If Asia is ascendant, is “Europe at risk of becoming a business backwater”? What about the Philippines?
Consider: “Asia is increasingly the center of the world economy. By 2040, the region could account for more than half of global GDP and about 40 percent of global consumption.” [The future of Asia: Asian flows and networks are defining the next phase of globalization, McKinsey & Company, September 2019]
On the other hand, “Europe still looks like a series of mid-sized economies patched together, not a single rival to China and America. It risks becoming a business backwater.
“The single market matters – look at the mess Britain finds itself. A policy initially devised to break down trade barriers has not adapted fast enough.
“Europe’s banks have retrenched to their home markets and its firms have shifted their energies to expanding outside the EU.
“A decade ago, ten of the world’s 40 largest listed firms, by market value, were based in the EU; now only two are – in 32nd and 36th place. Few of the world’s leading startups are European.” [Europe single market at risk, The Economist, 12th Sep 2019]
Here’s the picture in the case of the Philippines:
“Mixed picture on jobs,” Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 27th Sep 2019. “The proportion of Filipino workers in the labor force unable to find work stands at 5.4 percent, the same rate one year ago. The good news is that our economy gained 2.3 million net new jobs over the past year, that is, since July 2018. That is nearly five times the 479,000 net new jobs posted last year.
“What about the quality of those new jobs? The not so encouraging news is that the percentage of wage and salary-paying jobs went down again, from 65.3 to 63.4 percent, as only about one-third of the 2.3 million new jobs were of this class of worker.
“There were 326,000 fewer entrepreneur-employers, which implies that there were that many small enterprises lost within the past year.
“This must be disappointing news, especially for the Department of Trade and Industry, which fosters more ‘negosyo’ along with more ‘trabaho.’
“There are now 1.7 million fewer managers compared to last year, while there are nearly 2 million new service and sales workers and more than a million additional unskilled or low-skilled workers in elementary occupations. Service and sales workers would include informal sector workers like ambulant vendors, laundrywomen, drivers, and other casual workers, probably more numerous than department store salesclerks, beauticians, and other formal sector service workers.
“All told, it’s a case of much more new jobs, but one wishes they were of the better kind.”
As the blog has argued, this mixed picture on jobs is self-inflicted. We are not able to create a better kind of employment because we are not an industrialized economy and by extension, lags in innovation and global competitiveness. It also explains why we have fewer managers and fewer entrepreneur-employers.
Moreover, MSMEs, as developed economies demonstrate, are subindustries spawned by larger, especially globally competitive enterprises or an industrial economy. Ergo: a service economy like the Philippines won’t create these high valuing adding jobs. Recall OFW remittances and the BPO industry are the drivers of the economy.
So, what do we want to do? “A SENATE committee on Thursday approved in principle measures that reduce the minimum paid-up capital for foreign companies seeking to enter the retail sector.” [Marc Wyxzel C. dela Paz, BusinessWorld, 26th Sep 2019]
Is this another manifestation of “pwede na ‘yan”? Is it the easiest way to open our closed economy and why we’re opting for it? Retail is low-hanging fruit, i.e., a low value-added enterprise with thin margins that can’t match the multiplier effect of a manufacturing/industrial economy – and why Jeff Bezos via Amazon was able to upend the industry employing scale and technology.
Industrialize. Industrialize. Industrialize. That must be our mantra, not “pwede na ‘yan.”
In other words, we need to step up to the plate and open our economy to industries that come with the technology that will make us win globally.
Benchmark. Benchmark. Benchmark. Think Vietnam becoming the hub of technology manufacturing, courtesy of Samsung, and by itself, generates roughly the aggregate of Philippine exports.
What does the CB Governor have to say? “REFORMS have made the Philippine economy more resilient in the face of external shocks, presenting investors with untapped opportunities, the central bank governor said.
“In his keynote address at the Euromoney Philippine Investment Forum Tuesday at the Fairmont Makati, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said the reforms had transformed the Philippines into ‘one of the most resilient economies in the region in the world.’
With due respect, the drivers of our economy, OFW remittances, and the BPO industry, bring us a windfall year after year that we want to celebrate even when they consign us to a service economy that won’t (a) match the output of an industrial economy and (b) generate the employment that can overcome poverty. Recall that in developed economies, the industry can account for as much as 30% of jobs as figured out by McKinsey & Company, a consultancy.
