A new paradigm for local investors – II

The efforts of the Aquino Administration and the private sector to accelerate economic growth open new doors to investors especially local. But we have to move beyond the old thinking, and it’s not easy? For instance, not everyone has to invest in ‘bangus’ farming or tilapia or shrimp or ‘lechon manok’ – and for the big boys, it means beyond infrastructure? The 21^st century mantra is competitiveness. Philippine-style oligarchy cuts us by the knees – it robs our competitive sense and spirit, sets up protectionism if not outright isolation, thus our inability to attract foreign investors while perpetuating a vicious circle? (There’s plenty of blame to go around re the Terminal 3 fiasco; in the end we’re the losers – a legal process could lend itself to more delays, with bystander Juan de la Cruz already in dire economic straits denied justice? Passion can win over reason – thankfully Al Gore demonstrated what ‘country first’ means?)

The writer talks about Fortune 500 companies given the backdrop of a globalized economy: our economic engines – our largest industries – are still ‘Ladas’ as Eastern Europeans love to compare their products of old, to Eastern- as opposed to Western-built cars. Our challenge is not whether we can create billionaires (although Malaysia has >3 X more when our population is >3 X), it is that our GDP equates to an impoverish nation, with literally millions or a third of Filipinos having lost their human dignity. In the region we’re the least able to overcome poverty – because over the last 40-50 years the world left us behind? And the gaps that we can turn into economic drivers are: power supply, world-class airport, foreign trade agreements, investments, and competitiveness, for example? But as an ex-NEDA chief says, ‘If the program looks familiar, discard it, it’s been tried, it failed. Look for the unfamiliar’. And reality hurts?

Does our hierarchical culture make us cheerleaders of a failed economy – when we could be cheering something even greater? For instance, successful leadership fields criticisms – e.g., the CEO of the world’s largest enterprise, Wal-Mart, squarely addresses criticisms; and the CEO of Netflix believes that criticisms and the fear of failure keep his creativity in overdrive? And the more successful they are, including our major investors, the more confidence and passion they have to push the envelope, elevating them to the Forbes wealthiest. If our local investors begin to apply their muscle; and knowledge, attitude, skills and habit to the new economic blueprint of ‘Arangkada’, for example, they would be able to put our economy on a higher plane?

For instance, they can adopt 21^st century competitive parameters and embrace a new paradigm starting with investment – it is beyond getting into a business, especially monopoly-like . . . and into visualizing the endpoint. In a globalized economy it means being competitive beyond the Philippines. And the critical elements are: technology, talent, innovation, product, market. (As Time magazine reports, Dec 17th: ‘iTunes accounts for about 66% of the downloadable music market, with Amazon trailing a distant second at around 13%. [Yet] Amazon beats iTunes in two of what you’d think would be the most fundamental areas: price and device support’. Ergo: it’s not all about price and even the add-on of device support.)

Technology, like infrastructure, is both hard and soft. It includes, beyond R&D and state-of-the-art technology, the way we think – beyond gearing for low-priced goods it is about developing products and services across the value chain. And the same construct applies to talent, innovation, product and market. In short, competitiveness is not being a bully – it comes from products and services that are innovative, with perceptible differentiating characteristics geared to generate economies of scale and healthy margins because their volumes are optimized across the value chain, making the law of averages work for the investor.

The typical enterprise in a poor country, and the writer has seen it many times outside the Philippines too, is to think small from the get-go – ‘the least investment’ instead of ‘the endpoint’ becomes the ‘guiding light’. Or why R&D in America generates more winners or commercialized product ideas, e.g., Apple, Google, Netflix, DuPont, etc. They start with the end in view. A ‘least-investment’ posture sets the bar low – and would influence low-talent parameters, a low-innovation sense, limited or low-product specs and limited-target and actual markets? The outcome: an uncompetitive industry and an economy like ours? Our challenge is to step up to the plate? And then we could truly be cheerleading?