“America Is Now a ‘Second Tier’ Country … America leads the world when it comes to access to higher education. But when it comes to health, environmental protection, and fighting discrimination, it trails many other developed countries, according to the Social Progress Imperative, a U.S.-based nonprofit.
“The results of the group’s annual survey, which ranks nations based on 50 metrics, call to mind other reviews of national well-being, such as the World Happiness Report released in March, which was led by Norway, Denmark, and Iceland, or September’s Lancet study on sustainable development. In that one, Iceland, Singapore, Sweden, and the U.S. took spots 1, 2, 3, and 28—respectively.” [America Is Now a ‘Second Tier’ Country, Eric Roston, Bloomberg, 21st Jun 2017]
America may no longer be the land of milk and honey but over 3.5 million Filipinos call the US home … And there are over 10 million OFWs that remit close to $30-B. And it explains why we can have a consumption economy. But to add insult to injury, everyone is taking credit for this phenomenon ...
Thankfully, we are getting some unvarnished perspective of our reality. “Our manufacturing exports to Asean have surged since the early 2000s as import tariffs fell to zero in 2010, and the growth of the manufacturing sector sped up to 7-8 percent annually, faster than overall economic growth. Intermediate goods have assumed the largest share in our trade with Asean, reflecting our strong integration into the regional production networks and value chains.
“Even so, we have yet to catch up with our comparable Asean neighbors in export earnings, foreign direct investment inflows, tourism revenues, quantity and quality of infrastructure, and many other indicators of economic dynamism. While we nearly doubled our export earnings over what we got in the previous decade, our neighbors zoomed even faster, and actually widened the gap by which we fall behind. Vietnam used to earn about $10-15 billion more than we did from exports; now it exceeds ours by close to $100 billion! We have multiplied our foreign direct investment inflows nearly eightfold, from an annual average of $1 billion in the last decade, to $7.9 billion last year. But even that still puts us behind the original Asean 5, and Vietnam.
“We also need to address high poverty incidence and wide income gaps, environmental degradation, and vulnerability to natural disasters and climate change, which remain among our most daunting challenges as a nation. Vietnam achieved all the Millennium Development Goals well before the 2015 target year; we missed achieving nearly half of them, including the primary goal of halving our 1991 poverty rate.
“Even as a founding member of Asean, we have yet to take fuller advantage of opportunities for economic synergies offered by regional production networks and value chains. This especially applies to products of agriculture, where we have continued to restrict trade in rice and products of livestock and poultry, rather than benefit from the regional production networks that have rapidly emerged in these products. We have yet to eliminate longstanding constitutional and legal restrictions on foreign ownership in vital services such as transport, telecommunications, mass media and education. Among other things, these have led us to suffer the consequences of lack of competition in the provision of critical infrastructure facilities especially in transport, telecommunications (including internet), and energy. Particularly embarrassing is how we lag in implementing our National Single Window, an online one-stop platform for all import and export clearances aimed at facilitating trade, which needs to be linked to the regionwide Asean Single Window (ASW) platform. Right now, activation of the ASW cannot proceed because of us, even as we had the bravado in 2007 to volunteer to lead the initiative and chair the ASW Committee, a post we still hold.
“Chairmanship of Asean should go well beyond our President and other officials sitting at the head of the table as our Asean colleagues talk above our heads. Leadership demands setting a good example, and in Asean, I’m afraid we have yet to be a good example to be able to lead with authority.” [Setting the example in Asean, Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 23rd Jun 2017]
In other words, “pwede na ‘yan” keeps our optimism high even as the blog has argued we haven’t gotten to the root of our underdevelopment going back decades; and it can be described by the broad buckets of infrastructure development, industrialization and competitiveness.
We are so behind the curve that in the 21st century we are still talking (with no guarantees of execution) Build! Build! Build! – something that Malaysia under Mahathir, although he came 16 years after Marcos, undertook a generation ago. And to this day visitors to Malaysia will see ongoing infrastructure-building efforts.
