Learning to walk and then run

“[R]ural banks should review the viability of their current business model and find ways to make their operations more suited to the needs and demands of the times . . . It is about time rural banks realized technology is a serious game-changer . . . Given the rapid advancements and challenges in the business landscape, it becomes imperative for rural banks to be attuned with the times” [The need to transform, The Manila Times, 14th May 2014]

“Recently, the Bangko Sentral ng Pilipinas (BSP) announced it was considering liberalizing foreign ownership regulations to open up the country further to foreign investors ahead of the forthcoming integration of the Southeast Asian nations . . . Among the amendments proposed were an increase in the allowed foreign ownership to 100 percent from the current 60 percent, and the lifting of the limit on the number of foreign banks that could enter the country . . . [S]ome economists and analysts say the financial system remains unprepared for the integration and the stiffer competition it is bound to bring. Debt watcher Standard & Poor’s, for one, had pointed out that local banks are still lacking in terms of scale.”

Note that the call to reform in the above news report refers to rural banks. Rural banks are not universal banks and by their very name are not major Philippine enterprises. But then, on the same day, this appears: “Magsaysay unit seeks perks,” Daryll Edisonn D. Saclag, Business World, 14th May 2014. “A UNIT of the Magsaysay Group of Companies is seeking government incentives for its newly acquired shipping vessel, a Board of Investments (BoI) notice published in a newspaper showed . . .”

What is this group of companies? In their website, the first thing one would notice is the following: “Our history in shipping,” and the next line reads: “1948-1958.” It is safe to assume that they are far larger than the typical rural bank? “NMCCLI is a unit of Magsaysay Transport & Logistics Group, which, in turn, is part of the Magsaysay Group of Companies. NMCCLI is engaged in full-container liner shipping, servicing six of the country’s major economic ports: Manila, Batangas, Cebu, Cagayan de Oro, Davao, and General Santos.” [ibid.]

They are 66 years old. And if small rural banks are expected to pursue reform, what about bigger enterprises? In fairness, our shipping infrastructure is like our economy, it lags those of our neighbors. Does that justify perks for shipping companies or should fixing our infrastructure be the priority? But then again, PHL has long been priority-challenged or simply, we can’t seem to prioritize, reflective of our ‘crab mentality’?

But the following would suggest that government indeed wants to promote inclusive growth? “THE DEPARTMENT of Trade and Industry (DTI) has turned nearly P1.3 million worth of weaving equipment to a community in Bohol to boost the industry’s competitiveness, the agency yesterday said in a statement.” [Bohol co-op gets weaving equipment, Daryll Edisonn D. Saclag, Business World, 14th May 2014] “The DTI said that, under its shared service facility (SSF) program, the Tubigon Loomweavers Multi-Purpose Cooperative (TLMPC) was granted 15 handlooms, laboratory equipment, and drying facility worth P1.259 million to help in the recovery of Bohol’s weaving industry. The handlooms will develop bigger and wider woven fabrics while the laboratory equipment and drying facility are intended to improve the quality of bleached and dyed raffia fibers, the agency noted. With the facility now in place, raffia rolls can now be sold at an average of P200 per meter (m) per P75/m, “redounding to increased income and better standard of living for the weavers.”

Sounds good . . . but is dependence something we take for granted?

“If the inauguration of the Commonwealth of the Philippines in November 1935 marked the high point of Philippine-United States relations, the actual achievement of independence was in many ways a disillusioning anticlimax. Economic relations remained the most salient issue. The Philippine economy remained highly dependent on United States markets--more dependent, according to United States high commissioner Paul McNutt, than any single state was dependent on the rest of the country. Thus a severance of special relations at independence was unthinkable, and large landowners, particularly those with hectarage in sugar, campaigned for an extension to free trade. The Philippine Trade Act, passed by the United States Congress in 1946 and commonly known as the Bell Act, stipulated that free trade be continued until 1954; thereafter, tariffs would be increased 5 percent annually until full amounts were reached in 1974. Quotas were established for Philippine products both for free trade and tariff periods. At the same time, there would be no restrictions on the entry of United States products to the Philippines, nor would there be Philippine import duties. The Philippine peso was tied at a fixed rate to the United States dollar . . . The most controversial provision of the Bell Act was the "parity" clause that granted United States citizens equal economic rights with Filipinos, for example, in the exploitation of natural resources.” [Ronald E. Dolan, ed. Philippines: A Country Study. Washington: GPO for the Library of Congress, 1991]

Can we learn to walk and then run after all these years? Or shall we always find an excuse why we can’t stand on our own two feet?“Perhaps, what’s most unfortunate is that the Philippines needs either the US or China to secure its future.” [Balancing security with economics, The Business Mirror Editorial, 1st May 2014]