“Mr. Diokno cited the Philippines’ recovery from the 2018 inflation crisis when the indicator peaked at 6.7% late in the year. Price growth has since ‘reverted to within the target range of 2-4%.’ [BSP touts PHL resiliency after economic reforms, Luz Wendy T. Noble, BusinessWorld, 24th Sep 2019]
When all we have is a hammer, everything looks like a nail, yet we call it reform. We will not acquire the requisite tools until we recognize what we are missing. When every solution we have is “pwede na ‘yan,” it is a symptom of a graver problem. We are structurally flawed, if not a failed state.
Consider: “METRO MANILA was ranked the most congested major city in developing Asia by the Asian Development Bank (ADB), which noted in a report that such problems are generally due to ‘lack of efficient and affordable public transportation.’” [Beatrice M. Laforga, BusinessWorld, 26th Sep 2019]
“What to do about traffic relief has become so muddled that transport officials are so shell shocked to do anything.
“In 1970, Mayor Antonio Villegas wanted to build a monorail. Nothing happened.
“During the Marcos years, the LRT-1 came about. Then FVR gave the sweetheart deal for MRT-3. LRT-2 followed. However, the key mass transport is MRT-3.
“The private owners … had a great deal going for them. They had a guaranteed income from the government. It didn’t matter that Erap pegged the fare at a point too low to recover the cost of operations.
“The PNoy administration made a series of bad decisions we are paying for up to now. They awarded maintenance contracts to political allies who were only interested in the fees, with zero knowledge of what to do.
“MRT-3 facilities need much fixing. The rails are falling apart, which explains why the trains are running at reduced speed. The electrical lines, the communication facilities, and other technical stuff need upgrading too.
“Under the JICA agreement with Sumitomo and DOTr, Sumitomo will only bring back MRT-3 to the point when their contract expired in 2009. No new train cars and they don’t want to have anything to do with the Dalian train cars.
“That means running 22 trains per hour by 2021, which was the level in 2009. In short, no capacity increase after 12 years! After all the huffing and puffing and wild anticipation, we are not going to be better off in 2021 than when PNoy took over.
“MRT-3 is important. It has a current daily ridership of around 560,000 passengers. It is operating significantly above its designed capacity of about 380,000 passengers per day. Stalling is frequent. Lines to ride it are kilometric.
“Any solution to our traffic problems requires a mass transit system like the MRT-3, particularly on EDSA. Everything else can be considered band-aid solutions.” [Traffic: Is relief in sight(?), Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 30th Sep 2019]
What to do? Here’s what “The National Association of City Transportation Officials (NACTO) says what's possible with public transit: car lane, 600-1,600 people per hour (PPH); bike lane, 7,500 PPH; sidewalk, 9,000 PPH; transitway, 10,000-25,000 PPH.
“NACTO is an association of 81 major North American cities and transit agencies formed to exchange transportation ideas, insights, and practices and cooperatively approach national transportation issues. Its mission is to build cities as places for people, with safe, sustainable, accessible, and equitable transportation choices that support a strong economy and vibrant quality of life.” [NACTO website]
Can we relate to the ability of 81 major North American cities and transit agencies to work together? We can’t even get Metro Manila cities to work together.
In other words, do our instincts get in the way? We are parochial and insular. We value hierarchy and paternalism, rely on political patronage and oligarchy, that at the end of the day, ours is a culture of impunity.
Infrastructure development is generational and demands foresight and dynamism, both alien to us. Add a culture of impunity, and we are a disaster waiting to happen, as in a failed state.
As we get deeper down the abyss, the more we can’t free ourselves from the vicious circle of our making. What to do? Rely on political patronage and oligarchy.
Consider: SMC’s Ang: Construction of P735-B Bulacan airport to start by the end of 2019; Naia rehab by PH tycoons finally gets the green light from gov’t body.
Government can’t get infrastructure going, and so we again fall into the trap of “pwede na ‘yan.” Let Ang, let the tycoons run the country.
“Manila had the best organized and efficient mass transit system in the region when my late father was growing up. They had the tranvia. By the time I came around, we had the privately-owned jeep and bus lines.
“It wasn’t so bad then because the population wasn’t as big as now. I could leave our house in Paco by bus at 6:30 a.m., go to Quiapo to pick up the JD bus to UP Diliman and catch my 7:30 a.m. class. Seems like eons ago.” [Chanco, op. cit.]
Are our fortunes changing, or are these all self-inflicted?
Gising bayan!
“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]
“You have to have a dream, whether big or small. Then plan, focus, work hard and be very determined to achieve your goals.” [Henry Sy Sr., Chairman Emeritus and Founder, SM Group (1924 - 2019)]
“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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