In fairness to the Du30 administration, let’s hear them out. “Duterte administration banks on reforms in tax system to cut poverty in PHL,”Catherine Pillas, Jovee Marie N. dela Cruz, Rea Cu, BusinessMirror, 21st Jun 2017.
“Citing as an example Thailand, [Karl Kendrick Chua, chief economist and Department of Finance undersecretary] said the Philippines will need to generate P1.7 trillion in revenues just to match the growth of its Southeast Asian neighbor. He noted that Thailand has invested heavily in infrastructure, education and health.
‘If the entire CTRP (Comprehensive Tax Reform Program) is implemented by 2019, our GDP is P17 trillion, so 10 percent of that is P1.7 trillion. I will get P366 billion from tax policy, P433 billion from BIR, P208 billion from customs administration, P188 billion from non-underspending, with a remaining balance of P478 billion still,’ Chua said.
“That is why we have ODAs. So that is the big picture, a combination of sources to achieve development like Thailand.”
But what does industry, especially the biggest exporters, have to say? “Seipi (Semiconductors and Electronics Industries in the Philippines Inc.) President Dan C. Lachica expressed concern about the impact of the measure on the local suppliers. ‘This tax-reform bill is really very critical, what we’re concerned about is the levying of VAT on local suppliers to exporters or multinational companies in the Peza zone.’
‘That will kill our local suppliers and small-medium enterprises. The concern with the VAT refund system is if it will be efficient.’
“The Seipi chief said of the $28.8-billion electronics products exported by the Philippines, $22 billion consists of imports.” [Pillas, et al, op. cit.]
It appears the administration is not poised to hit a home run. Why a home run? Because we are playing catch up. “[W]e have yet to catch up with our comparable Asean neighbors in export earnings, foreign direct investment inflows, tourism revenues, quantity and quality of infrastructure, and many other indicators of economic dynamism. While we nearly doubled our export earnings over what we got in the previous decade, our neighbors zoomed even faster, and actually widened the gap by which we fall behind.” [Habito, op. cit.]
If we are to truly catch up, we need more than economic development per se, i.e., beyond the conventional wisdom of monetary and fiscal policies. We need an economic miracle. And that is why the blog has teed up a much grander vision for PH. It is called imagination – to dream and foresee the future, the true measure of the human species. Think the Singapore miracle, the Pearl River Delta Economic Development Zone, and the Asian Tigers – Taiwan, Singapore, South Korea and Hong Kong.
We need a model bigger than Thailand. And more to the point, Thailand’s efforts came at the time when the global economy was booming; and where global competition was not as intense as it is today. So much so that wealthy nations like the US and the UK are no longer the gold standards.
And as some would know, the inspiration of the blog are the writer’s Eastern European friends. They are not looking at – and benchmarking against – regional players but rather the world’s best and biggest players in their industry. Why? Even the likes of GE, P&G, Unilever and Nestlé are underperforming.
Because good enough is never good enough – as in “pwede na ‘yan”.
And both Uncle Sam and PH better pay heed. “Trump Is What Happens When a Political Party Abandons Ideas,” Bruce Bartlett, Politico Magazine, 24th Jun 2017.
“Trump has turned out to be far, far worse than I imagined. He has instituted policies so right wing they make Ronald Reagan, for whom I worked, look like a liberal Democrat. He has appointed staff people far to the right of the Republican mainstream in many positions, and they are instituting policies that are frighteningly extreme.” Frighteningly extreme? Does that sound like Du30? But we have no qualms with hierarchy and paternalism – and even tyranny?
“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]
“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]
“National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists . . . A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.” [The Competitive Advantage of Nations, Michael E. Porter, Harvard Business Review, March–April 1990]
“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” [William Pollard, 1911-1989, physicist-priest, Manhattan Project]
“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]
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