Beyond low-lying fruit . . .

The efforts of the private sector and the JFC (Joint Foreign Chambers) with their proposed economic roadmap – ‘Arangkada Philippines 2010: A Business Perspective’ – could be undermined if we allow ourselves to be blindsided by the low-lying fruit. Clearly we need something to happen fast, but we can no longer keep missing on the foundation for the future. As kids we played Chinese checkers and it taught us the fundamentals of building for the end game or the future and winning? Arangkada tells us how we could elevate our investment levels, the nub of our problem, by as much as $75 billion; and which industries would deliver incremental revenues or GDP of $100 billion, and generate millions of jobs and reduce poverty. The end view provided by Arangkada is meant to overcome our own Dutch disease!

‘Dutch disease’ is the typical outcome when economies fail to see beyond the low-lying fruit. Desperate to prop up our economy, like the Dutch before us, we also succumbed to our Dutch disease – the increasing OFW remittances – thus failing to establish the right foundation for the future. Specifically, we failed to move toward industrialization. We can’t afford to lose our sense of purpose given the enormity of our challenge? Nor can we afford to stick our head in the sand?

The key is for government to reconcile what we must pursue as strategic industries – so that we can aggressively and confidently direct our meager resources against them, including the requisite legislations. It is encouraging that the Executive and the Legislative appear committed to work together. And given the 21^st century is highly competitive, innovation, by definition, is crucial for these industries to be truly strategic and sustainable. Thus, the question to ask is: are we incorporating innovation, competitiveness and sustainability in tourism as we see? In BPO as we see it? In electronics, as we see it? In mining? Or housing? Or agriculture?

Of course we need to do stop-gaps but must recognize that while programs like rural and poverty initiatives are imperative, such efforts won’t suffice given the magnitude of our challenge. (It should not be surprising, we do distinguish between teaching how and giving fish?) The same applies to CCT. Brazil’s success model comes from better economic fundamentals. Their GDP per capita is 3 X more; their exports (beyond mining they produce transport equipment) are 4 X more and their FDIs (Foreign Direct Investments) are over 14 X more. Net, they are aggressively pushing industrialization via FDIs, strategic industries and innovation (and so that they don’t miss out, the CEO of GE directed his people to erect an R&D center in Brazil) and are generating more revenues than we do and thus have more to spare for the poor via CCT. Our CCT can’t cope with the increasing rate of our out-of-school kids.

We simply can’t keep exploiting the low-lying fruit, do stop-gap measures and not establish the right foundation for the future? Even when looking at the local market, we have to raise our competitiveness because as trade barriers come down in a globalized economy, we have to contend with competitors more agile than the ones at home. We wouldn’t want to cry ‘foul’ again – and pursue protectionism? Big guys can be bullies and small guys must thus be smarter! And so we like to write about and visit Singapore, once viewed as truly tiny, because it is a place where things do work.

Of course, some Westerners are not enamored at Singapore because they find it too squeaky-clean (and not the typical Western-style democracy) almost like Disneyland! But the bottom line is: their GDP per capita beats that of the U.S – they are able to provide bread on the table and roof over the Singaporean’s head! To be critical because they are export-dependent and had a recession is like telling Donald Trump he became poor when he declared bankruptcy? But he came back strong given strong economic fundamentals and smart marketing – of his own, personal brand?

The Aquino Administration appears moving in the right direction. But our challenge remains: to focus on what will move us forward and sustain our gains? The administration can’t be everything to everybody – that’s the failed formula of the last 40-50 years, of trying to please everyone, that stunted our development? We need to learn the unfamiliar, including being driven out of paradise?