In the company of Lao PDR

“The Philippines’s CRI (Commitment to Reduce Inequality) performance was dismal, as we ranked 102nd out of 161 globally and 19th out of 25 in East and the Pacific. Furthermore, we were 106th in public services spending, 104th in taxation, and 92nd in labor rights and welfare. These rankings put us second from the bottom, ahead only of Lao PDR, among the nine ASEAN member countries included.

“One area that needs more attention is enacting reforms that will encourage investments and structural change in our economy so that we create high-paying jobs and better entrepreneurial opportunities are available across the country.” [“Jobs generation: A tool for fighting inequality,” Sonny M. Angara, Better Days, BusinessMirror, 28th Oct 2022]

“The government of Laos, one of the few remaining one-party communist states, began decentralizing control and encouraging private enterprise in 1986. Economic growth averaged more than 6% per year from 1988-2008. Laos’ development has more recently been amongst the fastest in Asia, averaging more than 7% per year for most of the last decade.

“Nevertheless, Laos remains a country with an underdeveloped infrastructure, particularly in rural areas. It has a basic but improving road system and limited external and internal land-line telecommunications. Electricity is available to 83% of the population. Agriculture, dominated by rice cultivation in lowland areas, accounts for about 20% of the GDP and 73% of total employment. Recently, the country has faced a persistent current account deficit, including falling foreign currency reserves and growing public debt.

“Laos’ economy is heavily dependent on capital-intensive natural resource exports. The economy has benefited from high-profile foreign direct investment in hydropower dams along the Mekong River, copper and gold mining, logging, and construction. However, some projects in these industries have drawn criticism for their environmental impacts.

“Laos gained Normal Trade Relations status with the US in 2004 and applied for Generalized System of Preferences trade benefits in 2013 after being admitted to the World Trade Organization earlier in the year. Laos held the chairmanship of ASEAN in 2016. Laos is in the process of implementing a value-added tax system. The government appears committed to raising the country’s profile among foreign investors and has developed special economic zones replete with generous tax incentives. Still, a limited labor pool, a small domestic market, and corruption impede investment. Laos also has ongoing problems with the business environment, including onerous registration requirements, a gap between legislation and implementation, and unclear or conflicting regulations.” [Laos - The World Factbook (cia.gov)]

We keep that company, not Vietnam, China, or the earlier Asian Tigers. And it brings my mother to mind: Tell me who your friends are, and I will tell you who you are.

Her other constant reminder is: Honesty is the best policy. She attended the Philippine Normal School but did not have the chance to practice because of WWII. Still, she wanted me to learn leadership, so she had me join the Boys Scouts in high school. She failed to develop my study habits, and I was indolent.

I grew up with the rest of the neighborhood kids, playing in the streets after school. Fortunately, I demonstrated a knack for leadership by teaching the kids how to play softball, and we became the regular entertainment during school breaks.

I am no longer surprised that I kept the company of “winners, not losers.” Over the four years of high school, whatever groups of boys I led were the models – winning competitions as a matter of habit. Yet, it is not about winning per se. It is how we play the game, i.e., honesty is the best policy.

My Eastern European friends did not disappoint. If you want me around, you must commit to transparency, no ifs, and buts. In a region that woke up to Soviet-style tyranny, they stand out. We kept a new factory mothballed for a year instead of acquiescing to the demand for grease money – to be hooked to the power source. When we had our first trailer truck of products into Ukraine, we asked the driver to turn around instead of paying his way through.

Unsurprisingly, the country is proud of my friends and recognizes them as model exporters, generating 70% of revenues from exports. 

Conversely, why is the Philippines in the company of Lao PDR?

News item: “World Bank: Philippines has one of the widest wealth gaps in East Asia.”

Here’s another one: “PHL urged to focus economic policy on keeping middle class prosperous. Income inequality did not begin to decline until 2012. It is still high: the top 1% of earners together capture 17% of national income, with only 14% shared by the bottom 50%.

“It’s no longer just economics. We must open our eyes and focus on a bigger canvas, not just economic indicators. Still, most social, political, and other inequality indicators frustrate our efforts to build social cohesion and unite people around certain reforms.”

We must open our eyes and focus on a “bigger” canvas.

Consider: “I am happy to note that the Philippines has just survived the worst pandemic and economic crisis of the last 100 years.

“COVID-19 infected four million Filipinos. About 64,000 died. Another 60,000 died, but their cause of death didn’t attribute to COVID—an act of dishonesty during a time of grave peril.

“In the third quarter of 2022, the economy continued its frenetic growth after coming from a crippling 16.9 percent decline in the second quarter of 2020—the height of the pandemic.

“Since then, the economy pulled itself up, registering a remarkable 12.1 percent jump (Q2 2021) before steadying at a robust pace of 7.0 in Q3 2021, 7.8 in Q4 2021, 8.2 in Q1 2022, 7.5 in Q2 2022, and 7.6 in the third quarter this year.

