing one’s own hypothesis and experiment. How will that find a home in the inward-looking, fixed and closed mind of Juan de la Cruz? And we wonder why innovation and competitiveness is alien to us? And why even teeny tiny Brunei is more competitive than PH?
Such insularity – aka false sovereignty and nationalism – happens even in the private sector. We would want to believe that Procter & Gamble, for instance, is a progressive enterprise yet here is how an analyst describes the global behemoth: “Procter & Gamble Won The Battle But Lost The War,” Josh Arnold, Seeking Alpha, 11th Oct 2017.
“Without Trian, an equity fund, PG will remain bloated and overvalued … The problem is that while the stock has continued its move up, the rest of the market has left it behind.
“PG needs someone else to come in and show it the error of its ways … [I]t has little willingness to change.
“[I]t has grown fat and happy over the past several years. Trian, no doubt, would have come in with some fresh ideas, including the reorganization it pitched ...
“Trian would have been able to help PG and give it the kick in the pants … But for now, all the evidence supports PG just carrying on as it has for years and that just isn't good enough.” Sound like PH?
“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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