Talk is cheap?

Did we say that Marcos was a master of the mind game such that not only he but also Juan de la Cruz had believed the “new society”? It’s understandable that as a nation we have to stay positive, but it doesn’t mean embracing the unreal? Yes, we should tap ourselves on the back given our elevated foreign exchange reserves and the strength of the peso; the investment-grade ratings that we’ve received and the heightened interest of foreign investors – though they have yet to translate into more substantial FDIs to approximate those of our neighbors. But we can’t brush aside that we’re standing on the backs of 10 million OFWs and the more recent BPO industry – i.e., they are the source of our income stream, not exports, where we need an incremental $100-B plus as the DTI rightfully set as a goal to be in the same league as our neighbors. Meanwhile our infrastructure system is dismal; our investment rates have been meager and thus our inability to produce truly regionally or globally competitive products; and, sadly, our culture of impunity is turning from bad to worse?

Still we mustn’t be discouraged. Yet we can’t keep fooling ourselves, to quote the former Senator Eddie Ilarde. Of course, the back patting has been confined to the elite class because Juan de la Cruz continues to suffer – as in more Filipinos feel they are poor?

“Something is wrong about all this . . . A long list of complaints against Agriculture Secretary Proceso J. Alcala has been enumerated, from corruption and cronyism to basically being ineffective in his job. If these are true—and we’re not saying they are—then why is he still in his post? The fact that Pangilinan has been put directly in charge of four agencies under the DA indicates that the structure is faulty . . . We have seen a Land Transportation Office that has not been able to perform its basic function of supplying license plates. The Ninoy Aquino International Airport, which is under the Department of Transportation and Communications, operates under a procurement system that takes months to do a job the private sector could accomplish in weeks. The Department of Energy seems helpless to ensure a reliable electricity supply.” [Government: Is the structure or the people in it the problem? The Business Mirror Editorial, 8th May 2014]

If those weren’t enough, an international institution had more unpleasant news for Juan de la Cruz: “Filipino unskilled workers among world’s least productive—World Bank.” [Paolo G. Montecillo, Philippine Daily Inquirer, 8th May 2014] “This stems from a long history of underinvestment in people, firms, and public investment,” said Rogier Van den Brink, World Bank Philippines lead economist for poverty reduction . . . As a result, rising wages in the country, due to yearly hikes in minimum wage mandated by law, have outpaced the increase in the average productivity of workers.”

We can’t gloss over very basic fundamentals? And fundamental to generating the economic output that we need for our wellbeing as a people and nation is investment. But to Juan de la Cruz investment comes from our cacique masters – or from government which, unfortunately, hasn’t done a good job? Yet there is still the need for us to develop a community sense (the opposite of crab mentality) if we are to learn to prioritize and successfully pursue the common god – e.g., recall NAIA 3 and as though not content, we now have Mactan airport? And so to hear captains of industry talk about innovation and competitiveness given where we are is adding insult to injury? And especially when our system matter-of-factly lines the pockets of supposed public servants and their cohort – and serves the needs of vested interests over that of Juan de la Cruz?

What about SMEs? First, what about infrastructure like power? [Cagayan de Oro, Davao hit by 7.5-hour daily brownouts, Alexander D. Lopez and Camcer O. Imam, Manila Bulletin, 8th May 2014.] And we talk about extending them credit facility but even beyond that: what is the way forward for our SMEs given ASEAN integration? Our large enterprises are encouraging SMEs to establish themselves as a reliable pool of support industries, but then again, beyond that: what compelling competitive attributes are our large enterprises bringing to the region? If only a handful of these large enterprises are geared to be truly regionally competitive, what is the future of SMEs? On a different though similar subject, didn’t we have the agriculture scam on the heels of the supposed good intentions of promoting agribusiness?

“The ACEF (Agricultural Competitiveness Enhancement Fund) scam resurfaced anew after one of its biggest recipients was embroiled in the pork barrel scandal. At least P775 million in ACEF funds went for the food processing and cold chain project of National Agribusiness Corp (Nabcor) in 2007 and 2008 . . . [It was] a multibillion-peso farm subsidy fund supposedly meant to prepare the agriculture sector for the country’s trade integration into the Southeast Asian market next year, but official documents showed [two lawmakers] gained from farm subsidies [and] their bailiwicks became the biggest beneficiaries of their pet legislation.” [2 lawmakers gained from farm subsidies, Gil C. Cabacungan, Philippine Daily Inquirer, 5th May 2014] 

But have we learned our lesson – or are we simply dependent on Big Brother and starting on the wrong foot? “Exporters of homestyle products have sought for a P1-billion export support fund (ESF) to help the sector arrest the decline in export revenues, the Philippine Exporters Confederation Inc. said Friday . . . Luis Sicat, a private sector trustee of the Export Development Council (EDC), was quoted in the statement as saying that the fund will be needed for export promotions, product design and development and improvement for technology, among others.” [Exporters plead for P1-B aid deal, Amy R. Remo, Philippine Daily Inquirer, 5th May 2014]

How are the intentions behind the new ESF different from that of the ACEF? This blog often talks about my Eastern European friends and their efforts to compete in the EU; they had access to funds (from the EU) similar to the above but they were not the key to their moving forward. Their real financial needs had to be sourced from private financial institutions – to whom they had to present a compelling case as is the norm when tapping a credit facility. And they had access to MNC managers to show them the ropes of global competition – which formed part of the assistance from the West; other assistance came to address their nation's statutory gaps and deficiencies as in constitution-writing (including check-and-balance mechanisms like the ombudsman) among others, or what my friends called “mentality-related” efforts – because they realized they had to toss their socialist inclinations. And, clearly, the massive infrastructure development assistance program from the EU was vital.

If our SMEs are to strike on their own, it is important for them to think like MNCs by committing to investment and technology and innovation as well as people, product and market development – which would facilitate developing a compelling case for private financial institutions to support their enterprise. While government – if PHL is to have a chance to transform itself from underdeveloped to developed economy – must provide the requisite infrastructure where, sadly, our track record is not encouraging?

Still, the overarching principle remains: Start with the end in view. We have to start viewing major undertakings from the backend, not the frontend or via the inputs. And which is why establishing a handful of industries where we can be competitive is a must. And that is where we can build the requisite networks and partnerships of large enterprises and SMEs. Arguably our largest industries benefited from our oligarchic economy – and why they’ve lobbied against competition especially foreign – and thus their muscles weren’t toned from roughing it up in the regional or global competitive arena but local domination and political patronage? There are exceptions, of course, but the beef is we have yet to develop an innovation and technology culture. And that starts from the mindset of honest-to-goodness freedom and democracy, that is, fair and square – and not accepting oligopoly as a given!

That is our reality and the more we talk about innovation and competitiveness, the more we will reinforce that talk is cheap – unless we put the requisite building blocks in place? On that sad note . . . Happy Mother's Day to all the mothers!