“The 7.6 percent third quarter GDP growth beat everyone’s expectations.

“Against that happy backdrop, let me cite among the best CEOs who did spectacularly in the last two years and nine months.” [“The best,” Tony Lopez, Virtual Reality, manilastandard.net, 16th Nov 2022]

We must open our eyes and focus on a “bigger” canvas.

Why can’t we? 

(1) Because of the Philippine caste system, we cater to the top 1% that, in turn, shower us with paternalism.

(2) Moreover, we grew up emulating the economic model of the West despite decades of contrarian ways demonstrated by our neighbors. In other words, the West did not have to focus on a giant canvas because they had already traversed the journey from agriculture to industry. But we are too “ivory tower” to recognize the pitfall.

On the other hand, our neighbors had a straightforward mantra: Begging for Western money and technology. In other words, they knew they had to leapfrog the development journey and be first-world economies sooner than later. 

In the meantime, given our logical yet linear and incremental thinking, we love analysis; but have not developed the big-picture view to learn analytics. Said differently, it is beyond us to reimagine the Philippines as a first-world economy.

Even more fundamentally, while we like to do our homework and sweat it out doing project studies and plans, we can’t “execute.”

“Our government finds it difficult to execute good plans and programs. Many agencies end the year with unutilized budgets. It is clear the taxpayers are not getting their money’s worth,” wrote Boo Chanco.

The blog is surprised the least. Recall that several times it asked, how many dissertations ever “see the light of day”? Or what happened to the scores of industry road maps we proudly developed? 

Or where are we with AmBisyon and Arangkada? 

Recall, too, that when I assisted a Ph.D. candidate with her dissertation, I was appalled at the number of dissertations I scanned that won’t ever get it to first base in the real world.

And so we had to revise the professor-approved outline, and after I said I would only assist you if you committed to pursuing a real-world challenge. Today, the once Ph.D. candidate is the global marketing director of a famous brand that can traverse the value chain of the product category instead of being stuck as a niche brand. How? She had to embrace the hierarchy of human needs, being the bedrock of innovation.

Conversely, given our mantra of 6%-7% GDP growth, please consider how much hubris we exude. Yet, we can’t provide Juan de la Cruz with the basics of water, food, and electricity. Then we turn around and claim we can’t industrialize because Philippine electricity is too expensive.

How badly do we need a hole in the head? 

Translation: If our economic managers are listening, as our legislators and “think tanks,” there is not one iota of justification – nada – for a nation of over 115 million not to provide the basics of water, food, and electricity.

We must not only put the BOI in the crosshairs to match the Pearl River Delta Economic Zone or the Samsung Vietnam partnership but also rack our brains to get Juan de la Cruz the basics of water, food, and electricity.

Not because that is easy but because it is hard. Think of the Kennedy moonshot speech.

We are too “ivory tower” to think out of the box — nor execute.

Thinking outside the box demands different skill sets, which we can’t acquire given our instincts, expressed in the Philippine caste system. That is why the blog has repeatedly raised the challenge of benchmarking against best practice models.

But the “ivory tower” won’t let us look outward, too. We’re stuck into the Western model of poverty and jobs – and “inclusion.”

Yet, decades of failed interventions must teach us a lesson. From CARL – the comprehensive agrarian reform law – to the 4Ps, to the OFW phenomenon, to call centers, among others, we failed to visualize the “bigger” canvas.

The bottom line: We are lost and can only see the trees but not the forest.

It is motherhood to say we must “encourage investments and structural change in our economy.

Instead, we must get ahead of the curve by visualizing economies of scale. Economies of scale must trump the Filipino crab mentality. And that means undoing the value hierarchy and paternalism, which perpetuates political patronage and oligarchy – and the perfect storm in our midst. 

Begin with the end in mind – to clear the cobwebs in our heads. Think of the seven habits of highly effective people by Stephen Covey. For example, Be Proactive.

And the rest goes: Put first things first; Think win-win; Seek first to understand, then to be understood; Synergize; Sharpen the saw – or continuous improvement.

Moreover, we are yet to internalize 21st-century skills: Critical Thinking; Creativity; Collaboration; Communication.

The problem with “critical thinking” is that it is too abstract. But there is a way to digest it, and it comes from the elements of cognitive development: dualism or binary thinking, multiplicity, and relativism.

In other words, to internalize critical thinking, we must recognize that the real world is beyond “binary thinking.”

The bottom line: Our best is not good enough. We are proud to be among the fastest growing economies doing 7% GDP growth, yet we are cellar dwellers. We are in the company of Laos.

At the rate we are going, the challenge Juan de la Cruz faces is way beyond our capacity.

We can’t settle for the status quo. Very soon, we shall find ourselves too deep into the abyss that the only thing left is for us to keep sinking.

We are in the company of Laos. How much deeper do we want to sink?

Gising bayan!