Square the circle

Taking the wrong turn every time there’s a fork in the road … will explain why we can’t square the circle?

More to the point, “Change or face extinction … We must embrace change, otherwise we become products of the past instead of being brands of the future … There are questions about whether old guards can radically transform themselves to stay relevant and keep up with the speed and flexibility of disruptive startups, but change should start in the boardroom … Technology is unstoppable. No matter how much we resist, the market will choose what is beneficial for them …” [Change or face extinction, businesses told, Krista Angela M. Montealegre, BusinessWorld, 21st May 2018]

That is motherhood, but what is reality for PH? “Philippines drops the most in Asia in competitiveness ranking,” Ian Nicolas Cigaral,philstar.com, 24th May 2018.

Why? “[C]ompared to other countries like Indonesia and specifically Vietnam, it is lacking appeal for foreign investors when it comes to establishing plans and operations there.”

Ergo? “The Philippine economy experienced the most significant decline in the region in terms of competitiveness dragged by ‘worsening’ tourism, employment and public finances, as well as concerns about the country’s education system.

“The country fell nine notches to 50th spot out of 63 economies tracked in this year’s World Competitiveness Ranking … The Philippines also slipped to 13th place from its 11th ranking in 2017 among 14 Asia-Pacific nations.”

And they explain why the “Tall order for PHL to hit 2018 export goal–experts,” Cai U. Ordinario & Bernadette D. Nicolas, BusinessMirror, 10th May 2018.

“The Philippines would be hard-pressed to meet its export and import targets this year due to the lackluster trade performance of the country in the first quarter … [T]he country’s export performance in the first quarter ‘leaves more questions than answers’ … [T]he figures are ‘puzzling’ considering that the country’s manufacturing output grew by more than 20 percent during the period …

“[T]he Philippine government should double its efforts in marketing the country’s export products to international consumers …”

How do we square the circle, with due respect to our economic managers? We’ve been talking about an uptick in manufacturing since the Aquino administration, yet our exports continue to be lethargic. Why? Ours is a consumption-driven economy, which we always hear from our economists, and with the close to $50-B receipts from OFW remittances and the BPO industry our domestic economy is bigger than that of our neighbors.

That we are still blindsided speaks volumes. Because we take our economic profile and fundamentals for granted, how can we ever square the circle?

And it has nothing to do with “PH government should double its efforts in marketing … to international consumers,” not in the way we define marketing. Which is doing road shows to peddle Philippine products. That is no different from door-to-door selling of decades ago, a hit-or-miss effort. Marketing is outward-looking, not inward-looking. In other words, it is not about what we have and want to sell but what the market, more precisely what humans, need ... to raise their well-being. 

Let’s revisit how we stand – and it’s not new as pointed out by the blog’s reason for being 9 years ago – against our neighbors and why we “lack appeal for foreign investors when it comes to establishing plans and operations [in PH].”

And it confirms that our FDIs are pitiful. In billion dollars, PH = 67.25; TH = 205.5; VN = 128.3; MY = 133.2; ID = 247.7. And because foreign investment comes with technology and competitive practices as well as an outward-looking mindset, our export receipts are woeful: PH = 53.22; TH = 228.2; VN = 194.6; MY = 188.2; ID = 188.2.

And the bottom line is, even when our domestic economy is larger, our GDP per person (at purchasing price parity), which roughly represents our tax base (and why no matter how much TRAIN is supposed to bring we will still be the regional laggard), is miserable: PH = 8,200; TH = 17,800; VN = 6,900; MY = 28,900; ID = 12,400.

We beat Vietnam – a relative newcomer to the free market – yet given their strong investment cum exports performance, their poverty rate stands at 11.3% against our 21.6%. And look at Indonesia, it will deflate our celebration for being over a hundred million strong and with a young population, i.e., their GDP per person is more than 1.5 times, with a population that is more than 2.5 times ours.

How do we square the circle again? “Con-com’s halftime performance: 80% of work’s done, but how near are we to adopting a federal constitution (?),” Bernadette D. Nicolas, BusinessMirror, 26th May 2018.

Messing up with the Constitution is indeed a major response. But are we taking the wrong turn again? Recall that the blog has called out our lack of foresight, thus our inability to craft a vision and to prioritize and assemble and erect the must-dos of development and nation building. In other words, we must create the ecosystem for a developed and wealthy PH.

Remember how we celebrated OFW remittances instead of pursuing industrialization? And 50 years ago, shouldn’t we have created the blueprint for a subway system in Metro Manila instead of figuring out in the 21st century what to do with the jeepney? And remember how we celebrated being an inward-looking and consumption-driven economy? Because we can’t compete against Japan anyway? Yet Korea followed suit and industrialized as did Taiwan, Thailand, Malaysia and more recently Vietnam? 

Where is our fixed mindset coming from? When we should embrace a growth mindset and learn from the dynamism of creation – as in its oneness manifested by its ecosystem? And why the blog references Franciscan theology often. Because what we learned from religion, sadly, is “an authoritarian church that tells people how they should think and act.” [Can Ireland be Catholic without the Church (?), Eamon Maher, The New York Times, 26th May 2018]

And indeed, our instincts stem from our “culture” or way of life. And to quote from previous postings, “We are parochial and insular. We value hierarchy given the expected paternalism that comes with it. [See above re an authoritarian church]. And we value patronage and rely on political dynasties and oligarchies that dispense its spoils.”

“It means tossing ‘crab mentality’ and embracing the priorities dictated by the demands of rapid development aka the Pareto principle and the 1-percent phenomenon.” Specifically, pursuing (a) rapid infrastructure development, (b) industrialization and (c) innovation and global competitiveness where the bulk of the economy is generated: (1) Luzon, from Hacienda Luisita down to Metro Manila and Calabarzon, (2) Cebu, (3) Davao and (4) Cagayan de Oro.

And a good starting point would be the 10 biggest export industries and where we have more knowledge than others, but we must raise their competitiveness with the right portfolio of products and scaled up the value chain. Competitiveness doesn’t mean greenfield but being responsive to ever changing human needs. And that means investing in technology (including partnering with the world’s best) and innovation in product development as well as market development and people development. 

In order words, is upending the Constitution a priority? Are we running away from change? [See above re our culture aka a “damaged culture”?] Or is it the absence of personal experience in development that our reflective judgment is suspect? How long will the Con-com exercise take our eye away from the ball? In the meantime, how do we address our economic profile and fundamentals? With due respect to our economic managers, a consistent GDP growth rate of 6-7% won’t leapfrog PH to be equal to our neighbors. We can’t keep managing the P&L and not the business.

The blog started out on a hopeful note when the business community, through the JFC, geared up to present to the incoming Aquino administration “Arangkada Philippines.” Sadly, at end of its term, the JFC didn’t hide its frustration. And we are nowhere near that enthusiasm to drive industrialization.

And why we can’t seem to square the circle. We in the elite class are calling the shots, why would we want change? Who cares if we leave something behind worse than we got it?

“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]

“Now I know why Paul dared to speak of ‘the curse of the law’ (Galatians 3:13). Law reigns and discernment is unnecessary, which means there is little growth or change in such people. When you do not grow, you remain an infant.” [Faith and Science, Open to Change, Richard Rohr’s Daily Meditation, 23rd Oct 2017]

“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]