But we believe we’re being patriotic by cherry-picking our positives forgetting that there is such a thing our accountants call “net worth.” Yes, we can’t keep advertising our assets – that we’re the fastest growing economy in the region, forgetting that in grade school we learned about fractions and the laws of small and big numbers; and as mind boggling is our/our economic managers’ inability to acknowledge so that we don’t keep falling into the trap of “pwede na ‘yan” that behind our vast consumption economy aka our own Dutch disease and why we can’t move up to the next level is the remittances of over 10 million OFWs and the BPO industry and PH newest “industry,” gambling – and sweeping our liabilities under the rug. And our net worth is aptly described as: we’re the regional laggard.
Why? Our neighbors like the Asian Tigers through visionary leadership saw what the future can be like and figured out how to traverse the road from poverty to prosperity. And over the nine years the blog has been around, it appears we still haven’t stepped up to the plate to recognize and acknowledge what our neighbors have done. Sadly, the blog is sounding more and more like a broken record. Because it hates to simply say, “I told you so.” Because he is intimately aware that it takes efforts.
The writer saw how his former MNC-company changed despite being a 200-year old enterprise and how his Eastern European friends in a matter of 15 years transformed themselves – born and raised as socialists under communist rule – to be an innovation- and globally competitive-driven enterprise able to thrive in the 21st century. Yet, neither was a cakewalk.
Consider: (a) “The lesson for us ought to be clear: We must keep our eye on the ball, as there’s still a lot of catching up to do,” ‘Beyond ‘PiTiK,’Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 12th Jun 2018; (b) “Taxation by LGUs emerging as a key TRAIN concern,” Elijah Joseph C. Tubayan, BusinessWorld, 19th Jun 2018; (c) “Foreign chambers blame TRAIN uncertainty for flat FDI outlook,” Janina C. Lim, BusinessWorld, 19th Jun 2018; (d) “Philippines losing digital edge — IMD,” Janina C. Lim, BusinessWorld, 20th Jun 2018.
The bottom line: We’re neither here nor there. And what is our response? “Now the BSP is saying they expect more dollar outflows and they are blaming it on our trade imbalance. They are expecting the value of the country’s imports to outpace what we earn from exports by over three times its original forecast.
“The BSP is now saying the country’s current account would likely end the year at a deficit of $3.1 billion, or a 342-percent increase over the original deficit projection of $700 million announced in late 2017. Exports are seen growing by 10 percent and imports climbing by 11 percent YoY.
“But the central bank is saying not to worry because this large deficit will be propped up by service-related inflows and the entry of more foreign capital. That’s optimism bias again.” [Optimism bias, Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 20th Jun 2018]
Of course, we’re doing more. “President Duterte is expected to issue a memorandum circular ordering concerned government agencies and requesting Congress to fast-track removal of foreign investment restrictions that require legislation, the country’s chief economist said Thursday.
“Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that the upcoming presidential order will complement the moves to liberalize the foreign investment negative list (FINL), which is also pending the President’s approval.” [Duterte to ask Congress to rush removal of foreign investment limits, Ben O. de Vera, Inquirer Business, 16th Nov 2017]
So, has President Duterte issued the circular? And beyond the circular, what are our next steps? We have a perfect storm, remember. We need more than a circular. We need the building blocks of the 21st century ecosystem. Yes, rapid infrastructure development is fundamental especially given we’re at least 50 years behind. And the administration’s mantra of “Build, Build, Build” is spot on. Yet we cannot eat a mantra. And we appear stuck and can’t move forward. Que sera, sera!
In the meantime, what are we doing about rapid industrial development? [“Focus on key industries could double FDI — AmCham,” Janina C. Lim, BusinessWorld, 21st Jun 2018] It is not about making PH the gambling Mecca and calling it an industry. We don’t have to choose between drugs and gambling.
And it’s beyond MSMEs. Because we need to simultaneously learn innovation and global competitiveness. Recall our neighbors were able to leapfrog the rest of the world because they begged for Western money and technology.
Yes, including Vietnam. Note that “7 million tons of bombs had been dropped on Vietnam, Laos, and Cambodia – more than twice the amount of bombs dropped on Europe and Asia in World War II.” [libcom.org]
How badly did we suffer from Spain, the Americans and whoever else? People get over it. Like we have embraced the Japanese and remain proud of our Spanish heritage. It’s called moving from a fixed mindset to a growth mindset – aka dynamism.
As the blog keeps saying, the road to prosperity is an exercise in building the requisite ecosystem, not a perfect storm.
Yes, our “culture” or way or life is what is kicking up this perfect storm. That we are parochial and insular. That we value hierarchy and paternalism. That we love tyranny and embrace political dynasties and oligarchies for dispensing the spoils of patronage.
And it also explains why we have the Mindanao problem – and why despite being called the gates of hell the notion of imperial Manila continues to rankle – and why we can’t find peace. Imagine how long ago since China embraced capitalism and we’re still negotiating with PH rebels to get us into the time machine that embraces decades-old assumptions? It explains why we can’t grasp how the Asian Tigers left us in the dust.
It has nothing to do with the system of government. [“It … would be counterproductive if we go into a new government system and we’re starting from square one,” Business groups want policy stability amid shift to federalism,” Camille A. Aguinaldo, BusinessWorld, 21st Jun 2018.] See above re taxation by LGUs. And we will have more of that in a federal system. And see below re perceptive judgment why we can’t seem to figure out if we’re coming or going. It’s reflective of our adolescence in nation building and development.
On the other hand, Trump fails to understand that industry as in manufacturing has traveled to Asia – no different from the first industrial revolution which the Britons themselves brought overseas given the opportunities they saw; and history repeated itself when US companies (including the writer’s) brought money and technology to China – while the US has become a service economy … and must then move the technology revolution up to the next level. And engaging China in a trade war isn’t going to flip the scenario. And the latest casualty being General Electric, one of the titans of the original 30 industries (which will be down to “seven against six tech firms, five financial institutions, three drug makers, three consumer-product companies, three retailers and an entertainment giant,” Yahoo Finance, 20th Jun 2018) represented in the Dow Jones Industrial Average formed by Charles Dow in 1896.
Trump comes from America, still the largest economy in the world. They can afford the misstep. But can we in PH continue to be the regional laggard? Which brings to the fore the concept of perceptive judgment that the blog has discussed as well as visionary leadership. The latter is the common denominator in the case of the Asian Tigers, the writer’s old MNC-company and his Eastern European friends.
What about perceptive judgment? The imperative to succeed was the motivation of the MNC-company and the Eastern Europeans. The former was driven by a threat of a takeover that it wanted to fight. And for the latter it was the eight years they were in the red. And in both cases, the personal experience of going through both failing and successful efforts rounded out their confidence knowing full well there is a way forward to prosperity.
Which brings us back to PH. We need to seek a visionary leadership as well as gain personal experience beyond failing efforts, that is, successful efforts in pursuit of community and the common good. We’ve had too much focus on oligopoly that it has become our success model. And given its symbiotic relationship with politics they can only perpetuate patronage and a culture of impunity. If we haven’t figured that out yet, it will get worse before it gets better for Juan de la Cruz.
“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]
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