Overarching game plan

The World Bank again pointed at our inability to attract foreign investments! Like it or not a third of us are hungry!

The good news is the new Administration has signaled its desire to focus on the vital few. And the cabinet members apparently are coordinating their efforts to better prioritize initiatives across departments. Hopefully they are developing an overarching game plan to ensure that they are in synch? For example, are they in agreement and thus committed: (1) to raise our revenues as a nation or our GDP; (2) to raise the margins on these revenues; and (3) to raise efficiency/productivity in pursuing their (vital few) initiatives? (MNCs typical develop their plans around these same goals given their bias for clarity, simplicity and execution, not perfection. We’re talking of DMIA as the perfect solution to our airport woes – let’s prioritize, fix NAIA first then talk DMIA?)

Raising revenues substantially requires enormous investments. The key then is to rapidly develop the critical initiatives that will attract foreign investments? For example, the Joint Foreign Chambers (JFC) have effectively started the process by teeing up 7 strategic industries that could raise our competitive advantage. This is a great straw man – the Administration could promptly evaluate them and develop a workable action plan?

They could assess if indeed these industries beyond their requisite inputs would yield the right margins that can flow right through our economy given their multiplier effect; and down to government revenues in the form of taxes? They could likewise figure out how to most efficiently (the Balance Scorecard is a good tool) execute these strategic initiatives?

The former DTI secretary handed over to his successor the Philippine Investments Promotion Plan (PIPP), and left word: “whoever will come in will implement his own policies, but this one is like a black book just like the MNCs where the ones succeeding will implement and hit the ground running.”

Indeed MNCs religiously keep their eye on their product portfolio to ensure that they are in the right business – that the elements of the portfolio will deliver their stated revenue goals and that they optimize margins to fund their competitive efforts, thus constantly drive efficiency/productivity to the hilt. As a nation, we can view the JFC-identified strategic industries as our model product portfolio.

Our traditional practice is to operate within a narrow framework or the revenues the government could raise from taxes, for example? We want to raise our sights beyond this limitation? For instance, even if the Administration can raise tax collections, they don’t substantially raise our GDP per person, the ‘Holy Grail’?

Taking a cue from the former DTI secretary, we could adopt the MNC approach and that is, aggressively drive revenue- or GDP-generating initiatives – for example, industries that can produce competitive products and services to sustain our revenues and margins thus our GDP! One of the strategic industries presented by the JFC is infrastructure; and it goes to the issue raised by the new DTI secretary: Given our high power costs we can’t aggressively pursue manufacturing! That’s how backward we are compared to the Asian tigers, for example; and given a highly competitive global economy! But we don’t have to take that sitting down?

In the meantime local investors are pursuing infrastructure projects – it’s a ‘Greenfield’ – beyond their core businesses. Let’s grant that they want to help in our development efforts. But given poorer Vietnam is investing more than we do, we ought to seek the optimum investment options if we are to accelerate infrastructure development? And for us to attract foreign investments, we must demonstrate that we have a level playing field, that we are focused on what’s good for the economy and country? Our loyalty to our favorite local investors must end where our loyalty to our country begins? Or does our hierarchical culture put that emotional prism – that we miss the third of us that are hungry?